Microsoft CEO says AI can reduce inequality

Speaking at Davos, Microsoft CEO Satya Nadella suggested that AI can decrease  inequality and reduce the pay gap between knowledge and frontline workers.

It is an accepted wisdom that two types of jobs are safe from automation — customer-facing roles, or frontline jobs, and tasks that manage or create the technology, or knowledge workers.

There is a problem, however. To put it mildly, knowledge workers are typically paid an awful lot more than frontline workers. In short, in the age of automation, there will be two types of jobs — lucrative and poorly paid jobs, but not much between. Or, to put it even shorter: gods and worshipers.

But tools like ChatGPT can code. And some software or AI experts — the creators of disruptive technology— may themselves be disrupted (as is the way with Clayton Christensen Innovators Dilemma.) Nadella said: "You have to unlearn and re-learn: the previous era AI expert will have the hardest time shifting to this new paradigm."

But if AI can code, might this empower the frontline worker?

Nadella touched on this theme, suggesting that frontline workers, supported by technology, are now doing what was recently considered knowledge work. He said: "This is probably the biggest thing that is under-reported."

He suggested we consider "someone in a retail, warehouse or healthcare front line role who is not an IT specialist, not skilled in computer science. He said: "They can participate in the digital transformation" of their organisation. This will lead to higher wages as they can now not only do frontline work but participate in what was previously knowledge work."

He added: "Why is there such wage disparity between a carer and a software developer? Because we as a society have decided to give a different premium — but those premiums will adjust as some of those technologies (like ChatGPT) truly get defused."

It is an appealing idea, but is Nadella, right?

There is an assumption that technology leads to increased inequality. Well, it does, and it doesn't.

Technology can not advance if there are such high levels of inequality that a mass market for technology cannot evolve. Think of how Henry Ford increased wages for workers at his factory, creating a knock-on effect so that, eventually, more people could afford his cars.

Maybe this is why the likes of Elon Musk favour concepts such as universal basic income — which may be essential to create a market for new technologies so they can scale.

And scaling technology is important.

For it to advance, technology needs scale. For example, the computer of 50 years ago could cost hundreds of thousands of dollars; today's computers are many orders of magnitude more advanced but are a fraction of the cost.

When he died, Henry VIII of England was one of the richest men in the world. But he died at the age of 55 of a disease (probably syphilis) we could almost certainly cure today. Who is the richest a human of below-average income living in the developed world today, or Henry VIII during the latter years of his life?