American Equity, by Sam Altman (with comments & highlights)

Feature Image: HackerNoon’s Midjourney AI, prompt “Depict a utopia in which poverty is eliminated and every citizen's basic needs are guaranteed.”

As OpenAI’s ChatGPT continued to take the tech world by storm after its release only 5 days ago, we would like to bring back this thought-provoking essay by Sam Altman, the CEO and cofounder of OpenAI, published on HackerNoon on November 28, 2017.

https://twitter.com/sama/status/1599668808285028353?s=20&t=kZXhvIKBX-gUjnjaSgeQ1g?embedable=true

American Equity - By Sam Altman

I’d like feedback on the following idea.

I think that every adult US citizen should get an annual share of the US GDP. (8 highlights)

I believe that owning something like a share in America would align all of us in making the country as successful as possible — the better the country does, the better everyone does — and give more people a fair shot at achieving the life they want. And we all work together to create the system that generates so much prosperity.

I believe that a new social contract like what I’m suggesting here — where we agree to a floor and no ceiling — would lead to a huge increase in US prosperity and keep us in the global lead. Countries that concentrate wealth in a small number of families do worse over the long term (8 highlights) —  if we don’t take a radical step toward a fair, inclusive system, we will not be the leading country in the world for much longer. This would harm all Americans more than most realize.

There are historical examples of countries giving out land to citizens (such as the Homestead Acts in the US) as a way to distribute the resources people needed to succeed. Today, the fundamental input to wealth generation isn’t farmland, but money and ideas — you really do need money to make money.

American Equity would also cushion the transition from the jobs of today to the jobs of tomorrow. Automation holds the promise of creating more abundance than we ever dreamed possible, but it’s going to significantly change how we think about work. If everyone benefits more directly from economic growth, then it will be easier to move faster toward this better world.

The default case for automation is to concentrate wealth (and therefore power) in a tiny number of hands. (3 highlights) America has repeatedly found ways to challenge this sort of concentration, and we need to do so again.

The joint-stock company was one of the most important inventions in human history. It allowed us to align a lot of people in pursuit of a common goal and accomplish things no individual could. Obviously, the US is not a company, but I think a similar model can work for the US as well as it does for companies.

A proposal like this obviously requires a lot of new funding [1] to do at large scale, but I think we could start very small — a few hundred dollars per citizen per year — and ramp it up to a long-term target of 10–20% of GDP per year when the GDP per capita doubles.

I have no delusions about the challenges of such a program. There would be difficult consequences for things like immigration policy that will need a lot of discussion. We’d also need to figure out rules about transferability and borrowing against this equity. And we’d need to set it up in a way that does not exacerbate short-term thinking or favor unsustainable growth.

However, as the economy grows, we could imagine a world in which every American would have their basic needs guaranteed. Absolute poverty would be eliminated, and we would no longer motivate people through the fear of not being able to eat. In addition to being the obviously right thing to do, eliminating poverty will increase productivity.

American Equity would create a society that I believe would work much better than what we have today. It would free Americans to work on what they really care about, improve social cohesion, and incentivize everyone to think about ways to grow the whole pie.

[1] It’s time to update our tax system for the way wealth works in the modern world — for example, taxing capital and labor at the same rates. And we should consider eventually replacing some of our current aid programs, which distort incentives and are needlessly complicated and inefficient, with something like this.

Of course this won’t solve all our problems — we still need serious reform in areas such as housing, education, and healthcare. Without policies that address the cost of living crisis, any sort of redistribution will be far less effective than it otherwise could be.

Comments

“I believe that owning something like a share in America would align all of us in making the country as successful as possible — the better the country does, the better everyone does — and give more people a fair shot at achieving the life they want.”

I think, practically, this is very difficult to incentivize. One could claim this is already true about the environment. From a economic model perspective, we should all have self-interest in its preservation. But we still need the EPA.

China’s social rating system is an interesting example of incentivization. They can create significant behavioral change based on carrot/stick. What about an incentivization system that benefited people who had a positive, long-term impact on society. Example a 30% tax on net income that is used as funding for positive, long-term thinking projects?

https://en.wikipedia.org/wiki/Goodhart's_law

Those who move into performance based income tend to be more motivated, work harder, and are wealthier. You’ll notice this when transiting from a salary position to a performance position because there’s more room to grow. If we had equity in America, we’d care more.

This is an interesting offshoot of the guaranteed minimum income theory. One thing I would be wary of is turning America into America, Inc. and encouraging every citizen to think like a stockholder who is only interested in personal, short-term gains. Will many of us feel compelled to push for massive resource extraction merely so we can get a bigger “bonus” next year? It could end up being a very dangerous experiment in mass psychology if we all start behaving like the self-serving members of our elected legislatures and seek personal profit from every government policy decision.

