Technology by its nature is deflationary. This is something that, if someone is old enough and concentrates, it can be seen.
However, since most either don't have enough years or ignore the idea, it gets overlooked.
Of course, the era we are innow is completely different. The pace of technology is changing everything. Nowhere is this more noticeable than in the area of artificial intelligence. Throughout the entire spectrum, we see massive progress.
To get a bit more specific, the advancement of chatbots is truly stunning. Anyone who used earlier version of ChatGPT or Llama see how things are changing.
That said, we really have not seen the conversation framed in terms of the economic impact.
In this article, we will look at what is happening and how much of an impact this can have on companies.
Deflation is being put on steroids.
The power of these chatbots is stunning. Each iteration only seems to accelerate thearms race. There is a new leader every few weeks.
ChatGPT was in the lead until Gemini was introduced by Google. The title was held until Claude3 came out and, by many accounts, puts Gemini to shame.
Claude will be the top dog until next release by one of the other companies.
Again, this is something obvious. Which brings us to the financial impact.
Customer service appears to be changing. Based upon the result of the online retailer, Klarna, we could see this mostly automated.
The image above reveals some of what took place. If we look at the last line, we see a profit of $40 million from this move.
After further analysis, we see further clarification.
When broken down on a per call basis, things become a lot clearer. The price, per conversation, went from $1.58 to $.004. It is now less than a half a cent each. The total went from $3.6 million to $9,000.
Basically, there is no way for humans to compete.
Not only was there an enormous savings, the service was much improved. Resolution times went from 11 minutes down to 2 while on par with the humans in customer satisfactions scores.
Some are still holding hope that something is going to protect jobs.
The problem with this stems from the futurists who still hold onto the idea that "technology always created more jobs than it destroyed".
To start, I disagree with this idea. My view is that, based upon the labor force participation rate, it hasn't been true for the last quarter century.
In spite of a bounce back after the COVID recessions, we are still 10% below where we were at the end of the 1990s.
Another element is the speed which the change is occurring. We are no longer looking at advancements over a 10-20 year period. Instead, we see the pace happening in a couple years.
For example, if this is possible with ChatGPT 4, what happens when we see version 6 in a couple years? Of course, this is not accounting for what other companies are able to produce.
If this works for incoming calls, what about outgoing?
Consider what happens if a chatbot can replace one's sales department. We already saw Google laying off hundreds from its advertising sales teams.
This is only going to keep growing. The numbers are too enticing for corporations. Humans simply cannot compete either in price, productivity, or efficiency.
It is getting to the point where these articles almost write themselves. No, I am not referring to AI writing them although that is possible. What I mean is that every 6 months we see major advancements that clip another slice of jobs.
Think of it way: why did technology companies lay off more than 42K people when their stocks are at record highs and business is strong?
My guess is, like Google, they are reducing headcounts through automation.
It is best to start compiling that staking capital since incomes are likely to dry up.
