basic income

Universal Basic Income, Capitalism and Christianity - Can We Reconcile the Three

I was born and raised in the West, steeped in Capitalism, market economies and the power of supply and demand. As I began to consider the concept of Technological Unemployment, I wrote about Capitalism having an “end-game”.

I believe that remains true. I believe that if left to its own devices, with technological advancement, Capital (as in Capital v Labor) would choose to eliminate the labor from its cost equation, resulting in 100% of profit left for Capital. You might argue that 100% capital and 0% labor is too extreme, and I agree. There will always be roles/work for humans to do, based upon the skills that humanity retains which machines cannnot replicate, even if that is limited to their “humanness”. In this piece, I am using the extreme example to highlight a risk, not predict an exact future. Capital is incentivized to eliminate labor from its cost structure. AI and Automation are capital investments that can replace labor therefore, I expect Capital to increase investment in AI and Automation which will likley result in significant unemployment, at least as it relates to jobs that pay a salary.

To complete the ideological triumvirate, I was raised and subsequently chose to be a Christian, which defines the core of my morality. I am not asking you to agree with my morality, just understand that my moral choices, come from this background, as I try to reconile these concepts. With that as foundation, I decided to host a backyard BBQ, where the pre-announced topic was Universal Basic Income, Christianity and Capitalism, reconciling the three ideologies. I invited good friends and was not attempting to make this a “comprehensive and stastically significant focus-group”, instead I wanted to just talk and debate and see if we could learn a few things and achieve some level of consensus. It was a lovely dinner, the talk and questions were challenging and while we wandered a little bit into the weeds, as all good conversations tend to, we actually did find some key points upon which we generally agreed, even if the details remained a little debateable or ambiguosly defined.

So I present for your consideration the results of this discussion. It should be noted, that the crux of the discussion was about UBI and thus what follows is a discussion about UBI, influenced by our similar capitalistic (western) backgrounds and by our shared Christian-faith. I believe this can be a useful guide for others as to how we considered some of the challenges presented by these three ideologies and where we landed. I do not expect that all will exactly share these beliefs, but rather take this as one version of the discussion for you to consider.

A few bullet points:

  1. Belief that we have a moral responsibility, as a community to care for the poor and those who cannot take care of themselves. This is absolute and a core principle based on our Christian faith.
  2. Belief that “risk and reward are linked, greater risk should equate to greater potential reward and vice versa” is a bibilical concept. It need not apply only to money and capital, but in the Parable of the Talents, failure to “invest” Talents is considered sinful. This was discussed in the context of all behavior. Taking risk, deserves reward, but may also lead to failures, which is okay. Our understanding of the parable is that we should take risks with the assets that we have - we should invest. The group voiced a concern that UBI may lead to risk-averse behavior of all kinds, notably a lack of investment. Many UBI proponents talk out of both sides of their mouth on this subject which is why we spent time on it. On one hand, they criticize those who have taken great risk, sometimes with time, effort, work/life balance sacrifice, capital or even reputation, instead frequently attributing it to inheritence or unfair exploitation. Then they suggest that a UBI will lead all people to be more entreprenuerial because their downside risk is floored with the UBI, in other words, they will take risks. Either risk and reward are linked at all levels or they are not. You can’t reward “UBI entreprenuers” with profits and begrudge the wealthy who may have already earned their profits. Not to mention those middle to upper class members who just plain worked ridiculously hard. Something that used to be called the “American Way”. The group felt that a UBI, on a mass scale, would reduce the appetite for risk amongst the mass population, even if a few were emboldened. They did not accept the premise that UBI would lead to greater entrepreneurialism.
  3. Belief that work and participation in your own survival is a human responsibility both to yourself and to your community. The group did not believe in a “right to survive”. They support the “right to participate in your own survival”. The group believes that the community is responsible for caring for those who are “unable to participate in their own survival”. This might be a semantic argument, but the point for us was clear. Survival is not guaranteed, it must be worked for and that is the nature of life. In fact, the idea that anyone had a guaranteed right to survive was generally considered illogical.
  4. The group did not require Universal to mean that 100% of people must receive the benefit fully. They were supportive of the idea that high income earners could have their basic income effectively fully taxed, which of course reduces the cost of implementation. The group felt that it should be “means-tested” on both ends. The wealthy should be taxed on their UBI to lower the cost of the program. But on the receiveing end, all should work, who are able. This is a moral decision based in the belief that providing for ourselves, our family and our communities is our responsibility. They further felt it was appropriate to determine “who is able” as a community. Implicit in this point is the “ability to work”. If work disappears, then that reduces one’s ability to work. The group flat out rejects the notion of a “right NOT to work”. That of course is not the same as “you must have a job and be receiving pay”. The group roundly supports the value of “unpaid jobs” such as stay-at-home caretakers or volunteers.
  5. In the context of substantial technological unemployment, the group understood and accepted the idea that Universal Basic Income might be the only option. No other alternative was offered as yet.
  6. There was genuine concern about UBI and unintended consequences, such as laziness, forced re-location and subsequent low-income housing concentration and negative feedback loops. Some of the group were familiar with UBI studies and their “smallness” and “terminal value”. They recognizing that behavior associated with these tests is not likely to compare to behavior in a world that MUST rely on UBI, such as the conditions that might come to pass under technological unemployment. Therefore, they reject the notion that we “know” how people would react under a comprehensive and necessary UBI program, reverting to concerns that it would not encourage work of all kinds.
  7. Following onto that point, one who is able, must work, whether they like the work or not. Where work is defined as “putting in effort” to participate in one’s survival or to execute the will of the community if the community is providing the support. This is different than a “job”, which is associated with pay or a salary. Stay-at-home parenting is work, and provides great benefit to the community without pay. They also reject the notion that a worker should enjoy their work. In fact, the group laughed at the idea that someone shouldn’t have to do work they don’t enjoy. They all wondered who the lucky ones were who always enjoyed their work.
  8. The group points to Capitalism’s excellent success in wealth creation, accepts the principle that “investment” from the wealthy creates growth and new opportunities. They also felt that the profit/return motive has made the allocation of capital generally efficient and thus generally productive. Further the group accepts that the benefit from new opportunities may be to a diminshing number of participants and that a consequence has been an increase in income inequality. One of the supporting arguments for higher taxes and potentially a UBI was the concern about rising income inequality. They did not reject the notion however that Capitalism may have an end-game — technological unemployment.
  9. There was considerable concern about the misuse of cash designed to provide food, clothing and shelter. One member who has had significant dealings with the poverty-stricken noted that frequently those in need, needed far more than monetary support, as mental-illness and drugs were often associated with their situation. It was suggested that a UBI payment might be used directly for food, clothing and shelter, instead of as cash to avoid misuse. To which there was varied debate, which I tabled (another version of “off into the weeds”). There were doubts about the government’s ability to provide the “right” solutions for those needs and externalities associated with that process. There was no conclusion on the best approach, cash or vouchers for services.

