AI and the end of work

AI and the end of work

Dario Amodei, the chief executive of Anthropic, has offered one of the more arresting forecasts of the AI age. If recent improvements in AI continue, he wrote in January, “it cannot possibly be more than a few years before AI is better than humans at essentially everything.”  Could we be approaching a world that John Maynard Keynes imagined in his 1930 essay, “Economic Possibilities for our Grandchildren”, in which he speculated that technology would solve the “economic problem” and leave his descendants working a 15-hour week?

• If the past is a guide the answer is ‘no.’ History shows that people, society and institutions have a remarkable ability to absorb and exploit new technologies without abolishing work. Over time technological change has been associated with growing, not falling, employment.

• First, and most importantly, human desires are not fixed. A static view imagines a list of progressively more difficult tasks that machines conquer until nothing remains for humans to do. That has not been the experience. Mass mechanisation destroyed jobs on a vast scale, collapsing the number of people needed to produce the necessities of food and shelter. Instead of universal idleness, rising incomes created new jobs elsewhere, providing everything from health care to holidays. When one set of wants is satisfied, new wants appear. In the modern world the “economic problem” is increasingly not one of material scarcity, it is the open-ended nature of human aspiration.

• Second, those aspirations are unlikely ever to be met fully by machines. Humans value, and want to be with, others. Even if AI systems become technically superior, it does not follow that people will prefer machine-only provision. The doctor, lawyer or waiter does more than process and act on information. They judge mood, interpret, persuade and encourage. Mr Amodei himself has noted that although AI has become highly capable at reading scans, radiologists have not disappeared because part of the role involves explaining the results to patients and planning future care.

• Third, technology, by raising productivity and cutting prices, bolsters demand. If AI reduces the cost of, say, making cat videos for social media, we consume more of them. Cheaper computing did not eliminate work in the tech sector; it helped create whole new industries. The same holds in travel, communications, healthcare and finance. If AI makes a vast array of services cheaper, we will consume more of them and, if history is any guide, will create new complementary jobs, many in roles that are as yet unimagined.

• Fourth, technology often falls short of its theoretical potential. Sometimes the frictions and hassles associated with using tech are just too great. Often the tech underperforms humans. The QR code menu is one example. During the pandemic, many restaurants switched to using QR codes to reduce human interaction and the risk of infection. The technology works, it is cheap and it reduces labour. Yet five years later the human waiter rules the roost in most restaurants because ordering food is also a social process and part of the experience of eating out. Or consider the role of the barista. Machines make excellent coffee. Yet customers continue to pay for staffed cafés because they prefer dealing with a human being and like the ambience and reassurance that comes from having staff around. Businesses do not just maximise efficiency to minimise cost. They optimise across an array of factors. AI will face the same frictions, especially in sectors where errors are costly or where consumers prefer dealing with humans.

• This is not to be complacent about the effect AI is likely to have on the labour market. Disruption is already happening, especially in some entry-level jobs, including software engineering. Tasks will be automated; jobs will be lost and many more changed. The adjustment could come quickly, especially for structured, more routine cognitive work. But the idea that better machines mean the end of human economic usefulness is a stretch. AI will change the nature of work. It is much less clear that it will end the human desire to work for, and with, others.

OUR REVIEW OF LAST WEEK’S NEWS
The UK FTSE 100 equity index ended the week down 2.7% at 10,379 as the week passed without a resolution to the conflict in the Gulf.

Middle East conflict

• US president Donald Trump agreed to extend the ceasefire between the US and Iran for an undefined period of time to permit further talks
• Iran seized two container ships in the Strait of Hormuz after US forces boarded an oil tanker that was claimed to be carrying Iranian oil. Shipping traffic through the Strait remains very limited
• US defence secretary Pete Hegseth said that 34 ships had been turned around as of Friday morning as the US continues its blockade of Iranian shipping
• The price of oil rose over the week, reaching $106/barrel
• US president Donald Trump announced that Israel and Lebanon have agreed a three-week extension to their ceasefire. Iran has demanded an end to attacks on Lebanon as part of any deal to end the conflict.
• Israel’s defence minister Israel Katz said that Israel is prepared to return Iran “to the dark and stone ages” while the head of the Iranian Revolutionary Guards Aerospace Force Majid Mousavi said that “Iran’s southern neighbours should know that if their geographies and facilities are used in the service of enemies to attack the Iranian nation, they must say goodbye to oil production in the Middle East”
• Mr Trump ordered the US Navy to strike any boats laying mines in the Strait of Hormuz
• Mr Trump explicitly ruled out using a nuclear weapon in Iran, saying: "A nuclear weapon should never be allowed to be used by anybody."

