Power & Market

Artificial Intelligence & the Federal Reserve

In a recent speech in Toronto titled: Generative AI, Productivity, the Labor Market, and Choice Behavior, Federal Reserve Governor Lisa D. Cook discussed the rise of Artificial Intelligence (A.I.) and how it may impact the future. In her own words:

Some of the uses of generative AI may be unsettling. For example, concerns about the ability of generative AI to impersonate individuals to harm their reputation or violate their privacy exist and are growing. 

It’s true, the use of deepfakes can be used to discredit those in power. Privacy is a concern as well; but we can’t blame A.I. for nefarious activities or privacy breaches just yet.

The notion of “discriminative AI” may also be something of concern for regulators, as explained:

… AI models sometimes harbor, if not amplify, the biases found in their training data, leading to malign effects on decisions about mortgage approvals, insurance rates, medical diagnoses, and even pretrial detention.

Luckily it’s not all gloomy.

Some potential for efficiency improvements in the scientific process when it comes to literature review and writing is obvious. Yet AI can go much deeper, discovering patterns in data and in previous research to generate hypotheses for testing…

In the not-too-distant future, it would be nice if A.I. could analyze texts of Keynes against Ludwig von Mises and compare the use of logical inconsistencies, subterfuge, and nonsensical words or phrases.

Should A.I. ever become capable of making logical and unbiased choices, it would be interesting to see which school of thought it would lean towards. Would it prefer the popular dogmatic teachings guiding the world today or the axiomatic method of the Austrians?

She also asked, “Will AI itself improve steadily over time?” then followed it with uncertainty:

… AI goes back at least to the 1950s … Whether that explosive progress can be sustained is an open question.

Barring worldwide catastrophe, it’s difficult to imagine a future where technology simply stops progressing. World history comprises relentless technological innovations which can be suppressed from time to time; but in the long run (it seems) humanity is unable, or unwilling, to stop innovating.

The impact of Artificial Intelligence is far reaching.

… 80 percent of the U.S. workforce will see at least some of their tasks transformed by generative AI.

Given the high uncertainty and number of people who will be impacted, we should expect policymakers to intervene.

The benefit of AI to society as a whole will depend on the adaptability of workers’ skills, how well they are retrained or redeployed, and how policymakers choose to support the groups that are hardest hit by these changes.

Her statements are subtle, yet devastating. On the cusp of major paradigm shifts in society, there are policymakers who advocate for some people at the expense of others.

We mustn’t be surprised if the government uses Artificial Intelligence against its own people, first in secret, then in the open.

Ending with some assurance about the future:

AI makes predictions, but AI does not make choices. Ultimately, human beings are still in control.

There’s much to consider, and much to be seen. It’s unlikely Artificial Intelligence can be stopped at this point; but it is likely the government will look to intervene wherever possible. And while it’s true that human beings are still in control, we should ask ourselves “How long will this control last?”

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Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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