The Unimaginable Economic Implications of Generative AI Like GPT-4: Risks and Opportunities for Policymakers

GPT-4, an AI technology developed by OpenAI, has the potential to impact the economy and labor market in several ways.

There are opportunities for improvement and innovation, but there are also risks of labour displacement and increased inequality.

Policymakers should be aware of these effects in order to make informed decisions about the use of technology in organizations.

Opportunities

Increased productivity: GPT-4 can be used as a productivity multiplier, where human workers are complemented and become more efficient in their duties.

More stimulating work: GPT-4 can help improve the matching of candidates to jobs, which can lead to higher employee satisfaction as they can focus on more satisfying problems.

Innovation and new applications: GPT-4 is expected to accelerate the development of new technological solutions based on generative models, which could lead to solutions for more complex problems than we could previously even imagine.

Brand new marketsWhen jobs disappear, new ones emerge. Once upon a time, we had telephone operators that manually rewired people — now we have automated switches. Just a couple of years ago, “influencer” sounded like a made-up job, now it's a huge industry.

Risks

Entire professions disappear: Automation of some jobs, including those requiring years of experience and training, can lead to workforce displacement that causes occupations to no longer exist in the form they exist now. Examples singled out include (but not limited to) lawyers, programmers, and financial assistants. In short, we can see that any profession that uses language as a main tool is subject to radical changes, especially if the profession involves applying established and well-formulated practice.

Increasing inequality: Historically, the introduction of automation techniques has increased inequality and affected different groups in different ways. GPT-4 can affect the labor market in similar ways, with workers competing for fewer jobs lower wages and uneven access to tools and applications.

Strengthening of incumbents: Generative AI's way of generating responses can help consolidate the position of existing companies and organizations, which can inhibit competition and innovation. For example, there is only 1 answer to the question “What is the best bagel shop in New York” at a low enough temperature to the question. (Temperature is a parameter that controls how random/“creative”/surprising response you get from the AI)

Conclusion

GPT-4 can have tremendous economic impact when it comes to completely replacing professions, increasing inequality, and completely overturning entire industries.

But there are also opportunities for innovation, improved job satisfaction and radically faster technology development.

Prudent use and monitoring are essential to balance benefits and risks for you as an entrepreneur and needs to be dealt with.

It will also drive change in legislation at what we can assume is an accelerated pace.

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