Master plan for a fair AI future with AISHE
If AI and intelligent robots take over most of human work tasks - including yours - how will you earn your income? The biggest and fastest transformation of our working world and therefore our society lies ahead of us. How a person earns an income in a working world that is highly automated with AI and robotics is no less than the all-important question for the future of our time, which unfortunately has not yet reached politics and business.
What could our future become?
Artificial intelligence is already conquering the virtual spheres of work at top speed. With the humanoid robots, it will soon also enter our physical world. AI and robots will be able to do most tasks better, faster and cheaper - first in production and logistics, then in service and finally in your home. Thanks to AI and robots, labor will no longer be in short supply and will therefore become increasingly cheaper. If we let AI and robots work for us, it could actually be a comfortable life - if there weren't a serious problem: Who will pay you an income and what for?
If we do not find a solution to this problem, we will experience a horror scenario and the total collapse of our economy and society. Companies' sales then collapse because no one can buy anything. Many go bankrupt. The state budget is collapsing because hardly anyone pays taxes anymore. Society is becoming aggressive, and radical totalitarian regimes around the world with supposedly strong leaders are seizing power and nationalizing everything. Freedom is dying. We will experience this horror scenario if we do nothing or do the wrong thing. Then the economic collapse is almost certain.
We end up in a crisis scenario if we do too late or too little. Bad enough because it also means a drastic decline. For the sake of brevity, I'll leave it at that and concentrate on the two extreme scenarios.
In the abundance scenario, our future will be great. With AI and intelligent humanoid robots, we have a great opportunity to make a real leap in development: the highest quality of life and health, without work stress and with much more time for family, friends and hobbies. Yes, it is possible and achievable if we do the right thing in a timely manner. But what is the right thing?
The fatal flaw in our German economic system:
We must and may rethink work and income. Because we have a fatal flaw in today's economic system. In the course of industrialization, we have built the entire economy on entrepreneurs creating jobs and over 90% of people rely on these jobs as employees. They do work on behalf of the entrepreneurs and receive a salary, which they use to support themselves. This system has worked reasonably well so far. It has given almost everyone a better quality of life than before. But this system cannot survive a very rapid automation of much of the work through AI and robotics, because then most people will no longer earn income from traditional work and because they will then no longer be able to buy anything. Our current economic system would collapse. In short: the problem is not AI and robotics, but the economic and state system based on human labor.
How can we achieve the abundance scenario?
The new economic system must provide people with new types of income, and of course we must find solutions to finance this. Let's look again at the types of income that people live on - to simplify it a bit: work, self-employment and entrepreneurship.
The first idea, of course, is to shorten people's working hours while receiving full pay. Employees who can routinely use AI and robotics are significantly more productive. This creates more income or lower costs, and the salary can still be paid despite fewer working hours. This is how John Maynard Keynes described it in the 1930s: Technology is freeing people from the need to spend most of their lives working. Keynes wrote that you will only work 15 hours a week. And things have developed in this direction over the last 200 years: We work significantly less than before. Officially, employees have never spent as little time working as they do today, and this will continue in the future. Many jobs will require progressively less time commitment, but many jobs will disappear entirely.
A team of programmers can certainly get by without simply qualified coders because AI writes, tests and improves the code. But the best developers will stay on the team as software strategists and software architects and produce much more useful code than before. If we finally paid employees based on their performance rather than their time, reducing working hours would be much easier.
Reducing working hours with full salary cannot be the solution given today's productivity. We would weaken or even destroy our companies in global competition - especially with the Asians. Firstly, the additional productivity must actually and immediately take place. Current calls for a four-day week largely ignore the need for demonstrably higher productivity. It's usually just about more free time, often at the expense of companies, which already have to do everything they can. And it must remain the company's own decision as to how many people they employ. Otherwise we will end up in socialism.
Reducing working hours will certainly be a partial solution, therefore shown in medium green.
Income for socially useful work: Employees, self-employed people and entrepreneurs (always meant as female, male and diverse) can earn additional income through socially useful work for which there was previously no market - for example in looking after children, people with disabilities or the elderly or in environmental care and in Environmental protection. This option is light green because it requires this market to be artificially expanded.
