Pin factory / The surprising truth about AI and jobs |
Lord Stockwood, the minister for investment, recently floated the idea of universal basic income to cushion AI-driven job losses. Last month, the European Central Bank published a study of 5,000 eurozone firms showing that companies which adopt AI are 4 per cent more likely to hire. Something doesn’t add up. So what’s going wrong?
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In 2013, a widely cited Oxford study told us that 47 per cent of American jobs were at high risk of automation. Since then, every serious forecast has done the same thing: decompose a job into tasks, score which tasks machines can do, announce a crisis. The renowned VC investor Marc Andreessen refined the point this January: it’s tasks, not jobs, that get replaced. He’s right. But he doesn’t explain why the job survives once the tasks are gone.
For an answer to that question, look to Adam Smith. It should come as no surprise that just when we think the rules of economics are about to be utterly changed, that the core insight comes from the father of the subject.
The pin factory is the most famous anecdote in economics. Ten men can create 48,000 pins a day performing 18 operations between them. Every textbook reads it as a story about task decomposition. But Smith was describing something else. The wire drawer’s........