Governments should consider taxing artificial intelligence to cushion the effects of sweeping job losses, according to Alap Shah, co-author of a Citrini Research report that warned about tech disruption and fueled an AI scare trade.
The smarter AI gets, the more jobs it can replace, Shah, chief investment officer at Lotus Technology Management, said in a Bloomberg TV interview. A related hit to consumer spending would imperil the economy, he said, adding that governments should consider policies such as taxing incremental or windfall gains from AI.
Shah sees chipmakers, data centers and foundation labs as main beneficiaries of the AI trade. At risk are intermediation businesses like insurers and banks. His firm had short positions in some of the companies cited in the report, he said, while owning “a lot” of semiconductor stocks poised to benefit.
The AI “scare trade” rippled through markets on Monday after a weekend report from little-known Citrini Research warned about the technology's disruptive impact on the global economy. The note, which laid out hypothetical scenarios set in the future, highlighted food delivery and credit card companies as vulnerable — spurring a selloff in delivery, payments and software stocks.
The S&P 500 fell 1% while an exchange-traded fund focused on software tumbled 4.8%, bringing its drop from a peak in September to around 35% on concerns AI could cannibalize earnings. International Business Machines Corp. saw its worst drop in 25 years.
Shah said he was surprised by the market reaction. “I thought there was going to be a small reaction — it was definitely larger than we expected.”
The debate comes amid growing uncertainty over AI's impact on the labor market. While some fear mass layoffs, others point to prior technological advances that have spawned new industries and jobs.
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Shah estimates AI could cut white-collar employment by 5% over the next 18 months. Over the next five years, these jobs in the US will be a key gauge of AI's effects, with the impact likely to show up fastest there given its dynamic labor market, he said.
“It's much easier to fire folks than it is in other parts of the world,” Shah added.
In the near term, he expects further market swings, including in software companies, as traders assess the long-term impact from AI. “We are entering a really highly volatile time in the markets,” he said.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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