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“There will be no shortage of goods and services”
- Elon Musk prophesies a future with AI
Economics, at its core, concerns itself with the implications of scarcity. What do we produce with our scarce resources? How do we produce this? Who are we producing for? These fundamental questions have been the foundation for many prolific economists throughout time but perhaps there is a new question entering the discussion. What if there is no scarcity?
Automation as the end to labour force employment is not a new narrative. However, with recent developments of AI including the public release of ChatGPT discussions of the topic are surfacing in tech circles, mainstream media and around dinner tables. Billionaire entrepreneur and tech visionary Elon Musk has optimistically predicted an “age of abundance” for humanity where jobs are optional and undertaken out of personal interest. Contrastingly, some prominent figures such as Geoffrey Hinton - the “godfather” of AI - fear the “problem of AI taking over”. Despite their opposing attitudes towards the future of AI, the foundational concept of a universal basic income unites Musk’s and Hinton’s envisioned futures.
The Universal Basic Income (UBI) has often been described as a utopian fantasy in the realm of policy. A UBI policy can be defined as a regular cash transfer provided to all citizens regardless of personal circumstances. Sociologist Professor Erik Olin White proposes that these policies are often underlined by three core principles; they are universal, unconditional and adequate. For such a program to be universal it must be made available without any form of means test and paid out regardless of personal characteristics such as marital or disability status, age and gender identity. To fulfil the unconditional nature of the UBI, payments must not impose any requirements on recipient’s conduct and behaviour. The final condition, adequacy, ensures that the payment amount is sufficient to accommodate an individual’s basic needs, protecting them against poverty.
Interestingly, many agree that there has not been any examples of implementation of a pure UBI system. Even amongst theoretical discussions, advocates for the UBI often stray away from a completely universal system restricting payments to adults or varying payments depending on the number of dependents. However, many countries have or have trialled UBI adjacent programs. One such example has existed in Alaska since 1982 where residents receive an annual Permanent Fund Dividend (PFD) typically ranging between 1000-2000 USD per person. These dividends are paid out from the state-owned investment fund, the Alaska Permanent Fund, which utilises oil royalties to fund investments. Although arguments against the UBI often involve the risk of disincentivising work, analysis of this program in Alaska have shown no impact of the UBI on levels of employment. However, the PFD is not a perfect example of a UBI as it is generally considered too little in amount to cover expenses for basic needs and thus meet the adequacy condition. Despite this, there is some evidence to suggest that the relatively high equity in income distribution in Alaska is attributable to the PFD program. For example, a University of Alaska study (2016) found a reduction in poverty of up to 20% as a result of the PFD.
In any discussion surrounding the viability of UBI implementation, funding remains an inescapable concern. Policymakers argue that in the current Australian economy, a UBI system would only be possible alongside a system of higher taxes. Although the significance of this would likely be partially negated by the discontinuation of current welfare programs it is likely that this tax concern has prevented any nation from adopting a true UBI policy. However, if the envisioned ‘age of abundance’ is realised, is it possible a UBI would be funded with ease? In fact, Elon Musk’s proposed future economy was a step beyond the universal basic income to a universal high income. If fears that technological advancements will permanently reduce labour force demand come to pass, perhaps a UBI program may be the mechanism to defend against widening and extreme income inequality.
So what if scarcity becomes a relic of the past? Perhaps the question becomes one not of economics, but of philosophy. In this age of abundance and automation, where do we find our significance?
“The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have it make some difference that you have lived and lived well.”
- Ralph Waldo Emerson
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