Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Spencer Jakab wrote an interesting article regarding spending by the AI giants. These companies were formerly touted as being capital-light. Amazon, Alphabet, Oracle, Meta and Microsoft are projected to have capital expenditures of $354 billion collectively in the 2025 fiscal year. This amount is three times their capex spending in 2021, the year before ChatGPT launched.
"The tech giants’ outlay as a share of total U.S. investment rivals historic building sprees like railroads [emphasis added]. A server or an Nvidia chip, though, have a much shorter useful life than a mile of track, or a fiber-optic cable. The amount customers will pay for AI models also is less certain than for shipping a ton of coal."
"AI is likely to cause significant disruption in the job market. What can we do as a society to ameliorate the resulting impact? "
Every capitalist enterprise looks only at the set of financial conditions and projections which will likely affect that particular enterprise. None take into account the combined effects to or of the entire economy.
That's not a criticism, just an observation of the inherent limitations of a capitalist economy.
The other option is a centrally controlled and directed economy. The track record there isn't so hot either.
"Every capitalist enterprise looks only at the set of financial conditions and predictions which will likely affect that particular enterprise. None take into account the combined effects to or of the entire economy. That's not a criticism, just an observation of the inherent limitations of a capitalist economy."
I tend to agree with you. Let's say AI advances in the next decade cause long-term unemployment rates to spike to 15%. Think about how detrimental this would be to the economy and society as a whole. Wouldn't it be better if the U.S. had rational, well-thought out programs to lessen the overall impact?
Note: I don't count on the current Trump administration to develop or promote such programs.
Maybe they can train the robots to buy a lot of stuff so they won't need any people to do that. It shouldn't take all that long for a great number of people to die off anyway, and then the robots will just keep things moving along.
Here’s what heshe it said when I entered your question:
If artificial intelligence replaces most human jobs, the primary concern is that widespread unemployment would drastically reduce consumer spending power, potentially undermining the economy's foundation. The core issue lies in the economic paradox: businesses rely on people with income to purchase their products, but if AI eliminates jobs, those people no longer have paychecks to spend. This could lead to a scenario where companies face shrinking demand even as profits rise temporarily from reduced labor costs.
Some argue that the solution lies in a shift toward a two-class economic system, where wealth is concentrated among owners and investors who can afford luxury goods, while the majority of people, lacking income, cannot participate in the consumer market. This model is already reflected in sectors like gaming, where a small fraction of high-spending users ("whales") fund the experience for the rest. High-end brands are thriving, suggesting a growing market for the wealthy, but this does not address the broader issue of mass economic exclusion. To counteract this, several potential solutions are being discussed. Universal Basic Income (UBI), where every citizen receives a guaranteed monthly income regardless of employment, is proposed to ensure people have money to spend and keep the economy functioning. However, critics note that UBI may not be sufficient to counter inflation or provide long-term stability. Another idea is a "robot tax" on companies that replace human labor with AI, with the revenue used to fund UBI, job retraining, or social programs. This could discourage excessive automation and help redistribute wealth.
Alternatively, the focus could shift toward creating new job sectors that leverage uniquely human skills, such as emotional intelligence, creativity, and complex problem-solving, which AI cannot easily replicate. This would require massive investment in education and workforce retraining to help displaced workers transition into these new roles. Some also suggest that technological advancements could be designed to save time, thereby freeing up human time for consumption, though this alone may not solve the long-term demand-supply imbalance. Ultimately, the future depends on societal choices: whether to implement policies that balance automation with human livelihood, such as UBI or progressive taxation, or risk an economic system where only the wealthy can afford to buy the products created by AI-driven companies.
Seems to me that your AI failed to consider a third alternative: a well armed majority of people, lacking income, attempt to shoot their way back into eating regularly.
