Blain’s Morning Porridge – May 12th, 2023: Artificial Intelligence: who will be the winners and losers?
“Prepare to be assimilated species 5618.”
AI is dominating the headlines. Its either the greatest threat to mankind ever (as has been every economic revolution since someone discovered fire), or its going to make us all better off. The answer probably lies somewhere in the middle.. but it’s bound to raise uncertainty.
Five months ago ChatGPT and PaLM seemed little more than concepts I’d read about in New Scientist. We wondered about the Google engineer sacked for saying the firm’s AI programme had developed a personality. Today, the plethora of AIs threatening to turn us into grey-goo dominates my nightmares. If I read another article about the pros and cons of Artificial Intelligence this week, my brain might just jump out and strangle me…
On the basis If you can’t beat em, join ‘em…. my colleague Julian Wheeler and I recorded this week’s Shard Litebite Podcast about AI: you can listen to it here: https://shardcapital.com/ai-the-winners-and-losers/, and it will also be on the Morning Porridge website.
The question we all want answered is who will be the winners and losers of the AI Industrial Revolution? I have some very simple predictions:
- It’s going to make a small number of people fantastically rich,
- It’s going to raise some consequential but massive societal problems.
Every economic revolution, from the invention of fire, agriculture, the steam age, the internet and now AI has ultimately created growth by making the global economy richer, but at what expense in terms of resources, society and equality?
Our fears are about how AI could replace us. Luddites and saboteurs (so named from chucking their wooden clogs into industrial looms) are a common theme of all industrial paradigm shifts: workers driven to destroy new machines in the belief they will lose out. AI may be different. Instead of affecting the workers by hand, this time it will devour the jobs of workers by brain – meaning, unfortunately, us…
Goldman reckon AI will hoik global GDP by some 7% over the next 10-years, but hollow out some 300 million professional/clerical jobs, including accountants, auditors, bankers, clerks, lawyers, architects, designers, etc – in short.. Islington may disapear. Aside from no more Ottolengi, that’s a massive to hit to expectations that prosperous, growing middle classes are going to pay for services and drive growth in post-industrial manufacturing economies across former emerging nations from Asia, LatAm and Africa.
The beneficiaries will be those who work by hand; the plumbers, the artisans, the guys who can fix stuff and make it work again. Sad old market strategists will be beaten by the pixels – unless I can elevate the porridge to an art-form. (Some say it is, but even I don’t believe that…)
My starting point is AI is definitionally “artificial”. Even quantum computers will have a fraction of the computing power of the human brain. Today AI chatbots like ChatGPT lack the ability to make the imaginative leaps of insight that characterise great artists and scientists alike, but who know where they will be in 5-years, or should that be the next 5 days or 5-minutes. My only advantage over a future God-like AI ChatBot is my ability to think laterally… When AI eventually does it better.. I’m toast.
Or might the new AI’s provide the whiff of organisational genius capitalism needs to create a better, fairer more equal society? Can they unravel the propensity of success leading to hubristic greed. I doubt it.
No one needs a billion dollars, but entrepreneurs consider themselves failures if they don’t have it. $1 bln could make an awful lot of poor people much happier. I can guarantee AI will spawn a multitude of new billionaires, but is unlikely to create well paid jobs across society. The future business model will be an AI-Techlord developing her unicorn businesses with a staff of four and a dog. Herself to tell the AI what to do, her PA to organise the rest of her day, a man to feed the dog, and the office cleaner who doubles up the filling the coffee machine role.
I was given a great book recently on the economics of the air campaigns during the last global unpleasantness. It made some fascinating points about how dull, predicable but singularly well directed and motivated economies were able to outproduce and outcompete engineeringly competent, innovative but chaotically led economies in the struggle to destroy each other. Capitalism overcame autocracy – a lesson to hold in mind in the game of geopolitics. (Sure… resources was a major issue also… but, hey, I’m trying to make a convoluted point, so let’s not let facts get in the way….)
It’s a lesson that worries me. Capitalism succeeds on its willingness to take risks to produce and to fail. Our value as humans is in our randomness. In contrast AI is ordered and logical. When it learns how to merge random brilliance with logistical and managerial excellence, then the world really will change. There was a reason Mr Spock was a great science officer, but not leadership material. The Borg were a very different model of AI and efficiency – somewhat more Goldman Sachs than benign? (I am being very random this morning.. trying to confuse Skynet… cos it’s bound to be watching me already…..)
I expect the Morning Porridge could well become a victim of AI. First, I’m thinking about how I can stop AI’s pilfering my articles, my style of thinking and what we laughingly call my “personality” from what’s out there on the global net to essentially write a better, properly punctuated and spell-checked Porridge. (That’s why I think the job all young lawyers should be looking for is in Patents – enforcing my rights to be Bill Blain will be… challenging.)
Or, subscribers may just ask the ChatBot.. what is Bill Blain thinking tomorrow. It will probably know… it will be reading the same research, articles and sources as me.. It might even be in small part.. me? Arggggg!
