- Torsten Sløk views AI disruptions as echoes of past economic shifts, predicting overall growth.
- In his view, AI impacts white-collar jobs, yet history suggests it will boost economic expansion.
- AI's rise mirrors mirrors China's entry into the WTO, as new jobs and growth offset initial employment disruptions.
Torsten Sløk, Apollo's top economist, recommends looking to the early 21st century for clues about what AI might do to the labor market. He's not talking about comparisons to the dot-com boom, but rather, the impact of China's manufacturing push on US jobs.
In his blog on Tuesday, Sløk recalled the early 2000s when China joined the World Trade Organization, which led to heightened competition for factory jobs around the world as China became more enmeshed with the global economy. But Sløk says the initial decline in US manufacturing jobs was offset by other economic forces such as service sector growth.
Now, the economist sees the current AI-driven economy following a similar trajectory.
"The AI shock is following the same playbook," he said. "The displacement force is different this time, impacting cognitive and white-collar work rather than factory floors. But every other element of the structure is remarkably familiar."
The scenario that Sløk sees playing out begins with a powerful economic disruption that quickly leads to significant job losses in exposed industries. However, it is followed by a wave of growth that serves to keep unemployment low and helps stabilize the broader economy.
Sløk has said before that he thinks the AI revolution should be viewed as a positive economic force, not the job killer that some predict. He recently evoked Jevons paradox to illustrate why.
This economic principle inspired by British economist William Stanley Jevons that theorized that increases in productivity leads to more demand for labor as the cost of services comes down. By that logic, AI should create more jobs in the long term as companies at employees to account for new demand.
Based on the events of 2001, Sløk seems more convinced than ever that it will spark even more economic growth.
"If history is any guide, the gains will be substantial," Sløk wrote. "Just as cheaper Chinese inputs helped US businesses grow and hire, AI is already accelerating business formation and productivity gains across the economy."
He highlighted that more than half the job growth that the US has seen since 1980 came from jobs that have only been created since then and did not exist prior to that decade.
"The bottom line is that we have seen this before," Sløk added. "Just as the China shock gave way to new industries and stronger businesses, AI will drive productivity gains and create opportunities that will more than replace jobs lost today."
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