To wrap up our take on Universal Basic Income and trying to tie it together with Capitalism and Christianity, I would say the group was happy to consider the concept, unwilling to toss out capitalism, unwilling to accept some of the primary arguments of UBI advocates and generally unmotivated to run out and support a Universal Basic Income. They were happy to understand it better. Happy to consider the pros and cons more than they ever had and I know that awareness of the issues has been raised. Notably, I think everyone in the group is now comfortable having an opinion on the subject and how it fits into their views on life, poverty, public policy and technological unemployment. Maybe you, the reader, are a little more comfortable too. Whether you agree or disagree with the thoughts presented here, I suspect that the group’s thoughts are fairly mainstream. If you are vehemently opposed to UBI or zealously advocating for UBI, this ought to help you understand how one group thinks. Maybe it will make for a more fruitful dialogue as these challenges are considered in the future.

Robot Tax (No), Sovereign Wealth Fund (Yes)


Let’s talk for a minute about Robot Tax. Recently, it’s been a quick fix concept, espoused by Bill Gates and others. In San Francisco and South Korea, there is already talk of implementation. It’s the wrong idea, unless The United States truly wants to hinder robot implementation, in which case let’s hope the rest of the world agrees at the exact same moment to the exact same policy.

The idea of a “robot tax” comes from the fear of Technological Unemployment. Machines replacing human workers at many jobs, without an offsetting number of replacement jobs. I find this fear to be very reasonable as I have argued here:

I also recognize that not everyone thinks that Technological Unemployment is a problem. However, there is one thing I do know. If Tech Uneployment is not a problem, then we will end up in a good place with minimal risk and an economy that has grown more efficient, creating many high paying jobs. If however, Tech Unemployment does come to pass, then we will be faced with some major societal challenges. Upside gain = POSITIVE, down side risk = VERY NEGATIVE. So with my risk management hat on, this blog post attempts to deal with the downside risk of Technological Unemployment, by tackling the issue of “robot tax” and introducing an alternative solution - a United States Sovereign Wealth Fund (USSWF).

To begin, let’s examine some key assumptions for how Technological Unemployment may occur, recognizing that this is not a certain outcome. There are those who even argument that it won’t happen at all.

  1. Technological unemployment will be a process that takes years if not decades.
  2. We don’t know how and when people will become displaced. This is true at a company level, a sector level and across the economy as a whole, which I discussed here
  3. We don’t know what new jobs will be created
  4. There is an implicit concern about rising income inequality as the owners of capital reap the rewards of automation, while labor receives a decreasing share — approaching zero
  5. There is a belief that technological unemployment will be a byproduct of significant growth in economic production and subsequent wealth attributable to the implementation of AI and Automation.

Technological Unemployment, as discussed in detail by Oxford (2013), PwC (2016), Mckinsey (2017) and referenced directly by the White House report on AI and Automation (October 2016) is estimated to result in as much as 30–40% unemployment. Many people believe that this possibility is real and as a result they are concerned about supporting the unemployed. This is the genesis of the “robot tax” concept. Here are some concerns about the idea:

  1. It picks winners and losers based on how easily things are automated
  2. It creates a huge competitive advantage for countries/jurisdictions that do not tax robots. Most companies competing in AI and Automation are global in nature. Machine implementation will simply be shifted to other jurisdictions where the tax impact is minimized, so will the wealth creation associated with that machine implementation. Apple is a perfect example with nearly $250 billion dollars in cash overseas. Nearly all of that offshore cash is a function of tax issues. This point is not debatable, it is a corporate responsibility to minimize taxes legally, just as Apple has done. There is significant tangible history of corporations shifting production to jurisdictions where the tax is favorable. A robot tax punishes companies for innovating and will drive wealth creation out of the United States.
  3. Bureaucracy, companies rarely “flip the switch to automation” on a Friday and asks a set of employees to stop coming in on Monday. Therefore, identifying human replacement by machines will be difficult and policing a “robot tax” implementation would require significant manpower. If you are like me, when you see something is difficult to police, you probably also imagine a large bureaucracy trying to police it. Therefore, imagine the IRS, do we really need an IRTS (Internal Robot Tax Service) too? I suspect that is something most people would like to avoid. Taxes are difficult to implement on all companies public and private.
  4. Timing and measurement mismatch — Another problem with the “robot tax” concept is timing. For example, Company A automates Person A out of a job and therefore is subject to a tax. So Company A has its profit and capital reduced to pay the tax, but if this happens tomorrow, it is reasonably likely that Person A finds another job. Now the tax has reduced the capital allocation capability of the growing company and wasn’t put to good use supporting Person A who didn’t require the funds. Instead, it sits with the government, which is surely an inefficeint allocation of capital.

On top of all of this, no one has layed out the entire structure of a “robot tax”. Some have suggested banning the replacement of jobs by machines. Others have suggested a tax without much detail. In South Korea, where reports came out that they had enacted the first “robot tax”, it turned out to be all hype. The actual implementation was the decrease of tax INCENTIVES for the makers of automation.

In the end I suspect a Robot Tax is simply a reflexive action being suggested by people who are rightfully concerned but have no other alternatives to address their concern. Ideally this paper and the USSWF addresses those issues and proves to be a better tool to tackle the challenges.

Look I get the theory, if you want to grow your company and make more profits for yourself by automating, let’s tax those profits because you are removing jobs from the workforce. However a tax is punitive and redistributional. Why not participate with the company in their wealth creation, on behalf of that displaced worker. Practically speaking, if a worker were to be laid off by Google, Amazon or Apple, but compensated in stock for their termination. There is a decent chance that the capital gains of the stock may offset the lost wages.

