I have touched on Universal Income in the past. Many prognosticate that enforced socialism will be the inevitable American, if not world, eventuality. See Let Them Eat Brioche? (September 2018); Universal Income - A Reality Coming? (November 2016). The unifying theory of Universal Income is that somehow there will be wealth, and that the government will decide how and when to seize it and then redistribute it in some manner it deems fit.
The subject arose again recently with Fortune reporting on a "legendary investor" issuing "a stark warning regarding the future impact of artificial intelligence (AI) and humanoid robots." The outcome predicted is one of "dramatic increase in wealth inequality."
That outcome of inequality might be interpreted as requiring shifting human motivations and endeavors. Or, there is the alternative of centralized socialism.
The investor contends that a great many jobs will evaporate, and he "questioned the need for lawyers, accountants, and medical professionals." These occupations, he says, will be replaced by "highly intelligent robots with PhD-level knowledge." The thinking in society will be done by a “humanoid robot that is smarter than all of us and has a PhD in everything.”
Therefore, there will be some mechanism for both "redistribution of money" and how we might "put people to work." Today, putting people to work is largely a market-force proposition. Goods and services are demanded, and businesses strive for a method of being selected to fulfill that need for a particular individual.
Those who produce the best results, achieve the most perceived value price, or mount the most persuasive advertisement campaign win the contest, deliver some service or good, and are recompensed. As they say, "Et voilà!"
The consumer decides that this or that car company, law firm, hospital, or other provider prospers. We consume, and they succeed. These decisions are driven by individual needs, desires, proclivities, and even vanities. I drive a Hudson Hornet because "Now You're Face to Face with Tomorrow." That is why I picked it over the Studebaker across the street. Advertising draws, brand loyalty draws, looks, feels, and more sell.
We make other market choices that may or may not be "free" choices. Some of us decided in high school to pursue college; others went on to medical school, earned a pilot's license, learned to weld, or otherwise qualified for some vocation or profession. As a result of those distinguishing criteria, some of those were allowed to do tasks forbidden to others (I have had more people decline to let me do their surgery, and I cannot figure that out—I have seen it on the Discovery Channel enough).
In all this, there is an economic driver called scarcity. Decreased supply increases price. If it were legal for any person to do appendectomy surgery, the cost would go down dramatically. If anyone off the street could pilot a Boeing 777, then the salary for pilots would plummet. Scarcity rules the economic realm. If diamonds covered the beach like sand, then no one would pay thousands for a diamond ring. If the Gulfstream G650ER were not $150 million each, we would all own one (I would have two).
Scarcity governs economic decisions. The price tag that keeps me from the Gulfstream similarly keeps me from living on Key Largo, lunching on Beluga caviar, and so much more. Scarcity drives markets. Jessie J. insists "its' not about the money, money, money," but I fear it truly is, always has been, and always will be. (Price Tag, Universal Music, 2010).
Taylor makes more because she is talented, produces desirable music, and puts on a compelling show. Any might do any one of these, but she is the complete example--scarce, and price increases. The same works for Beyonce, Shaquille Oneil, Tom Brady, and more. Will they bring their talent, expertise, and panache? Why will the Musks and Jobs continue to innovate, explicate, and develop? What will drive them to the next revolution?
The pundits who posit that we will soon live in a society without economics never explain how, when, and by whom decisions will come regarding who gets to live on the water in Paradise and who has to live on the river in Cleveland. With Universal Basic Income, how will economic decisions be made? If we all have basic income, will stores stock products that are not basic? If they do, to what extent will there be a consumer base willing (or able) to reach for the Tillamook instead of the store brand?
If everyone in the proletariat gets the same UBI, what is the motivation for self-improvement? Who will study, stretch, achieve, and perform? Where are we left as a society if no one is reaching for the stars? There are those who believe that the destination is worthwhile, but a great many more see the value in the journey, the effort, and the opportunity. Can that human nature be rewritten?
In the midst of drafting this exploration, which barely scratches the surface of UBI and macroeconomics, Elon Musk iterates yet again that
"society won't just need a universal basic income — it will need something bigger: universal high income."
Mr. Musk says that we will all have way beyond "basic." We will all have the
The siren song is attractive. I picture myself resting my feet in the ocean on my private beach while I reflect on whether to take my Bugatti or my Ferrari to the airport to grab my G-4 for the hop to Cyprus for lunch. And yet, I wonder if there might be others who would compete with me for the space and possessions I would pursue? In other words, might my neighbor steal my Bugatti while I am at lunch? Not if she has her own, but might I then take hers because it is newer than mine?
At the end of the day, I am certain that Mr. Musk and a great many others are far more intelligent than I am. I am confident that there is much about our world that I do not comprehend, and a good bit of it I would not understand on your fifth or sixth attempt to teach me.
That said, I struggle to see a world of limited resources in which there will not be competition. I see human competition persisting on a personal, collective, and even national level. I see it on a rational and even emotional basis. People will compete for resources. Wars will be fought over resource access and needs, from survival to luxury and everything in between.
I predict that whoever/however resources are meted and distributed will not be fair, equitable, or impartial. Some undeserving will thrive, and some exemplary will stagnate and suffer. In that, the future will likely be significantly similar to today. There is, without doubt, a great deal of inequity and inefficiency in the distribution of resources in our present. On what basis would one expect that the future will magically produce a perfect, or even more efficient and effective, distribution than today?
Socialism has failed before. This has happened historically because of simple truths. Economist Mark Perry noted, years ago, that "Socialism does not work because it is not consistent with fundamental principles of human behavior." That will remain. Central planners produce outcomes, people will perceive inequity, and human nature will rail against the mindset of utopianistic central control. This will be true whether we have "Baxic Income" (c), 2025, or Mr. Musks's enhanced "Bext Income" (c) 2025.
As we strive today, grasping and adapting to the world that AI beckons us toward, know that there are some inalienable truths. Among these are human nature, competition, and independence/freedom. There may be economic shifts, false starts, and untoward outcomes coming in our future.
But, there is no utopian Brave New World coming to theaters near you by 1984. There will be no "Inner Party, the administrative Outer Party, or Proles" any more than humans will be categorized into "Alphas, Betas, Gammas, Deltas, and Epsilons." Humans will remain inspired, competitive, and self-interested.
Yes, the future is coming. Yes, AI will change the world as we know it. No, it is not going to be some socialist utopia. There may be some bumps and miscues. There always have been. There will be winners, and there will be the rest of us. But there will be opportunity, progress, and more.
