Governor at Fed Cautiously Optimistic About Generative AILisa D. Cook Foresees 'Broad Benefits' If We Address the 'Very Real Concerns'
A Federal Reserve Board governor is cautiously optimistic about the impact of generative artificial intelligence on jobs and productivity but urged the industry to address the "very real concerns."
Generative AI has the potential to improve overall productivity and lead to new jobs and new industries, Lisa D. Cook said during a Toronto conference. But in the short term, she said, it could also lead to disruptions in the labor market, making it imperative that lawmakers and organizations develop policies and practices to help workers adapt.
"In general, I am optimistic about broad benefits accruing to the economy and society from the use of generative AI - including more productive and less tedious work in offices, labs, factories and warehouses - provided we address the very real concerns," she said.
Her remarks come at a time when generative AI is becoming more sophisticated and powerful, with the potential to have a significant impact on the economy and society. The same technology that allows the production of publication-quality images through text prompts also enables threat actors to create deepfakes for propaganda and fraud, and even write convincing phishing emails.
While the potential for AI's far-reaching changes to the economy is clear, the pace of adoption and the extent of the changes will depend on the human workers, managers and policymakers, Cook said.
Innovations that have had the most consequential impact have been general purpose technologies widely used across the economy that improve steadily over a long period of time and raise the productivity of research and development, Cook said.
She believes generative AI has that potential.
The technology can improve productivity in settings such as computer coding, customer service, language translation and robotics. "It is easy to see the potential, and we seem to be headed for widespread use," Cook said.
Recent history shows an explosion of technical progress in the large language models using neural networks, but itis not yet known "whether that explosive progress can be sustained," she said. Generative AI has also shown "some potential" for efficiency improvements in the scientific process, and literature review and writing are the "obvious" use cases.
Its adoption must be complemented with changes in corporate structure and management practices, worker training, and the adjustment of the mix of capital in use, she said.
Concerns about technology replacing jobs are not new, and AI comes with its own set of concerns about making some jobs disappear and replacing humans in others. But for all the jobs that become obsolete, AI has the potential to create new ones and complement others, while also raising productivity and incomes of these jobs, Cook said.
The adverse impact of AI on jobs will only be borne by a small set of people, in contrast to the many workers throughout the economy who will benefit from it, she said. "When the world switched from horse-drawn transport to motor vehicles, jobs for stable hands disappeared, but jobs for auto mechanics took their place."
And it goes beyond just creating and eliminating positions. Economists encourage a perception of work in terms of tasks, not jobs, Cook said. This will require humans to obtain skills to adapt themselves to the new world. "As firms rethink their product lines and how they produce their goods and services in response to technical change, the composition of the tasks that need to be performed changes. Here, the portfolio of skills that workers have to offer is crucial."
AI's benefits to society will depend on how workers adapt their skills to the changing requirements, how well their companies retrain or redeploy them, and how policymakers support those that are hardest hit by these changes, she said.
AI will make knowledge work - where employees can do more research, communication and design in lesser time - easier and more in demand, Cook said, and this is especially likely to be the case in the STEM and social skills industries.
Policymakers and decision-makers in the government and in critical industries such as healthcare and consumer finance have the legal and ethical duty to be conscious of the impact their choices will have on the affected groups. There must be transparency in the process of decision-making, and the driving factors behind decisions must be explained to the stakeholders, she said.
"The impact of generative AI, as with all technical change, has to be understood in terms of human choice behavior in specific social and institutional contexts," she said.