The Power and Perils of the “Artificial Hand”: Considering AI Through the Ideas of Adam Smith

Artificial Intelligence: how to exploit benefits while limiting risks

Speech by Gita Gopinath, Deputy Managing Director of the @IMF, on the development of Artificial Intelligence (AI) and its potential consequences. In her opinion, despite the obvious benefits in productivity improvements that can be positive for society, it will be crucial to balance support for its development with regulatory oversight, developing a regulatory framework that favors the application of beneficial uses while limiting the negative impacts it can potentially have on society.

Main conclusions of the speech:

  • AI could boost economic growth and productivity significantly, but it will also impact the labor market: by automating cognitive and repetitive tasks, humans will become more productive, which, according to Goldman Sachs estimates, could drive a 7% (or almost $7 trillion) increase in global GDP over a 10-year period.. This favorable aspect for economic growth would inevitably converge with concerns about its impact on the labor market and job losses:

    • It is estimated that two-thirds of U.S. occupations could be vulnerable to some form of automation, and corporate hierarchical structures would flatten, generating more junior positions and reducing the number of those at the top or in the middle.

  • Risk of market concentration in AI development: In their view, AI is a technology that requires materials, infrastructure, and computing power that only a few large corporations can access.

  • Need for international cooperation to establish international regulatory frameworks to favor the development of the positive aspects of AI in society, while limiting its more negative effects. According to Gopinath, a new approach will be needed, with strong social support networks to help those who lose their jobs; tax policies that do not favor indiscriminate labor substitution; and adjustments in the education system to prepare the next generation of technology workers and to encourage retraining of current workers.

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