Economic Policy Challenges for the Age of AI

TL;DR

This paper discusses the economic policy challenges posed by the rise of Artificial General Intelligence, focusing on labor, inequality, education, and regulation in a transforming economy.

Contribution

It identifies eight key policy challenges in the Age of AI and explores how economists can address these issues for sustainable economic development.

Findings

AI will significantly reduce the role of labor in economies

Inequality and income distribution will become major policy concerns

New regulations and global governance are needed for AI management

Abstract

This paper examines the profound challenges that transformative advances in AI towards Artificial General Intelligence (AGI) will pose for economists and economic policymakers. I examine how the Age of AI will revolutionize the basic structure of our economies by diminishing the role of labor, leading to unprecedented productivity gains but raising concerns about job disruption, income distribution, and the value of education and human capital. I explore what roles may remain for labor post-AGI, and which production factors will grow in importance. The paper then identifies eight key challenges for economic policy in the Age of AI: (1) inequality and income distribution, (2) education and skill development, (3) social and political stability, (4) macroeconomic policy, (5) antitrust and market regulation, (6) intellectual property, (7) environmental implications, and (8) global AI governance. It concludes by emphasizing how economists can contribute to a better understanding of these challenges.