Larry Fink of BlackRock Envisions A.I. as the Cure for High Inflation

**New AI Technologies Promising in the Fight Against Inflation**

Larry Fink, the CEO of BlackRock, the world’s largest asset manager, believes that new artificial intelligence (AI) technologies have the potential to help end the period of record inflation. Fink made these remarks during BlackRock’s investor day event, emphasizing the significant role AI can play in increasing productivity and transforming margins across sectors, ultimately leading to a reduction in inflation.

**The Link Between AI and Productivity**

Fink’s optimism stems from the belief that AI, particularly generative AI tools such as OpenAI’s ChatGPT, can automate a substantial portion of knowledge work. According to a report by McKinsey Global Institute, this automation could contribute $2.6 trillion to $4.2 trillion to the global economy. The report also estimates that AI has the potential to automate work activities that currently consume 60% to 70% of employees’ time, resulting in an annual growth of labor productivity ranging from 0.2% to 3.3%.

However, McKinsey warns that this increased productivity may come at the expense of higher-wage knowledge workers who were previously considered less susceptible to automation.

**Remote Work and Its Impact on Productivity**

Fink’s optimism about the potential of AI to combat inflation arises from concerns about the decline in productivity associated with remote work. In a previous interview, Fink expressed the view that employees returning to the office is essential for increasing productivity and reducing inflation. BlackRock even mandated its employees to return to the office three days a week.

Despite these efforts, labor productivity has continued to decline, with a 2.1% drop in the first quarter of this year, according to the Bureau of Labor Statistics. Many surveys indicate that managers often report lower or unchanged productivity from remote workers. High-profile CEOs like Mark Zuckerberg of Meta and Marc Benioff of Salesforce have also highlighted the challenges of remote work, particularly for new hires.

However, economists caution against drawing strict connections between the decline in labor productivity and remote work alone. One reason for the decline could be a lack of well-defined hybrid work arrangements that fail to optimize productivity. Additionally, increased labor churn resulting from widespread job-hopping during the “Great Resignation” may also contribute to reduced productivity.

**Conclusion**

New AI technologies hold promise in curbing inflation by boosting productivity. Larry Fink, CEO of BlackRock, believes that AI can significantly contribute to increasing productivity and transforming margins across various sectors. McKinsey Global Institute estimates that AI has the potential to automate a significant portion of employees’ work, leading to substantial economic growth. However, the impact of AI on the workforce should be carefully managed to mitigate potential challenges for higher-wage knowledge workers. Additionally, while concerns about the decline in productivity associated with remote work persist, economists emphasize the need for well-structured hybrid work arrangements to optimize productivity.