SPI Management Newsletter 21.07.23
The Future of AI in the U.S. Workplace: Business versus Labor
Artificial intelligence (AI) and its regulation is becoming a contentious issue, particularly with the Federal Trade Commission (FTC) investigating the ChatGPT app. The investigation is shaping a debate between large businesses, labor unions, and progressive advocacy groups.
AI systems like ChatGPT are attractive to businesses as they have the potential to streamline operations, reducing the need for human input in areas like document creation or customer service. They can also customize advertisements to individuals or even converse directly with customers, potentially opening new markets. However, labor unions, privacy advocates, and consumer groups express concern that AI may lead to job loss and deteriorating work conditions. There's also a fear of potential misuse of AI for manipulation or fraud, especially if equipped with personal data.
The FTC's probe into OpenAI, ChatGPT's creator, raises further concerns that regulation might stifle AI development, considered crucial for future economic growth. It also raises questions about the sale of AI system access to other businesses. The central issue is how to harness AI's benefits while avoiding potential abuse. Generative AI systems like OpenAI's GPT could revolutionize how Americans work, shop, and travel, opening opportunities for businesses but also presenting potential risks.
The Biden administration, with strong ties to labor and progressive groups, aims to find a balance between encouraging innovation and preventing harm. Union representatives, concerned about job losses and privacy violations, recently met with White House officials to articulate these fears.
As regulatory measures are being considered, all stakeholders agree on the need for accountability. Some suggest that new AI models should go through a certification process before release, while others advocate for third-party audits of AI systems, though cost and feasibility concerns arise.
UK Inflation Slowdown Brings Temporary Relief Amid Continuing Household Struggles
The UK's inflation rate fell more than anticipated last month, offering a slight reprieve to Britons who have been facing one of the toughest cost-of-living crises among advanced economies. Consumer prices rose by 7.9% in June, a significant drop from May's 8.7% inflation rate, according to the Office for National Statistics. This development softened market expectations of future Bank of England rate hikes and bolstered UK stocks.
However, the easing of inflation rates does little to relieve UK households, with consumer prices continuing to rise more rapidly than in most other rich nations. This trend is driving the largest fall in real incomes in 70 years, setting a grim backdrop for the general elections next year. With high food prices and rapidly rising living costs, a significant number of Britons are dipping into their savings to cover expenses, and many struggle to meet rent or mortgage payments..
Despite the UK's recent slowdown in inflation, investors anticipate the central bank will continue to raise rates in the coming months, driven by persistently high inflation and rapid wage increases. As a result, households and businesses remain under pressure, struggling with increased costs and economic uncertainty.
Yen Rallies Against Dollar as Central Bank Policies Shift
After falling nearly 5% against the US dollar earlier this year, Japan's yen is on the rebound, gaining over 4% since July. The yen's resurgence is attributed to the shifting dynamics of global monetary policies. As the Federal Reserve looks set to slow its series of rate hikes, the Bank of Japan's prolonged ultra-loose monetary policy stance could soon change.
A weakened yen had been beneficial for Japan's major exporters like Toyota and Honda, boosting the value of their overseas revenues when converted to yen. It also attracted foreign investors to the Japanese stock market, allowing them to profit from both rising stock prices and a strengthening yen. The Nikkei 225, Japan's benchmark index, has climbed about 26% this year but has seen a recent slowdown coinciding with the yen's rise. The dollar's depreciation against the yen is more pronounced due to expectations of the Bank of Japan bridging the interest rate gap between the two countries.
Adapted from WSJ, FT, NYT, Reuters, CNBC