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Why AI and 5G Might not be Good for the Economy

Here’s How AI and 5G Could Leave You Much Worse Off

Artificial Intelligence (AI) and 5G newer, faster cellular data networks are already beyond the testing phases. A variety of automation solutions are rolled out, seemingly every day in the news often reported in headlines announcing job cuts. 5G will be released in 2020 by phone companies around the world.

Both AI and 5G are once in a generation improvements to the economy, of the sort not seen for 75 years now. We tend to think that the world is changing fast now, and it is, but most of the improvements we’ve seen recently have had only a marginal productivity benefit. The addition of Facebook to the world probably made work less efficient, not more efficient.

Typically, when a new technology is introduced, it slowly filters into the world of work, improving productivity for everyone who uses it. Word processors, for example, have aided charities writing letters to sponsors, soliciting more donations as well as incredibly successful fiction writers like Stephen King who are rumored to be worth upwards of $400m

The internal combustion engine, on the other hand, internal plumbing and the jet engine, were all rolled out in the early part of the last century and they affected every corner of the world and improved every job they touched.

5G and AI are from the same ilk as these game-changing steps forward, up there with air conditioning or the personal computer as evolutions which will have a dramatic effect on every facet of the economy. And AI & 5G are happening at once, overlapping and even reinforcing each other.

Like any technology, AI and 5G it will start simple, solving problems in the most basic jobs or components of jobs. Over time, each of them will evolve and move up the value chain, finding more complex problems to solve. Both of these new technologies offer promise beyond what is immediately apparent.

Unfortunately, the benefits may not be shared by all. They are likely to exacerbate a condition which is currently in place and which is becoming more openly discussed – income inequality. The world’s pie is growing but it is not being split ‘fairly.’

Why is income inequality bad?

There are a wide array of Ted talks on the subject of the negative social effects associated with income inequality. Income inequality is associated with almost every negative social outcome you could imagine, from higher infant mortality to increased alcoholism. That makes the subject interesting from an economic perspective.

Until this point, we (Western Capitalist economies) have tried to make people objectively better off. Income inequality is more of a psychological construct. Even when everyone is better off – albeit slightly, they feel worse – because the billionaires of the world took a much higher proportion of the benefits. It’s the job of politicians to reassign the money their economies generate through taxes. Unfortunately, often, billionaires and companies run lobby groups and sponsor politicians to stop them doing that.

Above everything else, Income inequality sews the seeds of social unrest. At the shallow end of the pool, it causes incidents such as the bus which drives people to the Google Campus being stoned.

More fundamentally, the French Revolution was a reaction to the glorified and conspicuous consumption of the aristocracy. It is no exaggeration to suggest that we are returning to 19th Century levels of difference in life experience, between the top 1% and everyone else.

Summing up the impact of AI and 5G

There is still reason to feel optimistic about the future. Economic growth has always hinged on unproductive tasks being eliminated or at least done more quickly. Few would suggest that the way to make a construction crew more productive is to give them tablespoons to dig a hole rather than a JCB. 5G and AI will certainly provide benefits by eliminating unnecessary work and speeding up the necessary.

A universal basic income has been posted as a potential solution. The idea, under which every individual is given state benefits irrespective of whether they seek work or not is under trial in Finland – and is showing generally positive results. The question, of course, is how will such a scheme be funded – will there be enough money in the economy after AI reaches the saturation point, to pay for it.

At an individual level, we’re used to ignoring income inequality, walking past the homeless, voting for political parties which will benefit us personally. At some level, most of us spend time ignoring what we individually know to be true – that if we gave a small proportion of our income to those in need overseas it could have a material impact on the wellbeing of others. This antipathy to the plight of others could come back to bite us.

Governments tend to be slow at the sort of behaviors required to improve the situation. In the face of these rising amount of data showing potential effects we are likely to strongly dislike, they appear to be taking no action. There needs to be a retraining program, to reskill lower-skilled workers displaced through automation and reconsideration of tax systems to include more progressive tax laws on inheritance, with more work done ensuring the technology giants who make the most from the tools they develop and disseminate.

That these technologies will create more wealth is not in doubt. Neither is the fact that everyone from an administrative assistant to the CEO they manage will have some boring bits of their jobs automated. The question is will we like how the income from these particular technology advances is distributed and what that will mean to the bottom of the income pyramid.

Written By

Keeping it simple, I would say I am a simple whacky kid :) whose mind is always open to learn more and more in this expanding universe. Another quality that I possess is- Even when the house is on fire, I try to keep a cool head. I have the right mix of education, creativity, organizational skills and motivation to become a competent professional. I prefer being involved in work rather than just watch it happening.

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