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PRODUCTIVITY—THE DYNAMO, THE COMPUTER, AND A.I.
PAUL KRUGMAN’S “A.I. MAY CHANGE EVERYTHING, But Probably Not Too Quickly,” The New York Times, March 31, 2023, is a fascinating parable on technology and its effects on productivity. It addresses the oft-cited observation that Artificial Intelligence, especially its latest large-language-model iterations, will bring profound changes to humankind. Here are tidbits gleaned from this article; you’re encouraged to read Krugman’s entire piece.
A.I. and the Economy. Krugman says, “Like previous leaps in technology, this will make the economy more productive but will also probably hurt some workers whose skills have been devalued. Although the term ‘Luddite’ is often used to describe someone who is simply prejudiced against new technology, the original Luddites were skilled artisans who suffered real economic harm from the introduction of power looms and knitting frames.”
As a confessed Luddite when it comes to autonomous vehicle technology, I might also be concerned that A.I. will affect my proprietorship of SimanaitisSays.
What about ChatGPTSays?? All of my writings are out there waiting to be hoovered by L.L.Ms. (Let’s agree on this abbreviation.)
How Large an Effect? How Soon? “On the first question,” Krugman says, “the answer is that nobody really knows. Predictions about the economic impact of technology are notoriously unreliable. On the second, history suggests that large economic effects from A.I. will take longer to materialize than many people currently seem to expect.”
A Matter of Productivity. Krugman offers this measurement of 10-year productivity growth over the 20th century. He notes two of its peaks in relation to two major changes in technology, electrification and I.T. (Information Technology).
“Why,” Krugman asks, “did a huge, prolonged surge in computing power take so long to pay off for the economy? In 1990 the economic historian Paul David published one of my favorite economics papers of all time, ‘The Dynamo and the Computer.’ It drew a parallel between the effects of information technology and those of an earlier tech revolution, the electrification of industry.”
Technology’s Accommodation Time. “As David noted,” Krugman recounts, “electric motors became widely available in the 1890s. But having a technology isn’t enough. You also have to figure out what to do with it.”
Krugman explains, “It took time to realize that having each machine driven by its own motor made it possible to have sprawling one-story factories with wide aisles allowing easy movement of materials, not to mention assembly lines. As a result, the big productivity gains from electrification didn’t materialize until after World War I.”
Notice, David’s 1990 paper was before the I.T. peak. “Sure enough,” Krugman writes, “as David, in effect, predicted, the economic payoff from information technology finally kicked in during the 1990s, as filing cabinets and secretaries taking dictation finally gave way to cubicle farms. (What? You think technological progress is always glamorous?) The lag in this economic payoff even ended up being similar in length to the lagged payoff from electrification.”
Productivity’s Fleeting Nature. “But,” Krugman writes, “this history still presents a few puzzles. One is why the first productivity boom from information technology (there may be another one coming, if the enthusiasm about chatbots is justified) was so short-lived; basically it lasted only around a decade.”
“And even while it lasted,” Krugman notes, “productivity growth during the I.T. boom was no higher than it was during the generation-long boom after World War II, which was notable in the fact that it didn’t seem to be driven by any radically new technology. (That’s why it’s marked with a question mark in the chart above.)”
ChatGPT’s Time Will Come, But…. “That’s not to say that artificial intelligence won’t have huge economic impacts,” Krugman predicts. “But history suggests that they won’t come quickly. ChapGPT and whatever follows are probably an economic story for the 2030s, not for the next few years.”
Well, that’s promising enough for SimanaitisSays. Geez, how long do you think I’d keep this up? Maybe when I retire from the fun of it, I’ll bequeath the website to some L.L.M. ds
© Dennis Simanaitis, SimanaitisSays.com, 2023
Simanaitis Says 
I liken the new rise of AI to be similar to the way humanity learned to use Fire! Game changing events in the evolution of life on Earth!