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AI’s inflation paradox

BCA Research’s weekly report tackles the strange situation wherein price inflation is paradoxically bringing about deflationary effects for European consumers due to there being no feedthrough from price inflation to wage inflation.Here’s the chart for the euro area, which reflects the paradox perfectly:In outlining the argument Dhaval Joshi, senior vice president, refers to an observation he made in an older report called The Superstar Economy: Part 2:“Many of the jobs that AI will destroy – like credit scoring, language translation, or managing a stock portfolio – are regarded as skilled, have limited human competition and are well-paid. Conversely, many of the jobs that AI cannot (yet) destroy – like cleaning, gardening, or cooking – are relatively unskilled and are low-paid.”It’s a fundamental insight because it demonstrates the absurdity of today’s style of innovation — exemplified in the rise of the gig economy.Having spent most of civilised history trying to reduce the number of hours humans work in back-breaking menial jobs and increasing the number of hours worked in safe and intellectually rewarding knowledge jobs, technologists for some reason think it’s now logical to encourage the opposite (apart from where YouTube stars and IT staff are concerned).Hint: the cost in the system is us.

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BCA Research’s weekly report tackles the strange situation wherein price inflation is...

Izabella Kaminska
Izabella Kaminska joined FT Alphaville in October 2008, which was, perhaps, the best time in the world to become a financial blogger. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP’s internal magazine. She has also worked as a reporter on English language business papers in Poland and Azerbaijan and was a Reuters graduate trainee in 2004.

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