Wednesday, June 19, 2024

Montana is bullish on AI

by Tanner Avery
| April 21, 2024 12:00 AM

By now you’ve probably heard that Artificial Intelligence (AI) has the power to ‘democratize expertise,’ enabling countless innovations the likes of which we haven’t seen since the invention of electricity.

While some, no doubt, view these proclamations as no more than a far-fetched dream, I am here to inform them that their doubts about the positive potential of AI will age no better than those who predicted the internet to be just a fad. The AI revolution is fast approaching, and that is good news for Montana. 

In my most recent Montana 2050 Report, I found that Montana stands to benefit more from AI than other states because our low-productivity sectors, which make up most of our largest industry sectors by employment, are the most ripe for AI productivity gains. 

Currently, Montana is one of the five worst states for overall labor productivity, and in the bottom half of states for labor productivity growth over the last decade. This has serious consequences as labor productivity, the measure of how efficiently work is turned into goods and services, is a major contributing factor to real wage growth and improved living standards.

The low-productivity sectors that currently rely on high-skill human labor, like healthcare and education, are the exact industries in which AI labor productivity gains via automation of routine tasks, optimizing operations, enhancing decision-making and resource allocation could be most pronounced.

Other large sectors like retail trade and leisure will also benefit from improved supply chains and automated cognitive work such as checking inventory or managing reservations, helping to free up workers to focus on higher quality customer service.

Less obvious areas, such as timber, farming and ranching, may not see as large of gains from AI, but it could be enough to increase their thin margins. For example, multifactor analysis on forage nutrition and soil health, paired with up-to-the-minute pest detection could provide Montana’s small farmers and ranchers with tools to make them competitive with large industrial farms. Similarly, the timber industry could see increases in productivity from faster and more comprehensive analytics that enhance logistics and log value potential. 

Together, these productivity gains could have a profound impact on our capacity to tackle some of the biggest challenges we’ve faced in recent years. It’s no secret that Montana has seen a large influx of people who work in tech and finance. And what would normally be a sign of a strong economy, has raised hackles across the state as these newcomers, empowered by high labor productivity incomes, have priced out many long-time residents.

By using AI to enable real wage growth and improved living standards for working-class Montanans, we can help existing residents be more competitive in relation to newcomers while still reaping the economic benefits of a growing tech sector.

Unfortunately, this AI productivity boom is far from guaranteed. Some Tech Giants, encouraged by an overzealous push by the federal government, have proposed regulations that would effectively destroy AI innovations by granting current giants a monopoly over this new technology.

While some steps have already been taken, such as the one by Attorney General Knudsen pushing back against Biden’s AI Executive Order, Montana must take more steps to take back AI leadership from the federal government. By protecting the right to compute, promoting regulatory clarity and avoiding regulatory duplication, Montana leaders could help make the benefits of AI a reality.

Montana has every reason to be bullish on AI, but without leaders doing more to champion these innovations, we may have our incoming productivity boom prematurely thwarted.

Tanner Avery is the director of The Center for New Frontiers at the Frontier Institute.