David Leonhardt of the New York Times recently hosted a discussion by economists about the effects of Artificial Intelligence (AI) on the job market. The discussion can be read at THIS GIFT LINK.

While there was general agreement that AI effects on the job market where difficult to tease out from other simultaneous trends in the labor market caused by other sources of economic disruption, from anecdotal evidence about software coders we could extrapolate into a general concept best expressed by Anton Korinek:

The good news is that artificial general intelligence would generate enormous economic gains. The same forces that may diminish the value of labor would also dramatically increase total output. The challenge is ensuring that humans share in that abundance when our labor is no longer required to generate it. Historically, wages have been the primary mechanism for broadly distributing the benefits of economic growth. We may soon need new mechanisms that decouple income from labor: broad-based capital ownership, universal basic income or approaches we haven’t yet imagined. We need to start building those institutions now.
I do not expect the very wealthy tech barons (like Elon Musk) to willingly share their wealth with the armies of unemployed displaced workers. Of course, the other side of the coin is this: if no workers are needed, then who will have any money to buy any products at all? And if nobody but wealthy tech barons can buy anything, what value do their tech companies actually have?

Traditional socialism has always been about taxing folks with money to provide benefits to even the poorest among the citizens. Capitalists have always found taxes and socialism to be objectionable concepts, although things like unemployment insurance, Social Security, Medicare and Obamacare eventually become popular enough that even the capitalists are forced to tolerate them. But even those old-style socialist programs collapse if a sufficiently large portion of the workforce can't find a job. Capitalists have tolerated those older socialist programs because a large part of the required taxes is taken out of the pay given to employees. As the percentage of employed people shrinks due to AI, a point will be reached where these programs can no longer be sustained. A new paradigm is required.

David Autor had this suggestion:

Two ideas that my M.I.T. colleague Neil Thompson and I sketch in a recent essay are “Universal Basic Capital” and “Wage Insurance”
Wage insurance is a bridging concept for people who lose higher paying jobs to AI. If they then choose to take a lower paying job and remain in the workforce, wage insurance will pay them a percentage (i.e., 50%) of the difference between their old pay rate and their new pay rate. The proposal by Autor is that this subsidy would only last "for a few years." Eventually, the subsidy ends and the worker is left with whatever job they have at the time. This isn't a long term solution to the fact that labor is worth nothing once machines can do everything humans can do.

So, lets look at the other idea:

Universal basic capital would grant every person a meaningful ownership stake in productive assets at birth.
What that sounds like to me is a professionally managed mutual fund which is balanced between income and capital gains. The income part should be something along the lines of what folks have been discussing for Universal Basic Income (UBI). The mail difference is that the income isn't funded by taxes but is instead funded by stock performance. That's an attractive idea for a few reasons, but there is still the open question of just how the stock in that mutual fund is acquired.

I suppose that one possibility is that the federal government just goes to the various stock exchanges and tells all of the listed companies that in order to remain in business in the US (and remain listed on a US stock exchange) you need to give the big government mutual fund new shares of your company equal to the existing outstanding shares plus 10%. That would dilute the wealth of all of the existing shareholders but would not otherwise be particularly disruptive to the economy. It also means that the government would gain majority ownership of all listed companies and gain seats on the board of directors for a cadre of professional board members who are employees of the government-run mutual fund.

Perhaps we might avoid an armed revolution of poor people by taking 55% of the wealth of stock owners and redistributing it to all citizens, including those wealthy people. It would somewhat offset what has been done to working people since the 1970s when working people entered a long era of no growth in real (inflation adjusted) income while managers and owners entered an era of huge prosperity. And by making everyone an "owner" (in some sense) perhaps we can avoid the forthcoming anti-capitalist rebellion. If everyone is a capitalist, then we would all have a stake in making capitalism work better. Finally, majority ownership by the government-run mutual fund would ensure better (less greedy) management of our nations companies. There are a lot of practices which corporate managements use to increase the wealth of a small group of owner/managers. Those would be banned by government board members.

We need to be thinking about and discussing what to do as we approach an era where artificial general intelligence (AGI) makes labor obsolete. To keep an economy functioning, and to provide capital to pay for all of the new machines, we need to find a way to redistribute the income stream. I do think that Universal Basic Capital is a decent starting point for us to consider.