Will AI Drive Wealth Inequality and Undermine American Capitalism?

Artificial Intelligence has a lot of good sides, but the bad sides are glaring.

BigTech would prefer we not know much about it, but AI has and will, especially in future decades, accelerate wealth inequality. This is a complicated topic but works since AI is disruptive. It puts power in the hands of the few.

The impacts of automation fueled by AI, RPA and algorithms are also not yet well understood. According to a new academic research study, automation technology has been the primary driver in U.S. income inequality over the past 40 years. The report, published by the National Bureau of Economic Research, claims that 50% to 70% of changes in U.S. wages since 1980 can be attributed to wage declines among blue-collar workers who were replaced or degraded by automation. 

AI Will Squeeze Wages and the Future of Jobs

Even software engineers are increasingly managed by algorithms in which they experience a code ceiling. Automation is not yet well understood, even though data risks are increasingly being understood from a National Defense perspective. China understands this very well. A prenatal test used worldwide sends gene data of pregnant women to the company that developed it with China’s military.

The U.S. sees a security risk. It’s really quite simple. U.S. government advisors warned in March that a vast bank of genomic data that the company, BGI Group, is amassing and analyzing with artificial intelligence could give China a path to economic and military advantage.

If this data takes in all the world, the future of AI will not only drive wealth inequality but infringe on human rights in the era of biotechnology augmentation and surveillance genomics. This is a bit hard to understand in 2021.

BigTech likes to talk about AI and tech for good, but the reality is a starkly different scenario. Artificial intelligence, robotics and new sophisticated technologies have caused a wide chasm in wealth and income inequality. It looks like this issue will accelerate. At the Last Futurist, we’ve made it part of our mandate to talk about AI ethics in an era where there are none. It’s hard to fathom the consequences of this as AI and data capture continue at the current pace.

What Does Algorithmic Imprisonment Feel Like?

Yet in the wealth inequality story there’s a more sinister way that AI based companies impact the future of work. The risks of algorithmic discrimination and bias have received much attention and scrutiny, and rightly so.

Yet there is another more insidious side-effect of our increasingly AI-powered society — the systematic inequalitycreated by the changing nature of work itself. During the pandemic and WFM era, there’s some inkling of where we might be headed. A significant number of people will end up being managed by algorithms. Jobs like HR and middle managers will for the most part disappear. This again is hard to understand easily for many of us in 2021.

AI Is Ubiquitous and Digital Transformation Will Have a Dark Side

The very nature of AI impacting multiple industries simultaneously and ubiquitously is supremely dangerous for wealth inequality. Artificial intelligence systems are ubiquitous and wages of even white collar jobs won’t be increasing. According to the study we mentioned above,  “The real earnings of men without a high school degree are now 15% lower than they were in 1980.”  With an AI first workforce we’ll start to see the same thing happen to white collar workers in the 2030s and 2040s.

Think about how Tech companies today actually work. In an AI-powered organization, junior employees and freelancers rarely interact with other human co-workers. Instead, they are managed by algorithms.

This is also hard for some graduates to understand: AI has permeated one’s entire career trajectory and possible paths. The drive to automate roles usually done by people has seriously adverse potential side effects. Think about it. Much of the changes in U.S. wage structure, according to the paper, were caused by companies automating tasks that used to be done by people.

AI Will Be Detrimental to Wealth Equality and Prosperity for All

When Google boasts about its AI, or Microsoft trumpets its AI for Good initiatives, remember that AI actually promotes wealth inequality and not only adds convenience to our lives or enables new forms of digital transformation, innovation and access to services.

It’s more complicated than that, and these BigTech firms are creating a world that many of our grandchildren won’t necessarily want to live (and certainly not reproduce) in because they won’t be about social justice, equality or access for all to the prosperity, freedom and hope that democracy and free-market capitalism used to be about.

The World Economic Forum (WEF) concluded in a recent report, “A new generation of smart machines, fueled by rapid advances in AI and robotics, could potentially replace a large proportion of existing human jobs.” 

Automation and AI aren’t bad in and of themselves but used to spur profits without regulation they will cause a great distribution of wealth into the hands of the few that will ultimately possibly cause the collapse of our service and consumer centric economy sooner rather than later.

Many of the jobs created by major companies like Facebook, Amazon, Google and others aren’t actually sustainable even as they disrupt other sectors. Even as these companies don’t pay their fair share of taxes and function in massive duopolies where adequate rule of law does not exist, their business models that place algorithms at the center, exploiting people, prices, attention and our data also funnel wealth to the few in massive wealth distribution schemes just as traditional banks did but on a much more massive scale.

Internet the First Mover of Surveillance Capitalism

When the entire internet has become deterministic and algorithms govern even our attention, and our data is mined and our time is being taken with an ARPU attached, you know it’s not just about wealth inequality.

AI and algorithms are responsible for robbing us of a bit of our soul (insert mental health) with behavior modification at scale. Even as AI led companies came with “digital transformation”, what does that really mean from a human centric AI side of things? Robotics and AI will cause a serious “double disruption,” as the pandemic pushed companies to fast-track the deployment of new technologies to slash costs, enhance productivity and be less reliant on real-life people. 

Surveillance capitalism after the pandemic is reaching a new kind of reality, one of AI Surveillance work-life infringement of our very freedom. The duopolistic internet and WFM? Oh, sorry, that’s just the new normal. The WEF asserts automation will slash about 85 million jobs by 2025. Many of the jobs created to replace the jobs lost during the pandemic will be in the new AI-led system.

Back to California – the Silicon Valley Heist

Capitalism has a wealth inequality problem and ironically the savior of AI is a central part of the problem. America and China are failing at human-centric AI, and wealth inequality will be a massive byproduct of this failure that’s likely more intentional than unplanned.

As America failed to regulate its biggest companies, BigTech has now become so advanced in AI that most other firms cannot compete with them either in hiring the top talent or having deep enough pockets to compete in the same markets.

This creates an unbalanced stock market and ETFs (weighted too much to Apple, Microsoft, Alphabet, Amazon, Facebook, Tesla and Nvidia) that it unbalances the entire financial system of the U.S. where only a few benefit. This accelerates the old refrain about the rich getting richer while the poor get poorer. As the bottom 1% fall out of the labor force in 2020 (unemployed for over 1 year), we have to wonder.

America failing to regulate its BigTech will be expensive to our future for short term gains. This explains China’s new firm regulations and antitrust probes (in the summer of 2021) on its own big technology companies: it’s learning from the failures of Washington and Silicon Valley.

While BigTech created incredible wealth inequality mechanisms in America’s economy, these same companies are profit driven and don’t actually innovate. This stunts a free-market economy system where a more equitable wealth distribution could take place.

Silicon Valley companies grossly abused their dominance and America’s GDP growth may never recover from this simple fact: the land of greed snowballed into a system that perpetuates wealth inequality at scale and it’s all because of AI.

You can find an expanded version of this article here.