Fed Chair nominee Kevin Warsh believes that productivity gains, not job replacement, are the real economic promise of AI.
In a new interview with Sadi Khan, Warsh says history shows that sustained wage growth only follows periods of higher productivity, and AI may be setting up the next major shift.
But he warns that workers and economies that fail to participate in that productivity shift risk being left behind.
“Because if we learned anything in economics, what we learned is productivity gains are the predecessor to wage gains. And if you can’t be part of that productivity revolution, then this ladder that I told, the story I told of the shining city on the hill, becomes more of a myth.”
Warsh also pushes back on the idea that AI represents a wholesale replacement of human labor, arguing instead that technology has consistently expanded what people can do rather than eliminating them.
“You’re not replacing people, you’re letting that person do more. And so the history of technology, which you know, is it’s not machine replacing person. It’s person and machine doing things together that they wouldn’t otherwise be able to do.”
According to Warsh, what makes the current wave of AI different is how accessible it has become to everyday users. Unlike earlier technological revolutions that required specialized technical skills, Warsh says AI lowers the barrier to entry.
“And the radical thing about this new technology is it’s accessible for everybody. And they don’t need to be a computer coder to do it. They could pick up the phone, they can ask a question, and they can explore things in sort of an unstructured way.
And for the economy, that’s where the big bang comes from. It’s that gotcha moment that’s exciting.”
Warsh’s view runs counter to the popular narrative that AI will trigger massive job displacement. Last month, Anthropic CEO Dario Amodei predicted that AI could do most or all human jobs in less than five years.
Meanwhile, a recent Stanford study found that AI could boost wages by 21%, driven by productivity gains.
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