Universal Basic Credit Would Create a Fair AI Economy

While I don't think ideas like this are a substitute for approaches like UBI which try to increase security and decrease inequality in a more stable, predictable and scalable way, I do think this is a good "yes, and" direction to go.

All people should start life with some opt-out capital, and some part of redistribution should come in a form that aligns incentives with the economy, just like some level of equity compensation is good.

That said, it's far from a panacea, and opens up many potential problems, as we can see in today in equity comp. or the casino culture of retail investors and meme stocks.

Is there a summary available elsewhere for those w/o a FT subscription?

Article text: " In the coming decades, European countries, like other developed nations, will become AI economies as the technology spreads across all enterprises from accounting to grocery stores to factories. Wealth creation and productivity growth will boom, but they will be increasingly divorced from jobs and income. Economic disparities will accelerate with the diminishing value of labour.

The inequality gap between those who own the technology directly or through investments and those who do not will inexorably grow. Bridgewater founder Ray Dalio warned recently that the top 1-10 per cent of people would benefit more than anyone else from the AI revolution while multitudes would be losers. Our divided societies will fracture further unless there is some form of distribution that shares the wealth.

The chasm of global wealth inequality today is driven primarily by the gap between those who hold financial investments and those who do not. In the US, the top 10 per cent own 93 per cent of all equities. In Europe, they own nearly 60 per cent of all wealth. The bottom 50 per cent owns just 5 per cent.

Policy for the AI age must address this dynamic. Some in Silicon Valley have embraced the concept of universal basic income. But this is essentially a redistributive transfer that would not move the needle on inequality.

The alternative concept is universal basic capital (UBC). This is a better fit for the digital economy of the future. It invites all those who labour for their living to earn value from investment in the technology. In short, it is predistribution, not redistribution.

The primary instrument for achieving this would be universal investment funds. All citizens would participate through individual or family accounts that hold shares across the AI economy.

Although it is a supplemental pension scheme funded by employer/employee contributions, Australia’s superannuation programme illustrates the wealth-generating power of compounded returns. That savings pool, initiated in 1992 by Labor Prime Minister Paul Keating to capture productivity growth in the economy resulting from deregulation, has now grown to nearly $4.2tn, greater than the nation’s GDP. The money is invested in assets around the world and in Australia, including in infrastructure, the financing needs of which are a fitting match for its long-term capital. The return on those investments to the plan’s participants has made Australia among the nations with the highest average wealth in the world at $550,000 per adult.

In the US, Congress has just initiated an embryonic form of UBC through so-called Maga accounts — Money Accounts for Growth and Advancement. Starting as early as July 2026, these would initiate by auto-enrolment a $1,000 account for every US citizen born after December 31 2024 and before January 1 2029. All income from investments in the S&P 500 in the vesting period (withdrawals are prohibited until the person is 18) would be tax-advantaged. Families can add up to $5,000 per year to the account.

Various similar “baby bond” schemes have been implemented elsewhere. The UK Child Trust Fund was launched by Tony Blair in 2003 but closed in 2011. In terms of encouraging savings, however, it was a success. During its lifetime, 6.3mn accounts were opened. As of April 2021, the total market value of the accounts was £10.5bn ($13.8bn), of which the government contributed only £2bn. In 2026, Germany will begin “early start pension” accounts to encourage savings and risk taking on investments. Every child from 6 years old until the age of 18 will receive €10 per month to be invested in capital markets.

To boost productivity in Europe, Mario Draghi has called for bolstering the single market to temper national fragmentation, loosening merger rules to enable scaling up of enterprises, and an annual investment of €800bn financed through floating debt at the EU level.

The former central banker calculates that targeted spending of those borrowed billions on subsidies and investments, especially in tech, will raise total factor productivity across the EU by 2 per cent and enable the continent to compete with China and the US.

Draghi’s plan could be married with European Commission President Ursula von der Leyen’s proposal for a European Sovereignty Fund. If it seeded a fund that was also an investment plan for citizens, the average European could share directly in the profits of tech and rising productivity.

Such a plan might even find a blessing from the Vatican. In his first comments as pontiff, Pope Leo XIV emphasised the urgency of addressing distributional justice in the age of AI. No doubt he had in mind the “Rerum Novarum” encyclical issued by his namesake Leo XIII in 1891. That papal address railed against exploitation of workers in the industrial revolution and argued for policy to “induce as many as possible of the people to become owners”. It was, in effect, a call for universal basic capital.

The AI revolution is global. But perhaps Europe, with its legacy of social democracy and the social market economy, can lead the way in ensuring that its outcome has more winners than losers. If EU citizens want to benefit from the AI revolution not just as recipients, they also need to own some of the capabilities of the future. "