People First, Market Based

People First, Market Based

A human centric vision for the economy of the twenty-first century and beyond.

As the world rapidly develops and implements, alone or in combination, various intelligence technologies such as large language models, machine learning, and autonomous robotics it is natural to wonder where "old fashioned" human intelligence and human labor will factor into society and the economy of the not-too-distant future. When capital can simply buy both labor and intelligence our traditional paradigm of exchanging human labor and human intelligence for pay may very well erode and cease to be relevant. Already, technology has had profound effects on society and the economy. The amplifying nature of technological change over the last few decades has resulted in a severe distortion of wealth away from a normal and natural distribution. Through a combination of luck and ability a few hundreds to thousands of people have accumulated an order of magnitude more wealth than one would expect based on a natural resource distribution curve.

1. This distortion is likely to grow worse if the status quo is maintained.

2. It is deleterious to the economy as a whole as it concentrates resources into too few hands and thus can stifle further innovation and natural money recirculation.

3. It drains the broader economy of the resources it needs to allow for a feeling of aspiration and upward mobility

4. It tends to decouple the actual wellbeing of people from decisions about the economy which become increasingly abstract as measured in money terms alone.

The question then becomes, what do we do about it?

"People First, Market Based"?

Let me start with a few clarifications and definitions. "People First" encapsulates the principle that money is only a stand in or approximation of actual value as it relates to human wellbeing. In a bit of irony, the very technologies that could exacerbate the problem of resource distribution distortion are likely also to allow for a deeper understanding of and more nuanced view of human wellbeing as it relates to a broader societal and economic framework. The key word being "allow". A people first approach would prioritize, even demand, such an application of the technology.

To be sure this would be an ongoing endeavor but to start with I propose a simple change to the tax code that will ensure the small cohort of individuals who have a net worth of say, $100 million or more, take into account the effect(s) their decisions will have on the rest of us. This is where the "Market Based" principle comes in. In absolute terms, markets are subject to significant distortions due to various confounding factors but in relative terms markets are quite good at influencing choices. Take for example a surtax indexed to the current rate of unemployment. Then, as an example, a decision to offshore a factory with 1700 employees would take on an extra dimension. While 1700 people is only about 0.001 % of the current U.S. labor force, the personal cumulative net worth of those with more than 100 million dollars is about 10 trillion dollars, thus the decision to offshore 1700 people would increase the net tax on this group by 0.001% or around $100 million a year while the net payroll for these employees would be at most twice that. Consider also that domestic payroll is mostly spent immediately and so would contribute to current GDP and would thus return in large part to the ultrawealthy cohort, if not directly, at least indirectly through the valuation of company stock which they may own. I'm not saying it would never make sense to offshore workers but on balance there would at least be a serious discussion. Of course, "offshoring" will likely become "replaced with A.I." in the near future but the principle remains. The enormous size of the resource curve distortion ironically gives us, (everyone except the roughly 10,000 people who fall into the ultrawealthy cohort in the USA), the opportunity to at least moderate a worsening of this disparity as intelligence technologies continue to develop by providing a market based incentive to motivate this cohort to give due consideration to the wellbeing of everyone else.

Is this simple 1 to 1 indexing of unemployment rate to a surtax on net worth over $100 million dollars the optimal answer? Probably not but this is why a people first market based approach would continuously monitor and work toward the optimal state incrementally taking into account the continued need for innovation to stay competitive with the rest of the world while prioritizing the overall wellbeing of people, not just the bottom line. Speaking of people, some might argue that this sort of tax will disincentivize the wealthy, (I can already hear it now, the "job creators..."), this simply falls flat in the face of reality. A billion plus or minus simply becomes a number in a spreadsheet for someone worth 50 billion and has no bearing on the human wellbeing of those involved except as it relates to the relative position the person has to their peer group. They remain perfectly free to compete for status on a somewhat altered but uniformly changed playing board and who knows, they may actually think about being a job creator. Furthermore, I predict that the aggregate net worth of this cohort would continue to increase under this taxation model, perhaps even more so when considered on a sustainable basis. In the end, they are people too and in the long run their relevance to the economy is very much tied to the relevance of people writ large.

Finally, does a money only analysis of gross domestic product per capita still have any human meaning when the vast majority of productivity and decision making is from non-human intelligence? We must find a way to keep humanity central to our economy or we very much risk making humanity an endangered species.

"People First, Market Based" is my answer, what is yours?