Anxiety and opportunity over AI
AI can eliminate or destroy jobs but investments in this technology can create new jobs or economic value in another area.
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AI can eliminate or destroy jobs but investments in this technology can create new jobs or economic value in another area.
There seems to be a lot of mixed feelings surrounding AI. A couple of weeks ago, I visited a balikbayan friend at his new vacation house in Batangas and we started discussing artificial intelligence (AI).
Since he was from the US, I asked his thoughts on the emergence of this technology.
Being in the services sector and planning to offer some outsourcing services in the healthcare industry, he said that there’s a growing concern over the impact of AI on US employment. He was concerned about what to tell his children about what college course or degree they should pursue, given the vulnerability of certain sectors to the growth of AI.
With his concern, I saw the logic behind his new house. With such a risk to the services sector, it made sense to diversify your income stream to include investments not vulnerable to AI.
But focusing for a minute on college degrees, The Economist recently had a report on college graduate employment trends entitled, “Is AI putting graduates out of work already?”
It analyzed the surveys taken by the National Association of Colleges and Employers in the US over the past 10 years, which asked new college graduates if they were unemployed, working, or in graduate school.
Their responses or outcomes were mapped to fields that were rated low to high based on their exposure to AI. The analysis showed that computer science and information sciences graduates were significantly worse off, i.e., they were doing much worse.
Based on the charts, college graduates with relatively high exposure to AI, such as Journalism and Accounting, had neutral outcomes. What surprised me was that despite having fewer graduates, Philosophy graduate outcomes were much better than other fields and were considered less exposed to AI.
A Federal Reserve note on the educational exposure to generative AI supports the exposure assumptions of The Economist report. In terms of exposure, Liberal Arts courses such as arts and humanities and to a degree, social sciences, are less exposed to generative AI. With the exception of biology (doctors and nurses), many STEM fields have high exposure to AI.
Attending one high school graduation this year, I noticed that the bulk of the graduates were in the STEM strand, followed by the Accounting, Business, and Management (ABM) strand, with significantly fewer graduates in the Humanities and Social Sciences and general academic (GAS) strands.
This seems reasonable as parents push their children to enter STEM and ABM because of the prestige and potentially high-salary jobs that would be waiting for them after graduating from college.
However, if we extrapolate from the US data and assume that Philippine firms adopt AI quickly, there is a risk that fewer jobs would be waiting for them — here or abroad — when they graduate.
Maybe taking up the humanities is not such a bad choice when looking at careers in the future. As a friend of mine explained, AI can help you think, but it is not designed to teach you how to think, which is how a humanities course, such as Philosophy, can help the future workforce.
You cannot avoid AI, but you can use it to manage problems and challenges. This week, the “gods” of AI have announced their plans to go public via initial public offerings (IPO). SpaceX of Elon Musk, which plans to set up AI data centers in space, is expected to be the biggest IPO in history with a valuation in the trillions of US dollars.
OpenAI and Anthropic, developers of ChatGPT and Clause, respectively, are also expected to announce their IPOs soon. Despite all the concerns about the global economy, the US stock market has delivered positive returns, thanks to AI–themed technology stocks.
While this is not to recommend Space X or any other incoming IPO (this requires more due diligence and research), it follows though a principle I have that every consumer should consider including in his/her portfolio, companies with products or services that he/she uses regularly.
In that way, you partially offset any value you exchange for their product/services with potential value returned as a shareholder via capital gains or dividends. Having said that, shareholder value creation or its return is never fully guaranteed.
AI can eliminate or destroy jobs, but investments in this technology can create new jobs or economic value in another area. This displacement is happening whether we like it or not, but what we can control is how we adjust our strategies and behaviors.
The adoption of AI will be very fast, in my view, so use your natural intelligence to move faster to work around or with its strengths.
