ABCs to ATMs - The Case for Paying Students to Learn

Chapter 5: Financial Viability

The Economics of Paying Students

The concept of paying students for their academic achievements represents a paradigm shift in education, but it’s more than just a theoretical proposal—it’s financially viable. Here’s how it works: Students complete “learning gigs” and are compensated for their effort and mastery. The earnings are deposited into a digital account, accessible via phone or a debit card. Schools can designate a portion of these earnings to be saved until the student turns 18, giving them a nest egg for future endeavors.

Schools have firm control over which learning gigs are eligible from their school, and how many students are given access. This allows a school to spend as little or as much as they desire on the assessment process. Of course, schools that have more assessments available are going to attract the best students.

Peer Pressure and Behavioral Changes

One of the immediate impacts of this financial system is a change in classroom dynamics. Students who excel academically will have more spending power, creating a form of positive peer pressure. This is particularly impactful for those who disrupt class or misbehave, as their actions will now have financial consequences not just for them but also for their peers. The repercussions of causing disruptions will be felt more keenly when they affect the collective pocketbook, making classroom discipline less of an issue for teachers and more of a community concern among students.

Financial Resources as a Safety Net for Future Challenges

One of the most transformative aspects of this financial system is that it equips students with resources they can draw upon in future life challenges. By allocating a portion of their earnings to be saved until they turn 18, students are not just receiving immediate financial rewards; they are also building a financial safety net. This nest egg can become particularly crucial for funding higher education, jump-starting a small business, or even aiding in the purchase of a first home.

Access in Emergencies: A Safeguard Against Life’s Uncertainties

Life is unpredictable, and unfortunate circumstances like homelessness, abuse, or neglect can occur. In such dire situations, the accumulated savings can be accessed earlier, provided that a verified professional—such as a social worker or counselor, approves the withdrawal. This gives the student an added layer of financial security and independence during times when they may have little else to rely on.

These early-access provisions not only offer immediate relief but also instill a sense of empowerment and control. Knowing that they have a financial resource to fall back on can be psychologically reassuring for young individuals navigating through challenges. This aspect of the system underscores its dual role as both an educational incentive and a social safety net, making it a truly holistic solution.

By providing both immediate and future financial benefits, this system goes beyond mere academic incentives. It becomes a tool for social mobility, a buffer against life’s uncertainties, and a practical lesson in financial planning. The blend of immediate gratification with long-term financial security serves to motivate students in the present while equipping them for the future, making the proposition not just educationally sound but also socially responsible.

The addition of this safety net adds yet another layer to the financial viability and social impact of paying students for academic achievements. It enhances the system’s role as a comprehensive solution that addresses not just educational gaps but also societal challenges, further justifying its implementation.

Financial Impact on Students

The idea of paying students for academic achievements has ripple effects that go beyond the classroom. The financial incentives offer students a tangible reward for their hard work, reinforcing the value of education. Over time, this system can create a culture of academic excellence and financial responsibility, setting the stage for long-term success.

Impact on Different Socio-Economic Groups

  1. Disadvantaged Students: One of the most profound impacts will be on underprivileged students. This system offers them a pathway out of poverty by providing them with additional resources. These financial gains, coupled with an improved educational experience, significantly increase the likelihood of these students going on to higher education or better employment.

  1. Lower Middle-Class Students: For families that are somewhat better off but still struggling, the additional income can be a game-changer. It could go towards transportation costs, home upgrades, or even a family vacation—luxuries that were previously out of reach. Moreover, the financial cushion could make the prospect of continuing education more attainable.

  1. Middle-Class Students: These students will benefit from having additional resources to pursue higher education, possibly at better institutions, and with less burden of student loans. The money saved and earned through this system can be an important factor in choosing higher education paths that may have seemed financially risky or impractical before.

  1. Wealthy Students: It’s essential to include students from affluent backgrounds in this system to maintain fairness; after all, they are also putting in the work. However, these students have the option to redirect their earnings toward philanthropic endeavors if they so choose. Whether it’s donating to less privileged schools or contributing to conservation efforts, the system encourages a sense of social responsibility. After all, what 8-year-old wouldn’t want to save baby elephants?

The financial viability of paying students for academic achievements is not only sustainable but also equitable. It offers a multi-faceted solution that addresses the diverse needs of various socio-economic groups, making education more inclusive and effective. This system transforms classrooms into micro-economies of knowledge, where the currency is academic excellence, and everyone has the opportunity to prosper.

Public School Profiles and Academic Competition: A New Measure of Effectiveness

In a world where schools are often judged by standardized test scores or complex ranking systems, the introduction of publicly visible school earnings presents a radical departure. Schools can now have public profiles that display total earnings, earnings per student, and donated earnings. This financial metric offers a direct, uncomplicated measure of a school’s effectiveness. It shifts the focus from abstract academic benchmarks to concrete, monetary outcomes that reflect both academic excellence and social responsibility.

