One question posed by AI has left economists baffled for a century, according to Warren Buffett.

• During the Berkshire Hathaway annual meeting, Warren Buffett answered several questions about artificial intelligence.
• Buffett has consistently stated that he doesn't invest in things he don't comprehend, and AI aligns with this definition.
• The billionaire investor stated that the release of the AI "genie" is similar to the beginning of nuclear weapons and the unforeseen consequences, and one of the significant questions it poses is how it will affect human-based employment and leisure time.

Warren Buffett acknowledges that he lacks knowledge about artificial intelligence, which aligns with his long-standing approach of avoiding technology that he doesn't fully understand. Despite his significant investment in Apple, his largest stock holding, Buffett admitted that his decision to invest in the company was more about its consumer success than its technological advancements. At the Berkshire Hathaway annual meeting, Buffett was unable to ignore the topic of AI, which was a concern for shareholders.

Buffett discussed the potential dangers of artificial intelligence, likening it to a "genie" that could cause harm once released. He expressed concern about the potential for AI to facilitate massive scams and the threat of unintended consequences and risk to humanity. Buffett also acknowledged that there is a question about AI's impact on the world that no one can answer, which could change the lives of every individual on a daily basis. This question has puzzled economists for a century.

Buffett stated that leisure time can be created in large quantities. However, the way the world utilizes leisure time is a separate issue. Many individuals believe that when they begin working, their primary desire is leisure time. However, Buffett stated that he enjoys having more problems to solve, and he has spent decades tap dancing to work in his Omaha office.

Buffett cited John Maynard Keynes, a renowned economic thinker of the modern era, who accurately predicted a rapid increase in output per capita but was unable to anticipate how humans would utilize increased productivity. Keynes is widely regarded as the founder of macroeconomics and is celebrated for his advocacy of government intervention through social and job programs to stabilize the economy during economic downturns, including the Great Depression, and for his influential book "The General Theory of Employment, Interest, and Money." Buffett recommended adding this book to a reading list.

Productivity has been steadily increasing over the past few quarters, with a 3% increase in productivity year over year, according to BLS data. Despite this, corporate executives are questioning the factors contributing to this rebound, including AI and return-to-office mandates. However, most agree that it is too early to make any connections between the technology's implementation and its impact on productivity, as gains from generative AI may take some time to show up in the data.

AI will eventually become a significant labor productivity driver, although it is not yet fully realized. IBM vice chair and former National Economic Council head Gary Cohn stated on CNBC last week that AI adoption is occurring rapidly, and the resulting productivity gains are also happening, albeit slowly. During a recent interview on CNBC's "Money Movers," Cohn explained that every company is considering how AI can help them improve their operations.

"Cohn stated that this is an evolution in the productivity game, and it will gradually impact the economy. However, he noted that the real productivity increase from AI has not yet been fully realized."

Companies are still in the process of establishing AI budgets and developing an overall strategy for its use to benefit both customers and employees, while attempting to transition into implementation mode.

MongoDB CEO Dev Ittycheria stated that executives are questioning when the value and return of AI will be realized, as the market is currently experiencing a phase where only the bottom layer, such as Nvidia and ChatGPT/OpenAI, is seeing value accrual. Companies must now prepare for the applications built on top of this infrastructure.

"There is a trend towards "agentic" workflows, where agents act autonomously on behalf of the end user. Although it may seem far-fetched, it is essential for businesses to develop apps, enhance customer experiences, reduce costs, and explore new growth opportunities."

Productivity booms and technology

Rare productivity booms occur approximately once per generation, with the most recent one occurring in the mid to late 1990s, leading up to the dotcom crash. This period of economic growth was not driven by the creation of new jobs.

The issue of technological advancements reducing the number of jobs is a persistent worry, and numerous studies have been published since the launch of ChatGPT in late 2022, discussing job losses or jobs that have "AI exposure."

While some companies claim that AI will not replace jobs, but rather allow human workers to focus on higher-value tasks, a survey by Resume Builder found that 37% of business leaders believe technology replaced workers in 2023, with 44% predicting more layoffs this year due to AI advancements. However, historically, technological advancements, such as industrialization, have not proven to be the career killers that experts predict.

Some experts, billionaires, and politicians have suggested implementing a universal basic income (UBI) to address the potential job shortages resulting from AI growth. Tech leaders such as Elon Musk, Mark Zuckerberg, and Sam Altman have also discussed this idea.

The relationship between technology and jobs is not entirely clear.

In the late 1980s, Nobel Prize-winning economist Robert Solow stated that while the computer age is evident in many aspects of life, it is not reflected in productivity statistics.

The dotcom era did not necessarily lead to productivity gains, as later research revealed a murky relationship between the two. A co-author of the work at McKinsey told the Harvard Business Review that the embrace of Solow's view in relation to the 90s tech boom was "oversimplified," and so was the view that came after it, that the internet drove the productivity boom.

Buffett stated that human labor-intensive companies, such as Berkshire Hathaway, must strike a balance between utilizing technology to increase efficiency and safeguarding human workers. He added, "I don't know how you ensure that happens any more than I know how to guarantee that when you use two atomic bombs in World War II, you didn't create something that could destroy the world later on."