The AI Economist: Can It Optimize Tax Policy?

Economist struggle to walk the line between equality and productivity. This is the foundation of the "isms" we typically see.

Economic structures such as socialism strive to improve the equality of the overall system. This is offset by the fact that these systems tend to lower productivity.

Capitalism is at the other end of the spectrum. This is the king of productivity. No system has created more wealth than capitalism. Of course, the problem is that wealth inequality has never been higher. For all its advances, capitalism has not done the best of jobs of spreading the wealth around.

Could AI help to change this?

One of the advantages of AI is that millions of simulations can be run. This will provide outcomes in a variety of ways. Through the learning process, AI can keep pumping out virtual experiments without abandon. As computers get more powerful, this process will only increase.

Salesforce developed an AI economist. The goal of the project is to find the sweetspot between equality and productivity.

Here is a short video on the AI.

A big part of the equation is tax policy. Could we see tax policy designed by AI outpacing what is presently done? There is a chance for this due to a couple different reasons.

To start, tax policy tends to be driven by politics as opposed to optimization. Ideologies drive each side regardless of the impact. In the developed world, we tend to see tax policy that "punishes" success. The belief is that taking from one class and giving it to another is the key to equality.

Sadly, the results have not panned out.

Another factor is that distribution is also not optimized. Government programs tend to be majorly inefficient. The waste associated with them is legendary.

This debate is going to increase in magnitude as more people see their jobs eliminated due to technological develops. Corporations, in a post-COVID world, now have incentive to get rid of as many humans as possible.

Looking at debts around the world, it is obvious that governments (politicians) are horrible as spending wisely. Countries are over extended like at no point in history. Something needs to be done since a sovereign debt crisis is just around the corner. This will likely see governments finding it difficult to get financing meaning they will have to adapt.

Could the AI economist help this situation?

Time will tell what comes of this. However, could it really be any worse than what the politicians are presently doing? Whatever economists they are listening to are telling them the wrong story.

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