Automation can shrink employment even as production grows

Transcript

From the transcript The Diary Of A CEO publishes with the episode.

1. 1:18:52

   AI. But is that an accurate description of what will happen if the U.S. build AGI technology before say the UK where I'm originally from and where you're originally from? This is something I think about a lot. Because we're going through this budget process in the UK at the moment where we're figuring out how we're going to spend our money and how we're going to tax people. And also, we've got this new election cycle. It's approaching quickly where people are talking about immigration issues and this issue and that issue and the other issue. What I don't hear anyone talking about is AI and the humanoid robots that are going to take everything. We're very concerned with the brown people crossing the channel. But the humanoid robots that are going to be super intelligent and really take causing economic disruption. No one talks about that. The political leaders

2. 1:19:34

   don't talk about it. It doesn't win races. I don't see it on billboards. Yeah, and it's interesting because in fact, I mean, so there's two forces that have been hollowing out the middle classes in Western countries. One of them is globalization where lots and lots of work, not just manufacturing, but white collar work gets outsourced to low-income countries. But the other is automation. Some of that is factories. The amount of employment and manufacturing continues to drop even as the amount of output from manufacturing in the US and in the UK continues to increase. We talk about our manufacturing industry has been destroyed. It hasn't. It's producing more than ever just with a quarter as many people. It's manufacturing employment that's been destroyed by automation and robotics and so on. Then, computerization has eliminated whole

3. 1:20:36

   layers of white collar jobs. Those two forms of automation have probably done more to hollow out middle class employment and standard of life. If the UK doesn't participate in this new technological wave, that seems to take a lot of jobs. Cars are going to drive themselves. Waymo just announced that they're coming to London, which is their driverless cars. And driving is the biggest occupation in the world, for example. So you've got immediate disruption there. Where does the money accrue to? It will accrue to who owns Waymo, which is what Google and Silicon Valley companies? Alphabet owns Waymo, 100%.

4. 1:21:17

   So yes, I mean, this is... So I was in India a few months ago talking to the government ministers because they are holding the next global AI summit in February. And their view going in was, you know, AI is great. We're going to use it to, you know, turbo charge the growth of our Indian economy. When, for example, you have AGI, you have AGI controlled robots that can do all the manufacturing, that can do agriculture, that can do all the white collar work. And goods and services that might have been produced by Indians will instead be produced by American controlled AGI systems at much lower prices. You know, a consumer given a choice between an expensive product produced by Indians or a cheap product produced by American robots will probably choose the cheap product produced by American robots. And so potentially every country in the world

5. 1:22:18

   with a possible exception of North Korea will become a kind of a client state of American AI companies. A client state of American AI companies is exactly what I'm concerned about for the UK economy, really any economy outside of the United States. I guess one could also say China, but because those are the two nations that are taking AI most seriously. And I don't know what our economy becomes. I can't figure out what the British economy becomes in such a world.

6. 1:22:51

   Is it tourism? I don't know. You come here to look at the Buckingham Palace. You can think about countries, but I mean, even for the United States, it's the same problem. At least they'll be able to take a hell out of it. So some small fraction of the population will be running maybe the AI companies. But increasingly, even those companies will be replacing their human employees with AI systems. So Amazon, for example, which sells a lot of computing services to AI companies is using AI to replace layers of management. It's planning to use robots to replace all of its warehouse workers and so on. So even the giant AI companies will have few human employees. In the long run, I mean, think of the situation, you know, pity the poor CEO.

7. 1:23:44

   Whose board says, well, you know, unless you turn over your decision making power to the AI system, we're going to have to fire you because all our competitors are using, you know, an AI powered CEO and they're doing much better. Amazon plans to replace 600,000 workers with robots in a memo that just leaked, which has been widely talked about. And the CEO Andy Jassy told employees that the company expects its corporate workforce to shrink in the coming years because of AI and AI agents and they've publicly gone live with saying that they're going to cut 14,000 corporate jobs in the near term as part of its refocus on AI investment and efficiency.

8. 1:24:28

   It's interesting because I was reading about the sort of different quotes from different AI leaders about the speed in which this this stuff is going to happen. And what you see in the quotes is Demis, who's the CEO of DeepMind saying things like it'll be more than 10 times bigger than the industrial revolution, but also it'll happen maybe 10 times faster. And they speak about this turbulence that we're going to experience as this shift takes place. That's maybe a euphemism and I think the, you know, governments are now, you know, they've kind of gone from saying, oh, don't worry. We'll just retrain everyone as data scientists. Well, yeah, that's ridiculous.

9. 1:25:09

   The world doesn't need four billion data scientists. And we're not all capable of becoming that by the way. Yeah, or have any interest in doing what I could even do if I wanted to, like I tried to sit in biology class and I fell asleep. So that was my grip as a surgeon. Fair enough. But yeah, now suddenly they're staring, you know, 80% unemployment in the face and wondering how, how on earth is our society going to hold together? Both deal with it when we get that.

10. 1:25:37

    Yeah, unfortunately, unless we plan ahead, we're going to suffer the consequences, right? We can't. It was bad enough in the industrial revolution, which unfolded over seven or eight decades. But there was massive disruption and misery caused by that. We don't have a model for a functioning society where almost everyone does nothing, at least nothing of economic value. Now, it's not impossible that there could be such a functioning society, but we don't know what it looks like. And, you know, when you think about our education system, which would probably have to