The Competitive Landscape: Not Just for Affluent Schools

One might assume that this system would inherently favor schools in affluent districts, where students can access more resources. However, it’s crucial to consider the motivational dynamics at play. Students who stand to gain the most from this financial system—those in less privileged circumstances—are likely to be the most motivated to excel academically. As these students start performing better, the pressure will mount on schools in more affluent areas to keep pace.

A Level Playing Field: The Rise of Academic Achievement

The beauty of this approach lies in its inherent fairness and the competitive academic environment it fosters. Schools from less affluent districts have the opportunity to rise in the rankings based on the sheer motivation and effort of their students. Meanwhile, schools in wealthier districts face a new kind of pressure to maintain their standing, encouraging them to redouble their academic efforts.

This landscape creates a positive feedback loop of competition and achievement. The highest-earning school becomes a coveted title, spurring other schools to strive for excellence. Similarly, the most philanthropic school—measured by donated earnings—can become a point of pride and social responsibility, enriching the school community’s ethos.

Unprecedented Mass Achievement

What we’re looking at is a potential revolution in educational achievement. By tying school effectiveness to financial earnings, we’re setting the stage for a level of mass academic achievement that has never been seen before. Schools will not just be teaching hubs but also centers of financial empowerment and social mobility. The public profiles act as both a scoreboard and a motivator, pushing schools to strive not just for academic excellence but also for financial and social impact.

How To Fund Paying Students: A Sustainable and Cost-Effective Model

The question of funding is often the first hurdle any innovative educational proposal must clear. The idea of paying students for their academic achievements might initially seem like an added burden on already stretched school budgets. However, a closer examination reveals that this model is not only sustainable but, over time, can actually make education more affordable.  

After all, the school is only paying for inexpensive assessments. 

The Economics of Assessment

Let’s begin by breaking down the costs. Schools would pay a nominal fee—for example, $10—per assessment per student. Students can retake the assessment multiple times for that initial outlay, and upon achieving mastery (a score of 80% or above), they would receive 90% of the assessment cost, i.e., $9. 

While the notion of students potentially earning over $100 a week seems daunting, several factors make this a financially sound investment.

Long-Term Cost Savings

  1. Blended Learning Model: The new system allows for a blended model of education, where students can engage in lectures and readings at home or independently. Physical attendance at school becomes necessary only for group projects, presentations, and specialized tutoring. This reduces overhead costs associated with maintaining a full-time, in-person educational environment.

  1. Teacher Efficiency: With assessments handled externally, teachers will spend less time grading and more time on meaningful educational interactions, such as project-based learning. This not only improves the quality of education but also increases teacher job satisfaction.

  1. Minimal Preparation: Teachers act more as mentors in this model, guiding students who are working at their own pace. This minimizes the need for extensive lesson planning, freeing up teachers’ time and mental resources.

  1. Special Education: Currently one of the most resource-intensive aspects of education, special education could undergo a radical transformation. While some students will always require a high level of individualized attention, many others could graduate to less intensive forms of support, thanks to increased motivation and the opportunity to earn.

  1. Curriculum Cost: Outstanda Academy provides a free curriculum for all assessments, eliminating the need for schools to purchase expensive textbooks and materials. Schools would only need to invest in enrichment materials tailored to their student populations.

  1. Reduced Security and Discipline Costs: With the potential for a blended model that allows students to work from home, costs related to security, enforcement, and disciplinary actions like detention or suspension could significantly decrease.

  1. Faster Graduation, Smaller Population: With a more engaging and motivating educational environment, the number of students being held back could decrease, and more students could graduate early, reducing the overall student population and associated costs.

Dynamic School Structure

As schools transition to this new model, they could operate in two shifts, focusing on mastery, athletics, competition, and academic excellence. Over time, a more dynamic structure would require fewer staff members. While it’s unrealistic to expect immediate staff reductions, natural attrition could gradually bring down staffing levels as the system is fine-tuned.

The combination of 2 shifts, fewer teachers, and students graduating more quickly will result in significant cost savings for any school district.

Ask Yourself This

What we’re presenting here is more than just an innovative educational model; it’s a financially sustainable roadmap for the future of education. The initial investment in student assessments is more than offset by the manifold long-term savings and efficiencies gained. Schools will not merely be centers of learning; they’ll become hubs of financial empowerment and social mobility, operating at a fraction of today’s costs.

So, the question isn’t really whether we can afford to pay students for academic achievements. The real question is, can we afford not to?

Even with these cost savings and benefits, there could still be a gap in funding, especially with a highly motivated student population. The good news is that this problem is the perfect pairing with another issue: How AI and Automation will displace jobs and how we deal with it.

Tax on Automation and AI: Bridging the Gap between Technology and Human Learning

In the dawn of the Fourth Industrial Revolution, where automation and AI are increasingly taking over tasks once done by humans, there is a growing need to address the societal implications of this seismic shift. One of the most effective ways to do this is through a targeted tax on automation and artificial intelligence, designed to benefit human learning directly.

