Embracing Ethical AI for Economic Progress: Lessons from History and Directions for the Future

By: Rooz Aliabadi, Ph.D.

It was the year 1675 when disgruntled workers, fearing their employment threatened by new mechanical looms, attacked factories, captured machinery, dragged it to public squares, and set it ablaze. This act of rebellion, backed by significant public approval and even unofficial sanction from the authorities, marked a significant episode in the ongoing history of labor unrest due to the advent of labor-saving machines. This phenomenon was not unique to the 17th century; centuries before, the implementation of the fulling mill had similarly sparked outrage among workers compelled to seek alternative professions. Fast forward to 60 years ago, Life magazine predicted that automation would lead to a scarcity of jobs, only for employment to proliferate.

Currently, the emergence of ChatGPT and other generative AI systems have stirred another wave of alarm, this time focusing on the future of white-collar jobs. Questions are arising about the potential redundancy of paralegals, a portion of the legal profession, and even the possibility of AI outperforming doctors in diagnosing certain medical conditions. The media, in its characteristic urgency, has already started documenting the initial job losses.

While AI advancements have indeed given rise to a fleet of non-economic concerns ranging from disinformation to privacy threats and the impact on democracy, these apprehensions, although valid, will be addressed elsewhere. Focusing on the economic aspect, including jobs, history offers valuable lessons, despite a few cautionary signals. The current issue is not an overflow of technology; rather, it’s a shortage.

Artificial intelligence, in a broader sense, has been in existence for thousands of years. The invention of the abacus in ancient Babylonia over 4,000 years ago marked an early labor-saving device that expedited mathematical calculations, consequently reducing workload. Reflecting on my high school years during the 1990s, manual calculators and pencil-drawn spreadsheets were our only aids for numerical analysis. Now, a simple mouse click does it all.

Less than 30 years ago, scholarly research demanded hours spent digging through dusty books; today, it’s a matter of few keystrokes. It’s not surprising that the number of librarians has remained steady since 1990, while total employment has increased by more than 40 percent.

Several job categories have nearly vanished. When was the last time you interacted with a telephone operator? Or took a ride in a manned elevator? On the other hand, a plethora of new job categories has emerged. A study by MIT economist David Autor revealed that about 60 percent of jobs in 2018 were in occupations nonexistent in 1940.

Hence, the robust American employment landscape continues to evolve. In the decade following Life magazine’s robot scare, the United States added 20.2 million jobs, and today, the unemployment rate stands at 3.6 percent, slightly above its 50-year low. The financial sector employment has surged, despite increased productivity through computers, Excel, and other technologies.

Increased worker productivity leads to higher wages and cheaper goods, boosting purchasing power, encouraging consumption, inducing production, and consequently creating new jobs. This cycle represents the fundamental mechanism of growth. Therefore, AI is indispensable, not just beneficial. The only way to ensure sustained economic progress and improved living standards is by augmenting worker productivity, a goal at which technology — be it looms, robots, or AI — is adept.

Generative AI, as fascinating and intimidating as it may seem due to its transformative potential, is just another milestone in the journey of progress. Did our ancestors not experience similar astonishment witnessing revolutionary inventions like the telephone or the light bulb?

During the prime era of commercial innovation (1920–1970), productivity grew at an annual rate of 2.8 percent. However, barring a brief period between 1995 and 2005 (the modern computer revolution), the yearly growth rate has averaged a modest 1.6 percent. While pessimists may interpret this as an indication that impactful technological advancements are behind us, I see it as a sign to press on with AI.

The precise definition of “pressing on” is yet to be determined. While some are confident that AI will be revolutionary, others doubt its game-changing capabilities. I surmise that AI will contribute to productivity growth, albeit not quite reaching the golden era rates of the previous century.

Regrettably, the benefits of productivity growth do not always trickle down to workers as expected. Since 1990, labor efficiency has risen by 84 percent, but average real hourly compensation (adjusted for inflation) has increased only by 56 percent. This discrepancy primarily benefits corporate profits, driving a stock market surge and unprecedented income inequality.

The government can alleviate these inequalities. Over the past century, redistribution, although often considered a taboo in America, has played a significant role in managing the gains of industrial and technological advancements.

Today, the repercussions of the government’s failure to manage these changes are palpable. We can see evidence in the disgruntled Midwestern factory workers supporting Donald Trump despite his policies favoring the wealthy. With only 22 percent of Americans believing our country is on the right track, the nation feels more politically and socially divided than ever in the past nine decades.

We fell short in preparing Americans for the transition from a manufacturing-based economy to a service-based one. We must do better this time around.

If AI turns out to be as transformative as its proponents (and some opponents) predict, a significant demand for improved education and training could arise. The impact will be widespread, affecting not only factory workers but also professionals across industries, from financial analysts and coders to graphic designers and customer service representatives.

A recent report from Goldman Sachs, one of the most optimistic voices in the tech community, concludes that AI can help restore our productivity growth to its mid-20th-century glory. I sincerely hope that the Goldman report proves accurate and that AI heralds a new era of technological and economic advancement, provided we take the necessary steps to ensure the benefits are equitably distributed.

This article was written by Rooz Aliabadi, Ph.D. (rooz@readyai.org). Rooz is the CEO (Chief Troublemaker) at ReadyAI.org

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