I’m a big fan of Bernie Sanders. He has done an enormous amount to move American politics and especially the Democratic Party to the left. He constantly stands up to the rich in the name of ordinary working people.

But I have to disagree with him on the idea of an AI sovereign wealth fund. This strikes me as wrong-headed from every angle.

First and foremost, Donald Trump is doing his best to show us why it is often a bad idea to have the federal government directly involved in running private businesses. He is using the power of the government to stuff his and his family’s pockets in every way imaginable.

He also is using the government to force private businesses to suppress criticism as you’ll see on the Colbert show tonight. Why on earth would any progressive want to give this demented jerk more power?

We can say that Trump is an aberration, which we should all hope he is. But we elected this aberration twice. Does anyone want to say it can’t happen again?

The economics on this look even worse. The job-killing effect of AI exists much more in the minds of our political elite than in the data. Productivity growth, the measure of job killing, has been extremely weak the last two quarters. Quarterly data are erratic and perhaps the future will be different, but if AI is killing off large numbers of jobs, it is doing a great job concealing the evidence.

Most likely the AI sector is in a massive bubble. At its peak value, Nvidia’s market capitalization was roughly 20% of U.S. GDP. In the late 1990s tech bubble, Microsoft’s market cap peaked at less than 6% of GDP. 

An AI sovereign wealth fund is likely to end up being a mechanism to shovel yet more money to Elon Musk, Mark Zuckerberg, and the rest of the right-wing billionaire gang.  We have already given this crew enough money.

I doubt that we will see massive AI-related job displacement, but if we do, we have old remedies that should work just fine.

1) a workable corporate income tax at a higher rate, for all companies. The best way to do this is to require companies to turn over non-voting shares equal to the targeted tax rate (e.g. 25% of shares for a 25% tax rate).

2) serious anti-trust enforcement. It is likely that Chinese AI will be very competitive, and probably much cheaper, than the domestic stuff. We let in Chinese-manufactured goods to screw large segments of the blue-collar workforce. We should not have protectionism to keep Elon Musk and Mark Zuckerberg ridiculously rich.

3) Stronger labor standards. We set the 40-hour workweek 90 years ago and have not changed it since. Other countries have shortened the work week/work year. If AI is going to give us the promised boom in productivity, let’s lower the threshold to 32 hours, or possibly even lower. We can also double the overtime premium to 100% rather the 50%.

We have all the tools needed deal with an AI productivity boom; we just lack the political will to use them. The sovereign wealth fund idea is a massive leap in the wrong direction.