This is the subject of my latest column for Bloomberg, here is an excerpt:
To see how this might happen, start with the difference between sectors that are easy to go out of business, and sectors that are not. Many firms that sell computer services, for example, do not have guaranteed customers or revenue, at least not for a long time. Workers must deliver, or they and their company will be replaced. The same is true for many media companies: If they lose readers or customers, revenue disappears. There is also free entry into this field in the US, thanks to the First Amendment.
Another set of institutions is going out of business very little, if at all. If a large state university does a poor job of educating its students, for example, enrollment may drop. But the facility is likely to be around for decades more. Or if a nonprofit does a poor job of advancing its mission, donors may not learn of its mistakes for years, while previous donors may pass on and include the charity in their wills. The point is, it can take a long time for all the money to dry up.
Which leads me to a prediction: Companies and institutions in fluid and competitive economic sectors will face enormous pressure to adopt AI. Those who are not in such fields, will not.
It is debatable how much of the US economy falls into each category, and of course it is a matter of degree. But important parts of the government, education, health care and non-profit sectors may go out of business very little or not at all. That’s a big chunk of the US economy — big enough to slow AI adoption and economic growth.
As AI advances, the fast-exit and free-entry sectors of the economy will change rapidly.
Recommended, read the whole thing.
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