Hey Everyone,
This week, Nvidia has overtaken Microsoft in market cap. What does this actually tell you about the market? In the last two weeks after a 10-1 stock split, the GPU behemoth added $300 billion. The market cap of is mysteriously up ninefold since the end of 2022.
Nvidia took 10 months to double to from $1 Trillion to $2 trillion.
Nvidia took just 96 days to hit $3 trillion.
But remember, it had taken it 30 years and some luck to get to $1 trillion market cap.
The centralization of the entire U.S. stock market into a few BigTech names could be a sign of things to come. It’s a future of increased centralization and control by a few over the many and it could have disastrous consequences on human civilization.
The IMF and I are Worried AI will Accelerate Global Inequality
It’s also making the richer, a lot richer. Meanwhile, many other countries don’t really have firms of this technological order of magnitude and opportunity. Free market competition is limited by the costs of compute, talent and funding requirements. These corporate Titans have increased leverage with Generative AI and it sort of spirals winner-takes-all Capitalism to dystopian levels, without significant interventions.
Those companies with a market cap of above $1 Trillion are in rarified company. Saudi Aramco or TSMC don’t count, they aren’t exactly diversified. Eli Lilly? Berkshire Hathaway? Not really. Diversified tech companies have market advantages that exploit business models like software subscriptions, digital advertising, Cloud computing and Enterprise deals that skews their market advantages giving them unfair advantages over other firms. All of them exist in the United States, therefore America has an unfair leverage over Generative AI.
As BigTech become more powerful than entire countries, nation states and even entire regions, what will occur to the AI they harness? The legal and regulatory parametres on a global scale, don’t exist yet. There is no functional global rule of law here, there is no higher authority. It’s tyranny of another kind which humanity has never seen before.
So won’t the magnificent seven plus Nvidia and OpenAI just continue eat software, the cloud and mobile? It sure looks that way. This errant corporate nationalism is a dark path.
But what sort of a world is that going to lead to? What sort of an internet? What sort of a global order among global economies? Are countries just going to become technological vassals of the United States or China? It’s not a future that the global youth can look forwards to with much hope. And it might be dire to the future of jobs and the idea of meritocracy itself.
Here are the top 20 “Tech companies” that have the most leverage with Generative AI. For the most part, they are American companies.
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Warnings by Head of IMF and Geoffrey Hinton
Analysis by the IMF, the international lender of last resort, says about 60% of jobs in advanced economies such as the US and UK are exposed to AI and half of these jobs may be negatively affected.
Two people I’ve been trying to be open to listening to are Geoffrey Hinton and IMF head Kristalina Geogieva. These aren’t spring chickens. However their warnings sound a bit serious.
IMF chief Kristalina Georgieva urged policymakers to tackle this “troubling trend” and proactively take steps “to prevent the technology from further stoking social tensions.”
The economic impact of AI might not be what Silicon Valley is telling us.
The IMF said it had “profound concerns” about massive labour disruptions and rising inequality as societies move towards generative AI, and it urged governments to do more to protect their economies.
International Scientific Report on the Safety of Advanced AI
Department for Science, Innovation and Technology and AI Safety Institute
Published 17 May 2024:
Gen-AI: Artificial Intelligence and the Future of Work
January, 2024
The Developing World will have Higher Exposure to Disruption by Generative AI and Agentic AI
The U.S. having BigTech to race to frontier models nearly capable of replacing human experts should concern the rest of the world. That is, if we want to live in a world where the benefits of global capitalism are shared in a distributed, equalitarian and benevolent way to the maximum number of people – we might have a problem.
Mostly recently the IMF made an obvious point: Fiscal policy has a potentially “major role to play” in broadening the financial gains from generative AI technology and preventing a spike in wealth inequality, the IMF said monday June 17th, 2024.
The Washington, D.C.-based institution on Sunday assessed the potential impact of AI on the global labor market and found that, in most cases, the technology is likely to worsen overall inequality. Of course we’ve known this for quite some time and there’s a reason OpenAI and Microsoft don’t address what they are doing in this regard. Their real impact on the world differs significantly from their AI for Good or AGI marketing.
Just like the U.S. has internally a K-shaped economy recovery since the pandemic, the same might occur globally with the impact of LLMs and Generative AI and whatever productivity and commercial products it leads to. That is, developed countries have significant advantages over how they are able to be first movers and adopters of AI.
The U.S. should not be allowed to abuse its position of leadership and enter a kind of technological colonialism phase that we are now seeing in the era of AI datacenters.
The Unfair Advantage of Advanced Economies
The AI Arms race in the Geopolitical Order
Given that other countries outside the U.S. don’t’ have Tech companies worth over $1 Trillion, and the U.S. have six and likely Broadcom soon enough (make that seven), it’s not exactly a world where free market capitalism is going to prevail in a healthy way. U.S. monopoly capitalism is likely to continue to skew a winner-takes-all scenario. That’s probably why the U.S. are being so venomous against China. They are scared to lose their Superpower status. They realize that economically they must retain their AI Supremacy, no matter how fragile it really is. They think they can dominate the 21st century. But will that even come to pass?
