- AI’s displacement of white-collar labour risks concentrating economic power, eroding democratic structures in favour of oligarchy.
- A fiscal crisis could emerge if AI-generated income surpasses human contributions, as 85% of US federal tax receipts rely on human workers.
- The Fourth Turning theory suggests this era could culminate in radical institutional change, akin to historical crises like the Great Depression or WWIlI.
- Loss of US dollar hegemony—a cornerstone of global finance—might trigger geopolitical conflict if nations resist relinquishing economic dominance.
- Recent IMF reports warn AI could disrupt 40% of global jobs, underscoring urgency for policymakers to address tax reforms and labour safeguards.
The rapid integration of AI into economies worldwide is no longer a speculative fiction—it’s a reality with seismic implications. As algorithms replace swathes of the white-collar workforce, a critical question arises: who controls an economy where machines generate the majority of wealth? The shift risks transforming democracies into oligarchies, where corporate entities and AI systems dictate economic flows, sidelining human agency.
Fiscal Collapse on the Horizon?
Today, 85% of US federal tax revenue derives from human labour and consumption. If AI agents—managing production, sales, and even decision-making—become primary income generators, traditional tax frameworks could collapse. Governments reliant on income and payroll taxes may face crippling shortfalls, jeopardising public services and social safety nets. The International Monetary Fund (IMF) recently highlighted this threat, urging nations to reconsider tax policies to capture revenue from AI-driven activities, such as robot taxes or corporate levies on automation profits.
Fourth Turning: A Historical Inflection Point
The theory of Fourth Turnings—cyclical eras of upheaval that redefine societies—frames this moment as a potential catalyst for systemic rupture. Past Fourth Turnings birthed revolutions, wars, and new world orders. Should AI-induced fiscal collapse coincide with eroding trust in institutions, the resulting vacuum could empower authoritarianism or radical reforms. Recent strikes by Hollywood writers and automakers, partly fuelled by AI-related job fears, exemplify growing societal tensions.
Geopolitical Reckoning: The Dollar’s Demise?
The US dollar’s status as the global reserve currency—its “exorbitant privilege”—rests on economic dominance and stability. A fiscal crisis triggered by AI could shatter this hegemony, prompting rival powers like China or the EU to challenge dollar supremacy. History shows such transitions rarely occur peacefully; the 20th century’s world wars were rooted in clashes over economic power. With nations like BRICS exploring alternatives to dollar-based trade, the stakes are intensifying.
Recent Developments
In late 2023, the US Treasury Department announced plans to study AI’s impact on tax systems, while the EU advanced legislation to regulate AI’s role in hiring and surveillance. Meanwhile, tech giants like Google and Meta reported record profits from AI-driven ad systems, starkly contrasting with layoffs in sectors like finance and media. These trends underscore the uneven benefits of AI—and the urgency for equitable solutions.
Conclusion
The convergence of AI, fiscal fragility, and cyclical historical forces presents a precarious future. While innovation promises efficiency, its unchecked rise risks destabilising democracies and economies alike. As the Fourth Turning unfolds, preparedness—not panic—is vital. Policymakers must act now to redesign tax systems, safeguard labour, and prevent oligarchic control. For families, diversifying skills and assets may be the best defence against a world where humans are no longer the primary economic actors.