Short-selling firm Muddy Waters Research Founder: AI May Trigger Widespread Unemployment Shock in Stock Market, Prompting Universal Basic Income

On June 22, Carson Block, founder of short-selling firm Muddy Waters Capital, warned that artificial intelligence (AI) could spark massive losses in U.S. knowledge-based jobs over the next several years—rippling through the stock market and even pushing for the adoption of Universal Basic Income (UBI). In a podcast, Block noted that roughly 15% of U.S. knowledge-based jobs could be automated by AI over the coming years, spanning sectors like tech, law, and finance and impacting some 15 million roles. He explained that AI is cutting demand for labor in traditional knowledge work, such as the massive volume of document and information organization tasks common in the legal field. He added that unlike the job rebound following the 2008 financial crisis, AI-driven job displacement will likely trigger irreversible structural shifts, resulting in what he calls a “steady decline in roles suitable for human workers.” Block also warned that a surge in unemployment could prompt households to pull funds from retirement accounts and slash ongoing investments, flipping the U.S. stock market’s fund flows from net inflows to net outflows and amplifying downward pressure on equities. He added that the growing share of passive investing could erode the market’s ability to absorb shocks during a downturn, raising systemic risk. Still, Block argues that society as a whole could stand to benefit from AI’s productivity boosts, with the middle class potentially moving to a 2- to 3-day workweek—while some people may rely on basic income for financial stability. He also noted that AI is drastically boosting knowledge work efficiency and has altered his earlier view of the tech’s capabilities, though he remains skeptical of cryptocurrencies, adding that he favors tangible assets over digital holdings during extreme market conditions. Click the link below to join the Dr. BlockBeat · Feishu AI News Channel for 24/7 coverage and real-time monitoring of global AI news and trending topics.