Like most technology, Artificial Intelligence is likely to destroy — then create — jobs

What I learned from the Obama Era White House Report on Artificial Intelligence, Automation, and The Economy

A few months ago, I had a very… animated, shall we say, discussion at my parents’ dinner table about how technology destroys jobs and leaves certain populations behind (for example, horse-and-carriage drivers, manufacturing jobs) — and then how, at least in the view of most economists, technology then creates more jobs than it destroyed. In other words, technology is widely considered a (or the) major driver of long term economic growth and increasing prosperity, even if there are negative short term consequences.

A White House Report on “Artificial Intelligence, Automation, and The Economy” from Dec 2016 (the Obama Era, aka “When a White House Report Meant Something and Probably Contained Some Truth”) lays out the argument nicely:

“Technological progress is the main driver of growth of GDP per capita, allowing output to increase faster than labor and capital. One of the main ways that technology increases productivity is by decreasing the number of labor hours needed to create a unit of output. Labor productivity increases generally translate into increases in average wages, giving workers the opportunity to cut back on work hours and to afford more goods and services. Living standards and leisure hours could both increase, although to the degree that inequality increases — as it has in recent decades — it offsets some of those gains.”

Then the report goes on to detail some concerns:

“AI should be welcomed for its potential economic benefits. Those economic benefits, however, will not necessarily be evenly distributed across society.
“Research suggests that technological innovation over this period increased the productivity of those engaged in abstract thinking, creative tasks, and problem-solving and was therefore at least partially responsible for the substantial growth in jobs employing such traits. Shifting demand towards more skilled labor raised the relative pay of this group, contributing to rising inequality.
“Some jobs may be automated away, while for others, AI-driven automation will make many workers more productive and increase demand for certain skills. Finally, new jobs are likely to be directly created in areas such as the development and supervision of AI as well as indirectly created in a range of areas throughout the economy as higher incomes lead to expanded demand.”

For me, the highlight of the report is this amazing fact:

“Every 3 months about 6 percent of jobs in the economy are destroyed by shrinking or closing businesses, while a slightly larger percentage of jobs are added.”

The report concludes with a discussion of what we can do to prepare for the inevitably more automated future of work:

“Historically and across countries, however, there has been a strong relationship between productivity and wages — and with more AI the most plausible outcome will be a combination of higher wages and more opportunities for leisure for a wide range of workers. But the degree that this materializes depends not just on the nature of technological change but importantly on the policy and institutional choices that are made about how to prepare workers for AI and to handle its impacts on the labor market.”

And this is the danger zone. Can “policy and institutional choices” — which I read as code for government regulation — actually, effectively “prepare workers for AI and to handle its impacts on the labor market?” Or do anything else effectively, for that matter?

The report gives platitudes for recommendations, such as:

“Strategy #1: Invest in and develop AI for its many benefits.”
“Strategy #2: Educate and train Americans for jobs of the future.”
“Strategy #3: Aid workers in the transition and empower workers to ensure broadly shared growth.”

My key takeaway from this last section: Even the best economic and technology minds the Obama White House could assemble don’t yet know how to prepare for AI.

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