I know quite a lot of people who work in tech and have been out of a job for over six months and many for over a year. Some have quit looking. I hope that this is the disruption part of the cycle that you’re talking about and things will normalize, but it is concerning.
What I wonder is if this shift in technology will create a super rich class (even richer than now) while bringing people who were solidly, middle or upper middle class more toward working class levels.
Perhaps part of the shuffle right now is that companies are still figuring out what they need. When I look at job descriptions, they are all over the map. The title that they use to describe the same thing or different they mesh the different skill sets into the same job description, etc.
My hope is that the companies doing the layoffs pause and look deeply at what their processes are and what they actually need. This could be the beginning of a new normal in an industry that has been totally thrown by a new tech technologies that changes so much of how these companies traditionally worked.
I love AI and I think it’s such a powerful tool and I think companies need to take a thoughtful look at the problems they are trying to solve with it and the skillets they actually need to solve them.
Thanks for the thoughtful piece! Let’s go with the $1mill UBI :)
But how should people benefit from capital income if they need to anticipate it? If people anticipate it, equity prices will rise accordingly, so existing owners will reap the gains. This makes me believe that government ownership would be necessary in this case.
Possibly, but it's a little more complicated. Take a stylized example just for the sake of argument. Take the real interest rate to equal the marginal product of capital. If AI replaces all human labor, including in R&D, then the marginal product of capital explodes.
Here is an alternative, intuitive way to think about it. If the future is way richer than the present, the question becomes should you consume today or consume in the future? Interest rates will be high because people know their consumption is going to be really high in the future anyway, so they need to be compensated a lot to save. This creates an opportunity for low-wealth folks to accumulate wealth quickly if they save.
However, as you note the effect on equity prices is more ambiguous than the effect on the real interest rate. See the discussion in their paper.
In any case I agree with you that some sort of intervention is probably better. I just think we should take people's savings as endogenous, and that could lead to different implications.
I know quite a lot of people who work in tech and have been out of a job for over six months and many for over a year. Some have quit looking. I hope that this is the disruption part of the cycle that you’re talking about and things will normalize, but it is concerning.
What I wonder is if this shift in technology will create a super rich class (even richer than now) while bringing people who were solidly, middle or upper middle class more toward working class levels.
Perhaps part of the shuffle right now is that companies are still figuring out what they need. When I look at job descriptions, they are all over the map. The title that they use to describe the same thing or different they mesh the different skill sets into the same job description, etc.
My hope is that the companies doing the layoffs pause and look deeply at what their processes are and what they actually need. This could be the beginning of a new normal in an industry that has been totally thrown by a new tech technologies that changes so much of how these companies traditionally worked.
I love AI and I think it’s such a powerful tool and I think companies need to take a thoughtful look at the problems they are trying to solve with it and the skillets they actually need to solve them.
Thanks for the thoughtful piece! Let’s go with the $1mill UBI :)
But how should people benefit from capital income if they need to anticipate it? If people anticipate it, equity prices will rise accordingly, so existing owners will reap the gains. This makes me believe that government ownership would be necessary in this case.
Possibly, but it's a little more complicated. Take a stylized example just for the sake of argument. Take the real interest rate to equal the marginal product of capital. If AI replaces all human labor, including in R&D, then the marginal product of capital explodes.
Here is an alternative, intuitive way to think about it. If the future is way richer than the present, the question becomes should you consume today or consume in the future? Interest rates will be high because people know their consumption is going to be really high in the future anyway, so they need to be compensated a lot to save. This creates an opportunity for low-wealth folks to accumulate wealth quickly if they save.
See this amazing work from Trevor Chow, Basil Halperin, and Zach Mazlish: https://basilhalperin.com/papers/agi_emh.pdf
However, as you note the effect on equity prices is more ambiguous than the effect on the real interest rate. See the discussion in their paper.
In any case I agree with you that some sort of intervention is probably better. I just think we should take people's savings as endogenous, and that could lead to different implications.