Despite the advent of personal computers, the internet and other high-tech innovations, much of the industrialised world is stuck in an economic growth slump, with the Organisation for Economic Co-operation and Development (OECD) countries expected to expand on aggregate just 1.7 per cent this year.
Economists sometimes call this phenomenon the productivity paradox.
The big new hope is that artificial intelligence will snap this mediocrity streak – but doubts are creeping in. And one especially sceptical paper by Daron Acemoglu, a labour economist at Massachusetts Institute of Technology, has triggered a heated debate.
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Acemoglu concluded that AI would contribute only “modest” improvement to worker productivity and that it would add no more than 1 per cent to US economic output over the next decade. That pales in comparison to estimates by Goldman Sachs economists, who predicted last year that generative AI could raise global gross domestic product by 7 per cent over the same period.
The bullish camp has great hopes for AI. Sam Altman of ChatGPT maker OpenAI sees AI wiping out poverty. Jensen Huang, the chief executive of Nvidia, the dominant maker of the chips used to power AI, said the technology has ushered in “the next industrial revolution”.
But if the boosters are wrong, it could be trouble for the developed world, which is in desperate need of a productivity breakthrough as its workforce ages and declines.
AI won’t reverse stagnation, Acemoglu has told The New York Times. One reason: the technology can automate only about 5 per cent of an office worker’s tasks, he has found. “AI has much more to offer to help with the productivity problem. But it will not do that on its current path; that’s why I’m so troubled by the hype,” he says.
Acemoglu sees AI as a tool that can automate routine tasks – for example, speed up writing emails, sales pitches or basic computer code. That could free workers to tackle more brainy challenges such as developing a business strategy for a new product launch.
But he questions whether the technology alone can help workers “be better at problem solving or take on more complex tasks”. Achieve that, and companies will see worker productivity climb, he adds.
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Acemoglu’s downbeat view is perhaps not surprising. He has been writing for decades about the good and ill effects of technology’s influence on the job market and the economy, and has warned that the big tech arms race to dominate AI could have a destabilising effect on society.
And he’s not alone in questioning the AI hype. David Cahn, a partner at venture capital giant Sequoia, and analysts at Barclays and Goldman Sachs have warned recently that the billions of dollars companies are pouring into AI could create a speculative bubble. (That said, Sequoia just led a funding round for the start-up Fireworks AI.)
Critics say Acemoglu is underplaying AI’s potential to spur scientific advancements and its effect on the business world. “A lot of the benefits of AI will come from getting rid of the least productive firms,” argues Tyler Cowen, an economist who says the model behind Acemoglu’s study is wrong.
Lynda Gratton, a professor of management practice at London Business School, who advises companies about adopting AI, is optimistic. But she thinks it’s too early to know if the technology will be a killer app for boosting productivity until it is tested in the workplace over the next few years. She says corporations are already running vibrant AI experiments.
Some businesses will see AI “as a tool to ground out costs and inefficiencies”, she says, “but if the company wants to build for growth, it will need tools to innovate”.
Acemoglu also notes the importance of spurring innovation to bolster workplace efficiency and, in turn, make ageing countries more competitive. Is AI the tool to make that happen? To that question, he answers with a figure: 40 per cent.
If AI tools can automate roughly that percentage of a typical worker’s task load, then he will reconsider his position on the technology. “I am not a total doomer,” he adds.
– This article originally appeared in The New York Times
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