Artificial Intelligence (AI) – the buzzword that’s reshaping industries. But here’s the twist: Is it our economy’s knight in shining armor or Pandora’s box of challenges? Let’s dive into AI’s impact on our economic landscape.
If medieval developments in the plough did not help lift Europe’s peasants out of deprivation, it was mostly because their rulers chose to construct cathedrals with the wealth created by the increased increases in output.
According to economists, something similar may occur if Artificial Intelligence (AI) penetrates our life so that only a select few benefit from the proclaimed advantages rather than the majority.
Some techno-optimists go even further, contending that Artificial Intelligence, with robots, is the technological advancement. It will eventually release humanity from routine jobs and usher us into lives of greater creativity and leisure. Nevertheless, concerns about its effects on livelihoods abound, including its potential to eliminate jobs in various areas. Take, for example, the July strike by Hollywood actors who worry about losing their jobs to their AI-generated doubles.
What is About the Productivity Gain?
These worries are not without merit. History demonstrates that technological innovations typically have an unclear, uneven, and occasionally negative economic impact.
A book published this year by Johnson and fellow MIT economist Daron Acemoglu surveyed a thousand years of technology – from the plough through to automated self-checkout kiosks – in terms of their success in creating jobs and spreading the wealth.
Although the spinning jenny was essential to the automation of the textile industry in the 18th century, they discovered that it resulted in longer working hours in more difficult circumstances. The growth of slavery in the American South throughout the 19th century was made possible by mechanical cotton gins.
The history of the Internet is complicated: while numerous new employment opportunities have been established, a small number of billionaires have reaped the majority of the benefits in terms of wealth. In many economies, the productivity increases it was previously praised for have stalled.
Even a technology as prevalent as the Internet left many areas untouched, and many of the employment it created were low-skilled – think of the delivery chain for online purchases – according to a research note published in June by the French bank Natixis.
Know Worker Power
It turns out that innovation is the simple part. Making it work for everyone is harder, and here is where politics enters the picture.
According to MIT’s Johnson, the introduction of railways in 19th-century England, at a time of swift democratic transformation, made it possible for broader society to benefit from these advancements, whether through quicker delivery of fresh food or a first experience with leisure travel.
Millions were able to benefit from technological advancements well into the 20th century thanks to similar democratic advances made in other countries. Johnson, however, argues that the aggressive shareholder capitalism that has characterized the past forty years is what first caused this to change.
He cites the automatic self-checkout as one example. Only the benefit from the decrease in labor expenses is realized; groceries do not become more affordable, shoppers’ lives are not improved, and no new job is created.
That is just one of many variables affecting how Artificial Intelligence impacts our economic lives, including antitrust laws promoting healthy competition among AI vendors and worker retraining. According to a July OECD poll of 5,300 workers, Artificial Intelligence may increase job happiness, health, and income, but it also raises privacy concerns, reinforces biases at work, and encourages overworking.
