No - the growth today is capital expenditures, not productivity.
To be fair, the industrial revolution was a 100 year period or so, computers, web, cloud, mobile and AI will likely be perceived in the same historical framework.
AI will take some time to pan out in terms of productivity, but it will.
The interesting thing here, I think, is what actually drives the growth of industrialization: cheap energy, an exploitable labor force and increased automation.
Every industrial economy seems to reach a plateau of diminishing returns, and it actually seems to be reached faster the faster industrialization is implemented. We see it in Europe, in the US, in Japan, in South Korea and it seems China is well on their way there, too: Cheap energy is diminishing (shale oil fracking, increased cost of building nuclear, etc) and exploitable labor has mostly been pushed as far as it can (dwindling fertility rates across the globe). Thus, we place our hope in automation, which has also been taken incredibly far already.
LLMs really must be some magic special sauce if they're to automate us into a new era of explosive growth. So far I don't think they're living up to that promise.
Growth is unrealistic.
During the industrial revolution, people were still exploring the world and expanding their reach, establishing new colonies for raw materials.
We are living in a global economy now. There is no growth into unexplored territories left to do.
The amount of carbon we're spewing into the atmosphere is unsustainable, and will lead to more worldwide instability.
Remember that the "Arab Spring" (rise to IS, wars and refugee crisis) had been triggered by rising food prices. New wars are pending. World leaders (political and industrial) need to prepare for how to survive what is to come: not fantasise of bringing back a time that never existed.
Will we see any growth acceleration? The Internet doesn't seem to have had this effect. AI may turn out to nothing in terms of gdp growth or even be hugely deflationary.
Internet is the foundation of the global almost automated distribution networks and has brought the ability to target your consumers in a way that's cheap and effective. Usa exports tons of digital services that balance the trade ledger. I don't understand this stance.
> Usa exports tons of digital services that balance the trade ledger.
In the accepted framework of global trade, where exchange value is either confounded or accepted as a use value, this is a correct stance. I think where we'd end up disagreeing is on that equality. I don't believe that just because you can sell targeted advertising for millions of dollar, that it's actually millions of dollars worth of social use value. We'd have to bicker about the definition of use value, obviously, but I find it hard to imagine an argument for why writing adware at Google is worth the money people are getting paid for it, relative to useful manual labour. In much the same way I don't believe the CEO's labour is worth 100x what the employee is paid, I don't believe the Google Engineer is worth 5x the gardener maintaining a park.
This spoken separation of use value and exchange value is missing from most internet opinions on the economy.
I hope that somewhat helps you understand how the stance can exist, even if I haven't explained it deeply enough for you to actually accept it.
I don't know if its something that we will be able to measure precisely or at least in aggregate at first since the positives will only come about in the long term. Anecdotally, all my recent trips to the doctor have basically been as follows:
1) Give some (frontier) model my symptoms, circumstances, etc.
2) Model outputs a list of possible causes, some more urgent than others
3) If its not something benign, I go to a doctor
4) Doctor orders blood work, checks me up, and I discuss possible diagnoses with them.
Around 60-70% of the time the model was correct about the illness, the doctor just confirms it with empirical evidence. This means that I am able to pretty effectively triage myself, saving me a considerable amount of time.
Now its already the case that the role of doctors is diminishing in medical practice, and Nurse Practitioners are performing the majority of the same work. Armed with AI tools, Nurse Practitioners are effectively at the same level of skill and knowledge as an actual MD, and we would need far less MDs, then to do medical care, reserving them for specialty cases, expertise where AI tends to fail. So there is both more room for particular and intricate medical research and care for the most stubborn conditions, and more capacity for care in general.
In the long run, this will lead to improved outcomes, greater cognitive and physical health, and lower costs for child rearing. All of this is an economic boon. And all of it will not be apparent in the numbers for decades. I believe this is the case for the majority of the processes that AI is improving.
