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What is theArtificalIntelligence?
The objective of AI is to make machines that can perform tasks that normally require human
intelligence and to make computers that can show what we call "intelligent behavior".It is
implemented by those who want to understand the nature of intelligence. The aim of those
who related to the nature of intelligence is not to imitate intelligence, but to make the
program intelligent. AI is a theory that shows how the human mind works.
When we focus on the why people want to use AI, we can see there are three important
reason for this.
-Media and object recognition,It based on the fundamentals of reviving the environment in
which people live. Images are taken with the camera and digitally perceived by information
power. Each pixel of the camera turns into a digital code. AI algorithms are used to
understand what these pixels are. The development of this technology is especially critical
for driverless vehicles. TESLA is leading the way in this field. This technology is still used in
the field of security. Another area used is medicine. Even the mobile phone’s camera is used
as a diagnostic device. Besides Amazon and Facebook use this characteristic of AI.
Natural language processing, new AI methods, especially through deep learning in recent
years this area is developing very fast. Google and Facebook are very insistent on
understanding what is written. Because Google wants to sharpen exactly what you are
looking for and what size of websites you are using. Facebook wants to show you specific
content and keep you on their site for as long as possible. On the other hand, institutions
want to understand what is being said about them, whether it isfollowed by social networks
and whether the public is positive or negative. Institutions want to calculate what the
individual or the client saying and what it means to turn into an opportunity. It ıs impossible
to make them for millions of customers with human mind and capacity.
When natural language processing comes together with sound processing, extremely
powerful combinations emerge. Microsoft’s acquisition of Skype has begun to translate
someone’s speeches in another language instantly.
Similarly, AI applications and initiatives are prepared by investigating the legal databases,
finding a precedent case and preparing a case file. Practices that follow the cancer
researches and interpret the articles written in this field and produce advice on oncologists
have also started to be seen.
-Judgement, the most difficult subject of AI. In some cases, even a human being makes a
difficult decision, what can the computer do? In a situation, determining alternatives,
calculating the decision that needs to be made, implementing it automatically is a difficult
area of concern. It develops rapidly with the development of deep learning and similar fields.
IBM Watson, the champion of jeopardy, and Alfa Go which defeats the world and Olympic
Go champions, use deep learning and patter recognition techniques. This ability shows that
AI can learn by trying other situations. The intervention that a surgeon must do, the decision
that a judge should give, the question a teacher should ask… With the development of deep
learning, AI is more likely to enter our daily lives, to affect our lives and to make some
decision on our behalf…
‘Global Artificial Intelligence Index- 2018 Annual Report’ was published with the support of
many researcher from SRI International, MIT, OpenAI, McKinsey and Harvard University. The
most comprehensive report compared to previous reports was the report published in 2018.
Although there are a lot of striking results, we will only be interested in the economic result
for this paper.
As we can see, AI expanding and people’s influence on everyday life is increasing. In many
areas the effects are inevitable, for instance; nanotechnology, medicine, information
systems, electronic communication, finance, etc. A number of question await answer for
their effect.
Will the machines developing with artificial intelligence replace the people working in the
factories? Are we going to see completely unmanned factories? How will these impact on
the economy?
We firstly focus on economic consequences of AI and find the answer of some question
mentioned above.
As we mentioned above, AI effect our everyday life and the result’s effect will be examined
in economically on the basis of employment. Because the effect on almost all other areas
engender economic consequences.
There are a lot of questions which waiting to be answered. For example, What will the future
of AI bring for society and states? Will AI technologies inrease the quality of life and
productivity, or will it further increase the gap in the distribution of income ?Are scientific
research conducted in this field more or less to increase commercial gains for the benefit of
the society or by the private sector ?
In an important article, Harvard Business Review described the effects of the AI on company
management. Many administrative work, approval processes, permitting processes
organizational decisions, etc. AI can be done in a much better way. People are advised focus
on more creative and social work. It is even recommended to work as a designer. Similarly,
in a paper published in CIO magazine, it is stated that bureaucratic procedures will gradually
be transferred to automation and hence, there will be no need for the intermediate level
manager who make such administrative works. It is thought that such decision of an
objective and rational AI can make much better decisions. “Klick” had a software called
GENOME that has been able to track all performance metrics of employees, identify projects
that will be successful, reveal the highest performance personnel etc. In normal
circumstances, the human resources department while shrinking in time and GENOME
platform has made this assessment work in a much more comprehensive, rational, objective
and very analytical way.
