I’ve been thinking a lot about the A.I revolution and the impact on our economy, and i’m more and more convinced that a universal basic income is going to become an economic necessity in a not so long future (I would guess 15-20 years).
My point is that we are reaching a point in human civilization where our technology could replace humans in almost anything they do, and that’s very different from the previous technological revolutions where technological progress enable humans to dedicate more time to activities only humans could do ( like the transitioning from the agricultural sector to manufacturing, manufacturing to IT and services industry).
I’m really starting to think that only a small group could produce the goods and services for the whole economy using robots and that’s going create problems if the wealth is not redistributed. First of all, there is not going to have enough demand in the economy for it to be near it’s potential, since higher income individuals want to save a bigger proportion of their income. So our economy would reach a point of low growth, excess savings and low interest rates and inflation. And that’s not even considering political instability or moral considerations.
What do I propose? I’m not talking about the present situation, but eventually a universal basic income covering the basic necessities of life. It would not but paid using a taxing system, but using the central bank to create new money.
But we are going to have hyperinflation! NO, money printing doesn’t create inflation by itself. Too much money chasing too few goods creates inflation. As long as we have the technological capabilities to meet the demand coming from the money printing, there’s not going to be hyperinflation. So that’s why I don’t necessarily agree with a universal basic income now, because we don’t have these technological capabilities yet, but it’s coming fast. We should at least prepare ourselves to the idea of people not working or working less and being sustained, which is not ok with our culture as of now.
I’m so sick of people trying to predict the future and just rehashing what other people have already said about Ai and universal basic income. The fact of the matter is since people are discussing this concept now means it will not happen. These are the same people who feared Y2K and Mayan Calendar apocalypse.
Efficiency and automation are nothing new! Machines will continue to coincide with man stop ripping off Elon Musk. And by the way, when was the last time ANYONE used Paypal.
“I’m so sick of people trying to predict the future and just rehashing what other people have already said about Ai and universal basic income. The fact of the matter is since people are discussing this concept now means it will not happen. These are the same people who feared Y2K and Mayan Calendar apocalypse.”
FYI, a huge part of the cfa program is base on predicting the future.
I’m sorry if I’m rehashing what other people have said, I guess I should not listen to what other people say before i form my own opinion.
Lets look at the Subprime crisis. There were people (Paulson, Falcone) at hedge funds who were ready to invest billions in shorting subprime (I think ABX). They knew what was going to happen, the effects, and an instrument to profit on it, but they didn’t know one thing. The ‘when’. Market timing was essential and some people who shorted ABX too early lost their shirts. You are talking about some vague idea of a macro view with a vague perception of timing and impact. How are you supposed to factor that in your financial model?
"Lets look at the Subprime crisis. There were people (Paulson, Falcone) at hedge funds who were ready to invest billions in shorting subprime (I think ABX). They knew what was going to happen, the effects, and an instrument to profit on it, but they didn’t know one thing. The ‘when’. Market timing was essential and some people who shorted ABX too early lost their shirts.
You are talking about some vague idea of a macro view with a vague perception of timing and impact. How are you supposed to factor that in your financial model?"
yes they are some macro predictions and micro predictions, what’s your point?
look, I don’t know if we are going to have A.I robots that are going to take jobs away from cfa, engineers, doctors or prostitutes. It’s just that I think people are not ready for the idea of not having to work and still being supported by society if it does happen. I just thought it would be interesting to have the opinions from people in finance, who tends to view long working hours as a badge of honor.
It’s pretty dumb how a new guy posts with sincere thought and some AFers just take a sh!t on him. Pretty insecure, and dismissing an idea completely is as arrogant as guaranteeing that same idea.
The issue I see with UBI is one of freedom. If the majority of humanity receives UBI we will need population controls, among other controls and checks on freedom. There is also the psychological factor. Automation drastically reduced coal jobs, a tiny sector of the US economy, and we have witnessed the outrage. People do not like to appear useless.
Why would UBI require different controls than increasing levels of world per capita income? Why is the source of income going to impact population growth and such? Are you assuming people will make more babies with all the extra free time?
100% agree. Everyone is too smart for their own good.
To the OP, I’ve actually thought about this a great deal. Traditional economics has historically been concerned with how to allocate scarce resources – the most significant and costly of which has typically been labor, depending on the capital intensity of the industry over time. So if labor becomes essentially free, it changes the nature of all economics as we’ve known it.
Even the nature of money may change in such an environment. It isn’t clear that the functions of money – store of value, medium of exchange and measuring stick – carry the same relevance in an economy of machines. I would argue that in such a world, money concepts would actually regress, and humans would have a preference for hard commodities, gold and other metals, etc.
It’s fascinating to think about. Remember, the Fed is only 100 years old. In the scope of humanity, that’s no time at all. Concepts of what economics is supposed to achieve (even before the dismal science had a name) and it’s relevance to society has changed over the centuries.
“Even the nature of money may change in such an environment. It isn’t clear that the functions of money – store of value, medium of exchange and measuring stick – carry the same relevance in an economy of machines. I would argue that in such a world, money concepts would actually regress, and humans would have a preference for hard commodities, gold and other metals, etc.”
that’s an interesting point! I would argue that fiat money have value mostly because we have to pay taxes in this form. The government doesn’t take gold, silver or sheep in payment so it would be troublesome to conduct our other transactions in another form. Even in world with no labor (I don’t think we are going to reach that point ever), capital would still be taxed.
Regarding the accuracy of my predictions, I think automation have a huge impact already on the income and wealth equality in a lot of countries. So we may already live with some of the consequences of these inequalities I was mentioning (excess savings, low demand).
Jobs are not a goal in itself, it’s a cost of production, so I think machines taking jobs away from people is a good think if we implement the right policies to make our economy work in that context.
UBI has to come from THE CORPORATION’S stash, not the government. Basic math.
It is as simple as all the citizens owning the stocks and getting the dividends (how the system was originally supposed to work). Reverse income inequality, assets held in a trust, dividends distributed monthly. Done.
So communism? If not, and the shares can be bought and sold, 100% chance the majority sells theirs off to fuel present consumption and you’re right back to where you started before you even know what happened.
“BI has to come from THE CORPORATION’S stash, not the government. Basic math.”
i would say it’s the opposite, the government is the issuer of the currency, people needs to have the money before we can tax it. taxation is not a way for government to finance it’s spending, it only takes money out of circulation and ensures that the amount of money is not too big for the amount of goods in circulation and that we don’t end up inflating. in other words, government spends first and then tax.
You’re running away from the problem, trying to look for a Band-Aid. Just address the root cause of the problem.
Automation means income is being churned out constantly without doing much of anything. Great! But concentration of asset ownership is a problem. Address that. Why did it happen? The corporation. Why? Because it crushed worker power and took everyone’s wealth. Fix that.
“Automation means income is being churned out constantly without doing much of anything. Great! But concentration of asset ownership is a problem. Address that. Why did it happen? The corporation. Why? Because it crushed worker power and took everyone’s wealth. Fix that.”
I’m not saying ubi is the solution to every problem we have. I agree with you that the problem is that workers bargaining power has been crushed, for many reasons, in part because of automation that favors high skills individuals and capital owners. There’s many way to distribute wealth, al the citizens having ownership of companies is definitely one of them and is close to Marxist original ideas, I just think it’s not applicable in practice.
I just think that ubi is the only way we can stay in capitalist society, which is the best system we have found yet, and still have a wealth distribution that allows for a stable society politically. we can finance this ubi by taxation or money creation, I prefer the later because I think it would be more accepted politically.
