Latest / Art of the Question / Why UBI Is the Answer to AI Stealing Your Job - Scott Santens - #4

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Why UBI Is the Answer to AI Stealing Your Job - Scott Santens - #4 · Art of the Question

• speaker-0: I think my main goal for today is to make UBI a bit more concrete. To me, it has always existed in the vague and also always as a very binary solution. So we either go all in on UBI or we don't do it at all. And after reading some of your articles, ⁓ I have a much better understanding that it's not so black and white as many people may think. So I think the goal for this discussion today is just to ⁓ get an understanding of what UBI would actually look like in practice and that it may not be as extreme as many people may think. for starters but you have been interested in UBI for quite a long time now so I was ⁓ wondering how did you first get interested in the concept of ⁓ UBI? speaker-1: Yeah, I first got interested back in 2013 and this was, it was prior to the publication of a report that made a lot of news at the time or a study that came out at the time, which was the study suggesting that perhaps like 40 something percent of jobs could be eliminated, you know, within the next like 20 years. And Like, I got into this before that point, but like that's when it kind of exploded. But the reason I got into it was basically that same thinking. And it was that, you know, people weren't talking about automation, but it seemed like it was going to be a big deal. And how do we make sure that, you know, it's a good thing instead of something that really leaves a lot of people worse off. And that thinking led me to the concept of basic income as one of those possible solutions. And that got me into, you I read about the history of the stuff and the pilots is what really won me over just looking at, like, I didn't realize that we had even done experiments already, both in the U.S. and Canada and also other places in the world. And the evidence was just clearly positive in like large ways. And seeing that positive evidence and seeing this history really got me thinking that, this is like, you know, an idea with legs and, you know, could really, before we got the groundwork for this, we can actually just do this. ⁓ It doesn't seem to be something like an extreme kind of thing, you know, it's not like a science fiction kind of thing. It's just, we can do this. We could have done it decades ago and we just continue not to do it when we can. speaker-0: Yeah. And would you say the last few years with everything that's happening around AI and AI becoming into the hands of the general public has helped relight that fire and put UBI back in the spotlight as a potentially viable solution? speaker-1: Yeah, yeah, it seems to be going that way. It was interesting how there was, I don't know, it's like an automation sandwich or something where like the middle part of this was like during COVID. And so like prior to COVID, we were really talking about automation and worried about this and thinking about basic income. Judy Yang ran for president on this and that really helped like amplify it even more. And it just seemed to be like we were talking more and more about UBI in response to technology. And then COVID hits and then suddenly we're like, ⁓ well, we need to get money to people. because basic income was already at the top of people's thoughts, it feels a little bit easier to get those checks out. And they weren't like fully universal, at least in the US, but they were universal in other countries. It was around like a dozen, a dozen countries did fully universal cash. So that was a big deal. And it was great to see like it just released like an avalanche of, you know, like, let's just get checks to people. And that was, I think, something different. And I think it was part of the discussion or because of the the EBI discussion. But then during COVID, we really like coming out of that, we stopped talking about automation. And it was, you you hear these complaints of, we can't even find anyone to work anymore. Like, we can't even find enough truck drivers. And we're worried about like truck driving being automated. Like that's dumb. And so it was like the, the thinking about automation became kind of like a joke to even be like worried about, uh, for like a couple of years there. And then it was, come out of that. I would say it was a joke until chat GPT launched. late in 2022, suddenly it became real again, and we started worrying like what's going to happen. And since then, as the AI models have continued to improve like. pretty impressively quickly, this discussion has been growing again. speaker-0: Yeah, I mean, it's part of the reason why it's gotten my interest as well. It's often being named as one of the solutions for if we just extrapolate a little further, if AI continues to improve like this, many, many jobs will either be lost or we'll need less people for the same amount of jobs or yeah, probably new jobs will arise as well, but I don't know. It's, it's nobody really knows at this point where things are going, but I think it it's safe to assume that AI is already very disruptive to the way we work and everyone is being affected by it. So it's also part of the reason why it came to my attention and is, yeah, it's something I'd like to understand better. So I think what I read in one of your articles was. pretty interesting regarding the very just basic definition of UBI because maybe if we can repeat that definition if you are talking about UBI what is it that you mean specifically? speaker-1: Yeah, so the definition of UBI, and ⁓ this is created by the Basic Income Earth Network, which is the international organization that was founded decades ago for basic income. The definition is a periodic cash payment unconditionally delivered to all on an individual basis without means to ask for work requirement. So to break that down, this is cash. with four additional characteristics. So it needs to be universal. It needs to be unconditional. It needs to be provided to individuals, not households. And it needs to be a regular payment, not like just a one-off payment. And those five things create ⁓ basic income. speaker-0: Yes, but at least for me, had a, I think it was a more binary approach to universal basic income. ⁓ I think that's also part of the critique it's often getting is that when people hear UBI, they often think all jobs will be erased. Nobody will work again and everybody will just stay in their beds all day and receive money from the government, which is not what you are a proponent of and is also not what you mean by UBI. Can you maybe explain that? speaker-1: Yeah, so I think ⁓ the way to look at basic income is it's a floor and it should be considered a dividend, especially when it comes to technology. So by floor, you know, this is it's a minimum amount. something that everyone gets as a starting point. So right now, the floor is zero. And, know, you maybe you can qualify for some kind of welfare if you meet some Conditions and jump through some hoops, know, you can get that But like