Draft:Quantum Economic Model, The future of economics

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Quantum Economic Model, the future of economics

1. Introduction

The Quantum Economic Model is a contemporary economic theory developed by Kevin Randal Rulach, a law graduate from the University of London, investment banker, and futurist. This model represents an advanced form of capitalism, integrating principles from modern monetary theory and universal basic income. It underscores the significance of technological advancements, particularly in artificial intelligence and artificial general intelligence, and addresses job redundancies caused by these innovations. The model is predicated on the idea that to combat rising unemployment driven by AI and robotics, a framework like the Quantum Economic Model should be adopted to ensure financial security for all citizens. The concept is articulated in straightforward language to make it accessible to readers without a background in economics.

2. Capitalism and Quantum Economic Model

Capitalism is an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state. The origins of capitalism trace back to the 16th century. Key characteristics of capitalism include capital accumulation, competitive markets, a price system, private property, recognition of property rights, voluntary exchange, and wage labor. However today most countries, especially in the developed world are capitalist whilst there are few countries that are socialist, which means certain essential enterprises such as schools, hospitals and construction companies are owned by state, however there are very few poor countries, which still survives on communist or similar economic systems such as Cuba and North Korea, these countries are very feeble in both economic and political terms. The Quantum Economic Model is an advanced iteration of capitalism that maintains respect for competitive markets, equity markets, a price system, private property, recognition of property rights, voluntary exchange, and wage labor. The most notable distinction between the classical capitalist economic model and the Quantum Economic Model is the inclusion of Universal Basic Income.

3. Overview of the concept

The core of the Quantum Economic Model is the concept of Universal Basic Income (UBI). UBI proposes that capitalist economies should provide their citizens with a basic income sufficient to ensure a good standard of living, regardless of employment status. This entails the state paying a reasonable UBI to all citizens, whether they are employed or not, and irrespective of their circumstances. Countries such as the Netherlands, Finland, Brazil, Canada, and Germany have conducted trials with UBI on a limited scale, although these trials did not fully adhere to its principles. For the full benefits of UBI to be realized, it must be adopted universally in a supranational manner, with mutual agreements between countries, continents, and trade unions to ensure comprehensive implementation.

In addition to eradicating absolute poverty, UBI addresses job redundancies caused by technological advancements. For instance, the rise of artificial intelligence has eliminated many job roles, and it is anticipated that future automation will replace numerous jobs that currently require human labor, such as customer service representatives, vehicle drivers, and travel agents. Introducing UBI is seen as a strategic way to balance the need for technological adaptation with the protection of fundamental human rights, providing significant relief for those displaced by automation and technological progress.

3.1 Benefits of providing a Universal Basic Income

Given below are some of the benefits of providing a UBI.

• Irradicate absolute poverty.

• Provide every citizen the ability to enjoy a reasonably good standard of living. • Helps parents by providing them financial autonomy to care for their children.

• Will create a culture where people can work for passion than money.

• Reduce inequality.

• Reduce crime. • Support mental wellbeing.

• Support victims of abuse.

• Support those suffering with a disability, low education, of dotage and retired.

• Youth will receive more freedom to engage in educational activities as well as extra-curricular activities.

• Will provide the ability to invest in automation and technology without having any regrets nor guilty feelings of leaving behind employees.

3.2 Technological Singularity

Technological singularity, a point at which artificial intelligence surpasses human intelligence, is anticipated to occur in the near future. This will likely result in the radical disruption of various industries, similar to the transformations seen in the telecommunications, mobile phone, and tourism industries. Currently, AI systems can provide solutions to complex problems in seconds, facilitate the purchase of goods with a single click, and enable autonomous vehicles to operate without human drivers. While artificial intelligence, robotics, and automation offer significant advancements, they also bring substantial societal challenges. These advancements can lead to job losses, forcing individuals to seek employment far from home or abandon their education to make ends meet. Such disruptions are byproducts of the quantum revolution in technology.

The progression of science and technology is both inevitable and essential for human development. However, it is crucial to concurrently advance economic and legal systems to ensure the sustainable and equitable integration of these technologies. Universal Basic Income (UBI) is proposed as a means to support the evolving demands of society, mitigating the adverse effects of technological progress. By reducing economic stress, UBI could help society transition more smoothly into a future where technology and human well-being coexist harmoniously, moving us closer to a utopian ideal.

3.3 Entrepreneurship and UBI

There is a common misconception that Universal Basic Income (UBI) supports communism and state control, offering no benefits to entrepreneurs or private institutions. This is incorrect. A well-designed UBI system can ensure that business operations remain stable and efficient, potentially even encouraging greater entrepreneurial risk-taking. For instance, consider an average employee, Joe Bloggs, earning $3,000 per month from his employer under the current capitalist system. If the government introduces a UBI of $2,000 per month, the employer would only need to pay the remaining $1,000 to meet the employee's previous income level. This reduction in payroll costs could significantly decrease overall sales and administrative expenses, thereby increasing retained profits. The employer might then be incentivized to reinvest these savings into the business or distribute them as dividends to shareholders, potentially attracting more investors.

However, it is important to note that, ceteris paribus—assuming only the introduction of UBI without other changes—the government might need to tax high-profit companies more to ensure proper money circulation and equitable wealth redistribution. This approach would help ensure that the benefits of UBI are shared fairly among all stakeholders, promoting economic equity.

3.4 Ways in which a UBI can be introduced into the society

There are many ways in which a UBI can be introduced to a society. Given below are few predictions on how future policymakers will introduce a Universal Basic Income to its citizens.

