What’s Wrong with ChatGPT?

Microsoft is reportedly delighted with OpenAI’s ChatGPT, a natural-language artificialintelligence program capable of generating text that reads as if a human wrote it. Taking advantage of easy access to finance over the past decade, companies and venturecapital funds invested billions in an AI arms race, resulting in a technology that can now be used to replace humans across a wider range of tasks. This could be a disaster not only for workers, but also for consumers and even investors.

The problem for workers is obvious: there will be fewer jobs requiring strong communication skills, and thus fewer positions that pay well. Cleaners, drivers, and some other manual workers will keep their jobs, but everyone else should be afraid. Consider customer service. Instead of hiring people to interact with customers, companies will increasingly rely on generative AIs like ChatGPT to placate angry callers with clever and soothing words. Fewer entrylevel jobs will mean fewer opportunities to start a career – continuing a trend established by earlier digital technologies.

Consumers, too, will suffer. Chatbots may be fine for handling entirely routine questions, but it is not routine questions that generally lead people to call customer service. When there is a real issue – like an airline grinding to a halt or a pipe bursting in your basement – you want to talk to a well-qualified, empathetic professional with the ability to marshal resources and organize timely solutions. You do not want to be put on hold for eight hours, but nor do you want to speak immediately to an eloquent but ultimately useless chatbot. Of course, in an ideal world, new companies offering better customer service would emerge and seize market share. But in the real world, many barriers to entry make it difficult for new firms to expand quickly. You may love your local bakery or a friendly airline representative or a particular doctor, but think of what it takes to create a new grocery store chain, a new airline, or a new hospital. Existing firms have big advantages, including important forms of market power that allow them to choose which available technologies to adopt and to use them however they want.

More fundamentally, new companies offering better products and services generally require new technologies, such as digital tools that can make workers more effective and help create better customized services for the company’s clientele. But, since AI investments are putting automation first, these kinds of tools are not even being created.

Investors in publicly traded companies will also lose out in the age of ChatGPT. These companies could be improving the services they offer to consumers by investing in new technologies to make their workforces

more productive and capable of performing new tasks, and by providing plenty of training for upgrading employees’ skills. But they are not doing so. Many executives remain obsessed with a strategy that ultimately will come to be remembered as self-defeating: paring back employment and keeping wages as low as possible. Executives pursue these cuts because it is what the smart kids (analysts, consultants, finance professors, other executives) say they should do, and because Wall Street judges their performance relative to other companies that are also squeezing workers as hard as they can.

AI is also poised to amplify the deleterious social effects of private equity. Already, vast fortunes can be made by buying up companies, loading them with debt while going private, and then hollowing out their workforces – all while paying high dividends to the new owners. Now, ChatGPT and other AI technologies will make it even easier to squeeze workers as much as possible through workplace surveillance, tougher working conditions, zerohours contracts, and so forth.

These trends all have dire implications for Americans’ spending power – the engine of the US economy. But as we explain in our forthcoming book, Power in Progress: Our Thousand-Year Struggle Over Technology and Prosperity, a sputtering economic engine need not lie in our future. After all, the introduction of new machinery and technological breakthroughs has had very different consequences in the past.

Over a century ago, Henry Ford revolutionized car production by investing heavily in new electrical machinery and developing a more efficient assembly line. Yes, these new technologies brought some amount of automation, as centralized electricity sources enabled machines to perform more tasks more efficiently. But the reorganization of the factory that accompanied electrification also created new tasks for workers and thousands of new jobs with higher wages, bolstering shared prosperity. Ford led the way in demonstrating that creating human-complementary technology is good business.

Today, AI offers an opportunity to do likewise. AI-powered digital tools can be used to help nurses, teachers, and customerservice representatives understand what they are dealing with and what would help improve outcomes for patients, students, and consumers. The predictive power of algorithms could be harnessed to help people, rather than to replace them. If AIs are used to offer recommendations for human consideration, the ability to use such recommendations wisely will be recognized as a valuable human skill. Other AI applications can facilitate better allocation of workers to tasks, or even create completely new markets (think of Airbnb or rideshare apps).

Unfortunately, these opportunities are being neglected, because most US tech leaders continue to spend heavily to develop software that can do what humans already do just fine. They know that they can cash out easily by selling their products to corporations that have developed tunnel vision. Everyone is focused on leveraging AI to cut labor costs, with little concern not only for the immediate customer experience but also for the future of American spending power.

