Why Wall Street Wants You to Fear AI

Goldman Sachs, the infamous Wall Street “vampire squid” (aptly so dubbed by Matt Taibbi), wants to scare the hell out of us. It reports that more than 300 million jobs worldwide could be affected negatively by artificial intelligence programs and that “roughly two-thirds of U.S. occupations are exposed to some degree of automation by AI.”

How convenient! Wall Street is off the hook. They aren’t job killers – AI is. And there’s not a damn thing any of us can do about it, because there’s no stopping science and technology from their god-like domination of society. AI will gobble up your job and you will just have to make do.

Big finance knows we’ll eat this up because we always do. Since the dawn of the industrial era, we’ve been fascinated by the power and prowess of modern machinery. We love stories about robots and computers taking over the world, fighting us to the finish. It is, after all, truly amazing what we, the recent descendants of chimpanzees, are capable of inventing. We have to marvel when making a phone call to the other side of the world in a split second. And it is indeed chilling to have AI programs write us a heartfelt love poem in an instant.

So yes, we are inclined to believe that AI is the most powerful, far reaching job killer to ever have roamed the planet. But it isn’t. In terms of jobs loss, it’s just a distraction, the shiny object that gets our attention while Wall Street picks our pockets.

More than 300 Wall Street hedge funds feasted at the trough. There’s your job killer.

The same Wall Street firms and their media cousins that want us to marvel at the shock and awe of AI, are destroying jobs the old-fashioned way – through stock buybacks. They kill jobs in order to stuff more money into their pockets and they’d greatly prefer us not to notice.

There is a direct connection with most mass layoffs and stock buybacks, but seldom if ever is that reported. Hell will freeze over before Goldman Sachs issues a report that shows how stock buybacks are destroying the jobs of millions of working people while enriching the already wealthy.

For those new to this game, a stock buyback is when a company uses its revenues to buy back its own shares to boost their price. Yes, this is stock manipulation, and it was once outlawed. Now it’s legal and companies are using nearly 70 percent of all their earnings to buy back and boost the price of their own shares.

Why? Reason number one is that Wall Street firms, usually big hedge funds, will buy up a company’s stocks with borrowed money, gain a certain amount of control, and then demand the company buy back stock so the hedge fund makes a killing in a hurry.

Reason number two is that CEOs receive most of their compensation through stock incentives. Boost the price of shares through stock buybacks and CEOs instantly get richer.

How to pay for all this? Through mass layoffs, orders of magnitude greater than AI. In January 2024 there were 82,307 job cuts in the economy. Only 381 were due to AI.

But wait. That’s right now. In the future might not the numbers reverse? After all, AI’s journey has just begun.

Indeed, it has, but as I detail in Wall Street’s War on Workers, virtually every study of the job impact of automation shows that it’s a very slow process. Also, the entry of automation doesn’t necessarily mean that the number of jobs in an automated industry will decline. After robots marched through the auto industry, overall employment actually increased. In Japan, the world’s leader in automotive robotics, the auto industry provides lifetime guaranteed employment.

Sure, this time it could be different, with AI proving to be an exceptional job killer. But that belief is based on fantasy and fear, amplified by the media, and not by actually examining the causes of job loss. In our economy, the big job killer is stock buybacks.

In 2023, Facebook, Google, and Microsoft announced 43,000 layoffs. Yet just before those announcements, in the third quarter of 2022 alone, these companies conducted $28 billion in stock buybacks. In the past five years, they have used $383 billion in stock buybacks to boost their stock prices. More than 300 Wall Street hedge funds feasted at the trough. There’s your job killer. (For the gory details see Chapter 11 of Wall Street’s War on Workers.)

How do we stop them?

The policy part is easy to imagine. Once again prohibit stock manipulation by outlawing stock buybacks. Also, attach one simple clause to every corporation getting a federal contract – no compulsory layoffs during the life of the contract. You can’t take taxpayer money (amounting to approximately $700 billion a year) if you’re going to force taxpayers out of their jobs. If you want to lay someone off it must be voluntary, which means you have to buy them out. You don’t want to do that? Don’t take the federal money.

The hard part is building a movement big enough to force politicians to take on Wall Street. We estimate that 30 million of us have gone through a mass layoff since 1996. Count the families of laid off workers and probably half of the U.S. workforce has been negatively affected by mass layoffs. The labor movement needs to make mass layoffs a major cause and build a new organization that mobilizes this constituency – something like Workers United Against Mass Layoffs! If millions join, maybe politicians will start to listen.

To get there, however, we first need to defeat the technological fatalism that make layoffs feel inevitable and unstoppable.

Financial looting, not AI = Mass Layoffs!