JULY 1st, 2023 | DEVON KASH

A Promising Free-Market Alternative To Universal Basic Income

To help protect freedom, the free market should play a role in a world without human labour.

Universal Basic Income (UBI) has been a subject of debate, as it could be an inevitable solution to the eventual obsolescence of human labour. However, concerns have been raised regarding the potential infringement on personal freedoms, particularly the fear of having our incomes cut off based on our political views and actions. This makes the discussion about alternatives and safeguards perhaps the most important discussion of our lifetimes.

The apprehension surrounding personal freedoms under UBI is not a joke. The idea that a government could limit or cut off an individual's income based on their political beliefs strikes at the heart of our democratic principles—and we have seen it happen in Canada. During the trucker convoy in Ottawa, participants had their bank accounts frozen. To address these concerns, and to ensure a UBI isn't used as a way to control behaviour, it is imperative to explore alternative approaches that ensure the protection of our freedoms, while pursuing a reasonable way to transition away from human labour.

Social Impact Bonds

Social Impact Bonds, sometimes called “Pay-For-Success” contracts, emerge as ingenious solutions that create a delicate balance between social welfare and personal liberties. With SIBs, private investors step onto the stage, contributing their resources to fund social programs aimed at tackling specific issues, such as homelessness, education, or healthcare. The government, in turn, repays investors based on the achievement of a set of predetermined outcomes.

SIBs harness the power of incentives by aligning financial returns with the achievement of positive social impact. This creates a compelling motivation for investors to carefully select, finance, and support programs that deliver tangible results. Unlike UBI, where the focus is on providing a fixed income, SIBs prioritize outcomes, driving innovation and maximizing the effectiveness of social initiatives.

Though they don't offer a solution to the eventual elimination of human labour, they offer a better transitory solution than a UBI. SIBs also transfer the risk of a program's success or failure to private investors, reducing the financial risk for governments and taxpayers.

One of the strengths of SIBs is their emphasis on measuring outcomes—another thing that AI could help with. This data-driven approach fosters evidence-based decision-making, directing resources toward programs with proven effectiveness. As a result, society benefits from targeted interventions that yield a measurable impact.

By inviting private investment, SIBs tap into additional financial resources that can bolster social programs. Philanthropic organizations, impact investors and financial institutions step up to contribute their capital. This not only reduces the burden on government budgets but also injects fresh perspectives, expertise, and entrepreneurial spirit into the realm of social welfare. It incentivizes innovation, paving the way for creative solutions to many deeply entrenched societal challenges.

SIBs could even trigger the birth of new industries.

Through the involvement of private investors, these instruments introduce competition, efficiency, and cost-effectiveness. The careful allocation of resources would ensure that funds are directed where they can make the most significant impact, optimizing the use of taxpayer money. By embracing market principles, SIBs provide a path to socioeconomic progress that aligns with free-market principles.

It's Not Perfect

While SIBs present an enticing alternative to UBI, they don't come without challenges. Careful program design, monitoring and evaluation would be required to prevent the misallocation of resources, corruption, or the abuse of power. Balancing financial returns with social impact requires decisive collaboration among governments, investors and service providers. Moreover, not all social issues may lend themselves well to the SIB model, necessitating a more nuanced approach.

SBIs would require strong legislation, specific legal language, and high levels of transparency.

In a world grappling with the complexities of economic inequality and personal freedoms, Social Impact Bonds emerge as a compelling alternative to UBI. Challenges aside, these innovative financial instruments provide an avenue for private investors to contribute to social welfare while ensuring that personal liberties remain intact. By emphasizing measurable impact, accountability, and the power of market mechanisms, SIBs offer a path to transformative change that is both efficient and socially “inclusive”.

As society continues to evolve toward a more AI-driven economy, embracing dynamic approaches like SIBs becomes increasingly imperative. They encourage collaboration, foster innovation, and tap into the potential role of private capital in addressing pressing social challenges. SIBs empower individuals and communities by shifting the focus from handouts to tangible outcomes, allowing people to take an active role in shaping their own destinies.

While UBI offers the allure of a guaranteed income, the concerns about potential infringements on personal freedoms cannot be ignored. By embracing SIBs, governments can alleviate some of these concerns and create a more empowering approach to social welfare. SIBs provide an avenue for individuals to participate in programs that address their specific needs, fostering a sense of ownership and dignity.

SIBs are not a panacea. They require careful implementation, oversight, and continuous evaluation to address potential pitfalls and the protection of liberty. Collaboration among stakeholders is vital to strike the right balance between financial incentives and societal impact.

While UBI has sparked significant discussions and debates, concerns regarding personal freedoms necessitate exploring alternative approaches such as Social Impact Bonds. By leveraging private investment, prioritizing outcomes, and promoting innovation, SIBs offer a path forward that combines social welfare with market mechanisms. They not only address social issues, but they also work better at safeguarding individual liberties. As we navigate the complexities of the modern world, embracing innovative solutions like SIBs can pave the way for a less chaotic future.

Non-Human Production

An economy fully controlled by AI might be another 50-100 years off, but in the event that it comes to be sooner, we may need to find more free-market alternatives to UBI in our lifetimes. Investing in companies that are leading the way in AI could help some of us, or envisioning a future where we all became owners, operators, or stakeholders of robotic technologies is another.

With human labour replaced by automation and artificial intelligence, the focus could shift towards technological innovation and ownership. Companies that develop and own advanced technologies would become key players in the market. Investors who back these technologies would earn returns on their investments, potentially generating substantial wealth.

In a labourless economy, intellectual property rights and licensing agreements would gain prominence. Companies and individuals holding patents, copyrights, or other forms of intellectual property could charge licensing fees for the use of their technology, algorithms, or creative works. This could create revenue streams and drive market competition based on access to intellectual property. This reality would require us to focus our childrens' educations on robotics, programming and AI.

The ownership and control of capital assets, such as machines, infrastructure, and advanced technologies, should become central to wealth accumulation. Investors and individuals who own capital-intensive assets would earn income through leasing, rental agreements, or selling access to these assets.

On the supply and demand side, with humans acting primarily as consumers, market mechanisms would play a crucial role in resource allocation and efficiency. Prices would adjust based on supply and demand dynamics, guiding the allocation of resources and goods. Efficiency gained through automation could potentially lead to lower production costs, resulting in reduced prices for goods and services. In a few short decades, we could all be paying less for the things we need.

When corporations face lower costs due to the elimination of human labour, they could be made to reallocate their savings to SIBs and private welfare contracts.

It's important to note that in any such scenario, policymakers and society would face unique challenges in terms of addressing socioeconomic disparities, redefining work, preventing riots and uprisings, and ensuring social cohesion. The implementation of wealth redistribution mechanisms, social safety nets, or alternative models to support individuals who are unable to participate in the market-driven economy would be crucial to mitigate potential negative consequences and to ensure the continuation of a functional society.

Five Point Summary

1. In a free market, a fully AI-run economy could potentially create opportunities for individuals to earn income through ownership of advanced technologies, intellectual property, and capital assets.

2. Technological innovation and ownership would become central to generating wealth in the absence of human labour.

3. A more efficient economy with fewer mistakes would reduce the costs of basic items.

4. Wealth redistribution mechanisms, such as progressive taxation, might be necessary to address wealth inequality and ensure social well-being.

5. The implementation of social safety nets or alternative support systems through private capital would be crucial to mitigate potential negative consequences and maintain social cohesion in the face of significant socioeconomic changes.