Artificial Intelligence is an Awfully Wobbly Juggernaut

For something that was supposed to be taking over the world, AI is tottering.  I can’t speak for the status of the technology itself, but that’s not the issue.  How it progresses and what it ends up doing will be decided in other realms:  legal, financial, social, regulatory, and more.  What’s been happening with AI prospects over the past two and a half months?

The first clue was in Futurism, updated on August 11^th, “AI Is Starting to Look Like the Dot Com Bubble.”  This piece, modified by Maggie Harrison, started “as the AI industry’s market value continues to balloon, experts are warning that its meteoric rise is eerily similar to that of a different – and significant – moment in economic history:  the dot com bubble of the late 1990s.”  It is not that no companies are profitable – the hugest ones of Microsoft, Meta, and Amazon are – but there are many others, getting venture capital, which “have yet to even introduce a discernable product.”  It is time to realize that while there may well be Fords and Chevrolets, there will be Stutzes and Hupmobiles as well.

Per Ian Prasad Philbrick in the August 27^th New York Times, “Regulating A.I. Requires Congress to Act Nimbly.”  The author pointed out that “major federal regulation” has taken as long as 90 years to materialize after “invention or patenting,” with nuclear energy, with the shortest interval, still taking four years, and airplanes and automobiles 20 and 70 respectively.  Although our senators and representatives have attended informational sessions, it is a challenge, and will take “perhaps a decade or more.”

A strong indicator of how people’s attitudes can trump technical achievements was in the September 10^th New York Times, Kashmir Hill’s “Anonymity Is Over.  Big Tech Tried to Save It.”  It related how, six years ago, Facebook technologists worked out a way to identify faces and attach names and other information to them.  A related thing had been developed by Google in 2011.  Neither was released, as Google “decided to stop” what it was doing, and Facebook considered it “too dangerous to make widely available.”  Some are now using related facilities, but far fewer than their utility and technical merits would justify.

On the recent idea that artificial intelligence will at least help productivity, Aaron Mok, in Business Insider on October 2^nd, relayed that “OpenAI’s ChatGPT can actually make workers perform worse, a new study found.”  The research, from Boston Consulting Group, found that when people used ChatGPT with GPT-4 for work requiring capabilities the software was known to have, such as “brainstorming innovative… concepts, or coming up with a thorough business plan,” the tool excelled, but on “more open-ended tasks” such as offering business recommendations, it would make large errors, dangerous “because the  consultants with AI were found to indiscriminately listen to its output – even if the answers were wrong.”  It will be a challenge for businesses to distinguish between these two rough categories.

There were things to think about in “Knowledge vs. intelligence amid the hype and hysteria over AI” (Mihai Naden, Fox News, October 2^nd).  Naden considered intelligence to require not only evidence of ability to perform, but also what of two resources they required.  As “to win a game of chess at the expense of energy that a small town consumes in a week is unsustainable,” “artificial entities could justifiably claim intelligence if, in executing a task, they would use as much energy or less, and as much data or less, than a living entity performing the same task.”  That may be the criterion we need.

On the positive side, we have Paul Krugman’s October 3^rd New York Times “A.I. could be a big deal for the economy (and for the deficit too).”  Although he saw generative AI as “souped-up autocorrect,” he thought it could massively improve productivity in that role.  He included a Goldman Sachs chart with 23 different industries, each divided into “no automation,” “AI complement,” and “likely replacement” of workers.  The field faring best was “building and grounds cleaning and maintenance,” with about 95% of employees in the first category, and “legal” the worst, ripe for a 40% job loss.  Some areas, such as sales, education, social services, and computers, were 100% complemented.  Of course, this does not include other sources of automation, globalization, and efficiency.

Per Ed Zitron in Scientific American on October 17^th, “AI Is Becoming a Band-Aid over Bad, Broken Tech Industry Design Choices.”  He said iPhones came with 38 apps, 27 of which could be removed, and users would likely add more, but Apple is relying on AI interfaces instead of ones users could handle themselves, leaving “a Matryoshka of bolted-on features.”  Other vendors, according to Zitron, are similarly at fault.  Not an AI problem as such, but something to affect its reputation.

On October 18^th in the New York Times, Kevin Roose said that “Maybe We Will Finally Learn More About How A.I. Works.”  Developers have communicated poorly about how the software was formed, including its use of copyrighted material and how it shares data.  GPT-4 got a 40% “transparency score,” not far off the 54% maximum among ten popular models.  Is it true or false that “we can’t have an A.I. revolution in the dark.  We need to see inside the black boxes of A.I., if we’re going to let it transform our lives”?  That is for us to decide.

