Beware the Permanent Periphery—Asterisk

Most countries will never have frontier AI. They’re the ones who should be worrying.

Fear of AI disruption spreads in concentric circles. Outright frenzy inside the labs becomes intense anxiety in San Francisco becomes palpable anxiety on the East Coast — and once the sentiment has crossed an ocean, there’s only mild discomfort left when it washes upon the shores of the other side.<br>An honest appraisal of the situation, however, should suggest the opposite response: It’s the employees of the labs, rich in equity and embedded in the most dynamic labor market there ever was, that should feel the least apprehension. Though the institutions of American government face much more immediate disruptions, it is the periphery of AI development — the other 193 countries in the world without a domestic frontier AI developer to tax and regulate — that confront the biggest risks to their economic welfare and physical security.<br>These risks aren’t resolved even if the AI built in San Francisco is particularly safe or particularly aligned. In fact, the risk may cut the other way: The better AI goes for its makers and their country, the more it threatens to disrupt the countries that build no frontier AI themselves. If their institutions, from labor markets to governments, are unprepared for the coming transition, their citizens risk being consigned to lasting irrelevance. They face life on the permanent periphery of a new world.

The other 193 countries

If you’re reading this magazine, you too have probably been haunted by the specter of the “permanent underclass.” The San Francisco Bay Area is abuzz with concerns that AI will irreversibly calcify a stratified economic order.<br>Their concern trades on a fairly specific set of premises: AI progress will continue unabated, and perhaps even accelerate. The American frontier developers that reap most of the ensuing economic gains. And the end point of this progress will be a radical transformation, where AI comes to dominate economic affairs and strategic statecraft and power accumulates for those able to deploy the best AI most effectively.<br>The rest of this piece accepts these premises — and makes the case that, if they are true, they imperil every nation without its own frontier AI. With vanishingly little economic and political leverage compared to AI powerhouses, these countries may permanently lose the ability to compete in global financial and political marketplaces. Rather than existing economic groups within nations being pushed into a permanent underclass, entire countries could be pushed to the periphery.<br>From the innermost circle of AI development, it’s easy to be distracted by concerns that seem to imperil even in-the-know researchers and operators. But luckily, even under the above conditions, the real world might be a fair bit more complicated than these predictions assume. As the speculative post-AGI economy emerges from the very real constraints of our current political order, there are a few backstops that seem to make the emergence of a permanent underclass less likely.<br>The first is that the would-be-underclass still wields considerable political power today. The U.S. government holds great power over the trajectory — and even the possibility — of AI development. It could tax or expropriate leading research labs, suppress automation by fiat, or even follow the guidance of the most radical voices and declare the Butlerian Jihad on artificial intelligence, shutting it all down. In the interest of preventing this outcome, technology firms and moderate policymakers will probably do their very best to assuage concerns through policy intervention.<br>The second backstop is that the economics of AI labor replacement are far from settled science. Though some economists predict widespread disempowerment, just as much evidence points the way of a rearrangement of the labor market instead. The industrial revolution produced machines capable of performing much of what humans used to call work, but we still have not run out of work to do. And even if AI does cause massive labor disruptions, Americans could still stand to benefit — further showing that a permanent American underclass is unlikely to emerge.<br>None of these factors on their own are certain, and both are subject to counterarguments. The more nuanced takeaway is this: Many of those most worried about social stratification and outright disempowerment from AI might be among the ones most protected from it.

Abdication from the world stage

Most of the backstops protecting Americans are distinctly domestic in scope. The electorate that wields indirect power over these decisions is American. The tax base that swells with AI revenues and enables wealth redistribution is American. And the arguments that labor disruption will be gentle are strongest in the context of one well-connected domestic economy where there are few trade or migration barriers. Even if their careers are...