The Automation Tax Structure

For each job replaced by automation or AI, a tax of 17.5% of what a human would have been paid for that job would be levied on the employing organization. This isn’t merely a tax; it’s an investment in future human capital. The revenue generated from this tax would be earmarked exclusively for funding learning gigs, ensuring that as technology advances, so does the general populace.

Funding Learning Gigs

The revenue from the automation tax would go into a dedicated fund, 100% of which would be used to pay students for completing learning gigs. This creates a self-sustaining ecosystem: as more jobs are automated, more funds become available for human education, thereby preparing the next generation for the higher-order jobs that machines can’t do.

Economic and Social Benefits

  1. Resource Redistribution: This tax ensures that the benefits of automation aren’t concentrated at the top but are instead used to uplift the entire community.
  1. Incentivizing Education: Knowing that there’s a direct financial incentive can boost student engagement and academic performance, making society more resilient to job market changes.
  1. Skill Alignment: With more resources for education, curricula can be designed to align with future job market needs, making it easier for students to transition to the workforce.

  1. Reducing Income Inequality: By channeling funds from automation into education, we can help bridge the economic divide, providing equal opportunities for students from all backgrounds.

  1. Global Competitiveness: A well-educated workforce is more attractive to global businesses, potentially drawing more investment into the community.

Ethical and Moral Implications

Implementing a tax on automation and AI is not just an economic decision but also an ethical one. It signifies a commitment to valuing human potential and intelligence as much as we value technological advancement. In an era where the fear of machines replacing human labor is palpable, this tax serves as a societal safety net, reassuring citizens that progress will not come at the cost of human well-being. But instead of simply paying people who may be displaced, we will be paying them to continue learning and enhancing their skills. 

To help lawmakers along, I asked AI to write a draft of the law. Keep in mind this is only a tax on reductions in labor and jobs.

The Automation and Artificial Intelligence Job Replacement Tax Act of [Year]

Section 1: Title and Purpose

1.1 This Act may be cited as the “Automation and Artificial Intelligence Job Replacement Tax Act of [Year].”

1.2 The purpose of this Act is to impose a tax on businesses that eliminate jobs through automation or artificial intelligence, thereby generating revenue to support educational initiatives.

Section 2: Definitions

2.1 “Automation” refers to technology that performs tasks without human intervention.

2.2 “Artificial Intelligence” refers to machine systems capable of performing tasks that would ordinarily require human intelligence.

2.3 “Business Entity” refers to any organization engaged in commercial, industrial, or professional activities.

2.4 “Job Replacement” refers to the elimination of a position due to automation or artificial intelligence. 

2.5 “Revenue” refers to the total income generated by a business entity in one fiscal year before any expenditures.

Section 3: Tax Rate

3.1 A tax rate of 17.5% will be imposed on businesses with annual revenue exceeding $2,000,000 that engage in job replacement via automation or artificial intelligence. 

3.2 The tax will be calculated based on 17.5% of the annual salary that would have been paid to a human employee. 

3.3 The calculation of the automation and AI impact fee will be determined based on standardized employment estimations corresponding to the business classification. This benchmark will be established using the employment levels deemed necessary for similar businesses in the year 2000. If the business has not undergone significant operational changes that would warrant a workforce adjustment, the payroll levels will be updated annually to account for inflation or other economic factors.

Section 4: Use of Tax Revenue

4.1 All tax revenue generated by this Act will be earmarked for educational programs, specifically to fund “learning gigs” for students.

4.2 An independent body will be established to manage and allocate these funds in a transparent and accountable manner.

Section 5: Reporting and Compliance

5.1 Business entities subject to this tax must submit an annual report detailing job replacements, estimated salaries saved, and taxes paid.

5.2 Failure to comply with this Act will result in penalties as established by the Internal Revenue Service or equivalent body.

Section 6: Amendments

6.1 Amendments to this Act can be made with a 2/3 majority vote in both Houses of Congress or equivalent legislative body.

Section 7: Effective Date

7.1 This Act will take effect 90 days after being signed into law.

This Act is hereby passed by the [Legislative Body] and signed into law by [Highest Executive Official].

 Note: The above is a model legislative text and should be reviewed by legal experts for compliance with the laws and regulations of the jurisdiction in which it is to be implemented.

In sum, an automation tax devoted to human learning is not just a policy proposal; it’s a philosophical stance on the kind of future we want to build. It acknowledges that while machines can outperform humans in many tasks, they can never replace human creativity, emotional intelligence, and the ability to learn and grow.

Student Perspective

Autsin, 10th Grade, Towpath Trails High School in Akron, Ohio 

Do you think students should be paid to learn?

Yes, I think students should get paid in some way because it takes a lot to graduate. I do not think they should get paid until they graduate though.

If you make more than $3,000 a year to learn, how would it change your school experience?

It would be easier to come (to school) knowing I get an award.

If you graduated from high school and had access to a savings account that had $10,000 in it, what do you think you would do with the money?

Either a car or a house.

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Ron McDaniel
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