Most recent is a reminder that, even for the largest companies, “Long on Hype, A.I. Is No Guarantee for Profits” (Andrew Ross Sorkin et al., The New York Times, October 25^th).  Although both are deep into the technology, Microsoft has done far better than Alphabet since their earnings reports the day before, with a one-day 3.9% increase instead of a 6.2% decrease.  And Meta’s stock suffered the same day for other reasons.  So, it’s not enough to identify Ford or General Motors by their products – they must make money as well.  About that, we still, ample attention notwithstanding, do not know.  By the same token, we cannot see where artificial intelligence will wind up – regardless of our hopes and fears. 

Remote Work: The Con Side, From Writers This Summer

The issue of employees doing their tasks from the office or elsewhere keeps rolling on.  I won’t say it’s evolving, as I have maintained that its favor has been a pendulum, but it’s still oscillating.  Here is some input from commentators taking the negative view, which management mostly has now.

A remote-work effect adverse but not quite the responsibility of those causing it is the subject of “Middle America’s ‘doom loop,’” subtitled “Work from home is crushing Midwestern downtowns,” by Eliza Relman in Insider on June 22^nd.  The author blamed less activity there on civic decisions made to emphasize businesses, and called on those administering such areas to adapt to this change, as “economists and urban planners say many Midwestern cities need to get serious about improving amenities and boosting quality of life in their downtowns.”

Could it be that “In the war over remote work, companies are turning full-time jobs into low-paying gigs” (Aki Ito, Insider, June 27^th)?  Ito claimed that “employers are quiet quitting on the whole idea of traditional full-time employment,” as, per recent research, “businesses said remote work had led them to stock up on part-time employees, temps, independent contractors, and outsourced positions both at home and abroad.”  That trend was getting press late last decade, and has a certain justification, as, since worker’s performance issues are less important or drop out entirely when they are not conventional employees, working from home is especially compatible with such agreements.  These arrangements, as Ito points out, are not always negative, so this piece may not qualify as being against non-office work at all.

“For remote workers, time to get out of the house” by Isabella Aldrete on June 30^th in Benefit News, deals with a problem people may not even know they have.  “About a third of employees say they struggle to leave the house enough when working remotely,” meaning that “work-life balance” is not only for those going to offices.  Per one interviewee, it would help them to realize “it can be important to really find time to just kind of completely unplug, leave… and focus on life outside of work,” as “it is really important to set and maintain those boundaries.”  Yes, that’s important.

The July 15^th Economist had an article titled “The WFH showdown,” as “the fight over remote working goes global.”  “With bosses clamping down on the practice, the pandemic-era days of mutual agreement on the desirability of remote work seem to be over” – and, after naming various international examples, “the gap between the two sides of the work-from-home battle may yet narrow.  The question is whether the bosses or the bossed will yield the most.”

Finally, related to the second piece above, is “Remote workers are treating their jobs like gig-work, and it’s turning them into the most disconnected employees” (Jane Thier, Fortune, August 26^th).  The author recommended “a hybrid plan,” and largely attributed the problem to modern work issues in general, with special concerns about “engagement and empowerment.”

Although I am still broadly bearish on remote work, these pieces, given that they were the most pertinent over the past four months, offered little new.  That probably means that not much has changed.  Since the Clinton administration, the pendulum has swung and the sides have disagreed.  Until businesses find an antidote, the issue of where to work will not be resolved. 

The Past Year’s Union Going’s-On, Ending with Automakers

During the previous twelve months, there have been a fair number of events and observations pertinent to organized labor, some of which have set the stage for the 2023 strikes.  What were they?

Before Joe Biden joined the United Auto Workers picket line, views on his attitude about unions were often different, as “Some Rail Workers, Seeking Sick Days, Say Biden Betrayed Them” (Noam Scheiber, The New York Times, November 30^th).  Then, the president “urged Congress to impose a labor agreement that (one) union had voted down,” which led to a possible railroad strike, which he said “would threaten hundreds of thousands of jobs and… cost the economy more than $2 billion per day,” not materializing.  The main area of controversy was paid time off for illness or medical appointments.

Moving to a large, familiar company, which has had labor organizing efforts both successful and unsuccessful, was “At Starbucks, Schultz Is Back to Fight a Union” (Noam Scheiber and Julie Creswell, The New York Times, December 11^th).  The former and incoming CEO named in the title gave “new benefits and wage increases but withheld them from employees in the union, which represents about 2 percent of the company’s U.S. work force of more than 250,000,” and said “no” to someone asking him “if he could ever imagine embracing the union.”

