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Artificial Intelligence and Productivity

Posted on 17/01/25 in AI, Politics

It’s good news that Sir Keir Starmer’s Labour government is going to push AI as a means for increasing productivity in Britain. Its rhetoric about ‘turbocharging’ AI and ‘mainlining’ it into Britain’s veins, as well as being an early contender for mixed metaphor of 2025, is obvious and silly hyperbole. But it is evidence of a sensible willingness to explore its possibilities in administration and industry, while ignoring the absurd suggestion  that AI somehow poses an existential risk.

However, what it will not and cannot do on its own is raise productivity. In the first place, its positive contribution to productivity will be long term, even if it comes good on its promise. At the moment, it costs a fortune, is environmentally problematic, and no-one has discovered a way of making money out of it. Neither democratic governments nor even venture capitalists can afford to subsidise it sufficiently, which is why the tech giants are taking the lead. More employees use it than employers.

Given this, it can only function as one of a suite of measures comprising a general and coherent strategy toward productivity. Here, as so often, the Labour government has disappointed, by neglecting vital elements of productivity strategy. The most obvious two are transport and education. In transport, funds for vital investments have been cut, partly because of the dire state of the public finances, but more importantly because of the need for the government to placate its environmentalist supporters. In education, Bridget Phillipson may be about to undo one of the previous Conservative government’s few successes. In a natural experiment, England’s educational results, as measured by PISA surveys, have improved dramatically, while those of Scotland and Wales, run by the devolved governments, have plummeted. Incredibly, moves may be afoot to bring England into line with the Scots and Welsh, rather than the other way around. Again, one suspects Labour’s need to remain on good terms with ‘progressive’ supporters and public sector unions.

AI will make little difference to productivity in the short term, and can’t do very much anyway on its own. In this, as in many other areas, Sir Keir’s government disappoints.