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Saturday, 13 May 2017

Artificial Intelligence and Urbanisation

On 24 March 2017, PwC issued a report stating that “Up to around 30% of existing UK jobs are susceptible to automation from robotics and Artificial Intelligence (AI) by the early 2030s, but in many cases the nature of jobs will change rather than disappear”. Other regions face similar threats: Japan -21%, Germany -35%, and USA -38%.

Some other key predictions from PwC's report:
  • The likelihood of automation appears highest in sectors [like] manufacturing, transport, and wholesale and retail, and lower in education, health and social work. 
  • Male workers could be at greater potential risk of job automation than women, but education is the key differentiating factor for individual workers. 
  • Automation will also boost productivity and wealth, leading to offsetting additional job gains elsewhere in the economy  - but income inequality may rise. 
  • Economic, legal and regulatory constraints may restrict the pace and extent of  increases in automation in practice. 

On 8 May 2017, Bloomberg reports that “Two economists recently concluded that both jobs and wages fall in parts of the U.S. where more robots are installed.” This is hardly a surprise. When robots assume human jobs than more humans must compete for the remaining human jobs. Hence, wages of those jobs go down. It's the essence of a marketplace.

In 2014, the UN predicts that by 2050 nearly 70% of global population will live in urban conditions. UN: "Continuing population growth and urbanization are projected to add 2.5 billion people to the world’s urban population by 2050, with nearly 90% of the increase concentrated in Asia and Africa." Income and work are the main drivers for urbanisation.

On 9 May 2017, Bloomberg reports on a recent IMF warning: “Parts of Asia Will Grow Old Before Getting Rich, IMF Warns”. Bloomberg: “That means the ratio of the population aged 65 and older will be almost two and a half times the current level by 2050, and even higher in East Asia. [] The speed of aging is especially remarkable compared to the historical experience in Europe and the United States," the IMF said."

The above paints the following dire picture: (1) rapidly ageing populations due to fall in birth rates, (2) massive job losses due to AI and robotics, (3) low demand for new type of jobs might equal low supply of tech-savvy juniors, (4) low demand for seniors given outdated experience and knowledge, (5) high concentration in unemployment following urbanisation, (6) high inequality between (i) juniors in well-paid jobs, and (ii) unemployed seniors living off their savings.

Not all people are impressed by this 15-year timeline. In a recent interview with Axios, U.S. Treasury Secretary Steven Mnuchin said this about the impact of AI replacing human jobs: "it's not even on our radar screen.... 50-100 more years" away. "I'm not worried at all" and adding: "In fact I'm optimistic." CNBC: 'Business leaders [] were surprised by Mnuchin's indifference".

Indifference (1993) by Pearl Jam - artists, FBlyrics, video, Wiki-1, Wiki-2