AI Is Not the 'Boogeyman'

Editor's note: As AI models get more advanced, they're able to take on more complex tasks. Some worry that technology will lead to mass unemployment. But as MarketWise CEO Dr. David "Doc" Eifrig explains, we've seen these fears many times before. In today's issue, adapted from Doc's Health & Wealth Bulletin daily e-letter, he breaks down why AI won't replace workers...

Right now, you can think of AI a lot like a decent intern or an assistant with moderate skills... But it's going to get better.

If AI gets to higher levels of capability, it won't be limited to entry-level jobs.

At that point, what would be left for humans to do? Would there be massive layoffs? How would our economy function?

This sort of thinking can lead to sleepless nights as you worry about your own business or career – let alone what your children and grandchildren will do.

Take a deep breath.

People have feared that the efficiency gains from every major new technology would cause mass unemployment.

And as I'll explain, those fears have always turned out to be overblown...

Efficiency Gains Drive More Consumption

In 1900, 40% of the U.S. population worked in agriculture. As technological advancements over the years reduced manual labor on farms, that number has dropped to less than 2%.

This has been an undeniably good thing for humanity. We are more productive. Over generations, farmers moved into other, higher-productivity jobs. Lives were disrupted... but on a macro scale, it was a net positive.

For a smaller-scale example, consider what happened when ATMs started showing up all over the country in the 1990s.

At the time, U.S. banks employed nearly a quarter of a million tellers, and it looked like they'd be replaced by machines.

But instead, the number of bank tellers increased over the next two decades. Look at this chart from James Bessen's 2015 book Learning by Doing: The Real Connection between Innovation, Wages, and Wealth...

Tellers no longer needed to spend as much time counting out stacks of $20 bills. Instead, they focused on higher-level services like opening accounts and selling new products.

From the business perspective, this turned tellers from a cost center to a revenue driver. As a result, banks hired more tellers, not fewer.

Bessen also points out that the same thing happened with weavers, cashiers, and paralegals when technology automated parts of their jobs. Technology actually created more jobs for people in those roles.

Of course, throughout history, certain jobs have been wiped out by technology. But if machines made human labor uniformly worthless, then the share of income going to capital would increase and that going to labor would decrease.

Instead, labor's share of income has consistently been around 55% to 65%, going all the way back to the 1700s.

As technology makes us more productive... we find new jobs for people.

While resources are limited, human wants are not.

We will always want more than we have. Whether it's for comfort, status, or entertainment, humans can always think of a new product to consume.

That's why if the cost of producing anything goes down due to AI agents, our first thought will be to consume more of it.

For instance, when the printing press dramatically lowered the cost of books, the bookmaking industry didn't dry up... It exploded. The literacy rate in Europe doubled in the centuries following the invention. Books got so cheap that people learned to read just to take advantage.

That single innovation completely changed how societies operated. A handful of centuries later, the Internet did the same thing – in ways that were tough to predict at first.

Think about how many 40-year-olds are doing a job that didn't exist when they were children...

None of their high school guidance counselors could have suggested they work toward becoming a social media manager or take a job in e-commerce logistics. And a quarter-century ago, no one dreamed of becoming a YouTube star or an influencer.

Things change.

And this doesn't just apply to the workforce, either – it has widespread implications for investing.

In today's rapidly changing world, you need to get ahead of technological advances in AI if you want to profit from massive winners in the market.

AI is not coming for your job... But it should have a place in your portfolio.

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig

Editor's note: While AI is not going to take every job, the technology is advancing. The White House has launched an AI initiative it calls "comparable in urgency and ambition to the Manhattan Project." It's already backed by more than $5 billion in federal commitments across 278 projects – but the next catalyst is coming. And Doc says that soon, it means a small group of stocks could double in price...