That is the new Daron Acemoglu paper, and he is skeptical about its overall economic effects. Here is part of the abstract: Using existing estimates on exposure to AI and productivity improvements at the task level, these macroeconomic effects appear nontrivial but modest—no more than a 0.71% increase in total factor productivity over 10 years.…
“The Simple Macroeconomics of AI”
“The Simple Macroeconomics of AI”
21 Apr 2024 Leave a comment
in applied price theory, economic growth, entrepreneurship, human capital, industrial organisation, labour economics, labour supply, macroeconomics, poverty and inequality Tags: artificial intelligence
Will strong AI raise or lower interest rates?
29 Mar 2024 Leave a comment
in applied price theory, energy economics, entrepreneurship, industrial organisation Tags: artificial intelligence
That is the topic of my latest Bloomberg column. Here is one excerpt: First, as a matter of practice, if there is a true AI boom, or the advent of artificial general intelligence (AGI), the demand for capital expenditures (capex) will be extremely high. Second, as a matter of theory, the productivity of capital is […]
Will strong AI raise or lower interest rates?
Bryan Caplan on the economics of Star Trek replicators (that is, artificial intelligence)
03 Mar 2015 Leave a comment
in labour economics, labour supply, technological progress, unemployment Tags: artificial intelligence, Bryan Caplan, creative destruction, demand for labour, star trek, Star Trek replicators, supply of labour, technological unemployment
Bryan Caplan wrote a blog a few years ago, explaining the labour economics of artificial intelligence, using an exam question he poses to his graduate students:
Suppose artificial intelligence researchers produce and patent a perfect substitute for human labour at zero MC.
Use general equilibrium theory to predict the overall economic effects on human welfare before AND after the Artificial Intelligence software patent expires.
He then gave the answer about a week later:
While the patent lasts, the patent-holder will produce a monopoly quantity of AIs. As a result, the effective labour supply increases, and wages for human beings fall – but not to 0 because the patent-holder keeps P>MC.
The overall effect on human welfare, however, is still positive! Since the AIs produce more stuff, and only humans get to consume, GDP per human goes up. How is this possible if wages fall?
Simple: Earnings for NON-labour assets (land, capital, patents, etc.) must go up. Humans who only own labour are worse off, but anyone who owns a home, stocks, etc. experiences offsetting gains.
When the patent expires, this effect becomes even more extreme. With 0 fixed costs, wages fall to MC=0, but total output – and GDP per human – skyrockets.
Human owners of land, capital, and other non-labour assets capture 100% of all output. Humans who only have labour to sell, however, will starve without charity or tax-funded redistribution.
His logic is quite good. Caplan drew attention in the responses to his blog of Capt J Parker and Alex Godofsky in the comments section of his blog.
My comments at the time were as follows:
- An artificially intelligent robot that was a perfect substitute for human labour sounds like the replicators on star trek?
- Who operates the machines? who tells them what to do? what not to do?
- After the patent expired, would anyone care if the poor stole/copied the AI machines and made them for for themselves. who cares if a free good is stolen?
- Is it a crime to steal a replicator on star trek?
Utopia, you are standing in it! 
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