Tagged: microeconomics

I, Robot and Us

What happens if artificial intelligence (AI) technologies become significant economic players? The topic has come up in various ways for the past thirty years, perhaps longer. One model, the so-called technological singularity, posits that self-improving machines may be capable of a level of knowledge generation and disruption that will eliminate humans from economic participation. How far out this singularity might be is a matter of speculation, but I have my doubts that we really understand intelligence enough to start worrying about the impacts of such radical change.

Barring something essentially unknowable because we lack sufficient priors to make an informed guess, we can use evidence of the impact of mechanization on certain economic sectors, like agribusiness or transportation manufacturing, to try to plot out how mechanization might impact other sectors. Aghion, Jones, and Jones’ Artificial Intelligence and Economic Growth, takes a deep dive into the topic. The math is not particularly hard, though the reasons for many of the equations are tied up in macro and microeconomic theory that requires a specialist’s understanding to fully grok.

Of special interest are the potential limiting role of inputs and organizational competition. For instance, automation speed-ups may be limited by human limitations within the economic activity. This may extend even further due to fundamental limitations of physics for a given activity. The pointed example is that power plants are limited by thermodynamics; no amount of additional mechanization can change that. Other factors related to inputs or the complexity of a certain stage of production may also drag economic growth to a capped, limiting level.

Organizational competition and intellectual property considerations come into play, as well. While the authors suggest that corporations will remain relevant, they should become more horizontal by eliminating much of the middle tier of management and outsourcing components of their productivity. The labor consequences are less dire than some singularity speculations: certain low knowledge workers may achieve more influence in the economic activities because they remain essential to the production chain and their value and salaries rise. They become more fluid, as well, because they can operate as free lancers and thus have a broader impact.

This kind of specialization and out-sized knowledge influence, whether by low or high-knowledge workers, is a kind of singularity in itself. Consider the influence of the printing press in disseminating knowledge or the impact of radio and television. The economic costs of moving humans around to convey ideas or to entertain evaporate or minimize, but the influence is limited then to highly-regarded specialists who are competing to get a slice of the public’s attention. Similarly, the knowledge worker who is not easily replaceable by machine becomes the star of the new, AI economy. This may be happening already, with rumors of astronomical compensation for certain AI experts percolating out of Silicon Valley.