Schindlers Attorneys, a prestigious South African law firm with a long history, has taken a bold step into the future by embracing AI. Some of the technologically inclined partners have developed a legal AI engine to assist with all manner of legal preparation. Recently, their AI system tackled an “ex parte” application on a real matter presented to a full court Bench. The AI drafted every necessary submission to sustain the relief sought, producing 120 pages in under 30 seconds using a training canon of case law, law texts, opinions, and precedents, as well as the entire record of the matter at hand.
The document produced by AI was checked by a lawyer, but only minor changes were needed before the matter came up in court. The application was successful, and when the attorney revealed that every word presented was produced by AI, one of the judges and several advocates commented (only half in jest) that their careers were over.
AI Disruption and Employee Replacement
This matter required the highest level of legal skills, typically prepared and argued by highly remunerated legal practitioners who would take weeks to prepare and be paid tens or even hundreds of thousands in fees. If AI can operate at this level of very starched white collar, what of the rest of us offering our more mediocre skills to employers?
Consider this scenario: AI innovations continue to accelerate, including in computer vision and robotics. Jobs soon start disappearing at scale as corporations race to deploy cheaper and more productive alternatives. This includes “thinking” jobs and jobs requiring physical dexterity. Corporations, businesses, and factories become human-free dystopias of robots, computers, and automated devices.
How widespread will this employee replacement be? How high up the skills hierarchy will it reach? The answer is becoming clear – very wide and very high. If AI can produce the work of highly paid lawyers in no time at all and at very little cost, then few levels of expertise in any industry will be immune. The question arises: how soon will this replacement happen and how brutal will it be? Some argue it will “free up” employees to do other highly skilled or more productive jobs within the commercial sector. This is an optimistic view with no evidence that it will happen at a speed compensating for the misery caused.
John Mauldin, author of the widely read newsletter Thoughts from the Frontline, reflects that previous employment disruptions brought on by technology took decades or more to take root, somewhat mitigating the employment pain and allowing some people the option of retraining and reassignment. He wrote: “In 1800, many jobs were agriculture-related. It was still very high 50-100 years later when industrialisation really began to kick in. But we had four generations to transition from farm jobs to factories and other businesses.” The same was true within many other industries in our more recent history, including assembly line workers, telephone operators, typists, typesetters, etc., albeit with somewhat shorter timeframes. New jobs and industries were eventually created, and disruptions to overall employment were minor.
But this time is different. Most alarming is the speed with which new intelligent agents are being developed — in areas such as healthcare, writing, graphic arts, agriculture, customer service, manufacturing, education, finance, and software development. We won’t have decades to prepare, skill up, and restart, and protective regulation cannot possibly be implemented at anywhere near the speed of AI innovation.
Displacement has already started in many industries (consider Swedish fintech company Klarna laying off 700 employees in favor of an AI replacement) and it can only accelerate along with the astonishing rate of innovation in AI.
Employers are interested in two things above all else — profit and their ability to compete. They may say comforting words about their commitment to their staff but if they start underperforming in relation to their competitors, they will do what is necessary. And what could be necessary is the wholesale replacement of humans with AI. If companies don’t do it and their competitors do, they will be out of business. It will be a simple decision driven by the mathematics of capitalism. Venture capitalist Joe Lonsdale makes the point succinctly: “Any business that can triple its profit margins by implementing AI systems is obviously going to do it as fast as possible.”
So back to our scenario where most people lose their jobs but let’s assume that goods and services fueled by AI become so cheap to make, produce, and distribute that the unemployed can sustain themselves quite nicely on state grants, giving them time to write poetry or watch football.
Which brings us to my final point: who is going to pay taxes when the jobs go to AI? About 80% of state taxes come from individuals and payroll taxes. Only about 7% comes from corporate tax. And if there are no taxes to be scooped into the fiscus, how will the government provide services for its citizens?
The formalization of national income tax is a fairly recent phenomenon, often traced back to the UK Income Tax Act of 1799. It has since become the core of government funding and its greatest source of revenue. Political systems cannot afford idle citizens. This may become the biggest problem for governments if there is little work left for humans to do.
As I said, this is one possible outcome among many. Even so, it’s worth considering.
