AI May Create a More Equitable Future or Exacerbate Existing Inequalities, S...

TMTPOST -- Artificial Intelligence (AI) has the potential to enhance human capabilities, reduce disparities within and between nations, and pave the way for a more equitable future. However, if control over AI is concentrated in the hands of a few, we risk creating a society even more polarized, where the elite benefit while the majority are left behind, said Simon Johnson, a 2024 Nobel laureate in economics, a professor at the MIT Sloan School of Management, and a former chief economist at the International Monetary Fund, on Saturday at the 2024 T-EDGE Conference and TMTPost Annual Economic Meeting.

“What we develop in terms of the technology, what becomes available, what's offered to people, has some reinforcing feature, particularly because we're talking about machine learning, where the technology is getting good at learning from the humans who use it. So we could go heavily down the pro-worker path or heavily down the elite path,” he shared.

The question of how AI will shape the future carries significant weight today. At the heart of this question lies the dilemma of whether AI will ultimately benefit society as a whole or exacerbate existing social inequalities. As we stand on the cusp of a transformative era in technology, the outcomes could go either way.

The next few years are pivotal. As machine learning algorithms advance, the technology is becoming increasingly adept at learning from the humans who interact with it. This creates a feedback loop where AI's development could either favor the workforce or reinforce elite control. The decisions made today will shape the future, and the direction we take will determine whether AI serves to bridge the gap or widen it, he explained.

In his book Power and Progress, and in recent speeches, Johnson emphasizes a crucial point: technological advancements do not inherently lead to prosperity. In fact, they can exacerbate social inequality if the benefits are concentrated in the hands of a few. This dynamic has been observed throughout history, with early technological revolutions, such as the British Industrial Revolution, serving as a cautionary tale.

During the late 18th and early 19th centuries, industrialization in Britain dramatically increased productivity, particularly in the textile industry. Machines could produce goods thousands of times faster than skilled artisans, leaving workers with traditional skills economically displaced. However, the benefits of industrialization were not immediately felt by the majority. It wasn't until broader industrialization, including the development of railways, that a wider segment of the population began to see the economic rewards. New tasks were created, requiring expertise, and wages began to rise for skilled workers.

This historical parallel underscores the need for society to harness AI in a way that creates new, meaningful jobs and opportunities for all. It is essential to find ways to channel technology in ways that promote growth and inclusivity, ensuring that the market compensates individuals for their contributions, Johnson noted.

Governments, particularly in high-income countries, must take an active role in shaping the future of AI. One of the most critical aspects of AI's potential is its ability to facilitate the creation of inclusive institutions—those that help foster prosperity for all. Governments must focus on policies that promote economic inclusion, ensuring that AI benefits are spread across society.

The challenge, however, is that AI’s current applications are often driven by profit motives, particularly in the realm of digital advertising. The AI systems that dominate today are designed to capture attention, often through emotionally charged content, which can have harmful effects on public discourse. Instead of fostering connection and understanding, these technologies can polarize individuals and exacerbate societal divides.

To create a more inclusive future, governments must not only regulate AI but also work to align its development with the common good. One possible solution is to implement pre-purchase agreements in which countries specify their needs for AI applications, whether in agriculture, transportation, or other sectors. This would encourage AI developers to focus on solving real-world problems in a way that benefits everyone, rather than just the wealthiest markets.

How AI will affect employment is one that transcends national boundaries. In both developing and developed countries, the potential for job displacement due to AI and automation is a major concern. In China, for example, the rise of driverless taxis has raised fears about the loss of jobs in the transportation sector. Similarly, in countries with high labor costs, such as Japan, the adoption of AI is seen as a way to supplement the workforce, particularly in industries that rely on older populations.

However, the impact of AI on employment is not uniform across the globe. In high-wage countries like the United States, AI could lead to greater productivity but may also create new challenges for workers displaced by automation. In developing countries, where labor markets are more dependent on manual labor, the rapid adoption of AI could have a devastating effect on employment. Without the infrastructure or resources to quickly adapt, these countries may face significant economic shocks.

The key to navigating these challenges lies in creating a global vision for AI that emphasizes cooperation and inclusivity. By working together, countries can ensure that AI is deployed in ways that benefit all, rather than just a select few.

The key is to approach the development and deployment of AI with a clear vision: one that fosters collaboration, innovation, and equity. By ensuring that AI benefits everyone, rather than just the few, we can create a future where technology serves as a tool for progress and social good. The choices we make today will determine the course of this transformative journey.

As the next election cycle approaches, politicians are reportedly receiving significant funding from cryptocurrency supporters, raising concerns about potential deregulation in the sector. With the entire House of Representatives up for election in two years, analysts anticipate a wave of changes in cryptocurrency regulation, which could lead to a period of unrestrained growth followed by a "nasty bust."

"Governance matters, and weak governance always leads to trouble," Johnson warned. While a boom may seem promising, history shows that deregulation often brings financial disasters, as we saw in the 1920s and 2008.

Johnson drew parallels to the 1929 stock market crash, pointing out that financial excess and unchecked deregulation can damage the real economy. "Look what happened in 2008," he said. "We may well be heading into another crazy credit-driven, deregulation-driven cycle. So what I say to everybody is be very, very careful."

Johnson also touched on Bitcoin and government involvement in the cryptocurrency market. "On Bitcoin per se, the government does own and does acquire a quarter of Bitcoin, of course, through its law enforcement activities," he noted. "But creating a strategic reserve of Bitcoin is not a sensible policy."

Despite this, the prospect of deregulation looms large. Johnson predicts that policies favoring cryptocurrencies could cause a surge of questionable financial schemes, echoing past periods of economic instability.

On the topic of U.S. President-elect Donald Trump's views on deregulation, he pointed out that Trump is likely to advocate for reduced oversight of not only banks and hedge funds but also cryptocurrencies. Deregulation might give a temporary sugar high, but it often ends badly, he cautioned.