The default case for automation is to concentrate wealth (and therefore power) in a tiny number of hands.

But this could be said another way. Wealth is only a fleeting source of power. Once it’s gone, so is your power. Education is lasting empowerment.

I think what you are saying is that the financial gains of automation might only benefit a few people: engineers, company owners, the like — leaving out factory workers, and the like, whose jobs stand to change more significantly due to automation. Your proposal is to give these people money (too).

The problem with that is that it puts the cart before the horse. The engineers and company owners who stand to have financial gain first had educations. That’s the reason they have the jobs they have today. That’s the real source of their power.

How about we take that money and invest it into our public schools? How about we use that money to create better tools for education? How about we use that money to give people a real source of power? — one that can’t be taken away.

If not, then this plan only serves to perpetuate the power of people who already have it — people with educations — people like you.

Basic income schemes which do not address systemic and individual inequality are flawed solutions.

• You need to address reparations to African-Americans, not only for slavery, but for Jim Crow, and the current carcerial system. We’re three Reconstructions behind
• A basic income scheme can’t substitute for single payer or Medicaid expansion
• You have to consider people with visible and invisible disabilities. Your income subsidy cannot replace existing disability payments (as flawed and abelist as that system is)
• We have to address the problem of whiteness in our society, otherwise instead of building systems to help people, we’ll be dragged into building systems that arbitrarily exclude people. You stepped in that mess already by mentioning “what about immigration?”

I believe that a new social contract like what I’m suggesting here — where we agree to a floor and no ceiling — would lead to a huge increase in US prosperity and keep us in the global lead. Countries that concentrate wealth in a small number of families do worse over the long term — if we don’t take a radical step toward a fair, inclusive system, we will not be the leading country in the world for much longer. This would harm all Americans more than most realize.

As I read your proposal of “American Equity,” it represents communism. As such, its elevator pitch is compelling, and its shortcomings are profound. The most hobbling of its shortcomings are that dulling the bite of non-productivity in the society and throttling the individual reward of productivity incentivizes non-productivity while disincentivizing productivity. And then, there’s that human nature thing. Given the chance and just enough power to corrupt a collective economy and selfishly reap undue profit, humans will. But, hey, the USSR was so successful; why not the USA? We could prove Lenin, Stalin, Khrushchev, and Putin wrong in one fell swoop. Or not.

Here is my feedback: you will probably need to invest tens, if not hundreds, of millions into the political lobbying system to have a shot of having this idea seriously considered. Tens of millions of dollars is actually not a huge sum. But writing letters and speaking at conferences is not enough. How do we make proposals like this realpolitik?

Don’t be so blinkered in your view of the world. Think back 250 years and you will see that automation has already delivered more abundance than anyone dreamed possible. It has also changed the jobs people do unrecognisably. It’s changed dramatically over the last 50 years.

However wealthy, healthy and fair our society gets we will always want better but you have to see this as a continuous process not a revolutionary one.

Hey Sam —no feedback — but if you are interested in a solution, we are currently building the system that will get to the result you (and many of us) are after that does not involve the impossible task of starting with the government — but does collaborate with government in short order. I am not talking about some ideas we have — but a fully baked system that we have tested and are currently building and implementing in the world. If so, indicate in a response here and we can connect via a different channel.

The major problem with the system now, as at least one other has already indicated, is that it has greatly centralized. From my point of view, the most important part of that centralization is the automation, which has gathered around corporations. If you want to have any hope of implementing a truly sustainable system of this nature then, we have to use machine learning to greatly distribute automation in a useful way.

I admire Sam Altman for addressing these concerns. Poverty is out of control in this country. Most Americans fear for their future. How can a country succeed with its citizens living on the brink? The US is collapsing before our eyes. Hopelessness and despair are in the eyes of people across the country. Is it not revolutionary to disrupt the wealthiest country in the world? Genius is often ignored, until the people claim it for themselves. The disruption of America, the greatest experiment on earth, is in seed stage. But with so many adopters, scaling is certain. Sam Altman, your views may be your legacy. Not a phone, not a ride, not a rental, not a site….but lives.

With AIs and automation, the entire structure of our economy is going to have to be looked at. With the automatic processes making such headway, i don’t see how the old “work every day all day long” strategy is going to continue to be possible for huge numbers of people. Even farmers have machines that replace numerous human beings.

This equility idea might very well be necessary to give some of us any ability to be viable members of society at all and the technological age continues to make us redundent in the work force.

By any other name, this is the latter of…

From each according to his ability; to each according to his need.

While the proposal sounds good, history has shown that — on a national scale — it leads to an inefficient economy, decreased well-being, and worse.

