Will AI Lower Prices? History Has an Answer for You.
Last week, in North Carolina, every G20 member signed something called the Carolina Principles. China included. So that's the US, China, Canada, France, India, and the rest — all agreed that the road for AI innovation is open. I think it's pretty remarkable, because it truly ignited the starting point of a new industrial revolution.
And I just want to add my prediction on how this will affect prices during this inflation. But first, let's travel to the past.
Food Two Hundred Years Ago
At the turn of the century, when American farms were still running on 24 million horses and mules, the average American family spent 42% of their budget just on food.
Once the tractor became mainstream by 1960, the average family spent 24% of their budget on food. So it went from 42% to 24%. Today it's around 10% of what each household earns. Can food prices drop from 10% to 5% once again because of AI? I really think it can. Can people afford to have Starbucks every day again? I think we can.
I remember when I was in high school, that was in 2008. I was able to get my Caramel Macchiato from Starbucks every day. And then I gained 15 lbs, and then I had to try to lose weight. But it feels great when you can drink Starbucks every day. Isn't it?
Clothes Two Hundred Years Ago
Then let's talk about clothes. Before the Industrial Revolution, a shirt cost about 580 hours of someone's life. It took a lot of time, from spinning cotton to weaving thread, finishing the fabrics, to making the garment. Spinning alone took 500 hours, weaving took 72 hours, and sewing the garment took 7 hours. So that's about 580 hours to make one piece of clothing.
Today, thanks to machines, thanks to the Industrial Revolution — from spinning, to weaving, to finishing a fabric, and then sewing and packing — a shirt takes only about half an hour.
Half an hour versus 580 hours. That's the difference in 200 years.
And that's why in 1800 a farm woman only owned 3 dresses. And today, most of us have too many clothes. We have an abundance of clothes, and we are not even aware of it. We are just living in a different universe than our ancestors did.
So why shouldn't food get cheaper just because of AI?
Does it make sense that major corporations, especially in the food industry, need to make an effort to make food prices more affordable?
I really think so. That's the benefit of living in a capitalist society. We all have the power to influence the market rather than waiting on the government to eliminate inflation.
Can Business Adopt AI Without Firing People?
The next question: can a business adopt AI without firing people? I really think the answer is yes. And I'm not just guessing.
The New York Fed looked at this. Only 4% of service companies laid anyone off because of AI. Manufacturers, zero. And more than a third of them retrained their people instead.
I think each company has its own ambition, so why not move your staff to do more creative and humane work for your company? Like marketing, sales, customer support, human resources, or even admin. Places that will require us to give each other more love and care.
Can you imagine your people pouring more love, soul, and creativity into your company? Once again, your company will be alive from the inside out. I've done the math, if a business invests a small sum of money to transform its process into an AI process, you actually receive two very real and very big benefits.
#1. YOUR COMPANY'S PRODUCTIVITY WILL INCREASE BY ADOPTING AI. That will save you a lot of money long-term by accelerating your production process. That's the first obvious benefit.
#2. YOU CAN MOVE YOUR PEOPLE OFF THE BORING, REPETITIVE PROCESS LINE AND INTO THE HUMANE DEPARTMENTS — marketing, customer service, sales, human resources, administration, etc. Moving them to those departments requires people to use their right brains instead of their left brains. That means they get to release their potential as a human, not as a working robot.
And can you imagine having more staff pouring their hearts and souls into your marketing, into your relationship management with your customers? We are talking about a different level of success and much higher frequency here.
Now we're looking at an increase in both productivity and customer retention. So I think the strategy we mentioned today is a very good strategy for companies to adopt during this AI era, and a good answer for how to move around employees who already know your company inside and out.
Ready for AI Transformation?
If your company is ready to adopt this new AI process and operation, feel free to call or text us at (786) 567-8477 to schedule a consultation, and I look forward to bringing light-speed productivity to your firm.
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