For about a year now, one of the most significant narratives in the developed world has been job losses due to the advance of AI. In every sector, AI is the heir presumptive to administration, management and research roles. This technology has even crept into the arts, confounding our notions of creativity with AI demonstrating a primal understanding of the abstract and adding a substantial amount to unemployment figures.
Inside Telecom has published innumerable articles on job loss in the last twelve months. Often, we’ve reflected the bewilderment surrounding the loss of jobs in the very companies who’ve developed job-stealing AI in the first place. The explanations we’re given make a sort-of sense, but they also sort-of don’t. Why haven’t the brains in these companies planned for their own future while they’re plotting the world’s? Instead, we’re served up legally-sanitised statements about right-sizing. At this point in the article, economists and investment analysts are excused. You know very well why unemployment is gaining momentum. The rest of you, stay put.
Not One, But Two Causes
Once upon a time (2008, to be exact) an event occurred in the U.S. which precipitated the Global Financial Crisis (GFC). It was extreme enough for the world’s banking system to institute a policy called Zero Interest Rate Period (ZIRP). The idea behind ZIRP was to restimulate economic growth by making money more available without punitive charges. And it worked. But it also triggered much higher inflation. Because the stimulus resuscitated consumer demand. No matter, ZIRP is a switch-on/switch-off idea. So off went the switch seven years later in 2015.
But four years later, the Covid-19 pandemic wreaked its own brand of social and economic chaos. So ZIRP was turned on again in 2020 and stayed on until 2022. This relit the global economy and investors were treated to a period of growth and much needed optimism. And most of the growth came, naturally in this digital age, from the technology sector. More specifically, the accelerating development of AI.
But the investment world is no interested in growth – we’ve been out of the second ZIRP for almost a year. Investors are looking for profit. In other words, Wall Street is putting the squeeze on tech companies to deliver some ROI. Meaning tech companies have to, by and large, cut down on its operating expenditure. Just ask Amazon, Alphabet, Microsoft and Meta. Collectively, they’ve contributed to unemployment by letting 50,000 human beings go in the last year. In total, almost 200,000 in the U.S. alone.
So before you assume AI is to blame for the majority of job losses experienced recently, think again. Good old human greed has contributed, too.
And the storm’s hardly even begun.