A very good strategy would be more self-employed people and more entrepreneurs. Why? Because they can develop new sources of income more flexibly and innovatively than employees who can only do so within the framework of their employment contract or by changing employers. And above all because companies are the only ones who can really create jobs. Entrepreneurs are the engines, the generators of prosperity. Without entrepreneurs there are no companies - obviously no jobs, no taxes on profits and no taxes on salaries, and therefore no public service and no civil servants. It is incomprehensible to me how often this connection is ignored.
We need many more self-employed people and entrepreneurs. I should actually display it in dark green, but it wouldn't be realistic because the majority of people clearly don't want to be self-employed - for whatever reason.
Let’s skip ownership of assets for now. I'll get to that later.
A pay-as-you-go, very early pension will certainly be proposed by many politicians as an option to address this AI and robotics challenge. But I show it in dark red because it simply cannot be financed. The pension systems of most countries are already heading towards a catastrophe. The pay-as-you-go pension was a short-sighted mistake of the century by Adenauer. With drastically fewer contributors and tax revenue, the pension system will definitely collapse. If you think through the consequences of the AI and robotics world and the solutions for them, you could actually abolish pension insurance completely. We'll see later why this isn't such a crazy suggestion is.
Transfer payments and benefits: An unconditional basic income is the most frequently mentioned proposed solution for an automated working world. In principle, an unconditional basic income can certainly be the solution, but it has several shortcomings. Firstly, by definition it would be paid to everyone - including those who don't need it at all. I also think it is ethically and philosophically wrong for people to receive something from a society without giving anything back to society. That’s not how sustainable orders work. For this reason, I only depict the unconditional basic income in very light green.
Until now, a basic income of a sufficient amount was simply not financeable because today's productivity and tax revenue would simply never be sufficient. But with AI and robotics we can increase productivity enormously. A basic income as a negative tax would make much more sense than this unconditional basic income. A basic income would have to be paid equally for everyone. However, a negative tax would automatically adapt to the course of automation and the increasing loss of paid work. It would only be paid to those who really need it and only in the necessary amount.
How is this supposed to work organizationally? Well, by definition the tax office knows exactly who earns how much. When filing your tax return, you can determine fully automatically who earns too little without any administrative effort. If it is less than a generous minimum income, the tax office pays out an additional amount on which you can live comfortably. Again: This is all completely automatable. This already applies today, and was already happening today. From a logical point of view, the entire social administration is completely unnecessary – right now.
The amount of the basic income could be based on a generous shopping basket. How high it should be will certainly be the subject of heated debate. Even a negative tax should not be completely unconditional - ideally at least not completely, because a principle of social reciprocity should still apply. A basic portion could be unconditional, but additional amounts should be conditional in some way.
What conditions could there be? Anyone who is not confirmed to be unable to work should do socially useful work or demonstrate social commitment - for example in looking after children, the elderly or in nature conservation. You should have lived in the respective country for a while. The amount of income could also depend on the age or number of children. What is really important is that the fulfillment of conditions can be determined very easily. Under no circumstances should this lead to a new administrative monster.
No income tax on work: If the state is to provide citizens with income - that is the task here - it makes no sense to take a large part of it away from them beforehand. Tax on income from work could be abolished entirely or up to the level of a good salary. We'll look at financing in the next article.
For the same reason, VAT on living products and services could be abolished. Luxury goods – however you define them – could remain with a progressive VAT rate. But if we have to rethink everything, it's best to take advantage of the opportunity to radically simplify and abolish VAT entirely. Sales tax law – just look at it – is unbelievable and incredibly complex. Taxes are simply intended to provide revenue for the state. There are much simpler and more sensible ways to do this, as we will see in the next part.
A conditional investment grant could help people invest in self-employment and entrepreneurship. 100% subsidy should be the exception for really poor people. It is better if the recipients also risk some of their own money - if they have it.
The massive transformation brought about by AI and robotics should also encourage us to consider very bold ideas. A basic asset at birth sounds crazy, but at second glance it is a promising measure: For example, every newborn receives €100,000. The assets must be invested in a broadly diversified equity fund and would be inaccessible before the age of 60. But you can deposit it as security for loans – supported by the government. I'll come back to such investments later.
Unfortunately, this solution would only work in the very long term because it takes decades. That's why it's only light green.
