AI Superpowers: China, Silicon Valley, and the New World Order

by Kai-Fu Lee

the cotton gin, lightbulbs, cars, video cameras, and cell phones—none of which led to widespread unemployment.

general purpose technologies, or GPTs. In their landmark book The Second Machine Age, MIT professors Erik Brynjolfsson and Andrew McAfee described GPTs as the technologies that “really matter,” the ones that “interrupt and accelerate the normal march of economic progress.”

steam engine, electricity, and information and communication technology (such as computers and the internet). These have been the game changers, the disruptive technologies that extended their reach into many corners

first and second Industrial Revolutions (1760–1830 and 1870–1914, respectively).

Broadly speaking, this change in the mode of production was one of deskilling. These factories took tasks that once required high-skilled workers (for example, handcrafting textiles) and broke the work down into far simpler tasks that could be done by low-skilled workers

In terms of employment, early GPTs enabled process innovations like the assembly line, which gave thousands—and eventually hundreds of millions—of former farmers a productive role in the new industrial economy. Yes, they displaced a relatively small number of skilled craftspeople (some of whom would become Luddites), but they empowered much larger numbers of low-skilled workers to take on repetitive, machine-enabled jobs that increased their productivity. Both the economic pie and overall standards of living grew.

The Second Machine Age, over the past thirty years, the United States has seen steady growth in worker productivity but stagnant growth in median income

“the great decoupling.” After decades when productivity, wages, and jobs rose in almost lockstep fashion, that once tightly woven thread has begun to fray. While productivity has continued to shoot upward, wages and jobs have flatlined or fallen.

growing economic stra...

By 2017, the top 1 percent of Americans possessed almost twice as much wealth as the bottom 90 percent combined.

While the two other GPTs ramped up productivity by deskilling the production of goods, ICT is instead often—though not always—skill biased in favor of high-skilled workers.

But one thing is increasingly clear: there is no guarantee that GPTs that increase our productivity will also lead to more jobs or higher wages for workers.

The AI revolution will be on the scale of the Industrial Revolution, but probably larger and definitely faster. Consulting firm PwC predicts that AI will add $15.7 trillion to the global economy by 2030. If that prediction holds up, it will be an amount larger than the entire GDP of China today and equal to approximately 80 percent of the GDP of the United States in 2017.

Seventy percent of those gains are predicted to accrue in the United States and China.

Steam power fundamentally altered the nature of manual labor, and ICT did the same for certain kinds of cognitive labor. AI will cut across both. It will perform many kinds of physical and intellectual tasks with a speed and power that far outstrip any human, dramatically increasing productivity in everything from transportation to manufacturing to medicine.

it will simply take over the execution of tasks that meet two criteria: they can be optimized using data, and they do not require social interaction.

the main thrust of AI’s employment impact is not one of job creation through deskilling but of job replacement through increasingly intelligent machines. Displaced workers can theoretically transition into other industries that are more difficult to automate, but this is itself a highly disruptive process