The machines are coming and they will eat your job. This has been a well-known refrain over the years, dating back to the Luddites in the early 19th century. In the past, leaps in technology have replaced low-paying jobs with a greater number of higher-paying jobs. This time, with the arrival of artificial intelligence, there are those who believe it will be different.
Politicians know that even in the best-case scenario, AI will massively disrupt labor markets, but they are deluding themselves if they think they have years to come up with an appropriate answer. As tech entrepreneur Mihir Shukla recently said at the World Economic Forum in Davos, “People keep saying AI is coming, but it’s already here.”
Developments in machine learning and robotics are advancing rapidly while the world has been occupied by pandemic, inflation and war. AI will be to the fourth industrial revolution what the spinning jenny and the steam engine were to the first in the 18th century: a transformative technology that will fundamentally change economies.
Change will not happen overnight, but as with previous industrial revolutions, it will be as painful for those affected as it is for millions of workers. Previously, machines replaced manual labor, leaving jobs that required cognitive skills to humans. Advances in AI – symbolized by ChatGPT – show that machines can now have a decent try at doing creative stuff too.
ChatGPT is a machine that can write intelligently. Asked to create a Donald Trump-style version of Abraham Lincoln’s Gettysburg speech, it will search the web for appropriate source material and generate original content.
ChatGPT was launched by San Francisco-based research lab OpenAI in November of last year and had its 100 millionth user in 60 days. In contrast, it took Facebook two years to reach the same milestone.
More new products will follow. According to a report by Stanford University in California, the number of AI patents increased 30-fold between 2015 and 2021. Robots are becoming cheaper and more sophisticated.
History shows that profound technological change poses significant challenges for policy makers. Each of the previous three industrial revolutions had similar initial effects: it has eroded jobs across the economy, it has increased inequality, and it has reduced the share of income going to work.
AI threatens to have exactly the same impact, but with one key difference. Without control, the owners of the new machines will make enormous sums of money from their innovations. Capital’s share of income will increase at the expense of labour. There will be an erosion of some sectors of the economy, but there will be job growth in other sectors.
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The difference this time is that the jobs most at risk will be white-collar and middle-class jobs, while many of the jobs created could be of the low-paying, dead-end variety. As Shukla noted in Davos, the days of people processing mortgage applications are numbered.
There are ways to deal with some of these problems. Governments could invest more in education and training so workers have the skills they need to make a decent living. They might look for ways to spread the gains from the new technology. Silicon Valley entrepreneurs are among the most vocal advocates of universal basic income.
But whatever they do, policymakers must act both prudently and swiftly. The economist Joseph Schumpeter popularized a phrase to describe how capitalism periodically reinvents itself. He called it creative destruction, and such a process is now in its early stages.
