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    Technology

    Faster, Please! — The Podcast

    Welcome to Faster, Please! — The Podcast. Several times a month, host Jim Pethokoukis will feature a lively conversation with a fascinating and provocative guest about how to make the world a better place by accelerating scientific discovery, technological innovation, and economic growth.

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    Latest Episodes:
    📖 My chat (+transcript) with Mentava founder Niels Hoven on accelerating kids’ education Sep 12, 2024
    Show notes

    When it comes to sports, everybody is basically aligned that the goal here is helping every kid reach their potential. We celebrate talent, we give athletes the resources and personalized support they each need to develop their skills. We have varsity leagues, we have junior varsity leagues. We make sure that kids are challenged at the appropriate level for their current level abilities. And for some reason, when it comes to academics, we throw all of that out the window.Our progress as a society depends a lot on the brilliant ideas of our greatest thinkers. To improve our way of life, we should be promoting our best and brightest to the highest heights of their potential. Instead, we seem to be stemming the flow of great minds at the source: in our public schools. With a one-size-fits-all, equality-of-outcome model, we rob our kids, and our society, of their potential.Today on Faster, Please — The Podcast, I talk with Niels Hoven, founder and CEO of Mentava, an educational software company. Hoven’s goal: to help kids learn at their own pace, whether that includes additional support, or simply the resources to excel beyond expectations.Hoven is the father of four, former product manager at Cloudflare, and was VP of product development at Pocket Gems.In This Episode* Treating academics like athletics (1:35)* School as childcare and instruction (5:44)* The role of parents (8:04)* Mentava’s mission (10:04)* Reframing the public school (15:20)* The San Francisco algebra ban (17:50)* Investing in our future (20:05)Below is a lightly edited transcript of our conversationPethokoukis: Niels, welcome to the podcast.Hoven: Thank you so much. I appreciate you having me here.Treating academics like athletics (1:35)You argue that the current American education system is fundamentally flawed.I do think it has some issues.How does closing achievement gaps hurt our education system? How does it hold students back?So obviously my problem is not with closing achievement gaps, my problem is what happens when you set up policies with that as the only goal. I think what we've seen is that the goal of today's modern education policy is closing the gaps between high achievers and low achievers, which is, of course, wonderful, but the way that has actually manifested in schools is by slowing down high achievers and not giving them the opportunity to achieve their potential. In San Francisco, you're literally not allowed to teach material above grade level, which I think is crazy.Most school systems have gifted programs. Doesn't that meet your concern?So those gifted programs, I think they don't go far enough to support the learning needs of students who are really capable of achieving dramatically more, and, in a lot of places they're very, very hard to get into. So in our school district right now, in order to qualify for the gifted program, you have to take a series of tests and you basically have to score 99th percentile on all of those tests. All of those tests are basically grade-level tests, so they're not really teaching seeing how far above grade level you are, so it's really, “Are you really, really good at taking the tests, so well that three times in a row you can score 99th percentile on grade level stuff?” That's not really getting the kids who need their learning needs supported by these special programs, and these programs really only operate a single grade above grade level. What about the kids who could be doing calculus in middle school, or want to be moving much faster than that: Two years of math a year, every single year — we aren't supporting them.You've proposed treating academics more like sports. What does that look like in practice and how might that change how we approach education and how we think about education more broadly?When it comes to sports, everybody is basically aligned that the goal here is helping every kid reach their potential. We celebrate talent, we give athletes the resources and personalized support they each need to develop their skills. We have varsity leagues, we have junior varsity leagues. We make sure that kids are challenged at the appropriate level for their current level abilities.And for some reason, when it comes to academics, we throw all of that out the window. We just say, “Okay, everybody must progress at the same speed, learn the same thing at the same time.” To me that's like saying, “Okay LeBron, you are not allowed to dunk until everybody else can dunk also.” And so I want to see us treat academics more like sports, where we encourage students to pursue their interests, to develop their talents to the fullest potential, and respect the diversity of kids' ability and motivations.To what do you attribute the staying power of this — I don’t know if it's a one-size-fits-all system, but of a system that, in many key ways, isn't different than it was a hundred years ago?It is a government-sponsored monopoly, so I guess that would be my answer. How did the taxi cab medallion system last so long, even though it was dramatically underserving everybody who wanted to take a taxi? There's no competition.What does that more sports-like environment look like? It sounds like there'd be more freedom, there'd be less regimentation. What does that world look like?What I'm really pushing for is I would like to see students receiving instruction appropriate for their current level. I talk a lot about high-achieving students, but this is also true for struggling students. Right now we have a very one-size-fits-all model of education, and that means students who are struggling and need extra attention to get caught up aren’t given the opportunity that they need to perhaps move at a slower pace or get extra support, and kids who want to be moving faster and maybe learning two years of math a year, every single year, so that they can be doing college-level math in middle school, they're also not getting that support. We managed to do that in sports, we have lots of different leagues so that kids can find the level of competition that is appropriate for them, but for some reason, when it comes to academics, we refuse to allow that amount of differentiation.School as childcare and instruction (5:44)You advocate reducing instruction time to two hours a day. One, is that enough? And two, what are the kids doing for the other . . . are they getting into mischief? What are they doing for the rest of the day if they're not studying?I think we've really conflated the role of school, and I think an important question to ask is: Is school as we provide it now, is it childcare or is it academics? And I think it is both. An interesting fact about school is, despite all of the problems that we all understand our schools have, schools have like an 80 percent approval rating from parents, and that's because the job that schools do for most parents is actually childcare. It is free childcare for while the parents are at work, it is finding a place where your children are entertained and loved, and that is super important.But somehow we have also layered this layer of academic theater on top of that childcare instead of saying, “Okay, these kids can play in the woods for eight hours a day, or they can play dodgeball or grow their social-emotional skills and build their friendships with a friend.” We had to say, “No, they have to be learning something – but not too fast at this very, very slow pace.” And if you look at things like homeschoolers, you see most homeschoolers do two hours of academics a day, and they have the same outcomes as kids who are going to public schools, so we really don't need that much more time doing academics as long as that time is being spent efficiently.Is this new world possible within a mostly public school system as it exists today? Can you do this, or are you talking about private school, homeschooling, but does this have anything to do with the public school system, which seems to me fairly resilient? Certainly, I think the changes of the sort of magnitude you're talking about.I like the public school system. I went to public school, I had a really positive experience in public school. My own kids go to public school. And I think the