Will AI be be a net plus?

AI – the abbreviation for “artificial intelligence – appears on a path to be a bigger part of our lives.  Initially confined to labs and a few companies, AI is now a major part of the investment world, it is in the middle of international competition – particularly between the US and China – and it is sending both worries and excitement to the labor market.

Each of the three key segments of our economy, including businesses, consumers, and workers, have a stake in AI. The big question is whether the impacts on each will be a net plus or a net minus?

Before I address this important question, let me review exactly what is AI?  AI is a technology that combines three parts of today’s world – the availability of large amounts of data, the development of computer programs analyzing these data, and efficient, high-speed computers that can quickly provide the results of the analysis.

Here’s a quick example.  When I was a youngster in the 1950s and my parents took me to our family doctor, Dr. McClellan, he would rely on knowledge he learned in medical school to make diagnoses.  Although Dr. McClellan was a good doctor, his training was likely decades old. He could try to keep up on new information by reading medical journals, but limited time likely kept him from knowing all the latest information. 

AI can solve this problem.  In the future, if a patient is suffering from a medical issue, the patient’s symptoms and other characteristics will be feed into an AI program on the doctor’s computer, and in mere seconds later a diagnosis and suggested treatment will be given.  Importantly, the diagnosis and treatment will be based on an analysis of people with similar characteristics – such as age and gender – and similar symptoms using data from across the country, and maybe from across the world.

The same process using AI will be used for many situations to help consumers receive better service and outcomes.  But the benefits to consumers from AI won’t stop here.  Businesses of all types will use AI to become more efficient. Increased business efficiency means cutting waste and getting more production value from inputs to the production process, including labor. And greater business efficiency often leads to lower prices for consumers.

Here’s a quick detour into how AI could help an iconic North Carolina industry, textiles. Textiles was a dominating industry in North Carolina for decades in the 19^th and 20^th centuries. But international competition, especially in the form of lower-cost labor, reduced the ability of domestic textile firms to compete, and hence the industry declined.

The good news is that many textile experts believe that use of AI in textile mills will reduce waste and increase worker productivity enough so that the US textile industry, including in North Carolina, will increase its competitiveness and boost its production and sales.  While the industry will not necessarily regain its dominance of earlier times, it will experience a recovery.

Hence, so far it appears use of AI will create benefits for businesses and for consumers.  Yet, some worry about AI being used to produce results that could have adverse outcomes.  The news has covered examples, with many of the situations focusing on younger individuals.  Of course this is a concern, and the question is if these adverse uses of AI can be controlled while at the same time preserving the benefits from AI.

The last group to address is workers, and this may be the most challenging group because there will likely be pros and cons for workers. 

On the “pro side” is the likelihood salaries will rise for workers who become more productive due to AI as well as for workers who receive special training for developing, maintaining, and using AI. There will be surge in schools creating training in AI and an increase in jobs for AI trained individuals with good salaries.

But the downside is that AI will likely reduce, or even eliminate, many other kinds of jobs, including many with good salaries. Any occupation that requires analysis of data, such as bookkeeping, investing, and even management, will be vulnerable to being performed by AI. A recent study found use of AI resulted in fewer jobs in engineering, financial analysis, computer sciences, and architecture.

This discussion leads to one of the ironic impacts that some experts forecast will occur from AI. This is that AI will lead to a reduction in income inequality.  In other words, the gap between higher-paid workers and lower-paid workers will decrease.  How so?  It is because AI’s analytical abilities will replace numerous high-paying jobs that now perform those analyses, as cited in the previous paragraph.  At the same time, workers without that higher level training will be able to use AI to give the same results, hence increasing their value and pay.

AI is here to stay, and its impacts on our lives will be increasing seen in coming years. Will AI be a net benefit to our society?  As with most things, AI will have benefits and costs.  Clearly, this is a situation where each individual will have to decide.

Walden is a William Neal Reynolds Distinguished Professor Emeritus at North Carolina State University.