I’m sorry but this is a bad take. We’re suffering from a healthcare crisis, globally. We don’t have nearly enough doctors. Even in the US where wait times are relatively low, it sometimes takes months to get an appointment with my PCP, let alone a specialist. And while I do sometimes feel when I see an NP at an urgent care like I could have used an LLM for all the time and attention they paid to my concerns, that’s not a compliment to the LLM.
Besides that 60-70% is not an acceptable hit rate and there’s already early evidence of skill atrophy in AI saturated fields like radiology. We need way more people offering more personalized care, using more judgement and offering more compassion, not a chat interface that says “you’re totally right to push back, the post nasal drip was the smoking gun.”
Maybe some forms of ML, even LLMs, become part of the solution to that shortfall, but we’re a long way from proving that’s a net positive let alone a big leap forward.
Exactly. I believe that growth caused by the rise of IT, be it Internet or LLM, will be marginal, because the benefits for humanity are very marginal compared to that caused by steam engine, wing, antibiotics or telegraph.
Everything IT does is slightly simplifying things we already could do. We could already telegraph someone across Atlantic, we could extract knowledge in library, we could do accounting. The speedup is small compared to horses vs steam power for transportation for example.
That's very myopic view. The gains by the rise of IT have been staggering in e.g. medicine. Modern drug discovery would be impossible without advances in computation, and we are getting breakthrough drugs all the time thanks to that.
> We could already telegraph someone across Atlantic, we could extract knowledge in library, we could do accounting. The speedup is small compared to horses vs steam power for transportation for example.
The speedup is much larger than horses vs steam power. How much time would it take you to find some scientific article if your library did not stock journal it was published in? You'd have to write request to get that issue and then wait few weeks before it arrives. Now you can get it basically instantly.
> That's very myopic view. The gains by the rise of IT have been staggering ...
You can't make people who have basically been, their entire lives, coding variations of JavaScript "punch the monkey" abusive ads understand the impact the Internet had on the world.
Clearly written by someone who's never lived without steam power (semi tongue in cheek).
But seriously, your ability to expediently research just doesn't compare to the ability to ship a metric ton of freight across the country without marshalling an army of people for months on end. As one example.
I think the speedups and conveniences of modern IT and the Internet have been massive: I can bank from my pocket, review the best photos out of 100k+ just when riding a tram, get virtually any good produced anywhere delivered to my doorstep in 1-3 business days (and it will be the exact kind and make I chose, not something that happened to be available), read virtually any book ever published while my appointment is delayed.
However, almost all of these are purely private benefits that do not show in any ledger. This is at least in part why the Internet seems to have had such small impact on gdp.
How about AI? So far, even more private benefits than the Internet.
And most of the time savings gained from all this is blown on grind clicking "social media" so net effect is, yes, close to zero (or in more modern terms, not 100x, not 10x, but 1x at most).
Value is subjective, though. If you actually gave people an ultimatum to stop using AI tools for a year, with a negotiable price, I wonder what that would come out at. Many other personal goods are like this, they are valued highly but do not appear as commercial transactions.
I do believe efficiency gains have been significant. Not as big as with industrial revolution but still effective.
Does not mean that some of these gains have not been wasted or there has not been in sense waste introduced to waste excess productivity and efficiency. IT certainly has made this waste lot more easy to do.
Don't think in terms of dollars. Think in terms of stuff and services.
You don't see the internet in terms of dollars because it often makes it cheaper to do something that was possible before. That looks like a negative, in terms of GDP. In terms of what people can do, and can afford to do, though, it opens enormous doors. Want some information? Don't need a library. Want to plan a trip? Don't need a travel agent. Want to download some free software? Don't need a floppy and a friend who has a copy. And so on.
But if you look around, you see things like Amazon. They don't exist without the internet. You see Facebook. Youtube. Netflix existed, but they became a lot more convenient - no need to run to a store. There's a lot that was created that people found valuable, but didn't have to pay for (Amazon excepted). There's value, but because the nominal charge is $0, it doesn't show up in the GDP statistics.
Some people think so in the technology singularity that humanity may be approaching.
