The real artificial intelligence (AI) job crisis may be about how quickly companies adopt the technology rather than how many jobs it ultimately eliminates, eminent economist and former Reserve Bank of India (RBI) governor Raghuram Rajan has said. In his latest note, \u2018How Corporations Can Mitigate an AI Jobocalypse\u2019, Rajan proposed an AI tax on companies to level the playing field with human labour.<\/p>\n
The former RBI governor said AI-related job displacement is inevitable, but the pace, scale and sectors affected remain uncertain. He mentioned that much will depend on how quickly individual companies integrate AI into their operations.<\/p>\n
\u201cAI-related job displacement is coming, though no one knows how fast it will proceed, how far it will go, and which sectors it will affect most. Much depends on the pace at which individual firms apply the technology to their operations,\u201d Rajan said.<\/p>\n
According to Rajan, the first task for any government is to identify and address all the ways the tax system biases corporations against human labour. "For example, a US firm contributes social-security payments for every worker, but not for AI. In a world where governments are already cash-strapped, one way to level the playing field is to levy a tax on the AI tokens a firm uses,\u201d he opined.<\/p>\n
The economist cited a recent US Census Bureau Business Trends and Outlook Survey, which found that only 20% of firms with fewer than 20 employees use AI, compared with 37% of businesses employing at least 250 people. While larger companies are ahead in adoption, he noted that even 37% remains low given that the survey counts firms using AI in \u201cany business function\u201d.<\/p>\n
Rajan believes that the biggest obstacle to wider adoption at present is not AI's capabilities but the difficulty of integrating them into existing workflows. Companies need systems that can not only work with existing data but also adapt to new data generated through everyday use, he noted.<\/p>\n
Uncertainty over costs is another factor slowing adoption, Rajan pointed out. Many large companies are still running pilot programmes and delaying hiring or firing decisions until they have greater clarity. However, he argued that competitive pressures will eventually force businesses to adopt AI more extensively.<\/p>\n
Rajan said the outlook for workers is not entirely bleak. If companies continue producing the same goods and services, AI would have effects similar to previous technological advances: some jobs would become redundant, while others could become more productive and engaging as AI takes over routine tasks.<\/p>\n
He also pointed to the possibility of new jobs emerging, including roles such as AI engineers overseeing the implementation of the technology.<\/p>\n
Rajan argued that if businesses adopt AI because of the productivity gains it provides, rather than simply because it is cheaper than employing people, the resulting ability to produce more at lower costs could allow firms to cut prices and boost sales. This, he said, could lead to higher employment through what is known as the Jevons effect.<\/p>\n
AI could also lower the barriers to starting new businesses, he said. For instance, someone wanting to start a driftwood furniture business might previously have needed to hire a web programmer and an accountant. With AI able to perform some of those functions, starting a business could become significantly cheaper.<\/p>\n
Rajan also cited economist David Autor's argument that AI could give moderately skilled workers higher-order capabilities. He gave the example of a nurse practitioner using medical AI to diagnose and treat a wider range of illnesses.<\/p>\n
\u201cWith enormous demand for medical services worldwide, and also services more generally\u201d, Rajan argued that there is considerable scope for AI-driven job creation.<\/p>\n
Even if the feared \u201cjobocalypse\u201d proves less severe than expected, Rajan said governments and companies will still need to limit the social impact of worker displacement.<\/p>\n
He argued that corporations should play a central role because they are likely to have the best understanding of which new roles their employees could be retrained for.<\/p>\n