Politics still trumps all, even technology
Expectations of recession, or worse, have stalked the public imagination since the end of the Covid-19 pandemic. It hasn’t come. Nevertheless, with endless confusion about tariff policy, growing geopolitical tensions, inflation, energy price shocks, clear overvaluation of assets from housing to shares (not to mention imaginary assets in the form of cryptocurrency) and, yes, workers’ fears of being replaced by machines, we might be forgiven for thinking that the road ahead is going to be a bumpy one.
The latest bellwether is cloud software company Salesforce, which hit the headlines this week after announcing it planned to cut staff numbers globally by 4,000.
Chief executive Marc Benioff (pictured) came in for criticism after telling the Logan Bartlett Show: “I’ve reduced it from 9,000 heads to about 5,000 because I need less [sic; fewer] heads”.
The roles facing the chop are in support, he said, and had been replaced by AI agents, before going on to suggest this created new scope for sales hires, saying Salesforce would “put those heads into sales”.
The planned layoffs garnered a lot of attention in Ireland, likely due to the company’s significant presence in the country, where it hosts its European HQ. It is far from alone, however. Oracle has started to shed staff in the US, though no announcement has yet been made. Swedish debt platform Klarna, too, has directly linked AI to job cuts, with boss Sebastian Siemiatkowski saying in 2024 that the company can “do much more with less”. Who knows? Perhaps it can also get AIs to rack up debt on chips. (Incidentally, Klarna backpedalled this year.)
It is worth noting, though, when talking about employment trends in tech, that the wider US jobs market is cooling. A jobs report due to be published by America’s Bureau of Labor Statistics as this column is being written is widely expected to tell of a slowdown.
Readers may also remember a post-Covid layoff spree throughout 2022 and 2023 as business, from startups to global giants, reduced numbers.
Investors tend to respond positively to layoffs: unless the company issuing the P45s is truly circling the drain, such moves are interpreted as an attempt to cut costs and, thus, boost margins. It is hardly a surprise that this rankles.
Today, spending on AI is very obviously a factor, of course. And not simply because jobs are being replaced by bots, but because the cost of implementing AI is enormous, particularly if it involves buying a bevy of processors that, unlike most capital goods such as buildings, will be utterly worthless in short order. Amazon, for instance, recently found it necessary to issue a short story’s worth of boilerplate [PDF], hoping to reassure shareholders that spending on AI really would pay off real-soon-now.
In truth, breathless claims about AI’s supposedly inevitable replacement of workers, whether that future is presented as a positive or a negative, have not helped anyone, with the possible exception of short term speculators.
Critics of AI do have a valuable role to play, and I suggest starting with the chatbot’s inventor Joseph Weizenbaum, who won few friends for his scathing attacks on how computers distort human reason. However, the more apocalyptic among them are little more than the mirror image of the moronic inferno of boosterism that spews into the media, such as the self-serving claim made by Mikey Shulman, chief executive of AI music generation toolmaker Suno, that people don’t enjoy making music.
When considering AI’s likely impact, taking a broad view of macroeconomics and its relationship to politics is crucial. Still, it would do no harm if people understood, you know, how computers actually work. Sadly, none of these things appears to be terribly common, despite being the water in which we swim.
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