Will AI be an economic blessing or curse? History offers clues
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[August 07, 2023] By
Mark John
(Reuters) - If medieval advances in the plough didn't lift Europe's
peasants out of poverty, it was largely because their rulers took the
wealth generated by the new gains in output and used it to build
cathedrals instead.
Economists say something similar could happen with artificial
intelligence (AI) if it enters our lives in such a way that the touted
benefits are enjoyed by the few rather than the many.
"AI has got a lot of potential - but potential to go either way," argues
Simon Johnson, professor of global economics and management at MIT Sloan
School of Management.
"We are at a fork in the road."
Backers of AI predict a productivity leap that will generate wealth and
improve living standards. Consultancy McKinsey in June estimated it
could add between $14 trillion and $22 trillion of value annually - that
upper figure being roughly the current size of the U.S economy.
Some techno-optimists go further, suggesting that, along with robots, AI
is the technology that will finally free humanity from humdrum tasks and
launch us into lives of more creativity and leisure.
Yet worries abound about its impact on livelihoods, including its
potential to destroy jobs in all kinds of sectors - witness the strike
in July by Hollywood actors who fear being made redundant by their
AI-generated doubles.
WHAT PRODUCTIVITY GAIN?
Such concerns are not unfounded. History shows the economic impact of
technological advances is generally uncertain, unequal and sometimes
outright malign.
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 wealth.
While the spinning jenny was key to 18th century automation of the
textiles industry, they found it led to longer working hours in harsher
conditions. Mechanical cotton gins facilitated the 19th century
expansion of slavery in the American South.
The track record of the Internet is complex: it has created many new job
roles even as much of the wealth generated has gone to a handful of
billionaires. The productivity gains it was once lauded for have slowed
across many economies.
A June research note by French bank Natixis suggested that was because
even a technology as pervasive as the Internet left many sectors
untouched, while many of the jobs it created were low-skilled - think of
the delivery chain for online purchases.
"Conclusion: We should be cautious when estimating the effects of
artificial intelligence on labour productivity," Natixis warned.
In a globalised economy, there are other reasons to doubt whether the
potential gains of AI will be felt evenly.
On the one hand, there is the risk of a "race to the bottom" as
governments compete for AI investment with increasingly lax regulation.
On the other, the barriers to luring that investment might be so high as
to leave many poorer countries behind.
[to top of second column] |
High school student Richard Erkhov is
reflected on a screen of "Alnstein", a robot powered with ChatGPT,
in Pascal school in Nicosia, Cyprus, March 30, 2023. REUTERS/Yiannis
Kourtoglou/File Photo
"You have to have the right infrastructure – huge computing
capacity," said Stefano Scarpetta, Director of Employment, Labour
and Social Affairs at the Paris-based Organisation for Economic
Cooperation and Development (OECD).
"We have the G7 Hiroshima Process, we need to go further to the G20
and UN," he said, advocating the expansion of an accord at a May
summit of Group of Seven (G7) powers to jointly seek to understand
the opportunities and challenges of generative AI.
WORKER POWER
Innovation, it turns out, is the easy bit. Harder is making it work
for everyone - which is where politics comes in.
For MIT's Johnson, the arrival of railways in 19th century England
at a moment of rapid democratic reform allowed those advances to be
enjoyed by wider society, be it through faster transport of fresh
food or a first taste of leisure travel.
Similar democratic gains elsewhere helped millions enjoy the fruits
of technological advance well into the 20th century. But Johnson
contends that this started changing with the aggressive shareholder
capitalism that has marked the last four decades.
The automated self-checkout, he argues, is a case in point.
Groceries do not become cheaper, shoppers' lives are not transformed
and no new task is created - just the profit gain from the reduction
of labour costs.
Worker groups, which have lost much of the clout they had before the
1980s, identify AI as a potential threat to workers' rights as well
as employment, for example if there is no human control on
AI-steered hiring and firing decisions.
Mary Towers, employment rights policy officer at Britain's Trades
Union Congress, cited the importance of unions "having statutory
consultation rights, having the ability to collectively bargain
around technology at work".
That is just one of several factors that will help determine how AI
shapes our economic lives - from antitrust policies that ensure
healthy competition among AI suppliers through to re-training of
workforces.
An OECD survey of some 5,300 workers published in July suggested
that AI could benefit job satisfaction, health and wages but was
also seen posing risks around privacy, reinforcing workplace biases
and pushing people to overwork.
"The question is: will AI exacerbate existing inequalities or could
it actually help us get back to something much fairer?" said
Johnson.
(Additional reporting by Eva Mathews in Bengaluru; Writing by Mark
John; Editing by Catherine Evans)
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