#1: A state owned bank or institute directly deposit the UBI to your personal bank account at the end of each month, say $2000, which you can use or save as you please, If you believe you require additional funding you may work for a private institute and earn extra money, which can be saved in the same account and can also be used as you please. You may bequeath the money to a person you wish when you are old, and account will cease to exist upon your demise.

#2: The state may provide you with a debit card from a state-owned bank account, it may deposit say $2000 at the end of each month, you may use this money as you please, but there may be restrictions on how much you can withdraw or transfer to another individual. When you are old you may not have the privilege to transfer the accumulated funds in that account to another person, but the saved funds may return to the state and account will be closed upon your demise. If you believe you require additional funds to survive you may work for another institute and any salaries received will be transferred to a separate account which you may use as you please and can bequeath to any individual as you please. Note funds in the state-owned account shall not have that privilege.

#3: A state owned bank will provide you a debit card from a state-owned special bank account. You will be provided with a UBI of $2000 at the end of each month. This money can be used as you please, however the next payment will be a top up to reach $2000 again, in such scenario your funds in the state-owned bank account will not exceed $2000 for any reason. For an example say you received $2000 in January, and you used $1300 and left with $700, in February you will only receive that $1300 which you spent therefore bringing the balance back to $2000. If you require addition funds for survival you may work and earn a salary, which you can deposit in a separate bank account and use as you may please.

It is important to note that in all three scenarios, the value of money in both state-owned accounts and personal accounts remains unchanged, but they are functionally similar in every aspect. Additionally, it should be acknowledged that these are merely a few examples of how UBI can be introduced to society. There may be more creative and efficient methods to implement UBI, which could further enhance its effectiveness and societal impact..

4. Variables in an economy that will be affected by a UBI.

Making changes to an existing economic model can be highly risky and painstaking. Such changes should only be undertaken with precise statistics and precautions. Any modification to an economic system should be implemented in small, reversible steps. When introducing a Universal Basic Income (UBI) while keeping other elements unchanged, the following variables will be affected:

1. Inflation: Inflation will be significantly impacted by the introduction of UBI. As more money is universally distributed, the increase in disposable income may lead to a higher demand for goods and services, thus exerting upward pressure on prices. This can be managed by increasing interest rates to encourage saving or by establishing price ceilings in certain industries to prevent hyperinflation, thereby stabilizing both nominal and real variables.
2. Taxation: The government will need substantial reserves to ensure timely UBI payments alongside other expenditures such as infrastructure development and the maintenance of state-owned institutions. UBI can enable private institutions to generate higher profits by reducing their general expenses. Consequently, the government may impose higher taxes on these institutions. For example, a company with a net profit margin of 50 percent might be taxed 30 percent of its profit before tax (PBT), thereby redirecting funds to state reserves to cover UBI and other expenses.
3. Reserves: Implementing UBI requires significant state reserves. Nations may negotiate with regulatory bodies such as the IMF, World Bank, or Federal Reserve to secure the necessary initial capital. Providing a UBI equivalent to the minimum wage might cost 20 to 50 percent of the gross national income. Avoiding the classical dichotomy problem could result in a positive shift in national output and real growth in GNP or GDP.
4. Safety: Countries may adopt blockchain technology to securely store individuals' bank details and other personal information.
5. UBI Amount: The amount of UBI paid to individuals will depend on the country's per capita income and economic rankings. For instance, if the per capita income in the USA is $3,000 per month, a UBI of $2,000 could be provided. Economic indices such as the Human Development Index (HDI), ease of doing business, corruption statistics, and literacy rates should also be considered.
6. Birth Rates: UBI may indirectly affect birth rates as financial freedom increases. In cases where overpopulation is a concern, policies can be adopted to encourage families to have only one or two children, such as providing welfare benefits for the first two children and charging standard fees for any additional children. Educating the youth about family planning can also promote responsible behavior.
7. Limited Resources and Infinite Needs: Given the finite nature of resources, regulation is essential. Taxing certain goods, such as vehicles, and investing in infrastructure to promote public transport can help manage consumption. Encouraging renewable energy, biophilic architectural designs, vertical farming, and fair appraisal systems for compensating individuals can further optimize resource use.
8. Increase in Drug Abuse: Free access to money could potentially lead to an increase in drug abuse. Stricter laws and effective deterrence measures are necessary to combat illicit drug use. Additionally, creating a database with personal information and a scorecard system can lay the foundation for more efficient reward systems in the future.

5. Controversies regarding the Quantum Economic model

The UBI concept is normative, and despite modern technology enabling simulations of many economic theories, its success cannot be guaranteed until implemented in real life. Several controversies surround the adoption of the Quantum Economic Model:

• UBI may encourage individuals to stay at home rather than work. It is vital to strike a balance between providing a sufficient UBI and incentivizing work. In well-educated and cultured societies, most individuals are self-motivated and enthusiastic, enjoying work despite receiving an income without working. UBI may also encourage entrepreneurship and demand for better working conditions.
• UBI could rapidly disrupt economies. While some industries may remain intact due to regulations and entry barriers, others may cease to exist. The advancement of technology may simplify starting businesses, potentially making many jobs redundant. Thus, it is crucial to devise a system to protect individuals' financial security and well-being.
• UBI may encourage greater ambitions such as space exploration, raising fears of space wars and the weaponization of satellites. UBI is believed to remove financial constraints, making it vital to establish bilateral and multilateral agreements, universal laws prohibiting military use of space technology, and strict penalties for violations.
• UBI may cause instability in exchange rate fluctuations. Modern AI can monitor these variables and provide necessary solutions.
• The Quantum Economic Model may fail to emphasize other vital factors such as the multiplier effect, the velocity of money, and Dynamic Stochastic General Equilibrium (DSGE) etc.