Why AI is a tortoise, not a hare

SINGAPORE talks of Nvidia and OpenAI partnerships, Punggol “test bed” plans and more. Meanwhile, Meta, Standard Chartered and others slash jobs, citing artificial-intelligence efficiency drives.

Globally, many claim that the sole factor bucking the bearish Iran war is AI – with productivity gains set to turbocharge profits and banish inflation… while also laying off millions.

It all fans hysteria. In October, I wrote that AI hadn’t caused a stock-market bubble – and it is still true now.

But just how will it have an impact on economies, industries and the world? How can you sort out fact from fiction (or science fiction)?

First, quiet the hype – heavenly or horrific.

In 2023, I said AI’s reality was nuanced. Since then, hopes and fears have gone hyperbolic. But AI’s future remains largely unknown even to supposed “experts”. Buying or selling stocks or industries on AI speculation is pure arrogance. With all possibilities overhyped, knowing something others don’t is impossible.

Stocks pre-price it all, be it far-flung (often dystopian) theories or endless forecasts predicting fast, vast change – usually negative. “AI” is among businesses’ top 10 reasons for recent layoffs. Some say fintech firm Block cut half its jobs this year to optimise AI. Layoffs at Meta and Standard Chartered have led to similar claims.

The pain that layoffs cause is real. But doomsayers take it too far. Their big mistake: thinking that innovation destroys, but doesn’t create concurrently.

Think again

Such thinking abounds throughout history. In 1981, economists warned that computers would displace masses of workers. Robots would take over, while people sat idle in a societal surge of sloth. That didn’t happen – jobs changed, workers learnt new skills.

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Decades earlier, a 1925 New York Times column lamented that cars would supplant the “faithful donkey”. Yet man endures. Donkeys too. Both with lives vastly improved.

AI’s actual share of layoffs is tiny – and likely overinflated. Reality: Block’s stock has plummeted hugely in recent years. It, Meta and others vastly over-hired post-pandemic. AI makes a convenient scapegoat for it all. Even Standard Chartered plans to retrain many affected back-office employees.

Futurists usually overrate big changes’ speed. The Internet brought enormous change… but slowly. First came clunky dial-up access on boxy desktops. Then broadband and wireless Internet and affordable laptops. Then smartphones and social media’s explosion, video conferencing, mobile payments, delivery services and more – over decades.

In the case of AI, land for data centres, power and chip shortages all limit roll-outs’ pace – a reality that Singapore’s compact geography underscores. Look at land and energy constraints spurring the city-state’s proposed Digital Infrastructure Act, which aims to create energy-efficiency standards and reporting measures for data centres.

AI surely changes some industries greatly. Others, less so. Can it improve kueh? Or duct tape? Can it frame a home? Maybe it helps streamline logistics for transporting and storing food and tape. But, beyond that?

Customers don’t purchase knowledge-based services such as Singapore’s solely for expertise. They also want responsibility. Good luck getting an AI provider to take responsibility if their chatbot botches your tax filing. Data privacy is a massive challenge, too.

Not any time soon

Big technological changes seldom include either/or scenarios. Even as smartphone-based food delivery services such as GrabFood exploded on the scene, grocery and restaurant sales kept growing. Big-box stores changed retailing. Then online retailing did. Yet, many small shops thrive alongside bustling mega shopping centres such as VivoCity.

AI will likely overhaul much of our world… eventually.

Take legal work. It is far too costly to use brains for brainless tasks. Eventually, AI will free young lawyers for more productive tasks.

Transportation and logistics firms will benefit, too. Eventually, driverless trucks should mitigate global driver shortages. Self-driving vehicles, such as those cruising Punggol’s streets now, should eventually proliferate, giving blind and disabled folks previously unfathomable independence.

AI will also aid Singapore’s mighty financial services industry. But replace everyone? How many retirees will entrust their life savings to a liability-free bot?

Ageing populations need AI’s upcoming healthcare efficiencies. Globally, AI tools help more older folks live at home despite nursing shortages. Apps detecting falls and vital-sign changes help families juggling work and caregiving. Singapore’s Housing & Development Board showed this with its successful Queenstown fall-detection pilot programme – which is now expanding.

Efficiency is AI’s big benefit. No great company ever changed the world by counting more beans with fewer people. All ascended by doing hugely popular never-yet-done things. Great firms see a problem, develop novel solutions and create a life-changing outcome.

Can AI do that? Not any time soon. Doomers fret about endless job cuts, plummeting consumption and AI reliance – a human wasteland. If so, who buys what AI creates? Other algorithms? Where do the profits come from? The scenario lacks logic.

Current fears and hopes are excessive exaggerations. Crucial issues must be remedied before AI becomes the force many foresee. Big change will come, but not so fast. Stay level-headed.

The writer is the founder, executive chairman and co-chief investment officer of Fisher Investments, an independent investment adviser serving both individual and institutional investors globally