Swaminomics: Will AI create an uproar by eating up jobs? Remember these technological revolutions of the past

Microsoft CEO Satya Nadella recently visited India. he/she told that his/her company will invest 3 billion dollars in India in the next two years. This investment will be in the field of cloud and Artificial Intelligence (AI). This will increase the development and use of AI rapidly. Nadella also promised that in the next five years he/she will train one crore Indians in AI. This will create a skilled technical workforce, which Microsoft needs for its global operations. The population of western countries is declining. Therefore, there are not enough graduates in STEM (Science, Technology, Engineering, Mathematics). These graduates are needed for the rapid development in the field of AI. India’s education system may have many problems, but it produces the largest number of English-speaking STEM graduates in the world. Therefore, India has become an important source of talent, not just for Microsoft, but for the entire world.

Till now Indians used to do relatively low technical information technology work. More high-level work was done in Western countries. But now all the big global companies have opened Global Capability Centers (GCCs) in India. These companies are taking advantage of the immense supply of STEM graduates in India. Every year a large number of graduates come out from here. So India is now in a position to do what Nadella calls ‘technology frontline work’.

It sounds great to create millions of jobs in AI and related fields. But won’t AI also eliminate millions of jobs? Unlike earlier innovations, it looks capable of replacing people not only in blue collar jobs but in a vast range of white collar jobs. Some people fear that AI machines will become more intelligent than humans and take over the world. But the more widespread fear is that AI will create mass unemployment on a scale never experienced before.

Optimists like me say that every new technology creates fear of mass unemployment and crisis, which is never true. The first textile machines took away so many people’s jobs that the Luddites in England destroyed textile mills to prevent mechanization. As it turned out, the shift from hand-spun to machine-spun yarn meant greater productivity per worker, higher wages, and much cheaper cloth. Some workers faced temporary unemployment, but the end result was good.

The same happened with the mechanization of transportation. Traditional employment in horses and carts was destroyed by the automobile, but it made possible higher productivity, higher wages, and lower real prices. Then personal computers, industrial robots, and the Internet emerged. All three put a huge range of jobs at risk, with people having no confidence that enough new jobs would come. Yet in every case, more jobs were created overall while prosperity improved.

Why did serious threats to jobs become not constant disasters, but pathways to higher prosperity? Mainly because of what economists call macroeconomic effects. Mechanization lowered the real prices of the goods and services being mechanized. This left consumers with more cash in their pockets for other purchases, which increased demand for a variety of goods and services completely unrelated to the industry being mechanized. Liberals worry about the fate of people displaced by machines and cannot see positive effects for unrelated industries. But this is what has made mechanization a net positive for all societies.

At the end of the 19th century, half the American workforce was employed in agriculture and 40% of food consumption was. Then waves of farm mechanization eliminated many jobs. Today only 1.8% of Americans work in farms but they feed the nation and produce vast amounts of surplus food for export. Mechanization has steadily reduced the real price of food, which now accounts for only 12% of household expenses. On top of that, there has also been a tremendous increase in quantity, quality and variety.

Pessimists say that even if AI succeeds in creating some very well-paid jobs for STEM graduates, it will create mass unemployment for others. They see a future in which tech companies make huge profits and tech workers become wealthy but make the skills of large portions of the workforce obsolete, creating a huge divide between high-tech workers and everyone else. .

It is unlikely but not impossible. So far, countries have been able to compensate displaced workers with unemployment benefits, retraining, and overall lower prices. But could the rapid spread of AI mean that job losses are happening too fast for the positive effects to begin? This cannot be ruled out. But surely the solution would be for governments to tax the high corporate profits and high incomes of tech workers to increase unemployment compensation and pay it out over a long period of time, allowing enough time for the benefits of retraining and lower prices to reach everyone. So to receive.

Let’s welcome the coming AI revolution. Possibly AI will start writing newspaper columns and make writers like me irrelevant. I’m happy to live with that risk.

(Translation of the column published in our sister newspaper Times of India)