This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
While the AI transformation is built on the hopes of augmented productivity, the expected downside that comes with it is job displacement on a massive scale.
Corporate profits will swell and stocks will appreciate, but many people who work at US companies will be thrown off the payroll. Or, as attrition does its work, find themselves drifting through un- or underemployment.
The industry knows just how big a problem this could become.
To temper the fallout from the technological tidal wave, OpenAI (OPAI.PVT) is proposing a slew of policy proposals — a fresh industrial policy agenda, a rebalanced tax base skewed toward capital-based revenues, and expanded access to healthcare and retirement benefits.
Enacting such proposals will be no small feat. The idea of revamping the social safety net and targeting wealth and corporate profits seems far-fetched in a political environment defined by dysfunction. But that may hinge on how inevitable businesses, investors, and voters believe the AI-driven economy to be.
And as far as OpenAI and its AI peers are concerned, it’s the industry’s job to convince the world of that inevitability.
As OpenAI acknowledges, the coming technological upheaval poses a challenge to households and the governments that rely on tax income from the labor pool.
“As AI reshapes work and production, the composition of economic activity may shift — expanding corporate profits and capital gains while potentially reducing reliance on labor income and payroll taxes,” the company said.
JPMorgan CEO Jamie Dimon is thinking about this too.
In his annual letter to shareholders, published Monday, the veteran CEO pitched his own version of an assistance program: “We do believe that business and government can do many things to properly incent retraining, income assistance, reskilling, early retirement and relocation for those whose job might be adversely impacted by AI.”
One of his proposals is to double the Earned Income Tax Credit and use the tax code to lift families at the bottom of the economic ladder.
That money will matter. Just think about what powers the economy and what has kept endless recession predictions from being realized. Taking people’s income without replacing it would be a recipe for cratering consumer spending and tanking the economy.
But labor market and macroeconomic disruptions are only part of the social, economic, and political consequences that many expect to unfold as a result of the mass adoption of AI technology. The potential job losses may not seem severe right now. But the preparation needed to meet that inevitable moment should have already kicked off.