AI will eventually lead to a more extreme society of haves and have-nots
The discussion these days is all about whether artificial intelligence will lead to a surge in productivity, lower inflation, higher economic growth, better living standards and value creation. The stock market seems to think so, as the shares of many AI-related companies have surged.
This is leading many to believe that a bubble is forming. Such bubbles are not atypical. A 2018 paper published in Marketing Science titled Two Centuries of Innovations and Stock Market Bubbles shows that groundbreaking innovation tends to be linked to bubbles in the stock prices of companies commercializing innovation. Those investors who remain overallocated to an innovative company after the bubble has ended suffer the effects of long-term reversals.
My sense is that AI will not improve productivity as much as markets expect. I tend to agree with Nobel Prize winner Daron Acemoglu, who believes that the AI-related frenzy will eventually lead to a tech crash that will leave everyone disillusioned with the technology.
Historically, new technologies have been disappointing in terms of increasing productivity. There is no clear link between technological innovation and productivity growth, as defined by gross domestic product per worker. A recent example: Nobel Prize winner Robert Solow has written that the computer age was everywhere except in productivity statistics.
Editorial: A real reform mandate for the first federal AI minister
Here are three points to counter too much optimism about AI.
First, it is hard to see the big societal problem that AI will solve.
Second, AI may lower inflation but at the same time will increase demand for capital because of the huge investments and funding it will require in its early stages. This will push real interest rates up, leaving nominal interest rates little changed.
Finally, AI may be hurting more than helping society. For example, researchers at Microsoft published a paper recently arguing that while AI may improve efficiency, it can also reduce human critical thinking capabilities and diminish independent problem solving. 'Used improperly, technologies can and do result in the deterioration of cognitive faculties that ought to be preserved,' it found.
Despite all this, I do believe that AI needs to be embedded in our day-to-day lives, as it is not going away. Whether we like it or not, we are headed full speed toward an AI-powered future.
The key question is, will AI benefit and reach all people? Historically, that hasn't been the case when it comes to new technology, which is usually controlled by a few people. And it may be worse this time.
In my opinion, AI will most likely create a more rigid class-based society: the upper class, which will include people who are on top of AI knowledge and applications, and the lower class – those who are not, and who will be left behind without embedding AI into their everyday life.
A recent article in The Globe and Mail hit the nail on the head. Author Don Tapscott, who is co-founder of Blockchain Research Institute, said, 'AI will become a new social fault line. Those with intelligent agents [i.e., large language model-powered systems] will be superpowered; those without them will fall behind. A small class of enhanced individuals could dominate productivity, creativity and influence.'
An AI-powered future and an AI class-based society reminds me of the landlord-serf relationship in medieval Europe, which was a central feature of the feudal system and could end up being a central feature of the AI-powered future. 'Landlords' were typically those who controlled large estates, while 'serfs' were peasants bound to the land, obligated to work for the landlord and lacking many freedoms.
The land cultivated by serfs was owned by a landlord. A large portion of what serfs produced had to be given to their landlord. Serfs lacked freedom of movement; they could not permanently leave their village, marry, change occupation, or dispose of their property without their landlord's permission.
In the future, these landlords will be those in control of AI, and the serfs will be those without much knowledge about AI.
This looks like a scary dystopian future that should force us all to become sufficiently prepared ahead of time in AI and be in full command of AI agents, irrespective of whether we believe the technology will solve the society's productivity problems or not.
George Athanassakos is a professor of finance and holds the Ben Graham Chair in Value Investing at the Ivey Business School, Western University. His latest book is Value Investing: From Theory to Practice.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
National Post
3 hours ago
- National Post
Columbia protester Mahmoud Khalil freed after 104 days of immigration detention
JENA, La. — Palestinian activist Mahmoud Khalil was released Friday from federal immigration detention, freed after 104 days by a judge's ruling after becoming a symbol of President Donald Trump 's clampdown on campus protests. Article content The former Columbia University graduate student left a federal facility in Louisiana on Friday. He is expected to head to New York to reunite with his U.S. citizen wife and infant son, born while Khalil was detained. Article content 'Justice prevailed, but it's very long overdue,' he said outside the facility in a remote part of Louisiana. 'This shouldn't have taken three months.' Article content Article content The Trump administration is seeking to deport Khalil for his role in anti-Israel protests. He was detained on March 8 at his apartment building in Manhattan. Article content Khalil was released after U.S. District Judge Michael Farbiarz said it would be 'highly, highly unusual' for the government to continue detaining a legal U.S. resident who was unlikely to flee and hadn't been accused of any violence. Article content 'Petitioner is not a flight risk, and the evidence presented is that he is not a danger to the community,' he said. 'Period, full stop.' Article content During an hourlong hearing conducted by phone, the New Jersey-based judge said the government had 'clearly not met' the standards for detention. Article content The government filed notice Friday evening that it's appealing Khalil's release. Article content Khalil was the first person arrested under Trump's crackdown on students who joined campus protests against Israel's devastating war in Gaza. U.S. Secretary of State Marco Rubio has said Khalil must be expelled from the country because his continued presence could harm American foreign policy. Article content The Trump administration has argued that noncitizens who participate in such demonstrations should be deported as it considers their views antisemitic. Protesters and civil rights groups say the administration is conflating antisemitism with criticism of Israel in order to silence dissent. Article content Article content Farbiarz has ruled that the government can't deport Khalil on the basis of its claims that his presence could undermine foreign policy. But the judge gave the administration leeway to continue pursuing a potential deportation based on allegations that he lied on his green card application, an accusation Khalil disputes.
