Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 303 | June 30 – July 6, 2023.
It’s Too Early to Proclaim an AI Productivity Boom
By Enda Curran | Bloomberg Businessweek | June 22, 2023
Listen to the Extractive Summary of the Article
The steam engine, electric lighting, refrigeration. If you’re wondering what these things have in common, they’re examples of transformative technologies that lifted worker productivity, along with wages and economic output. Does generative AI belong on that list? Cue the debate.
Hardly a day passes without some news of the feats that so-called large language models (LLMs) can pull off, from helping to write academic papers or design buildings—along with projections on how many jobs will be wiped out as companies figure out ways to deploy the new technology. But economists are divided on whether the likes of OpenAI’s ChatGPT or Google’s Bard have the potential to jump-start productivity growth, which in Europe, the US and Japan has fallen by half since the 1980s.
According to a new report by McKinsey & Co., AI is the productivity tonic mature economies have been waiting for. McKinsey’s researchers project AI will deliver $4.4 trillion in economic benefits annually to the global economy, equal to 4.4% of global output in 2022.
While the technology is still evolving, its eager uptake is forcing economists to make early estimates of its impact. A research paper in May by the Brookings Institution, titled Machines of Mind: The Case for an AI-Powered Productivity Boom, argues that LLMs could jump-start productivity, with the biggest gains expected in white-collar work.
Another study shows it’s how employers deploy generative AI that will ultimately determine the extent of the gains for workers and the larger economy. If companies use it to shrink their payrolls, average productivity may tick up, but it will hurt wages or living standards. If businesses use the tools to free up their workers for value-added tasks, that will have a wider economic impact, according to Simon Johnson, co-author with Daron Acemoglu of Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity. It’s a question of using machines to get rid of workers or, instead, to help them with their jobs, he says.
On the flip side, says Louis Hyman, an economic historian at Cornell University, blue-collar workers could benefit. “It won’t change blue-collar work, but it will change who can get out of blue-collar work and get into better jobs,” he says. “We are living through one of those inflection points through human history.”
3 key takeaways from the article
- The steam engine, electric lighting, refrigeration. If you’re wondering what these things have in common, they’re examples of transformative technologies that lifted worker productivity, along with wages and economic output. Does generative AI belong on that list?
- Economists are divided on whether the likes of OpenAI’s ChatGPT or Google’s Bard have the potential to jump-start productivity growth, which in Europe, the US and Japan has fallen by half since the 1980s.
- One study shows it’s how employers deploy generative AI that will ultimately determine the extent of the gains for workers and the larger economy. If companies use it to shrink their payrolls, average productivity may tick up, but it will hurt wages or living standards. If businesses use the tools to free up their workers for value-added tasks, that will have a wider economic impact.
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Topics: Technology, Artificial Intelligence, Productivity
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