Would It Be So Bad If AI Took Our Jobs?

Last time I wrote a fairly negative view of the impact of AI. Today, I’m going to explore some of the ramifications of an optimistic view of AI’s potential.

AI has the potential to be the next Industrial Revolution. There are obvious benefits to this from the increase in productivity which should lead to higher living standards. Conversely, there is the fear of widespread unemployment as jobs performed by humans are replaced by machines.

But, there is one big piece of the equation often ignored by those worried about the latter. Global population in first world countries is set to decline dramatically over the next 100 years, especially for people of working age. This is arguably the biggest challenge facing humanity in the future, even though it’s rarely discussed.

If we do nothing, living standards will decline meaningfully. There won’t be enough people to fill the jobs we have today. That means there will be widespread shortages across the economy. It will resemble living under Communism.

However, there is one solution to this challenge (other than a major change in global attitudes towards having more children or people working until they’re 80). Economic growth is a function of two things – population growth and productivity growth.

As noted, population is set to shrink which is why, all else equal, living standards will decline. However, a productivity boom could offset this decline. This is where the potential for AI is greatest.

An Industrial Revolution is necessary to increase productivity to offset declining population. AI may well be the solution to save us from the harm from declining birth rates.

Of course, this assumes we have the ability to match AI advances with the pace of population decline. That is unlikely. It is more likely the the productivity gains (and thus job displacement) come faster than the decline in population.

Which brings me to the main topic of today’s article. Is our current social construct of the value of work appropriate for the future or do we need to rethink the role of work in society if AI advances rapidly?

Work, A Brief History

We are all shaped by our lived experience and tend to think things were always quite like today. Yet, the nature of work has changed dramatically over the centuries.

In early civilizations, people worked so they could eat. They were subsistence farmers or hunters. You didn’t work for purpose or wealth. You worked so you wouldn’t starve! People from 5000 years ago would be stunned at how hard we work even though food is abundant.

Life remained largely this way though the Middle Ages as serfs or peasants worked the land to have enough food to get by. The one exception to this was royalty. While the King and Queen may have had official duties, members of the the royal household (especially those not in the line of succession) could live a life of luxury and didn’t seek work.

Note, this unused potential was not ideal. If intelligent people were confined to the farm, they were underutilizing their potential. If the elite chose a life of leisure, they were wasting their talent to contribute to society.

Things began to change in the 1700s. This was the beginning of modern work. There was a confluence of the Industrial Revolution, the emergence of the Protestant work ethic, and the growth of capitalism and democracy.

The reward for work now went beyond just food. There was the possibility of purchasing land or advancing from an apprentice to a master with your own business. Individual wealth was possible regardless of social status.

All of this led to a new view of work and the identification of one’s status being tied to their profession rather than their social caste.

This was amplified by the religious aspect, particularly in the West, that equated hard work with morality and virtue. While the belief may have been sincere, it ended up being great strategic propaganda. By convincing people that God wanted them to work hard, it unlocked some of that aforementioned untapped potential, previously trapped in the field.

Those who were successful didn’t sit back and collect rents like feudal lords. Rather, they kept working to make more money or expand their business. The glorification of wealth was also brilliant propaganda as it led to greater productivity.

The Industrial Revolution, while on one hand reducing the need for workers, also turbocharged consumption as productivity gains led to lower prices which were accelerated by the expansion of capitalism.

The 300 years since have been filled with more and more ways to unlock dormant productivity. The women’s rights movement greatly expanded the workforce leading to dramatic output increases. Increased education led to more white collar professions like finance which reduced frictions in the economy.

And now, just when it seemed like we were about to run out of unused resources to find that next leg of growth, along comes AI.

A Jobless Future

If AI delivers on its hype and takes all the jobs, that is actually more good than bad. We would no longer need to work for subsistence. We would no longer need both spouses to work to afford daycare. As for the Protestant work ethic, let’s face it, there are a lot fewer religious people today than at any time in the last 2000 years. I don’t think people feel a calling to work for salvation anymore.

So what would people do if they didn’t have to work (and their financial needs are met – more on that below)? They would live like the royalty of the past and have unlimited leisure time!

We know most people (some workaholics excepted) prefer leisure to work. If you think about what higher living standards means, it typically translates into less time working and more time for leisure.

Note, leisure doesn’t mean you have to scroll social media all day. You can volunteer, pursue hobbies, seek further education, write a novel, etc. But it would be your choice, not an obligation.

