The idea of a Universal Basic Income (UBI) has been around for a long time. However, despite all the benefits, our capitalist economies have been doing amazingly well without it; so there has never been a need — until now. In this article, I try and explain what’s changed, and why we need a UBI now, before it’s too late.
Economics is a diverse and complicated subject, but, if we ignore a lot of the details and grey lines, our capitalist economy basically consists of three interacting components:
- Rich people
- Poor people
- The state
Rich people are people that don’t need to work to survive. They own capital: property and businesses that provide them with rent and dividends. Poor people are everyone else, including you and me. We need to work to receive an income.
At its core, our economy uses employment and taxes to redistribute wealth. Businesses and the state employ people and pay them salaries and wages. The state taxes people and businesses. People and the state then use this money to buy goods and services.
This system works. The wealth trickles down to the poor. It works well enough for it to be the foundation of most countries’ economic models in the world today. A lot of our politics focuses on how much flows along each of these arrows. However, as long as it flows, we avoid talking about whether the flows make sense.
As technology improves, businesses are able to reduce costs and produce more. There is a huge incentive for businesses to reduce costs, and one of the biggest costs is wages and salaries. Since the start of the industrial revolution, more and more machines have been doing more and more work; better and cheaper than humans can do it.
However, every time a machine is brought in to do the job of a human, that human doesn’t get the benefit; the business owner does. Instead of being freed from their daily toil and allowed to live the rest of their days as the rich do without working, they are told they must find another job; or starve. Every time a job is replaced by a machine, there are more and more people fighting over fewer and fewer jobs. For businesses, more and more people fighting over fewer and fewer jobs has an added benefit: it drives wages and salaries down; further reducing business costs. Some argue that more and better technology creates more and better jobs for humans, but this is not supported by the evidence.
The rapid rise of AI
Not so long ago, we were being told that we should all learn to programme or be left behind in the new economy. But, when even technology companies, who already generally have fewer employees per dollar revenue, are cutting jobs again and again, we need to stop and realise that technology does not create new jobs.
It’s also all too easy to not notice how quickly the recent developments in automation and, more specifically, artificial intelligence (AI) are happening and accelerating. It was nearly 30 years ago in 1996 that a computer (Deep Blue) first beat the world champion at chess. It took another 20 years for a computer (Alpha Go) to beat the world champion at Go — a much more complicated game. We hear about these stories, are fascinated by them and then move on, because we don’t see how they affect us. However, when all the best humans have been beaten, the computers only have each other to beat, and the speed at which they are beating each other is phenomenal.
Just two years after Alpha Go beat the best human player at Go, Alpha Zero beat Alpha Go. More impressively, Alpha Zero also beat the world’s best chess computer (Swordfish). Alpha Zero is not a specialist, it’s a generalist, and it’s the best at all the games it plays. If that’s not impressive enough: we then learn that Alpha Zero is a self learning computer. It took only nine hours to learn chess well enough to beat Swordfish!
The incredible and rapid advancement in artificial intelligence (AI) is further highlighted by Open AI’s GPT (Generative Pre-Training) model. Most people first heard about it with the launch of ChatGPT in November 2022, which is based on GPT-3.5. ChatGPT is so good that some people are convinced it’s sentient (it’s not). However GPT-4 is out and it’s even better. Among other things it can:
- Score of 710 out of 800 (93rd percentile) of the SAT (US standard university entrance exams) Reading & Writing section
- Pass the verbal (99th percentile), quantitative (80th percentile) and writing (54th percentile) sections of the GRE (US Graduate Record Examinations)
- Score 298 out of 400 (90th percentile) on the bar exam
- Pass the Chartered Financial Analyst (CFA) Level I and Level II exams
- Beat everyone (99th to 100th percentile) in the Biology Olympiad
At Open AI’s developer conference in November, they talked about how people were developing modules for GPT-4 (new jobs for those that can learn quickly?). However, the same conference also showed how GPT-4 was already better at creating modules for itself than humans. The fastest I’ve ever seen a new job be replaced by a computer.
GPT-4 is astounding. This change from novelty chat bot to beating us at every test is what has happened in just the last year. What will 2024 bring?
However, before we can even begin to think about, never mind grasp, how this rapid improvement in Open AI’s GPT in the last few years will affect us in the near future, we hear about another: Gemini. We’ve already stopped asking whether these technologies are better than humans (because they are). We now only ask which is better?
The Impact on the Capitalist Economy
Machines are stronger, faster, cheaper and better than humans at the tasks they perform. They learn faster than us; so if our job gets replaced by a machine, robot or AI, we can no longer expect to learn a new skill before a machine replaces that job too. The number of tasks that machines can perform better than humans is simply increasing too quickly.
These new advancements are great news; especially for businesses. They can replace expensive, finicky, demanding humans with cheap, consistent and obedient machines. However, as businesses rely more and more on automation and AI, the wages and salaries flow of money in our capitalist economy is disappearing.
AI and automation are great for removing the need for people to do work and reducing business costs, but it’s also eliminating the only way money currently trickles down to the poor: wages and salaries. By eliminating the need for people to do work, AI and automation will break the flow of money in our capitalist economy. Without money trickling down to the poor, the poor cannot buy the goods and services that business provide. Without salaries and wages (income) there is no income tax.
Fortunately there is an easy solution: give everyone a UBI. Make the rich (and businesses) who benefit from the poor spending money, pay taxes to fund it.
Our politics can still focus on how much flows along each of these arrows, but the important point is that it flows, and then we can all benefit from the rapid and awesome development in AI and automation.
I for one look forward to a world where machines do all the work, and I don’t have to work. However, for that to work we need a UBI now.
Daniela Ortner