Sunday, August 31, 2025

David Ricardo was Probably Right About Automation, Hence Right about AI

David Ricardo is an economist whose views on automation and substitution of machinery for human labor are relevant for discussions of the impact of artificial intelligence on jobs. Basically, Ricardo came to the conclusion that substituting machinery for human labor was not good for workers. Lots of workers who never study economics could figure that out for themselves. 


With regard to the impact of AI, we might find lots of cognitive workers pondering the impact as well. 


In principle, automation can increase wages, but only when accompanied by new tasks that raise the marginal productivity of labor, and when workers in the affected industries and roles are able to gain a share of productivity growth (profit sharing or some other mechanism). 


There are some early signs that what AI might be doing, in some areas such as customer service and software development, is eliminating some number of entry-level jobs


source: Stanford University Digital Economy Lab


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