AI-Driven Inequality Reaches Crisis Point
The world has never been more unequal in terms of wealth distribution. The richest 1% now extract nearly twice as much wealth as the bottom 99%. In Australia, households in the top 20% have 93 times the wealth of those in the bottom 20%, while in the US, the top 10% of earners account for half of U.S. consumer spending.
The divergence between the haves and have-nots has accelerated over the last 30 years, dubbed the K-shaped economy. Central banks' decisions, particularly low interest rates, have exacerbated this inequality. Janet L Yellen, Chairwoman of the Federal Reserve in 2014, expressed concern over rising inequality.
The pandemic further widened the gap between rich and poor, as those holding assets benefited from inflation in house prices and stock prices. The younger generation is hit hardest, with high house prices, rents, and student debt making it difficult for them to access intergenerational wealth transfers.
AI has also contributed to this inequality, with technology-adapted industries thriving while others struggle to adapt. The AI bubble has pushed the US stock market value to over $75 trillion, twice the annual output of the US economy.