Explanation for the massive wave of layoffs in the US: The effect of artificial intelligence, worse than the industrial revolution

Massive clearances in Amazon, UPS and Target (a US department store chain) offices. Other groups in many sectors (banks such as Citigroup and JP Morgan Chase, digital leaders such as Meta-Facebook and Salesforce, retail and automotive giants such as Walmart and General Motors) warn that they will lay off employees and managers or at least stop hiring: artificial intelligence (AI) is enough to meet their new work needs, the Italian publication Corriere della Sera wrote on Thursday, according to the RADOR news agency.

In the United States, most of the layoffs in October (128,000 out of a total of 172,000) affected technology companies. Are the prophecies of those who have been predicting for years an apocalypse of white-collar intellectual work caused by the advancement of AI coming true? Or are they just physiological phenomena of substitution? Are endangered jobs made redundant and reabsorbed by new sectors created by the computational intelligence economy?

For years, techno-pessimists and techno-optimists have been bombarding us with contrary predictions. Even recently, Google's chief economist, Fabien Curto Millet, downplayed the situation: history teaches us that after all the agricultural and industrial transformations from steam to electricity, many jobs have disappeared, but long-term employment has increased. The American publication The Washington Post lists the professions that have disappeared or dwindled to a minimum: in the mid-19th century, agriculture absorbed more than half of the workforce, while now, according to ILO data, it has fallen to 1.5%. Blacksmiths, shoemakers and artisans, who once made up almost 2%, now survive with statistically insignificant numbers. However, the labor market has regained its balance.

Stuart Russell, a computer science professor at Yale University who has warned for years about the risks of uncontrolled AI development, notes that his fellow economists have long argued that, according to their econometric models, labor demand would also increase in the AI ​​age. Only to realize at some point that this work was not being done by humans, but by machines.

Dario Amodei, a pioneer in the development of artificial intelligence models at his company Anthropic, warns that artificial intelligence could replace half of mid-level professional jobs: translators, programmers, legal departments, accountants, medical diagnosticians, journalists and more. Many leaders of tech giants share this analysis but prefer not to discuss it: either because they believe new jobs will emerge but can't point to any for now, or simply because they don't want to risk policy changes that could slow the pace of innovation.

But it is precisely the enormous speed of technological change that makes this labor market crisis different from that of the Industrial Revolution, which was slower and easier to solve, in part because it was limited to the replacement of physical labor. This time, everything is changing much faster, and the change is not only about physical work: it has reached the brain. Moreover, with large language models, AI, imitating us and developing additional skills due to the ability to process enormous volumes of data, invades the domain of language, which is the essence of our nature and has allowed us to detach ourselves into the animal kingdom.

These differences should prompt a more careful approach, both by politicians and companies, in managing such profound transformations. Eight years ago, speaking at a seminar at MIT in Boston, Kai-Fu Lee, a Chinese scientist and entrepreneur who studied at American universities and worked for a long time at Google, Apple and Microsoft, argued that China would overtake the US in the field of artificial intelligence. With the potential to replace humans in many tasks at all levels, artificial intelligence required a rethinking of the very concept of work, to be implemented as soon as possible.

The audience, composed almost entirely of academics, greeted his predictions with some surprise. Eight years later, MIT's tech magazine explains why China is winning the AI ​​race. Perhaps Kai-Fu Lee's other prediction should also be taken seriously.

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