The acceleration of the speed of technological growth seems real, look how fast AI research and tools are advancing seemingly on a daily basis, rather than innovation happening in months, years or decades long timescales.
Think about the rate of progress of the steam engine, and then think about technology since the splitting of the atom. Warp speed!
> The Internet doesn't seem to have had this effect.
This is both correct and incorrect.
US and China tech did totally skyrocket in the 21st century and pulled the GDPs of both the US and China up like mad.
The one western continent that had none of the Google, Amazon, Netflix, Alibaba, Tencen, Micron, SK Hynix, NVidia, that's nowhere in drones, etc. saw his GDP (in USD and inflation adjusted) barely moving and that'd be the EU.
The EU now has an economy based, as someone pointed out the other day, on selling overpriced "luxury" (at least pretending to be luxury) handbags assembled in China: in the Top 100 companies by market cap besides ASML the EU has L'Oreal and LVMH. That and fake public companies that are actual state monopolies (like spanish banks and french oil companies). It's really totally pathetic.
The EU, even though the public debt of its countries grew like mad, is where to look at to see a continent that had hardly any GDP growth in the 21st century.
But I'd say that it's precisely because the EU missed the Internet: it was all chinese (and now asian too) tech companies.
If this first quarter of the 21st century is of any indication, it looks like history is repeating: the EU is, once again, absolutely nowhere when it comes to AI (yay, Mistral, but we all know how that one is doing) and shall, once again, continue to see the public debt of its countries grow like there's no tomorrow (France is at 6% deficit of its GDP seen the insane spending of the state) and its GDP hardly move at all.
But AI leading to no growth in the US and in Asia? I think it's a bit early to call that.
Early capitalism didn’t have steady growth because of technical advances. It had steady growth because it was early capitalism. When capitalism expands (be it by replacing older modes of production, or through rebuilding after a world war), it always has steady growth. When there’s nowhere left to expand to, the machine always grips. Technical progress doesn’t prevent this outcome, it accelerates it. More productivity means less labour per productive cycle, hence less profit.
Also bear in mind that the industrial revolution in the UK occurred under the British Empire, which extracted a lot of wealth and resources from its territories, usually under less-than-fair arrangements. It is hard to imagine the British industrial revolution without this benefit - they were not separate aspects of the economy.
"England was to become the ‘workshop of the world'; all other countries were to become for England what Ireland already was — markets for her manufactured goods, supplying her in return with raw materials and food. England, the great manufacturing centre of an agricultural world, with an ever-increasing number of corn and cotton-growing Irelands revolving around her, the industrial sun. What a glorious prospect! …
But then a change came. The crash of 1866 was, indeed, followed by a slight and short revival about 1873; but that did not last. We did not, indeed, pass through the full crisis at the time it was due, in 1877 or 1878; but we have had, ever since 1876, a chronic state of stagnation in all dominant branches of industry. Neither will the full crash come; nor will the period of longed-for prosperity to which we used to be entitled before and after it. A dull depression, a chronic glut of all markets for all trades, that is what we have been living in for nearly ten years. How is this?
The Free Trade theory was based upon one assumption: that England was to be the one great manufacturing centre of an agricultural world. And the actual fact is that this assumption has turned out to be a pure delusion. The conditions of modern industry, steam-power and machinery, can be established wherever there is fuel, especially coals. And other countries besides England — France, Belgium, Germany, America, even Russia — have coals. And the people over there did not see the advantage of being turned into Irish pauper farmers merely for the greater wealth and glory of English capitalists. They set resolutely about manufacturing, not only for themselves, but for the rest of the world; and the consequence is that the manufacturing monopoly enjoyed by England for nearly a century is irretrievably broken up."
agree, technology doesn't change the basic mechanism of capitalism so I don't think this will be different, the only real question is how far means of production will be in term of capital intensity from upper class, which will decide if the outcome will be victorian golden age or robber baron age
The century from 1870 is filled with many one-time only developments that will never happen again:
Things like accepting germ theory (so treating sewage and drinking water), the development of vaccines and antibiotics, the creation of mechanical motion (previously biological methods, in the horse, was the fastest mode), electricity (artificial light that did not entail burning things), mechanical/electrical calculation of numbers.
