Universal Basic Income in the Age of AI

Transcript

Introduction: UBI in the Age of AI

Hello everybody. It's going well. So yeah, we are here to talk about UBI crypto in the age of AI. And so um before I jump in, I just want to give a shout out to some of my colleagues Dawson and Michael also from Haraca. Woo. So if you guys have any questions about um financial inclusion, emerging markets, building stable coin banks, please come talk to us. But today, this talk is going to be slightly different. It's going to be about universal basic income, which I think is quite relevant given all the technological changes that are happening in society today. And so why are we talking about UBI? What's my connection to this? Well, um in a previous life, uh not only am I super

passionate about this concept, but I've worked on several UBI projects. um once as country director of give directly which is a nonprofit that does unconditional cash transfers and so I launched the world's largest UBI program there. It's a $30 million program in Kenya. Um actually it was once the largest I think Sam Alton beat me about two years ago. uh uh and then in within crypto I've been in the crypto space for about 7 years now and worked on and contributed to several UBI projects and so I do have a lot of experience in this space but to be totally honest um even I I think I still have more questions than answers and so the goal of this discussion is not to kind of um make you guys UBI experts or to convince you one way or the other about UBI it's really

What Universal Basic Income Actually Means

about provoking thought and so if after this um there's some juices flowing around this topic. I think that'll be successful. So, are we ready? >> Let's do it. So, let's start with the basics. What is UBI? Um, well, luckily the definition is kind of in the name. Um, you may also heard of UBI called unconditional basic income. Uh, it might also be called basic income guarantee, but the tenants are pretty standard, right? Number one, it's universal, meaning that everyone gets it. It's not means tested. You don't have to prove anything or apply. Um, number two, it's basic. So, it should be enough to cover your like essentials and daily needs.

And lastly, this is very important. It's income, right? So, it's not a lump sum. Uh, it's not it's predictable. It's stable. You can kind of expect it and depend on it. What is it not? Again, it's not welfare. So, it's not means tested. Everyone gets it the same amounts. Um, it's not socialism. Contrary to some popular opinion, it can coexist with capitalism. And in fact, some of the best UBI designed programs um should be kind of like funded by capitalist resources. Um and it's not free money. Like ideally, you're not printing money to give it out to people. So that's just the basics. I would actually like to do a quick straw poll of this audience, right? So hypothetically, say this room is a

Live Audience Referendum Thought Experiment

society, a very self-closed society. and there is a referendum on the ballot. Um, so we have options here. Usually when people are considering UBI programs or other sorts of programs, it's not in a vacuum or in isolation. It's like compared to other sorts of uh uh opportunities. So hypothetically, this society that we're all part of right now, say that we have uh a budget surplus, how should we spend it? Okay, so the options are a UBI program. I see someone's super excited already. That's great. B, public works. So, this is very popular in a lot of countries where we fund public goods and give people jobs and pay them to do them. Uh, C, targeted

welfare. So, things like food stamps or like uh uh um uh child benefit taxes uh or tax cuts, basically giving money back proportionately to those who pay taxes. So, take a moment, think about it, and let's vote. So, who thinks we should do a UBI program? Please raise your hand. Okay, cool, cool, cool. About half the room, which is not surprising for a UBI talk. Um, what about B, more public works. Okay, also a couple hands. Uh, C, targeted welfare.

Why Most Countries Reject UBI (Switzerland & Germany Votes)

Oh, interesting. I see a half a hand. Love it. Love it. And then D, tax cuts for the rich. I saw that was a little bit biased, but clearly clearly um it seems like UBI has a lot of favor. Um what I'm going to do next is basically try to help separate some of the noise from the signal, share some of my opinions and experience and see if any of these opinions change. So remember your vote and uh let's keep going. So what's interesting is to no surprise the way we voted is very different than the way most people most societies vote.

