History suggests profound technological change presents significant challenges for policymakers. Each of the three previous industrial revolutions had a similar initial impact: it hollowed out jobs across the economy, it led to an increase in inequality and to a decline in the share of income going to labour.
AI threatens to have precisely the same effects, but with one key difference. Left unchecked, owners of the new machines will make enormous sums of money out of their innovations. Capital will see its share of income rise at the expense of labour.
That’s Larry Elliott and normally he’s better than that.
Agreed, certain flavours of economic theory insist that capital will get ever more of the money. But that’s not, in fact, what actually happened. Does anyone really, truly, believe that capital got more of the cash in the High Victorian Age than it did in, say, 1320?