I’ve seen way too many articles about AI casting doom and gloom that it will “replace millions of jobs” and that this will lead to societal destruction as the now job-less replacees have no more money to spend. The common refrain is “when AIs replace the workers, who will buy the products?”
This is just another fundamental misunderstanding of AI and technology. AI is a multiplier of human effort, and what once took 10 men now takes 1. That doesn’t mean that 9 men will be homeless on the street because their jobs are “replaced.” The gains reaped from productivity are reinvested back into the economy and new jobs are created.
When the loom replaced hand-spinning weavers, those weavers were replaced. But they could eventually find new jobs in the factories that produced looms, and in other factories that were being developed. When computers replaced human calculators, those calculators could now find jobs programming and producing computers.
For centuries now, millenia even, technology has multiplied human effort. It used to take dozens of people to move a single rock, until several thousand years ago someone had the bright idea of using ropes, pullies, and wheels. Then suddenly rocks could be moved easily. But that just in turn meant the demand for moving rocks shot up to meet this newer, cheaper equilibrium, and great wonders like the Pyramids and Stonehenge were suddenly built.
The same will be true of AI. AI will produce as many new jobs as it creates. There will be people to produce the AI, people to train the AI, people to ensure the AI has guardrails and doesn’t do something that gets the company trending on Twitter. And there will be ever more people to use the AI because demand is not stable and demand for products will rise to meet the increase in supply generated by the AI. People will want more and more stuff and that will lead to more and more people using AI to produce it.
This is something that people get hung up on, they think that demand is stable. So when something that multiplies human effort gets created, they assume that since the same amount of products can be produced with less effort, that everyone will get fired. Except that demand is not stable, people have infinite wants and finite amounts of money.
Technological progress creates higher paying jobs, subsistence farmers become factory workers, factory workers become skilled workers, skilled workers enter the knowledge economy of R&D. These new higher paying jobs create people who want more stuff because they always want more stuff, and now have the money to pay for it. This in turn increases demand, leading to more people being employed in the industry even though jobs are being “replaced” by machines.
To bring it all back to weavers, more people are working in the textile industry now than at any point in human history, even though we replaced weavers with looms long ago.
AI will certainly upend some jobs. Some people will be unable or unwilling to find new jobs, and governments should work to support them with unemployment insurance and retraining programs. But it will create so many new jobs as well. People aren’t satisfied with how many video games they can purchase right now, how much they can go out to restaurants, how much housing they can purchase, etc. People always want more, and as they move into higher paying jobs which use AI they will demand more. That in turn will create demand for the jobs producing those things or training the AIs that produce those things.
It has all happened before and it will happen again. Every generation thinks that theirs is the most important time in the universe, that their problems are unique and that nothing will ever be the same. Less than three years ago we had people thinking that “nothing will ever be the same” due to COVID, and yet in just 3 short years we’ve seen life mostly go back to normal. A few changes on the margins, a little more work from home and a little more consciousness about staying home when sick, but life continued despite the once-a-century upheaval.
Life will also continue after AI. AI will one day be studied alongside the plow, the loom, and the computer. A labor-saving device that is an integral part of the economy, but didn’t lead to its downfall.