AI, and the Rise of the Creative Class—the Demise of the Useless Class

 

by Perry C. Douglas,

March 2, 2020

BNN Bloomberg: “CIBC cuts over 2000 jobs, shuffles executives in CEO cost-cutting mission…5% reduction in headcount to reduce the run rate of expenses by $260 million.” Financial Post: “CIBC beats expectations, hikes dividend.”

The official line from CIBC is that the “bank continues to cut costs and improve efficiency […and] we are continuing to identify opportunities to simplify our bank and work differently, including streamlining decision-making.” This is code for Artificial Intelligence (AI) not only supplanting task-driven jobs, but also corporate decision-making ones such as management; and both at a fraction of the cost of human labour, and geared to meaningfully improving corporate profitability over the long-term.  Pay attention, the ground is shifting right below your feet.

We already know automation has taken over everyday banking, reducing the need for tellers and lower level back-office employees. Evident by the CIBC example earlier, AI is now evolving into the middle management and the executive spaces. AI algorithms can process more in seconds than a human being can; CIBC is simply doing what a company should, seeking to increase long-term sustainable profitability. Employing AI allows them to cut costs and increase efficiencies quickly, providing a competitive growth advantage. Accordingly, embarking on “streamlining decision-making” at the middle management and C-Suite executives is just the natural progression of technology and business efficiency. The value is now driven through AI ecosystems, not human managers’ skills and intuition. Consequently, the simple $260M question becomes, why would a corporation pay a manager $150k a year when a machine can do it for a fraction of that amount?

A staunch pillar in the traditional professional community that has been able to relatively resist the barrage of disruption other sectors have experienced, is the legal profession.  The old system has worked well for those senior partners—who have had little incentive to change. However, the incumbents' advantage is no longer secured, AI-driven software is already predicting outcomes of cases and taking over time-consuming tasks like document review, once the work of articling students and associates. In 2018, global funding in law tech reached more than US$825 million, up from US$305 million the year before. There’s a new generation of lawyers emerging, and growing up in the digital age; they are “smarter,” now joining tech developers to streamline the task-driven, and monotony nature of legal work to make it more accessible and less expensive.

For the educated middle managers, the MBAs, the technical and specialized class, etc., they will eventually become the useless class as the logical economics of AI prevails. In an organization the value specialists once had is now being replaced by AI and machine learning. This is not in the future this is the now!

If we go back to Darwinism for a moment – survival of the fittest, natural selection, and adaptation – you either adapt to new technology, conditions or environments or become irrelevant, and eventually extinct. The ones who will thrive in the future will be the ones who can survey the changing landscape and adapt quickly. In the future, the value will be placed in those who can actually create it! AI will replace those specialized task workers that essentially process what the creators develop. Machines will increasingly do the task-oriented jobs, and less economic value will be placed on manual managerial type work, resulting in lower-paying jobs for the remnants of a time gone by. 

According to AI and Industrial Engineering scholar, Andrew Forde, and from my vantage point, there will only be two real drivers of value creation for the corporation of the future:

1. Intellectual Property, which drives human behaviours and expectations, and

2. Content Creators, and marketers, which drives human thought and feelings to make everyday decisions and purchases.

Someone who has spent years of education specializing may simply find AI replacing his or her task driven job. The highly paid investment analyst or banker, for example, who analyzes companies towards making stock recommendations will be replaced by specialized AI algorithms that can compute and connect hundreds of thousands of data points. Providing much better fact-based insightful Points of View (POV). It is simple; a human cannot perform hundreds of thousands of computations per second, detect patterns out of ambiguity, and form conclusions in short order.

Currently, for example, value-creating entrepreneurs and innovators are forced to pay investment banks and law firms millions of dollars, to what amounts to manual cut and paste template advisory. With what task specialized algorithmic programs can do in seconds, better and cheaper, at a fraction of the cost, why would any firm continue to pay an analyst or banker millions of dollars+ annual salaries to do? I predict this will change dramatically fairly soon. Remember, it wasn’t too long ago when firms like Goldman Sachs employed thousands of traders, now maybe two supervisory traders earn livings monitoring programmed trading algorithms for firms like Goldman Sachs.

Historian, Yuval Noah Harari, offers insight and predicts that just as mass industrialization created the working class, the AI revolution will create a new “unworking” class. Harari’s work poses a simple but bracing question:

“What should we do with all the superfluous people, once we have highly intelligent non-conscious algorithms that can do almost everything better than humans?”

