Artificial Intelligence and Unemployment | An Analysis

Artificial Intelligence and Unemployment | An Analysis

Hello and welcome to the Discourse. Technology improves life as it brings development and prosperity. Despite this fact, the debate about whether the new technologies will cause mass unemployment and hamper the progress of underdeveloped or developing countries like India continues to make rounds. The advent of OpenAI, ChatGPT-4 recently raised concerns over the ill effects of technology. According to OpenAI, GPT-4 exhibits “human-level performance” on various professional and academic benchmarks, passing a simulated bar exam with a score in the top 10 percent of test takers. It became clear that almost any job that doesn’t require physical presence could soon be substantially automated and done through generative AI. In fact, a recent report by Goldman Sachs estimates that as many as 300 million full-time jobs around the world could be automated in some way by the newest wave of artificial intelligence.

While such fearmongering continues to make circles, the fact remains that just like any other technology, Robotics and Artificial Intelligence are meant only to serve humankind.

Will Technology Cause An Unemployment Crisis?

The idea that technology destroys jobs and will cause massive unemployment prevails despite history demonstrating otherwise. It’s a disproven myth. After all, if technology had been destroying jobs for the hundreds of years people have been arguing about automation and machines, there would be hardly any jobs left. This is of course not true. Bulldozers took the place of men with shovels. Cars put railroad workers out of business. Elevator operators, typists, blacksmiths, and manual telephone operators jobs all vanished over the 20th century.

Every new labor-saving device destroys jobs. But this is of great benefit to mankind. It frees labor for tasks that were impossible to accomplish previously! At the time of the founding of our nation, more than 95 percent of the labor force had to work on the farm to keep us fed; nowadays, less than 45 percent in India is so employed. Had we known that this would happen, should we have worried about the loss of jobs in agriculture? Should we have tried to stop the advances in technology that obliterated 50 percent of the jobs in existence at the time? On the contrary, it was the freeing of 50 percent of the labor force from farm work that allowed us to take the gigantic steps forward we have made in the past two centuries.

Also, the agricultural sector isn’t that promising. Whether we put 50% of our labor or 10% of our labor on food production, we would not be able to change how much our households spend on food or that we need plenty of things besides food. The contribution of agriculture to the Indian GDP is around 16%. When 50% of people share only 16% of income, there is poverty in farming by default. We are condemning them to low incomes. This is why we have to get a majority of our farmers out of agriculture and have them be used in sectors where people actually spend money. That is the only way to get them out of poverty and technological advancements provide those new sectors where the labor force can be used.

In his book, Economy in One Lesson, Henry Hazlitt discussed the issue of technology and machines displacing humans and causing mass unemployment. In the chapter titled “The Curse of Machinery” of Economy in One Lesson, Hazlitt first asserts that if machines create unemployment, it follows that every technological innovation to this day has done so by improving the manufacturing process, gradually displacing jobs. This logic would lead to the conclusion that to achieve maximum employment, all the technological progression of the past millennia would have to be reversed.

While it may be true that in the short run, a machine may displace jobs upon being introduced to a sector, the creation of the machine itself would bring in new jobs. The economizing entrepreneur would only adopt the machine if he sees it as an integral component in expanding his profits. These new profits could be used for expanding his operations, or his own personal consumption. If the former, the entrepreneur could invest in new machinery, in turn creating new jobs, and if the latter, money spent in any given industry would lead to an increase in employment in that industry. Another point to consider is that goods produced in one industry could be used as capital in another industry. For example, a firm may use machines to create bolts at a faster rate. While this may lead to an initial decrease in the number of jobs in the bolt industry, it would lead to an increase in jobs in another industry. For example, car manufacturers may need to use these bolts, so they now have more capital to use in manufacturing cars. This would lead to an increase in the amount of jobs in the automotive industry.

Will AI Cause Social Inequality?

Another issue related to the development of AI is that it will cause income inequality. All the greedy capitalists will take advantage of the increased productivity of the automated techniques and fire all of their employees. Unemployment will rise as we run out of jobs for humans to do, they say.

This fear is also. First of all, how could these greedy capitalists make all their money without a large mass of consumers purchasing their products? If the majority of people are without income because of automation, then the majority of people won’t be able to help line the pockets of greedy capitalists. Second, there will always be jobs because there will always be scarcity. Human wants are unlimited, diverse, and ever-changing, yet the resources we need to satisfy our desires are limited. The production of any good requires labor and entrepreneurship, so humans will never become unnecessary.

Technology serves to make the economy stronger. Machines and tools make us more productive. The entire goal of economic progress is to make us more productive, and more efficient, have more consumer goods available, have more leisure time, and have higher standards of living. This is achieved by higher productivity and efficiency. We are better off not needing twelve people with shovels to do the same thing as a bulldozer.

The major issue with OpenAI is that it will reduce the jobs for writers, content producers, website designers and developers, programmers, and other technicians. Should we really worry about this? We should ask what happened to all of the VHS manufacturers, the landline phone manufacturers, and video store workers? What happened to the railroad workers or the typewriter makers and technicians? Labor is fluid and finds new work. Job Hopping is a reality. People learn new things and get new jobs. They do it constantly. Society creates and destroys different kinds of jobs through technology. Markets adjust and people will find new work, just as has been in the past. The prediction that technological advancement will be too rapid for us to adjust is a hollow, misguided forecast that lives on despite its losing record. Job displacement does occur and people must adjust. It is worth taking notice of this and knowing that people can use help when finding new jobs and new careers. However, technology should not be avoided and feared because it replaces currently existing jobs. It makes our lives better and leads to the liberation of labor for newer, better jobs. The next generation of technological development and automation won’t result in a joblessness crisis.

So this is it for today. We Will continue to discuss the Ethics of Liberty. Please stay connected with the Discourse. Thanks and Regards!