💥 AI is the invention of a new method of invention — and its potential is more amazing than you realize
Also: 5 Quick Questions for … urbanist Alain Bertaud on the future of cities
In This Issue
The Essay: AI is the invention of a new method of invention — and the potential is amazing
5QQ: 5 Quick Questions for … urbanist Alain Bertaud on the future of cities
Micro Reads: US recession watch, Russian brain drain, reviving woolly mammoths, and more …
Quote of the Issue
“It’s obvious that we don’t know one millionth of one percent about anything.” - Thomas Edison
💥 How AI is the invention a new method of invention
Item: Will AI turbocharge the hunt for new drugs? Advocates point to the pandemic as proof of its value in healthcare even as critics dismiss its use in drug discovery as ‘hype’ - Financial Times (March 20, 2022)
Item: “A larger share of Americans (37%) say they are “more concerned than excited” by the increased use of AI in daily life than say the opposite (18%). Asked to explain in their own words what concerns them most about AI, some of those who are more concerned than excited cite their worries about potential loss of jobs, privacy considerations and the prospect that AI’s ascent might surpass human skills — and others say it will lead to a loss of human connection, be misused or be relied on too much.” - Pew Research (March 17, 2022)
If artificial intelligence is finally ready to supercharge the US economy — a subject I wrote about last week — then it will need to affect worker productivity in a broad swath of business sectors. In other words, it will need to be a “general-purpose technology,” or GPT, much like factory electrification in the 1920s. And when you look at all the various use cases, it’s easy to see how AI qualifies as an economy-wide GPT. Among them: retail product recommendations, customer service chatbots, business analytics for better decision making, and optimizing logistics. Of course, effectively using AI, as was the case with electrification, requires all sorts of complementary investments, from new business processes to new worker skills. The good news — and this is the main point of my previous piece — is that there’s considerable evidence that such investments are being made.
GPT meet IMI
Yet there’s another way to look at AI — deep learning, specifically —that may give a greater sense of its potential than the above examples. AI isn’t just a GPT. It’s also an IMI, an invention of a method of invention. “IMIs raise productivity in the production of ideas, while GPTs raise productivity in the production of goods and services. However, a subset of GPTs also provide an IMI and have an important role in increasing the productivity of innovative efforts,” writes University of Warwick economist Nicholas Crafts in the 2021 paper “Artificial intelligence as a general-purpose technology: an historical perspective.”
This dual-nature of AI is one reason why I’m so medium- to long-term bullish on America’s economic potential, as well as that of other advanced economies. This perspective strikes at the very heart of the pessimist case against technological progress, increased productivity, and economic growth.