difference is that when I was in public school, people were much more accepting of the idea of kids who wanted to move at their own pace. And so Mentava, certainly we're happy to support kids who are homeschoolers, who are in private school, but the real vision is to allow kids to be part of, essentially, their local public school community, go to school with friends from the neighborhood, but still have the opportunity to progress at their own paceThe role of parents (8:04)Tell me a little bit about your personal educational experience and how that shaped your views and how it eventually led to your company.Education has always been very important to my family. My dad taught me to read early, when I arrived at kindergarten, I could already read, I was roughly a year ahead in math. And so he negotiated with my school to just let me, during math class, just for an hour a day, could I just go to the next grade up and sit in on their math class and then come back to my own class for the rest of the day. And we did that, and that worked great until third grade, because my school only went up to third grade, so there wasn't a class for me. So at that point, I just started doing independent study. Just during math class, for an hour a day, I would go to the back of the classroom, I would study out of a math book, and then at the end of that hour I would come back and rejoin my friends for the rest of the day.And I did that for the next four years, and basically, thanks to that accelerated support, I ended up taking calculus in eighth grade. There are kids who can be moving that fast if you just kind of get out of their way. My own son — he goes to a public school — we also got permission for him to do independent study last year, and now in fourth grade he'll probably be ready to start pre-algebra.This is doable now. This was doable when I was a kid with textbooks, this is doable now with off-the-shelf software, but it's harder than it needs to be. And so our vision is: We can make this easier. I think a lot of kids could have done what I did, but they weren't given the opportunity. We want to make sure that more kids have this opportunity to have their learning needs supported.Do you think parents underestimate what their kids are capable of doing?Parents have no idea what their kids are capable of doing, especially parents of high-achieving kids. We've seen this over and over again with the families who are entering in Mentava’s learn-to-read software now. We target our software at kids as young as two, but often age three and four, we're trying to teach them to read, trying to get them to about a second grade reading level in maybe six to 12 months. We just had a three-year-old complete our entire curriculum, which gets us close to a second grade reading level, in about six months. So it is doable, it can move fast, and we have parents who say, “I had no idea that my kid was capable of doing this at this point!”Mentava’s mission (10:04)So walk me through what your company does, the service it provides, how it all works.The long-term vision for our company is to support the learning needs of kids who are not being supported in school. If you have a child who wants to learn two years of math in a year, the real gating factor of that is, a lot of times it's teacher availability, or it's school policy that says there's no one available to give them that instruction. But imagine that they had the opportunity to just go open a math book.It's a resource issue. We'd love to do it, but we don't have the resources.We don’t have the resources. Sometimes that's true, sometimes that's not true, sometimes it's policy, but whatever. But they could go get a math book, they could just study that book and go as fast as they wanted — but that's boring. Not every kid is going to have that motivation. And so, to some extent, we're not really solving for curriculum, we are solving for motivation. We want to build software that can deliver that same curriculum — we know how to teach math, we know how to teach reading — deliver it in a more sort of fun, entertaining, motivating way, and allow kids to essentially continue to progress at their own pace without being gate-kept by the availability of teachers to essentially unlock that knowledge for them. And so we are starting at a very young age by teaching kids to read with software.What I really want to teach is math. I want to get kids to learn math as fast as possible, but in order for kids to be able to teach themselves math, they have to be able to read, and so that is our first piece of software: learn-to-read software for preschoolers.And obviously preschoolers, these are young kids, so is your expectation that software will be done at home? Are there schools trying to incorporate in some way? How's that working?We've started talking to schools about pilots, but I think, right now, we get a lot of attention from parents. Incentives are just better aligned that way. Schools right now are not particularly concerned with, “Are we supporting our kids achieving their fullest potential or are we ensuring our kids can learn as fast as possible?” But parents really care about that. And so right now we have a lot of customers who are basically parents at home who realize, “Oh, my three- or four-year-old is ready to start reading, what can I do to best support them now?”How long has the company been in business?We kind of accidentally launched about six months ago.Was this a pandemic-related idea?This was. I have four kids. I had three kids during the pandemic and the fourth one arrived during the pandemic. They were at home, doing school at home, and I also had a job at the time, so did my wife, we had two working parents trying to take care of three kids at home, we were trying to figure out how to help them learn, and really the only way to make that work was to give them the skills that they needed to teach themselves. And at that time, my kids were five and three. And so how can I get my five-year-old teaching themselves math? How do I get my three-year-old teaching themselves to read? And the solution to that is software. We know the curriculum, we know if you want to teach reading, it's phonics, but how do you get the kid to sit down and memorize the 44 sounds in the English language? Well, turns out that software and games are really, really good at solving motivation, so we just needed to package that all together and that was how Mentava was started.So during this exact period that you've thought of this idea, you're putting together a company, putting together the software, we have sort of a new stage in software happening with chatbots and large language models. Are those technologies that compliment what you're doing? Are you going to have to do something different to use those technologies? How's that going to work out for you?It's very complimentary. So we're not using AI right now, but we see it coming. There is kind of this perfect storm of timing right now where, I think because of Covid, parents started to realize that, “Oh, my kid is not learning as much in school as I thought. This is what they're doing in school?” We had all that visibility when our kids were doing homeschool in front of screens at home.Technology has gotten to a point where we can give screens to every kid, and iPads, and other tablets. Touchscreens make learning much more accessible. We're seeing the effectiveness of some learning software — a lot of lea…

    Full show notes at the publisher

    ⚡ My chat (+transcript) with venture capitalist Katherine Boyle on 'American Dynamism' Sep 05, 2024
    Show notes

