What will happen to Australia when artificial intelligence takes over

Hundreds of years ago, during the Industrial Revolution, workers rebelled against the mechanization of their work.

Known as Luddites, these workers had watched their industries transform from labor-intensive to labor-low production for decades.

The problem for workers was that new technologies, such as cotton mills, were much more efficient than manual labor.

Machines have largely replaced work rather than complementing it.

This offers an important distinction regarding the ongoing boom in artificial intelligence (AI) and its impact on employment.

The clerk as a weaver

Unlike the experience of the 19th century industrial revolution, the areas most at risk of automation in the AI ​​revolution are service sectors.

These are the economic activities undertaken most often by Australians and make up 80% of the economy.

This is typical of postmodern developed economies and has led to estimates of AI-related workplace fatalities of up to 300 million worldwide.

About 9% of all jobs on the planet.

The experience of the industrial revolutions of the 18th and 19th centuries is that it is probably exaggerated, at least in terms of speed.

However, there are reasons to believe that the impact will be material and unstoppable.

Nothing to break

The 19th century Luddites had an obvious target for their anger. In protest they attacked the machines that replaced their jobs.

But what can a worker do if his entire production chain becomes a module bolted to an AI backbone somewhere in Silicon Valley?

Workers will have to protest directly to their government to obtain supportive policies.

They could include a universal basic income, robot taxes or retraining subsidies.

What they won’t be, because they won’t work, are tariffs to prevent automation. AI is in the cloud, and companies will move jobs to AI-enabled jurisdictions.

Australia and artificial intelligence

Artificial intelligence poses a more difficult challenge for Australia than other developed economies.

This is because the structure of our economic growth is different from most countries.

Typically, developed market economies grow by attracting business investment.

Australia grows by expanding its labor market through immigration and then chasing declining living standards with public investment.

Clearly, if AI turned into a material threat to employment, then this model would be threatened as foreign workers would be increasingly excluded due to political backlash.

A microcosm of this dynamic is playing out now, as the post-Covid economy comes under pressure from interest rate hikes and immigration is curbed.

The prospect of weak labor markets colliding with AI job losses suggests that the model will become completely unsustainable.

The Australians won’t be able to break the machines but they could break Canberra.

David Llewellyn-Smith is Chief Strategist at MB Fund and MB Super. David is the founding editor and publisher of MacroBusiness and was the founding editor and global economics editor of The Diplomat, Asia Pacific’s leading geopolitics and economics portal. He co-authored The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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