the minimum of zero so with UBI it's saying look we can start at $500 per month $700 thousand fifteen hundred whatever but as long as everybody gets that amount to start with then that's a UBI and so people then think too that oh well You know, if the basic income is a thousand dollars per month, as Andrew Yang was talking about, that's not enough to live on. You know, we'll be worse off if we have a job that's paying us $80,000 a year and we lose our job and we fall to $12,000 a year, then clearly we're worse off. And if we all fall down to $12,000, then we're all worse off. And then it'll just be like some trillionaires. But Yeah, that's like if we if we all have money to spend then we also will you know be creating our own jobs by issuing our own demand, know, Just because a machine can do something doesn't mean that there's no possible way that someone else a human being can earn any money doing that You know, so like you can always earn any amount of money on top of basic income. It's a floor So you can have a job and earn additional money on top of it. You can have multiple jobs if you want, and we're not going to eliminate all jobs. They're a significant number, probably. Like we don't know what that'll be. It could be something as low as like five to 10 % or it could be something as high as like 20 to 50 % or something. But when you're saying like, ⁓ we won't have any jobs at all for people, I think that's completely unrealistic because also, you know, if we have money through the UBI, we will be creating jobs through that, you know, the one way I try to get people to think about this too is, you know, it's like, if you look at ⁓ musicians, you know, like we can all listen to Spotify, we can all listen to recorded music, you know, like even now we can all listen to like AI generated music and stuff, but like, we're always gonna wanna like go to a concert, know, like that's just fun. It's like really great to see someone live doing this for real. Like that's just its own unique experience. And so that exists like through everything, you know, if you personally, like I really love sushi. Like I love going out and like sitting at the counter and doing like an omakase kind of situation where like it's chef's choice and like it's amazing. And like, you know, I can go into a... a grocery store and buy like robot made sushi, we all can. But that's a different thing. know, like I still want to express demand for that human labor, that human, you know, artisanship and expertise like that, that, that experience. So that's always going to exist. speaker-0: Yeah, I agree. And I think it's even starting to become a selling point. I spend a lot of time watching YouTube documentaries and I see now in a lot of titles and thumbnails, people advertising their videos. No AI was used while making this video because people seem to have a really visceral reaction to AI generated content. did an episode with a psychologist. Mel Selig the other week actually about this very topic why we have such a visceral reaction to AI generated content and an AI slop as we call it. I definitely agree that even yeah, we can automate certain things, but it doesn't mean we will for everything. Maybe we'd like to buy a table that was handcrafted by an expert or a beautifully crafted knife or whatever. I completely agree. What I've also found interesting in one of the articles, ⁓ you mentioned that obviously if there must still be some incentive to do the extra work, right? So we still want to provide people, even if we were to provide people with UBI, then still the benefit, the upside of making extra money, for example, people that want to become a doctor, for example, they still can and the gap between the baseline of the UBI and what a doctor earns should still be big enough in order for the incentive to still be there for people to perform such difficult jobs and study for 15 years. Can you maybe explain? speaker-1: Yeah, so one of the things that I think is really important too about basic income are these ⁓ incentives. And I think it creates ⁓ a labor market that reflects supply and demand better. What I mean by that is right now, let's say there's a job that no one wants to do. Technically speaking, that job should pay more. know, like it should offer enough money that people will take it. ⁓ But we have a situation right now where people are in a situation of great need. They're afraid of starving, going homeless, whatever. ⁓ The weaker the safety net, the more impactful this is. And so you've got people doing jobs that people don't want, and they're the ones who are working for as little as possible because they'll accept anything in order to get by. And then you've got these jobs paying a great deal of money that really a lot of people would love to have, but you know, only like some people are fortunate to have or able to do it, you know, that kind of thing. So if we have ⁓ a basic income, then we have the power to say no to wages and conditions and stuff that we will refuse until those improve. And we have the freedom to say yes to jobs that like we really enjoy doing and that UBI could actually subsidize. So This means that say, you know, people always say, who will clean the toilets or something after UBI? Well, okay, well, robots can do that potentially, but also a human, ⁓ we can pay someone enough. And there's always a number amount that we can pay someone and they will choose to do that work. Like that's supply and demand. And then there's jobs that people want to be doing right now that are considered to be very meaningful and they actually can afford to do them because they don't pay enough. Like imagine, There's people out there who would want to be a teacher, but teacher doesn't pay very well. So maybe like go work on Wall Street or something, you know. And so then with, with based income, you know, you will start with say $15,000 a year and then maybe a teaching job that paid 30,000. Uh, now you can do because you'll have 45,000 total gross before taxes. And so maybe that's something that is better enabled through a basic income. So I want people to consider. that people will actually be more able to do things that they want to do and also jobs that should pay more, can pay more ⁓ with basic income as well. And then another thing I want to add too, since we're talking about incentives, I think something people miss about like the existing welfare systems are that they, because they disappear with work, then that functions as a high marginal tax rate. meaning that, you know, here in the US we have SNAP, which is our biggest ⁓ assistance program. It reaches about two out of three people in poverty. And if you earn a dollar ⁓ from work, then you lose 30 cents of your SNAP benefits. So that's a 30 % tax rate. And de-stack too. So, you know, if you're on SSI, and SNAP here in the US. SSI is like a disability program. SSI has a 50 % tax rate and on earned income, 100 % on under income. Meaning that, you know, if you get a job and you earn a dollar, then you lose 50 cents of SSI. And then you also lose 30 cents of SNAP. So the total is you lose 80 cents. What