Last week, Senator Elizabeth Warren stated in an Op-Ed that she wants to tax the development of artificial intelligence (AI) and “invest in people,” warning that AI will “break society, “creating a “permanent underclass.” In brief, Warren fears the creation of billionaires who are building these companies.
The Senator declared:
“Taxing AI is one way we make sure the winnings from AI benefit all Americans, rather than channeling them only to the wealthy few. If millions of people lose their jobs to AI, we’ll need the funds to deliver universal health care so those workers are not bankrupted by a visit to the doctor. If AI transforms the future of work, we’ll need to invest in free education and apprenticeships and a new jobs guarantee so that all Americans have good-paying work. And while workers get back on their feet, we’ll need the revenue to bolster unemployment insurance to keep families afloat. The only way we can get there is by overhauling our tax code.”
While predicting a job apocalypse, many observers anticipate that, even as employment adjusts, AI does not mean mass layoffs will take place, pointing to history as well as the fallacy that the number of jobs is capped.
Prominent VC firm Andreessen Horowitz states that while a transformation will occur, human labor will shift toward higher-value activities. AI is a tool that will boost productivity – not eviscerate it.
“The “lump-of-labor” fallacy claims there is a fixed amount of work to be done. It assumes a zero-sum competition between existing workers, and anyone or anything that may do the same job—whether that’s other workers, machines, or in this case, AI. If there is a fixed amount of useful work that needs doing, then if AI does more, humans must do less.”
The Boston Consulting Group concurs. They forecast that up to 15% of jobs could disappear, mostly in repeatable, easily replicated tasks, while productivity gains will drive job growth elsewhere. While seeing jobs being reshaped by AI, “productivity gains from AI use trigger increased end product demand and the potential for augmentation is high, we believe there will be a need for more and, in some cases, new human roles,” predicts the author.
In the 1950s, some forecasted a dire outcome due to automation in manufacturing and “blue-collar” job losses. The reality was different as both employment and wages rose.
The advent of computers and PCs was met with the fear of white-collar job devastation by some. Again, productivity gains accompanied higher wages.
The fact of the matter is that Senator Warren aims to grow government while reducing private-sector innovation. This will have the opposite effect she ostensibly desires. Capital is always limited, and public-sector use is less efficient than private-sector application. One is driven by control, the other by profit.
Warren frequently pounds the table on the need for the affluent to “pay their fair share” without defining the amount, leaving one to wonder if she means 100% of all income. She ignores the overwhelming value provided to society from innovative firms and their creators that make life better, raising standards of living while generating enormous wealth creation, and not just for the founders. Unfortunately, some will fall prey to mistaken warnings of impending doom emanating from the Senator. History notwithstanding.