Is AI Becoming A Major Trap For States?

Health, care, schools, transport, administration, jurisdiction - there is hardly a government domain in which artificial intelligence is not touted as a "wonder weapon". Algorithms are supposed to make the state faster, more efficient, cheaper and more resource-efficient. A look at practice shows exactly the opposite: things are working worse and worse instead of better. Financial experts, meanwhile, believe that expectations of AI are completely exaggerated and expect the bubble to burst soon. Have the heads of state - once again - bet on the wrong card to serve the technostructure?

The SPD parliamentary group in the German Bundestag is currently presenting its AI strategy: it is intended to show how German SMEs can make better use of AI-based applications and thus become internationally competitive. On closer inspection, the strategy itself is a fig leaf designed to conceal the massive political failings that have led German SMEs into the exact situation they currently find themselves in. AI can neither reduce location costs nor remove economic barriers caused by sanctions. Nor can the increasingly protectionist economic policies of Berlin and Brussels be eliminated by elegant programming. But the strategy shows one thing very clearly: artificial intelligence is being touted as a "magic bullet" that will solve all problems - from the shortage of skilled labour to the infrastructure crisis.

Wonder weapon for the public sector

This can also be read in the OECD report on the status of the AI strategy in Germany[1]. While Germany is struggling to realise an economic and political "turnaround", AI should be seen as an important tool for maintaining its international position as an economic power.

AI could also improve the efficiency and decision-making of the public sector and public services. It is criticised that the low level of digitalisation in the public sector is hindering the "transition to a more innovative and agile public sector".

AI is seen as a problem solver above all in those areas where the wrong political decisions of the past decades are now taking bitter and costly revenge: in healthcare, the care sector, technical infrastructure, education and training. Politicians, and not only in Germany, are receiving support from the major think tanks[2], which present analyses on the blessings of artificial intelligence in the public sector almost every week.

At the same time, representatives of the technostructure never tire of praising the blessings of AI. For example, Sasha Rubel, Head of AI and Machine Learning at Amazon Web Services, recently claimed in an interview with Euronews[3] that AI could actually add 600 billion euros to the European economy by 2030. The use of AI increases productivity, which is particularly beneficial for agriculture and healthcare.

It should only be noted in passing that this sum is roughly equivalent to the GDP of Belgium (2023) or the turnover of the entire German automotive industry in the same year.

Will the AI bubble burst?

The idea is more than tempting for state leaders: using algorithms to make the state faster, more efficient, cheaper and more resource-efficient. A look at the reality shows exactly the opposite, because things are working worse and worse instead of better. The crisis runs right through the state domain. Despite (or perhaps because of) digitalisation, inefficiency and the frequency of errors are increasing in both public and private sector administration. In some areas, this is leading to a standstill.

However, the states have set their course and, in contrast to the technostructure, such directional decisions cannot be adapted quickly. The latter has benefited above all on the stock market, as a glance at share prices such as those of chip manufacturer Nvidia shows.

All the more attention must be paid to the statements of analysts who are already talking about a huge AI bubble that is threatening to burst. A small but growing group of market observers are expressing increasingly loud doubts that AI will herald the next great phase of capitalism and hand over more and more work to intelligent machines, increasing efficiency and accelerating growth[4].

When the AI bubble bursts, the tech giants will move on like locusts in search of the next promising field. The leaders of the states will be left behind, with ailing infrastructures and a digitalisation process that has come to nothing. They have overlooked the fact that replacing jobs with enormously expensive technology has become their own trap. They have also overlooked the fact that they have made themselves dependent on a few monopolists who can dictate to them from now on. And they have overlooked the fact that the people of the state, whose service they are supposed to be serving, are sitting on the ruins of their simple-minded assumption that society can be controlled by algorithms.


This article was first published in Courrier des Stratèges on July 31st, 2024.

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[1] https://www.ki-strategie-deutschland.de/

[2 ] https://www.mckinsey.com/industries/life-sciences/our-insights/how-artificial-intelligence-can-power...

[3] https://www.euronews.com/business/2024/07/22/the-big-question-can-ai-really-add-600bn-to-europes-eco....

[4 ] https://www.businesstimes.com.sg/companies-markets/capital-markets-currencies/goldmans-top-stock-ana...