A few quick comments regarding the AI-driven suggestions listed above. A shift towards a two-class system with tremendous wealth disparities — greater than already significant disparities — is ludicrous. The masses would revolt. Local Universal Basic Income (UBI) programs have been implemented in several communities. UBI would be difficult to scale nationally and it smacks of socialism in a very capitalistic society. A "robot tax" used to fund job training or social programs could be beneficial.
Too far over my head at the moment … The wide and growing wealth disparity is already a source of angst not just for you and me, but for some of the wealthiest who have at least paid lip service to it like Buffett and Dalio. On one hand, there exist a privileged few having private schools and gated communities, private jets and yachts, while on the other hand there exist people living hand to mouth and receiving cursory governmental protection and service. The middle has been shrinking. The imbalance growing.
What are the root causes? That’s where it gets tricky. Is it a result of ever advancing technology? Capitalism? Republicans? Or perhaps the continued dumbing down of the populace by the internet and cable news outlets that seek to arouse rather than inform? In this area, even local news outlets are owned by right wing Sinclair and spout right wing fear and propaganda.
I know the gap is real. We still had strong labor organizations back in my working years. Like many, I benefitted from that. But unions have been wilting away for several decades with the blessing of the far right and many wealthy.
The disparity exists not only at the dinner table, but also in education / educational opportunity, medical care. I suspect if also affects the degree of justice meted out to citizens of different socio-economic levels. Hell, I don’t know what can be done about it. I’ll leave it to you guys much brighter than me to come up with the answer.
Generally we were taught some basic problem solving steps in grade school.
- Identify the problem
- Devise a list of possible solutions
- Consider & evaluate each one
- Select the best solution
- Implement
But if our leaders can’t even keep the government open and pay government workers how do you expect them to engage in any serious problem solving?
Karl Marx was right philosophically. But put into practice Communism failed dismally to work. Human nature I guess to want a bigger slice of the pie then your neighbor.
MANY years ago I thought the increasing wealth gap would lead to a revolution but it hasn't, yet... I could never understand the hording of money as I thought the more you pay your workers the more money they'll have to buy your products. Why take a chance of them revolting. The more money among the masses would lead to more and more consumption which would lead to even more wealth for the wealthy. Aside: what, we now have multiple 4-5 trillion dollar companies, that's just crazy. FIVE TRILLION DOLLARS!!
As a 10 year old kid in the 50s we learned at school (and thru our Weekly Reader) that as science and technology progressed it would lead to shorter and shorter work weeks for the average Joe as they partook of the benefits. Sure as hell didn’t work out that way.
Living standards is a harder nut to crack. Certainly there is no comparison to the 50s when we struggled to steer a car w/o power steering and one likely to rust out in 5 or 6 years. The electronics at our command were unimaginable then. However, the wealth disparity is much greater and growing. Go figure.
Comments
What can we do as a society to ameliorate the resulting impact?
These companies were formerly touted as being capital-light.
Amazon, Alphabet, Oracle, Meta and Microsoft are projected to have capital expenditures
of $354 billion collectively in the 2025 fiscal year.
This amount is three times their capex spending in 2021, the year before ChatGPT launched.
"The tech giants’ outlay as a share of total U.S. investment rivals historic building sprees like railroads [emphasis added].
A server or an Nvidia chip, though, have a much shorter useful life than a mile of track, or a fiber-optic cable.
The amount customers will pay for AI models also is less certain than for shipping a ton of coal."
https://marketsam.cmail20.com/t/d-e-gjlhriy-duklntldl-r/
Every capitalist enterprise looks only at the set of financial conditions and projections which will likely affect that particular enterprise. None take into account the combined effects to or of the entire economy.
That's not a criticism, just an observation of the inherent limitations of a capitalist economy.
The other option is a centrally controlled and directed economy. The track record there isn't so hot either.
and predictions which will likely affect that particular enterprise.
None take into account the combined effects to or of the entire economy.
That's not a criticism, just an observation of the inherent limitations of a capitalist economy."
I tend to agree with you.