As seen above, AI has reached the capacity to replace the employees in both management
and operational process. As a result of the transition from the use of AI to the operational
process of many companies, what the current employees can do is the curiosity. What kind
of problems will the declining employment cause? The first result that we can achieve is AI
expanding while employment is reduced. As a result, increased unemployment will bring
decreasing in growth and demand. But at the same time new business areas are emerging.
Nevertheless, the idea that the negative impact on employment can be covered by these
business areas is not very popular. In fact the White House report’ Artificial Intelligence,
Automation and the Economy’ emphasizes that AI will remove a large number of US citizens
in the near future and there will be a significant unemployment problem in the country.
According to a survey conducted at Oxford University %35 of jobs in the UK can be
machined. According to another study by McKinsey, it is stated that robots will leave 400 to
800 million people unemployed worldwide by 2030.
At the session organized by the Harvard Policy Institute, the changing work description and
the future of the workforce in today’s AI world were discussed as a result of technological
developments in history. There was a serious concern in the community about AI’s
dismissing people. In fact, this is not something new, 25 years ago people had the same
concerns. There were always major technologies that changed the way we work but this
time was very different. One of the highlights of the discussion is that it will change shape
rather than loss of jobs. According to the speakers, the workforce is now; task and project
procedure, full-time jobs will be eliminated.
With the work of the division of labor which was the foundation of the classical economy,
published in 1776 by Adam Smith, it became a specialization. This led to more tedious jobs
than before and increased production in general. However, income distribution is biggest
problem. Increased production does not mean that all people are enriched and we should be
talking about this before.
The “Global Artificial Intelligence Index- 2018 Annual Report” reveals the impact of AI on
employment. According to the report, since beginning of 2018, the number of startups in
the US increased by 1.3 times, while the increase in the number of start-ups in the field of AI
was 2.1 times. It can be concluded that sectors interested in AI spread faster that others. In
the graph that examines the job opportunities that require AI capabilities, it is seen that
require Deep Learning ability increased from 2015 to 2017 by 35 times. We can conclude
that the rate of increase in employment created for AI is high.
According to the data in 2014, approximately %30 of the patents received in the field of AI
belong to the USA, followed by the South Korea and Japan, each with share of %16. It is also
seen that the share of technology giant companies is the US in these patent applications is
important.
Whatwill be theunemployment problem thatwillemerge as a result of
allthesedevelopments? Nowlet’sfocus on theanswertothisquestion.
Whileartificialintelligencepracticesimproveefficiency in investmentdecisions,
theyarealsothesource of significantfinancialrisks. On May 6, 2010, the New York
StockExchange's (NYSE) Dow Jones Index (DJIA) crashedrapidly in
minutesandthenquicklyrecoveredtoitsformerlevel, bringingtheriskyconsequences of
artificialintelligencepractices in thestock market. Therapiddecline of bothindex in
minutesandthereturntothesamelevel at thesame rate, emergedwith an
investmentfundactingaggressivelyandsuddenlyforthestockposition. A
suddencollapseoccurredwhenthesalesalgorithm of thecomputerdirectedthe market
tosellautomaticallyforthesale of 75,000 futurescontractsworth $ 4.1billion.Similar events
after the sudden downturn in US stock markets 2014 in US treasury bills in September and in
June 2017 in ethereum markets. All this shows that artificial intelligence can be as important
as the risks in the financial markets.
In conclusion; the application of AI in financial markets signal the more effective investment
management. But it also includes an uncontrollable system that can lay the groundwork for
unexpected collapse of the market. The fact that the reasons for the sudden collapse of
algorithmic operations caused by the US stock exchange in 2010 is still unclear and likelihood
of similar events being re-emerging leads to the prudential handling of artificial intelligence
in the financial market.
Conclusion
As a result, both positive and negative aspect of AI were evaluated. Economic result have
been evaluated and it has been seen that many profession faciliate their work. However,
although the negative impact on employment is not negligible, studies are being carried out
to reduce these negative effect.At thesame time, studiesarecarriedoutforthenegativeeffects
of financialmarkets.I thinkwedon’tneedto be scared, it'il be nice andeasy.
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