The International Monetary Fund (IMF) has warned that AI could lead on to massive job losses, widen inequality, and destabilize societies if governments fail to take proactive measures.
In a comprehensive report published today, the IMF outlined the large potential of generative AI to propel productivity and transform the delivery of public services.
However, the organization also expressed “profound concerns” in regards to the technology’s capability to disrupt labor markets and exacerbate income and wealth disparities on an unprecedented scale.
Era Dabla-Norris, deputy director of the IMF’s fiscal affairs department and co-author of the report, explained the necessity for policies that ensure the advantages of AI are widely shared while creating opportunities for staff whose jobs could also be displaced by the technology.
“We want people to have the ability to learn more broadly from the potential that this technology holds and we would like to make sure that there are opportunities created for people,” Dabla-Norris said.
So what suggestions did the IMF propose? Let’s select just a few themes from the 40+ page report.
A threat to high-skilled jobs
One of essentially the most striking features of the IMF’s warning is the popularity that, unlike previous waves of automation that primarily impacted blue-collar and lower-skilled staff, generative AI poses a threat to higher-skilled and white-collar occupations.
The report notes that AI’s ability to generate human-like text, images, and code could render many cognitive tasks performed by professionals similar to writers, designers, and programmers obsolete.
This could lead on to widespread job losses and a hollowing out of the center class, with far-reaching implications for social stability and economic growth.
We’ve seen some evidence of this in Hollywood, where AI has threatened to uproot highly expert jobs in TV and film, from acting to animation.
Consider this: AI can write a novel, compose a chunk of music, generate a video, or create a picture that wins an art competition but can’t yet properly drive a automobile.
So, while low-skilled jobs are definitely at massive risk – and are already being replaced en masse in some sectors – those in highly expert jobs shouldn’t get too comfortable either.
The report notes, “Evidence suggests that while earlier automation waves displaced mostly blue-collar (lower-skilled) staff, white-collar (high-skilled) staff are most exposed to AI.”
Preparing for the AI age
To mitigate generative AI’s disruptive impact and ensure its advantages are broadly shared, the IMF recommends overhauling education and training systems to equip staff with the talents needed to thrive in an AI-driven economy.
The report calls for a greater emphasis on lifelong learning, with governments and businesses investing in sector-based training, apprenticeships, and reskilling programs to assist staff transition to recent tasks and industries.
Other studies say there’s time to react, with MIT recently predicting that “AI job displacement will likely be substantial, but additionally gradual—and subsequently there’s room for [government] policy and retraining to mitigate unemployment impacts.”
Among fiscal strategies, the IMF report advocates for strengthening social safety nets, including unemployment insurance, to supply a lifeline for those facing job losses resulting from AI disruption.
“You wish to have the ability to cushion this costly transition and maintain social cohesion in societies,” Dabla-Norris explained.
Taxing AI gains
The IMF report also grapples with the potential for generative AI to pay attention wealth within the hands of just a few dominant firms, exacerbating inequality and undermining competition.
The IMF warns that as AI technologies change into more sophisticated and widely adopted, they might give rise to “winner-take-all” markets, where a small variety of firms with access to vast amounts of knowledge and computing power reap outsized rewards.
Centralization of AI power and wealth is a hot topic within the AI industry, though blockchain technology and open-source AI could mitigate it.
In an interview with DailyAI, David Palmer, CPO at PairPoint by Vodafone, explained, “Blockchain becomes highly relevant on this context. Blockchain can provide the decentralized infrastructure vital to support and facilitate edge computing for AI. By leveraging blockchain’s distributed nature, we are able to create secure and efficient systems for AI processing that reach beyond the constraints of centralized data centers.”
The IMF proposes increasing taxes on capital gains, profits, and company income to counter this trend and make sure that the gains from AI are more evenly distributed.
It suggests that governments adopt an “agile” approach to policymaking, remaining flexible and ready for highly disruptive scenarios because the AI landscape evolves.
A worldwide challenge
The IMF’s warning comes amid growing calls for international cooperation and regulation to deal with the challenges posed by generative AI.
The European Union recently agreed on the landmark AI Act, the primary laws of its kind to focus on the risks related to the technology. The act includes provisions for a possible ban on AI applications deemed to pose unacceptable risks to the security, livelihoods, and rights of EU residents.
Dabla-Norris stressed the importance of worldwide collaboration in navigating the AI revolution, given the technology’s capability to transcend borders and reshape economies worldwide.
“Because of the worldwide reach of AI, it’ll be really vital greater than ever for countries to work together,” she said.
The IMF’s report adds to a growing body of research and evaluation highlighting the potential dangers of unchecked AI development.
In January, the organization estimated that AI could affect nearly 40% of jobs globally. Reports from other organizations, similar to Goldman Sachs and McKinsey, predict that despite AI uprooting jobs, it would contribute positively to global GDP.
AI is definitely fueling tech stocks, with firms like NVIDIA rocketing in value as demand for the hardware required to coach and deploy AI soars.
The path forward could also be difficult, however the stakes are high.
As the IMF’s report makes clear, the choices we make today about managing the rise of generative AI will shape the contours of our economy and society for generations to come back.
There are loads of sound recommendations on the table. Implementing ideas will put practice to theory.
