AI Might Just Save the Middle Class

If all the tasks that made ancient Greece tick were automated — from churning out chariots to crafting ceramic vases — it wouldn’t transform the place into Singapore. The Mediterranean civilization would still be that of a few thousand years ago, not a modern Southeast Asian nation whose first prime minister rated the advent of the air conditioner as an epochal event.

Automation has, in many instances, replaced human labor, but tends not to bring forward new inventions. Much as it has benefited society and driven economic growth overall, the replication of basic human labor by machine has, nonetheless, wrought social and political dislocation. The Luddites who violently opposed technological change in the early 1800s weren’t the end of the pushback. White-collar employees without college degrees have been under fire in more contemporary times, thanks to the computerization of clerical duties. The loss of factory jobs to China, where tasks could be performed cheaper and at great scale, eroded working-class communities in key parts of the US and laid the conditions for the rise of Donald Trump.

Artificial intelligence, if we are fortunate, will work the other way, according to David Autor, a professor of economics at the Massachusetts Institute of Technology. He shot to fame nearly a decade ago for his work on the unemployment in electorally pivotal states that followed a surge in imports from China. Autor believes that AI will augment the tacit knowledge some workers already possess and enable them to perform roles that were once the domain of highly paid professionals. It may even help the world cope with the labor scarcity that results from a pronounced decline in birthrates.

When Autor talks about big shifts in human capital, it's worth listening. “AI used well can assist with restoring the middle-skill, middle-class heart of the US labor market that has been hollowed out by automation and globalization,” he wrote in a recent NOEMA magazine article and a paper published by the National Bureau of Economic Research. “While one may worry that AI will simply render expertise redundant and experts superfluous, history and economic logic suggest otherwise. AI is a tool, like a calculator or a chainsaw, and tools generally aren't substitutes for expertise, but rather levers for its application.”

The promise — and the potential for disruption — was a topic aired at the Asian Monetary Policy Forum in Singapore last week. The financial hub is wrestling with many of the themes arising from labor-market transformation, and not just at home. The city-state has to balance relations with China, its biggest trading partner, and America, whose companies are the largest direct investors. Importantly, Singapore is also evolving into a super-aged society; the government projects that almost a quarter of residents will be 65 or over by 2030. That means significant roles for AI and for immigration, along with a premium on recruiting and retaining health care professionals. Nurses, including foreigners employed in Singapore’s hospitals, are being awarded bonuses to stick around.

In his paper and in a Bloomberg podcast, Autor spent time discussing the rise of nurse practitioners. Such employment nearly tripled in the US during the decade to 2022, a surge that is likely not done, nor limited to America. He considers this a useful example of how AI can enhance careers and ease bottlenecks in the medical profession (and spur bitter fights with doctors’ groups).

“Electronic medical records and improved communication tools enabled NPs to make better decisions,” Autor wrote. “This point applies more broadly. From contract law to calculus instruction to catheterization, AI could potentially enable a larger set of workers to perform high-stakes expert tasks. It can do this by complementing their skills and supplementing their judgment.”

Autor doesn’t look through entirely rose-tinted glasses. These are scenarios, not predictions. AI will bring its share of upheaval, not all of it positive. One popular narrative runs up against demographic reality: The fear that machines are coming for everyone and becoming so smart that they’ll displace all of us, regardless of profession. Much of the rich industrial world is characterized by declining fertility — and a fair amount of developing countries, too. Labor-saving developments augmented by AI are welcome.

AI is already being deployed in a user-friendly and efficient manner. Less than a mile from the Singapore conference in a flashy hotel, 7-Eleven has entirely automated a convenience store in the Esplanade subway station. The window proclaims its dependence on AI; the point is hard to miss. Customers swipe a credit card to enter through a turnstile, get what they want from the shelves or refrigerator, and exit. The shop knows what you selected — in my case a bottle of water and a packet of crisps. Was that it? I checked my credit card later and the charge appeared. I didn’t have to do a thing. Had I wanted to make a last-minute switch, things may have become more complicated.

Automation didn't invent the convenience store, nor the bank that issued my credit card. AI did make it easier for me to find refreshment and tide me over until mealtime without the retailer having to employ someone to sit there all day. That staffer could be doing something of greater value — assuming they’re employed at all. Which is, of course, the understandable fear many have.

“Even if you automated everything in ancient Greece, it wouldn't be modern America,” Autor told Odd Lots. “The most important applications of technology are to enable capabilities that didn't previously exist. And I think AI will do that as well.”

There's a lot of doom-saying around AI, so it's refreshing to hear about a potential upside. One thing does seem likely: There’s a huge role for nurses and basic retail sans people even if that’s not met with universal enthusiasm. Singapore may well be the frontline.

More From Bloomberg Opinion:

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• If AI Wrecks Democracy, We May Never Know: Parmy Olson
• As Nvidia Goes, So Do US Stocks: John Authers

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