If you believe the concerns about Technological Unemployment and that a significant amount of work will be replaced by automation, we do need to prepare for higher, permanent unemployment. So what should be done. The answer, from my perspective, is a series of solutions listed below (of course, this is no small challenge and requires many policies to try to mitigate the risks). This list amounts to a comprehensive AI, Automation and Tech policy for the United States (where I have covered them previously, I will show the links), but for the rest of the piece, we will concentrate on point #5:

  1. Lifetime learning to ensure we have the most nimble and current workforce available
  2. A laissez-faire, regulatory environment (as discussed by Andrea O’Sullivan and others) that encourages leadership in the area of AI and Automation, (one could argue, this exists today, but is unlikely to remain so lenient, which may eventually hinder the expansion)
  3. Independent, market-driven audit oversight on key inputs to AI and Automation, such as ethics, standards, safety, security, bias and privacy. A model, not dissimlar to credit ratings
  4. A plan for shifting current welfare and Social Security into a Universal Basic Income, coupled with an increase in taxes on the wealthy to make the UBI funding budget neutral. In the future, NOT TODAY.
  5. Finally a Soverign Wealth fund for the United States (USSWF) designed to maximize the benefits of the growth and expansion on behalf of all US citizens equally.

Since this post is introducing the Sovereign Wealth Fund as a means towards maximizing the benefit of the comprensive Technology Policy listed above, we will remain focused on it and the other elements of the policy remain open for debate elsewhere.

Returning to the idea of Technological Unemployment, we can all agree it would be a process and would take some time to occur. During that process, there are few things that the United States should prefer to have happen. Here is a list of those positive outcomes:

  1. We want the United States to capture/create the maximum amount of the wealth creation from this process
  2. We want to be in a position to protect displaced workers immediately when they are no longer relevant to the workforce
  3. With regards to cutting edge skills, we want citizens of the United States to be in a position to posses the requisite skills for new age work.
  4. We want to begin to build a warchest of resources for the time when significant unemployment becomes more permanent (Sovereign Wealth Fund)
  5. As a country we want to be rewarded for create a favorable climate for automation and artificial intelligence

So with those goals in mind. We can examine how a sovereign wealth fund can help to achieve those goals and maximize benefits to all citizens from the expected increase in AI and automation.

To be clear, the funding for a US Soverign Wealth Fund (USSWF) is effectively a tax, so this is somewhat of a sematic argument, but the asset based funding and goal-orientation of the USSWF is what will differentiate it from the current discussions about a “robot tax”.

Sovereign Wealth Fund implementation, some of the highlights

  1. The USSWF immediately receives a 1% common stock issuance from every company in the S&P 500. Followed by a .25% increase each year for 16 years.
  2. Every new company admitted into the S&P 500 must immediately issue this 1% common stock into the fund and begin the annual contributions
  3. All shares included in the fund are standard voting shares with liquidity available from the traditional markets trading the underlying company common stock
  4. The USSWF is overseen by the US Congress
  5. The USSWF is controlled by a panel of 50 commissioners, one from each state, appointed by the governor of each state. The commissioner must be from a political party that the governor is NOT a member of. These are attempts to depoliticize the body and to identify citizens to serve the country.
  6. The USSWF exists for the benefit of all Americans equally, with a primary concentration of providing welfare/basic income support to US citizens
  7. The USSWF is a lock box and not part of the US Federal Govt budget. The US Federal Government may appeal to the USSWF for funding associated with the mission of the USSWF
  8. Simplicity — implementation is easy, automatic and systematic

Now, if this concept seems foreign to you, then you are clearly an American. Here are a list of the world’s largest Soverign Wealth Funds over $100 bil.


Notice that much of the oil rich world has already created a Sovereign Wealth Fund. Norway’s fund is the gold standard, providing a capital asset value of $192k per person. At 5% income stream, that is nearly a $10k payment per person with capital preservation. That payment can go a long way towards supporting a population. That is the concept we are trying to achieve with the USSWF, a bulwark against future challenges, such as technological unemployment. But instead of oil, or a single resource, the citizens of the US should benefit from the entirety of the economy. A genuine justification of our consumer-oriented mentality and laissez-faire regulatory environment.

As we try to capture the entirety of the US economy, we must find a liquid, tradeable proxy. I have suggested the S&P 500 as the right proxy for the US market. To avoid picking winners and losers directly. Automation and technological advances will happen in all industries and all markets. The best way to be comprehensive is to use a benchmark of the whole economy. The S&P 500 is widely regarded as the best proxy for the US large capitalization economy. Constituents of the S&P 500 are the most liquid stocks in the world and will result in the most minimal of impact from USSWF ownership. By having participation in all companies, the USSWF is in a position to reap the benefits of US economic growth, as represented by the stock market, on behalf of the citizens of the US.

There is also the opportunity to have the USSWF funded in additional ways, whether that be from oil royalties, carbon credits or other mutually beneficial societal resource dividend. These discussions are merited, but are beyond the scope of this paper today.

Some features and benefits of a USSWF:

  1. The intial funding is a tax on the wealthy (holders of stocks), which is consistent with a goal of redistribution and tempering the rising income inequality in the US. In some ways, it becomes a tax on foreign investors as well, which is an ancillary benefit.
  2. Keep capital in the hands of capital allocators and away from the government until needed
  3. It increases participation in the US economy as measured by the stock markets. All US citizens would have a share of the stock market up from the estimated 52% today.
  4. It creates a dynamic pool of assets which has an opportunity to track the expected wealth creation resulting from AI and Automation. Therefore the USSWF is well aligned with the goal of rewarding citizens for the possibility of having their jobs displaced
  5. A Sovereign Wealth Fund is far from new and has many precedents both foreign and domestic (public pension funds) upon which to build a robust program designed to maximize the benefit to US Citizens
  6. Alignment instead of antagonistic taxation. If the company wins, the country wins and even the displaced workers win.
  7. Compound return. Because the USSWF will not have a current cashflow demand, it will be allowed to grow for a pre-determined period, maybe 20 years. This will also maximize the benefits available to all current and future US Citizens

Some areas of concern (these points will be discussed further below):

  1. Dilution. This is immediate dilution on the value of existing shareholders and the equity markets are not likley to be happy about it.
  2. Commingling of corporate and government interests
  3. Reliance upon capitalism and equity market growth to fund future challenges. This is both a risk/reward area of concern and an idealogical area of concern for some.
  4. Bureacracy/control of the USSWF
  5. Increase in income inequality

Let’s tackle a few of these. Dilution, will be a concern and in a vacuum, one could expect the stock market to make a significant move backwards on this announcement. However, one could argue that the establishment of a long term, pro-automation policy and the avoidance of a “robot tax” might be equally as beneficial offsetting the expected dilution. Additionally, there is the benefit to the market as a whole from proactively addressing a pressing concern.

