As AI automates entry-level white-collar jobs, a growing number of college graduates will face unemployment. This creates what historian Peter Turchin calls 'elite overproduction'—people educated for elite roles with no positions to fill. This disenfranchised group is a prime demographic for socialist movements.
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Instead of a universal productivity boom, AI will eliminate repetitive white-collar jobs. This will shrink the consumer base, reducing overall demand and creating a powerful deflationary force, further entrenching a feudal economic structure with fewer 'lords' and more 'serfs.'
Just as NAFTA brought cheap goods but eliminated manufacturing jobs, AI will create immense productivity via a new class of "digital immigrants" (AIs in data centers). This will generate abundance and cheap digital services but risks displacing vast swaths of cognitive labor and concentrating wealth.
The advent of super-intelligent AI challenges the core tenets of free-market capitalism. When human labor competes against entities that are exponentially more capable, the 'creative destruction' model could lead to mass unemployment and social instability, forcing a move away from pure capitalism.
Early-career knowledge work (e.g., in law and programming) is being automated by AI while the gig economy, a traditional safety net, is shrinking. This combination severely limits opportunities for young people entering the workforce, creating a significant societal and economic challenge.
Recent increases in the unemployment rate are almost entirely concentrated among college-educated workers, while remaining stable for other groups. This specific, non-obvious trend may be an early indicator of AI's disruptive effect on white-collar and knowledge-based professions.
AI is expected to disproportionately impact white-collar professions by creating a skills divide. The top 25% of workers will leverage AI to become superhumanly productive, while the median worker will struggle to compete, effectively bifurcating the workforce.
A bipartisan legislative effort is being driven by stark warnings that AI will eliminate entry-level roles. Senator Mark Warner predicts unemployment for recent college graduates could surge from 9% to 25% "very shortly," highlighting the immediate economic threat to the youngest workforce segment.
The Gaokao produces millions of highly educated graduates, but China's slowing economy and the rise of AI cannot absorb them. This mismatch between educational output and job market capacity creates a potential powder keg of youth unemployment and social unrest.
AI is exacerbating labor inequality. While the top 1% of highly-skilled workers have more opportunity than ever, the other 99% face a grim reality of competing against both elite talent and increasingly capable AI, leading to career instability.
Capitalism values scarcity. AI's core disruption is not just automating tasks, but making human-like intellectual labor so abundant that its market value approaches zero. This breaks the fundamental economic loop of trading scarce labor for wages.
