AI Festival: Casaleggio’s accurate analysis of artificial intelligence and economics

The AI ​​Festival, an event that attracted, in two days, over 6000 visitors including: professionals, companies, startups, stakeholders or people interested in learning about and exploring the changes brought about by the Artificial Intelligence revolution. Among the many meetings offered by the AI ​​Festival, the most awaited and interesting event took place in the Plenary Room. The first of the speeches on the topic where we discussed with a rigorous and exhaustive analysis of: " Artificial Intelligence Economy ". The impact that artificial intelligence will have on the economy.

Economy and AI

Casaleggio e Associati is a company founded in Milan on 22 January 2004. As reported on the website, since its foundation one of its objectives has been: to analyze the web phenomenon with the aim of creating an Internet Culture and anticipating the trends of the digital scenario, grasp changes and opportunities in both the organisational, cultural and political spheres. Casaleggio is a company to which many players in the digital world and artificial intelligence owe a lot, for the many contributions made (research, e-commerce, information events). The focal point of the meeting was the impact that artificial intelligence will have on the economy.

AI Festival: Casaleggio's vision

AI Festival, the incipit of Davide Casaleggio's analysis was the axiom according to which a technology such as generative AI, in the next 10 years, will produce an increase in global GDP equal to 7% ( Goldman Sachs estimates ) . With an increase of 7 trillion dollars. This assumption suggests how a single technique will be able to "revolutionize" society and not only improve company productivity. Indeed, it will be able to change the current economic paradigm, transforming the business model. Probably the transformation closest to the one we are facing, due to AI, is that of electricity. In fact, the arrival and distribution of electricity in factories and homes brought productivity increases of 3% per year, revolutionizing the very way of thinking about production and work.

Internet

Similarly, catapulting us forward many years, it happened with the advent of the Internet. In both cases, electricity and internet, the impact was similar. But with one difference, the infrastructure. The transportation and distribution of electricity to industrial, domestic and commercial users meant building pylons, running cables, electrical substations, building electrical transmission lines to factories and homes. This branched construction to support electrical distribution took many years.

Source: Casaleggio

This is what makes the AI ​​phenomenon unique. It does not need to build infrastructure from scratch. Use digital infrastructure that is already available (even if it will continue to grow). These structures (networks, hardware) are the place where AI lives and where it has the data it needs available. This technology, unlike the others, does not need years to spread, perhaps it will take weeks or perhaps months but not decades or decades. Ergo, while previous innovations have allowed productivity peaks to be spread over long periods, AI will enable an immediate impact on the economy. From this perspective, what will the consequences be?

Research by Goldman Sachs tells us that one of the first reverberations will certainly concern the employment issue. This impact will allow the creation of new jobs, the birth of new professions, which today still do not exist but with a possible mismatch problem. That is, when the skills, cognitive and specific abilities for a particular job, do not correspond to those required by the job market. The same study shows how AI will impact 300 million jobs worldwide.

Source: Casaleggio

Some of which will be improved while the others will be replaced by this new technology. To understand the revolution that some sectors will undergo, it will be useful to use an analogy. The transformation that has occurred in the last hundred years in another field. In particular, in Italy, at the beginning of the 20th century, the agriculture sector employed approximately 80% of the total workforce. After 100 or more years, today, in the same country, technological development has made it possible to enormously reduce the number of employed people, with a trend that continues to indicate a decrease in the number of agricultural workers, bringing them to percentages of around ±3% of those employed .

We can also understand why sectors that do not have an elasticity of demand with respect to price react to the increase in productivity induced by innovations by firing people. While other sectors, which have enjoyed the same increase in productivity, react with an increase in employment. These include the healthcare or training sector.

AI Festival: Signs of economic transformation

How are things today?

The technology sector, Big Tech, fired 260,000 people in 2023. A company like Spotify in the same period and immediately after adopting a different business model, fired 17 percent of its staff. A school case sees: Netflix Vs Blockbuster. Netflix with 11,330 employees is worth $130 billion, Blockbuster 60,000 employees is worth $5 billion. A Netflix employee generates 130 times the value of a Blockbuster employee. It's no coincidence that Blockbuster is out of business.