Commingling of government and corporate interests. These interests have been commingled since the formation of the country, however the US has had an active policy to not become shareholders of corporations and this would change (unlike most other countries). At the 5% max level, I don’t see government being excessively influential in a shareholders meeting. But it may be the implied result that is concerning. The implied result is that the government is now “pro-business” and thus must be anti-citizen or anti-worker. I recognize the concern, and this blends into point #3 Reliance upon Capitalism and equity markets. Unless we are prepared to change the nature of this country immediately, we are already firmly entrenched in capitalism. We ought to maximize its effect in this endeavor. Capitalism has an excellent track record of wealth creation, but sometimes at the expense of some who are left behind whether through income inequality or lax worker safeguards. In the case of the USSWF, at least the worker is better positioned to profit from capitalism than she would be otherwise. It is my belief that any other solution is too far afield from the current wishes of the population.

Finally, bureaucracy and control. The USSWF involves a good deal of assets and that means it is powerful. That will attract bureaucracy and politicians who will look to control the USSWF. A 50 person panel is more than sufficient expertise on hand to make quality, non-political decisions in the interest of the American people, especially if they are deemed fiduciaries by the legal definition. Any attempts to associate a large staff with the USSWF should be met with great skepticism as the mandate is the operation of an Index fund tied directly to the S&P 500. It is a pool of assets, designed to represent the US economy, not to create a target return. Any return associated with the assets is a function of economic growth or broad stock market appreciation only.

Increase in income inequality. As a result of trying to maximize the United States’ share of growth due to automation, much of those rewards will accrue to the wealthy. This is a result of the reliance on capitalism and maximum capital allocation efficiency at the corporate level. This of course benefits the USSWF, but it benefits the owners of capital more (95% versus 5%) in the short run. To mitigate this problem, a crucial piece of the Tech, AI and Automation policy is a significant increase in taxes on the wealthy. Universal Basic Income, which currently is the only means by which the massive amount of unemployed are able to survive, must be funded from somewhere. The USSWF would be in a position to provide a solid foundation for this payment, but it will be insufficient to meet the full demand. The owners of capital MUST recognize that their windfalls from reaping the benefits of a laissez-faire regulatory and tax regime will be called upon to benefit displaced workers.

No plan is perfect, but the USSWF is better than a “robot tax”, whatever that might turn out to be. The key to success with the USSWF or any other solution aimed at protecting US citizens from technological unemployment is to participate in the wealth creation. Other ideas along those lines would be welcome additions to the discussion. I hope that you will think deeply on these points, challenge the theories, make suggestions and further this debate.

Universal Basic Income Isn't Perfect - It's a Necessity Because of the Future of Work

The Roosevelt Institute recently did a study, which is being quoted everywhere, that claims that a $12,000 per annum Universal Basic Income (UBI) would increase the GDP by 12.56% above baseline over the course of 8 years. After which, the economy would return to baseline. Of course the part that no one mentions is that this transfer payment is DEBT-FINANCED by the US Government. Using the same model, when taxes were used to pay for the UBI there was no effect. So they adapted the model to account for distributional effects but they made no similar adjustment to the investment impact because the only impact they examined was marginal impact of consumption and not the impact on investment.

So let me get this straight, if the US Government borrows a ton of money and gives it to people to spend then the economy will be stimulated… I’m shocked! ANY program where the government borrows that much money will project to stimulate the economy. Whether it is a tax cut for the rich (because these days only about 49% of the population pays taxes… so by definition) or a huge infrastructure program or a huge energy program or a huge defense program. Money into the system creates GDP. One can debate its effectiveness, but I am not interested in that. The point here is that proponents of UBI need to stop citing this study. There is no way that a UBI program will be done in this country with debt financing… zero chance.

UBI will need to figure out how to represent itself. Here are some key questions for UBI, that if we can all embrace these suggested answers it will go a long way to keeping the story focused and making it palatable for people who oppose UBI.

  1. Is it inherently stimulative (no)?
  2. Is it redistrubution (yes)?
  3. Is it a possible answer for a world where the future or work is in doubt (yes)?
  4. Does it attempt to achieve some basic societal goals of food, clothing and shelter for all people (yes)?
  5. Is it possible that UBI has a negative impact on GDP (yes)?
  6. Does it matter if UBI may negatively impact the GDP if it achieves the societal goals and we have growth due to technology (no)?
  7. Should we consider UBI, like food stamps, which can only be used for the intended purposes? (no)
  8. Does UBI have knock on psychological positive effects (unknown)?

Let’s tackle a few of these points, starting with #1. In the Roosvelt institute study, the stimulative effect was due to the borrowing not the concept of UBI, so we should stop quoting GDP stimulus ASAP. Now, if UBI through redistrubtion is considered there are merits to both sides of the argument and I doubt that our models are sensitive enough to discern a positive or negative effect. First, if the wealthy are saving their money and NOT deploying it productively via their capital investments, then taking wealth from them in order to give it to the poor makes brilliant sense. The poor will use it to buy good which would increase GDP thru consumption. However the evidence here is probably the opposite. Which means that this capital has had a knock on effect of stimulating more GDP growth than the likely effect of purchases of food, clothing and shelter. On top of that, there is no certainty that money for the poor will always be used productively. We have an opoid problem, gambling and other non-productive uses of UBI that should be concerning. If a portion of the UBI floats into unproductive spending then GDP takes a second hit. One hit from the negative redistrubution of capital and a second from unproductive expenditures. All in, I think UBI would be fortunate io breakeven on GDP impact. Thus we should avoid suggesting it is stimulative since that likely only hurts credibility.

#2 Is it redistribution? Of course it is. UBI should embrace this concept, especially in light of the huge increases in income inequality around the globe.


