Was recommended this article over twitter, seemed a good food for thought.
In summary, the main thrust is that
1) We have not seen big productivity improvements from computers, and we might not see much from AI either.
He then thinks through some big industries, because to get average big efficiency gains, they need to affect big industries, and comes up short.
Finally, looking at where such things are unambiguously important, such as media, these are actually fairly small industries, which means they're overall effect on general productivity can't actually be all that great. And the marginal benefits are even now fairly, well, marginal.
Interesting food for thought, hopefully, if nothing else.
Heretical thoughts on AI
Robert Solow quipped, “You can see the computer age everywhere but in the productivity statistics.” What if AI is the same way? What if it changes everything except the economy?
www.elidourado.com
In summary, the main thrust is that
1) We have not seen big productivity improvements from computers, and we might not see much from AI either.
Fool me once.
In 1987, Robert Solow quipped, “You can see the computer age everywhere but in the productivity statistics.” Incredibly, this observation happened before the introduction of the commercial Internet and smartphones, and yet it holds to this day. Despite a brief spasm of total factor productivity growth from 1995 to 2005 (arguably due to the economic opening of China, not to digital technology), growth since then has been dismal. In productivity terms, for the United States, the smartphone era has been the most economically stagnant period of the last century. In some European countries, total factor productivity is actually declining.
He then thinks through some big industries, because to get average big efficiency gains, they need to affect big industries, and comes up short.
An industrial perspective. I like to reason about the economy sector by sector because it imposes a bit of intellectual discipline. Stating what you expect or expected a particular technology to do to a given sector, and then summing across all the sectors is more concrete and rigorous than just stating what you expect the effect on the economy will be. In addition, you can initially focus on a few big sectors because it’s only the big sectors that can really move the needle on aggregate productivity.
Finally, looking at where such things are unambiguously important, such as media, these are actually fairly small industries, which means they're overall effect on general productivity can't actually be all that great. And the marginal benefits are even now fairly, well, marginal.
Swimming in content.
The one industry that AI is sure to disrupt is media...
There are those who think that more content is a bad thing. We will waste more time. We will be more distracted. But even putting those issues aside, we may be reaching diminishing marginal returns to media production. When I lived in Portugal as a child in the late 1980s, we had no Internet and two TV channels. I don’t know how much more content I have access to today, but it is perhaps a million times more (Ten million? More? I’m not even sure of the order of magnitude.)
That increase in content is life changing, but if the amount of content increased by another factor of a million because of AI, it’s not clear my life would change at all. Already, my marginal decision is about what content not to consume, what tweeter to unfollow, and more generally how to better curate my content stream...
Even if AI dramatically increases media output and it’s all high quality and there are no negative consequences, the effect on aggregate productivity is limited by the size of the media market, which is perhaps 2 percent of global GDP. If we want to really end the Great Stagnation, we need to disrupt some bigger industries.
Interesting food for thought, hopefully, if nothing else.