The Robotic Economy and Universal Basic Income
As a “data scientist in training,” I seem to be an emerging member of a new professional class that will work to increase the automation of society. As such, it feels important to start thinking about how a society can deal with the problem of robots putting people out of work.
I think we need to form some kind of sovereign wealth fund, whose purpose would be (ultimately) to provide each American citizen with a universal basic income. The fund would need to be sophisticated enough that it could outcompete existing funds and big enough that its dividends could form the incomes for millions of citizens. After all, the end result of a fully automated society should be a world where people are free to pursue their own interests because robots do all the work.
If we don’t do something like this, and automation increases at its current rate, we will likely end up with two populations: 1) a massive underclass of people who don’t have much to contribute work-wise and yet depend on work for their income; 2) people who have tied their pocket books to automated roboservices and collect unbelievably large income streams. To avoid this futuristic caste system, we should begin working now to democratize passive income streams and ultimately liberate the entire workforce.
Here’s how it would happen (in theory): we would have a giant fund that uses sophisticated algorithms to invest in various assets. Let’s say that the fund starts out with $15bn, and the population of America is 330 million people. Let’s also assume that each year the fund is able to grow 30%. Of the $4.5b of profit in the first year, we would take out 10% ($450m) and distribute it to all Americans. Each American would receive about $1.36 for the year. This seems small, but that is why we need to get this puppy started.
Year 2: The fund (now a little over $19b) grows 30%. Of the approximately $5.7bn of profit, we’d take out 10% (~$570m) and distribute to all. In year 2, each American would receive $1.77. Still small.
Year 3: By end of year, each citizen would get ~$2.30.
Let’s continue this:
Year 5: Each citizen receives $3.89 at end of year.
Year 10: $14.46 for the year.
Year 15: $53.69.
Year 20: $199.35
Year 25: $740.18
Year 30: $2748.24
Year 35: $10,204.05
Year 40: $37,886.92
Year 45: $140,671.49
Year 50: $522,303.38
In 50 years, with this kind of sovereign wealth fund, each citizen would receive a $522,303.38 end of year income. Wealth would become so ubiquitous that we would all be set for life and no one would ever have to work for money again. Additionally, each year, as the basic income rises, our government could reduce the amount of taxes each citizen pays into social security programs by the income increase. If the income increases by $5, everyone pays $5 less. People being supported by social security programs would retain their current levels of support, and the basic income would potentially increase twice as fast (once for the additional cash, twice for the taxes they now hold onto).
The pay off for a fund like this would seem small at first, but with compound interest, a national investment like this would be well-worth the wait. Imagine this: it could cost $15bn (the projected price for Trump’s wall) for the entire nation to be done with work forever. And all this without any form of wealth redistribution. We would eliminate poverty, all while treating the rich and poor exactly the same.
Of course, there are many complicating factors I haven’t considered in this blog post. But as our society continues to become more and more automized, I do think that we’ll need to consider in-depth solutions like the one I’m proposing. With something like that solidly in place, the robots coming for our jobs could be the best thing that ever will happen to us.