AI could widen gap between have-nots and have-lots

The rapid growth of artificial intelligence (AI) technology could exacerbate the divide between the wealthy elite and the general population, warns Labor assistant minister Andrew Leigh. While the Australian government hopes AI will boost stagnant productivity and end a decade of declining living standards, Leigh expresses concerns that without proper distribution of its benefits, AI could widen the wealth gap.

As the former academic details in a forthcoming book, the issue of AI's impact on inequality has long perplexed economists. Although AI may help reduce wage disparity among workers, Leigh is wary that it could also lead to a greater divide between capital and labor. Automation reduces businesses' dependence on workers to produce goods, and research indicates that those who own productive technology will reap a larger share of the resulting profits.

These gains tend to be more concentrated among households already possessing greater capital, causing the wealth gap to widen over time. Leigh likens the AI revolution to the industrial era, when the rise of industrialization created "robber barons" with unprecedented fortunes, and warns that today's tech titans may continue to pull further away from the majority of workers.

The growing concentration of wealth has fueled populist movements, with politicians like New York City Mayor Zohran Mamdani and Australian Greens leader David Shoebridge gaining traction. Shoebridge vowed during a recent press conference to focus on the one percent, while Labor's Treasurer Jim Chalmers framed tax reforms as vital for rebalancing the treatment of capital and labor.

Despite these concerns, Leigh contends that AI could also positively influence inequality. By augmenting workers' tasks and disseminating knowledge, AI could help lower-skilled employees catch up with more experienced staff. Furthermore, widely sharing ownership of capital, such as through universal superannuation, can ensure that the benefits of AI are more evenly distributed among the population, rather than being concentrated in the hands of a select few.