Ford understood that it made no sense to mass-produce cars if the masses couldn’t afford to buy them. Today’s corporate titans, by contrast, are using the new technologies in ways that will ruin our collective future.

Daron Acemoglu, Professor of Economics at MIT, is co-author (with James A. Robinson) of Why Nations Fail: The Origins of Power, Prosperity and Poverty (Profile, 2019) and The Narrow Corridor: States, Societies, and the Fate of Liberty (Penguin, 2020). Simon Johnson, a former chief economist at the International Monetary Fund, is a professor at MIT’s Sloan School of Management and a co-chair of the COVID-19 Policy Alliance.

Love is a manysplendored thing at Emirates this February 14, as passengers are set to enjoy sweet treats onboard, a range of love-themed decadent desserts in the lounges, exquisite rosé champagne, tempting giftgiving offers, and an array of romantic movies and music.

This February, love is in the air on ice as Emirates passengers can immerse themselves in feel-good movies, such as 2022 romantic comedy ‘Ticket to Paradise’, starring Hollywood heartthrobs Julia Roberts and George Clooney. There is a selection of more than 70 romantic comedies and dramas available including new releases ‘Meet Cute’ starring Kaley Cuoco and Pete Davidson and ‘Ask Me to Dance’, as well as all-time classics ‘When Harry Met Sally’, ‘Bridget Jones Diary’ and ‘The Notebook’. Amidst a huge library of TV series, passengers can choose from bingeable box sets including modern mini-series like ‘The Pursuit of Love’ (2021), or period romance dramas like ‘Emma’ and ‘Sense and Sensibility’.

Seductive soundtracks are already curated onboard ice with the ‘Love Is in The Air’ playlist and ‘Romantic Moments;’ a handpicked selection of classic love songs featuring Celine Dion, Whitney Houston, Ed Sheeran, Diana Ross, Roberta Flack and many more. Before a flight, passengers can even browse and pre-select their movies, TV shows or music playlists on the Emirates app, which can be synced to ice from the moment of boarding.

On Valentine’s Day, onboard passengers in all classes will be treated to luscious brownies or red velvet cupcakes adorned with red and pink hearts, in their own Emirates mini giftbox, while red mood lighting lights up the aircraft. From the 1315 February, Emirates Lounges worldwide will raise the romance with a beautiful array of themed treats, from chocolate hearts to Valentine’s mud cake, and chocolate covered strawberries.

In the Emirates Lounges of Dubai, First Class passengers can order velvety pistachio and strawberry cake or succulent raspberry tonka fondant, while Business Class customers can spoil themselves with a strawberry and yuzu Valentine’s tartlet or a fragrant hibiscus, strawberry, and almond mousse. Both First and Business Class passengers can toast the most romantic day of the year with Moët Rosé Impérial Champagne, a radiant and romantic expression of the signature Moët & Chandon style, or visit Emirates dedicated oldfashioned ice cream cart to enjoy homemade strawberry cheesecake ice cream and raspberry and rose sorbet. The complimentary Costa Coffee café in the lounges will serve heartshaped donuts, while Dilmah tea has created an array of special tea blends for the occasion.

Emirates passengers can gift their loved ones with special shopping offers on EmiratesRED and buy any two fragrances to get USD 15 off, on brands including Amouage, Givenchy, YSL, Roja parfums, Versace, Cartier, and Hermes. Passengers can also save up to 15% when buying two products from the same brand, including Cerruti watches, Benefit cosmetics, Elizabeth Arden beauty, Clogau jewellery and more. EmiratesRED. com pre-order service is also available on most flights, where passengers can shop from 21 days up to 40 hours before their flight, browse a wide range of exclusive products – some of which are not available onboard. Passengers need to provide their flight details during checkout, and the orders are delivered by cabin crew directly to the passenger’s seat inflight for an unforgettable gifting experience.

Emirates Skywards members can earn even more Miles this Valentine’s Day by shopping at popular retail brands across the UAE, UK, and USA. With thousands of brands on skywardsmilesmall. com including Farfetch, Harvey Nichols, Sephora and more than 150 designer fashion brands in Bicester Village such as Ted Baker, Mulberry, Pandora and more. Members can also book a romantic getaway with EmiratesSkywardsHotels.com and earn thousands of Miles on stays with Marriott Bonvoy, Hilton Hotels & Resorts, Four Seasons Hotels & Resorts, and much more. (Source: Emirates)

A few months ago, Germany was bracing for a harsh winter. After Russia cut off Europe’s naturalgas supply and prices more than doubled, German officials warned of power outages and rolling blackouts. Some cities reportedly planned to convert sports facilities into “warming halls” for the poor and the elderly, and the media speculated about energy rationing. But those predictions did not materialize. In the face of a historic challenge, Germany proved to be more resilient than many had believed.

