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How Artificial Intelligence Will Change the Economy

 4 min read / 

There has been a shift from economies based on industrial production towards ones based on information and computerisation. As the transition is made into a more digitalised economy and leads to a world where more processes are being automated, certain questions arise.

Are certain jobs going to be at risk due to recent advancements in artificial intelligence? Some jobs will be, but the effect that AI will have on all jobs is difficult and almost impossible to gauge at the moment. Based on some things that are in the process of being automated today, one can get a pretty clear idea of what other processes may also be autonomous in the near future.

Such innovations include the self-driving car. This is still currently in its test phase, though companies such as Uber, Tesla and Google have already made large strides in this area and have set themselves apart from their competitors. Self-driving cars are nonetheless something that won’t probably fully transition onto roads in less than 10 years time.

A New Age of Automation

The companies that will be able to automate their cars the fastest are likely to improve efficiency, increase profit margins, and be the first to capture market value in this given domain.

But with vehicles that drive themselves, the need for taxi drivers and cab drivers becomes obsolete. In this particular industry, it is the taxi drivers who will suffer the most, whilst car manufacturers and companies that are able to implement autonomous driving will reap the rewards as they decrease operational costs and increase profit margins.

Whether or not consumers will benefit from this technology in the form of lower car transportation costs is not known, as online transportation network and car manufacturers may not pass on the lower costs to consumers.

Disrupting Industries

Automation is not a phenomenon that will transform a few companies. It is something that has the potential to disrupt entire industries, as more mundane repetitive tasks become automated. Already, companies such as Amazon that have implemented automation into their logistics and distribution processes, and others will most likely follow suit.

This new wave of automation will increase efficiency and economic output, which will, in turn, lead to higher GDP. This boost in GDP or expected GDP growth comes as something of a revelation as Western countries have been battling sluggish economic growth in spite of record-low interest rates. Global growth for the past three years has sat at just over 3%, compared to the 7% seen in the 1970s, according to the IMF.

3%total GDP growth in the last three years

This new technology paradigm is not something new, the automation of processes to improve efficiency is something that was a large part of the industrial revolution. Then, things were done by hand, became automated and were done on a more industrial scale with machines. This economic shift meant that a vast number of jobs became extinct, but with this extinction came other jobs and other duties that needed to be filed in.

Social Consequences

In other words, the industrial revolution did not produce mass unemployment. Instead, it just changed the nature of jobs that were available. During the industrial revolution, though, income inequality increased, as the means of production owned privately by a small class of people would profit from the labour of the working class.

Something very similar may happen in the next wave of automation, where, instead of mass unemployment, the global population will see a shift in the types of jobs available to it. These jobs, however, are most likely going to be high skilled technology jobs that would revolve around understanding, maintaining, and creating the intelligent agents that would do the mundane, repetitive human tasks.

What To Do?

As a result, new social security measures will have to be put in place to help tackle the possibility of sudden unemployment for a small percentage of the general population. In the near future what we will not be able to automate are challenging roles that sometimes require human intuition and human emotion.

For instance, C-level roles (executive jobs) and even roles that require human interaction are not positions that can be easily replicated with machines. Roles that need the use of creativity, innovation, and emotional intelligence are roles that won’t be replaced. Advisory roles and consultancy roles are also good examples of jobs that may not be able to be replaced or automated by computers.

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