This is a disgusting graph. The World should be ashamed to allow this to happen. But, but, but, we have three choices when it comes to redistrubtion. Don’t do it, do it partially or do it completely. There is an argument for don’t do it. It is as follows. The overall wealth of the world has increased dramatically and thus the percentage of people living in poverty has fallen dramatically. So there is a robust argument that we should continue to allow the capital to flow to the wealthy, allow them to grow global GDP and allow trickle down improvements to the poor. It has worked as you can see in the chart below showing the numer of people living in poverty (using a few different definitions of poverty).


But it has not worked fast enough for many, which is what humanitarians argue. They may be right, I can’t be certain. Which leads us to our second choice, partial redistribution. Allow capital to flow and the rich to get richer (because it creates growth that we ALL can participate in), but let’s take a portion, enough to buy the poor up to the poverty line for starters. Covering food, clothing and shelter. Essentially trying to have our cake and eating it too. Leave the majority of the capital where it has proven to be productive but earn the societal good of eradicating poverty. Sounds good, but not likely to be that simple. Taking a meaningful portion of capital from the wealthy allocators will have a leveraged downside effect to the economy. We simply cannot know how negative it will be. We have already discussed the challenge of maximizing the UBI towards 100% productive usage of food, clothing and shelter. Failure to achieve 100% productive UBI usage reducing the value to GDP commensurately. Our final choice is complete redistrubtion, which is both impractical and ineffective and not worth writing more than a sentence about. Humans crave power and will always try to achieve, thus we will have income inequality. The point of this entire discussion is that we need to try to find the optimal amount of redistrubtion.

#3 the reason that ForHumanity supports UBI is because we anticipate machines replacing most human input into work. In a world where the available jobs are substantially fewer than the number of people, we must create a society that supports all of its members with the basic necessities, otherwise anarchy and revolution become the only choice. As much as humans crave power, they crave survival more. They will do what it takes to survive, even if that includes setting aside civil society. Is UBI the only answer to a world with far fewer jobs than people? ForHumanity remains open to other suggestions.

#4 UBI can target transfer payments to individual to cover food, clothing and shelter. To be honest, that should be good enough. It is a wonderful goal for a society to insure that all citizens have the basic necessities of life. To eradicate hunger and to eradicate homelessness should be priorities which is hardly debatable. It only becomes a debate when two things happen. Government gets involved to “administer” the goal and when those with the wealth are taxed for it. One way to begin the discussion is with the latter. Silicon Valley billionaires can advocate for the power of UBI, but they ought to volunteer their own wealth to pay for it, in the same breath. Until they do, it will remain an elusive goal. With respect to government, it becomes a political tool. “How to implement”, “fund for administration”, “who gets what and where and when”. When you examine Social Security, it had a similar mission and altruistic goal and now it is a political nightmare. Attempting to pass the most logical of adjustments like, raising the qualification age (associated with the unanticipated rise in life expectancy), is impossible simply because politics get in the way. So to attempt to deal with the political ramifications, I tried to tackle some political reform as well, see the link.

Universal Basic Income — A Working Road Map
As I recently discussed, there are a number of challenges to making Universal Basic Income (UBI) a real solution…

I approached UBI as a transfer payment offered in exachange for a 5 year commitment to government services that would be required by all citizens between the age of 18 and 30. The brief version of the theory is that would “justify” the payment for life to the UBI detractors who worry that money for “free” is a bad idea for a variety of reasons. Second, this substantially helps to pay for UBI by lowering the cost of running the government on all levels. In the end, government is needed to administer the policy and politics will make it difficult to implement well.

#5 Could UBI have a negative impact on GDP? I believe that it would. Based on the reduction of poverty argument already presented. While I am certain that a large percentage of the UBI payment would be consumed specifically for food, clothing and shelter, those are all consumption items and provided a 1 for 1 impact on GDP. Whereas, capital, treated as investment capital can be leveraged into investments that result in the expasion of profit and wealth. I’ll give you an example. If I have $1000 and buy $1000 of food taken from a wealthy individual out of her $1000 of savings. I am fed and the food companies and grocery stores have an additional $1000. The wealthy individual has $1000 less of savings and therefore made $1000 less investment in something. Wealthy individual invests $1000 in a widget company, which pays an employee $800 and invests $200 in equipment to sell more goods and services, such that the company produces $2000 worth of product, then our investment has grown wealth, far more than our transfer payment is capable. This is the argument of capitalism and the numbers have borne out the argument.

#6 Does it matter if the economy is negatively impacted. Well that depends, has automation and AI increased GDP by more? How negative is the impact? Remember, we have earned a series of societal goods by implementing our UBI payment, especially if the future of work leaves us with many who require their UBI to survive. We also may create enough wealth to achieve our goals. This is more a question of timing than anything else. But a small hit to GDP is worth it for the good that UBI can do.

#7 — Should UBI be portioned out, similar to FoodStamps (SNAP) in order to prevent misuse. Covered in the article below, misues of Food Stamps has generally been considered a fallacy. The vast majority of the program works effectively (less than 2% fraud rate) and has been used for food. While it is not unreasonable to believe that misuse might increase when a UBI payment is larger, the concern may not be great enough to merit forced participation. This also helps to avoid a large bureaucracy designed to policy the implentation of the policy, which is probably more valuable.

The Very Short History of Food Stamp Fraud in America
The reform of the United States' approximately $1 trillion in welfare programs is a perpetual subject for lawmakers to…

#8 Does UBI have knock on psychological positive economic effects? Here I think there is some possibility. There are many studies being done now, in microcosm to try to identify the effects. But I am afraid that the “in microcosm” and the non-permanent basis of all of these studies is highly distortive. Most of these people are working while receiving the payment. In essence, when UBI is the only choice, people will react very differently. When the future of work means limited job opportunities for people, reactions will be different. I suggest that we temper the “UBI makes everyone feel great” feedback. UBI is a necessity, for a future where work is scarce and people may struggle to meet the basic necessities of life.

UBI may be a great next step in our system of basic welfare. It may represent the best way for the wealthy to support the world around them and insure that the basic necessities of life are available to all. But I caution proponents of UBI to avoid over reaching with the “merits” of UBI, in the end, I think it damages the credibility of a potentially necessary program.

Universal Basic Income— A Working Road Map Part 2- Corporate Responsibility

Talk about partnering with companies to create a dedicated retraining program as part of the cost of replacement by machine. A commitment to communities and not just the bottom line (without breaking the profit motive). Job retraining/community commitment/then company based UBI and finally government based UBI. This theory is based upon today’s historically low unemployment rate. In other words, people in the work force are attached to companies NOW, let’s us that to minimize government involvement at the outset and maximize corporation’s responsibilities to this problem.

