The picture that spoke a thousand words from this month’s G7 summit in France was of the heads of the world’s biggest technology companies sitting around the table with the heads of the world’s most powerful states.
Money meeting power.
It was a working lunch, not the summit itself, and so the CEOs of Anthropic, Google and Open AI aren’t in the inner sanctum quite yet. But they may as well be.
As we know, their technology, the promise of artificial intelligence, their stock prices and the sheer wealth their CEOs represent are redefining pretty much everything about how the world works. And Canada’s “AI for All” strategy presented a few weeks ago is supposed to be comprehensive, designed to meet this moment.
The plan puts funding and thought into AI adoption, productivity enhancement, sovereign capacity and safety. What it doesn’t attempt to do is address the fallout that is already rushing through the broader economy as a result of AI and its tentacles.
Missing, so far, from the government’s thought process is the broader analysis of what will happen to Canada’s fiscal capacity and our time-tested system of relying on employment insurance, the social safety net and progressive income taxes to smooth out the rough edges of inequality and insecurity.
We need to get ahead of this.
Even though policymakers can’t predict exactly what will happen to the labour force, earnings, profits, government revenues and wealth distribution as a result of the AI economy, they do know that all those things are in play. There will be much realignment, and it will be rocky — hurting some and helping others.
The prognostications are all over the map.
Some experts predict widespread job losses, especially among white-collar workers, as automation and AI replace the need for their labour. Others foresee smaller effects on the job market as workers of all kinds use AI as a tool to boost their productivity.
Will tax streams be enough to support our social safety net?
But the nature of work is definitely changing, and that, by definition, will affect how well our traditional economic policy will function. Can employment insurance and other government supports that we normally lean hard on during upheavals be relied upon in the AI economy?
Those programs usually presume a recovery of the workforce as we have known it, and not a world where labour matters less and less.
If there are fewer permanent jobs, will government revenue streams that lean heavily on income tax stay steady enough to support our social safety net? Almost 46 per cent of the federal government’s tax revenues comes from personal income tax.
The nature of wealth is also changing.
The tech bros at the table are the most obvious manifestation of a concentration of wealth and power that has beset the U.S. Canada is different, but those same companies are very active in the Canadian economy. And Canada’s wealth gap — the difference between what the rich own and what the rest of us own — is not only large, it is growing.
‘Who is the wealth going to and who is it going to benefit?’
“The sum total of economic activity is absolutely going to be increasing over time,” says Rohinton Medhora, a professor of practice at McGill University and former head of the Centre for International Governance and Innovation. “Who is the wealth going to, and then, who is it going to benefit?”
In the U.S., there is an interesting idea that has a seat at the table alongside the tech bros and the politicians: taxing the companies who profit handsomely from the AI economy and using the proceeds to give everyday Americans a stake in those companies. Some call it “universal basic capital.”
Sen. Bernie Sanders is proposing legislation, but it’s not just left-wingers who are pushing the concept.
The Trump administration is reportedly in talks with CEOs of AI companies about acquiring stakes that would then be used to redistribute their wealth to the broader public. And the companies themselves have spoken openly about similar ideas.
In Canada, those companies are not domiciled here and the federal government backed away from its attempts to tax them when it cancelled the digital services tax last year.
However, government proposals to use equity stakes as a way to allow the public to partake in the country’s wealth are becoming more popular. Indigenous collaboration in the development of natural resources is increasingly designed this way. Prime Minister Mark Carney’s new sovereign wealth plan foresees members of the public taking stakes too.
There’s a growing recognition that wealth, not wages, is the path to prosperity.
For sure, we have to go about this differently than the United States, but it’s time we took a cue from them and started thinking outside the fiscal box.
When it comes to ensuring Canadians are able to thrive in the AI economy amidst the rich and powerful, Carney has some solid thoughts.
“You’ll hear me say this over and over again. It is never a good idea to have one option,” Carney said on his way to the G7, under pressure to explain how Canada would deal with the U.S. suddenly ring-fencing everything Anthropic, including ties with Canada’s cybersecurity plans.
“Nobody has done anything wrong in this situation. But we will have done something wrong if we just accept this.”
