Widespread concerns about the impact of AI on jobs are driven by the Luddite Fallacy: assuming that robots and workers are competing for a fixed number of jobs in a static economy.
Estimates suggest as many as 40% of jobs are at high risk of automation. However these projections vary widely and are unclear on actual job losses or timelines. This creates unnecessary fear around the technology and fails to look at the net impact on employment.
AI could mean a 4th Industrial Revolution, boosting innovation from driverless vehicles to accelerated vaccine development.
AI is critical to boosting the UK economy post COVID-19, creating new jobs, boosting productivity and increasing purchasing power.
£1 billion of the Department for Work & Pensions’ circa £175 billion budget should be used to fund policy experiments in welfare such as a lifelong learning voucher scheme or a Negative Income Tax to allow people displaced in jobs to find new training and employment.
To remove regulatory barriers to technological progress, the Government should set up a £5 million ‘Office for removing barriers to Artificial Intelligence’ (ORBI) and pass an ‘Unleashing Artificial Intelligence Act’ (UAI Act).
UK Government should expressly rule out populist and unworkable Robot Taxes.
Over the last decade, artificial intelligence (AI) research and development has surged. This has been driven by the wider adoption of machine learning techniques in business, hardware improvements, and a greater willingness to invest. In the last six years, over three thousand AI startups have received venture capital funding, totalling over $66 billion.
With this rise though have come calls for restraint in the development of AI and warnings about the consequences of the technology’s adoption. This includes concerns about a full-scale apocalypse driven by AI. Science and technology leaders like the late Stephen Hawking, and Elon Musk even have warned of an existential threat to humanity. Other doomsayers also assert a more imminent threat: AI will bring the collapse of our economic order, driven by mass unemployment.
A new paper by the free market think tank the Adam Smith Institute argues that these worries are unfounded and predicated upon a well established mistake: the Luddite Fallacy.
The economy is often thought of in static terms. This means people assume that robots and people are competing for a fixed number of jobs. It feels intuitive: if work that
used to be completed manually is now automated, there is less need to employ a person. Moreover, if many positions are automated, this suggests that displacement of existing workers will result in mass unemployment and wage reductions. If large numbers of jobs are at high risk of automation from AI then the result would be widespread unemployment.
But this analysis is fatally flawed. There is no finite number of jobs. As old jobs, especially dull and mundane ones are automated, new and better jobs can be created.
People can be paid better and do more interesting work. We can use labour resources more efficiently and to generate greater economic value. It is easy, the report’s author argues, to see how work is being automated but harder to conceive of the new opportunities and future jobs. It’s also easier for politicians to blame others (competitor countries, technologies, immigrants, etc.) than to focus on creating an environment that facilitates job creation.
Nevertheless, there is still a need to consider how AI could change the nature of the labour market. There is consensus about the huge scope for automation. However, the report argues, there is a lack of precise forecasts and a lack of recognition that losses because of automation do not necessarily translate to significant unemployment, as it will take time for businesses to adopt AI and new jobs will be created.
Technology progresses faster than regulation, creating a ‘pacing problem,’ while a regulatory vacuum hinders progress in technology. The precautionary approach feeds this vicious cycle, but the think tank argues it can be fixed by the implementation of a permissive regulatory environment, like the UK has pursued in fintech, or which Estonia has now for AI.
The Government’s announcement of a new centre dedicated to artificial intelligence as part of a Defence spending boost last week is welcomed by the think tank but it warns that the UK is not currently positioned to lead in AI or ready to address the potential jobs impact from its implementation.
The report argues that the Government should set up a £5 million ‘Office for removing barriers to Artificial Intelligence’ (ORBI) and pass an ‘Unleashing Artificial Intelligence Act’ (UAI Act). The Office would remove impediments to artificial intelligence and make permissionless innovation the legal default. This approach could be expanded to other areas of regulation.
The report suggests the Government should set aside £1 billion of the Department for
Work & Pensions £175 billion budget, to enable policy experiments such as a lifelong learning voucher system or trials of a Negative Income Tax.
Poorly thought out populist policies such as Robot taxes should be rejected utterly. They are poorly conceived, would hinder progress, and would be ineffective in a globalised economy already making mass use of technology in the workplace. An ideal tax is targeted at an activity that we want to discourage; technological advancement is no such activity.
Discouraging the use of robots would limit gains in productivity and overall output, making us all worse off. The Adam Smith Institute argues that it would be better to embrace higher output, and if necessary, redistribute afterwards once we are wealthier through more general increases in revenue.
AI has the potential to transform our world, but only for the better if it is embraced rather than resisted. Technological progress is key to growth and increased overall prosperity is the most likely scenario as AI develops, the think tank argues.
Report author and ASI Fellow James Lawson, says:
“I know first hand AI’s huge potential to transform our lives for the better, creating jobs and driving innovation.
“We should address people’s concerns about the impact on jobs, without resorting to excessive doom and gloom. The most likely scenario is that AI will create more jobs that it destroys, make us more prosperous and enable us to help anyone who loses out.
“The Government’s announcement last week of a dedicated AI centre is positive, but there is much more work to do if we really want to boost our economic recovery and position the UK for global AI leadership.”
Notes to editors:
For further comments or to arrange an interview, contact Matt Kilcoyne: matt@adamsmith.org | 07904 099599.
James Lawson is a Fellow of the Adam Smith Institute. This paper is written in a personal capacity.
The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.