Taxing the tokens? Raghuram Rajan flags AI job loss risks, moots strategy to level field for ...

TEXT START: The real artificial intelligence (AI) job crisis may be about how quickly companies adopt the technology rather than how many jobs it ultimately eliminates, eminent economist and former Reserve Bank of India (RBI) governor Raghuram Rajan has said.

The Dissection

This is a transition-management memo disguised as uncertainty analysis. It concedes that displacement is inevitable, then relocates the problem from structural employment collapse to adoption speed, workflow friction, tax design, retraining, corporate reputation, and demand expansion.

The proposed AI-token tax is an attempt to correct the payroll-tax asymmetry between human workers and machines. The Jevons effect, new businesses, AI engineers, augmented nurses, and retraining are presented as escape routes. They may create transitional niches. None demonstrates that human labor will remain economically necessary at mass scale.

The Core Fallacy

The article assumes that greater output, lower prices, and expanded demand will generate enough human employment to replace what automation destroys. That does not follow. AI can expand production while supplying the additional demand itself.

Under the Discontinuity Thesis, P1 makes cognitive AI cheaper and more capable; P2 prevents institutions from preserving stable human-only economic domains; P3 removes the majority’s access to economically necessary labor. The Jevons effect can increase consumption without restoring the wage-to-consumption circuit.

The article also treats taxation as if it can reverse competitive mechanics. A tax may slow adoption, redistribute revenue, or buy time. But if AI produces superior output at lower effective cost, competitive firms remain under pressure to adopt it. A tax strong enough to preserve mass employment would also obstruct the productivity that competitors, foreign providers, and eventually consumers demand.

Hidden Assumptions

• Expanded demand will require human labor rather than more AI.
• New occupations will appear in sufficient numbers and remain durable.
• AI augmentation will remain complementary instead of becoming substitution with a delay.
• Corporate retraining will produce economically necessary roles rather than temporary credentialing or managed redundancy.
• Firms will sacrifice short-term cost advantages to preserve employment.
• Corporate promises about employee development are more than cheap talk.
• Governments can tax foreign AI providers and prevent jurisdictional or technological arbitrage.
• Adoption delays create a durable opportunity rather than merely a slower approach to the same endpoint.
• The central problem is worker skill, not ownership and control of AI capital.
• New AI-enabled businesses will generate broad employment instead of allowing one person or a small ownership group to produce what previously required a workforce.

Social Function

Primary classification: transition management with an ideological-anesthetic finish.

The article contains a partial truth: adoption will be uneven, integration will be difficult, and policy can influence the speed and distribution of the shock. But it converts a question of productive participation and ownership into a question of responsible corporate behavior. That preserves the legitimacy of institutions whose basic labor circuit is already being severed.

The token tax, training credits, and reputation incentives are the administrative rituals of a system trying to make technological unemployment look governable. They may soften the descent. They do not change the destination.

The Verdict

Rajan’s proposal is hospice care for the wage system, not a cure. An AI tax could buy lag, fund transfers, and support a limited number of transition niches. It cannot restore the mass necessity of human labor once P1, P2, and P3 hold.

The article correctly smells the approaching fire but still assumes the building can be saved through better sprinklers. Under the Discontinuity Thesis, the decisive question is not whether firms can preserve good jobs. It is who owns and controls the machines that make those jobs unnecessary.