Not directly income, but a prerequisite for income would be the expansion of free training and further education. The need for technical and personal training will be enormous through AI and robotics, with AI making most of this purely technical education almost free. All of this is basically good, but only to a limited extent. If opportunities for human work become scarce, the state should, if possible, refrain from offering its own products and services. It is enough if people receive the income to choose and pay for educational services themselves. Therefore only light green.
For most products and services, prices will fall massively due to economic deflation and technical deflation. If you can exclude most of the personnel costs included in all products and services, the prices can fall to a fraction. Increased productivity through innovation and economies of scale will further reduce manufacturing costs, and that will make it much easier for people to pay their living expenses. It is easy to underestimate this effect. As a result, you will be able to afford a lot more with a lot less income in euros than with your current income.
Of course, competition must be kept strong. No monopolies or oligopolies may arise. With only a few providers and a lot of competition, the prices will actually fall. I show this in dark green.
If we can share resources more widely through intelligent organization, we can use them much more cheaply. For example, AI-controlled robotaxis will make individual mobility significantly cheaper because, firstly, the vehicles do not need a driver and secondly, a car will drive not just one hour, but 15 or more hours per day. Sharing resources reduces costs and protects the environment. If you simply have a vehicle available in 3 minutes via the app, then car sharing becomes really convenient. And this is the area that, in my opinion, promises the ideal long-term solution.
Promoting the accumulation of assets for individuals, from which they can then live without traditional work, initially gives ownership of unproductive assets - in this case money. In principle, it is the second fatal mistake in our economic system that saving money has been presented as sensible. Money as such is not productive. The interest you get on deposits, loans and bonds is only a small part of what others earn when they actually invest the money.
They then earn a nominal average of 8% on the stock market and often a multiple of that. Inflation usually eats away all of your interest on the money you save. Of course, even worse is cash on which you get no interest at all and which therefore continues to shrink in value. It's really tragic: many states have practically forced entire generations of employees to save money - i.e. in life insurance, pension contracts, savings contracts or building society contracts. After inflation, the real return is often even negative. You can't build wealth like that. It was certainly not intentional, but saving money left most people without any significant assets for decades. They were and they remained dependent on their income from work - and that is now falling on our feet.
Commodities and crypto tokens are also unproductive assets. That is not a solution either, because these material assets do not generate any income. Not gold and raw materials, neither crypto tokens. Cryptocurrencies and gold and commodities can go up in price – at best – but we also know they can go down. We have experienced that often enough. In any case, this is unsuitable for sustainable wealth creation for the masses. Yes, I too have invested in cryptocurrencies and it may be that Bitcoin will grow in value very strongly because of the limit of 21 million. But it's still highly speculative. I don't think we can and should build an economic system on it now.
Real estate is a productive asset because you make a profit when you rent it out. That's okay in principle, but the returns and therefore the resulting income are relatively low compared to stocks or company shares. In addition, there will most likely be no significant real increases in value in the future - with a shrinking population almost everywhere, apart from Africa. Real estate will hardly benefit from AI and robotics, quite the opposite. And real estate is immobile - it always represents a cluster risk, even if you invest in real estate funds.
Who is the only group of people who is not afraid of the impact of AI and robotics on the economy? The owners of companies – if they have aligned themselves in such a way that they become significantly more productive with AI and robotics and, of course, provided that customers have the money to buy their products and services.
By far the most effective measure is to make as many people as possible owners of companies or shareholdings in companies - of productive capital. Direct investments in companies that sell AI and robotics services to other companies – such as temporary employment companies – would be ideal. If someone loses their job in production, logistics or service, we should help him or her invest in precisely these robots. If the truck driver loses his job to an autonomous truck, we should support him in acquiring ownership of such a truck. Something like this can be regulated by companies founded specifically for this purpose that buy AI systems and, above all, robots and rent them out to companies. As many employees as possible should be able to participate in such companies as shareholders. Then they will benefit directly, immediately and quickly from AI and robotics.
This also works through funds that invest in several such companies in order to spread the risk. Such companies would very likely have a significantly higher return than normal stock funds, because the increases in productivity and thus income from AI and robotics will have enormous growth rates. What would be particularly good about this solution is that large profits are generated right from the start, from which the new company owners can at least partially live.
