One core detraction capitalism has faced since its earliest detractors is the widening gap it can create between owners and workers. That gap is now measurable at record levels: American workers’ share of output has fallen to 52.8%, the lowest since records began in 1947, while corporate margins sit at all-time highs.
I am by no means a Marxist (as I hope this article demonstrates profusely), but it is not hard to imagine how the average citizen’s growing separation from the wealth of the economy might stoke some sense of disenfranchisement and a loss of patriotism.
With the advent of AI and the meme of the ‘permanent underclass’, such anxieties are spreading to broader and broader swathes of the workforce, many of whom are already asset owners (with the argument now being that they just can’t access the right assets, largely because they are staying private for longer).
Early Movers & Inspirations
Whether or not it is explicitly because of the reason highlighted above, a growing crop of vehicles has emerged in the public eye to combat this ownership gap in the US.
The first, Invest America (which has since rebranded and been signed into law as Trump Accounts), offers American kids tax-advantaged brokerage accounts. These are funded with $1k at birth for children born from 2025-28, with those for any American child born 2007 onwards being eligible for the structure but unfunded by the Treasury – accounts are locked for withdrawals until the beneficiary turns 18, essentially operating as a government-issued trust fund. 70 million accounts have been created (of ~72mm children in the US), but this figure may be slightly misleading as they require parents to claim them through the Trump Accounts portal. One limitation to these accounts is that they are limited to holding SXP ETFs (Treasury contributions all directed to the State Street SPDR Portfolio S&P 500 ETF in particular).
The folksy tale of how the Invest America initiative began was from an Uber ride taken by notorious junk-bond pioneer Michael Milken in Sydney . In Australia, wage-earners are required to contribute a minimum of 12% of every paycheck towards a superannuation account that becomes available at retirement. Whilst there are options available to establish your own self-managed fund for this purpose, it is legally onerous, and as such most (myself included) will opt to invest it with one of the 9 mega-funds that more or less operate as index trackers (and given their respective industry focuses are often beholden to unions – story for another time).
This structure obviously has its benefits. By having 12% automatically stripped from my paycheck, I am protected from my own mismatched duration preferences and potentially irrational investing activities with any excess money I had left over. It is a tax-advantaged vehicle and improves the savings rate nationwide, which historically has shown to be a boon to national economies in the long-run.
But it is clear as day to see that it does infringe on financial freedom to some extent, and insofar as the mega-funds are just trying to beat an index hurdle it isn’t exactly going to lift anyone up out of the ‘permanent underclass’ by the scruff of their collar. If you are of the belief that escape velocity is achieved in the next 10 years and the winners are established by that point, what use is a portfolio of random index companies to me when I’m 67?
Which brings us to a more recent trend – modern engines of industry electing to pledge shares in their success to the public. If Trump Accounts (in their current manifestation) and mandated Pension schemes are limited by their generic asset selection, providing the public access to the upside from the core engines of progress towards ASI and the offshoots of such developments is a solid alternative.
That is kind of the promise that Anthropic is trying to achieve with its Public Benefit Fund – an initial committment of 5% of Anthropic’s shares and an additional 2% of shares for every 50% increase in value (subject to board discretion). Again, the italicised kind of in the previous sentence is used to indicate that it is not entirely clear where these funds will be redirected.
This point was addressed by Elon Musk, who since the Anthropic announcement pledged to gift one SpaceXSI share to every child in America.
This is a noble commitment and certainly a step in the right direction to democratising the gains from progress. The question from here then becomes how do we democratise these gains en masse without necessitating any form of unequitable wealth redistribution? The clear objection here would be that you can’t equitably give anything away that the person didn’t help contribute towards. But to the extent that these businesses and their ilk want to be perceived as vehicles for the progression of American ambition, innovation and imagination, it may be a worthwhile ploy.
Alternative Models for Citizen Ownership
To summarise what has been covered above – mass distribution vehicles for giving citizens access to the gains of equity upside are limited by their indexed selection of investment opportunities and the fact that most of the perceivedly transformative businesses are staving off public launches and sticking in the hands of sophisticated investors for longer.
‘Public Benefit’ vehicles like those posited by Anthropic and Elon Inc., are limited most clearly by their single asset focus (again, step in the right direction and all that they can do internally) and the fact that it requires some form of charitable donation from the business to the public (in Anthropic’s case in a very vague manner).