does that do? for work. Like it's weird. We understand, like we worry about, say, rich people and say, ⁓ my gosh, if they're paying 40 % taxes and we raise that to 50%, like how many of them will stop working or whatever? Like we'll work less because what is the point of earning an additional dollar if you lose 50 cents of it? And we do that to the poorest and we actually create these incentive structures. We're saying, look, if you earn an extra dollar, we'll take all of it away. So there is no incentive there. But then with basic income, it's a 0 % marginal tax rate because everybody gets the same floor. You're always better off working with basic income than you are not. And that is not the case with the existing welfare system, which is a reason why we should replace at least some of the welfare system with basic income in order to reduce those marginal tax rates created by those targeted programs. speaker-0: Yeah, we have a very similar situation in the Netherlands actually. If we have one of the most complicated ⁓ systems of all sorts of, if you have X amount of children, but you lost your job in year X, Y, Z, it's insanely complicated and there's like 50 different programs you can apply for and it's just a big mess. And what you'll often see is that there is a reverse incentive for people to start to enter the job market again after they lost their job, because if they do nothing, they will have more money than if they start working a minimum wage job, for example. So a lot of these people are like, yeah, I could go to work, but I would actually lose money by, by working. So. I think that's very, at least in the Netherlands, we've, we've, we've over complicated it so much. So, ⁓ I think a simple solution like this would be, ⁓ would be very welcome there. If we're talking about numbers, right? I've, I've read in your articles, they weren't necessarily your numbers. You were just stating some numbers from different studies and other authors. But a few numbers that were mentioned was ⁓ around 15 to 16 thousand dollars per year could eradicate most of the severe poverty in the United States. ⁓ And then I also read some number which was around like 2 % of the GDP to start with. ⁓ Can you maybe elaborate on those numbers and maybe discuss what would be a good number to start with and why? speaker-1: Yeah, okay. So in the US, ⁓ we kind of weirdly define poverty. our definition goes back like decades where we just like kind of arbitrarily calculated the amount of money that you needed for like a minimum food basket, you know, per month and we multiplied it by three and decided that was the poverty level. So we're a little bit different than other countries and like the way we define that. But our poverty line is defined. It's around like fifteen thousand dollars right now. And then also each additional member of a household increases it by about five thousand. So, you know, a household of two would be twenty thousand. Household of three is twenty five thousand. Like give or take. It's not exactly that. So yeah, if you start out with a basic income here in the US of around, you know, $15,000 per year plus $5,000 per kid, then you've eliminated poverty as we define it in the US. Half of that amount would be eliminating severe poverty, which is about half the poverty amount. Again, how we define it. So we could even, you know, eliminate severe poverty with, you know, about about half that, you know, and when it comes to like total cost is another thing. And this is an important element to understand. So I'll try to get into this a bit. There's the gross cost and then there's the net cost of basic income. The gross cost is what most people think of as the cost of basic income, which is simply taking the amount of basic income and multiplying it by everyone who gets it. And then you get like these really large numbers from that and go, oh my gosh, like we can't possibly give everyone $15,000 because then that would be like three to four trillion dollars in the U.S. What that misses is UBI is always going to pair be paired with some kind of tax reforms, welfare reforms, subsidy reforms, whatever. And so if you have someone who is, let's say they're getting $15,000 per year and the additional taxes that they're paying that they're paying as a result of implementing this is $15,000 a year, then they actually get zero. they spend, ⁓ you know, zero dollars more in taxes and they receive zero dollars in income on net because those two cancel each other out. And so then everybody above that income line is also a net payer and not a net recipient. They're not getting anything from the government. They're not receiving anything on net. So didn't you have to think of someone who's, you know, paying $8,000 to get $15,000, then they're netting $7,000. And you have to calculate that net difference for every person. And then that net difference is what the total cost is. So it's a summation of those differences across the population. And you'll have these people in the higher income ranges who are going to be net payers. And you're going to be having that net neutral point. And then below that, those are net recipients to varying degrees. So for those who are familiar with a negative income tax, it essentially works out the same way. It's just that a negative income tax would provide say $15,000 to someone earning zero and then phase it out at some amount. And if you could do it that way too, I would suggest it being like a low phase out, because then you don't want to get into these 50 % phase out ranges and you don't want them like stacking or anything else. If you have a phase out rate that's about 5 % to 20 % or something, I would say 30 % max, then you're going to preserve the incentive to work. As you, you know, the cheaper the plan is the higher the phase out rate effectively. There's a study done by Carl Wildquist, Carl Wildquist did this recently and calculated that if you did, if you paired a UBI with a 50 % surtax, which is turning it into like a negative Negative income tax of the 3 % phase out, right? Then the cost of that has actually been getting lower and lower and lower over the years and decades and So that it would have been you know I think was like six to nine percent in the 70s and now we're looking at about two percent and so as we go on it's only gonna get cheaper and cheaper and cheaper to do this because productivity is increasing GDP is increasing But that's like a super cheap plan because it's 50 % But yeah, we could technically eliminate poverty with a basic income, with a 50 % surtax, and we'd be there and it would be cheap. Like that would actually be around $600 billion per year instead of the gross cost of like three to $4 trillion per year. So yeah, you could do that anywhere. Anytime you do this, you calculate out that net cost, you're always going to be looking at about like a third or so depending of the gross cost. It all depends on whatever you choose for your like phase out rates, what programs you fold into it, what subsidies you eliminate, that kind of thing. speaker-0: Yeah. So based on, yeah, the current, population in