The Economist recently published an in-depth essay titled "Your job is (probably) safe from artificial intelligence." It's worth a read. While generative AI is not predicted to create a new class of robber barons, many people are more concerned with their economic prospects, particularly whether their job will disappear.

Terrifying predictions are abundant, with researchers estimating that around 80% of the US workforce could have at least 10% of their work tasks affected by the introduction of large language models (LLMs). Legal services, accountancy, and travel agencies top the list of professions most likely to be involved.

Economists have issued gloomy predictions before. However, the average rich-world unemployment rate has roughly halved in the past decade. Countries with the highest rates of automation and robotics, such as Japan, Singapore, and South Korea, have the most negligible unemployment.

A recent study by America's Bureau of Labor Statistics found that jobs classified as "at risk" from new technologies had no general tendency toward rapid job loss.

This time could be different. Companies like IBM have paused hiring for roles AI could replace in the coming years. But is this an early sign of a tsunami about to hit? History suggests job destruction happens far more slowly. It took decades for manual telephone operators to be replaced by automated systems, and it may take time for AI to sweep the labor market as well.

Regulation significantly delays technology adoption in industries with heavy state involvement, such as education and healthcare.

The absence of competitive pressure blunts incentives to improve, and governments may have public-policy goals, such as maximizing employment levels, which are inconsistent with improved efficiency. These industries are also more likely to be unionized, which can help prevent job losses.

Many jobs threatened by AI are in heavily regulated sectors, such as teaching. However, it is unlikely that governments would rapidly replace teachers or other professionals with AI. Instead, job replacement delays will allow the economy to create new types of jobs as others are eliminated.

A paper published in 2021 concluded that about 60% of the jobs in America did not exist in 1940, and the AI economy is likely to create new occupations that cannot yet be imagined.

AI may eventually make some industries vastly more productive, but many things are beyond its reach. Blue-collar work, such as construction and farming, and industries where human-to-human contact is an inherent part of the service, such as hospitality and medical care, may not experience significant productivity improvements due to AI.

Governments, not technology, are responsible for addressing issues like misfiring planning systems and high housing costs that hold back rich-world productivity growth. AI could even drain productivity, with the potential for distractions, spam, and fraud cases. Additionally, AI may lead to more litigation and create new challenges for teachers and editors.

AI may change the world in ways that are impossible to imagine today. However, that does not mean it will turn the economy upside down. As Robert Fogel noted in his study on the impact of railroads on 19th-century American development, the empirical base on which this view rests may not be as substantial as is usually presumed. A future Nobel Prize winner examining generative AI may reach the same conclusion in the mid-21st century.

One factor that could mitigate the negative impact of AI on the job market is the retraining and reskilling of workers in industries most affected by automation. Governments and companies can invest in educational programs and development initiatives to help workers transition to new roles and industries.

Another possibility is that AI could create new industries and job opportunities that we cannot yet foresee. Just as the rise of the internet led to the creation of entirely new industries and job categories, the widespread adoption of AI could have a similar effect. This could help offset job losses in sectors that become more automated.

AI may also increase productivity and efficiency in some sectors, which could lead to economic growth and higher demand for goods and services. This, in turn, could create more job opportunities in areas that are not easily automated, such as those that require creativity, empathy, or human-to-human interaction.

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