Arguments For UBI (Security & Creativity)

So there were two major very um popular referendums on ballots in Europe about UBI in recent history. The first major one was in Switzerland in 2016. Um and they asked basically the Swiss entire Swiss population, should we have a UBI program? Um and the Swiss folks overwhelmingly voted no. it was like 77% no. Um and then this happened again last year in Hamburg, Germany. Uh same question, UBI program and then twothirds of folks there voted no. So even though lately UBI has become more popular or well known in the terms of a uh to the average person, it's still not that popular as a proposal. Uh why is that?

Um, let me ask so, um, the gentleman in the back, the one who was super excited about UBI, can I ask you why you were very jazzed about it? >> Well, because how beautiful would it be if we wouldn't have to worry about the basic things like a roof over our head or being hungry and focus on what we're actually most passionate about and trying to make like create value for the community or the society from from that perspective, right? Like bubbles, hierarchy, all that kind of plays into that. I know it's I'm coming from privileged point of view myself, but it is how I try to live my life. Like I just pay myself UBI from my savings.

Arguments Against UBI (Productivity & Misuse Concerns)

>> But it's a very liberating and very creativity uh sparking way of life. I think you don't have to worry about it. >> Yeah. Yeah. For sure. Yeah. So, uh, if I could paraphrase for folks who may didn't hear, it sounds like what you're saying is like, you know, having basic needs met, sorry, basic needs met is kind of a human right and so we should cover that as a as a society and then let folks do what they want with the rest of their time. Is that right? >> Yeah. >> Cool. >> A lot of the challenges, if I can throw that in, you probably get to that, but of course, how do we track uh value creation or participation on an individual layer, right? because there will be some people who are doing less than others. May be okay, may not be okay. The system needs to be able to

evaporate all that. >> Yeah, for sure. I mean, like it's not all roses. Definitely. Um, actually, could we hear from somebody who maybe has a a little bit more skepticism around UBI? Anyone want to share maybe what they are more apprehensive about? Yes, >> I know that they they've done some UBI experiments and while it's I agree it sounds great in theory and I I would love it. I think certainly it's better expenditure than where a lot of the tax money currently goes to rather that just go to the people. I think what the studies have shown is that people don't always I guess spend the money wisely necessarily and then it can also disincentivize people from being productive basically. So that's why I chose public works like I think more public goods are great. I also think if a lot of that tax money just went to

Automation, Robots & Economic Collapse Debate

like benefiting our local community then we'd have you be living in freaking utopia. Um and yeah I still think it's important at least for now for people to be productive. I do think that once AI is doing all the productivity and stuff that maybe we'll have a need for UVI just because there won't be productive things people willing to pay people to do stuff when robots can do it. >> Yeah. Cool. Cool. Cool. I mean so uh what's very interesting is you guys basically hit upon some of the major pro and con points for UBI that you often hear. I promise this these were not planted questions, right? Um, but on the pro side, I mean, one of the most common things we hear is like automation's coming. Like the robots are going to take over all our jobs and unless we

have some form of UBI, societyy's going to collapse. Um, another maybe less dramatic kind of opinion on the pro camp is, you know, it's much more efficient. Managing welfare states with all these different sort of programs that you have to apply for introduces all this overhead, room for fraud, etc. And so a UBI program could achieve those means much more efficiently, right? Um a on the against UBI camp, you hear these things very very commonly. Number one is inflation risk. Like if you give everyone money, won't that just make prices go up? And if that happens, like what's the point of UBI? Um number two is people will work less or they'll take the money and spend it poorly. That's a very common conception. Um and lastly, it's expensive. UBI programs are very