    American global leadership is due in great part to its innovators — visionaries who drive society beyond the preconceived limits. Historically, government-led initiatives like the Manhattan Project or the Apollo Project pushed boundaries. Today, too often, government lags behind technologically.Today on Faster, Please! — The Podcast, I talk with Katherine Boyle about American Dynamism, the spirit of pro-progress innovation, and how a new generation of Silicon Valley startups is spurring government to break out of its old habits.Boyle is a general partner at VC giant Andreessen Horowitz, having previously been a partner at General Catalyst and a general assignment reporter at The Washington Post. She primarily invests in national security, aerospace and defense, and public safety companies, among others.In This Episode* American Dynamism (1:25)* From software to the physical world (7:23)* Government collaboration: challenges & opportunities (11:29)* Playing the long-game in Washington (21:16)* Building the American Dream (24:35)Below is a lightly edited transcript of our conversationAmerican Dynamism (1:25)Let's just start with a little bit of definition about American Dynamism. Broadly, what challenges or problems is this effort directed toward?It's a bit of a long story as to what American Dynamism is, how it arrived to be a category of innovation, but the short definition is American Dynamism is built for companies that support the national interest. So a very broad category of companies, everything from aerospace, defense, national security, companies that sell directly to the US government and to our allies, but also things like housing, education, transportation, infrastructure, things that are built in the physical world where Washington or states usually like to regulate those things.So one of the things that we saw in our own portfolio is that there are a lot of companies that we used to be classifying as “enterprise” or “consumer,” and really what they were were government companies because they had to interface with a regulator much earlier in their trajectory, or they saw government as a potential buyer of the product. So in cases of things like aerospace and defense, those are very obvious government buyers, but things like public safety, where we have companies like Flock Safety, for example, that started out selling to homeowners associations thinking they were a consumer company, but ultimately got extraordinary pull from local governments and from public safety officials because of how good the technology was. So the companies, in some ways, they were these N-of-One companies, really solving really important civic problems, but over time it became very clear that this was a growing category of technology.But the broader underlying thesis, I'd say, of where the movement came from, and when we really started seeing this as an area where founders, in particular, were excited to build, I think it did come out of “It’s Time to Build,” my partner Mark Andreessen's canonical post where he basically said during Covid that we have to be able to build things in the physical world. And there was sort of this realization that technology has solved many, many problems in the digital realm that I think, in some ways, the last 15 years of the Silicon Valley technology story has really been about changes in consumer technology or changes in the workplace, but now we're finally seeing the need for changes in government and civic goods, and there's just an extraordinary amount of momentum from young founders who really want to build for their country, build for the needs of the citizenry.Does it change what you do, or maybe the kinds of expertise that are needed, to think about these things as a category, rather than different companies scattered in these other kinds of categories. Thinking of them as like, “Oh, there's some sort of commonality,” how is that helpful for you?The thing that's interesting is that there's sort of a “yes” and “no” part to that question. The yes is that the founders are coming from different places. So the companies that have led to this sort of, I would say, extraordinary wealth of engineering talent where people are not afraid to tackle these problems, there's a handful of the companies that have scaled: it's companies like SpaceX, companies like Palantir, where, 20 years ago, they were banging their heads against the wall trying to figure out, “How do we sell to government?” In many cases, they had to sue the government in order to be able to sell and compete against the larger incumbents that have been around for, in many cases, 50, 70 years. But now you have these talented engineers who've sort of seen those playbooks, both in terms of, they understand what good engineering looks like, they understand the pace of innovation, how quickly you have to bring new products to market, and they also understand that you have to be in touch with your customer, constantly iterating.And so you now have companies that have scaled in these categories where there is this nice thing that happens in Silicon Valley, and I always say it's a mark of a really successful company when three, four, five years into the journey, you start seeing the early people at that company say, “Well, I want to solve this problem,” or “I want to go be a founder, myself,” and they start building more companies. So I think that, in some ways, the natural order of how Silicon Valley progresses, in terms of, do you need to have different expertise, or are there different talent pools? Yes, they're coming from different companies, but it's the same story of Silicon Valley Dynamism, which is, someone comes in, I always joke, they go to the University of Elon Musk and they learn how to manufacture, and then they say, “Well, actually, I don't want to just work on rockets anymore, I'd like to work on nuclear.” And so then you have companies like Radiant Nuclear that have spun out of SpaceX several years ago that are building in a totally different category for the built world, but have that sort of manufacturing expertise, that engineering expertise, and also know what it's like to work in a highly regulated environment.Does it require a different expertise, then, to advise these companies because of that government interface?I think in some ways it does, yes, the types of people who are investing in this category, maybe there's a number of investors where they got their start at Palantir, for example, or they understand the early journey of SpaceX. But at the same time, the thing that I think has been most surprising to us is just how quickly this movement caught on among the broader Silicon Valley ecosystem. And I think that's a very good thing, because, at its core, these are software companies in many cases. Yes, they're building hardware, but software is the lever that's allowing these companies to scale. So you are seeing the traditional venture capital firms that used to say, “Oh, I would never touch anything that is operating in the physical world,” or the meme you had five years ago, which is, “You'll never be able to sell anything to the US government, I'm not wasting my money there.” You've seen a complete 180 in the Silicon Valley ecosystem in terms of venture firms where they're now willing to take bets on these types of companies.And you're also seeing, there's a number of founders where their first company, for example, might've done very well, and it might've just been pure software, or in a consumer enterprise, sort of a more classical Silicon Valley domain, and now you're seeing those founders say, “Actually, I want to build for the civic need. I want to build for the national interests. These are issues I care about.” And so you're seeing those founders actually decide to build in the category and team up with founders who maybe have a little bit more experience in government, or maybe have a little more experience in terms of how they're building in the physical world.From software to the physical world (7:23)That period you referred to, which seems like a lot of what Silicon Valley was doing with the first 15 years or so of this century: they're doing internet, social media, very consumer-facing. How valuable was that period? Because that is a period that, here in Washington, is much criticized as trivial, “Why wasn't Silicon Valley solving these huge problems like we did in the ’60s?” Again, there were some critics who just looked at it as a waste of brainpower. To what extent is that a fair criticism, and do you think, is that unfair? That stuff was valuable, people valued the kinds of products that were producedYou would actually be better able to speak to this than me, but I'll say, the graph or the chart that's going viral today, as we speak, is the comparison of 2009 US GDP versus Eurozone GDP, which were roughly equal in 2009, coming right off the Great Recession, to today, which I actually think it was tweeted something like, I think it's. . . the US is 77 percent greater in terms of GDP than the Eurozone countries, which means that, for some reason, the Silicon Valley ecosystem — and it is largely attributed to Silicon Valley. When I first wrote the thesis on American Dynamism, I looked actually at 1996, because it was 25 years when I published it, but 1996, if you looked at the top US companies by market cap, all six of them were outside of technology as an ecosystem. They were energy companies, I would say almost archaic industries that had grown over a long period of time, but if you look at those six companies today, they are all tech companies. And so something has happened in the 21st century. You could say the new American Century is actually built off the back of software. It's built off of these large tech companies that were built in California, in many cases. And so the 15-year period that you're talking about, which is this sort of, it was a zero-interest-rate