AI and the failure of economics

Y = C + I + G+ [(X -M)-(Net income Deficit)]

The mathematics of external balance makes the political argument of productivity little more than an ideological slogan of questionable economics.

The net income deficit makes itself felt through the money supply. If the money supply is defined as

Ms= R + DCE

Ms = money supply

R = reserves

DCE = domestic credit creation

Whilst the net income deficit directly affects DCE, its impact upon the domestic economy and employment is its impact upon (X-M) and the money supply. In other words, the impact of a negative net income deficit can be understood from the GDP equation above.

Conclusions

As AI investment will be largely the province of large international corporations, external balance and the net income deficit must become major policy issues. These following questions need to be address by our politicians across all parties.

What impact will AI have on national sovereignty?

Which industries will be affected by AI?

How will rising unemployment be addressed?