the U S what people are earning, what are the top earners, ⁓ what people would be, ⁓ net receiving people who would be net paying. it even be necessary to raise taxes if, ⁓ if you want to implement UBI? speaker-1: I think it's always necessary to implement taxes for UBI that you want to eliminate poverty with. There is a UBI that you could do that you would not need to introduce any new taxes to do. And it would be small enough that you wouldn't ⁓ increase ⁓ express demand beyond the ability for supply to meet that, in which case that would lead to excess inflation. If you want to avoid excess inflation, then you do want to utilize taxes. But there's also lots of ways to go about taxes too. Like we don't have to only do income taxes. I think income taxes make sense to me as a phase out ⁓ to accomplish that like say, let's not have the top 10 % get even more, get a boost and get even more income when, you know, we can just have the bottom 90 % be net beneficiaries. That can also help handle inflation issues too, because right now in the US, spending is really unequal so that the top 10 % are actually consuming half of everything. So if we exclude the top 10 % via a phase out tax that creates it so that someone of the 10th percentile is paying in in tax and what they're getting in EBI, then That actually also helps with the inflation part because it's balancing it out. means the bottom 90 % boost to the top 50 % isn't. You're basically transferring consumption power from the top 10 % to the bottom 90%. And that shouldn't be considered like a tax that's a cost. That's functioning as like a negative income tax kind of shaping like a phase out. And then you can do, you can subtract money from the money supply to handle inflation in ways like, you know, land value taxes. When it comes to AI, you could do like a token tax or something. You could do a transaction tax. Like I like the idea of just hitting every single digital transaction with just like a small percentage tax. That way you're just like subtracting, like burning from the money supply with every transaction to help manage inflation in that way. And you know, you could do a VAT tax, could do assumption tax. You can do carbon tax. There's all sorts of ways of subtracting money from the money supply to help handle inflation. And I think that's how you should be looking at how do you fund the basic income? How do you pay for this or whatever? Because it's not about that. It's about managing inflation. You want to make sure that you don't exceed supply capacity ⁓ by just increasing the money supply. beyond what the economy can handle. And that's what taxes do is subtract that from the money supply. speaker-0: Yeah. And I think if you would do a combination of not just making it income based, but also make it consumption based, it would probably also help with people that are ⁓ migrating for tax purposes. Because at least what I see in Europe happening right now, we all, we say, okay, we need the top 1 % to pay, ⁓ billionaires should pay way more taxes than they already do. And you'll see that as we keep increasing taxes for very high earners, ⁓ they just move. I think the UK is especially daunting if you look at the numbers. think ⁓ only China has more millionaires moving out of the country than the UK. So in the UK there's so many people leaving the country because their taxes are getting extremely high at the moment and it's also pretty easy to move. It's easier to move, it depends on your business if you have a physical chain or whatever it is of course more difficult to move but a lot of businesses are digital nowadays so you'll see that a lot of people just move out of the country so I think by spreading it over different kinds of taxes, you would kind of mitigate such a reaction by super wealthy. speaker-1: Yeah, I think a mix of taxes is very, very important. I would say optimal. ⁓ Like another, you mentioned like the moving possibility. ⁓ Like one thing too is, you know, like there's so much anti-immigrant sentiment, like in a lot of places right now. And there's this belief that, you know, immigrants are the ones getting the welfare and the people within the countries, the citizens are not. ⁓ But if you have a basic income, where it's only for citizens, you know, that's not going to anyone who just crosses the border or whatever. That helps as far as citizens feeling that they're, you know, that they're being mistreated or something compared to immigrants. But also, if you have like a consumption tax, then immigrants would clearly be paying into this and then they were not receiving it. But then the immigrants would effectively be helping pay for the UBI of the citizens. And so, I think that's a way of kind of helping get around this like anti-immigrant kind of sentiment. If people are like, oh, well, if immigrants come in, then they're helping pay for my UBI. I can get more of a UBI. That's a possibility. But yeah, then when it comes to like the wealthy, you know, I think that the wealthy should pay their fair share, but you know, you always got to look at incentives. So, you know, they're... Optimal tax theory ⁓ shows that, you know, like maybe like somewhere around 70 % or so is where if you tax someone who has got a lot of income more, then they'll actually like work a little bit less, you know, like, so you want to find that balance. And I think when it comes to, you know, total taxation in that range, you don't want to surpass that. So I empathize with those who are like, well, let's pay 90 % or something tax rates for the rich. But like also if you do that, you know, and you reduce overall productivity and, know, the growth of the economy, is that a good thing? You know, people can argue about that, but I would say that, you know, there are kind of like limits as to like how much you can tax in certain ways. When it comes to like income taxes, I think you're already like going too high if you're like over, you know, 60, 70 % or something. And then, you know, like when it comes to a wealth tax, like You know, you can tax wealth to some degree, like maybe like a 1 % kind of tax, you know, you're not going to lose a whole lot of people. And especially like a land value tax, that that's a situation where it's not mobile. You you can't hide land. If you own land and you have like the certificate that says I own this, well, you're to be taxed on that land. And if you want to avoid it, then you have to sell the land to someone who will pay the tax and will develop it. Which is another reason why I like that because it doesn't make sense to have vacant lots anymore with a land value tax system. You can actually build this stuff up. Like I'm from New Orleans and you know, especially after Katrina, like so many houses just sat there like destroyed and no one developed in because there was like no one was paying any like those, the property taxes on this because it was low because property tax, you know, just works off like total property value. Whereas land value just says, look, what's the value of the land? And if you've got a vacant lot next to like a skyscraper, then that vacant