No Jobs, No Problem. What a Future AI Economy Could Look Like.

What happens if AI replaces whole industries and leads to large scale unemployment? This is a topic starting to gain more attention from governments, business leaders and economists.

Without an active and productive workforce, many of the economic structures we have in place today for building wealth and fuelling prosperity would fade away. Put simply, a non-existent workforce would mean that a government’s largest income stream — taxing workers — would dry up.

If AI advances quickly and automates or replaces jobs, we are heading into a new world where an alternative economy exists, unlike the one we have today. Governments would still need money, as would the population, but where that money comes from would shift.

Modern economies are built around people earning wages, paying income tax and spending those wages throughout the economy. If a growing share of production shifts from people to AI systems and robotics, governments would need to rethink how they collect revenue.

The average member of the OECD, a club of mostly wealthy countries, raises about half of its revenue through income tax. Another 30% comes from consumption taxes (the taxes on the things we buy). So, what are the alternatives that can be considered in an automated, robotics and AI-driven world?

Rethinking Taxation

One area under review is income tax. For those who do have a job and earn an income, the idea would be to allow them to keep more of what they make. Governments could then increase consumption taxes, as these wealthier and more fortunate people would still buy goods and services, with the government redistributing the proceeds to others.

Then there is the idea of taxing AI itself. Robot taxes could become a reality, as could token taxes based on the amount of volume passing through AI models. However, the counterargument is that if we start taxing innovation itself, investors may lose interest. There could, however, be a sweet spot where AI development still encourages greater human involvement.

Shared Ownership of AI

Another option is for workers to have a direct stake in the progress of AI. After all, it is our thinking and inputs that are being used to train these models. This would represent a redistribution of wealth through shared ownership of AI companies. It could be achieved by AI companies distributing shares or through sovereign wealth funds, which could then be used to support the country’s population and welfare system.

This last idea is not too far removed from today’s reality. Pension funds, superannuation and retirement accounts already track indices such as the S&P 500, generating compounded returns over time.

Beyond Economics

Even if governments solved the economic problem, there would still be a human one. Work provides routine, community, identity and purpose for millions of people. An economy where basic needs are met but meaning is absent presents an entirely different challenge.

As described in Maslow’s hierarchy of needs, people find purpose, achievement and identity through their work. Without this, society could look very different.

Looking Ahead

The reality of what will happen in the future is looking more like an economic overhaul than an apocalypse. One thing is clear: there are tools and methods available to redistribute wealth if necessary. During the Industrial Revolution there were similar fears of mass unemployment, the destruction of livelihoods and social collapse, yet the opposite largely proved true.

AI is opening up an interesting chatper on humanity — stay tuned.

Thanks for reading, Luke **LinkedIn + Website + Book**