Recently, Palantir – a tech corporation that boasts no fewer than five billionaire executives – announced its Q2 earnings: over a billion dollars generated in a single quarter. Forty-eight per cent growth in its business compared with the same quarter last year, including 93% growth in its US commercial business. These elephantine numbers are maddening – and, in large part, a result of the company fully embracing AI.
The AI revolution is here and, as its proponents remind us daily, it will remake our world, making every company and government agency more efficient and less error-prone while helping us unlock hitherto unheard of advances in science and technology. Not only this, but if we play our cards right, big tech’s latest explosion could yield unprecedented economic growth.
Though, we might ask, growth for whom?
Consider OpenAI, the technology giant behind ChatGPT. In a promo video announcing the latest upgrade for their flagship software, its CEO, Sam Altman, bragged: “It can write an entire computer program from scratch.” Three days later, the New York Times reported that computer science grads “are facing some of the highest unemployment rates” among their peers. And it’s not just coders and engineers. AI-powered automation promises to swallow up jobs at the low end of the labor market too, with McDonald’s, Walmart and Amazon all clamoring to integrate AI tools to automate everything from service interactions to warehouse picking and sorting.
As ex-ante reward for all these cost-cutting layoffs, the fortunes of AI entrepreneurs have ballooned beyond all comprehension. So far, if the AI revolution has succeeded in anything, it is in making very rich people even more rich. Rallies on Wall Street have seen AI stocks surge at a record pace for hundreds of so-called “unicorns” – the nearly 500 AI startups that are valued at more than $1bn each. According to Bloomberg, 29 founders of AI companies are now newly minted billionaires. And remember, nearly all of these firms were founded in the last five years.
Why are investors so bullish on the AI boom? Partly because this technology promises to lay off more workers, more rapidly, than any innovation in recent memory. The ludicrous valuations of AI startups are predicated on the idea that this technology has the power to eliminate the very need for human labor. And the business of layoffs is very lucrative. In that sense, the AI boom could represent the most efficient upward redistribution of wealth in modern history.
To be sure, some AI wizards insist the fallout from all of this won’t be so bad for the little guy. Microsoft even predicts that blue-collar workers might have an edge in the AI economy of the future. But none of this is very convincing. Some workers with durable skills will be able to hold on to good wages and stable work for a time. But with breakthroughs in self-driving cars, increasingly roboticized warehouses, lights-out factories and fully automated restaurants, non-college educated workers are going to feel the AI impact much sooner than rosy predictions suggest.
All of this raises a question about the current direction of our economy and whether a strategy that prioritizes hi-tech development over all else makes any sense any more – or if it ever did. In the late 1990s, the dawning of the knowledge economy was heralded as the solution to many economic woes. As the economy of brains replaced the economy of brawn, Americans were promised new heights of greatness. Sure, factories would close and with them millions of high-wage, union jobs would disappear, but the new jobs at Google would be so much better. As a generation of workers was laid off, their children were encouraged to “upskill”, go to college, and learn to code for the jobs of the future. How ironic, then, that AI, the zenith of knowledge work, is resulting in the abolition of knowledge jobs. Karl Marx once wrote that the bourgeoisie created its own gravedigger in the immiserated proletariat. Today’s tech elite seems intent on realizing that prophecy.
It’s not only that the information age supercharged a new class of oligarchs, from Bill Gates and Jeff Bezos to Elon Musk, who now command unfathomable sums of wealth. It’s also that further down the income ladder, wide class cleavages have opened up along educational lines. As computer-based work became prized, wage inequality between college-educated and non-college-educated workers created a widening social gulf.
Today, one’s position on a variety of cultural divisions – from gender ideology to immigration – can be dependably determined by one’s position in the labor market. Those who still make their money by some combination of craft and muscle are increasingly estranged from those who make theirs through the manipulation and administration of “data”. In urban knowledge hubs, an almost medieval class system prevails, with an untouchable clique of bankers and big tech clerics at the top. A large, relatively well-off layer of lawyers, medical professionals and white-collar knowledge workers are beneath them, followed by a proud, but squeezed group of blue-collar and service workers, and finally, a crisis-ridden group made up of the semi- and permanently unemployed.
Not surprisingly, this inequality has resulted in political dysfunction. Enmity, suspicion, resentment and extreme polarization characterize our civic scene, ultimately making for a politics with no winners except the financial and technological elite, who have effectively monopolized their influence on government. Under Joe Biden, they were showered with incentives and subsidies in the form of the Chips and Science Act. Under Donald Trump, they win tax cuts and deregulation. No matter who is in power, they always seem to get richer.
Socially, the great gains of the knowledge economy have also failed to live up to their promises. With instantaneous global connectivity, we were promised cultural excellence and social effervescence. Instead, we’ve been delivered an endless scroll of slop. Smartphone addictions have made us more vicious, bitter and boring. Social media has made us narcissistic. Our attention spans have been zapped by the constant, pathological need to check our notifications. In the built environment, the omnipresence of touchscreen kiosks has removed even the slightest possibility of social interaction. Instead of having conversations with strangers, we now only interact with screens. All of this has made us more lonely and less happy. As a cure, we’re now offered AI companions, which have the unfortunate side effect of occasionally inducing psychotic breaks. Do we really need any more of this?
Most of what we actually need to achieve some measure of the common good requires common labor. To rebuild our crumbling infrastructure and even to upgrade our electrical grid, we need electricians, steelworkers and bricklayers – not gargantuan data centers. To clean city streets, we need more, and better-paid, sanitation workers – not “smart” trash compactors. To handle problems of crime and social order we need more police officers on patrol – not a fleet of robot crime dogs. To improve transportation, we don’t need self-driving cars, we need buses and trains with people who drive them. In other words, there is plenty of meaningful work to be done, if only we, as a society, invested in the low-tech economy. Not to mention that all the essential stuff of life – love, family, friendship, community – are still best left in analog.
Beyond desirability, investing in a low-tech future might become a necessity. Despite all the hype about the potential for AI, the whole thing could be a mirage. The sheer scale of investor money pouring into the AI craze has all the signs of a speculative bubble. If it bursts, it could sink the already fragile Trumpified economy.
To be sure, this is not a Luddite appeal. Advances in technology should continue apace. But should tech development be the main, and overwhelming, priority of the government? In 2022 Congress approved some $280bn in hi-tech investments. In 2024 private investment in AI alone reached $230bn. This year, buoyed by Trump’s deregulation and Wall Street overconfidence, tech’s biggest companies are set to invest another $320bn in AI and data centers. By comparison, the price tag for Biden’s supposedly mammoth investments in roads and bridges totaled a paltry $110bn. It’s not that we need to throttle technology, but the balance is out of whack.
Marx – who was as great a promethean progressive as one could find – thought technology ought to serve social and human needs. Today, we have the formula exactly backwards – society serves tech. Of course, Silicon Valley leaders like to tell us that the increasingly complex challenges of the future will only be solved by yet more investments in R&D, yet more deregulation and clearance for ever-larger voltage-greedy data centers. But it’s not the complex problems of the future that are the most intractable. It’s the age-old conundrums of money, class and power.
