Artificial intelligence (AI) and the absurd

BarcelonaAll advances and new technologies generate concern and fear. We have seen this throughout history. And this is what is happening with artificial intelligence (AI). There are many studies pointing to the loss of hundreds or thousands of jobs, and the potential of this new technology is still in its infancy. But we have already seen many headlines like that of the weekly The Economist a few days ago, "The jobs apocalypse". The impact it can have cannot be denied, and not just on repetitive and low-value-added tasks.

In any case, the risk is not taking the dangers into account and letting economic principles prevail. In this sense, a study by Brett Hemenway Falk and Gerry Tsoukalas, researchers linked to the Wharton School of the University of Pennsylvania and Boston University, under the title The AI layoff trap. Essentially, they warn that if AI eliminates jobs faster than the economy can absorb them, there is a risk of eroding consumer demand and thus penalizing the results of the companies themselves.

In summary, if the only incentive for companies is to automate more than their competitors to reduce costs to the maximum and increase margins and profits at the expense of getting rid of staff, in the end, workers are harmed, but so are the companies themselves. If there is no other incentive than unlimited productivity increases, we can end up with zero demand. And it is easy to understand: if all companies do the same thing at the same time, the unemployed population grows, which has less income and, therefore, less purchasing power, which causes companies to sell less.

And what do companies do? Well, what the law of the market has taught them: further reduce costs to improve results and, consequently, increase productivity further at the cost of more layoffs. And it turns out that these people who are left without work buy less or simply stop buying altogether. And this unstoppable race to reduce costs leads to the absurdity of producing for no one, in the extreme case.

From here, the authors see only one solution to curb the corporate race for cutbacks: a kind of tax for each job replacement caused by AI. This would force companies to pay for destroying the purchasing power they generate. Something to think about.