In my last post, I discussed reasons to not be too concerned about AI taking your job, based on my personal work experience. Now, I want to make three general economic arguments not to worry about AI. I’ll admit I’m not an expert on economics or AI, so take what I say with a grain of salt.
The Status Quo Gives Reason to Doubt
As I wrote in a previous post, about 50% of the population can only read at a 6th grade level and 20% of the population is functionally illiterate. If I wrote a complex sentence of sufficient length, only about half of the population could decode it. AI can understand or decode such a sentence already.
The main argument that AI will kill everyone’s job is that people won’t be smart enough to beat AI, and therefore they won’t have a job. The problem with this is that AI is already smarter than many or most people, as measured by literacy and numeracy. Yet most people still have a job!
You could say it’s a miracle that our unemployment rate is perennially below 5%. We’ve always had not-smart people, yet many of them do just fine. Using back of the envelope math: If you assumed that the half of the American population that can’t read well were the bottom half of income, their median income would still be higher than most countries on Earth (about $41,000).
So yes, AI could kill your job, but that doesn’t mean it will kill your career or that there won’t be demand for skills, goods, and services that you possess and can provide for others. Your employability comes down to more than just your intelligence!
Productivity and Creative Destruction
Would you rather live in a world with or without tractors? If you were a farmer about 150 years ago, you’d probably say “without” because the technology threatened your job. Today, of course, you’d want the tractors, no questions asked.
In the United States, between 1870 and 2008 the share of people working in farming dropped from 50 percent to 2 percent and everyone would agree we are much better off. We’re richer, work less hours, grow more food, have more free time, and are doing better living life on all sorts of measures.
If we listened to the preferences of the agricultural workers in 1870, we’d probably all be worse off, not have these luxuries, and instead be working a farming job that we hated. So, I’m glad we didn’t ask farmers their preference about implementing certain technologies, we just implemented them anyway and reaped a societal benefit. Sure, countless people lost their jobs, and that was unfortunate. But most of them found new, better jobs, while also earning more money.
In this way, productivity gains through new technology benefit everyone, not just the people directly using it. Growing productivity through technology drives this process of economic growth, growing incomes, and improved quality of life. We’d like to think jobs lost are a permanent scar on an economy, but the reality is far different.
For instance, many people romanticize the economy of the 1960s in the rust belt. They look back at the manufacturing jobs of the time, which have since left due to automation1 with nostalgia. But there are more people living in each state (Ohio, Michigan, Pennsylvania, and Wisconsin) today, their economies are bigger, their median incomes are higher, and the poverty rates are lower than they were back in 1960. There may be fewer manufacturing jobs, but people are, by many measures, better off.
People are scared of automation because they see the surface level job loss. They see certain workers not getting money anymore. But what they don’t see is that the money the firm saved gets re-invested into the economy, which allows new industries and jobs to emerge for those workers. Capitalism in this way is just as good at finding workers for new projects as it is laying off workers with more productive technologies.
Capitalism is a Human System
The last reason I’m not scared of AI not taking everyone’s job is a simple observation: Capitalism is a human system. Humans have complex needs, including but not limited to air, water, food shelter, sociability, and much more. AI’s needs are more narrow.
When people say that AI will take your job, it’s not like your boss hires Commander Data and he sits at your desk and collects your paycheck while you’re in the poorhouse. Instead, it’s more like your company adopting Microsoft office or email, fundamentally changing the way it operates, for cheaper costs and greater productivity.
The the people who are voicing the most AI economic concern seem to assume a doom scenario where, say, most jobs are automated overnight. That seems bad on its face, but then it raises the question: What happens next? Do people just sit around and take it? Does Skynet come in and mass murder the unemployed? How do the prices of basic goods and services react? If no one has a job, who buys things in this economy?
These are just some of the questions that pop up and there are some simple answers that steer us away from the doom conclusion. If everyone’s unemployed, that means that tax revenues, prices, and profits plummet.
Put simply: There’s no scenario where a majority of society doesn’t have a job, can’t afford to participate in the economy, feels utterly powerless, and that doesn’t hurt everyone in power. Government has a vested interest in protecting its revenue. Businesses exist to increase profit. And most of all, capitalism exists to support humans.
In this way, market systems like capitalism are human systems where the needs of humans are put first and voted on every day through the market.2 The votes are dollars, cents, goods, and services. If capitalism is governed by the laws of supply and demand, I just don’t see how AI, as it’s currently conceived of, can become a “demander” in the economy. What could it need other than what it can get from being connected to the power grid?
That’s not to say this could never happen, but until we have convincing evidence that AI development is steering in that direction, we should portion our beliefs to the available evidence. As long as humans are in charge of markets, the government, and capitalism, and they don’t foolishly externalize decision-making, AI will continue to be a tool that benefits everyone, not an enemy or competitor to human well-being.
As I don’t see humans giving up this power willingly, I’m optimistic about the economic future of AI, and I hope you are too.
America’s decline in manufacturing jobs has more to do with technological automation than trade with China
I know that socialists and communists like to shake their fist and rant about capitalism being an inhumane system, but nothing could be further from the truth. All the awfulness of capitalism reflects the awfulness of humans in general from our disregard of the poor to the abuse of the environment. This awfulness is not unique to capitalism, in fact, it’s probably the least bad compared to other systems. But the reason why our capitalist system does good and bad things is ultimately because humans demand these things.
Is a society without mid-IQ white collar work a healthy one? Agreed that 50% of people read at a 6th grade level, and things work just fine. Also agreed that there will still be plenty of jobs after AI transforms the economy, and for the reasons you list. Nonetheless, haven't democracy and markets usually required a reasonably large bourgeoisie, usually of people involved in jobs AI will likely perform better than them? What would happen without an intelligent, propertied middle class, if AI primarily hollows out THOSE jobs?
Also, what will happen if, because of AI, that proportion of illiterates skyrockets to 80%? Or if people stop developing their minds, because AI can probably think better, so why bother?