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Is AI Coming for the Economy? [1]

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Date: 2023-04-27  

is one of the fundamental questions of the next twenty years or so. Tim Lee does not think so. The post is long, but the general argument is that AI will merely move work around because there are still going to be things that AI and robotics cannot handle. In general, the "pie will grow." and thus people don't really have anything to worry about.

Well, maybe.

I think Lee here is making a fundamental mistake in his approach, one I see right wing and centrist economists make: that the only thing that matters is the size of the economy. As long as the economy grows, then everything and everyone will be all right. I don't think that is true, and I think the question of economic distribution is where AI can have a deleterious impact.

Lee rightfully points out that the notion that "software will eat the world" that was prevalent in the mid 2000s didn't come true in quite the way that its proponents claimed it would. Given the similarities in that era and this new AI era, Lee argues that AI won't have a world devouring effect. He argues that there are too many things that can only be done by people because of existing preferences or the need for things like fine motor control. Further, he argues that for the foreseeable future, AI will make more people productive and thus increase the economy, creating more jobs.

Unfortunately, he basically stops there without considering the human impact of the economy he envisions. In Lee's mind, a high service economy is just as good as a high producing economy, or one where humans are required to create the high producing economy. I don't think that is an accurate statement.

Lee discusses Uber as an example of how a major software startup that has significantly impacted the world. his argument is that Uber hasn't ushered in a revolution in the ride giving business. That is true only if you refuse to look at taxi services from the perspectives of the employees. Lyft and Uber have driven the earnings of drivers down almost everywhere they have been successful. There has been a revolution, it's just not one that Lee can seem to understand: money has flowed from the workers to the owners. Now, that happened for a lot of reasons, but one of those reasons was the hands-off attitude governments took because Uber was a tech company. That does not bode well for regulating AI, though I suppose we can hope people have learned their lesson.

Similarly, Lee notes that robotic automation has not had a huge impact on employment. That, again, seems short-sighted. Lee mentions that ATMs did not signal the end of bank tellers. Banks opened more branches because ATMs made running a branch cheaper and thus more profitable. As a result, Lee says, "... the total number of bank tellers in the U.S. changed little between 1980 and 2010." Perhaps that is true, but it is not the happy story Lee seems to think it is. The population of the US was much larger in 2010 than it was in 1980, so keeping the number of tellers flat means that relatively speaking, there were fewer opportunities at a decent paying job that required no advanced education. In other words, the pie may have grown, but this is an example of things getting worse for the people who actually have to work for a living.

The other issue with Lee's scenario is similar: it envisions a world with largely service jobs for the vast, vast majority of people. The first problem with it is that service jobs pay much less than other kinds of work. That can change, but it requires re-fighting the unionization battles of the previous century, likely under less hospitable terms. Second, not everyone can do service work. The older you are, the harder these kinds of jobs become on your body -- even retail jobs can be difficult given the amount of time you have to spend on your feet. Finally, not everyone wants to have a service job. Some people don't want to interact with the public. Some people have conditions that make such interactions difficult. Some people prefer the joy of making things, either virtual or physical.

These may seem like small complaints, especially the issue of preferences, but I don't think they are. A narrow range of job choices means that more people are going to be unhappy with their possibilities in life, especially if those jobs are low pay. Aside from the moral case against deliberately making a significant portion of your citizenry unhappy, the more miserable people you have the more your politics is going to tend toward radicalism, bigotry, and various forms of authoritarianism.

I don't know for certain what effect AI is going to have on the world. I suspect as it chases work farther and farther up the creative chain, it is going to mean less work for people and worse paying work for those who do have jobs. Lee even admits this obliquely, saying:

higher-wage occupations are more likely to be impacted by the latest AI technology. So it’s very possible that AI technology will narrow the large wage premium that opened up between college graduates and less educated workers in the late 20th century. Why I'm not worried about AI causing mass unemployment (understandingai.org)

See the issue? The wage gap is going to be driven down not by wages going up on the bottom but by them being reduced in the middle. That is not a good thing, especially since the lost ages are almost certainly going to be captured by the capital class.

The real problem of AI is not necessarily that it is going to eat all the jobs. The real problem is that it may finally represent a tipping point where human work is devalued to the point where the majority of people are driven out of the middle class or worse. Growing the pie won't change that. Again, this might not happen. But if you are going to talk about the economic impact of AI, you must focus on the distributive effects. Doing otherwise ignores what is likely to be the most impactful change. And it means that you won't be prepared to deal with the consequences. And those consequences may be dangerous to both individuals and society as whole.

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[1] Url: https://www.dailykos.com/stories/2023/4/27/2166033/-Is-AI-Coming-for-the-Economy

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