This week, a single blog post wiped out hundreds of billions of dollars from Wall Street. But this was not a standard analyst report. Rather, it was a dystopian picture of the US economy in 2028, all thanks to the artificial intelligence boom.
The US research firm Citorini painted a grim picture of mass unemployment, plummeting stock prices, and the collapse of the “human-centered consumer economy.”
This is very theoretical content and shouldn’t be taken too seriously, but Australian Stock Exchange-listed tech giant Wisetech has revealed why these concerns can’t be completely dismissed.
The logistics software maker came out on Wednesday, becoming the first company in Australia to proudly claim artificial intelligence as the reason it cut 2,000 jobs, almost a third of its workforce.
The company’s founder and chairman, Richard White, is no stranger to making headlines for his personal actions, but he never massaged his company’s AI messages to avoid scaring horses.
Wisetech CEO Zubin Apu issued a dire warning, announcing a 35% drop in first-half profits and announcing plans to halve the number of customer service staff and software engineers.
“I’m ready to say it loud and clear: Gone are the days of manually writing code as a core act of engineering,” Appoo proclaimed.
WiseTech has reasons to shock employees and investors. The company is one of several Software-as-a-Service providers whose core business is at risk as customers could potentially use AI themselves and circumvent the need for such services.
The stock market valuations of thousands of once-valuable companies have eroded over the past nine months, including home-grown tech giant Atlassian, founded by wealthy Australians Mike Cannon-Brookes and Scott Farquhar.
It is inevitable that the pace of AI adoption will accelerate, and it is nearly impossible to predict how this situation will end.
If WiseTech’s strategy was to use layoffs as a circuit breaker, it worked. By lunchtime Wednesday, the company’s stock had risen 10%.
But estimating the potential for AI-enabled job savings across businesses more generally is a different story. For many workers on the front lines of AI replacement, the technology has become a thorn in the side.
The hysteria surrounding AI’s job-reducing potential has grown to the point where the surplus of AI is being hidden or obscured by being lumped into the larger bucket of technology savings.
Meanwhile, unions are trying to decipher corporate layoff announcements to understand whether they are actually caused by artificial intelligence. In most respects, they are fighting a losing battle.
It may be easy to distinguish. Some job cuts are not a direct result of AI, but they are made possible by AI.
In response to questions about the Commonwealth Bank’s 300 job cuts this week, a spokesperson explained: “While AI is changing the way some jobs are carried out, it is not the driver of role change.”
Qantas also strenuously disputed that the recent 30 job cuts at its headquarters were about AI, even if technology played any role.
After sitting on the sidelines for several years, assessing how AI can be leveraged to improve productivity, Australian businesses are now in the early stages of adoption.
CBA moved last year to use AI bots to replace some customer service roles, a move that backfired.
Now I can move more easily. CBA CEO Matt Kamin is not avoiding a future where AI is more embedded, but argues that this will also involve upskilling many of the bank’s staff, rather than completely replacing them.
However, there is no getting away from the fact that the pace of AI adoption is accelerating, and it is nearly impossible to predict how this will end.
At the far end of the fear and chaos spectrum, Citrini’s recent analysis conjures up a dystopian vision of 2028, where AI-generated unemployment rates reach over 10 percent and Wall Street’s S&P 500 collapses. In this scenario, productivity is soaring, but the “human-centered consumption economy” is collapsing.
“As AI capabilities improve, companies need fewer workers, white-collar layoffs increase, turnover costs decrease, profit margin pressures cause companies to invest more in AI, and AI capabilities improve,” Sitolini explains in the scenario, which results in a “negative feedback loop with no natural brakes.”
Although this is just one of many ominous AI studies published, its timing, at a time when fears about AI were at its peak, contributed to this week’s drop in the US stock market.
This is an interesting read, but it is very theoretical as it ignores the experience of other technological revolutions where new skills create new jobs. But no matter how AI plays out in salt mines, there will be disruption.
Companies like WiseTech are already feeling the heat and are leading the way.
Others may be more gradual and cause fewer casualties, but will result in major changes. No one knows whether this is a utopia or a dystopia.
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