Professor Geoffrey Hinton, the computer scientist regarded as the “godfather of artificial intelligence” says the government will have to establish a universal basic income to deal with the impact of AI on inequality. Of course it’s hard to tell what even Hinton really thinks about the technological singularity.
June, 2024 Paper by the IMF
“Left unchecked, generative artificial intelligence (AI) threatens to amplify job losses among white collar professions, International Monetary Fund staff wrote in a new paper.”
The IMF thinks the AI transition will require stronger social safety nets, investment in education, and tax systems that support human workers and mitigate inequality.
Lessons from past automation waves and the IMF’s modeling suggest more generous unemployment insurance could cushion the negative impact of AI on workers, allowing displaced workers to find jobs that better match their skills. It’s not clear if the U.S. or even Europe or China might implement such strategies. Or how they will pay for them. The U.S. might hit a debt wall within the next decade.
Can the World Limit Future-Shock?
I grew up on books like Future Shock (published in 1970).
Now that the world has finally caught up to Alvin Toffler, what are we in for exactly?
Even the so-called experts aren’t sure what to expect from the technological singularity. Geoffrey Hinton, a pioneering AI scientist who’s been dubbed “the godfather of AI.” Hinton prefers a different term—superintelligence— instead of AGI, “for AGIs that are better than humans.”
Not all Countries are Built Equally
In fact even in Europe one struggles to find BigTech at all, S&P (Germany) and ASML (Netherlands) are some of the best we can find, but aren’t even real heavyweights in the global order. So how is Mistral in France of Aleph Alpha in Germany supposed to build their own “OpenAI” in such a world as the importance of frontier models takes shape in the AI arms race? How are they indeed when Microsoft continues to support and poach companies like Inflection AI and now Adept AI. Sovereign AI on a national and cultural basis, is likely a myth manufactured to boost Nvidia GPU sales.
How do countries, ethnicities and cultures keep their Sovereignty in an era of Tech monopolies? That’s not how this will work.
Of course perhaps Kristalina Georgieva and Geogreey Hinton aren’t the best examples of people who are in touch with the future of AI any longer. They might even be exaggerating its future impact. Just enough to be entertaining and well, a kind of misdirection. While Professor Hinton is the pioneer of neural networks, which form the theoretical basis of the current explosion in artificial intelligence. Some of his recent statements have raised some eyebrows.
Even the IMF papers seems to exaggerate the real capabilities (like so many other “studies”) I’ve read over the last two or three years. It’s appealing to imagine a transformative generational presence among us. As if LLMs will change the fundamental tenets of the meaning of work and the global economy, in just a handful of years? That hardly seems probable or like a plausible argument, no matter the papers and investments that seem to suggest otherwise. The AGI prophets and Techno-Optimism manifestos feel like another kind of lobbying.
Major Drivers of Inequality are coming
That’s not to say however that, under the guise of “AI”, major inequality drivers and accelerators aren’t coming. AI Supremacy could be used to enforce a new kind of dystopia for Capitalism and democracy, a new economic global order. It’s not just wealthier countries that have an advantage building frontier models, it’s how America is using its biggest companies (literally against the rest of the world). Oversized diversified tech Titans operate by their own rules, and are obviously tied to the interests and Natural security concerns of American Nationalism. It’s very difficult for other countries to compete with them, especially if they can ban, blacklist and hurt your reputation with their strategic partners.
There’s a new kind of technological American exceptionalism at work here in the 2020s. And if you don’t live in the United States and aren’t reaping the benefits, it doesn’t appear to be very benevolent. The U.S. as a superpower in the era of AI, is taking on a draconian facade with Generative AI clothing. The United States is not using its economic leadership in a health way any longer, post 2023.
The Temptation to Leverage AI is Too Great
How the U.S. uses its leadership in this so-called incredible new tool will be fascinating to watch. Just like how some papers are showing how LLMs in charge of national militaries might escalate conflict. AGI could be a very bad idea, for any number of reasons. There are no signs the U.S. plans to regulate Generative AI in a cautious or reasonable manner.
What happens if you put an AI in charge of your national defense strategy?
In war games, LLMs tend to escalate & engage in arms races. Base models are more aggressive & unpredictable. The authors speculate that it is because there is lots of training data on escalation, little on de-escalation. – Ethan Mollick
But Nation states will put their militaries under the control of AGIs. Anything to give them an advantage to prepare for a potential global conflict. There exists no “higher authority” to prevent them from doing so. There’s no global body to regulate AI in any impactful or meaningful sense, there’s not even the illusion of such a council.
The late Stephen Hawking was a major voice in the debate about how humanity can benefit from artificial intelligence. Hawking made no secret of his fears that thinking machines could one day take charge. About a decade ago he sounded a lot like Hinton does today in 2024.