environment, cost of capital was very low, there was a lot of experimentation going on, it was, in many ways, the canonical example of American Dynamism broadly, that you had risk capital going after many new ideas in many different areas, but they were particularly really focused on the areas that government was not interested in regulating.And that's always been the theme of innovation in Silicon Valley is, “Let's go where they're not necessarily paying attention.” Maybe you had some one-offs in terms of, you'll always have to meet with your regulator at some point—in the case of Uber or Airbnb—but these companies were really born of the needs that founders understood. They were built off the back of a platform shift in terms of, 2007, 2008, the iPhone becomes the thing that everyone wants to build on, it becomes the mobile era. And so you really did have this focus of software, and enterprise software, and consumer, and companies were able to grow to extraordinary heights. And if you just look at what it has done for US GDP in comparison to even something like Europe, it is really extraordinary. So that is a story that I think we should be celebrating and telling.But what has happened, I think, since Covid is this new shift, which is, we've explored many of the digital frontiers that we can. And of course there's always a new digital frontier. Every time we think it's over, we get hit with a new one — in the case of AI. But the thing that I think has really changed is that entrepreneurs now are not afraid of the physical world, and they are realizing — and I hate to use the word “inevitable,” but in some ways this is an inevitability — that you are going to have to interface with government at a certain point if you are going to build in the physical world. And there are so many opportunities, there are so many different places where founders can build, that that really did take on new meeting post- this slew of black swan events, in the case of Covid, and then of course Russia invaded Ukraine, where I think it did wake up a lot of founders who said, “I want to work on these really hard problems.” And thankfully we have companies that have scaled during that time, that have trained these manufacturing capabilities, they've trained engineers how to do these things. So it is our view that that 15-year period was extraordinary for software, but the next 10 years are going to be extraordinary for these American Dynamism companies, as well.Government collaboration: challenges & opportunities (11:29)When you talk about interfacing with government, what popped into my head was a bit of video of a congressional hearing, and they were trying to decide, do we want to bring the private sector and SpaceX into the space program, and so not just have it be a government effort by NASA? And I just remember these senators just lambasting the idea. And I think they might've brought in some astronauts, too. And if I was interested in interfacing with government and I had seen that video, I'm like, “Boy, oh boy, I hope the attitude of government has changed since then, because it seems like that's a wall.” What is the attitude on the other side? You said the attitude of the entrepreneurs has changed, of funders, but what about on the other side? What is the openness to the kinds of solutions that your companies are presenting?I think it's changed because it has to, and I always point to the late former Secretary of Defense Ash Carter, who in 2015 started DIUx [Defense Innovation Unit Experimental] as an innovation unit for the DoD [Department of Defense], recognizing that there's a talent problem that US government has had; and it didn't start in the last 10 years. When I was exploring this talent problem, I actually realized that there had been a commission on the lack of talent going into the bureaucracy at the federal level.In the 1990s, Paul Volcker actually chaired the commission, it was called a “Quiet Crisis.” Basically that young people today, unlike in the ’50s and the ’60s where government was seen as this extraordinary job that you could have or that you could go into one of these companies and work in a company for 30 years and then draw a pension, that young people today want to go work in the private sector, and the growth and dynamism of the private sector has actually been an issue for government, and that is not a new issue. It was explored in the late ’80s, early ’90s, and it has gotten precipitously worse because of tech. I would say that the technological innovation risk capital going to Silicon Valley and saying, “We're going to fund young people as they come out of college because they understand this new type of engineering.” You're seeing some of the best and brightest young people decide not to go to traditional companies, which has been a huge issue for the prime contractors that supply 40 percent of the government programs for the DoD, but what has happened is you're seeing this extraordinary engineering talent go to startups. And so I think what even — this is 10 years ago now — DIU saw, if all of our best and brightest software talent is avoiding government, or much of it is avoiding government, they're avoiding traditional companies that we work with, we have to meet them where they are.And so the DoD I actually think was the first government organization to really recognize this crisis and to decide, we're going to need to have new interfaces. Now, whether that means new procurement, that's always going to be a debate, and that's a Washington issue that I think we've been fighting for several years now in order to change how these companies are able to work with the DoD on these big p…

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    ⚠ My chat (+transcript) with BCG economist Philipp Carlsson-Szlezak on dealing with macroeconomic risk Aug 15, 2024
    Show notes

    In our highly globalized economy, exogenous shocks and unsettling headlines are everywhere. It makes sense that market forecasters should be biting their nails, but so often their prophecies of doom prove completely false. Philipp Carlsson-Szlezak is a proponent of “rational optimism.” He believes there’s a calmer, more measured way of going about financial and economic analysis that sets us up to be more flexible to the highs and lows of the economic events. Today on Faster, Please! — The Podcast, I talk with Carlsson-Szlezak about why an overreliance on models — and a tendency to assume the worst — can impair our ability to roll with unexpected events and make the best of them.Carlsson-Szlezak is the global chief economist at Boston Consulting Group, and leads the Center for Macroeconomics at their Henderson Institute. He is the co-author of the new book, Shocks, Crises and False Alarms: How to Assess True Macroeconomic Risk.In This Episode* Optimism during a polycrisis (1:39)* AI employment panic (7:47)* Risk-assessment strategy (13:08)* Federal Reserve predictions (19:44)* Impending shocks? (23:41)Below is a lightly edited transcript of our conversationPethokoukis: Philipp, welcome to the podcast.Carlsson-Szlezak: Thanks for having me.Optimism during a polycrisis (1:39)It seems as if there are multiple challenges facing the world and the global economy simultaneously. People described it as a “polycrisis,” and it could be everything from trying to navigate economies to a soft landing after a bout of inflation; part of it, I guess, is the big rise in debt; we have war in Europe; maybe, eventually, war in Asia over Taiwan; and, of course, climate change; aging population; falling birth rates; and some people seem to view AI as more of a threat than a positive, it's going to take jobs, and perhaps other bad things. If I've given a sensible description of the world, how can one be a “rational optimist” in a world of polycrisis?Just taking maybe two of your examples: The soft landing that was supposed to be impossible, remember that? We need, what was it, six percent unemployment for how many years to bring inflation down? So clearly that didn't pan out like the pessimists said. Or think about the war in Ukraine that you mentioned, which, of course, is the tragedy, but the fact is that there is no recession in the Eurozone so far. The fact is that industrial production has held up rather well, even in the heartland of industrial production in Germany. So real industrial output is actually remarkably resilient. Overall, there's little doubt that there are many, many risks. There are crises, but, more often than not, we're focusing on the tail ends of the distribution and pretend that those risks are at the very center of the risk distribution.It sort of reminds me — it's not a perfect analogy — of where we were in the early 1990s. I suppose you can always point to, and maybe