lot, it's actually worth quite a bit, even though nothing is built on it. So if you want to own that land, then you got to pay for it. And I think that makes a lot of sense. It's a great structure for incentives and it's unavoidable. And it's also where like so much of this money flows to like would What do people invest in when you get like super rich? You you invest in like the stock market and companies and stuff, but a lot of it goes into real estate because they know that just it keeps going. It just keeps going up. So yeah, it's just tax land value. And then I like the tiny transaction tax just because it can be so small. No one cares. know, everyone, we all like pay like a small transaction tax when it comes to like our visa or mastercards, you know. So if we kind of utilize that at the government level and everyone pays like half a percentage point for like everything, then you don't care. No one cares about something that small and you can just, you can generate a lot of revenue that way. speaker-0: Yeah, and with all those multiple streams, it should be feasible to ⁓ provide the UBI at least in the amounts that we've discussed, starting 15, 16k per person, therefore eradicating almost all severe poverty and also a lot of the less severe poverty. didn't know what the exact term is. speaker-1: Yeah, and the flip side of that too is we should be seeing that as an investment because if you actually end poverty, then you're going to save a lot of money on other things, you know, because we spend a lot of money from poverty on crime, you spend it on healthcare, you know, we're treating the downstream impacts of poverty, we're treating the downstream impacts of, you know, mass chronic insecurity. Like even if you're not in poverty, let's say you're earning $30,000 a year, you're not technically in poverty. But maybe you're just stressed out like all the time because you don't know if you're going to be able to pay your bills. You're constantly worried about losing your job. You just you're constantly worried and stressed. And that causes health impacts too. And of course, you know, that leads to crime as well. You're stressed out. ⁓ Then, you know, it can lead to more drug use. can lead to more alcohol abuse. There's all of these costs that are generated by essentially the lack of basic income. And so if you make sure that people have that stable floor above the poverty level, then you're not going to be having to spend on a lot of these other things that treat the problems in a lot worse ways. So there's some big savings involved too. The ROI is huge. There is a study done on just child poverty alone here in the U.S. and that costs us over about $1.5 trillion per year. That's the total downstream impacts of poverty, of child poverty, just child poverty alone every year. And it frustrated me so much when we had, we did our enhanced child tax credit in 2021 as a result of COVID. And we provided every, well, nine out of 10 parents got $250 or $300, depending on the age of their kid per month for six months. It dropped child poverty by 40%. And in Congress, they're like debating, should we extend this, you know, and make it permanent? And they looked at this and I'm like, ⁓ we'd have to spend a hundred billion dollars more per year to do this. And like a hundred billion dollars more per year to reduce poverty by 40%. That's costing us one point, try and deal in 5.5 trillion a year. Like do the math on that. Like it's crazy that we would look at an ROI that huge and say, it's too expensive. So that's a big part of our problem is we're not looking at just looking at this as an investment and just a return on investment that we'd see. speaker-0: Yeah. Yeah. I mean, that's those numbers are incredible. And I think it's very well documented that if people live in poverty, that it's, yeah, there's all sorts of downstream effects of that poverty. One thing you mentioned, ⁓ which I wanted to, touch on was, ⁓ we mentioned migration for a little bit incentives. What about immigration and. incentives. When should someone be eligible to join the UBI dream? Let's say we'll implement it in the US next year. there's, mean, it's currently not super easy to migrate to the US, but let's just assume when should someone be able to receive their UBI after they've worked a couple of years? How do you picture that? speaker-1: The way I personally look at this is like voting. And so if you ask that same question, like how long should someone live in a place before they can vote? Like what should they have to do in order to vote? Like there's a process in order to go from immigrant to citizen. And I think it just makes sense to say, look, if voting is limited to being a citizen, then basic income should be limited to being a citizen. And if every country in the world did that, all of our citizens would be covered. Like you could be a citizen of one country and live in another country and receive your basic income through your country that you're a citizen part of. then if you want to switch and become a citizen of the country, you go through that process, whatever it is. I know that people would say, that's too conservative-ish to say that. Oh, we should at least extend it to permanent residents. And, you know, like in social security, have a, ⁓ you know, you have to pay in at least like a certain number of years. So there's like a certain duration of time there as well. ⁓ It's not uncommon to say you've got to like, be a resident, a permanent resident for like at least five years to 10 years or something, ⁓ in order to receive something like a basic income. And so, you know, I'm That's possible too. Every country needs to figure out what makes sense for them in regards to when someone can start receiving a basic income. ⁓ You certainly can't be an undocumented immigrant though. mean, the logistics of that don't work. You have to be on a recorded register. in order to receive a payment. know, like we have to know who you are, where you are, where you live, what your bank account is, you all that stuff. And so just by virtue of being an undocumented immigrant, you will never be able to get this. You have to actually be documented. You have to immigrate legally, in which case that actually creates a better incentive structure to actually immigrate legally anywhere because you want to make sure that you're going through the proper process in order to hopefully get that BISC income at some point in the future. And I think that kind of responds well to those who are like, ⁓ well, you know, wouldn't you just have a bunch of people crossing the border to like get this and like, well, it actually incentivizes legal immigration. speaker-0: Yes. No, I think so too. mean, obviously if you were to just give it to anyone who enters the country, then of course the flood gates are open. But I think if you actually have to wait five years or I don't know what the amount of years is in the United States before you're actually allowed to vote, but it would actually incentivize people to, start working and participate in society in order to. Yeah. speaker-1: Yeah, I also mentioned too. So