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  • Mathieu Provencher

AI: Who's job is next?

(picture from Wix's library)

Hello everyone! This month I’m going to give you an insight on how Economists see technological progress. This article applies very well to automation and (the upcoming) artificial intelligence but it can also generally apply to other innovations that displace human workers.

Let’s start with the big picture: without technological innovation, we would still live in caves, eating raw meat, and running away from anything that can eat us (which would be the majority of medium-size creatures)… from that perspective, technology (I’m using a very broad definition here) is a good thing.

Although most people may agree that technological progress is a good thing overall, many workers feel threatened by it. This seems to be especially true since the beginning of the industrial revolution. Machines started to be faster and cheaper than humans at certain tasks, which meant that people were replaced by them. Some of the skills that gave employment to workers for generations were now obsolete.

First, a little note for those that are not following the field of artificial intelligence (AI). Depending on how you define it, AI is either already here or coming very fast. There are already programmes that can pass on as humans on the phone, organise and manage storage facilities on their own, learn about a pregnancy before a woman knows it herself (just by analysing her behaviour), win against professional players at a number of games, drive cars, clean, have somewhat of a normal conversation, stand on their feet, compose music, and have sex…

Perhaps more relevant to this current article, AI, with the help of automation, has already replaced a sizable number of jobs that were previously filled by humans. It is estimated that AI will soon be able to be more cost-competitive than humans at a wide array of services.

SO, should we fear or should we embrace technological innovation?

Let’s approach this question from two angles: Classicals and Keynesians. Macroeconomists often find themselves in one of these two groups.

On one hand, Neo-Classical Economists tend to focus on impacts over a long period of time. They analyse the pros and cons of an economic event over 10, 20, 30 years or more. For them, the full impact of an event must be observed before judgement can be passed.

In their view, technological innovations create employment, not unemployment. New technologies bring new markets and new types of jobs. Old skills are abandoned by economic agents and get replaced by the skills of this new economy. Young people study what is relevant to these technologies and create economic activities that requires higher knowledge and thus bring better working conditions. Yes, some industries will fall and some people will be temporarily unemployed… but more new jobs will be created and more employment will come from them.

The substitution away from old skills to new skills can take two main shapes: first, people with old skills retire and leave the workforce; or second, people will old skills train into the new ones. This mechanism means that in the long-run, more people have better jobs thanks to technological innovations.

In the case of AI, receptionists, taxi drivers, nurses, and others will be replaced. They will either retire or train to become programmers, supervisors, or service providers for these new machines. Their children will train in the same fields, leading to better working conditions and employment opportunities than their predecessors.

On the other hand, Neo-Keynesian Economists tend to focus on impacts over a short period of time. They analyse the pros and cons of an economic event almost immediately after it happens. For them, the immediate effects can last a long time and can influence how future economic events occur.

In their view, technological innovations tend to create unemployment. People get displaced by faster and cheaper machines, making their knowledge and skills unmarketable. These workers are often of an age or an attitude unsuited for going back to school or university… they are also often too young to retire.

New technologies can also create confusion on what fields are viable in the near future. This uncertainty leads to many young people choosing to study classes that will not help them when they graduate. Employers can also be unwilling to invest and take risks if they feel that things change too fast. Less productivity from a lack of proper training and less investment from firms both lead to less employment.

In the case of AI, people losing their jobs will have to accept lower and lower standards of work to find employment. They may have to move to poorer regions where machines are not well distributed yet. This can lead to lower demand in the economy as unemployment or low-wage work becomes the norm for a significant part of the economy. Lower aggregate demand leads to lower production as firms are not able to sell enough of their new products. This downward spiral can lead to a permanently higher level of unemployment for the economy with marginalised groups in the labour market.

In case you are wondering, I’m a strange case! I don’t belong to one group… I subscribe to both at the same time. I see technology in general as bringing new economic opportunities to most workers. I also recognise that most of us cannot easily change our skills to suit these new markets.

Technological change has been relatively slow so far… every new generation has had time to adjust to the new labour requirements before they had to re-train themselves too much. These changes occur over decades and most of us have time to see them coming. Governments of a number of countries have been relatively smart in dealing with these new realities (changing their academic curriculums, offering training programmes, pushing for university certificates to update people’s skills, etc.) and as such we have mostly gained from it.

AI, however, could bring the speed of change to a whole new level. Once machines start programming other machines to learn without restrictions, we don’t know where that’s going to lead.

I’m afraid I don’t have the foresight to tell you guys if your job is going to disappear in 10 years… mine definitely could! What I can tell you is that new opportunities will arise and you need to be nimble. We all need to start developing an ability to learn things from different angles, to adapt to new ways of approaching a problem, and perhaps more importantly to be willing to change field at any opportune moment… I’m afraid I won’t be too good at any of this, wish me luck!

I hope you guys enjoyed this little presentation,

Have fun and stay sharp!

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