this is part of your point, if you want to focus on bad news, the world will give you plenty of bad news to focus on. But I remember at the beginning of the 1990s, very bad recession here in the United States, a lot of concerns about the ability for rich economies to grow quickly. Again, debt was an issue, and though, looking back, it may seem like, wow, people should have been really excited: end of the Cold War, there was a lot of uncertainty what would happen to the former Soviet Union, a lot of talk back then about suitcase nukes, who knew what was going to happen in the world? And of course, all of this kind of concern and uncertainty led right into a big economic boom.So to kind of get back to what you were saying, it seems to me that, rather than being rational optimists, we’re sort of naturally irrational pessimists.Yeah, but we shouldn't be. I think your example of the ’90s and what the mid- and late ’90s delivered, I think is not a bad analogy for what I think will play out in the 2020s, the rest of the decade. We're in an “era of tightness,” is what we call it in the book, which is really a structural condition of the labor market. Lots of people think that shortages in the labor market are a byproduct of Covid, but that's not true. The labor market turned tight already in 2017, so, in technical language, that's when unemployment dropped below U*. Covid was an interruption of this tightness. Unemployment went to almost 15 percent, and then it came down just as fast, but we are in this era of tightness, and I think it will persist.To be clear, even if and when you get another recession, you will return to a tight stance. And there are a lot of silver linings that come with eras of tightness: It translates into better real wage growth, it nudges and forces firms do capital-for-labor substitution, it pushes them towards the technological frontier in their respective areas, and all of that should lead into some boost of productivity growth. I'm not of the kind where we're predicting this big jump in productivity growth, I think that's too hyped, but I do believe that the structural tightness, which is almost like a spark to the fuel of technology, I think that will push gradually and measurably over the years to come.And the driving forces of that tightness are what?We have a number of things going. Essentially, you had a mismatch of demand of supply already in the late ’10s, as I described, so there's a supply issue, we don't have enough labor supply. You have certain forces on the demographic side that constrained that. And I think often we hear the story that AI is going to produce so much unemployment that there will be mass unemployment, and I don't believe any of this. I think that will play out very differently. Historically, technology has never given us structural or technological unemployment. On the contrary, technology is the deflationary force in the medium- and long-run. Firms that can deliver cost savings, they can lower prices, they will do so to grab market share. That is a real income boost for consumers. So when their real incomes grow, they redeploy that gained real income to new services, new goods purchase and consumption, and that leads to new employment. And so I think, essentially, you will remain with a story where labor is tight, and that is the defining underpinnings of what's coming. Today people don't remember that even in the 2010s, I think it was Bill Gates, he wanted a robo-tax, a robot tax. Because why? Because automation was taking over the assembly lines and we're going to have to provide for all these people who are going to lose their jobs! Well, where are we today? Near record-low unemployment. And this is in a line of a long tradition where Nobel Prize winners, and technologists, and politicians, they've all predicted technological unemployment.AI employment panic (7:47)I wanted to talk a bit about AI labor, since you brought it up. If you don't think mass-unemployment is a valid concern, could there be other downsides from deployment of generative AI in an economy? Could it be, instead of higher employment, might it just be greater inequality? Maybe, before, we had technology hurting blue-collar workers; certainly there's a lot of white collars worried about it. I was just reading a story in the New York Times — all of these people in Hollywood are just terrified, whether they're doing special effects, or they're sound editors, they're all terrified that their white-collar jobs are going away. So do you see, in the near term, any downside from AI?In macro there's always this tension between the aggregate, which is what macroeconomics is about, and then the distribution of experiences under the hood of macro, if you will. So there will be winners and losers, and there will be those that are harder hit than others, but I think when you look at the aggregate, you add it all up the net-net, I don't anticipate this being a structural or technological unemployment situation.To go to the micro level, you can take the other side of that argument, too. This is not a big area of research for me, so I'm straying outside of my field of expertise here, but plenty of people have argued that perhaps AI will give a lift to those least-skilled. Why? Because AI is a companion for them that makes them more productive and allows them to create more value, and therefore to be paid better. So I think the jury is out on that.I don't anticipate a smooth ride where everyone will be a winner and everything will be just plain sailing. Of course this is disruptive, of course there will be gyrations, but the story about technological unemployment's been told for so long. Today people don't remember that even in the 2010s, I think it was Bill Gates, he wanted a robo-tax, a robot tax. Because why? Because automation was taking over the assembly lines and we're going to have to provide for all these people who are going to lose their jobs!Well, where are we today? Near record-low unemployment. And this is in a line of a long tradition where Nobel Prize winners, and technologists, and politicians, they've all predicted technological unemployment.There's a nice story with Wassily Leontief, a Nobel Prize winner in economics. He said in the ’70s that human labor was going to go the way of the horse after the introduction of the automobile. Well, 50 years on, we're here with very tight labor markets. And Kennedy was worried about it, too, and others before him. And so I think we have to point to something that's truly different about AI to tell that story. I think we can potentially find some reasons that are genuinely different about AI, but before we all become hysterical about it, I think we should take a deep breath.Does it strike you as odd that, in a world of low unemployment and, if you're correct, perhaps a longer-term structural tightness, that it's at this moment that people are very worried about technological unemployment, it's at this very moment that they're very worried about immigration coming in and taking jobs. You would think these would be concerns at periods of very high unemployment: people standing in line around the block to get a job, but that's not where we're at. Yet the public mood seems to not be in sync with that.I think that's a good observation, I don't have a great explanation for it. The technology that's on display is impressive, it is novel, and what's different, generally, is that it makes a credible promise to impact the service economy. In our book, the way we position the slump of productivity growth has little to do with high debt and all those explanations that are occasionally fashionable. It has a lot to do with the fact that the US economy transitioned from being a physical economy to a service economy. And in the physical economy, the production of goods, you always had pretty respectable productivity growth, including the last few decades. But because of this mix shift into services where you did not have the technology to make progress on the productivity side, this mix shift dragged down aggregate productivity growth. If you have zero or very little productivity growth in services, which is like 65, 70 percent of the economy, and you have very high productivity growth and the part that is 30 or 35 percent of the economy, well the blended average is going to be low. And so, as we now have productivity growth promises from AI and services, I think a lot can change there. Again, not in a step change way, this is not like flipping a switch, it's going to be hard slog, and incremental, and cumulative, but something will happen there.There's plenty of risk out there. New crises will come and happen, but for every true crisis, there are many false alarms, and that is something that I think we need to