It's not an either/or situation, we'll have both competition *and* augmentation. Though it's nice that Musk doesn't want AI to compete with people, it's too late, we're already there, and AI is increasingly on the winning side -- falling costs, better performance, and none of the hassles associate with hiring meatbags. The only problem is economic: who's your customer when you've put everyone out of work?
If this goes on the govt. will have to fund college including a living stipend while people made redundant go back to college to learn skills for the new economy.
Nope. Government-funded college is socialism--the worst evil of all. More US citizens will simply have to cope with poverty, which, though undesirable, is at least ideologically pure. Maybe buy a lottery ticket and dream big!