May I continue with my stream-of-consciousness musings about a post-Artificial Intelligence (AI) world? I began with “what the *@#$ is AI”? Here, I ask – “How the *@#$ will AI change the world”? Again, I am anonymising the four-letter swear word, but you get its fury, right?
Let me reiterate what I said in the earlier companion piece (Part 1).
I DO NOT UNDERSTAND AI. I am not a techie, and my mind is simply unable to grasp how computers can read billions of word patterns in nanoseconds to write comprehensive reports, play better chess, solve complex mathematical theorems better and faster than intelligent beings!
BUT I AM A DIEHARD FAN OF WHAT AI DOES. I don’t know the “how”, yet I love the “what”. And that’s why I am trying to understand how AI will reconfigure human lives. I only have probing questions. I have an amorphous sense of the answers, but that’s not critical. The questions themselves are so fascinating that even without specific answers, they create an infatuating stream of consciousness.
First Question
As AI and other technologies proliferate, the Capital/Labour ratio could invert from what it was through the 20th century. In the 21st, capital could account for 60-70 percent of income, while labour could struggle to retain 30 percent of output. I’ve explained this inversion in Part 1. What’s the likely impact of this tectonic shift?
An obvious and massive shift in wealth will occur. People who own capital will become infinitely richer compared to those who work for them. The tip of this iceberg is already visible, with the frenetic valuations and cash hordes of the 'Magnificent Seven' tech giants, ie, Alphabet/Google, Apple, Amazon, Nvidia, Microsoft, Meta, and Musk/Tesla/x.AI/SpaceX. The founders and key employees of these companies are worth hundreds of billions of dollars. As the “network effect” accelerates, it’s conceivable that a dozen or so tech gurus could become trillionaires.
But that’s just the sexy-folklore tip, or peak, of the phenomenon. What’s happening in the submerged part of the iceberg is more frightening.
Because a million techies who have the rarefied knowledge required to harness AI and other digital tools are rapidly accumulating hundreds of millions of dollars of wealth.
These are the superstar techies leading/creating superstar firms. They will retain and reward an ever-shrinking pool of employees who can retrain and rearm themselves with new skills. Everybody else will get demoted, forced to eke out a living doing lesser jobs in the physical world.
What happens if the world’s demography becomes somewhat like this: Ten trillionaires, ten thousand billionaires, ten million millionaires, one hundred million half-millionaires, and 7.8 billion people struggling to grow crops, keep tables, become golf caddies, or hang around aimlessly without work.
It’s a dystopian thought, but a plausible one. Ouch!
Second Question
What are the consequences of such a dystopian-ly polarised world? If income inequalities become so extreme, won’t we get caught in an under-consumption trap? Won’t inequity and worklessness create uncontrollable social and political chaos? Is there an antidote for this dystopian malaise?
Clearly, it’s an existential challenge for human civilisation. If incomes fall to subsistence levels for several billion people, an economic collapse is inevitable. Dark factories may produce one smartphone every second, but if billions of buyers have no money, those production lines will come to a grinding halt.
A few million millionaires can only support a hyper-narrow consumption economy – after all, how much caviar, how many gallons of pink champagne, how many yachts, Lamborghinis, Rolexes, and gold-plated golf sets can they buy?
New and urgent solutions must be designed. An overhaul of the tax regimen is most critical.
We need to shift the tax base from labor to capital income; slap big wealth taxes, robot taxes; followed ultimately by a universal significant (not basic) income for people who don’t own capital. Finally, these taxes need to underwrite a major reskilling of the workforce to make them productive in a post-AI economy.
Third Question
While a universal significant income may ensure people’s survival, it’s still a soul-crushing dole. Will worklessness create social disorder? Or, in an optimistic construct, will it free people to pursue non-economic vocations, like painting, surfing, becoming better golfers, taking up a passion for acting and performing arts? Could this lead to a burst of creative and leisure pursuits, displacing a workless dystopia?
Nearly 300 years since the industrial revolution, a “formal job” has become the lynchpin of our social compact and identity. We are what we do. So worklessness destroys a person’s dignity and self-worth. A hopeless person is also dangerously prone to violence. It’s a powder keg that must be diffused.
While a few people may have the grit and talent to become “renaissance artistes”, ie, those who will unshackle from the “drudgery” of 9-to-5 routines and flourish with hobbies, the sobering reality is that the majority will want meaningful work.
Redistributive taxes and reskilling programs will become the toolkits of social and political survival.
Fourth Question
What will be the geo-politics of a post-AI world?
It could be brutal. In the commercial world, AI could create techno-oligarchies, ie, corporations with monopoly control over AI infrastructure like chips, data, and proprietary models, more powerful than most countries. In the political world, their spitting image will be AI superpowers, ie governments that control these techno-oligarchies. America and China top that game. India and the European Union could be in the running, but have to invest much more than they have currently done.
Many thinkers fear a new kind of “digital colonialism” where AI-haves dominate and exploit AI-have-nots.
Fifth Question
Has the all-conquering advent of AI revived the value of physical assets, an unexpected and unintended consequence? Through the 20th century, as digital assets replaced physical ones and occupied more of human time, their value increased exponentially, while physical assets stagnated. Since AI cannot recreate the sheer joy and thrill of physical spaces and activities – for eg, at golf courses, leisure spas, gourmet restaurants – the value of these assets could be resurrecting?
Yes! Especially for unique experiential forays.
Postscript: I have no clue whether any of these stream-of-consciousness musings will ever come true. All I know is that the post-AI world will be brutally, astonishingly different from the one we grew up in. It’s an existential thrill to ask probing questions about how it could play out!