Globe and Mail
4 hours ago
- Globe and Mail
Why Circle Internet Stock Skyrocketed 83.2% This Week
Shares of Circle Internet Group (NYSE: CRCL) have soared this week, finishing up 83.2% from last week's close. The massive run came as the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC) were relatively flat. The company, which IPO'd earlier this month, is the sole issuer of USDC, one of the most popular stablecoins on the market. Investors sent the stock soaring this week after the U.S. Senate passed the GENIUS Act, a landmark bill that would create a federal regulatory framework for stablecoins. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » One step closer for stablecoins The bill allows banks, fintech firms, and retailers to legally issue and use stablecoins, while also establishing consumer protections and regulatory oversight for their use. The bill must now clear the House of Representatives. House members will need to reconcile the bill with their own version, which contains some key differences, especially in what agencies would take the lead in regulating the market. If the bill successfully makes its way to President Trump's desk and is signed into law, it will mark a watershed moment for stablecoin adoption and the cryptocurrency market at large. Sen. Kirsten Gillibrand, a co-sponsor of the bill, said the bill aims to "enable U.S. businesses and consumers to take advantage of the next generation of financial innovation" and "protect consumers, enable responsible innovation, and safeguard the dominance of the U.S. dollar." Circle Stock is hot, but there are issues Since its IPO earlier this month, Circle stock has risen nearly 200%. While I think the excitement is warranted, investors should pay attention to valuation. With a market cap of nearly $60 billion and sales last year of $1.7 billion, there is a lot of growth priced in already. While I think Circle could do very well and that $1.7 billion is likely to grow significantly if the GENIUS Act becomes law, there are two factors that make me wary of the stock, given its valuation. One, the company's revenue is directly tied to interest rates, which are currently elevated. As the Federal Reserve cuts rates, which they are expected to do later this year, the company's bottom line will be hit. Two, a significant chunk -- roughly 50% -- of Circle's revenue is paid to Coinbase as part of the two companies' relationship. That percentage can change based on how much USDC Coinbase holds on its exchange. That means Circle's fate is directly tied to decisions made at another company. Should you invest $1,000 in Circle Internet Group right now? Before you buy stock in Circle Internet Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Circle Internet Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $891,722!* Now, it's worth noting Stock Advisor 's total average return is995% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025
Globe and Mail
4 hours ago
- Globe and Mail
2 No-Brainer Artificial Intelligence Stocks to Buy Right Now
No matter where you are on the artificial intelligence (AI) debate -- for or against -- there's no denying that it's transforming the way people work. Companies of all shapes and sizes are integrating into their daily workflows, and new industries are popping up because of it. The mass adoption of AI could result in a market size of more than $15 trillion by 2030, according to PwC research. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Fortunately, there are tons of AI companies out there that actually have a foothold in the market and aren't just flash-in-the-pan opportunities. Here are two well-established companies that are already benefiting from this trend and could be great AI stocks for years to come. 1. Taiwan Semiconductor Taiwan Semiconductor Manufacturing (NYSE: TSM) does exactly what its name describes -- it manufactures processors for companies. The world's leading chip designers, including Nvidia, rely on Taiwan Semiconductor (often referred to as TSMC) to make their processors because the company is so good at it. TSMC manufactures an estimated 90% of the world's artificial intelligence semiconductors, making it the clear leader in this market. This dominance led to TSMC's revenue rising 41% in the first quarter of 2025 to $25.5 billion and diluted earnings per share jumping 60% to $2.12 per American depository receipt (ADR). TSMC relies on its technological lead in semiconductor manufacturing to stay ahead of its competitors, and so far, it's still leading the pack. The company is focused on its 5-nanometer (nm) and 3nm chip production and management said recently that there continues to be "strong demand" for both. The company's CEO, C.C. Wei, said early this year he expects TSMC's artificial intelligence revenue to double this year compared to last year and recently reiterated that forecast. Taiwan Semiconductor stock has already gained 142% over the past three years, so what makes the stock a buy right now? Demand for semiconductors hasn't slowed down yet, and no one knows when or if it will. Companies are locked in an AI race right now, and a big part of that involves getting their hands on the most advanced AI chips. With TSMC's dominance in semiconducting manufacturing and it already holding a lead in advanced AI processors, the company is poised to benefit from chip demand as long as tech giants need the best processors available. And despite its share price gains, TSMC stock has a price to earnings ratio of just 25, which is below the P/E multiple of the broader S&P 500. 2. Microsoft Microsoft (NASDAQ: MSFT) has made itself an important player in artificial intelligence by making strategic investments in ChatGPT creator OpenAI over the past several years. The early move gave Microsoft access to one of the most advanced AI chatbots on the market, and it quickly implemented ChatGPT into everything from its Microsoft 365 suite of productivity tools to its GitHub Copilot coding assistant. That's helped Microsoft stay relevant in a rapidly shifting tech market and benefit from AI's growth. Part of Microsoft's AI strategy has been to offer more advanced services with its Azure cloud computing platform, which has helped result in a 35% jump in cloud services sales in the fiscal third quarter (which ended March 31). Microsoft is the second-largest public cloud computing provider with 21% market share, trailing only Amazon, which holds 30%. Microsoft has narrowed this gap over the past few years, and its investments in artificial intelligence infrastructure could make it an even stronger contender. The company will spend $80 billion on cloud infrastructure this fiscal year alone to stay ahead of the competition. Microsoft's stock is a bit more expensive than Taiwan Semiconductor's, with a P/E multiple of 36. But with Microsoft already off to a strong start in implementing advanced AI into its software and benefiting from AI cloud services, the company is setting itself up to remain a leading tech player for years to come. Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now? Before you buy stock in Taiwan Semiconductor Manufacturing, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $891,722!* Now, it's worth noting Stock Advisor 's total average return is995% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
