AI Bans Could Be On the Horizon
Governments have few options to tackle AI replacement
Four headlines caught my attention this morning. One was purely geopolitical: Europe is debating how to retaliate against Russia’s hybrid warfare, including joint cyber attacks.
For now, the probability of Europe actually doing this is at 0%. The goal is simply to float the idea of retaliation, hoping it deters further Russian action (which it will not).
AI Replacement
The other three headlines, however, were all about AI.
First, large consulting companies are freezing salaries as AI changes the business model. Second, Accenture is shifting deeper towards AI, referring to its 800,000 employees as “reinventors.”
Third, and perhaps the most alarming, a new study from MIT has found that almost 12% of US jobs can already be replaced by AI, representing $1.2 trillion in wages. That is equal to the entire GDP of Switzerland.
As thousands of workers are laid off, partly because companies are employing LLMs (large language models) to do human tasks, a major headache is forming. The job market is overloaded and crowded, as new graduates face off with seasoned professionals, who are themselves competing against younger, cheaper, and equally skilled applicants in other geographies. Outsourcing is colliding with national success, which is colliding with technological efficiency.
New Tax
Except, the AI-replacement that has occurred so far may not even be dress rehearsal, as the MIT study points out. The big question now is whether governments take some preemptive action before the situation snowballs.
In a strange paradox, countries need to slow down AI adoption (to protect workers) while powering AI development (to build power).
An “AI tax” has been proposed many times in the past.
Companies would pay taxes on the machines they employ. Except, there is too much vagueness here. For instance, if the OECD passes an AI tax, but a Silicon Valley firm is only employing AI to a “high degree” in its home market (the US), how does the tax work? Could the UK force this company to pay an AI tax even though the AI has not replaced British workers? Would this company be obligated to pay an AI tax to every OECD state?
Passing an AI tax (or robot tax) does not guarantee a solution. Rather, it could lead to a new collision between governments and Big Tech.
AI Ban?
Instead, some governments might opt simply for AI bans.
This would mean that countries ban companies from replacing workers with AI, or at least set a ceiling (i.e., only 3% of jobs can be replaced with machines). This might sound radical, challenging the tenets of capitalism. But governments are observing a tsunami approaching, and options are limited. Massive joblessness will require huge government budgets, which most do not have (look at France). Or it could cascade into extreme social and political instability, which nobody wants (look at Asia and Africa, where Gen Z are revolting).
What many are realizing is that low-skilled, high-skilled, blue collar, and white collar no longer matter. Everybody is at risk from AI replacement, from graphics designers to financial strategists. And with the pool of skilled jobs shrinking, and interest in other fields, like trucking or trade skills, fading, many countries are staring at a ticking time bomb.
Either governments will act preemptively and impose new policies that “control” how AI can spread within their societies. Or they will act after a crisis begins, and respond in impulsive ways, making an AI ban more likely.
AI bans could soon become the first card that governments play, permanently changing the AI calculations of the world.
Threat > Opportunity
However, AI bans alone do not provide long-term security.
If Kenya bans AI in certain professions to protect labor, it does not stop Western or European firms from employing AI in their operations, and cutting investments in the Kenyan market (and job creation).
Put differently, governments can only control what happens within their borders, not outside of them.
And this raises the likelihood that dramatic fights are likely to form between the state and global businesses, quickly spilling over into the geopolitical domain, as some countries begin to treat the rise of AI as a threat, not just an opportunity. The moment the perception of AI changes, the moment that domino is pushed, it will ricochet in all directions.
As the world frets about an AI bubble, the pin that might pop it is the next step a major economy takes to ensure stability.
-ABISHUR PRAKASH AKA. MR. GEOPOLITICS
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