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Comment by mitthrowaway2 | Hacker News Reader

In terms of solutions: UBI is frequently proposed. Depending on the degree to which AI and automation obsoletes human labor and increases, UBI could become arbitrarily redistributive. Increased output would keep inflation at bay, and the reduced incentive to work would be mitigated by the fact that there almost wouldn't need to be any incentives remaining for wealth creation.

Such an AGI scenario might also raise some old questions about the degree to which wealth disparity-as-an-incentive-for-success remains useful and justifiable. One wonders how Altman would receive this proposal.

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I wonder what will happen to millions of people with $3k+/mo mortgages when they’re all unemployed and UBI is only $2k/mo.

Sounds like the mortgage market would go through a correction? Or UBI would be bumped up to $4k. Lots of possible outcomes.

Not without pain. Housing correction would lead to foreclosures. Bumping UBI would lead to mortgage rates rising due to the ensuing inflation

30% of people in US pay mortgage, average payment is $2200. I have no idea where even $2k/mo of UBI will come from – when no one works, no one pays taxes. To avoid social unrest some new methods of wealth redistribution will have to appear. Why is nobody talking about this?

If no one works no one pays income taxes; this is one reason why I mentioned sales taxes in another comment. Income taxes are complicated to administer and a bad incentive structure anyway.

Traditionally, sales taxes have been considered regressive because they are linear; you can't bracket them like income taxes, so they heavily burden the most poor. But a UBI is progressive enough that a flat sales tax to fund it should still leave society more equal.

OK, so everyone gets UBI check today. Let’s say 10% of that check will be spent on sales tax. Where the next month check is coming from?

The UBI check goes out every month; the sales tax percentage is adjusted until the revenue matches the amount sent out as UBI (or more optimistically, adjusted until inflation is kept to a stable target).

Let's say that the sales tax reaches as high as 40%.

This means that if you are unemployed and destitute and the UBI represents your entire spending power, ~40% of your UBI check goes back to the government when you spend it. If you are a rich guy living the good life on your property portfolio rental income and MSFT dividends, 40% of your spending also goes back to the government, which is many multiples of your UBI check (which constitutes a trivial amount of your income).

Remember, the UBI doesn't amount to all gross income, even if nobody is employed. When you spend money to buy furniture, somebody gets it as their income, even if it's the shareholders of the IKEA robofactory. The people on the top will end up paying more into the system than they get out.

So you’re assuming rich guys will spend so much that 40% of their spent money will cover 60% of the entire UBI budget? Or do you also want rich guys to pay income tax? No matter how I look at this I don’t see it working without a massive forced wealth redistribution from rich to poor.

It's a mathematical certainty. Let me introduce it another way: the government imposes a 40% sales tax and then distributes the resulting revenue evenly as UBI, however much it is.

Do you still have concerns about the program not covering the UBI budget?

Aside from that, wealth follows a power law, so the rich guys do spend a lot. They have some very fancy champagne. I also elsewhere mentioned that the consumption value of land ownership (the equivalent rent) should be included in the sales tax, so that will be quite a substantial redistributionary force.

There's ~127m households in the US. At even $2k/mo (read: roughly the poverty line) that's over $3 trillion, which is half the US annual budget. UBI as a justification for throwing millions of people out of work is a joke. But this is obvious: far and away the markets for these companies are other companies looking to replace humans, not humans looking to kick back and let AI make their money for them. No one running any of these companies seriously thinks there's a policy to ameliorate the effects of what they're building, let alone a policy that's actually achievable. The entire stance is "progress gonna progress, figure it out suckers". Not great!

> UBI as a justification for throwing millions of people out of work is a joke

AI is the justification; UBI is just the tourniquet.

Sure, sorry, but the point still stands. Both these ideas (replace the workforce with AI and UBI broadly) are entirely disconnected from reality. Fortunately it looks like AI is hitting a ceiling so we'll probably avoid broad social destruction.

They'll probably go bankrupt and have to move to flyover country. But if you've got a steady income and don't need to work then living in flyover country isn't so bad.

yes, UBI is the solution usually proposed but i guess there's a few problems.

First problem i see is UBI is gonna be paid by governments when it's (mega-)corporations making (disproportionate) profits thanks to AI and not employing humans anymore.

Something would need to compensate for this.I guess a new taxes scheme based on the number of AI agents a company would employ ?

If you ask me? A very large consumption tax would probably handle most of it, as well as some form of asset taxation (eg. on land and voting-rights shares, in terms of their equivalent rental value).

This would basically amount to a leveling function across society: people consuming less than the mean earn (much) more in UBI than they pay in sales taxes. Wealthier people who consume more than average would pay in more than they get out. With wealth being power-law distributed, the wealthy would end up paying a lot more.

Then you just tune the UBI value to achieve any desired balance of equality vs incentive to work, while adjusting the tax take to control inflation.

The megacorp wealth flows back to the shareholders, who eventually will want to spend it on something.

You think voting and taxation is gonna work if Altman and co. achieves and monopolizes AGI? They can have autonomous soldiers and weapons while precisely controlling information intake of approximately everyone. You only need be diplomatic when the power imbalance isn’t too huge.

I assume in that case they will pay everyone a small allowance so that people aren’t too much of a nuisance and resistance is limited. As predicted by sci-fi.

I think there are a lot of plausible dystopian AI outcomes, up to and including the extinction of the human species. But that won't stop me from providing my preferred policy recommendations for dealing with the impacts of unemployment caused by automation.

The core problem is uneven power distribution. Shaving off some percentages of corp revenue will not compensate enough for the rapidly growing power concentrations.

