AI-ristorcracy: Universal Basic Income Makes the Rich Richer
As paid work disappears and the cost of living rises, experts call for a Universal Basic Income (UBI). Blinded by good intentions, they don’t see that UBI is a check-mate for an oppressive, global aristocratic regime. Here’s why, and what to do about it.
Ascension
From driverless cars to ChatGPT, protein identification to brain mapping, today’s innovations change the very nature of work. As jobs yield to autonomous systems, many from Mark Zuckerberg to Milton Freidman, now call for Universal Basic Income (UBI).
UBI is a theoretical welfare system that guarantees an income to cover basic needs. Though framed as a liberating notion supporting the most vulnerable, it is inevitably oppressive. It is the Trojan horse for one of humankind's greatest flaws - the idea that some lives are worth more than others.
Not everyone gets a say under a UBI system. An elite group of individuals will distribute spending power to the masses, and themselves. Despite the epic historical failures of this aristocratic model, today’s UBI proposals simply innovate by suggesting that the investors and creators of AI be the ones to have dominion over the world’s resources and its citizens.
Only, these AI enabled billionaires haven't solved inequality, racism, sexism, hunger, shelter, addiction, climate change, or war profiteering. Instead, they have hoarded wealth, avoided taxes, and used collective resources to go on holiday to space - all while average US life expectancy declines.
Consolidating Capital
A minuscule group of people have amassed the world’s resources.
Through the stock market, wealth has been hoarded. While many created important companies, extreme wealth is mostly unearned, derived from returns on assets. Over the past 2 years, each billionaire gained ~$1.7 million for every $1 of new global wealth earned by a person in the bottom 90%. Whatever you make will always make a billionaire richer.
Through climate policy, carbon-emission rights have been hoarded. Investing in research, lobbying, and entrepreneurship allowed elites to limit poorer pollution methods - like gas cooking or driving diesel. Only, the richest 1% emit as much carbon pollution as the poorest two-thirds of humanity; the equivalent of 5 billion people. Whatever emissions you reduce will never offset a billionaire’s.
And through digital infrastructure, computation has been hoarded. With major investments in cloud computing, data centers, and cybersecurity, new startups must tithe Big Tech for access to the immense technical infrastructure required to compete, or find established investor funding. Whatever invention you create will only cement the system.
A rent-seeking system between the haves and the have-nots is at play - a new aristocracy. And when leading figures from this group promote UBI, we should be critical.
Seizing State Assets
As power shifted, those in former privileged positions began bargaining. Self-serving politicians and advisors made deals with high-net-worth individuals, competing on behalf of their countries to allow tax deductions, avoidance, and procurement contracts in exchange for power in the new system.
Money poured out of countries, reducing governments’ ability to maintain vital services. Slowly the quality of state education, shelter, nutrition, and healthcare services declined. Politicians capitalized on public outrage as an opportunity to justify further privatization. They sold more state assets, and more tax revenue leaked out of the system.
A cycle of destitution emerged.
Consider the UK. In 2010 they transitioned from “Big Government” to “Big Society,” privatizing roads, schools, prisons, probation, post, health services, and student financing. Within 10 years, 1 million+ young people were “lost,” food banks grew from 10 to 2600, homelessness rose by 169%, 1.5 million people fell into poverty, life expectancy declined, and GDP growth slowed significantly.
Despite this remarkable failure, the elite were rewarded. UK billionaires bypassed £36 billion in tax, elite wealth made £170 billion in excess profits from the country’s energy crisis, and £831 million from the crumbling NHS. Politicians avoided accountability and were funded to stay in power. Predictably, UK politicians now suggest further privatization and ‘basic income’ as the solution.
When a country enters the cycle of destitution, major reform or moves towards UBI appear inevitable. UBI is the easiest option, facilitating the wholesale surrender of remaining services, and avoiding political responsibility.
Transferring Wealth
Once assets are under private control, the focus turns toward raising prices.
UBI facilitates price increases as it is a repackaged voucher system. Whether it’s the Economic Policy Institute, Brookings, the National Bureau of Economics, the American Economic Association, or the OECD - all agree that vouchers fail.
In the US when states gave parents public education funding to put toward private school tuition, schools simply increased prices. In Hong Kong, when the government gave elderly patients vouchers for healthcare, providers simply increased prices. And in the UK when the government created a housing voucher, estate agents simply increased prices.
The law of supply and demand tells us that if we increase demand (the money we have available) for goods or services then, all else equal, the price will go up. As UBI increases demand for essential services by giving the population more money, without an increase in supply - which is controlled by the aristocracy - the result will be a price increase for these services.
Based on the first principle of economic theory, UBI will make recipients poorer, and likely lead to a world where citizens will have to choose between health, education, food, and housing.
The effect of UBI will be to increase prices and make the rich richer.
Forcing Labor
Technological innovation has always benefited capital holders over laborers. We cannot see the obvious economic limitations of UBI as we are overwhelmed by constant messaging that jobs are disappearing. But this is propaganda. The era of AI has an abundance of jobs.
They just aren’t paid.
Today’s elite gives users apps and headsets in exchange for free data access and labor, just as aristocratic landowners once lent farmers land in exchange for free labor. The exchange is so entrenched that the average person already volunteers 7 hours a day to online consumption and content creation, unknowingly propping up a $16.6 trillion market.
The AI industry depends on free labor to survive. Solutions like UBI, robotax, or data profit shares merely buy time to cement this dynamic. To distract us from recognizing that the numbers behind these solutions are infeasible, the intellectual meekness of these ideas is hidden behind the financialization of the economy.
Consider Meta’s 2021 market cap of $0.9 trillion. It sounds enormous - enough to power significant social reform. But Meta only makes ~$13 in annual profit per user. The real numbers are so small that if we redistributed 100% of the 10 biggest tech companies' global profit to only US inhabitants, it would generate $3 a day per person. That’s abject poverty.
We are allowing AI leaders to blindly drive us into an oppressive three-tiered class system:
Those who profit from technology
Those who create the technology
Those who feed the technology
The biggest question for the future of work isn't unemployment, it's exploitation.
Changing Course
There is still time to reshape and save our current system.
With no clear reporting mechanisms for the market impact on individuals, we have unintentionally rejected inherent human value. We can rectify this by developing a new metric that values all participants and exposes the exploitative relationship between users, companies, and investors.
Fulfilling the elusive “S” in Environmental, Social, and Governance, we could use the rent-seeking ratio to determine the long-term viability and contribution of a company. Take Meta, for example.
Recognizing that Meta returns 6,173% more to an investor than a user through tax puts policy and market interventions into focus. As a government's role is to redistribute wealth, transfers cannot be made in the absence of effective taxation. By drawing money flows, we see that when AI leaders - like Sam Altman, Elon Musk, Bill Gross, or Ray Kurzweil - ask for UBI, without paying sufficient tax, they are asking for a direct transfer of public funds into their private bank accounts.
It is still in our power to choose to use AI for the benefit of all. We can use AI to calculate this rent seeking ratio at scale. AI gives us the power to analyze the FTSE 500 across countries, over time, using publicly available data, and expose the rent seeking reality without the need for additional permissions.
Money is flowing from the masses, who are the users, laborers, and engines of tech, to a tiny number of individual owners. We have an opportunity to use AI to accurately chart these flows and collectively stop the leak.