The guy in charge of watching over Canada’s economy isn’t totally sold on AI.
What happened: Bank of Canada governor Tiff Macklem offered his first public thoughts on AI and its potential impact on the economy, and he painted an uncertain picture that will take years to come into full focus.
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On the plus side, Macklem said AI could boost the economy by automating tasks, freeing up workers to take on more productive jobs, and creating new products or services.
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On the other hand, AI could eliminate more jobs than it creates. It could also contribute to inflation, be it through building infrastructure, or investments boosting equity prices and, by extension, consumption.
- Somewhere in the middle was the fact that it will be some time before any economic impacts are seen, or the possibility that AI will simply keep productivity going at its current pace, instead of significantly increasing it.
Catch-up: Productivity is a driving force for AI adoption. Person-by-person, companies hope AI can take on menial tasks to free up humans for more profitable work. In the big-picture way that Stats Canada defines productivity, the likes of TD and the Conference Board of Canada have said AI could help fix Canada’s “productivity problem.”
- Canada’s productivity — calculated as GDP created for every hour worked — has either been stagnant or declining for several years, an “emergency” caused in part by low business investment and competition.
Why it matters: Macklem’s view on AI was tempered, but the fact that he is even keeping an eye on the broad economic impact of automation is a departure from big tech companies and their customers, who’ve downplayed the job loss AI could result in, or maintained that the good would outweigh the bad.
Zoom out: Macklem pointed out that new tech doesn’t typically cause mass unemployment, but AI could be different as it gets more capable and deployed at scale. That impact shouldn’t be underestimated; fast food restaurants, for example, are keen on bringing AI to their locations, and replacing even 10% of their nearly 400,000 workers in Canada would impact unemployment.