For years economists have worried that the US’s aging population and falling birth rate would slow economic growth and leave future generations worse off. Now a new idea is gaining traction: that artificial intelligence could help America innovate its way out of demographic decline. Too few workers? We’ll have AI! Older workers becoming less productive? We’ll have AI! A shortage of caregivers for the elderly? We’ll have AI!
It’s plausible that AI will eventually help offset slowing growth from an aging population. That the US is facing two major transitions at the same time, however, doesn’t mean they’ll cancel each other out. In fact, in the short term at least, the better bet is that the two will compound — further decreasing labor market stability while people are already feeling precarious.
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So what does this mean for the economic outlook?
In general, economists tend to worry less about the long-run effects of technological change than about the transition. The consensus view is that higher productivity ultimately leads to economic growth, and that governments have tools — such as taxation and the social safety net — to share those gains. The real concern is the adjustment period.
Many people invoke the Industrial Revolution as a reassuring analogy for AI. And it’s true that, in the end, living standards rose. But living through the Industrial Revolution was a whole different ballgame. It was disruptive. It was violent. Many people suffered. It’s easy, 200 years later, to look back and say, “Thanks to the Industrial Revolution, our living standards are higher.” But the actual process of getting there was stressful, to say the least.
As Mokyr argued, that the Industrial Revolution coincided with rapid population growth likely made the transition more difficult. It seems unlikely that this one will be easier simply because the demographic transition is moving in the opposite direction. The jobs AI can do and the ones an aging society needs most just don’t appear to line up. Instead the more likely outcome is that the economy will have to navigate two massive transitions at the same time — and that each will complicate the other.
Read the full story: The US Economy Is Walking a Tightrope Between Aging and AI (Bloomberg)