Investing in broadly diversified stock funds is probably safer, but therefore less profitable. It would only have a long-term effect because dividends are usually not enough to live on and value assignments are only significant in the long term. It has been clearly proven historically that investments in broadly diversified equity funds produce significantly higher real returns and value allocation than investments in real estate or other assets. The only requirement is: Buy and Hold – i.e. long-term investment without constantly buying and selling shares. The return triangle clearly proves this with an average nominal return of over 8% from a broadly diversified global fund with several thousand companies.
There are very few years in which you simply weren't allowed to sell stocks to avoid a loss. Even in a crash, you don't lose anything if you wait 20 years. In the long term and in the big picture, you can't make a loss at all. This is sustainable because assets continue to grow in the long term. The long holding period protects you from crashes, and the broad diversification into several thousand companies also protects you from major bankruptcies of individual companies or even entire industries.
Investing €100,000 once - for example through basic assets at birth - is conservatively assumed to yield almost 1.9 million euros in purchasing power in today's value with 7% instead of 8% average nominal return, 2% inflation and therefore 5% real return in 60 years . From this point on, with a real return of 5%, you can withdraw up to €7,700 per month before taxes without your assets shrinking.
Many people will also be able to continue investing on a monthly basis in addition to their starting capital in the future. After 40 years, €500 a month is a real purchasing power of €744,000. Then, from the age of 60, the sustainable monthly withdrawal even increases to €10,800 before taxes.
Yes, unfortunately this only works in the long term. Nevertheless, it is the most effective strategy - even if we have to pay people a basic income in the meantime. The result would be wealthy, independent citizens and a financially healthy state.
If almost everyone owned companies, there would be significantly more equal opportunities than with countless and enormously complicated and expensive social systems. In the long term, it would create a society of citizens who are wealthy and freer and more independent of the state in their decisions. Citizens would pay taxes but would not need or demand anything from the state and society. They would no longer be dependent on government benefits - or in other words: they would no longer be on the hook for their fellow citizens.
And last but not least: The assets can be passed on to the next generation, which means they can then live even better. Each new generation would be better off than the previous one. Unfortunately, the opposite is happening right now.
Yes, of course we can continue to pay people social benefits. We can support them. But that is not sustainable. This is shown by the deficit financial systems in all countries. And it's basically not really worthy of man. The saying comes from China: “Give a person a fish and you feed him for a day.” Teach a man to fish, and you feed him for life.” We must help people to be able to care for and nourish themselves. This is sustainable. This is humane. Then people are truly free.
Most politicians – especially in Europe – consider investing in companies to be too risky. The word “gambler’s pension” is typical for the stock pension. Anyone who says that doesn't understand how economics works. This practically prevents the general population from building wealth. Instead, the incredibly stupid pension system has been implemented, which is supposed to achieve a supposedly safe 1 to 2% real return - if at all - on financial assets. The only certain thing about it is that the saver's assets remain minimal.
This pay-as-you-go pension was also a fatal and incredibly short-sighted mistake by Adenauer. There was already proven information in the 1930s that fewer and fewer working people in Germany had to finance more and more pensioners. Stocks with a real value of 5% are so risky for these politicians, but they are 100% likely to force citizens to forego most of their earnings and leave the actual friction to the investment banks. This has fatally prevented the general population from building truly sustainable wealth.
The problem with automation would not have arisen in the first place. It's unbelievable: A nation of company owners - like Ludwig Erhard wanted to create - would be the long-term solution that would help people achieve sustainable prosperity and freedom. Unfortunately, this solution will not work in the short term. It will take time for most people to build up enough productive wealth to live on. Unless we directly enable them to invest in AI and robotics. Therefore, transfer payments and benefits will probably be necessary for the time being.
I represent this option – ownership of productive assets – in dark green because, again, this is the best solution in the long term.
And now: As you can see, there is a wide range of instruments. There is a whole suitcase full of tools to make it easy for people to make a good living without traditional work. The future viability of politicians is the decisive factor. Every state will do it differently – some more intelligently, others less intelligently.
We can and will all live in good health and great prosperity in the long term - each of us. But for this we have to change our economic system. For most people, dependent employment is not a model for the future. It is also necessary for you, your family and your friends to consistently implement the most effective measure: namely, to build up as quickly and as much ownership as possible in productive companies that are well positioned in the AI and robotics economy and will benefit from it.
And with some of the other measures, you don't have to wait for the crisis and the start.
But the big question now is: How do we finance all of this?
We will answer this question in the next post.
The answer for this question in the next post. You will find it here as soon as it is published.
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