internalize more, and that is something that can help us see risk a little more calmly and in a measured way.Risk-assessment strategy (13:08)Just to take a quick step back: Describe your process for assessing risk. Where do you begin? What are the factors? Do you have a fundamental baseline model of the way the world works? How does that process start and work for you?The way we go about risk in the book is to say macroeconomic risk should be viewed both as the downside, which is how we commonly view risk, like a recession, or even a structural downside like a deflationary depression — these are downsides. But for practitioners, risk is also hidden in potential upside if you miss out on it. And both the downside and the upside, they come in two flavors: tactical, short-term stuff, cyclical stuff; and the more structural strategic kind, like shifts that happen over longer periods of time. And so we like to think of macro risk in those four flavors: the short, the long term, and the upside and the downside, if you willGenerally when we look at risk, it's very seductive and tempting to focus on bad outcomes and then start analyzing how bad will it be and how quickly they're going to happen. In most situations, it pays off to take a step back, and take a deep breath, and say, “Well, how is the system constructed? What are the drivers? What is the history of this thing?” and an important question, “What would it take to get that outcome from the edges of the risk distribution? What does it take to get there?” Too often in public discourse, we jump straight to the tails of the risk distribution. We're immediately obsessing with the cliff edge and the fall into economic death, and then we're pretending that that risk outcome, which is part of the distribution, so we can't ignore it, but we're pretending that the edges of the distribution are the very center.And so what we do in the book for a number of areas of risk in the real economy, the financial economy, and the global economy, we go over and over again into these approaches of asking, “How is this thing constructed? What are the drivers? What do you have to believe for the truly bad outcome?” There's plenty of risk out there. New crises will come and happen, but for every true crisis, there are many false alarms, and that is something that I think we need to internalize more, and that is something that can help us see risk a little more calmly and in a measured way.How well did markets, investors, economists — how well was their risk-assessment process in 2020, given where we are today? My guess is that the global economy is better in 2024 than people thought in February, or March, or April of 2020 as the pandemic was kicking in. Did we do a good job assessing risk and reward back then?No. Public discourse did a terrible job at that. The conventional wisdom and received wisdom in March and April, May, even June, July, and even August, the summer, when you had the first signs of recovery, the conventional wisdom was: This is worse than 2008, and this could be as bad as the Great Depression. And we have a great collection of headlines that we keep, there are lots of them in the book as well. It was, in my mind, a prediction failure. Why? Because what happens is that a lot of the commentary, a lot of the thinking, was too model-based, what we call “master-model mentality” in the book.So how do you project a recovery, typically? You look at the unemployment rate as a proxy for the health of the economy, and if you have a high unemployment rate and a recession, well, it can take a long time to bring that down. After 2008, it took the better part of the 2010s to bring unemployment down, and you had “only” (in quotation marks) unemployment of 10 percent after the Global Financial Crisis. Now with Covid, you almost went to 15 percent. So the models extrapolated outside their empirical range. They said, “Well, if it took almost a decade to bring down this unemploym…

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    🤖🧠 My chat (+transcript) with Google DeepMind's Séb Krier on AGI and public policy Aug 09, 2024
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    In a world of Artificial General Intelligence, machines would be able to match, and even exceed, human cognitive abilities. AGI might still be science fiction, but Séb Krier sees this technology as not only possible, but inevitable. Today on Faster, Please! — The Podcast, I chat with Krier about how our public policy should facilitate AGI’s arrival and flourishing.Krier is an AI policy expert, adviser, and attorney. He currently works in policy development and strategy at Google DeepMind. He previously served as Head of Regulation for the UK Government’s Office for Artificial Intelligence and was a Senior Tech Policy Researcher at Stanford’s Cyber Policy Center.In This Episode* The AGI vision (1:24)* The risk conversation (5:15)* Policy strategy (11:25)* AGI: “if” or “when”? (15:44)* AI and national security (18:21)* Chatbot advice (20:15)Below is a lightly edited transcript of our conversationPethokoukis: Séb, welcome to the podcast.Krier: Thank you. Great to be here.The AGI vision (1:24)Let's start with a bit of context that may influence the rest of the conversation. What is the vision or image of the future regarding AI — you can define it as machine learning or generative AI — that excites you, that gets you going in the day, that you feel like you're part of something important? What is that vision?I think that's a great question. In my mind, I think AI has been going on for quite a long time, but I think the aim has always been artificial general intelligence. And in a sense, I think of this as a huge deal, and the vision I have for the future is being able to have a very, very large supply of cognitive resources that you can allocate to quite a wide range of different problems, whether that's energy, healthcare, governance, there's many, many ways in which this technology can be applied as a general purpose technology. And so I guess my vision is seeing that being used to solve quite a wide range of problems that humans have had for decades, centuries, millennia. And I think you could go into so many different directions with that, whether it's curing diseases, or optimizing energy grids, and more. But I think, broadly, that’s the way I think about it. So the objective, in a sense, is safe AGI [Artificial General Intelligence], and from that I think it can go even further. And I think in many ways, this can be hugely beneficial to science, R&D, and humanity as a whole. But of course, that also comes with ways in which this could be misused, or accidents, and so on. And so huge emphasis on the safe development of AGI.So you're viewing it as a tool, as a way to apply intelligence across a variety of fields, a variety of problems, to solve those problems, and of course, the word in there doing a lot of lifting is “safely.” Given the discussion over the past 18 months about that word, “safely,” is, one, I think someone who maybe only pays passing attention to this issue might think that it's almost impossible to do it safely without jeopardizing all those upside benefits, but you're confident that those two things can ultimately be in harmony?Yeah, absolutely, otherwise I wouldn't be necessarily working on an AGI policy. So I think I'm very confident this can be done well. I think it also depends what we mean by “safety” and what kind of safety we have in mind. Any technology, we will have costs and trade-offs, but of course the upside here is enormous, and, in my mind, very much outweighs potential downsides.However, I think for certain risks, things like potentially catastrophic risks and so on, there is an argument in treading some careful path and making sure this is done scientifically with a scientific method in mind, and doing that well. But I don't think there's fundamentally a necessary tension, and I think, in fact, what many people sometimes underestimate is how AI itself, as a technology, will be helpful in mitigating a lot of the risks we're foreseeing and thinking about. There's obviously ways in which AI can be used for cyber offense, but many ways in which you can also use that for defense, for example. I'm cautiously optimistic about how this can be developed and used in the long runThe risk conversation (5:15)Since these large language models and chatbots were rolled out to public awareness in late 2022, has the safety regulatory debate changed in any way? It seems to me that there was a lot of talk early on about these existential risks. Now I seem to hearing less about that and more about issues about, maybe it's disinformation or bias. From your perspective, has that debate changed and has it changed for the better, or worse?I