Startup Nation or Welfare Nation: Who will support us when AI does everything?
While Singapore is aggressively pursuing the AI revolution with national mass-training plans and robust social safety nets, Israel is lagging behind due to infrastructure constraints and a lack of long-term vision. Efrat Bachar Nathaniel, CEO of the Mosaic Institute, warns of a looming wave of layoffs and proposes a bold solution: taxing the 'AI dividend' and establishing a civil wealth fund to ensure a dignified existence in a transformed labor market.
The artificial intelligence revolution is already here, and it is set to shake up the labor market and the global economy at an unprecedented pace. While in the past technology replaced physical strength, this time human intelligence itself is becoming a cheap and accessible product. How are countries preparing for an era in which machines perform white-collar work better and faster than humans? A look at Singapore's model and the vision of the Mosaic Institute for policy in Israel draws a roadmap for the near future.
The Singaporean model: protecting the worker, not the job
Singapore, a small island nation without natural resources, has always viewed human capital as its most important asset. Today, it faces an acute demographic crisis with a fertility rate of only 0.87. Instead of viewing AI as a threat leading to unemployment, the government sees it as a solution to the shortage of young workers. Prime Minister Lawrence Wong summarized this approach: "We will not be able to protect every job, but we will protect every worker."
To realize this vision, Singapore launched a national program to train 100,000 workers in AI tools by 2029. It offers unprecedented support to those willing to retrain: citizens over 40 in high-demand fields like data, cyber, or healthcare can receive a $4,000 training grant and a $3,000 monthly living allowance. The state also provides free six-month subscriptions to advanced AI tools. However, this support comes with a clear condition: the state helps only those who learn and work, as it refuses to accept a scenario of economic growth without human employment.
The Israeli challenge: innovation for the few and infrastructure gaps
In Israel, the situation is different. Despite high digital consumption, Israel ranks only 12th in AI readiness, trailing Singapore. While Singapore invests in retraining white-collar professionals (lawyers, accountants) affected by the revolution, Israel's national program currently focuses mainly on academic excellence and specific strategic areas like cyber, agriculture, and security.
Furthermore, Israel suffers from severe infrastructure barriers. The Electricity Authority recently halted new applications for connecting server farms to the power grid in Gush Dan for six months, as the isolated Israeli energy sector cannot cope with the accelerated demand for electricity required by AI infrastructure.
The AI dividend: the Mosaic Institute's solution
Efrat Bachar Nathaniel, CEO of the Mosaic Institute, warns that we are facing a dramatic shift. According to World Economic Forum forecasts, AI will allow businesses to produce far more services and products without increasing their workforce. AI requires no breaks or salaries, leading to massive profit concentration for capital owners. This process threatens to dismantle the capitalist system as we know it.
To prevent social collapse, the Mosaic Institute proposes a compensation principle:
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Capturing the AI dividend: The state should capture a portion of the excess profits created by companies replacing workers with technology, for instance, through a smart tax on profits exceeding normal trends or a dynamic VAT on digital services.
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Civil Wealth Fund: These funds should be directed into a national wealth fund—similar to the gas revenue fund—detached from the political budget. This fund would provide a safety net for those who lose their jobs, ensuring that technological abundance benefits the general public.
Bachar Nathaniel also suggests radical steps, such as cutting the public service budget by 50% while mandating better service, to force government systems to implement AI and increase efficiency.
Life on the day after work
The big philosophical question is: what will humans do if they don't have to work? Bachar Nathaniel reminds us that the "school-to-retirement" work model is an invention of the industrial revolution, not the default state of humanity. Future education must shift from labor market preparation to cultivating three pillars: curiosity, entrepreneurship, and human relations, alongside AI literacy as a new language.
Ultimately, the right policy will determine whether we reach a dystopia of displacement and social inequality, or a utopia in which technological abundance frees humans to be social and productive beings, even without the need to clock in every morning.