Inflation & Work Incentive Evidence from Studies

expensive. Um so what what does the evidence actually say about some of these things? Well, on the inflation risk and the people work less, surprisingly, there's not a lot of evidence to support this these arguments, right? So, I worked on a program for UBI and they measured these general equilibrium effects to basically what what happened to prices and uh surprisingly they didn't go up that much. Um the reason why was if your UBI program is funded by like productive means either taxes or resources, it's not really injecting more money into the system or with like when in a sort of an imbalance. It's basically a redistribution of existing wealth, right? And so that doesn't really have as much of a direct impact on prices. Um

though people work less when it's very very interesting. So there's some mixed evidence on this, right? By and large, we're not seeing the people exit the workforce in these UBI experiments to the scale that a lot of people are afraid of. But there have been some studies that shown some modest reductions in hours worked uh when a UBI is introduced. But I think you have to double click on it to really understand what's happening, right? So the people that worked less were primarily students and caregivers, right? And so people who uh were studying or taking care of families uh like children or elderly folks um and I would ask the question like is that really working less? Right?

Is UBI Affordable? The Cost Problem

Because often times things like caregiving is not considered work by any sort of like like uh statistic or measured thing but it's actually beneficial to society. And so um that's why the results are a little bit more nuanced or complicated than you know uh people may think. Um, on the expensive side, there's no getting around it. UBI is expensive. So, it's really expensive and we have to figure out a way to pay for it if that uh uh uh is going to be um implemented. Uh I don't think that's a solved problem. But, uh what that kind of counterbalances it is the argument that you could reduce a lot of these kind of like existing welfare states uh and replace them with the UBI.

Productivity vs Wages Over 800 Years

But actually, the point that I wanted to focus on today is this automation question, right? Is it true that with AI it's going to create a situation where UBI is not just like more uh urgent but essential? Um I'm curious what you guys think actually. Does uh do you think AI does make UBI more urgent? Uh let's me let me show you a couple evidence points and then we can take another straw poll. So to kind of answer this question, I think we have to go back a little bit and uh see what's been happening in society for the last say hundred years.

Um one thing that's very apparent is average worker productivity has increased substantially, right? But wages have not. So what does that really mean? Well, that means that like even though as a society we're producing more with fewer inputs, that wealth is being concentrated at the very top. So it's leading to inequality. But this is the kind of the structure of a capitalist society, right? People own the means of production. That's where the value flows. And so, uh, that's always kind of been the case for a while. But what's maybe a little bit more alarming is this trend does seem to be accelerating. So, since World War II, um, labor has uh, the labor force has earned a lot less as

a share of total productivity or value created from a society. But threearters of that decline has happened in the last 25 years. So this trend is accelerating. But the question is like will this be different? Let me actually play the counterargument. It's not the first time we're asking this question. Like every generation thinks that their technological change or advance is different. Right? Go back to 200 years to like the industrial revolution where people were saying like uh machines are going to replace factory workers or like uh talk think about the computers people being afraid of computers replacing blue collar work uh white collar workers or how the internet's going to disrupt society and

Will AI Be Different From Past Technological Revolutions?

cause all this massive upheaval. And so we've always had this fear. It's been kind of a pattern where technology happens, people get afraid. Some jobs disappear but more jobs are created but they might be different ones. So like is this time really that different? Let's do a qu let's do a poll. Who thinks yes this time is actually genuinely different? AI is creating a different set of situ AI is creating a different set of circumstances. Interesting. So about little more than half the room I would say. Um what about B? No this is fine. Like it's always been the case. We'll we'll we'll be fine. Who thinks it's B?

Audience Poll: Is This Time Different?

I think it developed actually. >> Okay. So say more. >> Well, so it feels different because I mean the the speed alone it's certainly different and just like the machines did replace the workers in the factory but then different jobs higher level jobs were more required certainly for the transition period time right now it's more about coordinating the work than it is executing the work. Mhm. >> So we just need different kind of humans in the loop. But I think that will certainly for a while be the case.

>> Is that a hand I see? >> Yes. Um actually thinking that UBI might make AI special because there might be jobs that people who would do if they got paid money, but once they have money their robot did. >> Yeah. Yeah. For sure. For sure. Um to be totally honest guys, we don't know. Like this is this is an unknown question. Um but it's an interesting discussion topic. Uh unless someone else here thinks they know any better.