These jumps in productivity/efficiency will never happen again, so expecting corresponding jumps in growth that they led to is not reasonable:
Certain new inventions and refinements of existing ones will continue, but it is hard to think of things that will improve people's lives as, say, clean drinking water.
One things that could be done is more redistributive tax policies, like existed post-WW2, so as to better spread around the current income and wealth in a less concentrated way.
Any parallel should be taken with a grain of salt.
In any case, I'd like to make two points about the job market.
1. Yes, it is true that the job market recovered from the machine-ization of agriculture and industry. What's never mentioned, is that it took 80 years for the UK's job market to recover occupation and salaries seen at the beginning of the 1800s.
Europe's salaries and occupational levels were hit with a similar cataclysm as machines started appearing in the agricultural fields. That prompted millions and millions of Europeans to flee Europe for the Americas. Again, sure, the job market did recover, depending on the specific western European country between the 1960s and 1970s. That's between 50 to 70 years of slump. Almost twice the average person's career in a long lasting job market slump.
Please remind that to people that "AI will not impact job markets or will do so positively" using previous technological advancements as examples, that might be very well true but on a very undefined and likely very long time frame.
2. At no point in history a technical revolution threatened all kind of jobs at the same time, it always hit specific sectors like manufacturing or agriculture. Not all of them at once, manual and intellectual.
To be fair, the industrial revolution was a 100 year period or so, computers, web, cloud, mobile and AI will likely be perceived in the same historical framework.
AI will take some time to pan out in terms of productivity, but it will.
A better comparison might be railroads.
Every industrial economy seems to reach a plateau of diminishing returns, and it actually seems to be reached faster the faster industrialization is implemented. We see it in Europe, in the US, in Japan, in South Korea and it seems China is well on their way there, too: Cheap energy is diminishing (shale oil fracking, increased cost of building nuclear, etc) and exploitable labor has mostly been pushed as far as it can (dwindling fertility rates across the globe). Thus, we place our hope in automation, which has also been taken incredibly far already.
LLMs really must be some magic special sauce if they're to automate us into a new era of explosive growth. So far I don't think they're living up to that promise.
If GDP increases, that’s just money left on the table by the ultra wealthy.
We are living in a global economy now. There is no growth into unexplored territories left to do.
The amount of carbon we're spewing into the atmosphere is unsustainable, and will lead to more worldwide instability. Remember that the "Arab Spring" (rise to IS, wars and refugee crisis) had been triggered by rising food prices. New wars are pending. World leaders (political and industrial) need to prepare for how to survive what is to come: not fantasise of bringing back a time that never existed.
In the accepted framework of global trade, where exchange value is either confounded or accepted as a use value, this is a correct stance. I think where we'd end up disagreeing is on that equality. I don't believe that just because you can sell targeted advertising for millions of dollar, that it's actually millions of dollars worth of social use value. We'd have to bicker about the definition of use value, obviously, but I find it hard to imagine an argument for why writing adware at Google is worth the money people are getting paid for it, relative to useful manual labour. In much the same way I don't believe the CEO's labour is worth 100x what the employee is paid, I don't believe the Google Engineer is worth 5x the gardener maintaining a park.
This spoken separation of use value and exchange value is missing from most internet opinions on the economy.
I hope that somewhat helps you understand how the stance can exist, even if I haven't explained it deeply enough for you to actually accept it.
1) Give some (frontier) model my symptoms, circumstances, etc.
2) Model outputs a list of possible causes, some more urgent than others
3) If its not something benign, I go to a doctor
4) Doctor orders blood work, checks me up, and I discuss possible diagnoses with them.
Around 60-70% of the time the model was correct about the illness, the doctor just confirms it with empirical evidence. This means that I am able to pretty effectively triage myself, saving me a considerable amount of time.
