US politicians lack readiness for the AI revolution, which could negatively impact the economy.
The forthcoming years could significantly impact the trajectory of the AI innovation, and Glenn Hubbard, a former dean of Columbia Business School and economist, fears the United States may not be equipped to manage the ensuing alterations potentially catalyzing years of stagnancy. Presently, growth is a primary focus, with its advantages being universally appreciated. However, it's accompanied by challenges known as disruptions. Numerous economists reason that growth necessitates disruption. Lately, these disruptions have been handled poorly, prompting political figures to overlook the importance of growth.
Glenn Hubbard outlines this significant issue in an interview, expressing his concerns about the adverse implications it could have on the economy. This interview has been meticulously edited for brevity as well as clarity.
When is the right time to focus on AI and economic growth?
Prosperity consistently garners support. Any endeavor that potentially contributes to positive social change or deals with environmental concerns, military restructuring, education, or job creation, primarily hinges on economic growth. Yet, why don't politicians tackle growth overtly? Suppose there's a coin – one side depicts growth, and we unanimously agree that it's desirable. But the other side symbolizes disruption – a concept that challenges numerous politicians as they're unsure how to manage it. Consequently, it's been disregarded.
Are you referring to the job losses that might result from AI?
Treat this as two waves. For several decades, technological advancements, as well as globalization, have caused a gradual disruption in the job market and affected communities. Now, AI is imminent, and we could witness these disruptions occurring in a span of five years. In comparison to the previous process that took three or four decades, this generation would be confronted with disruption much faster. Hence, it's pivotal to reconsider the methodology employed for handling change. After all, technological advancements are positive, yet the real contention is managing the impact.
Corporate entities are acknowledging the development of AI within their organizational structures. Don't we require governmental assistance and intervention then?
Corporations will optimize their operations using AI. They'll become more efficient, and this is beneficial for their businesses. But it isn't the business owner's responsibility to upskill or reassess the job market. Hence, government intervention is necessary. This concept entails collaboration between the government and community colleges to deliver training and education. The existing infrastructure can be amplified, yet riding on private entities to take care of their employees' welfare might not be enough.
In light of the recent laws such as the CHIPS Act and the Inflation Reduction Act, individuals seem to agree that they've stimulated growth...
Perhaps it's a starting point, yet there's room for greater advancement. The administration should concentrate on major research, preferably in the field of chip manufacturing. The real question is the long-term perspective. The United States seriously underinvests in R&D. The government could foster research or identify specific areas, where it needs to dedicate resources and prioritize them for the future.
Despite efforts to reduce inflation, it still exceeds the Federal Reserve's 2% target. Would concentrating on growth worsen the situation?
The policies being suggested wouldn't result in skyrocketing demand, but instead, focus on raising overall production capabilities. Although the government has to prioritize fiscal responsibility, it could still opt for either bolstering research or appropriating funds for particular needs.
Would any significant tax increase be likely during an election year?
No, candidacies would steer clear from such suggestions as of now. Nevertheless, the upcoming president must address this pertinent issue, even if it isn't their central campaign theme.
What are the negative impacts incurred by shifting attention away from growth?
Evading the topic of growth could compromise Americans' financial opportunities and growth prospects.
If the current trend persists, it will lead to slower growth in productivity. The emerging technology of Generative AI is likely to drive this growth in the next decade or two, not just by replacing jobs but by increasing personal productivity. However, this could also mean that some businesses will shut down, some people will lose their jobs, and other companies will grow significantly. Are we prepared to face these consequences? While I think it's acceptable, I'm not certain if our political system is ready to accept these changes.
What are the potential long-term repercussions if the situation remains unchanged?
We're witnessing a gradual breakdown of support for our social system. A lot of communities and individuals feel that contemporary capitalism isn't providing them with sufficient benefits. If we keep ignoring this issue, it might threaten the very system that has been prospering.
I don't understand why this idea would be met with resistance. For instance, if I propose funding specific areas, like communities or community colleges, why would that be detrimental? If I'm a governor or a mayor, I'd be thrilled! It's puzzling why we can't seem to make progress with these ideas.
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Glenn Hubbard suggests that investing in AI and education to adapt to its impacts could be crucial for managing the economic disruptions brought about by AI. This is necessary for businesses, as AI integration could lead to increased efficiency and job changes.
Given the potential of AI to catalyze significant shifts in various industries, it's essential for the government to support businesses and individuals in their efforts to invest in this technology. This could involve collaborating with educational institutions to provide relevant training, enabling a smoother transition.
Source: edition.cnn.com
