Some real talk on AI

Okay, let’s have some real talk about AI. Not that I have all the answers, by the way, but I do want to talk about the looming crisis and opportunity that might be presented by artificial intelligence.

I don’t know where it’ll end up, and I don’t know how quickly it’ll get there. What I know is that we are using it at The Motley Fool to great effect, and I know plenty of other companies are claiming the same sort of success, with jobs being lost as a result.

Now, maybe some of the hyped advantages are exactly that – overhyped. Maybe there is even more to come. Maybe, as some have suggested, the whole thing is a charade. And frankly, my perspective is just that: mine.

But let’s break it down.

Let’s start with history.

Way back in the day, when the first technology was brought to bear on sewing, there were protests in the streets. Jobs would be lost, they said. And you know what? They were right.

Let’s go to farming. Once upon a time, more than 80% of us worked in agriculture, and the work was done largely by hand with some relatively simple tools. Now throw in some very early farm machinery, like the stump-jump plough. Add to that mechanisation through tractors and other pieces of relatively early-stage technology. Then fast forward many decades, and less than 5% of us work on farms. That is a massive number of jobs lost.

Look at car manufacturing. Henry Ford’s famous assembly line was a huge step forward in the way products were produced, but most of that was still done by hand, or at least using tools wielded by humans. And now? Most car manufacturing and assembly is done by robots. Yes, the work is overseen by individuals, but the machines do most of the tasks.

Remember stories of the typing pool? Or, if you’re a little older, maybe you remember the typing pool itself? That’s now gone, replaced in part by the personal computer.

Remember banks of accounting clerks? The proverbial green eyeshades of those who wielded spreadsheets when that word had its original application, and a ‘spreadsheet’ was a large piece of paper? Those two groups are gone now, too.

What about the cooper who made barrels? What about the farrier and the blacksmith?

Truthfully, I don’t love the idea that those jobs have been lost. I’m a romantic at heart and quite like my nostalgia. I like the idea of those things being handmade by artisans. The thing is, I also like the progress we’ve been able to achieve and the increase in living standards that we’ve enjoyed as those roles were replaced by faster, cheaper, and more efficient machines. So do we all.

And the result? Not mass unemployment. Not an economy that ground to a halt. Not the end of civilisation or the economy as we knew it. But progress.

We are far healthier and wealthier than we were in decades and centuries past. Don’t get me wrong, it wasn’t all smooth sailing, and there were real victims on the way through:

Farriers and coopers who maybe never worked again. Farm workers who couldn’t adapt to the changing workplace. These are not things we should blithely ignore.

But it’s also true that, as a society, we are far better off for the progress we’ve made. That’s the uncomfortable truth and uncomfortable trade-off.

Does anyone really want to go back to 85% of Australians working on farms? Do we want to give up the material comforts and workplace advances that have come from decades of progress? Do we want to forgo the improvements in health, national safety nets, shortened working hours, improvements in workplace health and safety, leisure time and options, and more? Because that’s the price of the nostalgia that we sometimes feel like we’d prefer to go back to.

And nor am I saying that things have improved unquestionably. There are absolutely negatives to the progress we’ve enjoyed, and we should fix those things. But that’s not the same as going back in time.

Farm tools improved our society. Automation improved our society. Computerisation improved our society. These are not things we should give up willingly.

And so we turn our thoughts to artificial intelligence.

Are all the claimed benefits going to come to fruition? Almost certainly not. But will some, or many? I’d bet on it. And will that come with disruption? I’d bet on that, too.

I suspect there will be many jobs disrupted and lost as artificial intelligence is adopted more deeply and broadly across the country and the world. The thing is, we couldn’t hold back that tide even if we wanted to. We could make local laws about it, I guess, but would our international competitors? I think we know the answer.

And so our choice is to adapt or go backwards. But even that adaptation isn’t just a question of staying still.

AI has the very real potential to improve our standard of living quite meaningfully. If just some of the efficiencies are able to be realised, we stand the very real chance of being able to grow the economy and improve productivity in ways we haven’t for a long time.

My bet? I think the benefits of AI accrue to the end users for the most part. Yes, some companies and individuals will make a fortune.

But as an analog, just think about the benefits of the internet. Sure, some internet companies have made a lot of money – a huge amount of money. But I’d bet an even larger amount of money that the ability to use the internet for everything that we do, professionally and personally, has created far, far, more value for us as a society than for those businesses.

I suspect AI will be the same.

And so, I think we should embrace it. Both because we don’t have a choice – others will even if we don’t – but also because I think it’s a potentially huge net positive.

I also think we should make room for the very real chance that its adoption will be quite disruptive for businesses and workers alike. We need to be prepared for the possibility that many, many jobs are lost, and potentially quite quickly.

And it’s that last bit that is the real social concern.

Lots of farm jobs were lost. Lots of factory jobs were lost. Lots of administrative jobs were lost. And these weren’t just absorbed, but many, many more jobs were created as time went on. Even better, those jobs, on the whole, paid more than the ones that were lost.

Progress is imperfect and sometimes unevenly distributed, but we should welcome it.

The real risk, as I see it, is that the pace of AI innovation may overwhelm our ability to create new jobs in time to re-employ those whose roles are eliminated thanks to artificial intelligence. That is where I think our social and political attention should be paid: How do we prepare for, and manage, that potential fallout? Not because it’s inevitable, but because it’s possible, and we should have war-gamed that outcome well in advance. 

Otherwise, we risk a significant jump in unemployment and potentially even a recession, as those put out of work no longer have the purchasing power to keep the economy growing. That’ll be bad for both those who lose their jobs directly as a result of artificial intelligence, and those who lose their jobs as a result of any subsequent recession. Ditto business failures.

Attention paid to that is far more useful than efforts to somehow retard the growth or progress of artificial intelligence, if only because a lack of international competitiveness would probably be more damaging than losing domestic jobs to AI itself.

As an investor, I’m not currently making any specific bets on artificial intelligence, by the way. If I’m right that AI becomes an enabling technology far more than specific value creation for a small number of AI companies, the question will be which companies adopt AI and use it to specifically get a jump on their competitors. Because just using AI, just like using the internet, isn’t an advantage; it’s simply required to be competitive and to serve your customers.

AI will probably improve our productivity and probably make us wealthier, and that is great for the economy and great for listed businesses as a whole, as they find a way to capitalise on better serving customers and more efficiently running their businesses.

My guess is that over the long term, it makes for a better economy and a more prosperous society. We just have to work out how we get from here to there and manage any unexpected or unwelcome fallout.

That’s the policy challenge, but we shouldn’t let it get in the way of taking advantage of the long-term value creation that could come from the use of an incredibly productive and useful technology.

Fool on!

The post Some real talk on AI appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.