Intelligent Systems And Their Societies Walter Fritz



Social Dividend


As robotization of all economic activities increases, ever fewer man-hours are needed to produce more than is produced today. It seems certain that working hours will have to be reduced drastically. Also there will be an increased demand for some specialists, who will have a high pay; and a much decreased demand for unskilled labor, which today are the majority. How then will these live? If no action is taken, so that they also can have an income, a bloody revolution is sure to come. Finally the time will come when any work can be done better by a robot than by a person; work, a paid activity, will have ceased to exist (This is also explained by Jeremy Rifkin in his book "The End of Work").

This means that everybody will work very few hours per week and finally will have the time to be with their families and enjoy all the marvelous things that a modern technology can provide.

But to reach this situation we have to find a different way to distribute purchasing power to the members of the society, a way that does not depend on the work each does. We need to maintain this purchasing power, so that they can satisfy their material needs and so that there is a demand for products and a high level of production.

It is better to foresee this coming situation and take the needed steps now, than to do nothing and get into a disaster.


As we have seen in The importance of Societies (For continuous reading, like a book - do not enter here now), even today most of the well being of a member of a society is due to the participation in the accumulated knowledge and goods of this society. This well being is not due to its own efforts, but to the efforts of preceding generations. The member inherited the accumulated knowledge and goods. We didn't invent electricity, tools, machines. Preceding members of the human society did this. We didn't build up all scientific knowledge, preceding members did that and we use all this to reach our objectives much easier then without it.

Now, let's see what even today is done in the direction of a "social dividend": In all civilized countries the state even today provides many services "free": In some it provides for medical care, in some there is free education, there is a social security and pension service, there is unemployment compensation.


We propose that each member of a society shall have a share (in the financial meaning) of her/his society, she/he would be a stockholder. Children would have a partial share:

The society would pay monthly dividends, using the income obtained from a higher value added tax (VAT).

The objective could be that the lowest 10% income bracket of the population should have an income, no less than one tenth of the highest 10% income bracket. You can see details in this spread sheet (Enter for continuous reading, like a book).

These dividends probably would represent a very low income at the start, but as the general well being increases due to automatization and robot work, they should rise to a level where the basic material needs of a person are taken care of. This is not a "just" solution or a "right" solution but only a viable one.


Each citizen, including babies, would have a share of the corporation that is the municipality. The share would be nominative and not transferable. It would exist only in the computers of the municipality. Each citizen would have a bank account to which the dividend is transferred on the last day of the month. This payment would be completely computerized, without human intervention. It would be automatic, without exceptions and equal for all.

If the Value Added Tax is collected by the municipality, as would be best, we have the problem of rich and poor municipalities. A solution would be that a portion , say 20%, of the income of the municipality would be send to the next higher level of government. The municipality would have a share of the next higher government corporation and as all other municipalities would receive a dividend on this share. This, repeated at many government levels, would be a somewhat equalizing factor.


The initial level of the dividends
The average payments by the government for a pension, unemployment compensation, compulsory medical care, free education and any other "free" services, should all be added up. The total would be a good starting point for the starting level of social dividend since it would replace all these.
As automation and robotization increases, the level of the social dividend should increase also.

The value added tax (VAT) would increase, differently in each nation, by about 16% to 20%. But the effect on the population is cancelled by the income from the social dividend. The effect on enterprises should be low, since taxes should be reduced by the amount of "free" services that are not required any more. The overall tax effect should be very nearly zero.

Note: The social dividend is paid equally to all, poor and rich, so that there is a very low cost of administration. Also disputes can be avoided by those persons near the income level where it would be paid or not paid. Payment to the rich will be returned by the higher value added tax paid by them on the goods they buy. Also in this way, a person of low income will not be at an disadvantage if she/he obtains additional income, since that will not diminish her/his social dividend.


Benefits for enterprises
If nothing is done to give an income to every person, we will, with time, have a large portion of the society without income. This means that the market for products will be drastically reduced and commercial and industrial enterprises will have very few sales and low profits.
A mass of persons with no income, but much free time, will seek to obtain some income by any means: meaning theft, robbery, breaking into stores, high jacking trucks, civic disorder and finally a revolution. All this is added costs for the enterprises and makes them non competitive with those of other, more socially stable, countries. Also those persons that do have an income will only be able to live in well guarded areas (this is starting already), and their journey to and from their jobs will be perilous. So possibly the most important effect of the social dividend will be to avoid a social condition which is unbearable and to permit enterprises to produce and sell at full employment levels.


Benefits for the population
The proposed social dividend will initially cover some of the material needs of a person, but with time and more automation, it will cover them all.
This social dividend would take care of the material needs of orphans, single mothers, the aged, the unemployed, those that are ill, and those that cannot work, or do not want to work. It helps adolescents which still do not have an independent income, it reduces or eliminates the fear of being fired, it helps those that do not have an adequate professional education and those that the enterprises do not want to, or cannot, employ. It is a type of overall insurance.


Probable objections
Naturally such a proposal will produce immediately many objections. Some will be about the way this income is distributed, since naturally all would like to get a bigger share. Also there will be an objection to giving this dividend to recent immigrants, since they have not done anything for the society so far. Possibly the strongest objection will be the great risk of producing a parasitic attitude in those without jobs. The social dividend will diminish the will to work. Finally it will be asked how all this free time could be organized so that it will not have a psychologically or socially destructive effect.
All these objections are correct, but we feel that the advantages far outweigh the disadvantages.


As we have seen, doing nothing in the face of an acceleration of technical efficiency, will produce a situation of large scale unemployment, of a loss of market, a reduced production level, a high crime level and probably a bloody revolution.

We propose the social dividend, not as a "just" or "correct" solution, but only as a possible solution to avoid the situation that we so clearly foresee.
In this way the population can finally enjoy life, be with their families more hours of the day and enjoy all the marvelous things that modern technology offers. To implement this, will not be easy, as there will be many objections. Nevertheless, as the process of technical efficiency advances and there will be less and less jobs, the catastrophic consequences of technological unemployment will become more obvious and the moment will come when the population requests a solution.

Here, we have given a possible solution.


See also: Basic Income Earth Network (BIEN)
Universal Basic Income (UBINZ)
Canadian social research links
Negative income taxation
Citizens Dividend


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Last Edited 7 Marzo 2013 / Walter Fritz
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