A consensus has formed that while artificial intelligence may create new and better jobs, its threat to current job holders requires massive new government training programs, unemployment assistance, income supplement programs and even a guaranteed minimum income. Missing from this rush to expand the government’s social safety net is any recognition that previous efforts to cushion the transition from jobs of the past to jobs of the future have done little to benefit those making the transition—and have raised the cost for society as a whole.
Societal gains from technological change come from what the economist Joseph Schumpeter called “the wave of creative destruction.” The lost jobs and investments rendered unprofitable by new technology free up labor and capital that can be redeployed to produce new and higher-valued goods and services. The more seamlessly the transition from the old to the new, the greater the gain from the new technology. “American exceptionalism,” our ability to generate and sustain higher living standards, has come in part from developing new technology and benefiting from being the first to implement it, and in part from our ability to move labor and capital dislocated by the wave of creative destruction efficiently into higher and better uses.