Redefining Work, Income in the AI Economy
By Paula Klein
Is work becoming obsolete? Will Americans learn to love their leisure time? As the spotlight focuses on AI and its various implementations, former Harvard Professor Jeffrey Sachs, now at Columbia University and a special advisor to the United Nations, has some strong and diverse opinions about the macroeconomic impact of robots on the role of work in the future.
At a Mar. 24 seminar hosted by MIT IDE—the same day Treasury Secretary Steven Mnuchin amazed the tech community by saying AI wasn’t even on his radar-- Sachs described AI developments as a “huge” with implications as vast as any previous seismic technology wave. “We are in the midst of a major transformation” that will fundamentally change civilization from the past, he said.
The biggest change already under way is the shift away from a labor-intensive economy to a more capital-intensive one. “The market for physical labor” has all but evaporated in the past 50 years, he said, and the demand for cognitive work is diminishing, as well.
In Sachs’ view, technology certainly has the ability to raise the quality of life and create many comforts and benefits. At the same time, income distribution and inequality currently are worsening and must be addressed as AI accelerates.
Sachs diverges with other economists by seeing too much “fixation” with jobs when considering the impact of AI. Americans may have to learn how to adapt to working less and finding time for more education, creativity, and leisure activities. At the March 8 AI and Machine Learning Disruption Timeline Conference, the economic costs of automation were top-of-mind and many experts at the conference addressed the key question of the day: Can disruptive technology charge ahead and also create good jobs?
In his talk, Sachs cited Norway and Sweden as possible role models for countries managing the reduction of work: They employ advanced technologies yet promote income distribution and social benefits such as health care, and six weeks or more of paid vacation time.
His recommendation is to welcome automation and its benefits and focus more on income distribution than job creation. Sachs believes we are eliminating skilled labor—from farming and coal mining to paralegals and radiologists-- and new jobs aren’t being created at same rate.
Meanwhile, the overall economy is growing disproportionately with gains skewed toward capital owners and their children as a result of intergenerational wealth; “the rich stay rich and the poor stay poor for future generations. Income inequality widens.”
While he’s uncertain of the best method to use, Sachs advocates for a combination of taxation and wealth transfer as the best ways for societies to equitably share the benefits of AI and robotics in the future.