AI - positive for jobs but could widen the regional divide

This is the sort of article that I love because it dispels an economic myth, in this case, the lump of labour fallacy, that says that there are a 'certain number' of jobs to go round in an economy and that anything that takes jobs - such as technology, in this case, or immigration - will result in unemployment.

The latest research suggests that AI is creating new jobs and upskilling existing ones, with over three-quarters of the firms surveyed reporting the former. The only downside might be the distributional effects; AI might widen regional inequality.

In related news, the Competition and Markets Authority has fired warning shots, alerting people to the possibility that far from being a boon, AI could be used in an anti-competitive fashion. It notes that AI might drive prices higher, provide misleading information in the form of fake reviews and distort markets rather than inevitably making them more efficient.

Please read: AI boom may not have positive outcome, warns UK competition watchdog (Guardian)

What is the lump of labour fallacy and how might it apply to artificial intelligence?

The "lump of labour fallacy" is a misconception that arises when people believe there is a fixed amount of work or jobs in an economy, and that the introduction of new technology or automation will inevitably lead to a decrease in the total number of jobs available. In other words, it suggests that there is a finite "lump of labor" that must be divided among workers, and any increase in productivity or technological advancement will result in job losses.

This fallacy has been debunked by economists over the years, as history has shown that technological advancements and automation can lead to increased productivity, economic growth, and the creation of new industries and jobs. While certain jobs may become automated or obsolete, new opportunities emerge as technology opens up new avenues for employment. The workforce can adapt and develop new skills to meet the demands of a changing job market.

When it comes to artificial intelligence (AI), the lump of labor fallacy can apply in the following ways:

1. Job Displacement: As AI and automation technologies continue to advance, some routine and repetitive tasks in various industries may become automated, potentially displacing workers in those specific roles. This has led to concerns about job loss in industries like manufacturing, customer service, and data entry.
2. Job Creation: On the other hand, the development and deployment of AI can create entirely new industries and job categories. For example, AI has driven growth in fields like data science, machine learning engineering, and AI ethics, creating employment opportunities for people with the skills and expertise needed to develop, maintain, and govern AI systems.
3. Productivity and Economic Growth: AI has the potential to significantly boost productivity in various sectors by automating mundane tasks, making processes more efficient, and enabling better decision-making through data analysis. This increased productivity can lead to economic growth and the creation of new markets and job opportunities.
4. Skill Shift: The widespread adoption of AI may require workers to acquire new skills or adapt existing ones to work alongside AI systems effectively. This shift in required skills can lead to opportunities for education and training providers and, in turn, create jobs in the education and skills development sector.

In summary, while the introduction of AI and automation can lead to job displacement in certain areas, it is a fallacy to assume that there is a fixed "lump of labor" that will inevitably result in overall job reduction. Instead, the impact of AI on the job market is complex, with both job displacement and job creation occurring simultaneously. Adaptation, education, and workforce development are key factors in ensuring that the benefits of AI are maximized while addressing the challenges associated with its adoption.