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Artificial intelligence might be the most transformative technology ever devised. Exactly how its effects will work through the economy is impossible to say, but serious disruption of one kind or another seems likely. Millions of jobs – in the end, maybe most jobs – could radically change, and many will disappear entirely.
Artificial intelligence is poised to be the most revolutionary technology ever developed, promising significant economic disruption. While the precise impact on the economy remains uncertain, it is anticipated to radically alter or eliminate millions of jobs, potentially most jobs in the long run. This massive impending shift raises a critical question for economic policy: how should governments respond to this profound transformation?
A growing number of proposals advocate for imposing new taxes on AI services and investments as a means to slow the displacement of human workers. However, this strategy is fundamentally flawed. Innovation, including AI, is a primary driver of productivity and improved living standards. Deliberately slowing AI adoption would be as ill-advised as historical attempts to resist advancements like electrification. Furthermore, if the U.S. hinders AI progress while other nations advance, it risks not only slower domestic growth but also an accelerated decline in its global competitive standing.
Some proponents argue that AI taxation aims to make AI 'pro-worker' by favoring augmentation over automation. Yet, designing practical policies to implement this distinction is nearly impossible. Automation and augmentation are often interconnected; most jobs involve multiple tasks, and automating one often frees workers to concentrate on others or take on new, more complex responsibilities, thereby augmenting their capabilities. Consequently, blocking automation inadvertently stifles augmentation. The nascent stage of the AI revolution also means that predicting specific labor demands or required skills is impossible, making attempts to direct AI development through taxation impractical and potentially counterproductive to overall economic progress.
Instead of resisting AI investment or trying to redirect it, policymakers should focus on helping affected workers adjust, adapt, and share in the benefits of this technological leap. Given the potential for extraordinarily fast adoption of AI and the resulting abrupt shifts in labor demand, urgent policy measures are necessary. The core principle should be to support the workforce through change, rather than attempting to artificially slow or control the innovation itself. This proactive stance ensures that society can harness the full potential of AI for broad-based prosperity.
The article outlines several concrete policy recommendations to support workers during the AI revolution. These include: 1) State and federal collaboration to roll back pervasive and excessive occupational licensing restrictions, which currently impede job mobility and upskilling opportunities. Such flexibility is crucial as AI could enable workers to perform a wider array of demanding tasks. 2) Reforming unemployment insurance to remove disincentives for employers to hire workers for roles that might not be long-term. 3) Establishing a more robust social safety net for individuals who are displaced from their jobs or forced to relocate. 4) Adjusting the tax code to provide more generous incentives for both workers and employers to invest in retraining and reskilling programs. 5) Expanding the earned income tax credit and shifting the tax base from wages to consumption to stimulate overall labor demand. These policies, while beneficial in any economic climate, become critical and urgent in the face of AI's transformative impact, ensuring that disruptive innovation leads to collective advancement rather than widespread loss.