Look, I understand why everyone is turning to Universal Basic Income and Robot taxation. We look at a massive problem and throw our hands up and say “only the government can tackle this one”. I find the government isn’t very good at most things that it does and we seem to be getting worse and worse. Take Social Security, a solid concept, built in the 1930’s and legislators didn’t have the foresight to see rising average life spans. That’s a forgivable mistake. The unforgiveable mistake is the decades of time where this problem has been OBVIOUS and nothing is done about it because of politics (raise the age limit). So forgive me, if I may suggest some other avenues for us to turn and we leave government to the true backstop role that it ought to play.

So, in this blog post, let’s begin with the premise that government is available only as a last resort. The problem we are looking to address is that AI & Automation may eliminate between 40% and 80% of the jobs known today. So we have jobs today that we know will be replaced. For example, WalMart. WalMart employs approximately 6,000 truck drivers. Within 5 to 10 years those truck drivers will be replaced by autonomous drive vehicles. Now What?

Here’s what I propose, and ideally it is a model for all other companies that will likely choose to go down the path of automation (it will be more profitable). Now these things don’t happen overnight, so it won’t be a one and done kind of thing. I’d like to see Walmart choose or maybe be required by law to follow the following protocol:

  1. No layoffs from automation (that’s the equivalent of a robot tax btw). I am not suggesting that layoffs are illegal. Layoffs may be the only thing that keep an entire company from going bankrupt.
  2. Required internal retraining. The onus on the company, at their expense to make that employee useful to them
  3. Required external retraining. Here is our “robot tax”, but rather it is a layoff tax and is a one time charge, payable over 4 years. This 4 year payment could be funded through private insurance, federally mandated insurance or simply from profits. However the first two, if legislated and funded in advance are still forms of pre-Robot Tax.
  4. Federally supported retraining and Federal work fare
  5. Federal Universal Basic Income as a last resort

So let’s break these out. McDonald’s just announced 2500 automated kiosks replacing cashiers. They also announced those cashiers will become customer service reps and front of house staff. So this accomplishes number #1 , no layoffs. However there is a hidden consequence here and we will see it down the road. McDonald’s will hire LESS people over time. They will let attrition be their layoff mechanism. This is the hidden nature of technological unemployment.

McDonald's hits all-time high as Wall Street cheers replacement of cashiers with kiosks
McDonald's shares hit an all-time high on Tuesday as Wall Street expects sales to increase from new digital ordering…

This also highlights #2, McDonalds will have to retrain those cashiers to be customer service and front of house people. We can all recognize this isn’t the equivalent of a GED in terms of education, but they will certainly get new skills. For other companies, this can be the model, even if it requires more high end learning. I advise that companies begin to implement the Lifetime Learning model I wrote about here and they will be well on their way to creating the dynamic workforce that they want and need.

Lifetime Learning — a Necessity Already
I started ForHumanity, partly as a response to thoughts I had about my children who are 8 and 6 today as I write this…

I envision companies working closely with universities to incorporate cutting edge learning into the daily JOB of all employees. Technological improvement is happening so quickly, that unless you are constantly learning, you are falling behind.

Once we get to #3, we find a system that is fairly broken and ineffective. Which is why I’d prefer to have it handled at the corporate level. Micro level solutions always function better than large macro programs. At this level, we introduce our “layoff tax”, a one time charge to provide the employee with the funds he requires to retrain himself. We can call this money towards a new degree, or a 3 to 4 year severance package, but the result is that the employee knows they must find and learn a new skill to remain in the workforce.

#4 Often that employee won’t know where to turn for both education and new economy jobs. So now we begin the federal system of education guidance and work fare development. This is a dynamic effort from the government to meet directly with companies and continually identify the skills, education and jobs that are being filled by humans NOW. This marketplace of jobs and skill development will be applied directly to each individual worker once they enter the “work fare system”. The tax is no longer payable if the former employee becomes employed elsewhere.

#5 Finally, there simply aren’t enough jobs left. If you take the minimum numbers that many people are quoting we are talking about a 40% reduction in the jobs of today. If 10% of those are replaced by new HUMAN jobs, I’d be shocked. So minimum 30% net new unemployment. If you take my high end number the unemployment is 70%. In either case, here is where Federal Universal Basic Income (UBI) steps in.

Steps 4 and 5 can be iterative, as workers may choose to enter and exit the workforce, based on motivation and demand for their skills. Remember in my previous work, each individual has already earned their right to their UBI in the form of their dedicated government service.

Universal Basic Income — A Working Road Map
As I recently discussed, there are a number of challenges to making Universal Basic Income (UBI) a real solution…

I believe that this combination of changes (from UBI — a working roadmap Parts 1 & 2) is a reasonable way to step into our new world of technological unemployment and provide the support and back stop required to give everyone who wants to work the best opportunity to do so while ensuring that we are not leaving many unemployed and impoverished in a world of AI & automation.

13 Things That UBI Can't Replace - A Reflection on Universal Basic Income

This is not a knock on Universal Basic Income (UBI). Instead, this post is intended to be supportive of UBI, at least in terms of making sure that we are creating a proper replacement for work. Or at the very least recognizing what UBI can provide and where its short comings may lie so that we can develop other, supplemental solutions. The interest in UBI lies in the belief held by a growing number of people that the advancement of AI and Automation will significantly impact the number of full-time jobs available to people. If 40–80% of all jobs disappear over the next 20–50 years, it follows that there must be a replacement for income for people to survive on and potentially even thrive on.

Recently, Finland has been conducting a two -year experiment with UBI. As part of the ongoing research, a recent news article in the published by Chris Weller in the World Economic Forum

quotes on participant, “ There was this one woman who said: ‘I was afraid every time the phone would ring, that unemployment services are calling to offer me a job,’” Turunen recalled of a woman who needed to care for her parents, and so couldn’t work.

Look, if we remove someone’s greatest fear, the feedback will ALWAYS be positive, I promise and my fingers aren’t crossed behind my back. UBI is easy to get positive reviews for. Here’s a random quote, made up by me to highlight the point, “Wait, you’re giving me a bunch of money for free? no responsibility? no commitment? no waiting in line and filling out paperwork? Yeah, that sounds AWESOME!” said anyone receiving a UBI payment. So it is important to look a lot deeper.

