What hasn't been said about artificial intelligence? It's a disruptor, a game changer, the next technological revolution. Soon we'll all be chilling with our feet up while our AI assistants do all the heavy lifting — right?

One economist isn't so sure. A new study by Caleb Maresca at New York University predicts that just the looming possibility of transformative AI has the potential to completely upend the economy in a bad way, decimating wages and sending interest rates skyward.

"My findings reveal that expectations of [transformative AI] can substantially affect current economic conditions," Maresca writes, "even before any technological breakthrough occurs."

The study looks at possible dates when AI will be ready to automate work — what Maresca calls "transformative AI" — to predict how the hype will affect the economy, in a thought experiment that raises grim possibilities.

For one thing, a growing expectation that AI will gut the price companies pay for work could lead to huge increases in interest rates — the cost of expected inflation on borrowed money — by as much as 10-16 percent in some scenarios. This would mean the cost of starting a new business or buying a house goes to the Moon, scaring people into saving more and spending less. (That might be prudent on an individual level, but at scale, it's generally seen as bad for the health of the economy.)

It's impossible to know just how much work AI will actually end up taking over, but the study safely assumes big business will revel in any chance to cut costs on labor — no doubt the ultimate endgame of AI development. Indeed, today's ultra-wealthy are already positioning to take the helm, boosting AI hype as they do.

Just weeks ago, OpenAI CEO and billionaire Sam Altman declared that AI will require a new social contract. Earlier, fintech CEO Sebastian Siemiatkowski bragged that his company's AI agent could do the work of "700 full-time" employees while laying off 22 percent of his workforce. And of course there's Elon Musk, who once pined that "jobs will be optional for humans" in the near future.

But Maresca's work indicates otherwise.

"When AI automates a job — whether a truck driver, lawyer, or researcher — the wages previously earned by the human worker don’t vanish or automatically transform into broader economic gains," the economist notes. "Instead, they flow to whoever controls the AI system performing that job."

That's great news for anyone who owns an AI company, and bad news for the rest of us. Under these conditions, households might try to save cash to afford slices of the AI pie, though the race to save would create a "form of prisoner's dilemma in saving behavior," as Maresca puts it.

If all of this is true, then AI hype might soon lead the US into a scenario like Russia's, where one percent of the population holds over 55 percent of the nation's wealth, and low wages mean that over half of adults have less than $10,000 in assets to their name. And it could even be worse — unlike our imagined future, there's currently a huge demand for human labor in Russia.

Though his analysis is not a prescription, Maresca told Futurism that "the best thing people can do collectively is to push politicians to enact policies that ensure that the wealth that will be created by [transformative AI] is shared broadly. This is especially relevant if AI leads to persistently high unemployment."

"On an individual level, it is important to prepare for the possibility that traditional capital may be much more important in the future and that human capital could sharply depreciate in value," the economist said, noting that he's not a licensed financial advisor. "For most people, their human capital is by far their largest source of income, and so this could be a huge financial loss."

It's a stern warning that an AI utopia is only as good as the society that makes it — and at the moment, we have a lot of work to do.

More on AI hype: Startup Investors Foaming at the Mouth To Carve Up Your Job With AI


Share This Article