A friend owns a three-unit building in San Francisco (rents carefully controlled by qualified government officials!) and is concerned about the value of his place if AI eliminates most programming jobs. My response was to consider the extreme case that 100 percent of GDP is generated by AI and robots. In that case, the economy becomes like a petrostate, e.g., Kuwait. The efforts of human residents aren’t significant economically compared to oil flowing or NVIDIA chips cogitating. In petrostates, however, the rulers don’t expel most or all of the citizens (like Bhutan did!), but instead use whatever money isn’t stolen by elites to house and feed everyone. Thus, in the typical petrostate, real estate still has substantial value. “Maybe everyone in San Francisco will be on Section 8 and the rent will be paid by the government instead of individuals,” I said, “but you’ll still get rent.”
How will the government get revenue? Petrostates often nationalize the oil industry, as Venezuela did in 1976 and 2007 (Hugo Chavez for the win!). If most of the wealth and income of the U.S. ends up in the hands of the owners of NVIDIA, Anthropic, et al., the government can simply nationalize the top 20 most successful AI-related companies. (We can see a half measure of this right now with Bernie Sanders and Ro Khanna proposing to harvest 5 percent of billionaire wealth every year.)
In other words, it doesn’t make sense to be an AI Doomer on economic grounds because being a citizen of a typical petrostate isn’t terrible (let’s ignore Venezuela for the moment!).
Let’s check in on a petrostate that has been shooting down U.S. fighter jets recently. Kuwait is rich, though not quite as rich per capita as it once was. It looks like they’ve grown the denominator via population growth and, thus, each individual’s share of the oil income has been reduced.
(Note that U.S. politicians, beginning with Lyndon Johnson in the mid-1960s, have been working desperately to grow U.S. population via immigration, exactly the opposite of what makes sense if our destiny is that most wealth comes from something that functions like an oil well.)