Every few days we hear sombre announcements from “experts” that we must plan for an impending apocalypse of AI job losses. Economists typically brush aside such claims but their message is worth repeating. 

In this piece, I show why we must celebrate, not lament AI-driven job losses. The AI revolution is bringing us ever closer to self-actualisation – the highest point of the Maslow needs pyramid. That’s a good thing. That’s also where many new jobs are already being created.

1. Computers heralded centralised, global productivity 

Over the past four decades, there has been a step change in the way the world operates. Prior to PCs and the internet, it was difficult to centralise and replicate business operations. It could be done (e.g. via franchises) but it was feasible mainly for things like a burger or supermarket chain. 

With the internet came the capacity to massively centralise and replicate operations across the world. Thus, India’s IT industry services banks and other companies worldwide. Amazon and eBay have found ways to arbitrage tiny margins into huge centralised profits. This is an entirely new kind of productivity – instantaneous, centralised, global. 

2. Computers have created thousands of billionaires

A major consequence of this productivity shift has been the rise of billionaires. Today, there are 3,000 of them, plus over 50 million millionaires.

Pre-computer billionaires organised real physical goods in commerce and industry. Computer billionaires, on the other hand, mainly deal with intangibles – with a focus on transaction costs both for private individuals and businesses (I’m using the term loosely to include search costs, costs of price discovery and part of personal and industrial logistics). When we click on Amazon’s website and shoes are delivered to us the next day, we have saved both time and money: transportation costs to the market as well as time to reach the market and search for shoes. Most often, as well, Amazon provides more options – such as, in my case, the extra-wide shoe size 6E which is almost impossible to find in any real shop. 

The value released by slashing such costs in billions of global transactions every day has made multiple billionaires, even as millions of small shopkeepers have been gutted. 

3. More jobs created than lost

While millions of jobs have been lost during the IT revolution, many more jobs have been created – exactly as economists have long predicted. 

Jean-Baptiste Say’s insight (early 19th century) was that supply must precede demand. Producers who create value (such as the computer billionaires) are rewarded with wealth which drives demand, including for luxuries. Computer billionaires don’t shovel their money under a mattress, they spend it or invest it in new projects. Say’s law holds not just in a static economy which produces the same old things but also for the dynamic, innovative economy. An innovator creates a car with a powerful engine but can’t afford to set up a factory unless enough people buy his car or invest in it. Here’s where the rich come in, again, to buy the car or to invest in it. In this churn, which constantly rewards the most valuable ideas, owners of businesses which can’t compete must shut down (Schumpeter’s creative destruction). 

4. The shift towards self-actualisation

One of the main things that changed with the computer revolution is the shift towards self-actualisation, driven by the ultra-rich. 

Mankind had struggled in the past to achieve even the basic tier in Maslow’s needs hierarchy: food and shelter. Then, in the 1600s, came the first agricultural revolution with a boom in food production. This led to millions of people moving out of villages from around 1750 to cities to work in newly sprung factories. The products of the factories assisted humans to move to the next Maslow tier: safety, including safe travel – think cars, trains, airplanes. 

By around 1950, people became busy with producing things and didn’t have time even to wash clothes or cook at home. This led to the services industry boom: burger chains, restaurants, laundromats; and, of course, healthcare and education. Some parts of the service industry also served the needs of “belonging”, the next level of Maslow’s pyramid (think large birthday parties and social dinners in restaurants or theme parks).

Finally, by around 2000, came the self-actualisation industry. This industry is best illustrated by the urge to climb Mt. Everest. This urge is potentially lethal and has nothing to do with basic needs like food, shelter, safety or belonging. It is about that aspirational thing called self-actualisation: what people want do when they have everything else. Till around 2000, climbing Mt. Everest was a tiny enterprise but now tens of thousands are employed directly or indirectly in the industry. The self-actualisation industry (which can also be called the “experience industry”) is growing at a relentless rate, with millions of rich people determined to see different places with their own eyes, to climb Mt. Everest, to go into space. 

That’s where many of the new jobs of the past 25 years have come from. When people have money to pay, there’s no limit to what can be done to cater to their desire to see this amazing planet – and beyond. Each such opportunity is an industry with new jobs.

4. AI is a part of the computer revolution

AI is an extension of computer technology and will further increase centralisation of production and profits for owners. Much of AI will fail but some of it will increase productivity. That will lead to more and cheaper stuff; and higher wages for some people but job losses at the same time in the productive industries. 

Overall, AI will generate even more billionaires and millionaires who will demand big houses, fancy cars, yachts, private planes, 7-star hotels. The common man won’t get a direct AI boost but indirect: he will able to buy everything that he currently buys at a much lower price; this will release savings to splurge on things he couldn’t have otherwise afforded.

This combined new demand generated by AI – both from the rich and common folk – will increase demand for all goods and services but also for experiences. The increased demand will vastly offset any decline in demand from (temporary) job losses. Manufacturing will grow, but relatively slowly (of course, there will be far more goods produced than before). Restaurants will grow, too, but slowly. The main arrowhead will come from the self-actualisation industry. 

We can expect new opportunities in luxury manufacturing: cars, yachts, private airplanes, recreational vehicles; luxury construction; luxury hospitality: fancy hotels, restaurants, luxury travel and cruise, and luxury golf, pickleball and tennis. Just study what the rich have been doing for the last 25 years.

Conclusion

The more that robots and AI produce for us and do our boring tasks, the more mankind will move towards higher-order flourishing. Losing jobs to technology is always a good thing as it leaves humans free to do the more interesting things. While a few people will need to readjust their career plans, they will never find a shortage of opportunities. 

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