Goldman Sachs: The Potentially Large Effects of Artificial Intelligence on Economic Growth
AI will take jobs.
The scale of transformation - both positive and negative - will be earth shattering, according to a report by Joseph Briggs and Devesh Kodnani of Goldman Sachs.
According to the authors, AI is now able to “generate content that is indistinguishable from human-created output”. Moreover, AI technology can now “break down communication barriers between humans and machines”…”a major advancement with potentially large macroeconomic effects”.
If generative AI delivers on its promised capabilities, the labor market could face significant disruption. Using data on occupational tasks in both the US and Europe, we find that roughly two-thirds of current jobs are exposed to some degree of AI automation, and that generative AI could substitute up to one-fourth of current work. Extrapolating our estimates globally suggests that generative AI could expose the equivalent of 300mn full-time jobs to automation.
While jobs will be destroyed, the authors argue that new jobs will also be created. Even if this is true, the transition will be painful for a large segment of society. Many will simply permanently leave the job market.
Briggs and Kodnani continue:
We estimate that generative AI could raise annual US labor productivity growth by just under 1½pp over a 10-year period following widespread adoption, although the boost to labor productivity growth could be much smaller or larger depending on the difficulty level of tasks AI will be able to perform and how many jobs are ultimately automated.
The boost to global labor productivity could also be economically significant, and we estimate that AI could eventually increase annual global GDP by 7%. Although the impact of AI will ultimately depend on its capability and adoption timeline, this estimate highlights the enormous economic potential of generative AI if it delivers on its promise.
It’s critical to recognize that generative AI will grow the economy, but only a certain segment will benefit. This could lead to a further concentration of wealth - a bigger pie with fewer slices.
Corporate leaders are already taking notice of the potential productivity gains. The chart below shows the number of times AI was mentioned during analyst calls. Competitive forces will reward companies that improve efficiency by replacing expensive labor with cheaper technology or amplifying human labor with AI.
Not all jobs are at direct risk, but ultimately oversupply of labor could drive down wages across the board. Generative AI is highly deflationary.
The tasks and jobs least at risk are more manual in nature - construction, cleaning, personal care.
Musk and Other Tech Gurus Issue Warning in Open Letter
Elon Musk and over 1,300 people including AI experts and researchers have penned an open letter warning of the dangers of rapid AI deployment, asking for a 6 month moratorium on development.
AI systems with human-competitive intelligence can pose profound risks to society and humanity, as shown by extensive research and acknowledged by top AI labs. As stated in the widely-endorsed Asilomar AI Principles, Advanced AI could represent a profound change in the history of life on Earth, and should be planned for and managed with commensurate care and resources. Unfortunately, this level of planning and management is not happening, even though recent months have seen AI labs locked in an out-of-control race to develop and deploy ever more powerful digital minds that no one – not even their creators – can understand, predict, or reliably control.
Contemporary AI systems are now becoming human-competitive at general tasks, and we must ask ourselves: Should we let machines flood our information channels with propaganda and untruth? Should we automate away all the jobs, including the fulfilling ones? Should we develop nonhuman minds that might eventually outnumber, outsmart, obsolete and replace us? Should we risk loss of control of our civilization? Such decisions must not be delegated to unelected tech leaders. Powerful AI systems should be developed only once we are confident that their effects will be positive and their risks will be manageable. This confidence must be well justified and increase with the magnitude of a system's potential effects. OpenAI's recent statement regarding artificial general intelligence, states that "At some point, it may be important to get independent review before starting to train future systems, and for the most advanced efforts to agree to limit the rate of growth of compute used for creating new models." We agree. That point is now.
Therefore, we call on all AI labs to immediately pause for at least 6 months the training of AI systems more powerful than GPT-4.