“A Nobel laureate on the economics of artificial intelligence” (MIT Technology Review, March/April 2025):
For all the talk about artificial intelligence upending the world, its economic effects remain uncertain. But Institute Professor and 2024 Nobel winner Daron Acemoglu has some insights.
Despite some predictions that AI will double US GDP growth, Acemoglu expects it to increase GDP by 1.1% to 1.6% over the next 10 years, with a roughly 0.05% annual gain in productivity. This assessment is based on recent estimates of how many jobs are affected—but his view is that the effect will be targeted.
The full paper is available for download as a PDF.
The news gets better:
“We’re still going to have journalists [especially in Gaza where food, health care, education, and shelter are all paid for by US/EU taxpayers via UNRWA?], we’re still going to have financial analysts, we’re still going to have HR employees,” he says. “It’s going to impact a bunch of office jobs that are about data summary, visual matching, pattern recognition, etc. And those are essentially about 5% of the economy.”
If “artificial intelligence” includes self-driving, I’m not sure that the effects on the economy will be small. As of 2016, supposedly about 3 percent of jobs were for drivers per se (CNBC). As anyone who has taken an Uber or Lyft can attest, many of these folks speak no English. If their driving jobs disappear, at least some percentage of them will be on track for the lifetime full welfare lifestyle (public housing, Medicaid, SNAP/EBT, and Obamaphone).
Related: Mindy the Crippler is preparing for the stock market panic when people realize that AI is fizzling…
Related:
- “Did Paul Krugman Say the Internet’s Effect on the World Economy Would Be ‘No Greater Than the Fax Machine’s’?” (Snopes; answer: Yes, in 1998)
Garbage in (pseudo code prompts) garbage out (stack overflow) so far. Someone has to develop ever more complicated pseudo code prompts & someone has to keep putting examples in stack overflow. If Teslas are just replaying recordings of humans driving, how is the algorithm going to continue improving if no more humans are driving?
Other than shorting Nvidia, how can we short “AI”, that is Large Lying Machines (LLM)?
lion and Thersnoboks, I have some thoughts on other shorts for AI (if that is your inclination), but wondering if you could articulate a bit about your short thesis? Please educate those of us who don’t work directly in the industry, but who are very interested why you are negative on AI generally. A balanced upside/downside thought process would be super interesting (guessing your downside arguments are more likely and/or prevail based on your comments, but would be great to hear you articulate both sides ). I will follow up with shorts.