Bay Street Bull Magazine: Luxury Business and Lifestyle


Artificial intelligence is here to stay (and also make everything better)

Written by Grace Wei

Consumer-side artificial intelligence (AI) is something that society has embraced with open arms. We’re fine with Siri getting smarter with each update, and self-driving cars are an exciting development that has the potential to completely shift the way we view transportation. According to Wired magazine’s executive editor, Kevin Kelly, and his contemporaries, the injection of AI into our products and services is referred to as ‘cognification.’ And while we have seen and experienced many of the benefits and conveniences of consumer-level AI, these developments have also been occurring on the production side. According to Bernstein Research, China spends more than $3 billion on robotics annually. BBC also reported in 2016 that Foxconn, a multinational electronics manufacturing company, had replaced over half of its workers with robotics and is only seeking to increase this figure. To anyone who has taken a first-year economics course, this all may sound like bad news for developing countries waiting for their turn to capture low-wage manufacturing jobs. Similarly, it’s also bad news for blue-collar Trump supporters who hope to see these jobs return to America. But it’s hard to be mad at machines when their sole purpose is to be efficient and meticulous.   

With major powers around the world pouring billions of dollars into robotics this year, we can expect widespread cognification to arrive sooner rather than later. For some, this induces anxiety driven by fears of mass unemployment and wage disparity. For others, it is a call to action to vouch for global social-political reform, such as universal basic income and mass skill retraining. While these considerations are merited and necessary, it’s not all doom and gloom for the road ahead.

Creating New Jobs

We often forget that robots were created to benefit employees, as well as employers. Robots are purchased to cut costs and reduce error, but also to take over work that is unsafe, mundane, and uneconomical in a high-wage economy. When ATMs were first introduced, bank teller jobs were thought to be rendered obsolete. However, the exact opposite happened. According to James Bessen, the author of Learning by Doing: The Real Connection Between Innovation, Wages, and Wealth, teller jobs have increased faster than the labour force as a whole. While ATMs reduced the number of tellers needed per branch, it became cheaper for banks to open more branches. The resulting net effect was an increase in demand for bank tellers. In a podcast, Bessen discussed parallel examples, such as scanning technology causing an increase in cashiers and document discovery software in legal offices causing an increase in paralegals. David H. Autor, Associate Head of Economics at MIT, would agree. “Journalists and expert commentators overstate the extent of machine substitution for human labour and ignore the strong complementarities that increase productivity, raise earnings, and augment demand for skills,” stated Autor.

An article in Industry Week discusses how Lincoln Electric Automation, a Cleveland-based robotics supplier, helped its clients hire more people. Wing Enterprises, one of these clients, reported a 30 percent increase in productivity that led to a new facility three times the size of the original and an employee increase from 20 to 400. Another client, Crown Equipment, saw a similar expansion that increased employees from 200 to 335.

In a case study conducted by the International Federation of Robotics, hourly wages were compared for different time periods at manufacturing company, Marlin Steel. In 1998, its employees were paid six dollars an hour with no benefits. The CEO commented, “It was a boring job and an unsafe job, with a low level of quality.” Fast forward to 2011, employees were paid $25-30 per hour with bonuses and benefits. The output quantity and quality both improved exponentially.

In the current stage of development, robots still need to be trained, supervised, and repaired by humans. A robotics-driven output increase means a larger capacity, which requires more high-waged programmers, technicians, and maintenance staff.

Humans Wanted

 If I had asked people what they wanted, they would have said faster horses.
— Henry Ford

 Robots have us beat on the most efficient way to get from A to B. However, what if we need to find a new way from A to C, a point we can only unearth through inefficient trial-and-error? Henry Ford once said, “If I had asked people what they wanted, they would have said faster horses.” The invention of the automobile was not the result of linear thinking. While robots excel in colouring the pixels within the lines, humans are still the exclusive designers behind the bigger picture.

This is also the reason why automation won’t occur in some tasks, even when technically feasible. Imagine a robot nurse or teacher that can deliver the same services of their human counterparts, at least on paper. Likely, patients would prefer a human who can understand their needs on an emotional level, and parents would want a human who can inspire their children. It’s no surprise that, according to a McKinsey Quarterly study that examined over 2,000 work activities in every US economic sector, the least susceptible profession to automation was education. The study also showed that, while machines can replace specific tasks, only five percent of occupations can be fully automated. This means that people will be trading in repetitive tasks for work involving emotional intelligence and creativity, filling in gaps that robots can’t—at least for now.

Making it Through the Transition

As the world passed through the first industrial revolution, which permanently replaced elbow grease with electric power, we saw our lives transformed for the better. Electricity became a tool we could command with the flick of a switch or the turn of an ignition key. Likewise, when cognification becomes the successor to electrification, we will be able to command it, if we play our cards right.

“The car is going down the highway, it’s 250 horsepower, but in addition, it’s 250 minds,” Kelly stated in a TED Talk. “The AI is going to flow across the grid—the cloud—in the same way electricity did.”

Just as modern-day machines once took our jobs and gave us new ones, robotics will provide us with creative jobs that highlight our advantages over them. Each technological innovation, when applied with due diligence and a clear conscience, has led us to richer, more meaningful lives. It’s important for us to anticipate change and make ourselves flexible to benefit from it. However, just as our ancestors could not have predicted how big the internet would be, we won’t be afforded a crystal vision of the full potential of AI.

“We’re in the first hour of what’s coming,” said Kelly. “The most popular AI product in 20 years from now, that everybody uses, has not been invented yet. That means that you’re not late.”