🧠 AI Productivity: Fact From Fiction

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Welcome back AI prodigies!

In today’s Sunday Special:

• 🎯They’re an Easy Target

• ⚙️Rise of IT

• 💵IT and Profitability

• 🤖Self-Fulfilling Automation

• 💭Healthy Skepticism

Read Time: 6 minutes

🎓Key Terms

• Information Technology (IT): the use of computer systems to manage, process, protect, and exchange information for corporations of all industries and sizes.

• Productivity Paradox: a phenomenon that occurs when organizations don’t see the expected productivity gains from investing in technology.

🩺 PULSE CHECK

🎯THEY’RE AN EASY TARGET

Have you ever seen a billboard in the San Francisco Bay Area? Here’s a peek into the advertising landscape of technology billboards in Silicon Valley during 2015.

Currently, AI companies are spending millions of dollars on tailored campaigns targeting business leaders. These tailored campaigns promote the idea of chatbots or AI agents capable of replacing employees.

Based on their organizational restructuring decisions, business leaders believe you show up to work out of fear of the breadline. This belief is true enough to make them prime targets for Generative AI (GenAI) tool-peddling salespeople. Managers would love to cut operating expenses (e.g., fire employees) and replace them with AI agents. AI agents don’t unionize, they don’t backtalk orders, and they don’t experience any inconvenient moral injury when ordered to improve a product or service.

Every dollar you earn is a dollar that isn‘t available for executive bonuses, stock buybacks, or dividends. Software is cheaper, and it doesn’t advocate for higher wages. That makes your boss such an easy mark for AI peddlers, which may explain the vast gap between the valuation of AI companies and the utility of AI to the customers who buy those companies’ products or services.

As an investor, buying shares in AI might represent a bet on the usefulness of AI, but for many of those investors, backing an AI company is indirectly a bet on an executive’s desire to replace you, or at least your least productive colleagues. Unfortunately, your boss’s path to realizing the productivity gains promised by an AI salesman runs through you.

A new report from The Upwork Research Institute (TURI) demonstrates the gap between how bosses and workers think about AI:

• 96% of bosses expect that AI will make their workers more productive.

• 85% of companies either require or strongly encourage workers to use AI.

• 49% of workers have no idea how AI is supposed to increase their productivity.

• 77% of workers say using AI decreases their productivity.

Bosses spend a lot of time thinking about your productivity. Some monitoring is natural, but how did employer and employee relations disintegrate over time?

⚙️RISE OF IT

The Productivity Paradox shows a rapid, persistent decline in American worker productivity, starting in the early 1970s and continuing to this day. The Productivity Paradox refers to the growth of the Information Technology (IT) sector, which is sold as a productivity-increasing miracle. Many theories explain this paradox, one of which came from the late David Graeber, an American anthropologist and cultural observer. In his 2012 essay, “Of Flying Cars and the Declining Rate of Profit,” Graeber proposed that the growth of IT was part of a broader shift in research approaches. Research was once dominated by eccentrics or oddballs who operated with relatively little red tape. The rise of IT coincided with the rise of “managerialism,” the McKinseyoid drive to monitor, quantify, and, above all, discipline the workforce. IT made it easier to generate these records.

Before long, every employee, including the eccentrics or oddballs whose ideas were credited with the productivity gains of the American century, spent countless hours filling in forms, documenting their work, and generally producing a legible account of their day’s labor. All this data gave rise to a ballooning class of managers who colonized every kind of institution, not just corporations but also universities and government agencies, which were structured to resemble corporations.

Even if you think all that recordkeeping might be useful, there’s no denying that the more time you spend documenting your work, the less time you have to do your work. The solution to this was inevitably more IT, sold as a way to make recordkeeping easier. But adding IT to a bureaucracy is like adding lanes to a highway: the easier it is to demand fine-grained recordkeeping, the more recordkeeping will be demanded of you.

💵IT AND PROFITABILITY

But that’s not all that IT did for the workplace. There’re a couple of areas in which IT absolutely increased the profitability of the companies that invested in it.

IT allowed corporations to outsource production to low-wage countries in the global south, usually places with worse labor protection, weaker environmental laws, and easily bribed regulators. It’s difficult to produce things in factories thousands of miles away or oversee remote workers in another country. But IT makes it possible to eliminate distance, time zone gaps, and language barriers. Corporations that discovered how to use IT to fire workers at home, exploit staffers, and despoil the environment in distant lands thrived. Executives who oversaw these projects rose through the ranks. For example, Tim Cook became the CEO of Apple thanks to his successes in shifting production out of the U.S. into China.

Outsourcing provided a sugar high that compensated for declining productivity…for a while. Eventually, all the gains to be had from outsourcing were realized, and companies needed a new source of cheap gains. That’s where “Bossware” came in: workforce monitoring and discipline automation. Bossware enabled monitoring workers at the finest-grained levels, measuring everything from keystrokes to eyeball movements.

The declining power of the American worker—a nice bonus of the project to fire vast numbers of workers and ship their jobs overseas, which made the remainder terrified of losing their jobs—meant that Bossware could be weaponized to tie wages to metrics. It’s not just gig workers who don’t score consistent five-star ratings from app users whose pay is docked; it’s also content creators whose YouTube and TikTok wages are cut for violating rules that they aren’t allowed to know because that might help them break the rules without being detected and punished.

Bossware dominates workplaces, from public schools to hospitals, restaurants to call centers, and extends to your home and car if you work from home or drive for Uber.

🤖SELF-FULFILLING AUTOMATION

One way to think about how this works is through the automation-theory metaphor of a “centaur” and a “reverse centaur.” In automation circles, a “centaur” is someone who is assisted by an automation tool. For example, when your boss uses AI to monitor your eyeballs to lower your pay, they’re a “centaur,” a human head atop a machine body that does the work far in excess of any human’s capacity.

A “reverse centaur” is a worker who acts as an assistant to an automation system. The worker ridden by an AI that monitors their eyeballs, bathroom breaks, and keystrokes is a “reverse centaur,” being used and, eventually, used up by a machine to perform the tasks that the machine can’t perform unassisted.

But there’s only so much work you can squeeze out of a worker in this fashion before they’re ruined for the job. Amazon’s internal research reveals that the company has calculated it ruins workers so quickly it’s in danger of using up too many workers across America, which explains the other significant findings from The Upwork Research Institute (TURI) study:

• 81% of bosses have increased their worker demands over the past year.

• 71% of workers are “burned out.”

A boss’s answer to “AI making workers feel burned out” is the same as “IT-driven form-filling makes workers unproductive.” Do more of the same, but go harder. Cisco Webex has a new product that tries to detect when workers are about to snap after absorbing abuse from furious customers. It gives them a “Zen” moment in which they’re shown a “soothing” photo of their family.

This “Zen” moment is just the latest in a series of “workplace wellness” technologies that monitor workers and try to help them “manage their stress.” AI salespeople know this, too, and they’re more than happy to sell your boss the “reverse-centaur” automation tool.

💭HEALTHY SKEPTICISM

AI may be a bet your boss can be suckered into by buying a chatbot that can’t do the job, but investors are souring on that bet. Goldman Sachs, which once trumpeted AI as a multi-trillion dollar sector with unlimited growth, is now publishing reports describing how companies that buy AI can’t figure out what to do with it.

Fine, investment banks are supposed to be a little conservative. But Venture Capitalists (VCs), the risk-loving type? Sequoia Capital, a top-tier Silicon Valley VC firm, is also publicly questioning whether anyone will make AI investments pay off. Maybe the productivity pitch isn’t so perfect after all.

📒FINAL NOTE

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