Muddy Waters founder: AI may trigger mass unemployment, shock the stock market, and drive the implementation of basic income systems

BlockBeats News, June 22 — Muddy Waters Capital founder Carson Block has warned that artificial intelligence could trigger large-scale losses of knowledge-based jobs in the coming years and, through a chain reaction, impact the stock market and even propel universal basic income (UBI) into reality.

Block stated during a podcast that in the next few years, around 15% of knowledge-based jobs in the United States could be replaced by AI, covering fields such as technology, law, and finance, involving about 15 million positions. He pointed out that AI is significantly reducing the demand for labor in traditional knowledge work, such as large volumes of paperwork and information sorting in the legal industry.

He further believes that, unlike the employment recovery following the 2008 financial crisis, the job replacement brought by AI may be an irreversible structural change, leading to “a continuous decrease in available jobs for humans.”

Block also suggested that a wave of unemployment could cause households to withdraw money from retirement accounts and reduce ongoing investment, shifting US stock market capital flows from net inflow to net outflow and adding pressure to the downside of the market. At the same time, he pointed out that the rising share of passive investment could weaken the market’s buffering capacity during downturns, increasing systemic risk.

Nonetheless, Block believes that society as a whole could still benefit from productivity gains brought by AI, with the middle class possibly shifting to working two or three days a week, and some people potentially relying on basic income for their livelihood.

He also stated that AI is significantly improving the efficiency of knowledge work and has changed his previous perception of artificial intelligence’s capabilities, but he remains skeptical about cryptocurrencies. He said that in extreme scenarios, he would still prefer physical assets over digital assets.