A shared limitation of the Invest America and Elon models also is that they exclusively target children, and excludes pre-Trumpbaby and post-Boomer workforce – the very people who are (as it stands) most disaffected by the current state of affairs (see: models drinking our water, data centre NIMBYism etc.) and likely to disengage from the project of American dynamism.
A third caveat to add before discussing any alternative models is that any alternative would have to address short-to-medium-term issues with the growing spread between asset-owner wealth and household wealth. This precludes the most historically discussed option – Universal Basic Income (and any adjacent proposal for UBCompute, UBTokens, UBIntelligence et al) – as philosophising around its implementation relies on entirely post-economic circumstances that are (1) impossible to model because no one knows what this Jetsons-era economy looks like and (2) exist only in a world where any concept of savings (or even money) is rendered irrelevant by all-conquering machine intelligence.
So then, how to achieve the joint aims of helping households join in on the economic gains arising from frontier technologies whilst keeping the capital engine that propels their developers intact?
One idea is that of the public tranche for capital raises in frontier technology companies. When such a company raises a private round, a small slice is offered to some variety of sovereign wealth fund (i.e. a public sector version of what Robinhood or Revolut are introducing to depositors through their respective Ventures arms).
The company loses nothing here in the way of dilution; capital is capital. The capital provided from a government venture arm gives the firm upwards of 340mm new brand ambassadors. The public benefits from all of the upside instead of having to wait to participate at (likely) absurd IPO prices. The stricture that this model presents is that it is wholly reliant on another generation of transformative companies coming through the pipeline, rather than the existing leaders eating all market share.
The clear issue that something like this may present is the difficult battle between conflicts of interest and adequate fund management. The government can’t be seen to be picking winners unless they are legitimately in the national interest, so it would have to take stakes in qualifying competitors in designated sectors important to the national interest.
It would also have to be managed at arm’s length from anyone with direct political aims. Norway’s sovereign wealth fund (SWF) is a benchmark in this regard. Where the endowment of Norway’s SWF is derived from its vast oil & gas resources, the US template would be backed by the intelligence of its entrepreneurs.
A second idea is that of the ‘AI trill’. The trill is a concept introduced by economists Robert Shiller and Mark Kamstra whereby governments would issue securities representing a one-trillionth share of GDP as a proxy for shares in USA, Inc.
In the case of allowing the public to reap the economic rewards of an intelligence explosion, this could manifest as a cash dividend to qualifying members of the public that represents a portion of corporate tax income (both capital gains and income tax) that the government takes from players in industries of national interest (most likely AI, robotics, defence, manufacturing and industrials).
This would involve setting a baseline tax revenue the government can harvest from the AI sector without changing the corporate tax rate on these entities, and distributing the difference to citizens. This provides the public direct participation in any realised equity upside these companies generate, doesn’t change the tax these companies are paying today, and still yields the government their tax dollars (not that I am for or against this, just an argument that favour of all parties).
Further, if they were serious about the idea of allowing citizens to benefit from technology champions, they could bifurcate standard corporate tax revenues from any capital gains revenues and distribute the latter in their entirety.
The above idea borrows from the arrangement Alaska has had with oil-related government revenues since 1982, which has remained one of the State’s most popular policies since its inception.
Both of the ideas outlined above can tie in nicely with the Trump Accounts concept as well. As regards the public tranche for early rounds in national-interest-serving businesses, the shares taken by the SWF (or similar vehicle) can be apportioned between Trump Account holders so that they can see their own slice of the businesses of tomorrow directly on their user interface (rather than sitting in a SWF that may have limited transparency, uncertain reinvestment strategies and that citizens probably wouldn’t feel any direct tie to).
Whilst it is less of a factor of giving the citizenry ‘ownership’ of American Innovation, if the government wanted to improve long-term compounding savings and reinvestment in other areas of the economy it could distribute ‘AI trill’ dividends directly into these accounts also.
Final Words
I’ll be the first to admit that all of the above is fanciful at best and structurally a near impossibility at worst. Sweeping changes to how the government purse works are controversial and would seem leftist. Given that these technologies have been weaponised as political tools by many would paradoxically maybe even make it unpopular with those opposed to the growth of the tech sector.
But the idea of transforming the permanent underclass into a permanent shareholder class is an enticing one. With the pledges in place, it seems that it may be on the way, but it shouldn’t have to depend on the generosity of a small few wealthy owners donating their shares.