Now its already the case that the role of doctors is diminishing in medical practice, and Nurse Practitioners are performing the majority of the same work. Armed with AI tools, Nurse Practitioners are effectively at the same level of skill and knowledge as an actual MD, and we would need far less MDs, then to do medical care, reserving them for specialty cases, expertise where AI tends to fail. So there is both more room for particular and intricate medical research and care for the most stubborn conditions, and more capacity for care in general.
In the long run, this will lead to improved outcomes, greater cognitive and physical health, and lower costs for child rearing. All of this is an economic boon. And all of it will not be apparent in the numbers for decades. I believe this is the case for the majority of the processes that AI is improving.
Besides that 60-70% is not an acceptable hit rate and there’s already early evidence of skill atrophy in AI saturated fields like radiology. We need way more people offering more personalized care, using more judgement and offering more compassion, not a chat interface that says “you’re totally right to push back, the post nasal drip was the smoking gun.”
Maybe some forms of ML, even LLMs, become part of the solution to that shortfall, but we’re a long way from proving that’s a net positive let alone a big leap forward.
Everything IT does is slightly simplifying things we already could do. We could already telegraph someone across Atlantic, we could extract knowledge in library, we could do accounting. The speedup is small compared to horses vs steam power for transportation for example.
> We could already telegraph someone across Atlantic, we could extract knowledge in library, we could do accounting. The speedup is small compared to horses vs steam power for transportation for example.
The speedup is much larger than horses vs steam power. How much time would it take you to find some scientific article if your library did not stock journal it was published in? You'd have to write request to get that issue and then wait few weeks before it arrives. Now you can get it basically instantly.
You can't make people who have basically been, their entire lives, coding variations of JavaScript "punch the monkey" abusive ads understand the impact the Internet had on the world.
But seriously, your ability to expediently research just doesn't compare to the ability to ship a metric ton of freight across the country without marshalling an army of people for months on end. As one example.
However, almost all of these are purely private benefits that do not show in any ledger. This is at least in part why the Internet seems to have had such small impact on gdp.
How about AI? So far, even more private benefits than the Internet.
Does not mean that some of these gains have not been wasted or there has not been in sense waste introduced to waste excess productivity and efficiency. IT certainly has made this waste lot more easy to do.
AI powered robots will be flexible (once they work reliable) ..
You don't see the internet in terms of dollars because it often makes it cheaper to do something that was possible before. That looks like a negative, in terms of GDP. In terms of what people can do, and can afford to do, though, it opens enormous doors. Want some information? Don't need a library. Want to plan a trip? Don't need a travel agent. Want to download some free software? Don't need a floppy and a friend who has a copy. And so on.
But if you look around, you see things like Amazon. They don't exist without the internet. You see Facebook. Youtube. Netflix existed, but they became a lot more convenient - no need to run to a store. There's a lot that was created that people found valuable, but didn't have to pay for (Amazon excepted). There's value, but because the nominal charge is $0, it doesn't show up in the GDP statistics.
The acceleration of the speed of technological growth seems real, look how fast AI research and tools are advancing seemingly on a daily basis, rather than innovation happening in months, years or decades long timescales.
Think about the rate of progress of the steam engine, and then think about technology since the splitting of the atom. Warp speed!
This is both correct and incorrect.
US and China tech did totally skyrocket in the 21st century and pulled the GDPs of both the US and China up like mad.
The one western continent that had none of the Google, Amazon, Netflix, Alibaba, Tencen, Micron, SK Hynix, NVidia, that's nowhere in drones, etc. saw his GDP (in USD and inflation adjusted) barely moving and that'd be the EU.
The EU now has an economy based, as someone pointed out the other day, on selling overpriced "luxury" (at least pretending to be luxury) handbags assembled in China: in the Top 100 companies by market cap besides ASML the EU has L'Oreal and LVMH. That and fake public companies that are actual state monopolies (like spanish banks and french oil companies). It's really totally pathetic.
