Capitalism for Everyone

From Weekly I/O#40

Capitalism for Everyone: Let everyone benefit from capitalism as an equity owner by taxing companies in shares and distributing ownership and wealth to citizens to align incentives.

Article: Moore's Law for Everything

Building upon the assumption that Moore's Law will be able to apply to everything with AI advancement, Sam Altman proposed an intriguing economic system.

A stable economy requires two components: growth and inclusivity. Capitalism is an effective incentive system for driving economic growth and creating technological gains. However, the price of progress from capitalism is inequality.

The traditional way of progressively taxing income to address inequality hasn't worked well. And Sam Altman argued that it would work much worse in the future.

"It will work much, much worse in the future since many of those jobs won't be ones that create a lot of economic value in the way we think of value today. As AI produces most of the world's basic goods and services, people will be freed up to spend more time with people they care about, care for people, appreciate art and nature, or work toward social good."

Because the best way to improve capitalism is to let everyone benefit from it directly as an equity owner, he wants to use taxes as the opportunity to redistribute ownership and wealth to all citizens. The two main sources of wealth in the AI-dominant future will be companies (especially those leverage AI) and land (fixed supply).

Therefore, Sam Altman proposed a very interesting system: The American Equity Fund. The Fund would tax all companies above a certain valuation of 2.5% of their market value each year, payable in shares, and tax 2.5% of the value of all privately-held land, payable in dollars. All citizens over 18 would then get annual distribution into their accounts and use however they want in dollars and company shares.

Taxes on company shares rather than profit should align incentives between companies, investors, and citizens. Companies' profits can be disguised and often disconnected from their share price. However, everyone who owns a share in a company wants the share price to rise.

As to privately-held, the value of land appreciates because of the work society does around it (network effect, public transportation, community), and it's fair for that value to be shared with the larger society that did.

Ideally, if everyone owns a slice of American value creation, everyone will want America to do better. Therefore, the collective focus will be on making it "more good" instead of "less bad". As Sam Altman said:

"Simply put, more good means optimizing for making the pie as large as possible, and less bad means dividing the pie up as fairly as possible. Both can increase people's standard of living once, but continuous growth only happens when the pie grows."

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