AI won’t bring back era of rapid growth, says Nobel Prize winner

[LONDON] A Nobel Prize-winning economist has warned that artificial intelligence will not return Western economies to the era of rapid productivity growth, which may be gone forever.

Christopher Pissarides, who specialises on the impact of automation in work, said as many as four in 10 US and UK jobs would be largely unaffected by AI and cited areas such as nursing and hospitality.

Tech firms and governments have pinned their hopes on AI reviving levels of growth that have slowed sharply in recent decades. The sluggish performance of Western economies, particularly in Europe, has made policy trade-offs more difficult and potentially contributed to a febrile political backdrop amid weak real wage gains.

But, in an interview with Bloomberg News, Pissarides said there is little sign of any productivity boost from AI so far and questioned those, such as Nvidia boss Jensen Huang and OpenAI’s Sam Altman, who have claimed the technology will have far-reaching consequences for jobs. Pissarides won a Nobel Prize in economics in 2010 for his work on labour market frictions.

“There is up to 40 per cent, or at least a big number of jobs in the UK, which are not exposed to AI so they are not going to get productivity gains because of AI,” the London School of Economics professor said.

While there is likely be some productivity benefits from the technology, “I doubt there will be a new computer boom equivalent to what we had in the 1980s and 1990s,” said Pissarides.

“Given what we know now and what we see happening, I don’t see the productivity growth matching those levels,” he added while stressing the uncertainty over the technology’s future.

Earlier on Monday in a lecture at the Royal Economic Society conference in Newcastle, Pissarides argued that there would need to be huge productivity gains in the most AI-exposed sectors such as finance to achieve the strong growth rates that optimists have predicted.

“It’s just not practical to talk about high productivity growth,” he said. “I think we should be resigned to the fact that the days of fast productivity growth are over, whatever we do.”

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While he recently cautioned that it will take time for AI to feed through into the growth figures, Bailey said that the technology “may well ride to the rescue.” BLOOMBERG