Gen-AI, Power, and Labor

I. Gen-AI Is Likely to Cause Massive Global Unemployment

Historically, general-purpose technologies (GPTs) have diffused slowly, disproportionately affected blue-collar labor, and often emerged through relatively open or accessible development pathways. The steam engine, patented in 1769, took nearly a century to become the dominant means of production (Crafts, 2004). As the primary GPT of the British Industrial Revolution, it generated major output gains while wages for factory workers stagnated or declined, allowing owners to capture the bulk of the resulting profits for roughly half a century (Allen, 2009).

The dot-com era presents a contrasting case. While still capital-intensive, the core technologies were comparatively accessible. Entrepreneurs with limited resources could build transformative companies using open-source tools and local servers. Amazon, for example, emerged from this environment, as Jeff Bezos founded Amazon with an initial $10,000 investment (Stone, 2013).

Generative AI represents a sharp departure from both of these trajectories. OpenAI's first public release was backed by a $1 billion investment from Microsoft in specialized supercomputing infrastructure, placing the foundational development of the technology far beyond the reach of individuals or small firms (Microsoft, 2019). Today, over 60 percent of foundational AI platforms are controlled by just two firms, Microsoft and Amazon (IoT Analytics, 2025). At the same time, diffusion has been unusually rapid, with an estimated 40 percent of the global workforce exposed to AI tools within two years of ChatGPT's release (Cazzaniga et al., 2024).

This combination of extreme capital concentration and rapid diffusion is historically unusual for a GPT. It suggests that the distributional consequences of Gen-AI may be more severe than those observed in earlier technological transitions. Allen (2009) describes an Engels' pause, a period in which wages lag productivity before eventually recovering.

II. The Strategic Battle for AI Dominance: Power and Control

First, it's important to understand the United States' interest in winning the AI battle before we look at current AI strategies. The National Security Commission on Artificial Intelligence Final Report (2021) states that allowing regimes like China to obtain AI superiority would threaten democratic values, citing examples of mass surveillance and military power.

Innovation control and export policy

Looking at the current strategy of the US, it appears that current actions revolve around control and power. As the US is leading the AI industry in innovation, it looks for ways to maintain that innovative edge (The White House, 2025). One of those ways to maintain innovative controls is to limit the exports of GPUs needed to continue building AI with China by implementing a “volume cap” policy that restricts the quantity of advanced chips, such as NVIDIA's H200, that can be sold to Chinese entities to 50% of the volume shipped to U.S. customers (McGuire, 2026).

Narrative leadership

The US also wants to control the narrative and global usage guidelines surrounding AI. They are doing so by leading international safety consortiums and enforcing the “AI Action Plan,” which prioritizes American-led standards in international diplomacy (The White House, 2025).

Economic power

The larger the economy of a country, the more power it exerts on a global stage (Kroese, 2024). The US sees its heavy investment in AI as an essential driver towards economic growth (Bank of America Institute, 2025). In fact, economists from the Penn Wharton Budget Model (2025) project that Generative AI adoption will increase US GDP by 1.5% by 2035 and nearly 3% by 2055.

Military and national security

And of course, a government strategy isn't complete without discussing military implications and national security. Our current administration isn't shy about testing AI within the military as it is actively experimenting with Grok AI to operate on Pentagon networks (Associated Press, 2026). Furthermore, the Department of Defense has launched the “Replicator” initiative, aiming to field thousands of autonomous AI-driven systems by August 2025 to counter China's military scale (Defense Innovation Unit, 2025).