AI and Its Acolytes: Improving Life on Earth by Its Utter
Destruction
Artificial Intelligence and Our Rapidly Changing
Economy and Workforce, Parts 1 & 2
[ed. note] Part 1 of the following was first posted March 27, 2023, and was subsequently removed. Part 2 never made it to the server. Herein is the complete rewrite of Part 2 and partial rewrite of Part 1. Both parts can now be better understood in context to each other.
On
November 24, 2022, I posted about the Coming Crash
of the Tech Economy. My thesis was that negative cash flows;
continuing layoffs throughout the sector; and the emergence of new
technology will make many white collar IT jobs obsolete. All data
points do indicate a major contraction is occurring across all sectors of the information industry.
My observation was the current economic trends and events that contributed to this
significant contraction in the tech sector mirrors in many ways previous
crashes of the tech
economy. Six months later, all the trends are
even more discouraging for struggling IT workers.
The staggering amount of losses in cryptocurrencies, 4 Trillion in USD, cannot be ignored when considering how things got to be where they are right now. It is probably correct to assume that a significant number of those individuals whose capital investment in crypto currency simply vanished are also IT workers whose jobs and livelihoods may also vanish.
Besides the almost daily news of layoffs from the biggest names in the IT industry, a most telling sign of the turmoil in tech is those who may have once been The Angel Investor for an IT focused startup are demanding certain fledgling firms simply close up shop. Entities whose products lack "product-market fit," may well receive no additional funding, but the principles of that startup could find themselves on the hook for funds due back to investors. Product-market fit "describes a scenario in which a company’s target customers are buying, using, and telling others about the company’s product in numbers large enough to sustain that product’s growth and profitability." So if a startup does not have a viable product, then that startup may well find itself on thin ice.
With demand of startups software products waning, and the days of easy money now over, any startup still operating is very likely running out of cash. Elan Gil, a noted investment entrepreneur, estimates that these startup business failures will accelerate in late 2023 through 2024.
There is likely a mix of companies who have raised anywhere from 2-4 years of cash in 2021 that will not grow into prior valuations, and will need to find an exit or shut down. As such Q3 2023 through end of 2024 (and maybe part of 2025) seems roughly when these companies will start to seek exits and or shut down.
Adding
to the Liquidity Crisis, a year of steady interests rate increases have
hit tech especially hard. Across the spectrum, it has been declared
that the "Days of Easy Money" are over. As the
Business Standard explained, January 10, 2023:
Cheap money — an incredibly popular and influential feature of finance that led to a surge of wealth, speculative trading and booms in ridiculous investments such as meme stocks and digital images of cartoon monkeys—died suddenly in 2022. It was 14 years old. Cheap money is survived by its estranged relative, expensive money.
As the confluence of related and unrelated events overwhelm the industry, displaced IT workers, who have only known the recent boom years, will likely find themselves in dire straights. With fewer possible employers to chose from, and certainly intense competition for available positions, unemployment among this class of Americans will place stresses on many other segments of the American economy. Entering into this murky near future employment situation for many white collar workers, is the AI.
Not only is the image below an excellent scenario for a modern day Marx Brothers movie — if only such a thing were possible — the AI generated image of the media control room of our very near future is also an apt commentary on the employment fallout of AI on particular industries.
The scene shows a producer/manager (certainly to be played by
Groucho
Marx); his
immediate assistant (Chico Marx might take umbrage at his role here); and, of
course, that mad cap clown and King of Pantomime, (Harpo Marx), as the new
star of the 21st century media control room: The Prompt
Engineer. And one lonely no name support guy in the back (Zeppo
Marx?)
who plays it straight.
What our scene here lacks, though, is a cadre of human technicians performing the mundane everyday tasks required to get any kind of media production on air or online. Replacing these former stalwarts of the media age is the Prompt Engineer. As Time Magazine put it, April 14, 2023,
"Prompt engineering is now considered one of the hottest tech jobs as companies look for ways to help train and adapt AI tools to get the most out of new large language models, which can provide results that are not always correct or appropriate.
One 29 year old Prompt Engineer Time interviewed for the article above claimed to have no technical background or knowledge at all.
Bernstein, who studied English in college, was a copywriter and historical research assistant before becoming a prompt engineer. “I had no tech background whatsoever,” she says. “But to have a humanities background in this field seems to me like a triumph, especially since part of the point of developing AI is to imitate human thought.”
And, lest I think that the MA in History was, in fact not wasted time
after all, the $335K job that 29 year old above enjoys may itself soon be
consumed
by the AI work revolution. A startup,
Taskade, will automate the prompt writing process
for you. For a mere $19 bucks in USD per month, all that pesky
punctuation and syntax needed to write an effective AI prompt will be
done for you.
Forbes Magazine may have dubbed 2019 the "Year of the Knowledge Worker." Indeed, those Invaluable New Age Employees of 2019, all used...
Analytical, theoretical or otherwise high-level knowledge to develop services or products, usually online. They often have acquired this knowledge through formal training, such as college or professional certification.
