Within a few years, artificial intelligence will displace a significant portion of the world’s highly paid knowledge workers. Aggregate demand will suffer, but flows into retirement investment accounts will turn net-negative: workers won’t just stop paying in, they will need to withdraw funds.
These outflows will come largely from passive investment funds, particularly S&P 500 index trackers. Although such redemptions involve selling every constituent in proportion to its index weight, the price impact will not be evenly distributed. The AI „mega-caps” that have powered the index higher, such as Nvidia, Microsoft and Amazon, are also the names whose valuations have been most dependent on mechanical passive inflows as the marginal buyer. The result, ironically, is that the companies powering the AI revolution are likely to suffer the largest price drops.
De redactie van NRC selecteert de beste artikelen uit The Economist voor een breder perspectief op internationale politiek en economie.
AI is at the inflection point at which large language models are improving at a rate that is non-linear and will soon become exponential because they are themselves coding their successors. The most sophisticated users of AI are in tech companies. Using the current generation of models, they have in many cases reduced teams that previously had half a dozen workers or more to just one. It is quite possible that within three to four years AI will have replaced 15% of jobs in America’s broader knowledge economy.
