AI & Business Blog Series Part 1: Professor Veli Safak

Professor Veli Safak gives his perspective on the future of AI and Business in Part 1 of the AI & Business Blog Series, prognosticating how young entrepreneurs can potentially take advantage of their ideas with more flexible avenues of investment.

Artificial intelligence is set to transform the global job market in three key ways: displacement, productivity, and reinstatement. It will boost productivity, as we have already seen with tools like Google Translate and Grammarly, which enhance efficiency in various tasks. AI will also create new job opportunities, often in fields that are currently unimaginable. However, it will also lead to job displacement, particularly in roles focused on cognitive tasks such as reading, remembering, speaking, listening, and paying attention. In summary, while AI will render some jobs obsolete, it will simultaneously open up new opportunities and enhance productivity in the workplace.

AI and robotics will impact every industry, with effects that can be perceived as either positive or negative depending on one’s perspective. On the positive side, AI will be a game-changer for industries like healthcare and education, making these services more affordable, faster, and accessible. On the negative side, sectors reliant on roles that AI can automate, such as certain civil service positions, may experience job displacement. In essence, AI’s impact will be widespread, presenting both opportunities and challenges depending on the specific industry and one’s role within it.

According to the OECD Employment Outlook 2023 report, the impact of AI on employment is highly uncertain but concerning. Blue-collar jobs, which typically require less cognitive ability, are less at risk from AI but more vulnerable to robotics displacement. In contrast, white-collar jobs can be divided into two categories, routine and non-routine jobs. Routine jobs, such as positions in sales, office, and administrative support, are more vulnerable as AI can efficiently take over these cognitive routine tasks at lower costs and risks. Meanwhile, roles in management, legal, and healthcare are less at risk because they require complex decision-making and human interaction.
In summary, cognitive routine jobs are at a higher risk of displacement, while non-routine roles remain relatively safer.

AI is reducing barriers to entry in digital markets, enabling young entrepreneurs to test ideas, products, and services with less time and financial investment. This is particularly evident in industries such as entertainment, education, marketing, art, and design. Entrepreneurs can now launch ventures more easily, though this increased accessibility also means heightened competition. New roles are likely to emerge in AI app development, data analysis, digital marketing, and creative industries. These jobs will blend technology with creativity and be in high demand. For Gen Z and Gen Alpha, becoming digital business founders will be more accessible than ever. Staying updated with technological and economic developments and maintaining a mindset of constant inquiry will be essential for navigating this evolving landscape.

AI has significantly affected job markets, including those for college students, where competition for positions has intensified. There is a concern that AI could concentrate wealth among a few companies; however, many of these companies are publicly traded, allowing individuals to invest in their success. This underscores the importance of financial literacy. The gap between financially literate and illiterate groups is expected to widen as those who engage with financial markets are better positioned to benefit from AI-driven growth. Policies such as Universal Basic Income (UBI) could help mitigate job displacement, but their success would depend on pairing them with increased financial literacy, support for entrepreneurship, and strong digital infrastructure. In conclusion, while AI poses risks of economic inequality, these risks can be mitigated through education, investment opportunities, and supportive policies.

In the long term, AI is likely to displace more jobs than it creates, particularly in routine cognitive roles. This mirrors the economic shifts and deflationary period experienced during the first industrial revolution. Job displacement will occur as AI automates tasks, but it will also bring economic shifts, such as advancements in personalized medicine and increased lifespans, which could contribute to overpopulation and pension crises. However, younger generations like Gen Z and Gen Alpha, who have better access to financial information and markets, will have opportunities to adapt and thrive. Ultimately, the ability to innovate and leverage new opportunities will determine whether AI leads to widespread unemployment or economic growth.