An Econ Paper Designed to Make Most People Complacent about AI
March 19, 2025
Yep, another dinobaby original.
I zipped through — and I mean zipped — a 60 page working paper called “Artificial Intelligence and the Labor Market.” I have to be upfront. I detested economics, and I still do. I used to take notes when Econ Talk was actually discussing economics. My notes were points that struck me as wildly unjustifiable. That podcast has changed. My view of economics has not. At 80 years of age, do you believe that I will adopt a different analytical stance? Wow, I hope not. You may have to take care of your parents some day and learn that certain types of discourse do not compute.
This paper has multiple authors. In my experience, the more authors, the more complicated the language. Here’s an example:
“Labor demand decreases in the average exposure of workers’ tasks to AI technologies; second, holding the average exposure constant, labor demand increases in the dispersion of task exposures to AI, as workers shift effort to tasks that are not displaced by AI.” ?
The idea is that the impact of smart software will not affect workers equally. As AI gets better at jobs humans do, humans will learn more and get a better job or integrate AI into their work. In some jobs, the humans are going to be out of luck. The good news is that these people can take other jobs or maybe start their own business.
The problem with the document I reviewed is that there are several fundamental “facts of life” that make the paper look a bit wobbly.
First, the minute it is cheaper for smart software to do a job that a human does, the human gets terminated. Software does not require touchy feely interactions, vacations, pay raises, and health care. Software can work as long as the plumbing is working. Humans sleep which is not productive from an employer’s point of view.
Second, government policies won’t work. Why? Government bureaucracies are reactive. By the time, a policy arrives, the trend or the smart software revolution has been off to the races. One cannot put spilled radioactive waste back into its containment vessel quickly, easily, or cheaply. How’s that Fukushima remediation going?
Third, the reskilling idea is baloney. Most people are not skilled in reskilling themselves. Life long learning is not a core capability of most people. Sure, in theory anyone can learn. The problem is that most people are happy planning a vacation, doom scrolling, or watch TikTok-type videos. Figuring out how to make use of smart software capabilities is not as popular as watching the Super Bowl.
Net net: The AI services are getting better. That means that most people will be faced with a re-employment challenge. I don’t think LinkedIn posts will do the job.
Stephen E Arnold, March 19, 2025
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