Experts are predicting AI will soon be able to do many tasks currently done by people. Some speculate combining AI and robots could eventually make work “optional.” Such work would probably not be employment, as market economies have known it, but something we now call entrepreneurship — using AI and robotics to produce new goods and services.
Although economic research makes clear that technological revolutions historically have caused only a temporary upset in employment — a shift from “old” jobs to “new” — they ultimately cause increased productivity, greater prosperity, and more and higher-paying jobs. Not terribly long ago, the vast majority of the population in industrialized countries was employed in agriculture. Mechanized farm equipment like the tractor displaced labor, but did not cause lasting mass unemployment. In fact, the population today is much greater than back then, so it should be obvious that we have more jobs than was the case in agrarian times, along with higher salaries and standards of living.
Some say AI is too capable and could displace labor broadly, leaving almost no industry unaffected. Nobel laureate Joseph Stiglitz has predicted that AI “labor stripping” will both destroy jobs and deepen inequality. He holds a dissenting view for an economist, believing that “unfettered capitalism, unfettered innovation, does not lead to the general well-being of our society.”
Displacement and Transition Costs
Stiglitz’s fears are exaggerated, if not politically motivated, but we should expect the AI revolution to cause dramatic change in the labor market and, therefore, transition pains for workers.
The first to go are the ones that can easily be replaced or that make only marginal contributions to the firm’s bottom line. Jobs consisting of process documentation, bureaucratic control functions, and calculating production goals will go first, along with what David Graeber called “bullshit jobs.” Those exist mostly as consumption, with salaries feeding institutional egos or keeping up appearances, rather than adding value to final production. AI will simply, quickly, and almost costlessly provide the necessary data to support management, passively surveilling and interpreting system performance in real time. People employed in human resources, coding, compliance, and as administrative secretaries also look likely to be shifted out of their current work.
As AI takes over tasks and replaces jobs, new jobs will also emerge as a result of both the economy’s higher productivity (Elon Musk has predicted that AI will double the rate of growth) and the availability of people willing to work. Indeed, approximately 60 percent of US employment in 2018 was found in occupational specialties that had not yet been invented in 1940.
There is no fixed basket of human potential, a fixed number of ways we can find to be useful to one another. But those who want to find new jobs will require different skill sets, which can cause matching problems in the labor market. To illustrate, Salesforce recently let go almost half of its customer support staff, citing AI capabilities, while at the same time hiring about as many in AI projects and sales. The company is more productive as a result and employs the same number of people. But those who lost their jobs found their skills are no longer as sought after as before. With AI replacing them, they will have a difficult time finding new and lasting employment unless they update and expand their competencies.
If doomsayers like Stiglitz are right, this will be the case for most or all jobs. But if history and economics have a say, then most of the jobs that will be available for human workers are yet to be created. And they will be more focused on creating value than carrying out production tasks. In this sense, the AI revolution is not actually different from previous technological revolutions: it relieves humans of the tedious, repetitive labor portion of producing our necessities and allows us instead to focus on what is important — how best to serve one another.
AI, Empathy, and Entrepreneurship
Some job growth will be concentrated in areas where AI will have difficulty competing, even if it is, by some measures, more productive than human labor. As social animals, the “human touch” is something we deeply value. Loneliness is today cited as an epidemic and the cause of much distress and even ill health. Financial rewards are available to those who provide company, companionship, mentorship, care, and friendship.
The economic value of personability didn’t begin with robot competition. High-end stores and luxury resorts are comparatively over-staffed because customers value human assistance and are willing to pay to interact with friendly, helpful staff. Even if AI can carry out the service more efficiently by kiosk, automators will offer add-on “concierge” services for that human interaction. In the future, we may pay extra to have our UPS and FedEx packages delivered by a person — either for the human interaction itself or for the level of care only human hands provide.
Value, after all, is not only a matter of having products produced or services carried out. Value also lives in how services are carried out — and by whom.
Another core skill of entrepreneurship is likely to serve us especially well in the age of AI: the empathizing with customers, imagining new futures and constructing novel ideas for how to make people’s lives better.
AI can extrapolate from the past, but entrepreneurship — and, especially, innovation — is not simply about “what’s next” in a linear process, but about breaking with the past in important ways. Experimentation is not a random process, but based in entrepreneurs’ own humanity and their understanding of what drives us. We can serve other humans well because we ourselves are human. The judgment required to determine what brand-new goods to produce, how to tailor them to satisfy people, cannot be taken over by machines. Empathy is the method by which entrepreneurs generate value.
This does not mean that everyone will need to be an entrepreneur in the sense we think of current business owners. All it takes to be an entrepreneur in the age of AI and robotics is to exercise one’s judgment about the future, and place contracts with automated facilities for production of novel goods. The cost of development will fall, but the value of good judgment about what other people will value will soar. And it will no longer require enormous capital investments or huge markets to be a successful entrepreneur; earning a living may be enough for most people.
But will there really be enough jobs? That’s the wrong question to ask. The notion of a job will change, just as your factory-floor grandfather would hardly recognize all that screen-gazing and rhythmic key-clicking as gainful employment. In an economy made hyperproductive through AI and robotics, the cost of living is likely to plummet. At the same time, the added value of human labor — whether through “the human touch” or as exercised entrepreneurial judgment — will soar. We can, we hope, choose to work much less while maintaining a higher standard of living.
At the same time, as production is taken care of by AI and robots, rendered automatic and hidden from immediate view, human labor becomes more distinct. The economy we interact with directly could then be much more human even than it is now.
