Going All In on AI Depends on Learning to Share the Wealth
The productivity gains made possible by AI are compelling. Unfortunately, it is a fact that technology is automating jobs away. So, how to ensure a win for everyone? It requires sharing the wealth AI brings.
Legendary venture capitalist Vinod Khosla recently spoke with the Wall Street Journal, painting a picture of global “abundance” enabled by AI. He sees the potential for GDP growth to rise to 5% annually over a 25–50-year period – nearly twice the average since 1980. Having invested in OpenAI four years ahead of its launch in 2022, Khosla is clearly all in on AI.
The payoff for the world could be huge, but only if there’s something in it for everyone.
Productivity, Innovation, and Growth
Technology has driven amazing productivity gains in supply chain operations, from the original dot-com boom in the nineties to the emergence of low-cost, flexible robotics to, most recently, the expertise-magnifying power of generative AI. The future of our world, as seen through the lens of supply chain leaders chasing productivity, innovation, and growth, is bright indeed.
Looking at the business impact of this technology wave, UBS’ Head of Asset Allocation Jason Draho says the US is already booming. “It’s no longer too soon nor too optimistic to suggest that the US will experience a Roaring Twenties economy. It already is by our criteria, with the relevant question being whether these conditions will continue, not whether they will materialize.” Draho cites similarities to the 1920s when scaling the adoption of electricity across the economy drove massive growth. In both booms, the common ingredient is operators learning ever faster how to apply the new technology to work.
The double-edged sword of a technological breakthrough, however, is job elimination (even as output grows). It happened when mechanical looms wiped out cottage industry weavers and again when mechanization drove agricultural employment in the US down from 68% (in 1900) to just 1.3% (2021). AI is expected to repeat this cycle, with research by McKinsey saying that 60-70% of all work can be automated away.
What About the Workers?
None of this is lost on the International Longshoremen's Association (ILA). Having just settled with port operators for a 62% pay hike after a brief strike, the dockworkers union is gearing up for a prolonged fight to resist automation. Moving standardized shipping containers from ship to shore all day long is an obvious job for AI-enabled robots. Preventing this productivity boom so that a group of workers can hang on to obsolete, high-paying jobs sounds crazy.
Unless you’re a dockworker.
A win for both sides might include creating careers that tap the “machine whisperer” know-how of frontline workers who are able to tune automation as it is applied to specific tasks. This approach offers a path to higher earnings and more meaningful work. It will also quicken the scaling of automation and improve ROI, as Colgate-Palmolive has demonstrated. In fact, systems-level transformations like those being driven by BMW, Amazon, and UPS inevitably depend on upgrading operator skills to include business understanding, integrated end-to-end expertise, diagnostics, and critical thinking.
Respecting workers’ expertise in the automation journey could unlock faster, more sweeping gains for AI. Unfortunately, many workers won’t have what it takes to complete this journey. The ILA and most other traditional unions are focusing on those who’ll be left behind. Understandable, perhaps, but ultimately doomed to fail.
Fund the Safety Net
Vinod Khosla gets this.
His response is simple: we can afford a bigger, better public safety net for workers displaced by AI. Stock markets continue to set new record highs despite an aggressive Fed attack on inflation and a hot war in the Middle East. Investors smell a boom.
And it’s not just the US that should feel optimistic. Scottish data scientist Hannah Ritchie did a TED Talk on huge, worldwide gains in life expectancy, literacy, and income over the past 100 years (we wrote about it here). She underscores a truth easily overlooked by those of us awash in catastrophizing news blather: We have the tools to save ourselves if we can just learn to share the wealth.