Um I do think in my personal opinion on this is like it does feel like more dramatic in some ways the rate of kind of improvement and advancements happening more quickly than we had seen previously like in terms of like uh uh the amount of disruption that's happening whether we as a society can adapt to it I think is unknown. Second question. All right. So I uh also want to like think about like it's not just the what or the why of UBI but the how that matters a lot. Right? And so I would ask this room like does crypto and web 3 make UBI more feasible.

Can Crypto Make UBI Possible?

Right? Let's think about this for a little bit. Like we now have technology in place. It's a very different sort of system and you a lot more tools for kind of resource allocation. What does this mean? like um in this world where AI is kind of like digital abundance and crypto is digital scarcity, could you have both of them to create a system where you can actually create value for a lot of humans? Um to be honest, I think the answer is kind of mixed. So here's my take. I think crypto can solve some things uh but not everything, right? So one is distribution, right? Um it is true with crypto we can distribute uh uh value to people around the world especially those on the margins more

Distribution Efficiency: Crypto vs Traditional Aid

cheaply than ever before. So here's a tidbit. When I was working at give directly uh I was the country director of Kenya and we uh uh one of our kind of flagship stats was 91% of money we raised ended up in hands of beneficiaries. And so relative to other nonprofits or charities, that's a really high benchmark, right? I think you're seeing like 50% in a lot of like nonprofits in the US. Um, and so that's great from an efficiency perspective, but the average transfer was $1,000, right? So when you think about like uh uh 9% of that being kind of used for overhead and other sort of things, that's still like a hundred bucks per beneficiary. Um, compare that to some of these other kind of UBI experiments. And I will say these are not apples to apples like I think give directly was

more means tested. It targeted the poorest of the poor. There was much more focus on like making sure there was not a lot of like uh um fraud etc etc. Whereas I think a lot of these other ones focus more on efficiency. Um the those results are pretty even with that context the results are pretty astounding like folks like good dollar impact market were able to get funds to folks for like under a dollar right so it's a massive kind of like improvement on that sense. Um, there's also other cool things that crypto and web3 can do in terms of like transparency, programmable rules. So, there is some improvement here, but what it doesn't really solve is funding like um it doesn't solve identity, though some folks from oldcoin may disagree with me.

What Crypto Still Cannot Solve (Funding, Identity, Politics)

Um, and it doesn't solve kind of like the the political will challenge, right? Even as you guys saw, 2/3 to 3/4 of people are anti-UBI. And I don't think adding the crypto brand on top of that is going to make it any better. So, um I think that there should be more experiments happening. I will be honest like three of the four kind of UBI experiments I've shown here are no longer operating. And so, um take that as uh whatever way you will, but I do think that like more and more kind of evidence needs to happen.

Designing an economy with an Income Floor

So, let me start wrapping this up a little bit. Um I kind of want to like ask a question. So, like if we were designing the economy from scratch today, would we design it without a guaranteed income floor? I'm curious if anyone here has maybe changed their mind or had a different opinion from the beginning of this talk. I guess not. Interesting. Um, cool, cool, cool. Let's do one more live vote. Same vote as the beginning. All right. Raise your hand. A if you think UBI for everybody.

No. Okay. What about public works again? Okay. C targeted welfare. And D tax cuts. Interesting. Cool. Well, um I think I seems like the referendum passed in our society. So, congrats. Now we have a UBI program. Um cool. With that, I think my time is up. So I want to say thank you so much for this opportunity. Um I will be around. So if you folks want to talk about this or financial inclusion or anything like that, uh please reach out.

Final Vote & Closing Thoughts

My contact is also here. So reach out to me on Telegram, email, check out our website. Um yeah, and thank you so much for uh hearing me out for a little bit.