We need to realize that money and a job do not have a small and simple impact on our lives. Instead, they contribute many, many different things to our sense of self and well-being. And those contributions are weighted differently for each person.

Let’s try a few feelings that work gives us:

  1. a sense of purpose
  2. a place for social interaction
  3. a sense of accomplishment (which is different from purpose)
  4. a sense of providing/participating in survival
  5. a place to learn
  6. a place to be away from our families/people we co-habitat with
  7. an ability for upward mobility
  8. our self esteem
  9. a place for positive reinforcement
  10. the resources that allow us to entertain ourselves
  11. security
  12. intellectual challenges
  13. a positive use of time

That’s a lot of things that work may provide you and those things are often pretty important. Ask anyone who has been unemployed for an extended period of time. The feelings of “being lost”, “feeling useless”, “no reason to wake up in the morning”. These are legitimate feelings that weigh negatively on a person. Moreover, we have seen the devastation of a negative feedback loop on a society when unemployment is high. We have all seen the example of the Midwest ghost town when the local plant closed, or the rioting in Greece when unemployment threatened 40%. A substantial loss of jobs creates a terrible strain on society at-large.

UBI doesn’t solve ANY of these 13 problems. It provides money. Money becomes food and clothing and shelter. If there is a little left over it might provide for some small entertainment value. But the amount of money will NOT overcome the emotional losses of work. So advocates for UBI should quickly realize that UBI is NOT a panacea. It maybe a part of a solution but it is not THE solution. I am not discounting the value of a social safety net. the money I just references starts with food, clothing and shelter. So that’s a good start. If we didn’t achieve that goal and the unemployment level was too high we would have violent physical clashes in the street as people’s survival instinct kicked in. But that’s where UBI stops, it eliminates the need to survive. But let’s not forget that, most people are doing FAR more than surviving. But if our society suffers substantial job losses, those positive feelings we have as a thriving economy will vanish.

Over the coming months, I hope to develop some additional ideas and thought on what a UBI world might also need to overcome these 13 positive feelings missing in a world without work. Feedback and suggestions are always encouraged and welcome.

Also, by no means is this list exhaustive, I welcome further input on the feelings we earn from our paid labor. The more comprehensive that list is, the better equipped we will be to meet the needs of the people.

Should the significant amount of technological unemployment occur, consistent with the predictions of an increasing large number of analytics, it will take our collective actions to find suitable replacements for a world without work.

Universal Basic Income (UBI) - A Working Road Map

As I recently discussed, there are a number of challenges to making Universal Basic Income (UBI) a real solution. However, since I remain convinced that Artificial Intelligence (AI) and Automation will take as few as 40% and as many as 80% of the jobs over the next 25 to 50 years. If you accept either of my minimum or maximum premise, we do need to figure out something. So I will try to craft some basic points that could be applied to UBI in order to make it viable, affordable and acceptable to both Democrats and Republicans alike. Make no mistake that this is a political discussion. Whatever we can craft must be presentable to either Washington or the American people. I know that sounds impossible and close to impossible, but I have hope.

So let’s try this with a bullet point approach:

  1. Washington is broken — so let’s redo it. Two centuries ago, being a Congressman was a service. It was not a job. When it is a job, you do what it takes to maintain your job, not necessarily what is right. People have talked about term limits and there are good arguments on both sides of that discussion. So let’s take BOTH sides. Make the Senate unlimited. They can be the institutional memory of Congress and if their state wants to keep the same guy there for 30 years, let them. On the other hand, let’s limit our House of representatives. And #3 will explain how and why. One other thing, don’t discount the MASSIVE amount of professional bureaucrats in Washington and their influence on policy. They have as much to do with gridlock and the failure of Washington to be effective as do our elected officials, they need turnover as well. Government is a service job NOT a destination job.
  2. It’s not just Washington, state and local governments are broken as well. So we should limit those too…
  3. By creating a national system of service. All Americans, starting no later than 25 MUST contribute 5 years to government service. Government service can be many things. It can be military service, it can be Washington bureaucracy, you could run for local, state or national office. A person can work in their town government or even the Highway department. Pre-med students can go to work at NIH or other government oriented operations. Specialized students can target specialized government positions almost like an apprenticeship. There would be a series of “government” jobs that would be made available to eligible Americans and those who qualify, starting as young as 18 and no later than 25, will be required to serve for 5 years in some approved capacity. This will massively reduce the cost of government at all levels. Current number of government jobs is approximately 22 mil. Current number of Americans between the age of 25 and 30 is less than 19 million. So based on simply numbers, this can work.
  4. Reducing the cost of government helps us to pay for Universal Basic Income. In exchange for this 5 years of service, every American would receive a Universal Basic Income (UBI) for life. This payment, in exchange for service should be easier to swallow for the faction of political thought always opposed to welfare systems. They might argue that it is too much, but we can address that elsewhere.
  5. Social Security goes away. In exchange for a minimum basic income for life. You lose your SS payment. You don’t need it, you are already receiving it. Yes it’s the third rail, yes I just said out loud get rid of Social Security, seriously deal with it. It was a flawed system from the outset and you are still getting your money, AARP and all other biased lobbyists on this issue. Lobbies like that, ironically, take stands on issues because it keeps them in their jobs, even if it is bad policy (another example of some of the problems in government)
  6. Massive reduction in government employment costs. Everyone in government would now receive ONLY their UBI payment. That is a drastic decrease in cost. We can make exceptions for the offices that are held beyond the intended Service years, like the Senate. But I do think that treating all government held positions as a service and a sacrifice for country, rather than a destination job where people are fat and happy will better keep people focused on the “good of the people”. Does this make people susceptible to graft, Yes. Graft should be addressed with anti-corruption laws. However you have the advantage that most people now working in this version of government should all be only on UBI, so that competition is reduced and graft should be easily apparent.
  7. So with all of these cost reductions, we can go a long way to affording the UBI, but it won’t be enough. The wealthiest companies and individuals will have to pay higher taxes. Income inequality is already at all time highs and the top 100 wealthiest have as much wealth as half of the world’s population combined. It isn’t sustainable. I don’t want to take every dollar from the wealthy and the entrepreneurial. Creativity, new business creation and innovation are hard things to do, they require incentives and motivations. Risks are taken and risks need to be rewarded. It’s the difference between the UBI and the wealthiest that needs to be balanced and controlled. If everyone is on a UBI and the wealthiest are living in slightly bigger homes and taking an extra vacation or two to the nicest resorts, that feels okay. When they have their own space shuttles, have homes all over the world and are using their wealth just to make MORE wealth for themselves, then we begin to have problems.
  8. We need to address the notion of capital. There is a belief that capital creates new businesses and new wealth and without the free flow of capital (because of massive taxation), then stagnation will occur. I agree with that premise. Let me also add that I don’t think government is very good at anything that it does. Government ought to be a last resort solution for when capital markets fail to achieve our goals as a society. I don’t want wealth to go to the government for THEM to decide where to allocate capital. So I propose a dynamic taxation system that recognizes the two competing principles. Wealth should remain with individuals and corporations until it is REQUIRED by government to meet its immediate and duly legislated functions. This starts at the level of job replacement by corporations (But I will cover this is a separate blog post focused on how individual companies deal with job replacement by machines).

