The Real Threat Of Artificial Intelligence - Keynesian Dystopia

Tyler Durden's picture

Authored by Kai-Fu Lee, originally posted at The New York Times,

What worries you about the coming world of artificial intelligence?

Too often the answer to this question resembles the plot of a sci-fi thriller. People worry that developments in A.I. will bring about the “singularity” — that point in history when A.I. surpasses human intelligence, leading to an unimaginable revolution in human affairs. Or they wonder whether instead of our controlling artificial intelligence, it will control us, turning us, in effect, into cyborgs.

These are interesting issues to contemplate, but they are not pressing. They concern situations that may not arise for hundreds of years, if ever. At the moment, there is no known path from our best A.I. tools (like the Google computer program that recently beat the world’s best player of the game of Go) to “general” A.I. — self-aware computer programs that can engage in common-sense reasoning, attain knowledge in multiple domains, feel, express and understand emotions and so on.

This doesn’t mean we have nothing to worry about. On the contrary, the A.I. products that now exist are improving faster than most people realize and promise to radically transform our world, not always for the better. They are only tools, not a competing form of intelligence. But they will reshape what work means and how wealth is created, leading to unprecedented economic inequalities and even altering the global balance of power.

It is imperative that we turn our attention to these imminent challenges.

What is artificial intelligence today? Roughly speaking, it’s technology that takes in huge amounts of information from a specific domain (say, loan repayment histories) and uses it to make a decision in a specific case (whether to give an individual a loan) in the service of a specified goal (maximizing profits for the lender). Think of a spreadsheet on steroids, trained on big data. These tools can outperform human beings at a given task.

This kind of A.I. is spreading to thousands of domains (not just loans), and as it does, it will eliminate many jobs. Bank tellers, customer service representatives, telemarketers, stock and bond traders, even paralegals and radiologists will gradually be replaced by such software. Over time this technology will come to control semiautonomous and autonomous hardware like self-driving cars and robots, displacing factory workers, construction workers, drivers, delivery workers and many others.

Unlike the Industrial Revolution and the computer revolution, the A.I. revolution is not taking certain jobs (artisans, personal assistants who use paper and typewriters) and replacing them with other jobs (assembly-line workers, personal assistants conversant with computers). Instead, it is poised to bring about a wide-scale decimation of jobs — mostly lower-paying jobs, but some higher-paying ones, too.

This transformation will result in enormous profits for the companies that develop A.I., as well as for the companies that adopt it. Imagine how much money a company like Uber would make if it used only robot drivers. Imagine the profits if Apple could manufacture its products without human labor. Imagine the gains to a loan company that could issue 30 million loans a year with virtually no human involvement. (As it happens, my venture capital firm has invested in just such a loan company.)

We are thus facing two developments that do not sit easily together: enormous wealth concentrated in relatively few hands and enormous numbers of people out of work. What is to be done?

Part of the answer will involve educating or retraining people in tasks A.I. tools aren’t good at. Artificial intelligence is poorly suited for jobs involving creativity, planning and “cross-domain” thinking — for example, the work of a trial lawyer. But these skills are typically required by high-paying jobs that may be hard to retrain displaced workers to do. More promising are lower-paying jobs involving the “people skills” that A.I. lacks: social workers, bartenders, concierges — professions requiring nuanced human interaction. But here, too, there is a problem: How many bartenders does a society really need?

The solution to the problem of mass unemployment, I suspect, will involve “service jobs of love.” These are jobs that A.I. cannot do, that society needs and that give people a sense of purpose. Examples include accompanying an older person to visit a doctor, mentoring at an orphanage and serving as a sponsor at Alcoholics Anonymous — or, potentially soon, Virtual Reality Anonymous (for those addicted to their parallel lives in computer-generated simulations). The volunteer service jobs of today, in other words, may turn into the real jobs of the future.

Other volunteer jobs may be higher-paying and professional, such as compassionate medical service providers who serve as the “human interface” for A.I. programs that diagnose cancer. In all cases, people will be able to choose to work fewer hours than they do now.

Who will pay for these jobs? Here is where the enormous wealth concentrated in relatively few hands comes in. It strikes me as unavoidable that large chunks of the money created by A.I. will have to be transferred to those whose jobs have been displaced. This seems feasible only through Keynesian policies of increased government spending, presumably raised through taxation on wealthy companies.

