The AI Tsunami: Abundance vs Scarcity

By John Ian Lau


JiL’s Take on AI

In the quiet corridors of economic think tanks and the bustling halls of government, a profound perplexity is setting in. The future of human society, once plotted along predictable curves of growth and constraint, now teeters on the edge of an unprecedented transformation. On one hand, artificial intelligence and robotics promise hyper growth—an explosion of productivity that could redefine prosperity. On the other, the very foundations of income, labor, and value are crumbling, leaving us to wonder: How will societies sustain themselves in a world where work as we know it evaporates?

At the heart of this dilemma lies a fundamental question for governments: How to generate revenue in an era of abundance? Traditional tax systems rely on income from labor, corporate profits, and consumption—all tethered to scarcity. But as AI and robotics automate production, these pillars erode. Corporations, ever agile, are already eyeing tax havens like never before, migrating operations to jurisdictions with minimal fiscal burdens. Why pay taxes in high-revenue nations when algorithms and machines can operate borderlessly, untethered to physical locations?

Consider a matrix of interlocking forces reshaping this landscape: Scarce resources—oil, rare earths, water—still owned and controlled by nations, providing some leverage in a global economy. Technology, democratized yet increasingly centralized in the hands of a few tech giants, amplifies disparities. Tax dollars, the lifeblood of public services, face depletion as taxable events dwindle. Add to this geopolitical tensions, intellectual property regimes that favor innovators over regulators, and the rise of decentralized finance, which could further erode national monetary controls. The interplay is volatile: Countries rich in resources might barter for tech access, while others grapple with brain drain and capital flight.

Elon Musk, the unfiltered oracle of disruption, recently put it bluntly in a way no economist dares: The entire system is about to break, and nothing can stop it. AI and robotics aren’t merely generating growth; they’re dismantling the scarcity framework that economics has depended on for centuries. “It will hit us like a supersonic tsunami,” Musk warned, evoking an image of unrelenting force sweeping away outdated structures.

Production, in this new paradigm, compounds exponentially. Money supply, by contrast, grows linearly at best—constrained by central bank policies designed for a finite world. Productivity surges could sustain permanent double-digit expansion, numbers that sound like science fiction but are fast becoming baseline realities. This isn’t evolution; it’s replacement. Human labor, once the cornerstone of value creation, is supplanted by systems that learn, adapt, and scale without fatigue or salary demands.

Musk doubles down: “Prices collapse hard.” Not a gentle decline, but an implosion. AI strips out labor costs, eliminates production errors, and removes every inefficiency that has kept goods expensive. Manufacturing anything—from consumer electronics to pharmaceuticals—approaches zero marginal cost, while quality accelerates toward perfection. In a scarcity-driven economy, this would be a boon. But here, it unleashes deflationary pressures that defy conventional wisdom.

Singularity commentators like Ray Kurzweil have long prophesied this tipping point, where technological progress accelerates to a “singularity”—a moment when AI surpasses human intelligence, rendering exponential change the norm. Kurzweil’s timelines, once dismissed as optimistic, now align eerily with Musk’s warnings: We’re not just automating jobs; we’re redefining existence itself. Other voices, such as Nick Bostrom and Max Tegmark, echo this, cautioning that unchecked AI could lead to existential shifts, where human agency competes with machine autonomy.

Governments, reacting on instinct, will reach for familiar tools: Print money. Inject stimulus. Subsidize industries. Yet this playbook, honed in eras of shortage, collides with an abundance it has no framework to comprehend. Enter Universal Basic Income (UBI) as a potential lifeline—a radical redistribution where every citizen receives a stipend, untethered to work. Proponents like Andrew Yang argue it’s inevitable, a buffer against mass unemployment. But in a post-scarcity world, UBI might evolve beyond welfare into a foundational right, funded not by taxes on dwindling labor but perhaps through sovereign wealth from AI-driven productivity or resource royalties.

Is this the beginning of true and absolute socialism? The society we know will be vastly different, where ownership of production means—AI systems, data troves, robotic factories—determines power. Private enterprise could give way to collective stewardship, as abundance erodes the profit motive. Nations might nationalize AI infrastructure, blurring lines between capitalism and communalism. Yet this isn’t ideological triumph; it’s pragmatic survival. Scarcity bred competition; abundance demands equity to prevent chaos.

“GDP metrics are already meaningless,” Musk asserts, and he’s right. Every economic model—from Keynesian demand management to neoliberal supply-side theories—assumes constrained labor, limited output, and gradual improvement. AI doesn’t operate within those boundaries; it deletes them as variables.

As production explodes, central banks might flood the system with liquidity in a bid to stabilize. But prices will collapse regardless, because physical abundance scales faster than any monetary intervention can match. The production wave outruns policy response—always. Deflation, in historical models, signals crisis: factories idle, jobs lost, demand in freefall. But this isn’t demand collapse; it’s supply going infinite. Goods and services become so plentiful that value shifts from ownership to access, from price tags to utility.

The economy isn’t failing—it’s transforming beyond the tools built to measure scarcity. Power will accrue to whoever controls the systems generating unlimited output: Tech visionaries, AI overlords, or perhaps new alliances of states and corporations. Money becomes secondary when production costs vanish. Policymakers, meanwhile, are steering with instruments calibrated for limits that no longer exist—interest rates, fiscal multipliers, trade tariffs—all relics in a post-scarcity dawn.

This shift has already begun. Look at the rapid adoption of AI in manufacturing, the plummeting costs of renewable energy tech, or the automation waves rippling through services. The people running things—central bankers, finance ministers, economists—have zero answers for what happens when their entire profession becomes obsolete overnight. Society’s perplexity is warranted; the tsunami is here, and rebuilding will demand not just new policies, but a new worldview. This is no longer a test between nations or corporations—it’s a crucible for humanity itself, forcing us to confront whether we can harness abundance for all or let it fracture us irreparably. Either way, humans have long been creatures of reinvention. We are a species with the innate drive to prosper and evolve, having endured several major evolutionary phases throughout history. In the face of AI, we must shift our focus not to what can be improved externally—since AI already outthinks some of us and will soon outthink all of us—but to our internal strengths. This author aligns with TGG’s recent internal newsletter, which advocates a new emphasis on their operational acronym “LIT”: now reads longevity, impact, and transformation—all intrinsically human pursuits. By prioritizing our health, extending our lifespans, fostering one another’s happiness, amplifying our impact on communities, and reimagining how we live, eat, entertain, and connect, we can navigate this upheaval. “It’s going to be a vastly different environment in less than a decade. We don’t know what the away games will be like, so let’s focus on playing the best we can at home, starting from transformation of the way we think and live within ourselves,” as TGG affably remarked.

In conclusion, most who have witnessed the power of AI will agree that AI will do most of our tasks better and faster, in my previous writings, I have commented re the power necessary to power this AI evolution. Musk claims he may have found a way by harnessing solar power from the moon. Sounds like we will soon be living out of a sci-fi fiction. Wait, or are we?