So I think I’m going to stop here. Obviously this is a massive issue. I don’t pretend to have all the answers, but I do know that to even have this considered, we have to find a way to deal with the idea of “free money for nothing”. I think the idea that we are getting significant public service in return for this lifetime payment goes a few steps towards assuaging the fears of free money. I personally have competing agenda to try to balance in my own mind. I want to support and lift up the impoverished and the at-risk people in our society. However, I also want to minimize the amount of capital that the government controls. I believe that free market risk/reward systems motivate people correctly and those people should be responsible for capital. And then finally, I also believe that wealth can and ought to be capped or near capped IF and only IF it is required to meet the obligations of the government on UBI. More to follow on this. I welcome all feedback.

Challenges to Overcome for Universal Basic Income (UBI)

Look it’s a hot topic out of Silicon Valley and it is an easy off-the-shelf solution to a likely problem of significant technologically based unemployment. So everyone is trotting it out there as the ONLY solution. From my perspective, I don’t mind the solution (even though it has insurmountable flaws as a stand alone policy), but I think for the health of the discussion it is important to look at some impediments and shortcomings of UBI as well. So that’s what this blog piece will do.

Universal Basic Income is the idea that government will provide everyone(Universal) with enough money (Income) to afford the basic necessities of life primarily food, clothing and shelter, at a basic (BASIC) level so that all people may receive that funding.

#1 UBI is in conflict with basic human traits. I have genuine concern that the proponents of UBI simply fail to understand people. Many people like to work, like to achieve, like to outperform their peers, like to gather wealth, like to changes their social status, like expensive things, like to travel to exotic places. All of those things are diametrically opposed to UBI. Critics of UBI will argue that it will create a culture of malaise, intellectual stagnation, happiness in the status quo. These critiques while not perfect are probably accurate. UBI will drag down the middling portion of the population that might have been energized and incentivized to excel, but became comfortable and complacent in their UBI provided existence. The “American Dream” is the belief that America creates an opportunity to WORK to change one’s economic circumstances. UBI flies in the face of that.

#2 UBI implementation. Living in New York City and rural Kansas are not the same thing, just trust me on that. So how is UBI calculated and provided? Does someone receiving UBI in New York receive more than the person in Kansas? Their food, clothing and shelter will all cost a ton more… If they do, how is that fair or justified? IF we set the level to NY, the Kansas UBI recipient will be rich, plain and simple. IF we use the Kansas baseline, the the New York City recipient will be destitute, homeless, clothes-less and hungry.

#3 UBI — where does this magic money come from? GDP per capita in the US is about $53k per year. In Russia about $14k per year and in China about $7k per year. So that’s challenge one, we have massive global disparity. But also, that number is dramatically misleading. We have certain services that do NOT generate an income that must be maintained before the people can be paid. Debt owed per capita takes that income to zero. IF we don’t pay off the debt, then we must pay interest. Military, government functions. The result is substantially less than $53k per year. However, the US is a wealth country and could probably afford some sort of floor type payment for its citizens. Most of the rest of the world isn’t even close to being able to implement this idea. And this point can be made without even considering what a US based UBI payment ought to be…

#4 Marx tried this concept and it failed MISERABLY, we called it Communism back in the day. Yeah, I’m over simplifying, and that stuff we saw (In Russia and China) wasn’t true Marxism. I also know that UBI isn’t quite the same thing. But UBI supporters would be foolish to ignore this challenge to their case, because people will absolutely associate the two.

#5 Demographics, with declining birthrates in much of the West and an ever-ageing population, the support for a UBI from working class BETTER be augmented by machines, because fewer and fewer workers will be contributing to funding for UBI.

#6 Politics. A proper UBI replaces Social Security, Good luck with THAT discussion. We cannot afford SS and UBI… that’s obvious. And what politician do you know that is willing to make a change to social security.

#7 Cultural — Many in the US don’t like the idea of a free lunch. You would probably have to combine it with some form of government and public service responsibility to even begin to get broad consensus. Or wait for the mass unemployment and subsequent revenue shortfall from income tax revenue before you’d reach any consensus. I think that many proponents of UBI fail to realize that there are some innate characteristics in humanity. Competition, peer comparison, work to define self-worth are a few of those basic human traits that are neglected and in fact set aside in order to implement UBI. I believe this is major hindrance to a straight up UBI. Tie it so a “responsibility of some kind, like 2–4 years of military or social service” and you can justify a pension-like payment over the lifespan of an individual.

#8 Getting things done — this is probably the biggest hurdle to UBI. Nothing much gets done these days unless there is a crisis associated with it. So currently, AI related unemployment remains low. Until it hits the Tsunami threshold, it is unlikely that we achieve the national consensus required to consider it.

In Conclusion, I’m opposed to UBI as blanket payment for no work to people because technological unemployment. I am also opposed to UBI because people want to be Marxist instead of Capitalist. Marxism and Capitalism are belief systems based on the polar opposite views of humanity. Neither is right, both have flaws. UBI TIED to significant social service starting no later than age 25 and lasting for 5 years is a step in the right direction. It replaces much of the paid bureaucracy in government (source of funds for UBI), it provides a stepping stone from education to work for young adults. It justifies a lifelong pension for all citizens. Most importantly, it ties balances between a simple payment to people for existing and the “profit is all that matters” view of wealth creation and distribution.