Economics

• The Bank of England’s deputy governor, Sarah Breeden, warned that global stock prices do not accurately reflect levels of risk and are likely to fall. "The thing that really keeps me awake at night is the likelihood of a number of risks crystallising at the same time – a major macroeconomic shock, confidence in private credit goes, AI and other risky valuations readjust – what happens in that environment and are we prepared for it?", she said
• Early estimates of economic activity for April compiled from surveys of purchasing managers suggest accelerating momentum in the US and UK but a decline in the euro area
• US prosecutors announced that they are dropping their criminal investigation into Fed chair Jay Powell over the renovation of the Federal Reserve’s Washington headquarters. The development could ease Congressional approval for the proposed replacement Kevin Warsh
• UK inflation rose to 3.3% in the year to March, largely driven by a 8.7% month-on-month increase in motor fuel prices
• The UK unemployment rate unexpectedly fell to 4.9% in the four months to February driven by a rise in inactivity rather than employment. Average weekly earnings growth slowed to 3.8%
• UK retail sales rose by 0.7% from February to March driven by a rise in petrol sales as consumers stocked up on petrol ahead of expected price rises
• The Bank of England is expected to keep rates on hold at 3.75% when it meets on Thursday
• UK public borrowing in the fiscal year ending in March came in at £132bn, down £20bn from the previous year as tax and national insurance revenues grew by 9.1% while spending only rose by 5.6%
• The OECD published analysis showing that in 2025 the UK saw the largest increase in the proportion of labour income paid in tax by the average worker (including employer/employee social contributions) among its membership of 38 mainly advanced economies
• UK consumer confidence declined for a third consecutive month in April, falling to a two-and-a-half-year low, according to GfK

Business

• Shares in chipmaker Intel jumped 25% as it announced higher-than-expected revenue growth driven by the boom in data centre construction
• Meta, owner of Facebook and Instagram, announced it would cut 10% of its global workforce while Microsoft said it would offer voluntary redundancy to 7% of its US workforce as both companies look to make savings as they make huge investments into AI
• US authorities charged a soldier for allegedly using classified information to place highly profitable bets on prediction markets relating to the operation to capture Venezuelan president Nicolas Maduro
• French police are investigating whether a weather station at Charles de Gaulle airport in Paris was tampered with after a series of suspicious bets on Polymarket coincided with unexpected temperature readings
• The UK government announced plans aiming to delink electricity and gas prices by encouraging older renewable generation to move from the older Renewables Obligation scheme to a contracts-for-difference style regime
• Apple announced that its CEO Tim Cook will step down in September after over 15 years at the top, a period that saw Apple’s market valuation soar from $312bn to over $4tn
• The UK’s Civil Aviation Authority announced that Heathrow Airport will be permitted to raise fees to airlines to recoup the costs of its application to build a third runway

Global and political developments

• The EU approved a €90bn loan for Ukraine and a new package of sanctions after Ukraine reopened a pipeline transporting Russian oil to Hungary and Slovakia, leading those countries to drop their veto
• Swedish head of military intelligence Thomas Nilsson said that the Russian economy is in considerably worse shape than official statistics suggest despite a higher oil price boosting government revenues
• The US is considering options including suspending Spain from NATO and reviewing its position on the Falkland Islands amid frustration over limited support from allies for its military actions against Iran, Reuters reports
• UK prime minister Keir Starmer faced questions from MPs in a row over the security vetting relating to the appointment of Peter Mandelson as British ambassador to the US
• The UK and France signed a three-year £662m deal that will see French police deployed to prevent migrants from crossing the English Channel

And finally… a driver was stopped by police in County Antrim earlier this month after being clocked at over 135mph. Police were unimpressed with the driver’s explanation that he was on his way to collect a Chinese takeaway – wanton recklessness