As for what form that social welfare would take, I would argue for a conditional universal basic income: welfare offered to those who have a financial need, on the condition they either show an effort to receive training that would make them employable or commit to a certain number of hours of “service of love” voluntarism.

To fund this, tax rates will have to be high. The government will not only have to subsidize most people’s lives and work; it will also have to compensate for the loss of individual tax revenue previously collected from employed individuals.

This leads to the final and perhaps most consequential challenge of A.I. The Keynesian approach I have sketched out may be feasible in the United States and China, which will have enough successful A.I. businesses to fund welfare initiatives via taxes. But what about other countries?

They face two insurmountable problems. First, most of the money being made from artificial intelligence will go to the United States and China. A.I. is an industry in which strength begets strength: The more data you have, the better your product; the better your product, the more data you can collect; the more data you can collect, the more talent you can attract; the more talent you can attract, the better your product. It’s a virtuous circle, and the United States and China have already amassed the talent, market share and data to set it in motion.

For example, the Chinese speech-recognition company iFlytek and several Chinese face-recognition companies such as Megvii and SenseTime have become industry leaders, as measured by market capitalization. The United States is spearheading the development of autonomous vehicles, led by companies like Google, Tesla and Uber. As for the consumer internet market, seven American or Chinese companies — Google, Facebook, Microsoft, Amazon, Baidu, Alibaba and Tencent — are making extensive use of A.I. and expanding operations to other countries, essentially owning those A.I. markets. It seems American businesses will dominate in developed markets and some developing markets, while Chinese companies will win in most developing markets.

The other challenge for many countries that are not China or the United States is that their populations are increasing, especially in the developing world. While a large, growing population can be an economic asset (as in China and India in recent decades), in the age of A.I. it will be an economic liability because it will comprise mostly displaced workers, not productive ones.

So if most countries will not be able to tax ultra-profitable A.I. companies to subsidize their workers, what options will they have? I foresee only one: Unless they wish to plunge their people into poverty, they will be forced to negotiate with whichever country supplies most of their A.I. software — China or the United States — to essentially become that country’s economic dependent, taking in welfare subsidies in exchange for letting the “parent” nation’s A.I. companies continue to profit from the dependent country’s users. Such economic arrangements would reshape today’s geopolitical alliances.

One way or another, we are going to have to start thinking about how to minimize the looming A.I.-fueled gap between the haves and the have-nots, both within and between nations. Or to put the matter more optimistically: A.I. is presenting us with an opportunity to rethink economic inequality on a global scale. These challenges are too far-ranging in their effects for any nation to isolate itself from the rest of the world.

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knukles's picture

Progressives are Artificial Intelligence.  And see what happens, Larry?

TeamDepends's picture

These hobosexuals will be the death of us all (jumps through window)!!!

tmosley's picture

> At the moment, there is no known path from our best A.I. tools

Idiot NY Times reporters behind the curve as usual. Deepmind cracked the last barrier to AGI last week (or at least disclosed that fact). Their algorithm works just like the claustrum, allowing transfer learning between seemingly different domains, ie object recognition to voice recognition to translation.

This is the first "general" intelligence that we have created. They will get more complex and more useful QUICKLY.

HillaryOdor's picture

The failing NY Times makes me sick to read.  This is the height of delusion, not only the AI fantasy of what's coming, not only the notion that having less work to do is bad, not only the pre-planned government response, but most of all the idea that this planned utopia, built on the stolen wealth of generation after generation, is suddenly going to permanently end wealth inequality.  Gee, where have I heard that one before?  Oh yeah every communist revolution ever.  NYT sticking to their roots as always.  Delusional morons, all of them.

Stuck on Zero's picture

When diesel tractors came along and eliminated 30% of the (farm) jobs in America did a Keynesian government put them all on the dole?

When refrigerators put all icemen out of work did government put them all on the dole?

When the fractional horsepower electric motor put millions out of work did the government put them all on the dole?

When automation put half of all manufacturing people out of work did government put them all on the dole?