Times have changed significantly since December 17^th, when The Economist published “Picket lines and poké,” subtitled “Unions are gentrifying.  Can that reverse their decline?”  Its main idea was that “unions used to be associated with brawny middle-aged men standing outside factories” but as of article time “the most active trade unions represent workers who have degrees and wear white collars,” 46% of whom had four-year degrees.  That may have been the main story of organized labor over the previous ten years, but it has since shifted toward protecting employees, especially lower-paid ones, from problems managements will not solve.  Moving in that direction, “Unions won more elections in 2022 than they have in nearly 20 years” (Vox.com, December 25^th), with 641, or 80% more than in 2021.  As well, “unions are winning more than three-quarters of their elections,” “three times as many US workers went on strike in 2022 as in 2021,” and “the share of Americans who approve of unions is at its highest level since 1965.”  In addition, “US labor strikes surged 52% in 2022, showing rise in ‘worker activism’: study” (Brock Dumas and Bradford Betz, Fox Business, February 21^st). 

Just into this year we saw as “Amazon Loses Bid to Overturn Union Victory at Staten Island Warehouse” (Noam Scheiber and Karen Weise, The New York Times, January 11^th).  That decision was made by “a regional director of the National Labor Relations Board,” who “found that there was a lack of evidence to support Amazon’s claim of election improprieties.”

The conflict at the coffee-serving company continued, as “A barista fought to unionize her Starbucks.  Now she’s out of a job” (Greg Jaffe, The Washington Post, June 18^th).  This article, which made the top of the Sunday front page, related how someone, who had worked there “for nearly eight years,” as she “was one of 49 baristas from across Buffalo who sent a letter to the company’s chief executive in August 2021 informing him that they were seeking to form a union,” was fired.  As of the publication date, there were “about 320 unionized Starbucks stores in the United States,” but the effort at this one failed.

Finally, are we in “Striking times” (The Economist, September 16^th)?  The United Auto Workers stoppage, started one day before this publication date, was enlarged two weeks later (U.A.W. Expands Strikes at Ford and G.M.”, Neal E. Boudette, The New York Times, September 29^th), and is still in progress, with companies laying off workers and no reports of successful negotiations.  There will be more.  Whether justified or not, beyond any doubt the labor situation is evolving more quickly than it has for decades.  In a year we may know much more, but for now, we don’t.

Jobs Report: Another Banner and Expectation-Exceeding Month, with AJSN Showing Latent Demand for Positions Down Over 600,000 to 16.2 Million

Another month, another jobs report, another big winner.  Why do I say that?

First, we blew away the published forecast of 170,000 net new nonfarm payroll positions with 336,000 – almost double.  Second, we added 242,000 employed people to reach 161,669,000.  Third, those were accomplished with private nonfarm payroll wages going up only 6 cents per hour, to $33.88 – less than inflation.

Much of the rest broke even, including the seasonally adjusted unemployment rate at 3.8%, the adjusted number of officially jobless at 6.4 million, the labor force participation rate at 62.8%, and the employment-population ratio at 60.4%,  Others which did change included the unadjusted unemployment rate, down a seasonal 0.3% to 3.6%, the number of those jobless for 27 weeks or longer improving 100,000 to 1.2 million, and the count of those working part-time for economic reasons, or keeping such positions while looking thus far unsuccessfully for full-time ones 100,0000 better at 4.1 million.  The only discouraging number of the ones I consider front-line is the number of people not wanting a job, up 729,000 to 94,411,000.

The American Job Shortage Number or AJSN, the metric showing how many additional positions could be quickly filled if all knew they would be easy to get, fell a remarkable 621,000 to reach the following:

 

Five-sixths of the drop was from official unemployment, with another 138,000 from a lower count of those wanting work but not looking for it during the previous year.  None of the other factors added or subtracted more than 37,000.  With lower unemployment, the share of the AJSN from official joblessness came in at 33.6%, or 1.9% less than in August. 

Compared with a year before, the AJSN gained 223,000, with the 530,000 more contributed from higher unemployment mostly offset by improvements in the counts of those discouraged, those wanting work but not looking for a year or more, and non-civilian, institutionalized, and off-the-grid people comprising about one-eighth less than in September 2022.

Perhaps, with unemployment and workforce participation the same and more people getting on the shelf, September was not as good as I thought.  But, with so many new jobs added and once more no reasonably clear movement toward recession – not to mention noninflationary wage increases – we should take this data as a solid indication of continued prosperity.  As before, even if it means we are treading water, it’s plenty warm.  The turtle, once again, took a good step forward.