AI & Prosperity Paradox
AI is transforming jobs and society by boosting productivity and creating new opportunities. However, it also challenges us to adapt and retrain workers for a prosperous future.
AI is changing the world around us. It’s everywhere—education, research, product development, manufacturing, marketing, sales, and customer support. AI helps us work faster and better, especially in jobs that need a lot of thinking, like knowledge work. But what does this mean for the jobs, employment and society in the long run?
When people work well, nations grow. Think of a country’s economy as a simple math problem: per capita income (money per person) multiplied by the number of people. If each person earns more, the country becomes richer. AI will help here. It makes people more productive by doing tasks quickly and accurately. For example, AI can analyse data faster than humans, helping businesses make smarter decisions faster. When individuals are productive, the whole nation benefits. But there’s a catch.
New Jobs vs. Lost Jobs
There are two big ideas about AI and jobs. Some people, like Andrew Ng, a famous AI expert, believe AI will create new jobs. For example, we might need more people to build and manage AI systems—jobs that didn’t exist before. This is exciting because it means new opportunities. On the other hand, many worry that AI will take away existing jobs way faster than it will create new ones. If AI can do a job better and cheaper than a human, companies might replace workers with machines. This could lead to layoffs and lower salaries for humans, especially in knowledge work and manufacturing, where AI and AI-powered Robots are already making a big impact.
When AI takes over jobs, it reduces the need for human workers. This can hurt society. If people lose jobs, they earn less money. When they earn less, the per capita income drops. And when per capita income drops, society’s overall prosperity levels go down. This leads to a cycle: fewer jobs, less money, and a weaker economy. It’s a real concern.
AI Can Improve Living Standards
But there’s good news too. AI can make life better for everyone. How? When AI does the heavy work, like manufacturing products or providing services, it lowers the cost of those things. Machines are cheaper than human workers, so businesses spend less. When businesses spend less, the cost of living goes down. For example, if AI makes cars faster and cheaper, more people can afford them. When the cost of living drops, our living standards rise. We can buy more with less money, and that’s good for the society.
Challenge - Moving Workers to New Roles
Here’s the tricky part. AI is creating new jobs, but it’s also taking away old ones. Knowledge workers, like writers or analysts, are the first to feel this change. If the old jobs disappear faster than new ones are created, we’ll have a problem. People who lose their jobs need to learn new skills to take on new roles. For example, a writer replaced by AI might need to learn how to manage AI tools to produce content faster. This training takes time and money, not to mention the inertia which is true at the scale of economies. Economies around the world now face this challenge: how do we help workers move to new jobs quickly? This isn’t an easy endeavour; it involves not just updating the curriculum but retraining the trainers, which is a massive capital and operational investment effort.
Why Humans Need to Stay Involved
Humans feel proud when they create things with their hands or minds - the IKEA effect. If AI does everything for us, we might lose that sense of pride. Imagine a world where AI writes all our books, makes all our products, and even builds our homes. Sure, we’d get everything for free, but deep down, it might make us feel less valuable. We don’t want a world where humans have little (or worse, no) role to play. That’s why moving people to new jobs is so important. We need to keep humans involved in meaningful work to keep society strong and happy.
Looking Ahead
AI is a powerful tool. It can improve our lives by making things cheaper and better. But we must be careful. AI can lead to a brighter future if we train our workers and help them take on new roles. Nations and humanity can grow and benefit, living standards can rise, and people can feel proud of their work. But a capitalist-centric society optimises for profits (nothing wrong there), which is bound to create conflict.