The EU, even though the public debt of its countries grew like mad, is where to look at to see a continent that had hardly any GDP growth in the 21st century.
But I'd say that it's precisely because the EU missed the Internet: it was all chinese (and now asian too) tech companies.
If this first quarter of the 21st century is of any indication, it looks like history is repeating: the EU is, once again, absolutely nowhere when it comes to AI (yay, Mistral, but we all know how that one is doing) and shall, once again, continue to see the public debt of its countries grow like there's no tomorrow (France is at 6% deficit of its GDP seen the insane spending of the state) and its GDP hardly move at all.
But AI leading to no growth in the US and in Asia? I think it's a bit early to call that.
The other giant growth leap mankind had happened just before the Bronze Age Collapse.
Trade, automation, labor, same recipe. The outcome was a few centuries of dark ages though.
"England was to become the ‘workshop of the world'; all other countries were to become for England what Ireland already was — markets for her manufactured goods, supplying her in return with raw materials and food. England, the great manufacturing centre of an agricultural world, with an ever-increasing number of corn and cotton-growing Irelands revolving around her, the industrial sun. What a glorious prospect! …
But then a change came. The crash of 1866 was, indeed, followed by a slight and short revival about 1873; but that did not last. We did not, indeed, pass through the full crisis at the time it was due, in 1877 or 1878; but we have had, ever since 1876, a chronic state of stagnation in all dominant branches of industry. Neither will the full crash come; nor will the period of longed-for prosperity to which we used to be entitled before and after it. A dull depression, a chronic glut of all markets for all trades, that is what we have been living in for nearly ten years. How is this?
The Free Trade theory was based upon one assumption: that England was to be the one great manufacturing centre of an agricultural world. And the actual fact is that this assumption has turned out to be a pure delusion. The conditions of modern industry, steam-power and machinery, can be established wherever there is fuel, especially coals. And other countries besides England — France, Belgium, Germany, America, even Russia — have coals. And the people over there did not see the advantage of being turned into Irish pauper farmers merely for the greater wealth and glory of English capitalists. They set resolutely about manufacturing, not only for themselves, but for the rest of the world; and the consequence is that the manufacturing monopoly enjoyed by England for nearly a century is irretrievably broken up."
The same could be said today of the US and China.
That might give the reader the wrong impression. It is the same labour, but spread out over more commodities. You won't get to work less.
Things like accepting germ theory (so treating sewage and drinking water), the development of vaccines and antibiotics, the creation of mechanical motion (previously biological methods, in the horse, was the fastest mode), electricity (artificial light that did not entail burning things), mechanical/electrical calculation of numbers.
These jumps in productivity/efficiency will never happen again, so expecting corresponding jumps in growth that they led to is not reasonable:
* https://en.wikipedia.org/wiki/The_Rise_and_Fall_of_American_...
Certain new inventions and refinements of existing ones will continue, but it is hard to think of things that will improve people's lives as, say, clean drinking water.
One things that could be done is more redistributive tax policies, like existed post-WW2, so as to better spread around the current income and wealth in a less concentrated way.
In any case, I'd like to make two points about the job market.
1. Yes, it is true that the job market recovered from the machine-ization of agriculture and industry. What's never mentioned, is that it took 80 years for the UK's job market to recover occupation and salaries seen at the beginning of the 1800s.
Europe's salaries and occupational levels were hit with a similar cataclysm as machines started appearing in the agricultural fields. That prompted millions and millions of Europeans to flee Europe for the Americas. Again, sure, the job market did recover, depending on the specific western European country between the 1960s and 1970s. That's between 50 to 70 years of slump. Almost twice the average person's career in a long lasting job market slump.
Please remind that to people that "AI will not impact job markets or will do so positively" using previous technological advancements as examples, that might be very well true but on a very undefined and likely very long time frame.
2. At no point in history a technical revolution threatened all kind of jobs at the same time, it always hit specific sectors like manufacturing or agriculture. Not all of them at once, manual and intellectual.