“If you don’t care about science, that’s okay because AI is going to touch everything else as well. Whatever path you choose, AI will become aware of how work is done,” Schmidt said to loud boos from the audience.
Somehow, Schmidt hadn’t faced the harshest blowback yet. Bill Winters, the CEO of Standard Chartered, was slammed for his remarks on AI during an investor event in Hong Kong on May 19, when he said AI would allow the bank to cut jobs and replace its “lower-value human capital” with technology. Winters has since apologised for his remarks after financial regulators in Hong Kong and Singapore raised queries over them.
“This discussion is frustrating to me,” says Michael Spence, a Nobel laureate in economics and former dean of the Stanford Graduate School of Business. Spence was speaking at the joint dinner for this year’s Asian Monetary Policy Forum (AMPF) on May 21 when he touched on the debate over AI’s impact on the job market.
“The thing that gets a huge amount of attention is jobs. So, will we have enough jobs? Nobody knows. Are we going to have a lot of disruption? Yes,” Spence says, adding that unlike previous technological revolutions, AI won’t replace routine and quantifiable work.
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“Sometimes the AI takes out the high expertise jobs and sometimes it takes out the low expertise jobs,” Spence continues. “It is just all over the place. So, the pattern is going to be much more complicated.”
The AMPF is an annual event organised by the Asian Bureau of Finance and Economics Research, the National University of Singapore Business School, and the Monetary Authority of Singapore. Held from May 21 to May 22, this year’s forum featured speakers such as Spence and the European Central Bank’s chief economist Philip R. Lane.
“I ask people all the time. Let’s suppose we get a big productivity surge, regardless of whether it’s automation, machine learning or collaboration in some sector. Let’s call it software engineering. What do you think will happen?” Spence says.
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“Automatically, people say we need fewer software engineers,” he adds. “Well, what they have assumed is that the output is constant because people don’t know the concept of price and income elasticity. None of that. So, there’s a fair amount of the discussion that’s really unhelpful.”
AI’s a diffusion problem
Spence acknowledges that while it is tough to predict which new jobs AI will create, there’s no question that AI and automation have improved efficiency when used effectively.
“It’s hard to know what this balance between automation and machine-human collaboration is at,” he adds. “I have seen so many excessive automations now that I think people are going to go through a learning curve and kind of converge on something sensible.”
When it comes to AI, Spence says the real challenge for policymakers is ensuring that the benefits of the technology are spread across the economy rather than limited to sectors like technology and finance.
“I look at the American economy and ask myself the question, ‘Is AI going to show up in construction, healthcare, traditional retail, hospitality and education?’ These are the huge employment sectors in the American economy. I can guarantee you that if there’s a slow rollout across the economy, you will not see the productivity surge, and certainly not at the speed we hope for. Secondly, the distributional features will tend toward inequality for obvious reasons.”
Managing AI, Spence says, is a problem too important to leave to the private sector alone. Citing examples such as China’s 15th Five-Year Plan, which calls for integrating AI into the economy, and Singapore’s newly established National AI Council, Spence says governments will have to step up and set the AI agenda.
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“Even if we don’t know how to do it yet, just stating the intention and deploying really talented people to move us in that direction is to me incredibly important”, Spence says.
One thing Spence is certain about is that US tech giants are overinvesting in AI. Social media giant Meta Platforms Inc says it wants to invest up to US$135 billion ($172 billion) on AI in 2026, nearly double the US$72 billion it spent last year.
“People worry this is almost in bubble territory. Whether or not that’s true depends a lot on whether you think that going forward, the consequences of this are going to produce real results like productivity surges and whatnot,” Spence says. “The sceptics about that think this is all going to blow up, and the optimists think the opposite, but almost for sure there’s overinvestment.”
According to Spence, US tech companies have the same motivations as global superpowers like the US and China when it comes to AI. They want to dominate and occupy leading positions in the field.
“Coming in third is a really bad idea and so they are going to do their best not to do it,” he says. “They will err on the side of overinvestment rather than run the risk of coming in second or third.”
Economic fragility is building up
It has been nearly 25 years since Spence won the Nobel Memorial Prize in Economic Sciences. The Princeton, Oxford, and Harvard alumnus received the award in 2001 for his research on markets with asymmetric information.
Spence says the composition of global financial markets has undergone significant changes over the same period. “If you go back 25 or 30 years and look at a major stock index, you will discover that 80% of the market cap is tangible assets. If you do the same exercise now, you discover those numbers are almost reversed.”
“Value creation is shifting in the direction of capital intensity, and with an emphasis on intangible assets. That’s software, AI, data and all of those things that you never know,” he says.
The ongoing war in Iran and the ensuing shock in energy prices have sent countries spiralling into uncertainty. On April 14, the International Monetary Fund cut its 2026 global growth forecast to 3.1%, down from its initial forecast of 3.3% back in January.
Spence says he is struck by the remarkable resilience of the global economy as it has weathered multiple disruptions over the past few years. “I don’t mean it’s perfect. There’s slowing growth and headwinds and difficulties, and we are in the midst of one of those things now. But on the whole, it’s resilient.”
“I think this is a testament to the rising competence and experience of the managers of the economy in a whole variety of countries,” he says. “It’s certainly attributable to the fact that, unlike 30 years ago, when most of the world lived in low-income or low-middle-income countries, most of the world now lives in countries with much higher levels of income and much higher levels of resources to buffer the shocks.”
That said, Spence admits he is noticing signs of fragility building up within the global economy. For one, the fracturing of relations between the US and the rest of the world is a cause for concern.
“The US is 25% of the global economy. It’s much like a fraction of the global financial system. The other 75% of the world is continuing under something that vaguely resembles multilateral structures, to trade with and invest with each other and so on.”
“The thing that most worries me right now is that we are living in an extended period of higher real interest rates. That may be controversial, but the supply side looks like it is putting us in that direction,” Spence says. “We are doing that in the context of high and rising debts, sovereign debt, and other debt, and I’m worried that there’s fragility building.”
