The potential for AI to swiftly displace a huge number of white-collar workers is exaggerated, according to Raghuram Rajan, a former governor of the Reserve Bank of India.
Rajan said in a Project Syndicate column that how the labour market is changed by AI will depend on how quickly technology is adopted, how competitive the market is, and what policies the government enacts.
Resistance to change and implementation difficulties frequently impede adoption outside fields like software, he said, suggesting that new technology usually take more time to spread throughout industries than many predictions indicate.
Rajan used the decades-long transition from human operators to completely automated telephone exchanges to show how a similar trend could develop with the widespread deployment of AI in various industries.
Rajan elaborated in a LinkedIn article that the impact of AI on employment and the economy as a whole will be affected by public sentiment and governmental reactions.
In one of the possibilities he described for the AI-driven economy, a small number of tech corporations like Anthropic and Meta Platforms control the creation of very sophisticated AI systems and demand exorbitant fees from companies who use their services.
He warned that this might lead to a decline in white-collar jobs and an increase in automation of cognitive functions; those laid off could find work in service industries like retail or hospitality.
Instead of productivity benefits going to a small number of companies, Rajan proposed a different scenario in which numerous AI systems arise in competition with one another.
