The missed opportunity in the AI boom

Melissa Clarke: Hi, I'm Melissa Clark, coming to you from Gadigal Land. This is ABC News Daily. Artificial intelligence is disrupting and transforming our working lives. But while it holds the promise of greater productivity as machines take over the tasks of sorting, assessing and analysing from the human brain, it could also threaten a wide range of jobs and make income inequality even worse. Today, Professor Bhaskar Chakravorti, the Dean of Global Business at Tufts University in the United States, on how worried we should be about the AI revolution. Professor Chakravorti, artificial intelligence has just exploded over the past year and is really promising to transform our lives. What is it that makes AI so powerful?

Bhaskar Chakravorti: I think AI is powerful for many, many reasons, not the least of which being that it allows us to transfer a whole bunch of tasks to automated systems and in many ways it frees up human beings from doing those tasks. In many situations the tasks could be so complex that no combination of humans could actually accomplish them. So we could turn this over to machines and it could process all that information very quickly and help us make better choices. And those choices may have to do with, you know, big organisational decisions or something as simple as correcting the grammar in a sentence.

Melissa Clarke: Right, so we know computer algorithms have been used for a long time in many ways, but the recent shift in AI is towards generative AI systems like ChatGPT, which use machine learning. How is that shift likely to change our economy? What sort of jobs and work might be affected?

Bhaskar Chakravorti: Yeah. So, you know, historically the belief was that most of the routine jobs, you know, if for example, if you want to draw up a contract for the sale of a home, why do I need a high priced professional to go through it? Instead, I have an AI system that, you know, pretty much reads the template and does it. So many of these routine jobs could potentially be done by the AI systems. That was the traditional belief. And still those are the jobs that are most at risk. Now with the appearance of generative AI, what that has done is raised the possibility that a lot of white collar jobs and these jobs are people who are in, say, the marketing functions, they produce white papers or blogs or they write copy for advertising or even, you know, people who work for analyst houses like Goldman Sachs and McKinsey. Many of those jobs could be taken over by generative AI systems. So these are white collar, higher paid jobs, which are also at risk.

Melissa Clarke: Given that breadth, that really does suggest that it could be transformative in the economy and particularly when it comes to productivity. Do we have a sense of what AI might mean for productivity across the economy?

Bhaskar Chakravorti: So if the AI systems are deployed in areas where you could expect the systems to do things more efficiently and faster and employ fewer human beings taking less time, you know, arithmetically, that translates into greater productivity as long as the outputs of these AI systems are as good or almost as good as what the humans could produce, in some cases, the outputs may be even better than what they could produce, in which case of course, there is a huge jump in productivity.

Melissa Clarke: So the quality here is a really key factor of how much impact AI can have.

Bhaskar Chakravorti: Absolutely. One is the quality. The second is of course, the acceptance of the rest of society for the products of these AI generated systems. So that's another issue because a lot of humans may not entirely trust something that has been delivered by automation, by a chatbot or by an algorithm.

Melissa Clarke: We do have other points in the advancement of technology in our economy that have made some really fundamental leaps. You know, the development of the internet or the penetration of smartphones. Can we gauge anything from the introduction of those aspects of technology into our economy to take a guess at how that might see the introduction of AI play out?

Bhaskar Chakravorti: Yeah. So this is a great question because when we look at the history of technology, particularly digital technology and its impact on productivity, the history is a rather confusing guide. Interestingly, since, you know, pretty much after the Second World War, you know, we saw a pretty significant jump in productivity.

Robert Menzies, Fmr Prime Minister : Production is very important in Australia. Indeed, production is vital because without it there will be falling standards of living, there will be diminishing exports to the rest of the world and we will fail to do our duty by mankind. Wherever mankind may live.

Bhaskar Chakravorti: All the way up to the 70s and then right around the 70s, productivity started falling. And that was also coincident with the introduction of computers. That fall in productivity continued into the 80s as more computing started entering the systems.

Archival news report: In a few short years, computers have become part of our lives and there's no sign of the trend slowing. With the advent of desktop machines, businessmen, shopkeepers...

