Nathaniel Popper digs into the likely impact of AI on Wall Street, and it looks like a bloodbath:
Within a decade, he [Daniel Nadler, the founder of Kensho] said, between a third and a half of the current employees in finance will lose their jobs to Kensho and other automation software. It began with the lower-paid clerks, many of whom became unnecessary when stock tickers and trading tickets went electronic. It has moved on to research and analysis, as software like Kensho has become capable of parsing enormous data sets far more quickly and reliably than humans ever could. The next ‘‘tranche,’’ as Nadler puts it, will come from the employees who deal with clients: Soon, sophisticated interfaces will mean that clients no longer feel they need or even want to work through a human being.
‘‘I’m assuming that the majority of those people over a five-to-10-year horizon are not going to be replaced by other people,’’ he said, getting into the flow of his thoughts, which, for Nadler, meant closing his eyes and gesticulating as though he were preaching or playing the piano. ‘‘In 10 years Goldman Sachs will be significantly smaller by head count than it is today.’’
Goldman executives are reluctant to discuss the plight of their displaced financial analysts. Several managers I spoke to insisted that Kensho has not yet caused any layoffs, nor is it likely to soon. Nadler had warned me that I would hear something like that. ‘‘When you start talking about automating jobs,’’ he said, ‘‘everybody all of a sudden gets really quiet.’’
Goldman employees who lose their jobs to machines are not likely to evoke much pity. But it is exactly Goldman’s privileged status that makes the threat to its workers so interesting. If jobs can be displaced at Goldman, they can probably be displaced even more quickly at other, less sophisticated companies, within the financial industry as well as without.
Popper cites Frey and Osborne, the Oxford academics who’ve predicted that as many as 50% of occupations are at risk for being eliminated by AI and robots. The researchers suggested that finance was an area extremely susceptible to having people displaced, given the digital and quantitative context.
Popper’s legwork suggest that despite the techno-optimism spouted by many who pooh-pooh the impact of AI on employment – those that say new jobs will open up even as old ones are ephemeralized – there is most likely going to be a severe drop in jobs in finance that won’t be covered by new jobs:
The growth has made Kensho worth hundreds of millions of dollars and turned Nadler into a millionaire many times over, at least when his stake in the company is taken into account. But it’s not clear how beneficial his company will be to the American labor market as a whole. Back when I first met Nadler, for a lunch last summer, he wasn’t too proud to admit this. ‘‘The cynical answer that another tech entrepreneur would give you is that we’re creating new jobs, we’re creating technology jobs,’’ he told me. ‘‘We’ve created, on paper at least, more than a dozen millionaires.
‘‘That might help people sleep better at night,’’ he continued, ‘‘but we are creating a very small number of high-paying jobs in return for destroying a very large number of fairly high-paying jobs, and the net-net to society, absent some sort of policy intervention or new industry that no one’s thought of yet to employ all those people, is a net loss.’’
from Stowe Boyd http://stoweboyd.com/post/140213775492
