The latest infatuation for Wall Street is AI. Buyers around the world are insistent that it will be the next big thing to invest in since the first company that gets AI to start being seriously useful will be financially set.
If you can advance AI enough to make new discoveries and accurately complete important calculations, you have reached escape velocity, where AI can develop with little assistance and at a faster pace than anything before. The idea is that whoever gets to it first is going to be in the permanent rich class, while those who aren’t will be left in the dark.
But the history of social mobility may tell a different story.
In the 1980s, a downward spiral of social mobility began. Job polarity increased, unions shrunk and wealth started accumulating at the top, all further trapping people in their inherited socioeconomic statuses.
This downward trend didn’t start with AI and it won’t end with it either. America has already lost its priority of social mobility, so the death of mobility will be a conscious choice brought on by those in power rather than by any technological development such as AI.
Great developments occurred before the 1980s, yet we only see the mobility gap start to close after that time period. This means it’s not that these inventions are so incredible they cause uneven wealth distribution, but that some policy shift may have happened.
And sure enough, one did. Reaganomics, the economic policy that states giving the rich more money and tax breaks will allow them to boost the economy, took over the 1980s America and has had a strong hold on American thought since. Policies were enacted to lower tax rates on the rich, but they often failed and led to lower wealth distribution. From a 94% top marginal tax rate in 1944 to 37% now, the difference is clear.
As a result, we generally see that with more tax breaks for the rich, social mobility decreases. This is partly because those at the top are better positioned to influence markets, lobby the government and gain monetary leverage. In fact, a study on 18 Organization for Economic Co-operation and Development (OECD) countries found that tax breaks for the rich led to social immobility without any subsequent economic growth.
Many wealthy investors are convinced that tax breaks benefiting the rich are just a fact of life, so they don’t stop to consider that maybe it’s not.
Because of this, they begin to see inequality as inevitable. If inequality is seen as inevitable, then new technologies like AI are often interpreted through the same lens, where whoever dominates first will permanently stay ahead.
That false assumption leads them to assume that AI will end social immobility, so they are now rushing to not fall behind in the AI rat race.
So, what can you do? If you buy into the hype, you could try your luck picking the winning AI stock and hope you end up on the right side of the divide. But if you’re less interested in billion-dollar companies and more concerned about whether you’ll have a stable job after graduation, the answer looks a little different.
Boycotting companies that use exploitative measures for their revenue boost or that benefit from and reinforce these economic structures, is one option. Boycotts against Target, Bud Light and Starbucks in recent years are great examples of this.
People can also protest against the economic policies that concentrate wealth at the top, and not just in vain. Protests with more than 3.5% of the country’s general population have not often failed to create change. So, you don’t need a large percentage of the population to agree on an issue, you just need a decent sized vocal minority that’s willing to show up.
The power of the people is what makes us a democracy and that power may need to be enacted soon.
