Wall Street Exec Warns of AI-Induced Social Unrest

Artificial intelligence has the potential to significantly impact the job market, rendering many positions such as cashiers and drivers obsolete, potentially leading to widespread social unrest. Armen Panossian, co-CEO of Oaktree Capital Management, has identified AI as "the biggest risk" to economic stability. While AI promises substantial economic gains, its societal impacts could be detrimental. Panossian raised concerns about the millions of people who could be left jobless and the challenge of retraining these individuals for new roles in a post-AI economy. He warned that ignoring these risks could result in heightened unemployment and social division.

Panossian stressed the urgency of addressing this issue, indicating that society might be forced to choose between social unrest and expanding welfare programs. His views align with various studies and reports that predict significant job displacement due to AI. For instance, Goldman Sachs has suggested that generative AI could affect 300 million full-time jobs globally. Similarly, the World Economic Forum's 2020 study projected that AI and automation could displace 85 million jobs worldwide by 2025. A McKinsey report from 2017 estimated that by 2030, up to 800 million jobs could be automated, necessitating substantial retraining efforts.

The potential for a deepened socioeconomic divide is another major concern. Panossian warned that without proactive measures, the disparity between the wealthy and those living paycheck-to-paycheck could widen, leading to significant harm to a large segment of the population. This could exacerbate existing inequalities and social tensions, making it crucial for policymakers to implement strategies for workforce retraining and support.

In addition to societal impacts, Panossian highlighted the risks for investors in the AI sector. He cautioned against overexposure to AI stocks, suggesting that the current market could be overvalued and susceptible to speculation. Drawing parallels to the dot-com bubble of the late 1990s and early 2000s, Panossian warned that if the anticipated gains from AI take longer to materialize than expected, the market could experience a violent correction, leading to significant losses. Investors should be wary of putting too many resources into AI and maintain a balanced investment strategy.

Panossian's insights underscore the complex landscape that AI presents, balancing the promise of technological advancement with the potential for economic and social upheaval. As AI continues to evolve, it is essential for businesses, governments, and investors to work collaboratively to mitigate its adverse effects while harnessing its benefits. Preparing the workforce for new types of employment and ensuring equitable access to retraining programs will be vital steps in navigating the transition toward an AI-driven economy. These efforts will help minimize the risk of social unrest and create a more inclusive economic future.