Alaska has had like a UBI since 1982. This is the annual universal dividend, you know, in Alaska. ⁓ In order to qualify for that, you have to have to have spent at least one full year in Alaska and you couldn't have spent time in the previous year in prison. Those are like your qualifications, you know, to get those there. So it's not a citizen, you know, in Alaska. It's a resident. You have to have spent at least one year. in order to get that. And it's not uncommon to figure out some kind of duration of time ⁓ to be a part of that. speaker-0: Yeah, yeah, I think that makes sense. ⁓ one of the topics that I would really like to discuss as well is it's also part of the reason why I got interested in this topic in the first place is, ⁓ Elon's ⁓ universal high income. ⁓ he's been posting about this for years now and only it's only, ⁓ he's ramping it up. I believe one of the new taglines, the new slogan of either XAI or one of his other companies is now something like amazing abundance for all or something. So it goes from universal high income to amazing abundance or whatever he likes to call it. But you do not agree with the term universal high income. Could you maybe explain? speaker-1: Yeah, I think it helps people misunderstand what a UBI is ⁓ and also what the future can be. People think of universal basic income and a lot of people think that means it's really small. And then I need to go out there and explain, well, it can be any amount, ⁓ but it's just it's a floor. then every other income stream exists on top of it. ⁓ Universal high income is just a high universal basic income, where high of course is entirely arbitrarily defined, which is also why there is no amount as part of the BN definition because it's arbitrary. Like, what do you mean by someone's, you know, what is sufficient to meet basic needs? Well, if you poll a bunch of people, you're going to get a bunch of different answers. And so what, do you take the average of those answers? And then like you've got people above that who are saying it's still not basic and you've got people below that who are like, ⁓ this is much more than basic. Like, that's not what the basic part of basic income means. It's base really. It's that floor. It's basic as in we all got to start with something and that's what it is. It forms that base. So when Elon goes around saying, ⁓ don't worry. Like you're going to get so much more than universal basic income. You're going to get a high income. And that feeds into this, well, it's the only income. like, you have to think of this as the only income if you're thinking it needs to be high because there's not going to be any jobs. And so, you know, you can't have trillionaires and mass poverty and no jobs. So then you think, well, everybody's got to get like, what, 200,000 a year or something? Like, what is it that you mean by high for that? What is this like abundance or whatever? And what? And then it stays there and you don't earn anything on top of it. Like it's a ceiling now instead of a floor. It's like that is the only thing that you will ever get. And no matter what you do, you only ever get, you know, $200,000 a year or whatever. But that's, yeah, that's not what UBI is. It's confusing a ceiling and a floor. And so, yeah, it's frustrating to me when he's out there talking about you know, universal high income and like, you know, mass abundance or whatever as a result of, of robots taking everything over. It's, I think it just scares a lot of people and it, ⁓ it, it confuses the entire situation on both like the basic income side and the like labor impact side. speaker-0: Yeah, it certainly did for me. I mean, that's part of the reason why I really wanted to have this conversation because I really tried to think about Elon's future. I was like, all right, let's say I get 250K every single year, whatever. What do I do with this money? Are there still grocery stores? Do I go to the barber still? Can I buy clothes? Who makes the clothes? Like I had so many questions like, okay, we get this 250k, but are you going to be my barber, my therapist, my lawyer? Like what is your vision here, Elon? So it definitely confused me and I do feel I have a much clearer picture of what UBI actually should look like in practice. Why do you think he's pushing so hard on the universal, on the high part of this? speaker-1: It's marketing. It's just pure marketing. ⁓ It's frustrating with Elon because he'll say that he supports UBI, but then when asked too about now versus future, he will say he doesn't support UBI now because we still need people to work. then so UBI can only be done in the future. So again, that shows a misunderstanding. basic income actually has a better work incentive than the existing welfare system. Like if you want people to work, then give them basic income, not targeted welfare. And also if you make sure people have money, then that itself creates new jobs because they spend it. This is a good study from Alaska that shows this as well, where they looked at the work impact like ⁓ before and after 1982. It was a clever study. They concluded that The impact on full-time employment was twofold. You had a small reduction as the income effect. The income effect is, you know, if you have a little bit more income, then you maybe don't need to earn as much. And so, you you'll see a little bit work reduction. And actually, you know, a lot of experiments that are not like saturation pilots show this. It can have a small impact, like the Altman study, same kind of thing. showed like it had a... small like 2 % reduction, which works out to working about like 15 minutes less per workday. It's like a small impact work reduction. But then on the other side of this, you had the spending impact. So if more people are spending money into the economy on stuff, especially locally, you're spending it in local restaurants, grocery stores, local businesses, whatever, then that spending means they need to hire people on. because they need more workers to meet that demand. And then so more jobs open up, they're created, and then people who are unemployed and want jobs can take those jobs. So then you had a boost from that. The net impact on full-time employment was basically zero, no increase or decrease, but there was a positive impact on part-time employment, about 17%. So overall employment increased as a result of the Alaska Dividend. And the reason why it increased was because people were spending that money. So when, when Elon Musk says we can't do based income now because people won't work, you know, again, if you have a small based income, especially like $500 per month, the anyone is going to like not work because they're getting $500 per month. Like you're just going to like help a lot of people and you're going to stimulate the economy. You're gonna reduce poverty, you're gonna reduce stress, you're have lots of savings, it's gonna be a great return on investment. But like, he says that you can't do that. I think when it comes to, when I say marketing, when he says universal high income, I think he's just saying, look, I know my, I know, or I want people