think it has evolved quite a lot over the past — I've been working in AI policy since 2017 and there's been different phases, and at first a lot of skepticism around AI even being useful, or hype, and so on, and then seeing more and more of what these general models could do, and I think, initially, a lot of the concerns were around things like bias, and discrimination, and errors. So even things like, early-on, facial-recognition technologies were very problematic in many ways: not just ways in which they were applied, but they would be prone to a lot of errors and biases that could be unfair, whereas they're much better now, and therefore the concern now is more on misuse than it accidentally misidentifying someone, I would say. So I think, in that sense, these things have changed. And then a lot of the discourse around existential risk and so on, there was a bit of a peak a bit last year, and then this switched a bit towards more catastrophic risks and misuse.There's a few different things. Broadly, I think it's good that these risks are taken seriously. So, in some sense, I'm happy that these have taken more space, in a way, but I think there's also been a lot of alarmism and unnecessary doomerism, of crying wolf a little bit too early. I think what happens is that sometimes people also conflate a capability of a system and how that fits within a wider risk or threat model, or something; and the latter is often under-defined, and there's a tendency for people to often see the worst in technology, particularly in certain regions of the world, so I think sometimes a lot has been a little bit exaggerated or overhyped.But, having said that, I think it’s very good there's lots of research going on on the many ways in which this could potentially be harmful, certainly on the research side, the evaluation side, there’s a lot of great work. We've published some papers on sociotechnical evaluations, dangerous capabilities, and so on. All of that is great, but I think there has also been some more polarized parts calling for excessive measures, whether regulatory, or pausing AI, and so on, that I think have been a little bit too trigger-happy. So I'm less happy about these bits, but there's been a lot of good as well.And much of the debate about policy has been about the right sort of policy to prevent bad things from happening. How should we think about policy that maximizes the odds of good things happening? What should policymakers do to help promote AI to reshape science, to help promote AI diffusing as efficiently as possible throughout an economy? How do we optimize the upside through policy rather than just focusing on making sure the bad things don't happen?I think the very first thing is not having rushed regulation. I'm not personally a huge fan of the Precautionary Principle, and I think that, very often, regulations can cause quite a lot of harm downstream, and they're very sticky, hard to remove.The other thing that you can do beyond avoiding bad policy is I think a lot of the levers to making sure that the development goes well aren't necessarily all directly AI-related. So it'll be things like immigration: attracting a lot of talent, for example, I think will be very important, so immigration is a big one. Power and energy: you want there to be a lot more — I'm a big fan of nuclear, so I think that kind of thing is also very helpful in terms of the expected needs for AI development in the future. And then there are certain things governments could potentially do with some narrow domains like Advance Market Commitments, for example, although that's not a panacea.Commitments to do what?Oh, Advance Market Commitments like pull mechanisms to create a market for a particular solution. So like Operation Warp Speed, but you could have an AI equivalent for certain applications, but of course there's a lot of parameters in doing that well, and I wouldn't want a large industrial-policy-type approach to AI. But I think generally it's around ensuring that all the enablers, all the different ingredients and factors of a rich research and development ecosystem continue to thrive. And so I think, to a large extent, avoiding bad regulation and ensuring that a lot of things like energy, immigration, and so on go well is already a huge part of the battle.How serious of a potential bottleneck is the energy issue? It seems to me like it's a serious issue that's coming fast, but the solutions seem like they'll take more time, and I'm worried about the mismatch between the problem and finding a solution to the problem.I suspect that, over the coming years, we will see more and more of these AI systems being increasingly useful, capable, and then integrated into economic systems, and I think as you start seeing these benefits more and more, I think it'll be easier to make the case for why you need to solve some of these kind of policy issues a bit faster.And I also think these solutions aren't that difficult, ultimately. So I think there’s a lot that can be done around nuclear, and wind, and solar, and so on, and many regulatory processes that could be simplified, and accelerated, and improved to avoid the vetocracy system we're in at the moment. So I don't think the solutions are that difficult, I think mustering the political will might be right now, but I expect that to be less of a challenge in the coming years with AI showing more and more promise, I think.Policy strategy (11:25)Speaking of vetocracy, whatever the exact substance of the regulation, I am concerned, at least in the United States, that we have 50 states, and perhaps even more bodies if you look at cities, who all have a lot of ideas about AI regulation, and I'm extremely concerned that that sort of fractured policy landscape will create a bottleneck.Can we get to where we need to go if that's the regulatory environment we are looking at, at least in the United States? And does, ultimately, there need to be a federal . . . I think the technical word is “preemption” of all those efforts? So there's a federal approach, and there aren't a federal approach, plus a 50-state approach, plus a 175-city approach to regulation. Because if it's going to be what I just described, that seems like a very difficult environment to deal with. I'm not wildly optimistic around a patchwork of different state-level regulatory systems. I think that will come with various externalities, you'll have distortionary effects. It will be a very difficult environment, from a commercial perspective, to operate in smoothly. I think I'm a lot more open to something at a federal level at some point, rather than a big patchwork of city-level or state-level regulation. Now, it depends on exactly what we're talking about. There might be specific domain, and context, and application-specific regulations that might make sense in some state and not another, but in general, from a first principles level at least, I think that would probably not be desirable.A second regulatory concern — and maybe this is dissipating as policy makers learn more, especially at the federal level, maybe, learn more about AI — is that, at least initially, it seems to me that whatever your policy idea was for social media, or about content moderation or what have you, you just kind of took that policy framework and applied it to AI because that was what you had. You pulled that baby right off the shelf. Are we still seeing that, or are people beginning to think, “This is its own thing, and my ideas for social media may be fine for social media, but I need to think differently about AI”? Obviously the technology is different; also, I think both the risks and potential rewards are very different.Yeah, totally. I think that has been an issue. Now, I wouldn't say that's the case for everyone. There's been some groups and some institutions doing some very careful work that really think about AI, and AGI, and so on in careful, more calibrated ways; but also I’ve seen quite a lot of reports where you could have easily imagined the same text being about social media platforms, or some kind of other policy issue, or blockchain, or something just being repurposed for AI. And there's a lot of stuff out there that's just very high level, and it's hard to disagree with at a high level, but it’s far harder to apply and look at from an operational or practical perspective.So I've been seeing quite a lot of that; however, I think over time, the field is maturing more and more, and you're seeing better thinking around AI, what it really is, what's appropriate at the model level versus at the application level and the existing landscape of laws and regulation and how these might apply as well, which is often that's something that's forgotten, or you have lots of academics coming