If AI shrinks the job market and tax revenues fall, survival may depend less on the state and more on the people right next to you.
I had a call today with a friend in Latin America, and we were talking about a man he knows who receives a pension of 20 dollars a month. That’s not a typo. There aren’t many formal jobs, and the government doesn’t really take care of people. Yet life goes on. People lean on friends and family. They share food, pass around small jobs, sit in the shade, listen to music, nap, gossip, love. It’s not the Western script for a “good life,” but it is a life. And many seem, if not wealthy, at least unburdened by the constant grind.
That conversation got me thinking about our near future. What happens in 10-15 years if automation and AI eliminate a large percentage of jobs? What happens when tax revenues fall because fewer people work, or because mobile capital and talent keep outrunning higher rates? What happens when governments can only offer a subsistence income, or even that becomes hard?
The Western social contract may not work anymore
The Western social contract quietly assumes three things: most adults have paid work, governments can tax those wages and profits, and in exchange the state provides a safety net. But if employment shrinks and the tax base erodes, the math stops working. You can raise taxes on “the rich” and many will cheer, but the wealthy are also the most mobile. They move jurisdictions, restructure assets, or simply stop realizing taxable income. You can try to catch them, and some governments will try hard, but chasing the base tends to shrink the base.
Even if higher taxes “worked,” the numbers likely wouldn’t cover a generous universal basic income. I’m in favor of UBI in theory, but I’m against pretending that we can make it work based on tax once AI starts taking over most jobs. If the pie isn’t growing and the slice-takers get better at leaving the table, there’s less to redistribute. Meanwhile trust in government falls, especially as fiat purchasing power keeps leaking away and services decline.
A preview from the Global South
Parts of Latin America already live in a low-state, high-community equilibrium. There’s less formal employment, less reliable public service, and more dependence on your immediate network. It isn’t all sunshine (crime and instability are real) but there’s also an unexpected abundance: of time, of relationships, and of improvisation. People trade favors, share meals, raise kids together, and find meaning outside career ladders.
We might be headed for a version of that. Not identical, but rhyming. As the state’s role shrinks, the tribe’s role expands. “Tribe” here isn’t an online fan club. It’s your family, your close friends, your neighbours, your church or club. It’s the people who will pick you up from the hospital, lend you tools, watch your kids, and tell you when you’re being stupid. In a world where institutions become slower and thinner, the local and the personal get faster and thicker.
Less government power, more personal responsibility
I don’t think we’re headed for apocalypse. I think we’re headed for uneven abundance. AI will make goods and services much cheaper and better, but the distribution of income will be very different, and the old funding model for the welfare state will wobble. Governments will try to do more with less, but they’ll also try to tax more from fewer. Some will overreach, some will reform, but on average their relative power will decline.
That means we need to re-learn habits our grandparents took for granted: build community, share resources, fix things, grow things, teach each other, keep an eye out for one another. In affluent countries we’ve let the state do that for us. If the state can’t, we either rebuild those muscles or we will become very lonely.
Practical steps I’m thinking about
- Invest in people, not just assets. Treat relationships like compounding capital. Show up before you need help.
- Build a local mesh. Know your neighbours. Join (or start) a small group — a church circle, sports club, parents group, makerspace.
- Diversify jurisdictions and money. Don’t rely on a single tax system or currency. Keep some optionality (and privacy) where lawful.
- Learn useful, tradable skills. From basic repairs and cooking to AI-assisted craftsmanship. Skills are always useful.
- Reduce dependency. Lower your fixed costs, grow a bit of food if you can, keep some emergency supplies, and document your critical knowledge.
- Give first. The best insurance in a low-trust world is to make yourself high-trust. Be the person others want in their tribe.
If I’m wrong, nothing breaks
If governments pull off a miracle (strong growth, smart taxation, well-funded UBI, renewed trust) great. You still win: strong community, diversified risk, and real skills are assets in any scenario. But if I’m right (or even half right), then relying purely on large, distant institutions will feel riskier each year, and relying on the people you can actually call at 2 a.m. will feel like common sense.
The conversation with my friend was a reminder: many people already live in a world where the state is thin and the tribe is thick. They survive, and many find joy, not because they have more money, but because they have each other. As we move into an era of technological abundance and institutional scarcity, that may be the most important lesson for the West to learn.
PS: I’m not romanticizing poverty or chaos. I’m arguing for resilience and for rebuilding the human networks that let abundance actually feel abundant.