HillaryOdor's picture

Indeed.  It boggles the mind how we aren't already in utopia with all this assistance.  It's almost like it's put us in reverse.  I guess we just need more government, as always, just a little more.

tmosley's picture

Fewer people than ever are working productive jobs, yet we still have nearly the same standard of living.

Those who are productive have ever more and more leverage on their labor, thanks to technological advancement. Every other instance of growth of the non-working, or destructive class (ie overregulating governments) in history has lead to immeasurable destruction. This time is different. Pray that the trend towards increased productivity continues to match if not outpace the growth of government and the rest of the non-productive/destructive population.

RockySpears's picture

"we still have nearly the same standard of living"


  Really?  You think so?


Looking at where my children are compared to my wife and I, I think not,



playit's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do,...

SeaMonkeys's picture

I agree with you, RockySpears:

The "standard of living" of the human race has been increasing since the stone age, but that is measured in absolute terms only.

It's like George Orwell's Animal Farm. In theory, all animals are equal. In practice, some animals are more equal than others.

In absolute terms, a slave today is better off than a free man in antiquity. 

You are right to think of the very real future of your kids. They are entering a very unforgiving society. Our parents paid 25% of their income for housing, had free public universities, affordable healthcare, and real vacations. 

Nexus789's picture

Generally the standard of living has been supported by a growing mountain of debt. People are not in lines standing outside soup kitchens as indirectly debt via government borrowing is hiding the unemployed. None of this is sustainable. 

SeaMonkeys's picture

The government debt is to a large extent unnecessary. Our system of a debt based national government is due to Alexander Hamilton. Had we stayed with the articles of confederation, we would be a healthier, happier, and stronger country. Hamilton wanted the national debt to function as a savings account for the elites.

He got his way, and now we have $20T of interest bearing savings for the silver-spoons of the country. This is Hamilton's design. The vehicle for manufacturing the "need" for debt was and still is war.

Our national debt is approximately equal to the cost of all our wars. 

If the Jefferson/Jackson vision of America had won, we would be largely debt free and autonomous in spirit if not flesh.

Benjamin Franklin went to England in the mid 1700's and talked with the elites there. They complained to him that their economy was depressed, unemployment high. Franklin told them to do what the colonies were doing. Stop using privately issued debt money from the Bank of England and start using debt free sovereign money. 

The colonies at that time were prosperous and productive. 

Immediately the Bank of England told the crown that the colonies should be forbidden to use their own money. They had to use the BOE's debt money. The colonies then plunged into economic depression and we eventually had the American Revolution.

This is the history of our country that the elites don't want us to know. 

When Hamilton got his way, the net effect was to reverse our victiory in the American Revolution.

waspwench's picture

A lot people are living on their capital, others are eating their seed money, whole societies are operating on debt. 

When everything has been used up, when no-one will extend any more credit, what then?

Is-Be's picture

Ban earthmoving equipment. Give em all shovels.

Creative_Destruct's picture

" Imagine how much money a company like Uber would make if it used only robot drivers."

If Uber had to shell out the capital for a nationwide fleet of depreciating automobiles, it would cease to exist. Right now the ONLY thing that's keeping this scam of a company going is the SUCKERS who drive for it who put the wear and tear on their car...and then fail to understand that this depreciation is a real expense. Add it up, and these fools make FAR less than minimum wage.

Troy Ounce's picture
The problem is globalisation. Strong nation states and gradual diminishing import duties on everything that has been produced by AI machines in the answer. For a leader in developing countries the answer should be clear. Who do you give preference to: the shareholder of a far away bank or the labourer in your own country?
PT's picture

Oh for fuck's sake.

Eeeek!!!  We're all doomed.  The machines are going to do all the work and make everything but no-one will be able to buy anything becoz they won't have any munny becoz they won't have any jobs!!!

In the future, everyone will be either starving or in jail becoz:

Pretty soon we'll be able to run the whole economy with ten men but even they won't be able to afford to buy anything becoz there will be 7 billion people competing for their jobs (and no way could we possibly pay them moar than wot a free markit demands ) and they'll be willing to work for free becoz at least then they can steal food from work but then we will have to put them in jail becoz stealing is a crime!!!

Who writes these articles?  I DO NOT want whatever it is they are taking.

