So, Bernie Sanders and Donald Trump have found a point of agreement—that it is desirable for the public to have a stake in AI. To be fair, their agreement peters out after that point. Sanders suggests the transfer of a 50% equity stake into an American sovereign wealth fund; Trump’s proposal for the US government taking stakes in AI companies seems more limited. They mirror suggestions from within the AI industry itself, e.g., from Sam Altman. The Financial Times (FT) suggested taxation as an alternative route to compensate for the wealth creation and impact of AI on the economy, specifically suggesting an increase in the capital gains tax.
It is interesting that these proposals are surfacing. Perhaps one shouldn’t be surprised, given the parallel observations of enormous wealth creation, a looming fear about the impact of AI on jobs and a growing realization that there are also far greater risks to society and mankind from unbounded development of AI.
Twin forces make this debate about ownership of AI likely to become more intense. It is wealthier people who have benefitted more from a rise in stock prices; in parallel to this, there is the prospect is for a coming increase in the power of corporations vs. labor. The US already stands out both globally and compared with its own history in terms of an unprecedented increase in the corporate profit share of gross domestic product (GDP). This is one element, albeit one with potentially ugly social consequences, of the narrative of US exceptionalism that leads to us to recommend that investors maintain a strategic overweight in US equities compared with the rest of the world.
One needs to be humble in making forecasts for what the aggregate productivity gain from AI can be; we are generally cautious about such forecasts. Nevertheless, whatever productivity gain does come about can either arise from enhancing the productivity of a unit of labor or from automating and replacing that unit. Forecasts for AI-driven growth tend to be coy about how much each of these aspects might be at work, and to be fair, it is hard to predict ex ante. However, the current set up, with corporations being able to decide what AI is developed and released, seems set to increase their profit share further through automation.
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