The same goes for the advertising model. At Google, it takes less than one person to generate a million dollars in advertising revenue. In the similar model, that of the printed paper, 11 people are needed to reach the same figure.

Source: Casaleggio

AI Festival: Employment and new jobs in the economy

A research carried out in the United States in 2013 " The Future of Employment Frey & Osborne 2013 " groups all professions by number of employed people and shows how some of these jobs did not exist sixty years ago. Jobs such as:

  • Software developers and programmers
  • IT Support Specialists
  • Computer and information analysts

All jobs related to technology, especially digital. Considering this, it is necessary to reflect. When we talk about new jobs (digital sector), comparing the volume of new hires with those employed in the overall economic system, we are referring to a minority. Simply put: New jobs created will not replace all deleted jobs. This alone would be enough to understand what impact these innovations will have on the social fabric and the urgency of finding solutions to manage and not leave this phenomenon to its own devices. As Murphy's Law reminds us: "If anything can go wrong, it will ." And what's more, recent news also shows how this phenomenon will not only concern the working class.

In America, writers, authors and actors have also protested against the massive use of AI by the major film majors. But these must not become defensive battles of closure towards innovation. These struggles, if poorly managed, could become like the protests of the nineteenth-century workers' movement (Luddism) which protested against the introduction of automatic looms. Or the strike of the 1980s by British miners to fight the Government's decision to switch from coal to gas, closing coalfields and making people redundant. Protest, that of the miners, whose only result was to delay an already established trend by just a few years

Source: Casaleggio

Work and business model

At the beginning of the 20th century the concept of work was diametrically opposed to the current one. It was the norm to leave at dawn and return at dusk, after a hard day spent in the fields or in the factory. Something very different today. But in any case, nothing prevents the way we understand work today from being transformed again in the future. This time with significant diversity. Unlike in the past, with the speed with which these transformations occur today, it no longer takes a generation to change the business model or the company model. These transformations can occur within the same generation.

This creates the need for labor redistribution. And some phenomena that are not new. One of these occurred in the First Industrial Revolution, the Engel Effect. This phenomenon consists of an increase in GDP per capita, but this increase does not correspond to an increase in salaries. A similar phenomenon has been underway since the 1970s and consists of greater productivity, but this increase in productivity has served to reward capital and not wages. Let's add to all this the new Fordism, characterized by thousands of robots ready to replace workers in factories.

Source: Casaleggio

There has been discussion about the "adverse" repercussions that AI will have on our society and even more we could discuss the enormous advantages that the same technology will bring to industries, states and commerce. The improvement and greater efficiency of company processes will contribute to increasing profits and turnover. The paradigm shift and the transformation of the business model will result in market concentration. In which an epochal transformation of e-commerce is also expected, with the direct consequence of a hyper-concentration of activities in a few tools (Amazon has announced that Alexa will have its LLM).

Conclusions

Is it possible to find a strategy to deal with the boom that artificial intelligence will have on society? There is no single strategy with which to face the radical transformation on our doorstep. In this careful analysis, Casaleggio suggests a series of actions with which to face the next challenge. Among which:

Start immediately to create new business models linked to AI, trying to get ahead of the curve, in such a way as to guide the transformation and not undergo it. Without rearguard battles (Luddism) which would only serve to slightly delay the change. Think of a policy to redistribute productivity, thus intercepting to your advantage the changes with which these innovations invade the market. Extending them to everyone and not just a few large companies.

AI will bring an epochal turning point, it will certainly impact companies and states, the general alarm has already been raised, causing only a huge cloud of comments and opinions but to avoid repercussions on employment and companies we must not be caught unprepared.

The article AI Festival: Casaleggio's accurate analysis of artificial intelligence and economics was written on: Tech CuE | Close-up Engineering .