Oh noes!!!  Someone gave me a Ferrari so now I'll get fat becoz I will drive it everywhere insted of walking!!!

- Bad example.  On the one hand, a gift Ferrari could be viewed as a curse because the servicing costs will bankrupt a normal person and they may feel obliged to keep it because it is a gift ( White elephant anyone?  Well, a Ferrari is slightly better than a white elephant to the average yob ).  Or the normal person could just thrash the Ferrari and enjoy its short life - easy come, easy go - or sell it and get a couple of extra bucks.

Point being that JOBS is NOT the problem.  ROBOTS AND AI ARE NOT THE PROBLEM!!!!!  ROBOTS AND AI ARE / SHOULD BE THE SOLUTION!!!  PRODUCTION and DISTRIBUTION are the problems.  And people who are too dumb to figure that out NEED to be shot before they enslave us all.  In fact they have ALREADY enslaved us all.  Built-in obsolescence, anyone???  Or at least pay these idiots three cents per day to dig dirt by hand when there is a perfectly good excavator near-by.  Keep the fuckers busy doing stupid shit all day so they don't harm the rest of humanity.  Who knows?  After a few decades they may even come to their senses.

SeaMonkeys's picture

You hit the nail on the head. Capitalism as we know it is dying. We have a choice. Let the fantasy of ownership continue and push the GINI coefficient for planet earth to 1-where one person owns it all and the rest of the people on planet earth have to thank him for allowing us to live, or move in a direction that puts emphasis on real problems, not artificially created scarcity.

paradox's picture

+1 for the Big Lebowski reference.

TheBillMan's picture

Exactly, except most of the triggered, butt-hurt students at Evergreen State out where I live really aren't all that bright.  Have you seen the pics of the screeching protesters?


MK13's picture

The other option is not to use AI. No job reductions, no servitude, no progressive shit sold as big shit burger. That's all this is.

Great Deceivah's picture

>I would argue for a conditional universal basic income


More libtard propaganda from the Jew York times...

Libtard morons live in a dreamworld

They don't know what argument to use to justify the welfare state, the elimination of cash and "universal basic income"


Anyone who thinks that intelligent robots will be cheap and plentiful is dreaming

Just like cars.. robots will eventually be everywhere, and they will break down, wear down and have mechanical problems just like cars.. plus independent AI robots will be attacked, dismantled and sold for parts or reprogrammed by out-of-work humans just like they do with cars, and even more so, since no sane human is going to feel guity about beating the shit out of a robot, and scraping it for parts


Just like you have third world favelas, where police cannot enter, there will be no-robot zones where any robot caught going in, will be attacked and dismantled by poor humans.

So, yes Jew York times, keep on selling us your usual libtard fantasies, just like they did with the industrial revolution and the post-industrial world

People in the real world always know how your predictions turn out..

knukles's picture

Why, I'm a Luddite and proud of it.
I mean, I got shit rusting in mah front yard I ain't even bought yet.

Creative_Destruct's picture

SMILE... and " ...argue for a conditional universal basic income: welfare offered to those who have a financial need, on the condition they either show an effort to receive training that would make them employable or commit to a certain number of hours of “service of love” voluntarism.

The statist feel-good "service of love" tripe should be suplemented with Brave New World SOMA... better yet, skip the "service" and just drug us ALL up, stick a feeding tube down our throats and spare us this delusional crap.


OverTheHedge's picture

Can't we just agree to call it what it is: helicopter money!

Another 10 years at least with that lick of paint - your economy is good to go!

besnook's picture

how are companies going to be wealthy when there are no consumers of their product. that is the real dystopia. these dumbasses suffer from the cognitive dissonance of genius. ai will replace geniuses along with the dumb even to create ai themselves. then what do you do?

Oldwood's picture

You misunderstand utopia.

We will tax our manufacturers the money to provide us the funds to purchase their products and services. Easy peasy. No one ever need work again. This is the genius of progressivism that we have been pursuing all these years.

Just when we got the cattle to eat 100% sawdust, they inexplicably all just up and died. Something always pops up to disrupt the perfect plan.

