economics opinion quick thought

Quick thought: Wealth in the AI future.

A recent tweet and very interesting blog post by Sam Altman, co-founder of OpenAi, and a follow up article by CNCB, about the potential wealth generation by artificial intelligence delves into the future of industrialization and the socioeconomic impact this will have.

As Altman points out, this future is coming, and as CNBC emphasizes, the political class is woefully ignorant about both the speed and depth of change this is likely to impose on society. Altman’s core proposition is that, as the cost or value of human lever drops towards zero, it is capital not labor that should be taxed, with the proceeds placed in a national trust fund used to pay an unconditional universal basic income to all citizens. Altman also estimates a value of for this payment of 13,500 USD per person per year.

Superficially some, usually of the older, continuity biased generations, may retort that 13 1/2k is hardly enough to survive on in dignity. But this statement is both wrong in the context of such a future and grounded in a fundamentally flawed conception of wealth.

Wealth is often simplistically seen as a proxy for the size of one’s bank account balance. But, in a world where automation has removed labor cost, capital cost has long since depreciated, and energy cost has plummeted due to renewables and maybe also fusion power, in this world the cost of almost everything will have drastically dropped.

To illustrate this in a historical context, salt used to be a luxury good in many regions of the world for most of human history. Today, commoditization, has driven its price to record lows. For the average person, living in OECD countries, salt doesn’t factor into their annual living expenses as a mere rounding error.

In a world where a lot fewer people will be needed to produce things, providing access inexpensively to a decent standard of living will be essential to preserve social peace. At the same time consumers will still be needed to consume the products churned out by the the automated industrial complex to capture what little value can be extracted in what is essentially a heavily deflationary market environment. In fact, stimulating consumption in such a world will be a challenge until prices have bottomed out. All this stretched the current fabric of capitalism beyond structural failure.

In fact, from the perspective of the capital owners, what is the motivation to continue to pursue resource control when the rewards become increasingly meaningless. When a private jet can be produced for the cost of a bicycle, we will likely need a totally different means than “money” to ration access to the few goods that are consumption limited by physical constraints (such as airspace in case of the jet). As a society we have thus far failed to meaningfully engage in exploring viable solutions to this issue.

… and this would be ok, if those changes were to occur over the space of centuries, but it is possible, that these very changes will play out within one human generation. That is children born today will have their own children in a world that has already substantially evolved towards the scenario described above.

This leaves the fundamental question whether AI is in deed one of the great filters that has the potential to eliminate intelligent life. This is not because of machines enslaving or annihilating their fleshy masters, but because AI has the potential to bring about societal collapse, if the transition is mismanaged, by fundamentally undermining the socioeconomic scaffolding holding together human civilization, leading to us turning against each other.

This topic can be as dark as it can be fascinating and this blog will return to these issues periodically to see whether we are beginning to actually address the issues. Similarly as has happened with climate change, there is likely going to be an awakening moment driven by the younger generations who will have to live with the consequences of these transformations. Let’s hope that unlike with climate change we don’t leave things till the last minute.

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