An Emerging World of U.S. Exceptionalism and AI Leadership
A world where U.S. exceptionalism in AI adoption could hinder and spark conflict with the Global South and China’s geopolitical positioning as the ally of the developing world, and is a disaster waiting to happen. It’s a ticking time bomb for not just civil disorder but global interstate conflict. Nato under another Trump term could fall and left to fend for themselves. The Russia-Iran-China triad could escallate. The U.S. might even want to bait them into conflict, before China’s AI military capabilities are more advanced. China may or may not invade Taiwan in the 2027 window, but Generative AI is sure to lead to a less equal world, at least in the decades ahead.
A K-shaped global economy could emerge under the guide of the “democratization of AI”. In fact, it’s already occurring. Wealth and social inequality could further deteriorate. The rising cost of housing in major cities all around the world suggest this is already occurring and which the pandemic was a driver. Perhaps the “AI hype” is yet another driver. The Fed stimulus stoked this, and some global elite are clearing betting the farm on American BigTech. But why is that?
The IMF staff came out against the idea of implementing a special tax on AI products, which some academics have called for, arguing that it could end up hampering productivity growth. But the IMF is Washington based. Of course they cannot say anything outright against U.S. exceptionalism. They too are a mouthpiece for some stakeholders. However in the U.S. there is so much lobbying (by OpenAI and BigTech) it’s hard to know what is real any longer. Washington does not seem to be in control, at all. Their voice, a bloated muffle before the arrival of the Singularity (mythical or otherwise).
Generative AI might break American capitalism. Since the 1980s, the tax burden on capital income has steadily declined in advanced economies while the burden on labor income has climbed. Think carefully about what this trend means.
Something’s not quite right….
Generative AI might be the straw that breaks the camel’s back for wealth inequality in a K-shaped pattern both inside the U.S. and of the U.S. in relation with the rest of the world.
🤔 Build it and they will come…
I don’t believe the Generative AI will evolve into a general purpose technology (the real meaning of GPT) considering what we have witnessed in the last 19 months since ChatGPT went live, but I do believe some bad actors are using this hype to create conditions that accelerate wealth inequality and siphon economic value to the United States.
I don’t think the rest of the world is prepared for this level of U.S. exceptionalism and the United States behaving in this manner in its offense against China and how that’s going to play out. BigTech as a store of value is creating a world that is a ticking time bomb. A dystopia of civil unrest. For Microsoft, well it’s more paid subscription products packaging AI in a specialized SaaS model.
I find the IMF’s overly optimistic assessment of the situation, like that of the WEF (world economic forum), hopelessly naive:
“AI could further exacerbate inequality. Or, properly harnessed and directed through government policies, it could contribute to a resumption of shared growth.”
But there is no bright light of responsibility in U.S. leadership. BigTech is certainly exacerbating inequality and I wonder where the studies on that are? To date, I have not seen them. Do they even exist? Is Generative AI even useful to the small to medium businesses where most people in the country work? It’s probably disrupting more self-employed, freelancers and entrepreneurs, than it is creating.
Hinton making the media rounds also doesn’t make much sense to me:
Generative AI set to Exasperate Wealth and Social Inequality
In a world of so much exaggeration about what AI means and will be able to do soon, why aren’t we talking about its potential for global conflict and making the world less fair, with greater inequality?
A constant PR of misdirection is occuring in the media, and the bloated attempts to convince consumers that these are products we actually need. But inequality and the churning of the middle class with higher inflation, housing and food prices is real.
If demand for the products of OpenAI or Microsoft are already disrupting freelancers globally, and are hurting the size of SaaS orders of Software companies, clearly something is already starting to show.
The demand for freelancers working in writing- and coding-related jobs has dropped by 21% since the launch of ChatGPT (19 months ago) in November 2022, according to new research by Imperial College Business School, Harvard Business School and the German Institute for Economic Research. Software and Cloud companies like Salesforce are reporting changes to their guidance as well.
Is Generative AI positive for Consumers in the bottom 40%?
When consumers are struggling due to increased consumer debt, housing prices, food prices and inflation, but aren’t seeing the benefits of Generative AI in their careers or in wage gains that’s a problem moving forwards. Generative AI is highly likely to fuel a K-shaped acceleration and bifurcation in wealth inequality and continued social inequality that will be exasperated by AI that may have a more harmful impact than a positive benefit to society, capitalism and civil order.
If Generative AI contributes to significant automation of jobs in the next decade as some economists and technologists are expecting, things could be much worse than they seem today in this regard. Generative AI could usher in faster levels of wealth and social inequality rather than creating more opportunities for everyone. Policy and safeguards do not seem to be keeping up with the pace of the products of BigTech. The U.S. and and perhaps even China eventually thus remain in a position to exploit the rest of the world.
Aren’t those greater risks, than the benefits of the bottom lines of the top U.S. companies that line the pockets of the elite? Something doesn’t add up here.
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