The AI Inequality Machine

The same push toward polarization playing out across the global economy will also exacerbate inequality within the AI superpowers, the U.S. and China.

AI’s natural affinity for monopolies will bring winner-take-all economics to dozens more industries, and the technology’s skill biases will generate a bifurcated job market that squeezes out the middle class. The “great decoupling” of productivity and wages has already created a tear between the 1 percent and the 99 percent. Left to its own devices, artificial intelligence, I worry, will take this tear and rip it wide open.

We already see this trend toward monopolization in the online world.

The internet was supposed to be a place of freewheeling competition and a level playing field, but in a few short years many core online functions have turned into monopolistic empires. For much of the developed world, Google rules search engines, Facebook dominates social networks, and Amazon owns e-commerce. Chinese internet companies tend to worry less about “staying in their lane,” so there are more skirmishes between these giants, but the vast majority of China’s online activity is still funneled through just a handful of companies.

AI will bring that same monopolistic tendency to dozens of industries, eroding the competitive mechanisms of markets in the process.

We could see the rapid emergence of a new corporate oligarchy, a class of AI-powered industry champions whose data edge over the competition feeds on itself until they are entirely untouchable. American antitrust laws are often difficult to enforce in this situation, because of the requirement in U.S. law that plaintiffs prove the monopoly is actually harming consumers. AI monopolists, by contrast, would likely be delivering better and better services at cheaper prices to consumers, a move made possible by the incredible productivity and efficiency gains of the technology.

But while these AI monopolies drive down prices, they will also drive up inequality. Corporate profits will explode, showering wealth on the elite executives and engineers lucky enough to get in on the action. Just imagine: How profitable would Uber be if it had no drivers? Or Apple if it didn’t need factory workers to make iPhones? Or Walmart if it paid no cashiers, warehouse employees, or truck drivers?

Driving income inequality will be the emergence of an increasingly bifurcated labor market. The jobs that do remain will tend to be either lucrative work for top performers or low-paying jobs in tough industries. The risk of replacement cited in the earlier figure reflects this. The most difficult to automate jobs—those in the top-right corner of the “Safe Zone”—include both ends of the income spectrum: CEOs and home-care aides, venture capitalists and masseuses.

Meanwhile, many of the professions that form the bedrock of the middle class—truck drivers, accountants, office managers—will be hollowed out. Sure, we could try to transition these workers into some of the highly social, highly dexterous occupations that will remain safe. Home healthcare aide, techno-optimists point out, is the fastest growing profession in America. But it’s also one of the lowest paid, with an annual salary of around $22,000. A rush of newly displaced workers trying to enter the industry will only exert more downward pressure on that number.

Pushing more people into these jobs while the rich leverage AI for huge gains doesn’t just create a society that is dramatically unequal. I fear it will also prove unsustainable and frighteningly unstable.

Posted by Dr. Kai-Fu Lee on May 07, 2019 in All Posts AI and You

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