to believe that my technology is going to eliminate a lot of jobs. It's really good at doing what it does. Like we're gonna have... robotic cars, we're going to have optimist robots working in factories and stuff. People need to think that this stuff is going to work. And if it's going to work, then it's going to have labor impacts. And so if it has labor impacts, and it's going to get rid of lot of jobs, people can't be afraid of that to the point of like, they're going to be worse off. So I have to sell it as it's going to be more than what you're making now. Like don't worry about losing your job. You're going to earn more money as a result of this. So you say universal high income. If people are thinking universal basic income means you're going to be worse off. It's like it's just a marketing thing. But by using that, I feel it really helps people ⁓ not understand what's going on. speaker-0: Yeah, well, it confused me for sure. In the Alaska study, did they look at inflation at all? Did it have any impact on the prices? speaker-1: Yeah, Alaska is really interesting. It was one of the first things I looked at too in Alaska. you can find this, the CPI, Super Price Index is one of the ways to measure inflation here in the US. And you can find that prior to 1982, inflation in Alaska via CPI was growing at a slightly higher rate than the rest of the US. And after 1982, then it started growing at a slower rate. to the rest of the US. you know, it's, you don't want to confuse correlation with causation. Like I can't say for certain that like it was the dividend that somehow actually had a disinflationary impact in Alaska. But I would definitely say that it didn't have an inflationary impact, you know, because we would have observed something inflationary and we didn't. ⁓ So I think that's really interesting as the Alaska example. speaker-0: Yeah, for sure. one thing you mentioned earlier about ⁓ people, for example, the teacher example, I think is a great example, right? Many people would love to be a teacher. They like the idea of being a teacher. They don't like the idea of not being able to maybe not pay their rent at the end of the month or not being able to afford going on holiday anymore. Right. So a lot of people choose different jobs. One of my best friends, he actually quit his corporate job to become a primary school teacher, but he's being interviewed very often because this is a rare decision. This is not what people usually do. So I guess my question is, it's probably hard to get real data on this, but where are those effects visible in Alaska too that maybe people were able to choose jobs that they preferred doing rather than just doing it for the money? speaker-1: The Alaska UBI is on the lower side. On average, it's about $1,500 per year over the past decades. because it's on that small side and because also you never know what it's going to be, it could be higher, could be lower, there's some variance there. It's just, it's fully universal and unconditional and everything. I haven't seen anything that looked at that. wouldn't expect any kind of impact from that unless maybe ⁓ you've got a large family. you ⁓ know, maybe it's more like a temporary thing. if the dividend is $3,000 a year and you've got a household of five, that's $15,000. Maybe you can afford like a little bit more job search time to find that better job. But you do see that stuff in these other pilots. Like we do actually, we have observed that impact of people spending longer between jobs, which is also where some of the employment reduction comes from. And I think a of people don't recognize that either. you, if you like, let's say you see a headline from a pilot and it says employment reduced by 2 % per year. And then, and you know, maybe the author of that says, ⁓ or wants people to believe that, people got a little bit lazy, you know, and they don't calculate out that maybe that's like 15 minutes per day or whatever. but also it's not like, it's not that you're, that you're working less as in like, you know, per week, can even just be, you know, you lost your job and, ⁓ someone who would have spent, ⁓ two months unemployed, ⁓ Instead went three months unemployed and why did they do that because they had the ability to be choosier like they Usually you just kind of accept whatever you can and that's poor job matching You don't want that you like you want an economy where people are finding the jobs that are most suitable for them That are best suited for them. You're gonna have like better motivation to do that work. You're gonna have better quality work most likely and You're gonna have people like, you know doing what they're trained for And so that's a good thing. Like if you see a 2 % reduction in employment and the result is that you these people found much better suited jobs for them, then that's actually great for the economy. And it's bad to like somehow just assume via headline that it somehow like is bad because people work less. Like they're really the details matter. And yeah, you see that a lot is that people are actually just looking for those better jobs and maybe they're going back to school. ⁓ That's also something where a common impact is that if anyone works less, it's like new mothers and students. New mothers are using this as basically paid maternity leave. Is that a bad thing? I hope no one would argue no. And you've got like students like, no, someone who was like ⁓ working a job during high school and getting like, you know, D grades or something because they needed to help pay for their family or to not starve. ⁓ Now that kid can actually focus fully on school and get A grades and graduate and get a better job or go to college instead of getting a job to survive. Like those are good things in to pursue education. That's a better thing for all of society to have these better educated, better skilled workers. So if you're looking at like young adults working less and going to school more as a bad thing, then again, it's not the big picture. speaker-0: Yeah. I think one of the big arguments against UBI is always that what happens if you, if you just start handing out money to people, ⁓ they don't work anymore and they'll lose their purpose. But I think one of the big things for me that this conversation and also reading your, your articles has really helped for me is seeing it less as this, yeah, as I mentioned before, this binary thing. And I think seeing it as a floor, a starting point, a also eliminates the argument of people not having purpose anymore because people can still be a construction worker, a nurse, a painter, whatever they want to be basically. Would you agree? speaker-1: Yeah. Yeah. And so the great, again, like I described it as the power to say no and freedom to say yes. And like you're focusing right now on the freedom to say yes. And I think that's such an important part of this. And it's not only about being able to say yes to these jobs that are better suited, but you can actually do unpaid work too. Again, when it comes to like, ⁓ new moms, like when it comes to unpaid care work at home, is that valuable work? Is