Weekly Business Insights from Top Ten Business Magazines | Week 296 | Shaping | 1

Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 296 | May 12 – 18, 2023.

Your job is (probably) safe from artificial intelligence

The Economist | May 7, 2023

Listen to the Extractive Summary of the Article

The age of “generative” artificial intelligence has well and truly arrived. Openai’s chatbots, which use large-language-model (LLM) technology, got the ball rolling in November. Now barely a day goes by without some mind-blowing advance.  A recently leaked presentation, reportedly from a Google engineer, suggests the tech giant is worried about how easy it is for rivals to make progress. There is more to come—probably a lot more.

The development of ai raises profound questions. Perhaps most pressing, though, is a straightforward one. What does this mean for the economy? Many have grand expectations. New research by Goldman Sachs, a bank, suggests that “widespread ai adoption could eventually drive a 7% or almost $7trn increase in annual global gdp over a ten-year period.”

Financial markets, however, point to rather more modest outcomes. To judge which group is right, it is helpful to consider the history of previous technological breakthroughs. This provides succour to investors. For it is difficult to make the case that a single new technology by itself has ever radically changed the economy, either for good or ill. 

Of course, no one can predict with any certainty where a technology as fundamentally unpredictable as AI will take humans. Runaway growth is not impossible; nor is technological stagnation. But you can still think through the possibilities. Consider three broad areas: monopolies, labour markets and productivity.

A new technology sometimes creates a small group of people with vast economic power. Generative ai has some monopolistic characteristics.  There is, however, little chance of a single company bestriding the entire industry. More likely is that a modest number of big firms compete with one another, as happens in aviation, groceries and search engines.

Because of new new teachnology, history suggests job destruction happens far more slowly.  Many of the jobs at risk from AI are in heavily regulated sectors.  Legal services, accountancy and travel agencies came out at or near the top of professions most likely to face disruption.  AI will take less than 90 years to sweep the labour market. Perhaps, in time, governments will allow some jobs to be replaced. But the delay will make space for the economy to do what it always does: create new types of jobs as others are eliminated. By lowering costs of production, new tech can create more demand for goods and services, boosting jobs that are hard to automate.  The AI economy is likely to create new occupations which today cannot even be imagined.

Modest labour-market effects are likely to translate into a modest impact on productivity—the third factor.

But there are many things beyond the reach of AI. Blue-collar work, such as construction and farming, which accounts for about 20% of rich-world GDP, is one example.  It is even possible that the AI economy could become less productive. Look at some recent technologies. Smartphones allow instant communication, but they can also be a distraction. 

AI may change the world in ways that today are impossible to imagine. But this is not quite the same thing as turning the economy upside down.

3 key takeaways from the article

1. The development of ai raises profound questions. Perhaps most pressing, though, is a straightforward one. What does this mean for the economy?
2. Of course, no one can predict with any certainty where a technology as fundamentally unpredictable as AI will take humans. Runaway growth is not impossible; nor is technological stagnation. But you can still think through the possibilities. Consider three broad areas: monopolies (A new technology sometimes creates a small group of people with vast economic power which AI has), labor markets likely to kill some but also likely to create new occupations which today cannot even be imagined) , and productivity (Modest labour-market effects are likely to translate into a modest impact on productivity).
3. AI may change the world in ways that today are impossible to imagine. But this is not quite the same thing as turning the economy upside down.

Full Article

(Copyright)

Topics:  Artificial Intelligence, Technology, Economy, Employment