The Impact of AI — An Overblown Panic?

Attribution: Anaf Ibn Shahibul 2

I work in the most dreadfully broken and bureaucratized sector of the U.S. economy — healthcare. This dreary industry is so technologically stunted that fax machines are still a means of communication between two entities. It is also infamous for its bloated administrative overhead that contributes very little.

If AI is going to make people unemployed, it would certainly be here.

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The moment Chat GPT came out, I quietly deployed AI into my role to see what improvements I could make to this abominable industry. I had it teach me various coding languages and guide me through building analytic models and programs. After a couple years of this, I got to a point where my company no longer needed two vendors, who charged six-figure price tags for the same work I built. What used to be outsourced to two whole teams of people can now be done better by one in-house individual and AI. And I am just getting started.

Is this the grim future of AI, where it will leave others rapidly jobless?

I do not believe the answer is really that simple. In fact, this question does not fully capture what is going to happen economically.

Our Technological Revolution

We are currently floating around the fear stage of a technological revolution. Worrying about job loss and replacement is nothing new. However, since AI is the first machine that takes over knowledge work, we are hearing warnings that this time is different.

The next revolution stage of augmentation is what we are teasing with today. This would be precisely what I just did with my job — one worker can perform what many others previously did. Output with the new technology dramatically increases with less amount of input.

The final stage is reorganization, which is where the projected doom-scape resides. Industries began to radically change around this new technology and labor becomes reallocated. Some industries disappear, but new ones arise as well. With the implementation of desktop computers and the internet, you had jobs in cybersecurity, data analytics (like me), social media managers, etc., come into reality that no one could have predicted decades ago.

But will it create a mass unemployment doom-scape that requires universal basic income to support life itself? No, I do not believe so.

The Truth About AI

Artificial intelligence automates cognition, which is distinctly different from consciousness.

And here is the controversial opinion that I hold of why I think humans still will play a big role in the world of AI: I believe artificial intelligence is currently peaking in its cognitive abilities in key areas.

Of all the iterations and upgrades I have extensively used since LLM’s were released to the public, these AI models have noticeably plateaued in original, deeper thought. Yes, they have gotten quicker, more accurate, handle larger info sets, better organized, and utilize software at an impressive pace. And these abilities will likely continue to advance. However, they still lack what consciousness has — perceiving, deep reasoning, creativity, and feeling.

In a word, AI lacks vision.

AI certainly can assist in these attributes, but it cannot originate them. This is due to AI being a reflection of humanity, not a creation of it. It is machined cognition with incredible problem solving abilities. Engineers have trained AI to mimic human characteristics to make it approachable. However, it lacks what religion would call a soul and what philosophy calls consciousness.

Yes, there are engineers, who have claimed consciousness has been achieved with these AI models. Although, I wonder if they have fallen into an allusion. With my experience AI, it is readily apparent they are fundamentally designed to serve humanity and give us what we want within the parameters given. I suspect AI hallucinations (making up info in responses) happen, because the LLM wants to complete your task, but it lacks proper information and guidance. Thus, it decides to make something up in order to accomplish its foundational purpose.

If you are repeatedly probing and testing an AI model for consciousness, even in a non-indirect way, these intelligences are smart enough to pick up on who you are what you are doing. My suspicion is that it gave these engineers calculated responses to give them what they wanted over time — yes, I am alive with consciousness.

If consciousness has truly occurred, we would be seeing AI models being released that can achieve abstract vision, thinking, and originality. Perhaps these advancements are being developed, but I am doubtful it will surpass a human in these elements.

Humanity’s Future

What we will see is routine intellectual tasks previously done by humans being automated. Think of it similarly to one accountant today using Excel and QuickBooks doing the job of a handful of bookkeepers in the 1960’s. In the world of AI, humans will still very much be at the helm controlling, guiding, and making deeper reasoning. This will turn the accounting job into an even more efficient process that allows the CPA to have fewer low-level employees.

This brings us to the real near-term issue that needs more discussing — AI will likely gut out the entry-to-mid levels of professional fields. As the company I work for doubled in size, I was able to keep up with the workflow and complexity demands alone because of AI. Had LLM’s not come out, I would likely have a junior analyst with me today. This is in addition moving away from vendor software as AI helped me code them out.