Giving everyone ability to run open source AGI night do a bit of difference but if the big corps can run 1000x more of it the power differential will keep growing.

There's maybe an opportunity to make (A)I crowdsourced and find better ways to make our shared brain power and GPU power more powerful than the cognitive power of data centres.

>The megacorp wealth flows back to the shareholders, who eventually will want to spend it on something.

This is called trickle down economics.

>Wealthier people who consume more than average would pay in more than they get out. With wealth being power-law distributed, the wealthy would end up paying a lot more.

The wealthy consume basically the same amount as everybody else in their day to day. They might purchase better quality goods. So consumption taxes are regressive. It is better to tax progressive wealth.

It would be interesting to consider where humans would find fulfillment when what they have done every day for years is rendered worthless.

Some would pursue less lucrative passions. Some would spiral into lazy Sunday behavior every day.

I like to think about what I did before I had to work. Young me would never worry about finding things to do and none of those things were economically valuable.

UBI is nonsensical. Give everyone 5k a month, and everyone is not 5k richer. All you’ve done is decrease the value of the dollar.

Would love to be proven wrong.

Your assumption holds in exactly one scenario: One where everybody is currently earning exactly the same amount of money and has the same net worth.

Otherwise, such an UBI would indeed cause substantial redistribution, even after accounting for inflation and prices recalibrating.

To clarify. If everyone in the US is given an extra 5k a month do you believe that the price of goods and services remain the same as they are at present?

If my landlord is charging me 2k for rent, does she not increase it knowing I now have an extra 5k of UBI monthly?

Or, if there’s a bidding war on a home that might typically sell as high as 300k, does that still hold true now that everyone has an extra 5k, or does the house sell for more?

Will a plumber still charge $30 an hour when he has a guaranteed 5k on top of what he’s making? Or will he start to bump his price up to make it worth his while?

I really don’t see how prices don’t just climb and re-equalize so that we’re back at square one. And your response didn’t address that concern.

Prices would climb, but not "re-equalize." Let's say everything got 2x more expensive. People currently making very little could still afford much more. People currently making a lot could afford less.

There's a lot to unpack here, so I hope you don't mind a long and nuanced reply.

UBI on its own is obviously inflationary, like any other government spending. But it can be combined with taxes to reduce the growth in the money supply, as necessary to keep prices stable. Those taxes will tend to be aimed at the wealthy, and will take more than $5k/month away from them, so people bidding for a $300k home might have less purchasing power, not more.

But also, AGI-fueled unemployment is likely very deflationary, and that is the premise of this conversation. Let's talk about your landlord's situation. Sure, your tenant is now getting $5k/month UBI, but they've also lost their job, and so has most of the population. There might not actually be more juice to squeeze out of that lemon than there used to be. Plus, workers won't be bidding up rents in (formerly) high-wage cities for jobs that don't exist anymore. Your unemployed tenant is only staying in town because they like the weather. They could move elsewhere if you charge too much rent; it won't affect their commute.

The effect on prices will really vary a lot by type of good. For things that get effectively automated by AGI (let's say, for example... legal services and architectural drawings), the price may drop precipitously due to increased productivity. For other things (plumbing), the price would go up a lot. It would become quite rewarding to be a plumber.

Lastly, depending on the types of goods demanded, prices can be quite stable. If you give everyone $1k and they use it to buy an iPhone, the price of iPhones might not even go up that much, because it gets cheaper to produce in large quantity. In fact, they may even get cheaper. However, if you give one person $100M and they use it to buy a yacht, you don't get the same efficiency benefits from economies of scale. A more even wealth distribution favors mass production of goods, which keeps prices low.

We don't end up back at square one because:

1) The goal of UBI isn't to make everyone $5k richer, but to shrink the gap between rich and poor in a world where a few people are very rich from owning capital and many are poor due to a decrease in demand for labor.

2) We don't end up back at square one because at the end of the day, an unemployed person getting $5k/month has more purchasing power than if they got $0/month, even if prices do increase.

3) But aggregate prices don't even necessarily have to increase, because of changes to taxes and productivity, and also because of economies of scale.

For a reductio ad absurdum that might illustrate where your analysis falls down, consider how someone with net worth of $0 and someone with net worth of $100k would each be differently affected by getting a $5k handout, accompanied by a 10% decrease in the purchasing power of a dollar. The end result is not the same as the status quo.

The intent is not to make everyone richer, but to redistribute wealth in an equalizing direction. (In fact this might also make everyone slightly richer on average in real terms, because of second-order effects related to economies of scale that make it slightly easier to meet the growth in demand when wealth is distributed more evenly).

Of course, the decreasing value of the dollar is an undesired side-effect of any government spending; this is why you counterbalance it with taxes to pull money back out of the system and control price growth. These taxes don't exactly cancel the UBI if they disproportionately fall on the wealthy; this is why I like consumption taxes, which fall more heavily on people who have more money to spend.

96% of us are already given ~5k a month for 40hr/week of work.

If UBI is just printed, then sure there would be economic problems; but I think the idea is you redistribute it via taxation.

High interest rates, maybe a wealth tax, ought to do it. Cause deflation while giving UBI.

Right now you are correct that giving everyone 5k would not produce more stuff so the dollars would devalue.

The idea however is that at the same time as giving everyone 5k, AI workers would produce more than an extra 5k/head of stuff.

As an alternative having the AIs produce all the cars and houses we need but giving all the money to Sam Altman wouldn't make sense as no one would have the money to buy them apart from Sam who couldn't use them all.

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