Nevertheless, it was also in 2019 that one of the first authoritative studies was made that documented the impact that the then novel technology of Artificial Intelligence was having on employment practices of certain industries. This study is cited in, THE IMPACT OF ARTIFICIAL INTELLIGENCE ON THE FUTURE OF WORKFORCES IN THE EUROPEAN UNION AND THE UNITED STATES OF AMERICA, and is widely cited in other current literature about AI in the workplace. The entire 55 page study by US-EU Trade and Technology Council can be had here.
As early as 2019, the adoption of AI by various industries had already
begun. The jobs being replaced by AI are those jobs with very
similar tasks as
the Forbes mythologized "Knowledge Worker." Management, Professional
Services, and Information would be the
stock and trade of various jobs that may be
described as Working with Knowledge. Along with highly skilled jobs
aced out by the AI, are also the entry level type of jobs that give
young people their first
taste of work. The "Retail trade" topped out the
2019 chart along
with "Management" and "Information".
Another ominous trend emerging in the employment prospects of young people is that even the fast food industry is adopting AI in positions where a young person — or maybe a retiree — might well fill that role. On May 4, 2023, CNBC reported on the growing trend of fast food chains contracting with various firms to facilitate the adoption of AI throughout their operations. The latest is CKE Restaurants, known as Carl's Jr. to us in SoCal.
Carl’s Jr. and Hardee’s locations will roll out automated
drive-thru ordering nationwide using artificial intelligence software.
CKE Restaurants, the parent of Carl’s Jr. and Hardee’s, has
partnered with Presto and OpenCity, which both have the ability to
launch at the company’s locations nationwide. Presto Voice is already
used at Del Taco and Checkers & Rally’s restaurants, while OpenCity’s
Tori has been used by a Popeyes franchisee.
Apparently, as was the case in the California Gold Rush, facilitating the AI trade may turn out to be more profitable in the long run than actually adopting the AI trade itself ie Levi Strauss.
Nonetheless,
it is the tech jobs and the Knowledge Workers employed at firms across
all economic sectors who are
feeling the brunt of the ongoing retraction and realignment in the tech
industry, in particular, and the overall economy in general, circa 2023. The chart to the right lists the layoffs for
1st quarter 2023 from 50 firms, with each business involved with or
using
technology in some way. Employment agencies to fad weight loss
firms
all shed employees in the first quarter of 2023. A website at
https://layoffs.fyi/
tracks layoffs at tech companies.
To date (05/08/2023) the number of tech
job layoffs for 2023 is:
660 tech companies w/ layoffs ∙
191,538 employees laid off ∙
Proponents of AI, do acknowledge the immediate negative impact AI might well have on certain occupations. Indeed, an otherwise positive academic paper from the Harvard Business Review, December 12, 2022, states that:
ChatGPT, a new AI tool that can tell stories and write code. It has the potential to take over certain roles traditionally held by humans, such as copywriting, answering customer service inquiries, writing news reports, and creating legal documents. As AI continues to improve, more and more current jobs will be threatened by automation.
The authors' thesis here is that as new technologies emerge from AI, new jobs will also arise. The authors point out how Lyft and Uber used the novel online mapping technology to facilitate their business models. Indeed, online maps did make The Thomas Brothers Guides less a force to the automotive public. Oh how fast things can change, however, in our hyper speed world. On April 27, 2023, CNBC reported that Lyft had "cut 1,072 employees, or 26% of its workforce." Although Lyft competitor, Uber, does not like to use the word "layoffs." As was widely reported in February 2023, Uber will "conduct 'rigorous' review process of employees." Everywhere I have ever worked, including when I was one of those doing such employee reviews, the term "employee review" always meant culling the herd one way or the other.
The Biden Administration would point to the CHIPS Act and the infrastructure bill as its response to these indicators of more economic hardship to come. Indeed, any skilled iron worker or pipefitter might now consider moving to Texas or Ohio. But the nation's knowledge workers do not work with their hands — well, except on the keyboard. As these new fabrication plants come online, it is right to assume that many mundane tasks associated with information processing, which 20 years ago would have been performed by college educated humans beings with all that healthcare, family, and personal needs baggage that comes along with human employees, will now be performed by the AI. Anyway, it will be several years before those plants are online and their production will be such as to fill all the tech jobs that might be needed then.
Indeed, any new business would have to consider the adoption of AI wherever it seems practical. The cost savings are self-evident. Likewise, in inflationary times, when sufficient supply of any product is always in doubt, cost savings that do not take value away from the product or service will only benefit the business, and will therefore be applied. If the AI can do the job better, faster, and more reliably than any number of humans, then those humans will find themselves out of jobs.
Like a stupid dog chasing its own tail, Congress spends its wheels on what seem to me pointless efforts at testosterone replacement therapy. Chest thumping and verbal muscle flexing against social media platforms and file sharing services that any individual can turn off if they want to make far more interesting Sound Bites and Short Videos to the rubes back home than actually trying to come to some consensus about a problem impacting voters in every Congressional District in all of these US of A. An unemployed and discontented voter is more likely to vote against an incumbent than is a fat and happy voter. In times of economic hardship, providing for one's self and family will likely matter for more than any drag show. The current United States Congress represents the nadir of the classical meaning of intelligence, Organic, Artificial, or Otherwise.
Do things that will only help:
