Missing Out?

What if we miss out? Not of robots, nor LLMs (Large Language Models), but this competitive race toward basic productivity; missed again & again by so many of the most successful enterprises. Hopefully informative & helpful, to highlight a couple of perspectives of the impact of Artificial Intelligence (A.I.) on productivity and possibly, a Fear of Missing Out ...

FoMO is a powerful force. And, Artificial Intelligence (A.I.) has become almost the only thing on many minds today.? Compare this with a short while ago, when some would simply laugh at the thought of machines out-playing people at checkers, master chess, read printed words, recognise speech, translate between human languages, distinguish images, climb stairs, compose music, write jokes, draw like an artist, win at Jeopardy or Go, write poems and more.? This compressed time scale has introduced unforeseen challenges to many of us.

productivity absent?

Businesses rely heavily on innovation, new tools and processes to differentiate and win.? However the use of A.I. that promises to be more profound, is different.? A quick indicator of this distinctness is whether operational and labour productivity has improved, and despite the mounting evidence, “the jury is still out”.? But, why is there this effect?

There is also evidence that many enterprises have observed the opposite i.e. productivity declines.? A simplistic example is of a business owner, willing to pay more for a worker whose capabilities are amplified by A.I. (or with use of a lawnmower) than one who is unable to capitalise on this new technology (or can only work with a pair of scissors).? Paying more drives costs up, and improved output is yet to be recognised.

.. not a tool to be used alone

To businesses & policy makers, the biggest productivity line item is labour.? And, automating jobs is a popular strategy to reduce cost.? A lot easier than, for example, growing a market, or activities in a sector.? Some investors prefer “scalable” business models, which often also means prioritising increased productivity by reducing labour or effort needed to complete tasks.? Theoretically, & somewhat cynically, if the human labour used for a given output declines toward zero, then labour productivity would grow to infinity.? For example, A.I. may be able to read x-rays or ultrasound images better than a radiologist (person), but it cannot do the other multitude of tasks associated with the function.? The same principle applies to the more complex production systems that involve multiple people working together. To be successful, firms typically need to adopt a new technology as part of a system of mutually reinforcing organisational changes. Instead, the use of tools like A.I. have led to paradoxical declines in productivity.? Many now suggest that automating complete job functions with A.I. is proving more difficult than originally envisaged.? Does this suggest postponement of its productivity gains?? Or simply that the components of processes, training, culture and expectations were left by the wayside? Or that the data used to power these elements are simply disorganised, with poor or non-existent governance.? Or with customers just refusing to participate because of poor or just lackadaisical approaches to security and sharing rules???

powerful, only to a select?

We see use of A.I. realigning what we know of economic and political power in our lives.? On the one hand, it is a path to unprecedented wealth, increased leisure, robust intelligence, and a better understanding of ourselves. Trouble is technological change can disproportionately help or hurt some groups, even if it is beneficial on average.? When technologies automate human labour, they tend to reduce the marginal value of workers’ contributions, and more of the gains go to the owners, entrepreneurs, inventors, and architects of the new systems. In contrast, when technologies augment human capabilities, more of the gains go to human workers. When a worker loses opportunities to earn labour income, the costs go beyond the newly unemployed to affect many others in their community and in the broader society. With fading opportunities often come the dark horses of crime, abuse and misplaced trust.

‘right’ motives?

Then, what comes with knowledge is power, from the old adage.? To the extent that a person controls an indispensable asset (i.e. knowledge) needed to create and deliver a company’s products and services, that person can command not only higher income but also a voice in decision-making. When useful knowledge is inalienably locked in human brains, so too is the power it confers. But when it is made alienable, it enables greater concentration of decision-making and power.When knowledge becomes codified and digitised, it can be owned, transferred, and concentrated very easily. Thus, when knowledge shifts from humans to machines, it opens the possibility of concentration of power. Machine learning models are becoming larger, with hundreds of billions of parameters, using more data and getting more accurate results.

.. & finally, FoMO really?

If capital in the form of A.I. can perform more tasks, those with unique assets, talents, or skills that are not easily replaced with technology stand to benefit disproportionately. The result has been greater wealth concentration. This also leads to a burgeoning class of unemployable or folk with “zero marginal product”.??

All things considered, the impact of A.I. on Australian productivity presents a classic case of the productivity paradox. Clear productivity gains remain elusive. Businesses, lured by the promise of automation, find themselves like a surfer who invested in a top-of-the-line board, only to struggle paddling out due to a stronger-than-expected current.??

The answer lies not just in the technology itself, but in a comprehensive approach that addresses culture change, process redesign, training & reskilling, and importantly an integrated data governance. Policymakers must also consider the potential for A.I. to exacerbate wealth inequality. By fostering a collaborative environment where A.I. augments human capabilities,? we can overcome FOMO, the productivity paradox and unlock the true potential of this transformative technology.