The generative AI revolution

Artificial intelligence is becoming the transformational technology of our generation.

The pace of change has accelerated in recent months, with the phenomenon of generative AI creating new applications exploding out of Silicon Valley and into the UK national consciousness.

A song that used AI to clone the voices of Drake and The Weeknd got 15 million TikTok views before being hastily pulled from platforms. OpenAI’s GPT-4, a Large Language Model (LLM), outperformed 90% of U.S. high school students on exams in nearly every subject. Computer training has grown by a factor of 10 billion since 2010. In the first 3 months of this year, $11 billion has been invested in achieving Artificial General Intelligence (AGI), more than the previous decade combined.

While AI has entered the public debate through and through ChatGPT, the implications for policy and politics are not yet fully understood.

AI offers a huge economic and geostrategic opportunity. A recent report from Goldman Sachs predicts that the productivity benefits of generative AI alone will create $1.5 trillion in value over the next decade. The magnitude of benefits in the UK will be driven by two trends. First, rapid adoption: ChatGPT garnered 100 million users in 2 months, compared to 30 months for Instagram, 55 for Spotify and 70 for Uber. Second, increasing employee productivity. A recent MIT paper found using LLMs reduced the time required for professional writing tasks by 40% while improving quality.

International governments are already placing AI leadership at the center of their geopolitical strategies. The UK’s 2021 Integrated Review stated that the countries leading in critical and emerging technologies will be at the forefront of global leadership in years to come. But other countries are moving forward — the vast majority of recent generative AI developments have been driven by a few Silicon Valley-based AI labs with hundreds of employees.

Generative AI will shock our labor market. Each wave of technological advancement has led to an often unfounded fear of rising unemployment. But this time, the warnings must be heeded. For the first time, technology appears poised to automate cognitive functions and creativity, upending the traditional model of automating routine tasks.

AI could cause superstar effects on steroids: Taylor Swift could benefit from millions of personalized songs created by AIs using her voice or a high-flying corporate lawyer could scale up her productivity with effectively unlimited interns at her fingertips. White-collar jobs – such as the paralegals or graphic designers who make up a disproportionate share of the UK workforce, particularly the London workforce – could be fully or partially automated.

The UK could also experience macroeconomic shocks. Just as China’s introduction to the global trading system in the 1990s created downward pressure on inflation, generative AI will lower cost curves and prices for services. There will also be implications for interest rates: downward pressure on prices may lower short-term interest rates, but much higher long-term interest rates may be needed as we move towards AGI.

AI will create risks to our shared future. A recent letter, signed by Elon Musk and Stuart Russell, called for a six-month pause in generative AI developments to address the issue of alignment and ensure that AI systems act in accordance with human values ​​and goals. In a recent survey of AI experts, the average respondent estimated a 5% chance that AI poses an existential risk to humanity.