Accelerating progress in artificial intelligence (AI) has reignited long-standing fears about who benefits—and who gets left behind—in times of rapid change.
Yes, AI is a transformative technology. And like past waves of automation—from the steam engine to the microprocessor—it will probably create temporary dislocations in certain job markets while rewarding certain skill sets and capital holders disproportionately in the short run. But over time, market mechanisms, innovation, and institutional adaptation will broaden access to its benefits and mitigate extreme disparities.
The initial impact of AI may, indeed, widen income and wealth gaps. Those who control complementary assets—such as proprietary data, specialized infrastructure, or AI-literate developers and engineers—will capture outsized returns. High-skill workers in technical, managerial, or creative roles may experience rising wages, while lower-skill workers in routine tasks could face displacement or stagnating incomes. These trends reflect a classic example of “skill-biased technological change,” in which technology amplifies the productivity and rewards of those best positioned to leverage it.
Fortunately, such effects are not permanent. The history of economic development shows that the initial benefit of new technology tends to be uneven early in periods of rapid innovation, but that they tend to stabilize or even decline shortly thereafter. The early industrial era saw sharp inequality, followed by rising middle-class prosperity as productivity gains reduced prices, created new jobs, and raised living standards broadly. The spread of electricity, computing, and the internet followed a similar arc.
In market economies, high returns signal opportunities to which firms and individuals quickly respond. Educational institutions retool curricula, workers acquire new skills, and entrepreneurs tirelessly work to satisfy consumer and business demands. Just as smartphones evolved from luxury items into global essentials, AI will become increasingly embedded in everyday tools, workflows, and consumer products.
Policy can also play a supporting role. Removing barriers to labor mobility, encouraging competition, and eliminating the kind of occupational licensure and artificial barriers to employment and training will be key. But the core engine of equalization remains the market’s ability to reallocate resources dynamically.
AI may temporarily increase certain forms of inequality, particularly if adoption is uneven. But that is no reason to resist or the technology. Instead, it is a call to accelerate its adoption and ensure that institutions—formal and informal, public and private—are responsive. History shows that free economies do not freeze in the face of innovation; they evolve. AI will likely follow the same path: disruptive at first, but ultimately a driver of broader prosperity and broader opportunities, rather than permanent upheaval.
Peter C. Earle, Ph.D, is the Director of Economics and Economic Freedom and a Senior Research Fellow at the American Institute for Economic Research (AIER).
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