Artificial Intelligence, Automation, and the Economy

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Box 2: The End of Work?

In addition to the arguments that AI and future technologies will broadly follow the same path
as past technological revolutions, others make a more radical argument about the possible
longer-run effects. They posit that AI could prove different from previous technological
change because it has the ability to replicate something previously exclusive to humans:
intelligence. There have long been fears that technology—the machines, the assembly lines, or
the robots—would replace all human labor, but AI-driven automation has unique features that
may allow it to replace substantial amounts of routine cognitive tasks in which humans
previously maintained a stark comparative advantage. Initial waves of technology, such as the
wheel and lever, allowed humans to do more by replacing or augmenting physical strength.
Other processes allowed work to take place faster or more efficiently in a factory. Computers
allowed calculations or pattern recognition to take place faster and augment humans’ capacity
to think or reason.

AI, though, may allow machines to operate without humans to such a degree that they
fundamentally change the nature of production and work.^33 It may be that the question is no
longer which segment of the population will technology complement, but whether the new
technology will complement many humans at all, or if AI will substitute completely for much
of human work. The skills in which humans have maintained a comparative advantage are
likely to erode over time as AI and new technologies become more sophisticated. Some of this
is evident today as AI becomes more capable at tasks such as language processing, translation,
basic writing, or even music composition.

AI-driven technological change could lead to even larger disparities in income between
capital owners and labor. For example, Brynjolfsson and McAfee argue that current trends in
the labor market, such as declining wages in the face of rising productivity, are indicative of a
more drastic change in the distribution of economic benefits to come. Rather than everyone
receiving at least some of the benefit, the vast majority of that value will go to a very small
portion of the population: “superstar-biased technological change.” Superstar-biased
technological change is somewhat similar to skill-biased technological change, but the
benefits of technology accrue to an even smaller portion of society than just the highly-skilled
workers. The winner-take-most and winner-take-all nature of the information technology
market means that the fortunate few are likely to emerge as victors of the market. This would
exacerbate the current trend in the rising fraction of total income going to the top 0.01 percent
(Figure 4).

(^33) Erik Brynjolfsson and Andrew McAfee, The Second Machine Age: Work, Progress, and Prosperity in a Time of
Brilliant Technologies, WW Norton & Company, 2014.

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