that important work? I would argue yes. And is it meaningful? Of course. Imagine like there's so much unpaid work going on and basic income would enable more of that. Like you could volunteer more. You could volunteer in your communities. You could, you know, take care of relatives or friends. ⁓ There's just so much like there like if you actually look at unpaid work, it's actually really interesting how there's a cost to that. If you're pursuing unpaid work, The average is you're spending, I think it's like $7,000 per year to do that unpaid work. Like there's all these costs that accrue. And so there's people who want to do unpaid work, but you can't afford it. Like when you look at seniors who start receiving a social security or a pensions, know, wherever they are in whatever country, what happens? Like you see that a lot of volunteering is done by them. You know, every time when we vote here in the U S It's always amazing to me how like, you know, most of the volunteers who make that happen are seniors, you know, they're on social security. That's what enables them to do it. Like they don't, they're, not working a job, but they're doing something really important that actually helps everything to run. And they love to be able to do it. It, it, it's very purpose-filled work. And so, yeah, when we have basic income and even if there's like fewer jobs, there's always going to be that ability to actually do what you feel is important. And there's always going to be some of that, know, especially when it comes to care work, you know, like you can't replace care work with robots, like, you know, to some degree, maybe you could just like help in some way, but like you're never going to have that, that true, you know, emotional connection that, you know, care work really requires. And again, like when it comes to care work too, I don't want a carer who is feeling that they have no ability to say no to do that work. Like they're only doing it to survive. Like I don't want survival care work. I want care work for people who really wanna be doing that because it gives them joy. And that's what I think as we're looking at in the future with UBI is like so much more joy driven work. speaker-0: Yeah, I think, I think that's an interesting point. And I think also if we look at history, every time that we, there was a new invention that saved us a lot of time when we stopped traveling 24 seven and started building camps. Every time our innovation improves, it seems like we start making more art. start making movies. We start writing books. We start making. podcast now. I think this could help in that in that same direction. But what's next for for UBI? Is this a partisan issue? Is this a bipartisan issue? What needs to happen in order for UBI to become a reality? What are you doing to make that happen? speaker-1: Yeah, one of the things again that brought me around to basic income in the first place was just seeing the breadth of support over history. You know, how many ideas are out there that have the support of both like a Milton Friedman and a Martin Luther King Jr., you know. The fact that Milton Friedman and Friedrich Heyer both supported basic income. We're talking about like, no one would say these people are communist or socialist. These are like the godfathers of capitalism. They supported basic income because it's very market driven. This is cash to spend in markets. This improves the supply-demand signals. This enhances entrepreneurship. speaker-0: Yeah. speaker-1: There's such a great business case, so much of it, a free market economy case for basic income. But then also you've got this anti-poverty side. You've got this ⁓ more caring about what happens to people kind of side. So like not worrying about the market, just saying, let's just make sure that we reduce poverty. Let's make sure we care for each other. Like this is a very, that's a very leftist kind of angle. And you can get even to the importance of basic income to a sustainable economy. You're looking for the greener ⁓ abilities of a basic income as far as how much are we consuming? We don't need to. We can actually have a more sustainable economy with basic income. There's so many arguments from so many different political perspectives that can all agree on this thing. And that's tough for anything else to see that kind of alignment across the entire political spectrum. So that gives me hope. It's always given me hope. It's frustrating to me to see people on either side find reasons to be against it. There are people on the left against it because it's not communism, it's not pure socialism. They're like, ⁓ well, we don't want to use cash because cash can be... ⁓ You know used and absorbed by markets. So let's just do only services and no cash like there are reasons for those in the left to dislike it and There are also reasons on For on the right and as as the conservatives like it not like you they're saying ⁓ well sure It's great for for markets and stuff. But like poverty is deserved You know, like you're you're making mistakes and you you gotta pick yourself up by our bootstraps kind of stuff And so, you know, for the same reason there's people on all sides who support it. There's also people on all sides who don't, and that's kind of the more challenging part of it. I hope that we can get to a point where thanks to ⁓ the impacts of automation that people seriously start working together on this and start like worrying less about these partisan boundaries and going, well, it suits me. and my view and ⁓ it suits you and your view. Sure, we usually disagree, but we can agree on this. So yeah, it's very cross-partisan and I think that helps it. ⁓ But yeah, in regards to when it's going to happen, I have no idea. ⁓ It really just depends on what happens and the rate of change, I guess, is what I would say too. Like if people are surprised by how quickly stuff changes, the better improving models at a quicker rate kind of thing, then maybe it can like light a fire under some pants and get this going. speaker-0: Yeah, well, we'll see. will tell. the AI developments are certainly, I would argue, are helping the case for UBI. It's part of the reason how UBI got on my radar, at least. So we'll see where this goes. Is there anything you would like to emphasize or like to mention still? Anything I forgot before we wrap this one up? speaker-1: Yeah, I guess I'll make sure and mention ⁓ my foundation, know, income to support our foundation. ⁓ It's a foundation.org. We support projects that are actually trying to catalyze ⁓ UBI. And, you know, I'm very excited about our projects ⁓ so people can, you know, website and check those out. And yeah, check out ⁓ my FAQ at scotsantons.com. You know, there's a bunch of different articles for Buffett, bunch of different commonly asked questions. You want to learn more about this, kind of dive in. It's a great place to start. speaker-0: God, this was awesome. really, really learned a lot. ⁓ I started today with a very binary perspective on UBI and I feel I became a smarter man today. So thank you for that. speaker-1: Thanks Julius, happy to help.