Artificial intelligence will create new jobs, but poses same thorny issues as trade

Artificial intelligence will unlock new opportunities for jobs and economic activity, but will pose the same thorny issues around displaced workers that trade does until better institutions are created, according to a panel at a leading banking conference on Saturday.

The Institute of International Finance heard from experts including MIT professor David Autor and Susan Lund, a partner at the McKinsey Global Institute.

Autor in particular said the mistakes like those that were made in trade policy–like letting China into the World Trade Organization, which decimated manufacturing jobs — shouldn’t be repeated. “If we knew then what we know now about China accession to the WTO, we might have slowed it,” he said.

The process by which competition in textiles was introduced was phased in over decades, he pointed out. Autor used Norway and Saudi Arabia as examples of countries with similar sources of wealth — oil–but far different ways of spreading it.

“Institutions turn wealth into human striving or the absence of it,” he said.

On automation, Lund pointed out that it’s created demand for analysts and economists like never before. “There was a pent-up demand for more analysis, and we consume more of it than ever,” she said.

Like Autor, however, she pointed out that artificial intelligence is hurting those on the lower end of the educational spectrum. She said new McKinsey research will show that jobs in advanced economies that require a secondary degree or less are showing a net decline, while positions for those with a bachelor’s degree or more will be on the upswing.

There are “millions and millions who need to switch occupations and get more skills,” she said.

Mitali Das, deputy division chief at the International Monetary Fund’s research department, said emerging economies have more time to react to the trend toward automation since labor is still so cheap there.

“Much of this has yet to come,” she said. “They are in position to put [institutions] in place so that impact on distribution is smaller.”