Creative_Destruct's picture

YES. Why not just cut ot the Keynesian chase? Pay the competent 20% to actually PRODUCE something and then pay the other 80% to be be PROFESSIONAL CONSUMERS...

The perfect, centrally planned, Keynesian utopia/dystopia "circular flow of income and product." The perfect economic perpetual motion machine.

Is-Be's picture

You have a better plan?

  "This is what it is like as a species prepares to depart for the stars. Its a fire in a madhouse" Terrance McKenna.

tmosley's picture

Sit back and enjoy the fruits of robotic labor--forever.

besnook's picture

so the companies are going to pay a 110% tax to make sure they grow into the future?

tmosley's picture

No. Home robotization is the future. You will own a robot, and it will participate in the robot economy. No human intervention required. Goods flow in and goods flow out, without you even noticing. Your robot built a fab plant 100 feet under your house.

besnook's picture

so a robot is going to be assigned to you to replace your labor? or do you have to pay for the robot and contract it out? and who will assign this robot to you? and at what cost? another robot?

tmosley's picture

As prices fall, prices will fall.

Robot factories will produce robots at such low costs that they will be freely distributed. The newsest models might cost money, which can be had by selling land or other things with real value.

Of course, the first AGI robots will cost multiple thousands of dollars. Suggest you have bone on hand for that.

Is-Be's picture

Man, but there are some Debbie Downers on a this thread.

Eat magic mushrooms downvoter. Psilocibin has been shown to reduce depression permanently in double blind crossover experiments.

waspwench's picture

You think you will still have anything left to sell?

any_mouse's picture

Alexa on Steroids.

The UPS/FEDEX bot will only require Alexa's e-sig for delivery.

Because the robots are busy maintaining your lifestyle and your home, you will confined to certain areas of your home where it will be safe for a meat puppet to wander about aimlessly.

PeeramidIdeologies's picture

No. Software will proliferate, hardware is going to die a horribly expensive death.

any_mouse's picture

Retrain everybody to be trial lawyers before AI judges and AI juries. Great.

Sonny Brakes's picture

Trial lawyers for what? Who's going to be breaking the law when they're under surveillance 24/7? Who's going to want to be told what to do on a daily basis? 

besnook's picture

ai is already replacing human lawyers .human lawyers won't be needed at all.

DjangoCat's picture

Think of this.  All Ai take electrical energy to drive the CPU.  What we see now at Google, Facebook, Bitcoin mining centres, are Massive centralised datacenters eating up power and generating a lot of useless heat.

In the blockchain model, the chain works best if decentralised, spread over many diverse computers.  In this scenario, the waste heat can be used for home heating and cooling, greenhouse heating and so on.  The centralised model we are looking at now results in the concentration of wealth.  The decentralised system results in the spread of wealth, and is more efficient in its use of power.

Let us develop decentralised AI systems, privately owned autonomous cars and trucks.  Tax the shit out of centralised systems to provide basic income to the incompetent, but encourage the small scale decentralised systems that we the middle class can fund and reap the benefit from.


Exalt's picture

Why care for the incompetent? I have yet to hear a compelling reason.

PT's picture

Because they are the ONLY THING that make YOU look good.

Think about it.





Other than that, yeah, I get your point.

Common_Law's picture

They could fix all that wasted energy if they just learned to use energy from the vacuum.

Tom Bearden is a very interesting guy.

Is-Be's picture

Judy Woods said that the reason they jumped Poms and Fleischman is because P&F had stumbled into their patch.

I'm talking about a breakaway civilization. Prof. Woods said that she gets much support in the corridors from her peers, but none out in the open. They have to ensure that they get their budget.

Judy is not taken seriously because she is a girl. 

But the Girl has three degrees and is a fully fledged professor.

Sometimes it pays not to be taken seriously.

Great Deceivah's picture


Once cheap oil runs out, there won't be enough cheap energy to keep useless datacenters running.. all remining oil will to the most basic necessities.. like agriculture.

Once the cheap oil mirage ends, it will put to an end all the libtard utopia dreamland of rainbows and unicorns

Sonny Brakes's picture

Am I the only one that sees AI removing our choices? This article paints a view that won't exist once AI takes over. How do countries that are not the United States or China participate? I don't see this thing working for the benefit of mankind.