Humanity’s Destruction or Evolution? A Closer Look Into AI

David Dylan Andrew & Siti Husna Adny

“This is the world now. Logged on, plugged in, all the time.” - John Connor, The Terminator.

Blockbuster movies like ‘The Terminator’ (1984) and ‘The Matrix’ (1999) present AI’s potential harms vividly by featuring the ethical concerns and security risks corresponding to the development of AI technology. It would be a surprise if you have not seen these movies before. Well, if so, the former illustrates a robotic AI system that managed to enslave human beings into a simulated reality, while the latter shows a cyborg assassin set to kill the creator of SkyNet, an artificial intelligence system that would cause a nuclear holocaust.

How could these movies set in the not-so-distant future predict the potential drawback of AI decades ago? Well, it’s simple. They are not true, nor are they predictions. The most they could be are mere possibilities. These plots simply originated from the imaginative minds of the writers of the time and were perpetually produced due to its popularity. Now, however, the long-lasting idea is a solid incentive for policymakers and the public to explore both AI’s positive and negative disruptions towards society and the economy. After all, its growing influence is, in fact, undeniable. A few of the negative impacts include:

1. Unemployment: Automation will potentially replace occupations in certain industries, particularly those which are repetitive and tedious in nature. For instance, the emergence of a new AI tool, ChatGPT. It can write codes and tell stories in a conversational manner. Furthermore, it may take on roles traditionally held by humans such as copywriting, writing news reports and creating legal documents. This could lead to unemployment and job insecurity for workers whose field are involved.

2. Inequality: The adoption of AI into the economy may widen the gap of inequality as leaders of AI adoption benefit more from the technology compared to countries that have less incentive to push for AI absorption. At the end of the day, front-runners are likely to benefit disproportionately (capturing an additional 20 to 25 percent in net economic benefits) while nonadopters might experience a 20 percent decline in their cash flow from today’s level, assuming the same cost and revenue model as today. This will further exacerbate economic inequality.'

3. Super firms: The improvement of AI can lead to the creation of super firms: hubs of wealth and knowledge that could have detrimental effects on the economy. Dominant companies or industries will reduce competition and potentially lead to monopolies. This would cause wealth and power to be concentrated in the companies controlling these technologies, creating social unrest.

4. Security risks: It is undeniable that AI and automation systems present several security risks, including the potential cyberattacks or the manipulation of AI systems to cause harm. AI’s capacity in withholding vast information is a double-edged sword. The valuable data analysed by AI systems could be misused in the wrong hands.

Leaders of AI adoption (mostly in developed countries) might have no choice but to push for full AI absorption to gain higher productivity growth. The higher wage rates in these economies encourage industrial leaders to substitute human labour with machines. In contrast, developing countries are primarily more focused in restructuring their industries and improving their productivity. However, some developing countries are an exception to this rule. China, for instance, is investing heavily in this industry due to their national strategy towards becoming a global leader in the AI supply chain.

On a different note, while economics has been infamously described as a ‘dismal science’, the advancements of AI might just redefine the discipline forever. One of the main criticisms of economics is its inability to account for the impacts of unpredictable and irrational human behaviour. While behavioural economics recognizes this problem, it is not without flaws as demonstrated by the ineffectiveness of nudge policies in recent history. By implementing machine learning, economists can now model human behaviour more accurately and understand their impacts on certain policies. Moreover, Prakash Loungani’s (IMF) analysis, revealed that economists had failed to predict 148 of the past 150 recessions. With the help of AI, economists can forecast financial bubbles and potential vulnerabilities in the economy with greater accuracy.

The utility of AI further extends to a wide range of businesses and industries including manufacturing, entertainment, e-commerce and fintech. By automating certain processes such as customer service, product recommendations and customer feedback analysis, firms can increase their productivity while simultaneously reducing costs. AI and machine learning can also transform businesses by leveraging existing data in order to minimise inefficiencies, identify areas of improvement and so forth. Needless to say, AI is a great catalyst which allows businesses to achieve economies of scale at a much faster rate.

There is no doubt that AI can bring about unprecedented change to the economic world, for better or for worse. While the rise of AI technology has its fair share of criticisms and skepticisms, the question is not whether AI will be detrimental to the economy, but rather how we will adapt to AI. The key to adjusting is figuring out how to redesign our economic systems to fully engage the working population. The most important role for humans will be to ensure that the rise of AI does not get out of hand. Despite there being both debatable pros and cons of artificial intelligence, its impact on the global industry is undeniable. It continues to grow every single day driving sustainability for businesses. This certainly calls for the need of AI literacy and upskilling to prosper in many new age jobs.

When all is said and done, what exactly does this mean for Malaysia? For insight, major consulting company McKinsey & Co reported that 50% of work in Malaysia are repetitive actions that can easily be automated with the help of AI. We can double the rate of innovation and improve workers’ output by 60% in Malaysia, which helps accelerate economic growth and attract investments. Government initiatives like MyDigital under MDEB offer an upskilling platform to help compensate for the displacement in the workforce caused by AI automation. By embracing AI and endless potential, together we can march towards a future of sustainable economic growth.