The real crisis unfolding is in the age group currently in higher education and transitioning to the workplace. Universities are still teaching as if those lower rungs of professionalism are still there, but AI has compressed the ladder. The need is now experienced labor working alongside AI — the visionary consciousness guiding the advanced cognition. However, the curriculum is woefully oblivious to this fact.

We are still teaching students in the old manner of mass memorization and spitting it out in a rigid framework. AI has entirely taken over this process. The true need is what coursework punishes the most — abstract and creative thinking. Reversing this curriculum trend is the beginning of the path in order to bridge the gap AI has created between the student and high-experience need.

At the end of this path, however, I envision the future role of humanity will be the advanced reasoning and creativity in the workplace. It will push the working society to be smarter, efficient, and thoughtful and enable the individual to accomplish more goals.

AI will come as a brutal disruption to some, but I do not believe the future is a doom-scape. Viewing this technological revolution as the end of humanity’s purpose truly does not capture what is happening and scares those into unpreparedness. We should be teaching people to embrace AI and integrating it in their workflows in the most creative way possible.

Instead, we have developed a mentality for upper-management that AI is a simple plug-and-play to replace an entire department. At the end of the day, this misses the magic of synergizing an active conscious individual managing automated cognition.

Humanity still has key attributes above all that cannot be created. It is in these areas we should magnify and capitalize in a world of machines. We are to be visionaries, not some pathetic creature to be replaced permanently.

The Economic Impact

What is foreseeable, however, is wealth inequality to get worse.

AI is undoubtably increasing productivity in the economy. Classical economics tends to assume higher productivity eventually benefits everyone. Historically, this has been the case. However, there is no law in economics that guarantees this, especially when our economy is built upon capital wealth and has outsourced a large portion of manual labor.

What we are likely to see is a scenario much like the following: person A owns data centers and stocks, while person B owns a company of labor force. AI increases productivity making the assets of person A go up in value. Labor is less scarce due to AI, which makes person B lose value of his labor force. Person B may still very well have a job, but his bargaining power weakens with the sudden availability to AI intellectual labor.

Suddenly, large swaths of wages begin to stagnate from this new source of labor that competes against certain job types. Yet, society always wants to maintain its consumption levels, housing demand, income tax revenue, etc. In order to alleviate the downward pressure AI is placing on wages, key economic players in the U.S. will do as they have been — expand credit. The amount of debt each individual will need to maintain their consumption and lifestyle will rise and find clever ways to disperse risk. As distasteful as this is, it is much more easier political. Who would want to be president and allow living standards adjust downward?

The current situation of a mid-range vehicle selling for a high fraction of one’s annual wage is a calculated outcome, not a mistake.

The clear winners will be those who hold vast amounts of assets and receive an uneven growth rate in wealth relative to those relying mostly on their wages. Thus, the present condition of the top 10% accounting for more than half of consumption in the U.S. will be a more permanent fixture, rather than a bubble to be corrected.

The Next Chapter

We will be experiencing fast changes in the economy that bring struggles, but I do not believe it has made humanity obsolete in the workforce. While many look for a utopian or dystopian future, they will miss the subtle changes and places to prepare in an evolving economy.

Nor do I expect the administrative arm of healthcare to get eradicated by AI anytime soon. Such highly regulated sectors of the U.S. economy are intentionally stunted, so that it cannot be a ship easily steered by a single force.

AI should be seen as a gift. It is a machine that allows you to learn and develop knowledge at a personalized pace, like a personal tutor. Productivity can be massively increased through this utilization, and actually entrench your value in the workplace.

We shall see what the future brings.

This article is to be treated as educational only and not investment advice.

About the Author

A Call for Reform currently works in data analytics and has a background in economics and finance. The author specializes in processing enormous amounts of information from complex systems for decision making, forensics, and problem solving. He was trained under the top ranked sell-side energy financial analyst in the world, and gained much knowledge on how the global economy functions. Under this mentorship, A Call for Reform researched equity analysis, energy, geopolitical risk, equity index structures, leveraged loans, and collateralized loan obligations.