✨ The Age of AI, an update: A Quick Q&A with … economist Michael Strain

'Generative AI could have profound implications for the level and pace of invention, of innovation, and of productivity gains'

My fellow pro-growth Up Wingers,

It’s still early days in the accelerating AI Revolution, but not so early that questions about its impact on labor markets, productivity, and economic growth aren’t already taking center stage.

Looking for some preliminary answers, I recently chatted with economist (and my colleague) Michael Strain, director of Economic Policy Studies at AEI and a member of the National Academies Committee on Automation and the US Workforce. (The group recently publishes an excellent study, “Artificial Intelligence and the Future of Work.”) Strain is also the author of The American Dream Is Not Dead and a professor at Georgetown’s McCourt School of Public Policy.

While optimistic about AI's faster adoption compared to previous technologies, Strain emphasizes we're still in the early stages of both development and implementation.

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1/ If we can assume that generative AI is an important technology that will have a significant impact on the economy, where are we in that process? In the history of important technologies, sometimes it takes a while before that impact is measurable. Where do you sense that we are in that process?

I think you're bringing up two distinct issues: One is the creation of new technologies, and the second is the diffusion of those technologies into actual businesses in ways that improve day-to-day productivity. I think that there are a lot of reasons to think that artificial intelligence technologies will diffuse throughout the economy much faster than previous major technological innovations like electricity, or computers, or the internet, but I don't think that's happened yet. I'm much more bullish than the people who think it'll take a decade but I don't think 2025 is going to be the year where we really see that happen.

The second question is just the technology and, in my view, we're still at the early stage of this technological advancement. Obviously, technology gets created and then there's the diffusion process, but the innovation process continues, and these kind of continue on two separate tracks, but this technology doesn't exist yet. It's been invented and it can be used, but we are at the early stage, in my judgment, of the process of invention, to say nothing of the process of diffusion.

2/ Even though you say it's early, some people don't think it's too early to worry greatly about their jobs, especially people who are in a white-collar jobs and sit in front of a computer. What would you say, in terms of reassurance, to someone whose job is in front of a computer? Let's say they are special-effects artists in Hollywood and they see that you can create, just with a prompt, some amazing images and video now with a free AI platform. What do you say to that person? Do you say get ready to do something else or how do you calm them?

I think what people should always be trying to do with any technology, with any technological advancement, is try and figure out, “How can I use this new technology to make myself more productive and to make myself more valuable to employers?” If your job is doing a bunch of stuff that artificial intelligence is going to be able to do at much less cost to businesses than your services cost, or at a higher quality than you're able to meet, then you should try and figure out how you can change the stuff you do to use the new technology to make yourself more productive and more valuable.

That doesn't necessarily have to involve some sort of industry change or job change or anything like that, but it likely does involve learning some new skills and it likely does involve emphasizing different aspects of your job — deemphasizing the aspects of your job that the technology can do, and emphasizing the aspects of your job that the technology can't do, and that you could use the technology in a way that makes you even more productive.