Electrical Compliance

Australian government sources often report that the services sector represents about 70% of the Australian GDP, depending on the precise industry classifications used.

I asked the question “what fraction of people employed in Australia’s service sector have jobs that would probably not exist without government legislation, regulation and mandated compliance”.

My friendly set of AI tools eventually agreed that a rough estimate would be about 40%. This includes the whole public sector of course, and about 20% of the services sector that isn’t in the public sector.

That is, 5.2m people.

Now I am going to go out on a limb here and suggest that this group is unusually exposed to AI because much of its work consists of processing information according to rules.

Business leaders often moan about productivity gains. What that means in a services economy is employing less people but maintaining revenues.

This is because people are the main cost of a services business, and many of these people are only employed because of government legislation, regulation and compliance.

So, say for instance, the services sector takes the opportunity of removing 5.2m employees by adopting AI technologies.

Then 5.2m Australians (18% of the population) won’t be in a position to buy services. The services sector will contract rapidly and pretty quickly you have a great depression.

None of that will happen because people vote. But they are also as dumb as fuck and don’t know what to believe – and they show an amazing ability to be captured by special interest groups, such as a tech lobby.

The poor old politicians don’t really get any of this and won’t know what to do. Being Pavlovian robots they will however respond to whatever keeps them in their jobs.

The best solution is not to ban AI in the services sector. No, we should ban all government regulations and compliance which is so stupid that even an AI could manage it. Solve the problem at the source!

AI exposes the economic cost of regulation-created cognitive labour because it demonstrates how little human judgement many compliance functions actually require.

If compliance with a regulation consists primarily of deterministic information processing that an AI can perform, ask whether the regulation itself produces benefits exceeding the cost it imposes.

The take-home message – do not regulate AI to protect compliance employment. Use AI as a test of whether the compliance requirement deserves to exist in the first place.