Stiglitz suggests that increasing aggregate demand to keep the economy closer to full employment and retraining people for new jobs created by AI could help mitigate the impact of reduced demand for white-collar work. He also proposes the idea of a shorter workweek, with more leisure time, as a way to accommodate increased productivity and innovation. However, he warns that without the right policies, AI could exacerbate inequality and weaken workers' bargaining power.
Key takeaways:
- Generative AI is disrupting the job market and is expected to replace people in more routine jobs. However, it is not yet at a point where it can be trusted on its own and will require a lot of human interaction.
- AI is expected to create a demand for different skills and may change the kinds of skills that are valuable in the labor market. However, it is predicted that more jobs will be lost than created.
- AI is contributing to economic inequality by replacing routine physical work and reducing the demand for routine white-collar work. This could amplify the sense of disillusionment and have a macroeconomic effect on the level of inequality.
- Potential solutions to the reduced demand for white-collar work include increasing aggregate demand to keep the economy closer to full employment and having active labor market policies to train or retrain people for the new jobs created by AI. Government regulation may also be necessary to incentivize companies to shorten the workweek and accept reductions in overall profitability.