How to share AI wealth? Neither the US nor Asia has the answer

On October 18, Anthropic, the artificial intelligence (AI) laboratory preparing one of the largest listings in history, committed 5 per cent of its shares to a public benefit fund. The next day, Elon Musk promised one SpaceX share, next year, for “every kid in America” – about US$10.6 billion for some 73 million children.

The offers differ in who holds the shares. Anthropic’s will sit in an entity the company owns, spent on the public’s behalf; Musk’s would land, by a route he has not explained, in a child’s name. Should the public own the companies AI makes rich? Silicon Valley has begun answering yes, on its own terms.

This came a week after International Monetary Fund managing director Kristalina Georgieva described AI as a “slow-moving tsunami”, shifting income from labour to capital, that could augment, downgrade or eliminate 40 per cent of jobs worldwide. She spoke in Bangkok; Asia is where economic growth has long depended on creating jobs.

America shares growth through wages too, but 62 per cent of adults also own shares. For six decades, Asia’s growth reached households chiefly through the pay packet. Japan’s shunto, the annual wage negotiations between unions and employers, carried prime minister Hayato Ikeda’s 1960 pledge to double national income in a decade; the economy did it in seven years.

South Korea’s factories provided wages, and the 1987 strikes gave workers a bigger share. Beijing smashed the iron rice bowl and let private factories absorb the laid-off. Singapore took another route: the state turned wages into housing wealth through compulsory savings and public housing, and during the 2001 slump handed citizens economic-growth-linked New Singapore Shares.

Then pay stopped keeping pace. Since the mid-1990s, Japan’s labour ministry calculates, a 1 per cent rise in productivity has lifted wages by about 0.4 per cent, against roughly 1 per cent in America: higher productivity without higher pay, decades before AI.

08:53

Hong Kong graduates face gloomiest job outlook in 5 years

Past automation replaced hands on the factory floor while adding jobs above them. AI now threatens the route where it is weakest.

Stanford economists using American payroll data find that employment of those aged 22-25 in the most AI-exposed occupations has fallen by 19 per cent behind the trajectory of less exposed peers, up from 15 per cent a year earlier. Causation is contested and total employment has not fallen. But the pressure is falling first on the young.

The newest round of the old bargain was fought this year in Icheon, in South Korea’s Gyeonggi province. SK Hynix, riding on demand for AI chips, agreed last year to hand staff 10 per cent of its operating profit: about 700 million won (US$527,500) a head if this year’s 250 trillion won profit forecast holds.

This August, union members voted down a tentative deal to take 60 per cent in shares, wary of a volatile stock and the tax bill. Last month, they settled on half cash, half shares, with the option of more stock. Even the workers closest to the AI boom haggled over how much of their dividend should be in payroll.

They are the lucky ones. Last year, 450,000 young Koreans said they wanted no job at all, up from 287,000 in 2019, according to Bank of Korea. Beijing meets a record 12.7 million graduates this year with an “employment first” plan, though a China Daily commentary concedes AI may hit the young first. The dividend reached Icheon by negotiation. It has no route to the graduate who was never hired.

Asia’s routes share a blind spot: they assume a job. Wage talks bargain for the employed. Singapore’s new Tripartite Jobs Council and graduate traineeships help people onto the next payroll; neither gives citizens a claim on what AI earns.

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A system that drafts a junior analyst’s work turns part of a salary into a software fee and the rest into margin: much of the fee flows to model-makers in California or Hangzhou, then to shareholders and a small share to customers. Retraining decides who gets the next job, not who keeps the margin.

Silicon Valley’s answer is incomplete. Anthropic’s pledge awaits shareholder approval; SpaceX has shed about a third of its share price since its peak. The difference between Icheon and Silicon Valley is not cash vs shares. It is who decides. SK Hynix workers negotiated their formula and voted down the payment terms they disliked. American children hold a promise, revocable by those who made it. The workers voted. The children will not.

Asia has shared growth in many ways. It has never had to do so when growth needs fewer new workers.

Somewhere in Shenzhen or Pangyo, a finance director is about to sign an AI contract that removes a line from next year’s salary budget. Whose dividend is the saving?