How Does Cheap AI Affect Income?

Cliff Sosin tells two stories about how cheap, ubiquitous intelligence affects wealth and income distribution. One story, already widely discussed, holds that income concentrates: people made money on labs, data, and NVIDIA, with increasing returns to small groups.

The counterargument starts with rent takers. A software company that charges bowling alleys gets smoked. Losing the rent lowers the cost of bowling and raises living standards for everyone who bowls. Spending on bowling is a small share of a high income and a larger share of income for people who make less, so the effect flattens income. When the little rent pieces go away, corporate profits decline. Money the average American gives Bank of America leaves Bank of America. Capitalists lose. The average consumer wins, and the shift levels incomes.

A professional class whose role is intelligence takes big corpuses of information and applies them in a fairly straightforward way. If the work is commoditized, everyone gets the best, which is particularly good for people who cannot afford the best now, and the people who earned extra rents for being smarter drop to the next best alternative. In theory the curve might flatten. A counterargument holds that returns to initiative, ambition, and intelligence could rise, because the models work like a bicycle for the mind on steroids and let smart people with initiative accomplish much more. Whether the gain produces increasing returns for the subset and steepens the curve stays open. Truman asked for a one-handed economist. Two hands remain on the question.