Yet Germany is still panicking. Instead of fretting about gas heaters, however, Germans are now haunted by the specter of deindustrialization. Not a single day goes by without some media outlet or research institute predicting that factory closures and the rise of China will lead to the country’s downfall. The state-owned bank Kreditanstalt für Wiederaufbau recently warned that Germany faces “an era of declining prosperity.” And Yasmin Fahimi, the head of the German Trade Union Confederation (DGB), warned that the energy crisis would lead to deindustrialization and massive layoffs.

Meanwhile, the Center for European Economic Research (ZEW) in Mannheim called Germany the “big loser” of today’s global economy, placing it 18th out of 21 industrial countries in its competitiveness ranking. Other experts have warned that rising energy costs will force manufacturers to move their operations to Eastern Europe and the United States in response to US protectionism.

What explains this gloomy mood? German business leaders first raised the threat of deindustrialization last April, when Germany was considering a boycott of Russian gas, which at the time accounted for over half of its natural-gas supply. Corporate executives, among them Markus Krebber, CEO of energy company RWE, warned that an embargo on Russian energy would lead to mass unemployment, poverty, and widespread social unrest.

These warnings contrasted with an earlier academic paper by prominent German economists who estimated that the Russian energy embargo would cause a mild to moderate recession. The authors argued that a large economy like Germany has many ways to adjust to this severe shock, such as finding alternative suppliers and switching to other energy sources. Moreover, they argued, the government could step in and soften the boycott’s economic fallout.

As it turned out, the apocalyptic scenarios never materialized, even after Russian President Vladimir Putin shut off the Nord Stream pipeline to Germany. Instead, the German government was indeed able to find alternatives to Russian energy, energy-saving measures reduced gas consumption by 30%, and the winter ended up being milder than expected. The country’s gas supplies have recovered, and prices fell from €350 ($377) per megawatt hour in the summer to €80 per megawatt hour. There were no blackouts, and the decline in gas consumption did not even depress industrial output, as German firms simply became more efficient.

Given its longstanding dependence on Russian gas, the war in Ukraine and subsequent surge in energy prices represented Germany’s biggest crisis since World War II. But the German economy has weathered the storm and is estimated to have grown by 1.9% last year – a far cry from the recession many had expected. But the real threat is right around the corner. In a troubling sign, China recently overtook Germany as the world’s secondlargest car exporter. China’s share of the global electricvehicle market increased to 28% last year thanks to its dominance in battery manufacturing and the success of Chinese manufacturers like BYD Auto, Wuling, and GAC Motor, whereas the share of German companies like Volkswagen fell from 7% to 4%.

Similarly, China’s car exports to Europe surged from 133,465 in 2019 to 435,080 in 2021, owing to growing demand for Chinesemade EVs. Europe now imports more cars from China than it exports, as the net-zero transition and looming European phaseout of the internal combustion engine threaten to make the German auto industry obsolete.

In addition to car manufacturing, Chinese competition threatens the German machinery sector, a key segment of the Mittelstand – the small and medium-size manufacturers that form the country’s industrial backbone.

Earlier this year, the German association of machinery and equipment manufacturers, VDMA, published a report showing that China’s machinetools exports have surpassed Germany’s. While machinery exports from Germany grew by nearly 10% in 2021, machinery imports from China increased by 26%. Ironically, German firms operating in China had a crucial role in facilitating this transition, as they were forced into partnerships with local firms and thus accelerated technology transfer, effectively training their future competitors.

In 2022, Germany surprised the world by managing to shift away from Russian gas without falling into a severe recession. But restoring the country’s competitiveness is an even bigger challenge. Three decades ago, Germany went from being the sick man of Europe to being its economic engine. To compete in the increasingly cutthroat global economy of the twenty-first century, it must reinvent itself again.

Dalia Marin, Professor of International Economics at the School of Management of the Technical University of Munich, is a research fellow at the Centre for Economic Policy Research and a non-resident fellow at Bruegel. Copyright: Project Syndicate, 2023. www.project-syndicate.org.