Harari is pointing out that as old professions became obsolete, new professions come into play. He also continues – the idea that humans will always have a unique ability “beyond the reach of non-conscious algorithms is just wishful thinking,” and gives some good examples of that. Today, facial-recognition programs are able to identify people far more efficiently and quickly than humans can. Ten years ago most people might have thought the truck-driving profession would be safe from AI, but Google, Tesla and Uber are actually making things happen.

Too much specialization can lead to the elimination of one’s job, or lower the monetary value it demands. A taxi driver and a cardiologist may have more in common than you think. Because of their narrow focus or specialization, they are easier to replace by AI, AI can deliver in cognitive fashion specific tasks effectively and more accurate than a human can. For the cardiologists, for example, AI can execute specific tasks and pattern analysis to provide a diagnosis that is more accurate than the doctor’s or specialist is. Both professions are fundamentally redundant regardless of the level of education and training, and the reality of it all is that AI does that specific task better.

There is still hope, depending on your ability to adapt to the new environment. In particular, I see a specific group well positioned to rise and thrive in the new economy and digital age.  I call this group the “Content Creators” (C²); these are the entrepreneurs and innovators, artists, cultural thinkers, thought leaders, trendsetters, trailblazers and dreamers. They are the creative class. Those who see the world for what it can become and not for what it is. This is where the value of work will rest in the future, the real IP!

Historically, this group has always added value to society, shaping the way we live, work and play; from business to art, they contribute to the betterment of society.  However, along the way the processes and tasks required have taken too much of the value and wealth from this class. The “Taskers” for example – lawyers, bankers, regulators, etc., thrives off of the creative juices of the C² s.  They do the necessary tasks required to move from idea to product while getting dramatically overpaid in the process. In short, AI and machine learning will now do it better, and for pennies on the dollar, leaving more wealth in the hands of the deserving C^2’s.

Accordingly, AI can easily take on tasks and processing for the C² class. This group does not necessarily need to know how to write algorithms, just understand and be very familiar holistically with the technologies, ecosystems, and purpose. C^2’s must learn how to master specialized teams to their economic benefit while creating content. The ability to structure and facilitate and make things happen is the skill the C² must focus on. Then the future of wealth and power will shift more to those C²s who can prevail over specialized technology teams and the algorithms—creativity coupled with insightful fact-based processes will create value.

Once again, we turn to Yuval Noah Harari for insight in a historical context, he defines the future of value through the evolving technology landscape:

“In the 21st century we might witness the creation of a massive new unworking class: people devoid of any economic, political or even artistic value, who contribute nothing to the prosperity, power and glory of society. This “useless class” will not merely be unemployed — it will be unemployable.”

In other words, what are you going to contribute to society? Can you be creative and inclusive? What’s your socioeconomic value proposition and potential impact? Your long-term economic sustainability might depend on answering those questions above. If your answer is more of the same—specialized training, education for task-driven work, according to Darwinism, you will become extinct.

Most of what kids are currently learning in school today will probably be irrelevant in 10 years, or at least it won’t provide any real economic value towards earning a desirable income. In September 2013 Oxford researchers, Carl Benedikt Frey and Michael A. Osborne published a paper “The Future of Employment,” which stated that an estimated 47 percent of US jobs are at high risk of being taken over by computer algorithms within the next 20 years. I thought the most interesting nugget was the report found the likelihood of computer algorithms displacing archaeologists by 2033 is only 0.7 percent. This is mainly because their job requires highly sophisticated types of pattern recognition and doesn’t produce huge profits, so, it is improbable that corporations or governments will make the necessary investment to automate archaeology within the next 20 years. Again, it comes down to your economic value.

Henceforth, one’s human value in society may come down to what one can economically and socially produce. Capitalism, in its genesis, has created its own highly complex organic algorithm for recognizing and rewarding value—AI is just advancing capitalism.  In today’s world, the rapidly evolving impact of AI, the value shift is moving from the specialist to the C²s. If you can become a Content Creator, a “Socioeconomic-Artist,” then AI will provide you the algorithms that will help your ideas come to life. This is the eventuality of true value and wealth creation in the new digital economy!

Some “expert” thinkers have warned that once artificial intelligence surpasses human intelligence, it may exterminate humankind before we realize it. They see AI running the planet, and transforming the entire known universe into a giant supercomputer.  I do not subscribe to such unfounded fears; instead, I believe AI will make our lives considerably better! However, your mindset and decision making towards how you approach, adapt to, apply AI, and how you prepare your kids for the future of work, will ultimately determine your rise or demise by artificial intelligence. Be reminded by what history teaches us, that it is futile to resist change. However, aren’t we the ones the creator made to walk upright? So, why be afraid of machines?