The AI Revolution: Came as an Email article, but interesting16 May 2025 17:13
The AI Revolution
Let's state the obvious: The discussion of AI quickly falls into a domain bordering on Sci-Fi. My thoughts here are only marginally shaped by scientific facts.
If you look at technological progress over the centuries through the lens of productivity, the improvement was tiny, barely noticeable. Our ability to do the same tasks maybe improved a few basis points a year for millennia. People figured out fire, learned how to use levers, created a wheel.
Then the pace of technological progress started to accelerate with the first and second industrial revolutions – steam engine, internal combustion engine, electricity, microprocessors, internet – productivity went from improving a few percent a century to a few percent a year. The beauty of productivity growth is that it is the magic that improves our lives. Technology allows us to spend fewer resources as we grow tomatoes and build new houses.
Serendipitously, as I was typing this I received an email from Edward Chancellor, who, in his article titled “The Trouble with Prosperity,” argues that productivity growth has slowed down to 1% from 3% since the 1970s. Edward thinks that the main causes were: (1) prosperity – the wealthier we get, the less hard we want to work, (2) the larger role governments play in the economy (Western governments have run deficits for nearly fifty years), and (3) regulation – it is up tenfold.
I hope AI can reverse this. Back to the future.
I have been battling between two conflicting frameworks here.
On one side, the technological progress we observed over the last hundred years has changed the nature of employment. We used to have one-third of the population working on farms, but today only a tiny percentage work there – a single combine replaces dozens of workers.
I am quite sure that this transition was painful for many farmers, but it was positive for society as a whole. While a transition happens, we can only see the jobs we will lose but don't yet know the jobs that will be created, because those occupations are yet to be invented. Just look how many jobs that we take for granted today did not exist 50 or 100 years ago – laparoscopic surgeon, data scientist, Chief Listening Officer – I kid you not, this one was suggested by ChatGPT (maybe it can see the future).
On another side, as Larry Summers pointed out, the biggest difference between AI and all other advancements is that "the wheel cannot create another wheel" but AI can build AI. There's a good chance that AI will add exponentially to growth – the rate of productivity growth can accelerate. Again, I am in the Sci-Fi, not Sci-Fact, domain.
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