The State of AI: the economic singularity

The opportunities and challenges are both enormous. An executive at a Fortune 500 company says his organization conducted a comprehensive review of its use of analytics and concluded that, overall, its employees add little or no value. Rooting out legacy software and replacing inefficient human labor with artificial intelligence could yield important results. But, this person says, such a comprehensive overhaul would require major changes to current operations and would take years to implement.

There are some early encouraging signs. Productivity growth in the United States, which has been stuck at 1% to 1.5% for more than a decade and a half, rebounded to more than 2% last year. It has likely reached the same level in the first nine months of this year, although the lack of official data due to the recent US government shutdown makes it impossible to confirm this.

However, it is impossible to know how long this recovery will last or to what extent it can be attributed to artificial intelligence. The effects of new technologies are rarely felt in isolation. Instead, the benefits are doubled. AI benefits from previous investments in cloud and mobile computing. In the same way, the recent AI boom may be just a precursor to breakthroughs in fields that have a broader impact on the economy, such as robotics. ChatGPT may have captured the popular imagination, but OpenAI’s chatbot is unlikely to have the last word.

David Rotman answers:

This is my favorite discussion these days when it comes to artificial intelligence. How will artificial intelligence impact overall economic productivity? Forget the slick videos, the promise of companionship, and the prospect of customers doing tedious daily tasks – the bottom line is whether AI can grow the economy, and that means increasing productivity.

But, she says, it’s difficult to pinpoint how AI will impact that growth or how it will do so in the future. Erik Brynjolfsson predicts that AI, like other general-purpose technologies, will follow a J-curve where there is initially a slow, even negative, impact on productivity as companies invest heavily in the technology before eventually reaping the rewards. And then the boom.

But there is a counterexample that undermines the argument for simply being patient. Productivity growth from IT rose in the mid-1990s, but since the mid-2000s it has been relatively dismal. Despite smartphones, social media, and apps like Slack and Uber, digital technologies have done little to deliver strong economic growth. A strong increase in productivity was never achieved.