Let's say AI advances in the next decade cause long-term unemployment rates to spike to 15%.
Think about how detrimental this would be to the economy and society as a whole.
Wouldn't it be better if the U.S. had rational, well-thought out programs to lessen the overall impact?
Note: I don't count on the current Trump administration to develop or promote such programs.
Here’s what
hesheit said when I entered your question:If artificial intelligence replaces most human jobs, the primary concern is that widespread unemployment would drastically reduce consumer spending power, potentially undermining the economy's foundation. The core issue lies in the economic paradox: businesses rely on people with income to purchase their products, but if AI eliminates jobs, those people no longer have paychecks to spend. This could lead to a scenario where companies face shrinking demand even as profits rise temporarily from reduced labor costs.
Some argue that the solution lies in a shift toward a two-class economic system, where wealth is concentrated among owners and investors who can afford luxury goods, while the majority of people, lacking income, cannot participate in the consumer market. This model is already reflected in sectors like gaming, where a small fraction of high-spending users ("whales") fund the experience for the rest. High-end brands are thriving, suggesting a growing market for the wealthy, but this does not address the broader issue of mass economic exclusion. To counteract this, several potential solutions are being discussed. Universal Basic Income (UBI), where every citizen receives a guaranteed monthly income regardless of employment, is proposed to ensure people have money to spend and keep the economy functioning. However, critics note that UBI may not be sufficient to counter inflation or provide long-term stability. Another idea is a "robot tax" on companies that replace human labor with AI, with the revenue used to fund UBI, job retraining, or social programs. This could discourage excessive automation and help redistribute wealth.
Alternatively, the focus could shift toward creating new job sectors that leverage uniquely human skills, such as emotional intelligence, creativity, and complex problem-solving, which AI cannot easily replicate. This would require massive investment in education and workforce retraining to help displaced workers transition into these new roles. Some also suggest that technological advancements could be designed to save time, thereby freeing up human time for consumption, though this alone may not solve the long-term demand-supply imbalance.
Ultimately, the future depends on societal choices: whether to implement policies that balance automation with human livelihood, such as UBI or progressive taxation, or risk an economic system where only the wealthy can afford to buy the products created by AI-driven companies.
A shift towards a two-class system with tremendous wealth disparities —
greater than already significant disparities — is ludicrous.
The masses would revolt.
Local Universal Basic Income (UBI) programs have been implemented in several communities.
UBI would be difficult to scale nationally and it smacks of socialism in a very capitalistic society.
A "robot tax" used to fund job training or social programs could be beneficial.
What are the root causes? That’s where it gets tricky. Is it a result of ever advancing technology? Capitalism? Republicans? Or perhaps the continued dumbing down of the populace by the internet and cable news outlets that seek to arouse rather than inform? In this area, even local news outlets are owned by right wing Sinclair and spout right wing fear and propaganda.
I know the gap is real. We still had strong labor organizations back in my working years. Like many, I benefitted from that. But unions have been wilting away for several decades with the blessing of the far right and many wealthy.
The disparity exists not only at the dinner table, but also in education / educational opportunity, medical care. I suspect if also affects the degree of justice meted out to citizens of different socio-economic levels. Hell, I don’t know what can be done about it. I’ll leave it to you guys much brighter than me to come up with the answer.
Generally we were taught some basic problem solving steps in grade school.
- Identify the problem
- Devise a list of possible solutions
- Consider & evaluate each one
- Select the best solution
- Implement
But if our leaders can’t even keep the government open and pay government workers how do you expect them to engage in any serious problem solving?
Karl Marx was right philosophically. But put into practice Communism failed dismally to work. Human nature I guess to want a bigger slice of the pie then your neighbor.
Living standards is a harder nut to crack. Certainly there is no comparison to the 50s when we struggled to steer a car w/o power steering and one likely to rust out in 5 or 6 years. The electronics at our command were unimaginable then. However, the wealth disparity is much greater and growing. Go figure.