There would still be ways to find purpose though they would be less oriented to promotions or raises and likely revolve more around social networks (the ones with actual people you see in person, not on the other side of a keyboard).

I doubt early farmers got status through whose field produced the most bushels per acre. Status likely came from leadership within the community once the work was done.

The point being the association of identity with work is nothing more than a modern social construct. It hasn’t always been this way and can easily change under different circumstances.

Also, the need for human workers wouldn’t disappear instantly. Those who wanted to continue working for financial, or other, reward would be able to do so for decades likely.

It is also likely younger people would continue to work for a brief period of time but older people would have the ability to retire much earlier. Perhaps the initial wave of AI reduces retirement ages from 65 to 55, then later 45, and so on. It will be a gradual transition.

How Do People Get Paid?

While I am not a believer in UBI (universal basic income) in today’s society (it is effectively confiscation of wealth from those who work to those who don’t), in a truly machine worker society, it is very feasible to support people’s basic needs with the productivity gains achieved.

The economy would resemble what it looks like today for seniors. Seniors get a “guaranteed income” from the government called Social Security and then need to save and invest well to be able to enjoy a better lifestyle.

Similarly, a machine worker society would provide a base level of income and people would need to invest well to consume more. Investing would be the new “work”.

So how would we be able to afford to pay everyone to live a life of leisure? Instead of taxing a person’s (or company’s) incomes, we would tax the machine’s productivity.

Note, this is much fairer than our current system which leads to higher productivity workers paying for lower productivity workers. A machine won’t choose to not work as hard on the margin because it feels its taxes are too high.

Everyone would get “dividend checks” from the profit of the corporations that ran the economy. One idea would be to literally make it dividend checks. As in, people would receive shares of stock rather than a “Social Security” check.

This also gives people voting rights which means they can have some say in how these massive companies operate. We’d just have to hope they don’t vote for stupid acquisitions or investing in low ROI vanity businesses!

If you prefer, you can think of this “taxation” as more like a pension. Companies pay former workers a share of its earnings and, in return, don’t have to pay taxes (or at least pay much smaller taxes) to the government. From an efficiency standpoint, economists would love this outcome.

If it works as intended, two things would happen. First, companies would be optimized to be as efficient as possible which would result in lower and lower prices and thus less need for replacement income.

Second, these efficient companies would see their earnings continue to grow and thus their stock prices continue to rise. Thus, people would get additional wealth from their stock ownership grants which would allow for higher living standards.

People who choose to save more and invest wisely would end up with more long term wealth than those who choose immediate consumption. That is no different from today. There would still be tiers of wealth but they would be determined by savings and investment choices rather than your career success.

As an aside, government would also be less wasteful as AI hopefully would avoid developing bureaucracy and not be susceptible to lobbying. There is a scenario where AI is more impactful on improving government than the private sector.

Some Caveats

This is all admittedly a fairly cursory examination of what the future would look like rather than high confidence predictions. I could easily write 10,000 words and still not cover all the issues adequately. The purpose is to demonstrate that a “jobless” society is not something to fear.

To reiterate, a full AI workforce is far enough out into the future that the real concern should be how we manage the adjustment to less work, not no work.

But if we can agree on a few things – AI will raise productivity and lower prices, people would prefer to retire earlier, not later and work fewer hours per week, not more, and that there are other ways to find fulfillment outside of a career, then it is uncontestably a net positive for society as a whole that there will be lower future demand for human workers.

There will be challenges around those who get displaced first and don’t immediately receive the “AI dividend” I suggested. Almost certainly government will not manage this transition well, at least not initially. I don’t mean to suggest it will be a painless path to a better future.

An Unexpected Benefit

But, if people are freed up from work, it will unlock other talents they wouldn’t have otherwise been able to pursue, whether it be new inventions, new medical breakthroughs, new art or music, new forms of entertainment, or even the ability to create an even better AI worker.

This is the secret benefit nobody considers. Will some people use their new found freedom to play video games all day? Sure. But others will use it to pursue knowledge or develop talents that they wouldn’t have otherwise been able to do which could lead to a new Renaissance Age which, in turn, would allow us to leverage AI to do even more for us.

If the story of human progress is finding new ways to unlock untapped potential to increase societal output, then AI providing people the freedom to pursue knowledge outside the constraints of needing to work for income is the next evolution. The modern view of work has served humanity well but it may not be necessary for the next stage of human advancement.