Artificial Intelligence (AI) Is Likely to Create More Jobs Than It Actually Manages to Kill
Artificial intelligence holds far-reaching consequences for modern economies. Many of the jobs we are asked to do will change; a lot of them might disappear altogether. Facing this existential upheaval, experts advise that smart AI regulation will be needed — well, who could object to smart regulation? But the forms it should take, its methods and even its purposes, are unclear.
A good start might be to frame the problem more carefully. Easier said than done, perhaps, because AI is in many respects not technological progress as usual. Even so, earlier technological revolutions have relevant lessons. One worth pondering concerns the so-called “lump of labor.”
The lump-of-labor fallacy is surely the most thoroughly debunked — yet most impressively tenacious — misconception in economics. The idea is that there's only so much work to go around. If a faster, cheaper way of doing this fixed quantity of work arises, jobs must disappear. Machines are therefore a threat. Mechanized farming laid waste to agricultural labor, factory automation destroyed manufacturing employment, and now AI is coming for service-sector workers. Just as before, the result will be mass unemployment and, for swaths of the labor force, lower wages and collapsing living standards.
Except that this last part has always turned out to be wrong. These epochal economic transformations did cause unemployment. Jobs disappeared, workers were displaced and victims had to bear real costs. But aggregate employment kept growing and living standards soared. Why? Because far from being fixed, the quantity of work needing to be done proved to be infinitely expandable.
The same will be true of AI. There are two main paths to higher employment after this kind of innovation.
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