Part of the challenge here is the assumption that people will retain their new grant. When the Soviet Union collapsed and the communist economy privatized — workers across the nation were given shares in the factories, mines, and other interests where they worked. They were given their apartments, dachas, etc, too.

What followed, however, was that many didn’t know how to manage the ownership, many didn’t understand the long-term value of what they had — or they had short term needs that encouraged them to make a long-term/short-term trade.

And the Oligarchs were born. They had a better understanding of long-term rewards than the front-line worker — and so they went around accumulating the stock from individuals until they consolidated it in the hands of very, very few folks. (In both legitimate and illegitimate ways.)

Stock only holds value if it is transferrable. And if it is transferrable then your concept that everyone would participate in the future is rendered moot when (large) parts of “everyone” sell their shares.

I’m simplifying here, obviously, but while the goal is noble — the reality is that unless you can grant everyone an equal share and force them to keep it — this can’t work. But, controlling the decision-making of the masses in the market is an economic approach that was tried, for 3+ generations (70 years) and failed spectacularly.

Instead the best way history has seen to achieve your goals is to publicly finance education (shared public good that can’t be taken/sold) and allow individuals to make their own best decisions as to how to allocate their achieved education. Publicly financed education as a method of wealth transfer is akin to a granted “share” of the nation’s future and while the access to these shares is not perfectly balanced, it still remains the best system history has ever produced.

This is all just a play on words. Similar to the musings of the ancient Greeks. Thomas Piketty already did all the work necessary to fix our economy. Just replace all income and activity taxes not related to social engineering with a tax on wealth.

Study “Capital in the Twenty-First Century” and picture this married to a basic income. Then whatever robots create will flow to everyone by way of the holders of capital wealth. (By the way we want them to hold capital wealth because that is the way mankind has always reserved our seed corn for next years planting.)

If you look at the fairtax (www.fairtax.org), which has been proposed for several years now, you’ll see that it’s a new tax system that doesn’t distinguish between sources of income and that includes a pre-bate that, with tweaking, could be a UBI. I’d like to see something like the fairtax here.

If you can step back from the ‘America First’ position for a moment…

..but hold that original thought

Each adult human on the planet can rather easily have an equal stake in global money creation

A rule for international banking and trade, that:

All sovereign debt shall be financed with Shares of global fiat credit, that may be claimed by each adult human on the planet, held in trust with local deposit banks, administered by local fiduciaries and actuaries exclusively for secure sovereign investment, at a sustainable rate, as part of an actual social contract…

..will provide each with a quantum of secure capital valued at about a million, that will be available for secure sovereign investment at about 1.25%, globally, proportional to population

Each will own an equal Share of the credit supporting our global currencies, and collect an equal share of the interest paid to create all the money…

..without the complications involved with new organizations and administration

Each just goes to their bank, signs a social contract, opens their secure sovereign trust account.. and the banks and governments do what they do…

..loan and borrow money.. collect payments and distribute the income to each

Current global sovereign debt will return about $20/month to each adult human on the planet, which shouldn’t really get anyone’s panties in a bunch, but the values I note will create the potential for $1,000/month

The ubiquitous access to sustainably priced credit, globally, though, will enable each level of each government to provide a more comprehensive social contract… like maybe local, state and/or national BIs (to attract depositors)

..and as spending on basic needs globally increases/stabilizes, the provision of them becomes more efficient and costs reduce

Global economic enfranchisement makes each a Shareholder in the global economic system

Thanks for your clear concern, and your kind indulgence

American profit sharing — interesting idea! A few thoughts off the top of my head:

• GDP may be a problematic metric longer term due to technology-driven deflation.
• Who gets taxed to pay for this, corporations?
• Might be an interesting way to implement a universal basic income.

Love the simplicity and importance of that idea.

Well thought out and well written. Let’s see about what needs to be done to make it happen.

Update 2022

Answer any of these questions (or add your own) for a chance to be featured in HackerNoon’s next newsletter to our 220k subscribers. Simply submit a story with the headline Re: Sam Altman’s American Equity. Link to submit HERE.

1. What are your thoughts on giving every adult US citizen an annual share of the US GDP?

2. Many pointed out the incentive challenge of such a program. How do you think one could incentivize it?

3. China's social rating system looks the most similar to this system. Do you know of this system or any other historically or currently relevant examples?

4. Implementations seem to be of great concern. How do you think abuse could be mitigated, to the extent that it could?

5. Is GDP the answer? What could be some other long lasting source of wealth?

6. Is income inequality the right target? In other words, does “poverty” define the ultimate human’s misery?

7. How will this negatively or positively impact American’s standing in the world, considering the current political climate?

8. How could you apply this thinking to your country?

9. Could we achieve “global equity”?

10. How does tech play a role in this equation? Particularly, with the advance in the past few years of many technologies, such as AI, ML, and blockchain?