Blog: How AI will exacerbate global inequality
AI will make rich counties richer and deprive 3rd world states of an opportunity to quickly evolve
Globalization, according to conventional wisdom, has reduced global inequality and in general helped make the world a better place. In spite of its clear positive, there still remain a high level of international inequality between rich and poor states.
D. Quah identified two groups of countries as an evidence of global inequality:
The first group has 13% of the world’s population and receives 45% of the world’s PPP income. This group includes the United States, Japan, Germany, the United Kingdom, France, Australia and Canada, and comprises 500 million people with an annual income level over 11,500 PPP$.
The second group has 42% of the world’s population and receives only 9% of the world PPP income. This group includes India, Indonesia and rural China, and comprises 2.1 billion people with an income level under 1,000 PPP$. (See Milanovic 2001, p. 38). — Wikipedia.
What is worse, the advent of AI, machine learning, robotics and other novel technologies will likely exacerbate this trend towards polarization in coming decades.
We know history that as a result of globalization, Western companies have been moving their productions in countries with cheap labor, like China, South Korea, Singapore, Taiwan, India and many others. This has allowed these countries to kick-start economic growth and eventually turn into economic and technological powerhouses.
However, revolutions in manufacturing technologies, like robotics and 3D printing, are nullifying the advantage of low-cost labor countries, because American robots work as effectively as Chinese and they do not demand higher wages, join labor unions, or take vacations. Therefore, manufacturing is already beginning to return from cheap labor countries to the developed states and, coupled with subsidies, high-skilled work force required for automated manufacturing, strong consumer demand and better conditions in general more and more companies will move to the West.
This shift, apart from clear consequences on countries like China, will deprive other poor countries of the opportunity to boost economic growth, while making their huge unemployed population a source of instability, especially in African countries. Dictators will seek “splendid little wars” with neighbors that will help them overcome domestic problems by acquiring strategically important resources, like oil, thereby returning the era of instability and interstate competition. We already witnessed the examples of how authoritarian states tried to use military force to that end — Iraq during the Gulf War in 1991 and Rwanda in the Congo Wars in 1990s.
Large populations used to be low-cost labor countries’ greatest advantage. However, in the age of AI, this group will turn from engine of growth into a burden and a potentially explosive one if their governments will be unable to satisfy people’s demands for a better life.
Young people from these poor countries will then migrate into developed states like the US, Germany, Canada, and the UK. Even now there is the formation of nationalist, anti-immigrant sentiments in developed countries, which culminated in the EU’s immigration crisis and D. Trump’s wall on the border with Mexico and aggressive rhetoric against migrants. Global inequality will conduce millions of people to migrate, generating a violent backlash and sowing instability in the US and Europe.
As a technology and an industry, AI has a natural tendency towards monopolization due to positive feedback loop generated by its reliance on data (more data — better algorithms- more users — more data — better algorithms — more users, etc.). When a company gains early lead, it will be hard for its competitors to overtake it. Because American and Chinese companies dominate the field of AI, these two countries will gain the most from new technologies.
According to the research by PwC, out of $15.7 trillion of value added up to the global GDP thanks to AI by 2030, 70% of gains will be in China and the US.
Two AI superpowers — the US and China — will reap enormous profits from AI, thanks to their large populations, fledged AI giants, vibrant entrepreneurial and venture-capital ecosystem. As one expert on AI has put it,
Other countries will be left to pick up the scraps, while these AI superpowers will boost productivity at home and harvest profits from markets around the globe.
Global inequality will likely signal the end of “peaceful” period in the international relations, create China-US dominated world order and exacerbate instability in regions like the Middle East and Africa. AI will completely change the way we think about global politics, economics, international relations, balance of power and will pave the way to a completely new type of world disorder. Whether humankind will resolve challenges posed by such a threat is a matter of time.