The eggheads at the Cato Institute have just written a paper about what I believe is the single most important economic problem we’re going to face in the near future… You can find the PDF here Economic Growth Given Machine Intelligence.
“A simple exogenous growth model gives conservative estimates of the economic implications
of machine intelligence. Machines complement human labor when they become more
productive at the jobs they perform, but machines also substitute for human labor by taking
over human jobs. At first, expensive hardware and software does only the few jobs where
computers have the strongest advantage over humans. Eventually, computers do most jobs.
At first, complementary effects dominate, and human wages rise with computer productivity.
But eventually substitution can dominate, making wages fall as fast as computer prices
now do. An intelligence population explosion makes per-intelligence consumption fall this
fast, while economic growth rates rise by an order of magnitude or more. These results are
robust to automating incrementally, and to distinguishing hardware, software, and human
capital from other forms of capital.”
My take is that the stagnation of median wages we’re experiencing and the recession that will follow the housing bubble are fundamentally connected to this shift from complementary to substitutive AI working its way from the bottom up.