Both the opportunities and challenges are huge. An executive at a Fortune 500 company says his organization has conducted a comprehensive review of its use of analytics and concluded that its employees, overall, add little or no value. Rooting out legacy software and replacing that unskilled human labor with AI can yield significant results. But, as this person says, such an overhaul would require major changes to existing processes and would take years to implement.
There are some early encouraging signs. U.S. productivity growth, which had been stuck at 1% to 1.5% for more than a decade and a half, rose to more than 2% last year. It probably reached this level in the first nine months of this year, although this is impossible to confirm due to a lack of official data due to the recent US government shutdown.
However, it is impossible to tell how sustainable this rebound will be or how much of it can be attributed to AI. The impact of new technologies is rarely felt alone. Instead, the benefits increase. AI is riding on earlier investments in cloud and mobile computing. Likewise, the latest AI boom may only be a harbinger of breakthroughs in areas that have broader impacts on the economy, such as robotics. ChatGPT may have captured the popular imagination, but OpenAI’s chatbots are unlikely to have the last word.
David Rotman replies:
This is my favorite discussion these days when it comes to artificial intelligence. How will AI impact overall economic productivity? Forget about mesmerizing videos, promises of companionship and the potential for agents to carry out arduous everyday tasks – the main thing will be whether AI can boost the economy, and that means increasing productivity.
But, as you say, it’s hard to say how AI is influencing such developments or how it will do so in the future. Erik Brynjolfsson has predicted that, like other so-called general purpose technologies, AI will follow a J curve that initially has a slow, even negative impact on productivity as companies invest heavily in the technology before ultimately reaping the rewards. And then boom.
But there is a counterexample that weakens the be patient argument. Productivity growth from IT accelerated in the mid-1990s but has been relatively disappointing since the mid-2000s. Despite smartphones and social media and apps like Slack and Uber, digital technologies have done little to spur strong economic growth. A strong productivity growth never came.
