Visions of a jobs apocalypse are greatly exaggerated

Long ago, in the 1970s, when the internet let alone AI wasn’t a thing, I was gripped by a popular book called Future Shock. Selling more than six million copies, and widely translated, it described a society undergoing enormous structural change. In just a few short years, it noted, we had transitioned to an information age from a two-centuries-long industrial society which, in its time, had replaced an agrarian world lasting millennia.

Alvin Toffler, the book’s author, argued that the speed of this transition was plunging us into an overwhelming state of stress and disorientation. ‘Too much change in too short a period of time’, he concluded.

Like all visions of the future, Toffler’s predictions were a mixed bag. He was better at recognising the overall direction of travel than in pinpointing the specifics of how the world would evolve. The book was popular, however, because it tapped into our simultaneous excitement about and fear of rapid change.

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I was reminded of Future Shock this week by a blog post from a financial research firm, Citrini. The post went viral and sent tremors through the financial markets. Breathlessly, and at length, it laid out a doomsday scenario in which the success of AI turns out to be a catastrophe for the wider economy. The new technology’s productivity gains are paid for by white-collar job losses, a devastated housing market and plunging tax revenues.

The post is as gripping as Future Shock was half a century ago. It is written from the perspective of the near future (just a couple of years away) in which AI euphoria has morphed into existential dread and a stock market collapse to rival the one triggered by the financial crisis. The headline of the piece is a deliberate echo of the 2008 market slump: ‘The 2028 Global Intelligence Crisis’.

If you are interested in the big picture and what might happen to your money in the next few years, I recommend Citrini’s dystopian thought exercise. Google it.

There is much in the post that I agree with. First, the premise that stock market narratives are often dangerously one-sided. The enthusiasm about AI sees only half the story. The productivity gains that artificial intelligence promise can only be delivered by sidelining and ultimately replacing some elements of human intelligence. That must come at a cost for at least some humans.

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The biggest threat of AI, compared with the changes ushered in by the industrial revolution, is that the jobs rendered obsolete are those that pay for the lion’s share of economic output. Look around you at the people doing what machines will soon do better and think about all the cars, holidays, school fees, evenings out and the rest of it that they might not be able to afford and which the machines will never need.

The jobs most at threat from AI are those that make money out of friction. That is to say the difficulties caused by things taking time, people having only so much patience, a surfeit of laziness and a willingness to pay someone else to do what we can’t be bothered to do ourselves. As Citrini puts it: ‘a giant rent-extraction layer on top of human limitations’.

AI agents remove that friction. They change how consumer transactions take place. Do you remember going to a travel agent to organise your holiday? That seems absurd today. Extrapolate that to every other economic transaction in your life, and imagine the impact on jobs.

That is obviously problematic if your job is impacted by AI substitution. But even if you are lucky enough not to be directly affected, you will be caught up in the crossfire. That’s because so much of our wealth - whether tied up in our houses or our stock market investments - hinges on a continuation of the status quo.

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If enough pen-pushers on £80,000 a year are obliged to become Uber drivers on £30,000, or can’t work at all, that’s a lot of ordinary people struggling to meet the mortgage and paying less tax to the government. For the first time, this is not happening to other people. Look around you. It’s him and her across the office. Or you and me.

That is the short version of Citrini’s apocalyptic story. And, fortunately, it is as one-sided as the positive AI-transformation narrative it challenges. There are at least a couple of flaws in the analysis. At the very least there are unanswered questions that don’t necessarily lead us to a Grapes of Wrath scenario of redundant middle managers putting their families in the SUV and heading west.

First, it is not clear how the GDP growth from AI’s productivity gains simply evaporates. Sure, it might lead to a redistribution of wealth and a rebalancing of the economy away from a demographic that has disproportionately enjoyed the fruits of the information age. But it feels implausible that the wealth just disappears.

Second, people, companies and economies as a whole are very good at adapting to disruptive change.  The end of the horse-driven economy was painful and happened over a relatively short period of time, too. But we moved on.

Things are rarely as good or as bad as people imagine. And I don’t expect the AI revolution to be any different. Lots of nonsense jobs are going to disappear. And thank goodness for that. Perhaps it will soon be less difficult to find a plumber.

But this is not a good time to be making big sector or individual company investment bets. There’s too much uncertainty. I can’t think of a better environment in which to put my eggs in a wide variety of baskets. The future is likely to be just as shocking as it was fifty years ago.

This article was originally published in The Telegraph.

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