AI, unemployment and the social contract

How should democratic societies respond if unemployment rises substantially due to AI automation in the next few years, and income tax revenues crash correspondingly? We already see significantly reduced entry-level employment in the UK in the last few years, particularly in the most AI -exposed professions (I'll post links below!). I was proud to judge the The Young Fabians AI essay competition and deliver remarks to the winners at the prize ceremony held at the Houses of Parliament last week. The winner and runner-up essays from Owen Bell and Charles Winter thoughtfully proposed to (i) consider a "token tax" that provides a new source of revenue stemming from the use of AI, whether to augment or replace workers, and (ii) consider reskilling young workers and orienting new tax revenues towards labor-constrained industries with clear social benefits and spill-overs in the UK, including defense and construction. In my remarks to the winners and members, I noted that the scenario of near-term 10-20% unemployment in the UK is less farfetched than you might think. Job shedding from technological unemployment is not linear in time. It shows up as reduced (entry-level) hiring in good times, and lay-offs mostly in recessions. The canonical data point is that ~90% of automation-related job losses hit in the first year of recessions - concentrating built-up labor market pain from new technologies into single, painful years. If we do not give everyone a share in the progress and growth from AI, citizens will resist it, and the tech will be less likely to be adopted. We have to think about how to rewire our skilling, labor markets, unemployment insurance, tax system, and broad social contract before it's too late. Thanks again Lucas Irwin, Kasia Kramer and The Young Fabians for the event, and a huge congrats again to the winners! It's a really strong sign of healthy party politics to have a forward-looking youth wing of the UK's governing party that is thinking about and getting ahead of tomorrow's issues already today, and to have such strong essays revitalizing how we can think about the really key issues that today's politics should be about - you should all feel proud!