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The Risks of the AI Revolution

Manuel Alejandro Hidalgo Pérez

6 mins - 8 de Febrero de 2024, 07:00

The effects of technological change on production, the labour market, workers’ pay, and capital are complex. Although the collective perception has traditionally tried to simplify it, with Luddism as a radical exponent of this simplification, it is complex to anticipate what consequences any technological revolution will have on the variables or markets mentioned above. History teaches us that it is difficult to foresee such consequences.
What seems certain, however, after almost three centuries of technological revolution, is that technology partially facilitates, especially thanks to advances since the mid-20th century, the automation of routine tasks. This substitution, driven by robotisation and computerisation, has reduced the number of medium-skilled and less vocational jobs, particularly in the industrial sector. On the other hand, these changes have complemented cognitive, social, and higher value-added tasks. This duality of complementarity/substitution, however, has led to what many see as the main cost of today’s technological revolutions: labour polarisation and rising wage inequality.

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However, in recent years, I would almost say in recent months, the emergence of artificial intelligence (AI) as something more general and capable of performing tasks that only a decade ago seemed like science fiction, could change the entire productive, employment and even political and social landscape at national and international level. Until recently, being educated and knowing how to use these technologies in everyday life was an undeniable advantage. While wages for skilled workers continued to rise in most developed economies, wages for unskilled workers remained stagnant or, in many cases, declined sharply. Skills were a guarantee against an uncertain future in both work and personal life. However, advances in AI could reduce the space in which even skilled workers feel safe from the voracious substitution that machines have already demonstrated in other, less complex jobs and tasks. The threat is widening.
However, this does not mean that the advent of AI means the beginning of the end of work. As always, the introduction of new technology will destroy jobs, the main tasks of which it can perform, while at the same time boosting the development of others, thanks to the increase in productivity that favours the creation of new jobs. Therefore, once again, the effect of these technologies will be complex, having more of an impact on the redistribution of income among the factors of production than on creating an army of unemployed. Inequality will be the main factor to watch, not technological unemployment.
However, this vector of influence on inequality should not monopolise all our attention. Another adverse consequence of the current technological change is that it could deepen this increase in inequality, not only because of the unequal, asymmetric effect on workers conditioned by their qualifications but also because of its differentiated effect on the factors as a whole.
Any activity that produces a good requires inputs. An efficient market that distributes profits fairly to create value is one in which competition is high. However, in recent years, not only, but above all also due to AI, technological change has facilitated market concentration and with it an increase in corporate margins that is likely to increase further. As Jan Eeckhout has shown in his book The Profit Paradox, in recent decades, the increase in market power has led to a concentration of profits in the corporations generating new technologies, intensifying the rise in inequality beyond the mere increase in relative wages for skilled workers. The rewards for some types of capital have increased.

But the consequences of the new technological revolution will not only affect the distribution of income. The concentration of control of the new technologies in the hands of a few may go beyond the mere economic sphere. Never before have so few companies controlled the supply of a productive factor, of a frontier technology that is fundamental for the future of humanity.
A recent European Parliament briefing explains how AI presents both great opportunities and risks, in particular for coexistence and democracy. Thus, AI can increase citizen participation and improve political representation, as it could make it easier for citizens to better understand politics and for politicians to make more informed policies. However, AI can facilitate the dissemination of false information that allows the manipulation of public opinion on a large scale. This would undermine the integrity of democracy.
This is why we must be proactive in this situation. The control and regulation of AI must be a clear and evident objective, although without falling into excesses that limit or prevent these new advances from generating the value they are called upon to do. In any case, it is essential not to overreact, since technology has not historically eliminated jobs on a massive scale. Research on how technology can enhance human creativity and collaboration, especially in low and medium-skilled jobs, should be encouraged. Meanwhile, policies that monitor the pace of automation, facilitate the transition of displaced workers, and promote education and training should be implemented, all while designing thoughtful governance so that AI promotes rather than hinders the values of coexistence and democracy. 
In conclusion, the effects of the current technological revolution, driven by advances in artificial intelligence, are diverse and difficult to predict. While technology has not historically eliminated net jobs, it is likely to accelerate job polarisation and rising inequality, both in terms of wages and the concentration of corporate profits. Moreover, risks to democratic values emerge in the face of the growing power of a few technology corporations. Therefore, proactive policies are needed to promote the education and retraining of workers, facilitate labour transition, encourage uses of AI that complement human capabilities, and establish mechanisms for transparent and participatory governance of these technologies. This is the only way to harness their potential to improve collective well-being. 
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