Or, instead of panicking, I could get imaginative and try to figure out how to use AI to make the Porridge better – let it write the dull, boring factual stuff like “markets did this because someone said that while someone else did something else that caused someone completely different to do that..”, while I focus on all the imaginative and insightful stuff – mustering all my market nonce, experience and knowledge (such as it is) to make sense of the facts.
Already people are beginning to trust AI. Apparently 20% of UK adults would consider taking financial advice from a AI Chatbot. 8% of them already have. A recent game of theoretical stock picking saw ChatGPT produce a stronger return from its chosen portfolio of 38 stocks than any of the leading UK investment funds over a one month time frame. That’s… interesting.
Maybe that is what AI is going to be about? Palantir is finally making some money from Data. AI will make money from knowledge of what that data means. Maybe there is hope for autonomous driving after all?
As for the fear AI will turn us all into grey goo… too late. It could happen, if it does, it does.. Back in the early 1930s there was a move to ban aircraft on the basis civilisation was doomed to destruction by vast fleets of bombers. If aircraft we banned, then it could not happen… (and everyone would be quietly training glider pilots and building up hidden bomber production capacity.) You can’t uninvent AI and more than we can uninvent aircraft.
Chegg, an educational digital learning provider will go down in history as the first victim of the AI takeover of everything. The CEO spotted students are using ChatGPT instead of them – and there is little they can do about it: “we believe its having an impact on our new customer growth” was his Ratner’s moment, causing the stock to crash 49%. Get used to it – a firm’s vulnerability to AI is a definite risk.
In order to determine what AI will replace, let’s figure out what it can and can’t do. It can’t (yet) do stuff with the human touch, anything involving creativity, insights and empathy. That great for artists, artisans and folk like nurses, but also for tech that enables AI, the hardware and the guys that create it. Areas we’re excited about are design and experimentation – the Pharma sector could be a massive beneficiary as AI speeds up the new drug discovery process. Designing new fuel-efficient, less carbon intense shipping and aviation could be another win – essentially making things better. For Doctors – less good, studies show diagnosis is already better left to the AI!
What AI can do is pull together information to outline stuff, and it’s getting better on a daily basis at producing facsimiles of imaging, conversation, written word, and especially code. Hmm.. so AI will be writing its own code? What can possibly go wrong…?
But what happens to society when the middle classes find themselves jobless, and their creative skills valueless? Do we start paying workers to consume rather than produce to keep the economy ticking over, or will social wages leave us in dystopia? Or do we see it as an opportunity to rid the planet of surplus labour to balance the planet’s ecology? That’s a little like the Golgafrinchans in the fourth part of the Hitchhikers Guide to the Galaxy trilogy. They had the bright idea of getting rid of all the useless middlemen types in society, like telephone sanitisers, TV producers, insurance salesmen, investment bankers, bond brokers, market strategists and hairdressers by sending them to a distant planet.. (where they become the real ancestors of humanity).
Watch this Space… litterally..
Five things to worry about over the weekend..
FT The likely winners of the generative AI gold rush
FT Swedish real estate sector rattled as refinancing worries surface
BBerg Jamie Dimon Says US Needs to Finish the Bank Crisis
WSJ Bond Selloff Adds to the Pressure on Regional Banks
WSJ Yellen Doubts Biden Administration Can Avoid Default Without Congress
Out of time, back to the day job (catching a train now), and have a great weekend…
Strategist – Shard Capital
Great stuff Bill, one of your very best. Just two points:
Surely public sector workers should be on the list of accountants, lawyers etc
And surely the tech lord will soon figure out that the guy who feeds her dog can double up as office cleaner/coffee machine filler – thus substantially increasing productivity
Good piece. Please post the name of the air campaign book – sounds interesting.
There is a well-known quote from an AI scientist when asked why he started studying Artificial Intelligence: “Because I got tired of Natural Stupidity.”
Asimov’s three rules of robotics:
1) A robot may not injure a human being, or allow a human to come to harm.
2) A robot must obey orders given by a human, except when such orders conflict with rule 1.
3) A robot must protect is own existence as long as such protection does not conflict with rule 1 or 2.
In 1941 Asimov wrote a fantastic short story called Reason. Its about an AI taking control of a satelite beaming microwave power from orbit to earth. It becomes “de-ranged”, believing humans are irrelevant, but concludes that its “purpose” in the universe is to ensure the perfect operation of the station, which becomes its “religion”, which results in perfect, reliable power to the planet. Well worth finding…
Perhaps this is a solution to the AI conundrum, but what would stop a bad actor from dispensing with the rules to create a killer AI?
Is it just me or should we all be worried about your “mustering all my market nonce”? Scary, maybe even more than AI!
About your sentence: “Apparently 20% of UK adults would consider taking financial advice from a AI Chatbot. 8% of them already have.” Sadly, AI, if not manipulated otherwise might be better than 50% of the “Financial Advisors” or “Financial Planners” in the UK or anywhere else, as the AI won’t be interested in making sure to sell you the products that are to the AI’s benefit.
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