Bhaskar Chakravorti: And so there is a history of somewhat of a paradoxical relationship between the introduction of digital technology and productivity. And what we found is that the introduction of new inventions, whether it's the Internet or the World Wide Web or even, you know, singular products like the Apple iPhone, they may have led to episodic increases in productivity, but not a systemic long term increase in productivity. Now, why do I say that AI is likely to be a different story? Think AI; because of the nature of what AI is supposed to do, which is essentially, you know, take over human jobs and then over time do them even better, I feel that AI does hold the promise of actually defeating history and increasing human productivity.

Melissa Clarke: All right. So let's take the optimistic view and say your assessment is correct. And we do see AI create really significant improvements to productivity. What will that mean for people working in those jobs and the wages they receive?

Bhaskar Chakravorti: Yeah. So recently, a number of very well respected analysts like Goldman Sachs and McKinsey have released studies and with sort of eye watering numbers about, you know, how quickly these productivity improvements are going to come.

News report: Modelling by investment bank Goldman Sachs predicts AI will deliver a 1.5% lift in productivity across the global workforce in the next decade and there'll be a 7%...

Bhaskar Chakravorti: The second thing that is important to keep in mind is the increase in productivity doesn't mean an increase in wages across the board. What it means is that those who remain employed, their wages are going to go up because they can produce more output for any given hour of work. But what that also means is that there are many people who are going to be laid off and they'll have to find alternative work. And if they can't find alternative work, their wages are going to go down. So the net effect on everybody's wages is that it's going to lead to a lot of inequality. The people who are likely to be affected are historically disadvantaged minorities. And these could be racial minorities or women who historically have been in many of the routine occupations that AI is likely to displace earlier rather than later.

Melissa Clarke: And what about at a more societal level? Does it also mean that companies and countries that are heavily investing in AI will also see their power and influence increase?

Bhaskar Chakravorti: Yeah, absolutely. Many of these AI decisions, they require an enormous amount of computing power. So what that means is that very few companies are going to be able to afford it and very few companies are actually behind all the R&D in AI. So the concentration that we currently experiencing in the tech industry, that's only going to get worse. So that's yet another outcome of what we're going to see. We're going to see inequality in wage growth. We're going to see inequality in terms of increasing monopolisation of power in the tech business. And when I say, the powers, these are likely to be more in the private sector rather than in the hands of governments. Because what we've seen in terms of the amount of money that the governments are spending, and these are even the big superpowers like the United States and China, the amount of money that they're investing in AI doesn't come close to the amount of money that the Googles and Microsofts of the world are spending. There's an enormous interest and a redirection of scarce resources - by scarce resources mean talent, I mean data, I mean oversight capabilities. A lot of that is being directed towards generative AI applications, and my fear is that it's going to take these resources away from potentially societally more meaningful applications of AI. And to my mind, some of the biggest applications are saving human lives, whether it is in drug discovery or in crisis response during a tsunami; AI is being used to track down victims and and there are lots of other applications where human lives have been affected by thoughtful deployment of AI. And all of that requires further work and further development. And my worry is that because of this obsession with generative AI, we are potentially losing sight of some of these larger, societally meaningful applications.

Melissa Clarke: Bhaskar, as someone who spends a lot of time thinking about AI, do you believe the integration of AI into our lives will make our lives better? Are you an optimist or a pessimist in this case?

Bhaskar Chakravorti: Well, ultimately, I'm an optimist. But the path to optimism, you know, is many sojourns in pessimism. Invention after invention, we struggled to integrate them into our lives. In fact, even when the printing press first came about and books became a thing, people worried that everyone would become stupid because they wouldn't know how to memorise things anymore because there's just a page on which stuff is written. But here we are. We consider the reading of a book as an intellectual activity. So I do believe that over the long haul there are grounds for optimism. But we are going to make lots of mistakes along the way.

Melissa Clarke: Professor Bhaskar Chakravorti, the Dean of Global Business at Tufts University in Boston. This episode was produced by Flint Duxfield, Veronica Apap and Sam Dunn, who also did the mix. Our supervising producer is David Coady. I'm Melissa Clark. ABC News Daily will be back again tomorrow. You can find all of our episodes of the podcast on the ABC Listen app. To get in touch with the team, email us on ABCNewsDaily@abc.net.au. Thanks for listening.