Submission Statement:
Two (reasonable) grounds for scepticism about AI are that it’s unreliable and will remain so, and that its applications are narrow and mostly confined to programming.
The former is ultimately unfalsifiable; this piece assumes reliability has largely been solved and instead tackles the latter objection.
Written as a speculative post-mortem memo from mid-2028, it treats AI as a general-purpose technology and asks whether its diffusion could shift the capital-labour balance more abruptly than prior technological revolutions.
It explores a scenario in which productivity growth dramatically outpaces labour income growth, weakening aggregate demand and challenging the assumption that automation automatically leads to broad-based prosperity. It also raises fiscal questions about what happens when wage-based tax systems confront an economy increasingly driven by capital-intensive AI production.
Beyond the technology itself, the piece is about political economy: how competitive market incentives, capital deepening, and labour displacement might interact in ways that strain aggregate demand, fiscal stability, and the traditional growth model.
1 Comment
Submission Statement:
Two (reasonable) grounds for scepticism about AI are that it’s unreliable and will remain so, and that its applications are narrow and mostly confined to programming.
The former is ultimately unfalsifiable; this piece assumes reliability has largely been solved and instead tackles the latter objection.
Written as a speculative post-mortem memo from mid-2028, it treats AI as a general-purpose technology and asks whether its diffusion could shift the capital-labour balance more abruptly than prior technological revolutions.
It explores a scenario in which productivity growth dramatically outpaces labour income growth, weakening aggregate demand and challenging the assumption that automation automatically leads to broad-based prosperity. It also raises fiscal questions about what happens when wage-based tax systems confront an economy increasingly driven by capital-intensive AI production.
Beyond the technology itself, the piece is about political economy: how competitive market incentives, capital deepening, and labour displacement might interact in ways that strain aggregate demand, fiscal stability, and the traditional growth model.