in and just trying to re-regulate everything from first principles, and then you're like, “Well, there's tort law, and there's this and that over there.” You got to do your gap analysis first before coming out with all this stuff.But I think we are seeing the field of AI governance and policy maturing in that space, and I expect it to continue, but I still, of course, see a lot of bad heuristics and poor thinking here, and particularly an underestimation of the benefits of AI and AGI. I think there's a tendency to always think of the worst for everything, and it's necessary, you need to do that too, but few are really internalizing how significant AGI would be for growth, for welfare, and for solving a lot of the issues that we've been talking about in the first place.The Conservative Futurist: How To Create the Sci-Fi World We Were PromisedAGI: “if” or “when”? (15:44)Is AGI an “if” issue, or is it a “when” issue, and if it's a “when,” when? And I say this with the caveat that predictions are difficult, especially about the future.In my mind, it's definitely a “when” question. I see no real strong reason why it would be an “if,” and that being completely impossible. And there's been many, many, many examples over the last 10 years of people saying, “Well, this is not possible with neural networks,” and then 10 minutes later, it is proven to be possible. So that's a recurring theme, and that may not be sufficient to think that AGI is feasible and possible, but I'm pretty confident for a variety of reasons. About AGI, by the way, I think there's an excellent paper by Morris and others on Levels of AGI [for] Operationalizing Progress on the Path of AGI, and I think it's a very good paper to [frame one’s thinking about AGI].And that goes back to one point I made earlier in that, at some point, you'll have systems that will be capable of quite a lot of things and can do probably anything that your average human can do, starting at least virtually, remotely, to start with, and eventually to the physical world, but I think they'll be capable in that sense. Now, there's a difference between th…

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    ⤵ My chat (+transcript) with investor Ruchir Sharma on where capitalist economies went wrong Jul 19, 2024
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    ✈ A quick note: I will be traveling through the middle of the month and will be posting a bit less than usual and perhaps a bit shorter than usual.These days, it seems that critics of capitalism are more prevalent and more vocal than ever. But Ruchir Sharma, author of What Went Wrong with Capitalism, argues that the free market never let us down; our government did. Today on Faster, Please! — The Podcast, Sharma and I discuss the American addiction to “pain management” — unnecessary economic intervention aimed at dulling the effects of the natural ups and downs of a free market, and how it crippled American capitalism.Sharma is chairman of Rockefeller International and the founder and chief investment officer of Breakout Capital. He previously served as head of emerging markets and chief global strategist at Morgan Stanley.In This Episode* Disillusionment (1:20)* Economic booms (6:12)* Pain management (8:49)* Populist policy (14:38)* Catalyzing change (17:32)Below is a lightly edited transcript of our conversationDisillusionment (1:20)Pethokoukis: In the book, you write with some concern about the declining faith in capitalism, really among all Americans, especially Democrats and the young. It may be worrisome, but is it really surprising, given we had a financial crisis . . . hard to believe it was, what, 14 years ago? 15? Well, I guess 16, 2008 . . . Financial crisis, slow recovery. So, for a lot of people, there's a pretty good chunk of their lives where the economy didn't seem to be really zipping along very quickly and making a big change in their lives, so if people are skeptical of capitalism, can you really blame them?Sharma: Well, as I argue in the book, Jim, that the current system we have in place is very far from capitalism. It's a very distorted form of capitalism that we have in place, and the surprise, I think, has to be the fact that, at the headline level, the numbers from the American economy look pretty good, which are the fact that the economy is growing at above two percent, the stock market is booming, America is seen as the center of all the tech innovation, AI, and, compared to its major rivals such as Europe, America seems to be in a much better place. And I think that a lot of people in the Biden administration try to put that out, which is that, “What's the problem, given how well the American economy is doing?”And I think that the polling data is obviously very different. It shows a persistent and consistent decline in faith in the American economy, that the voters and people have, and, as you pointed out at the outset, that a lot of young people, in fact, say that now they prefer socialism to capitalism. So I guess that's the surprise, which is the fact that, at the headline level, the numbers look fine, and especially when you compare it to other countries, and yet, if you look beneath the hood, both the numbers, in terms of polling numbers and then a deeper look at capitalism, which is what I've done in the book, reveal that something is wrong with the system. The general feeling that the average American has, that the system is almost rigged against them, and rigged in favor of Big Business.Clearly one reason people are sort of unhappy is because we had a big surge of inflation, and, even though the rate of inflation has come down, prices are still a lot higher than they remember. But that seems to me to be a temporary aberration. As every day, and month, and year goes by, we'll be a little further from this inflation surge. And then you mentioned all those positive things: in every sort of emerging technology, America seems to be the leader. Is there really a deep problem that will be more or less solved on its own the further we get away from the pandemic and that pandemic-era economy?Well, anything can happen, but I wouldn't bet on that because, as you said, that the decline in the faith in America's brand of capitalism and the number of people who feel that the country's moving in the wrong direction, all that data predates the pandemic. So it's not as if there was a surge in inflation and that suddenly changed people's thinking about the economy and they're feeling much worse off because their real wages got wiped out by inflation. This happened even before that. Through the last 10 or 20 years, you've seen a consistent decline in American faith in the economy, in American faith in government. So this is not just about the near-term inflation data, or even in terms of what's happened in the post-pandemic world, and to bet, therefore, that, with the passage of time, as the pandemic sort of becomes more and more of a distant memory that this is going to change. I think the problems are much deeper, and it shows up in the fact that, as I argue in the book, that economic and social mobility in America today is close to record lows. Only 35 percent of Americans feel today that they're going to be better off than their parents, and when the American Dream was really flowering, that number used to be 70 to 80 percent of people felt that they'd be better off than their parents. So there's a whole host of data to show here that the problem and the disaffection with the economic system is much deeper than just the pandemic-driven surge in inflation.Economic booms (6:12)Is there anything about this economy that four or five years of above-average economic growth won't solve? I sort of recall that in the early ’90s, you could have made a very similar case that we had a nasty recession in the early ’90s. Some people have forgotten about it, but it was a bad recession. And then we had the Gulf War, and there were a lot of newspaper articles saying that the era of fast growth was over, America just couldn't grow fast anymore, and just as people were convinced that the good days were over, the economy took over, internet boom, tech boom, and we had very rapid growth—and, interestingly, it was also a period of high inequality, but people didn't seem to care so much because the economy was cooking and real wages were rising. So is there anything wrong that a little bit of faster growth couldn't solve?In terms of the fact that I remember living through that era, and I think that if you compare the polling data, it shows the fact that the problems are much deeper now, and the disaffection is much deeper than what was there, in terms of the fact that what solved it back then — even back then, the basic faith in American capitalism was never lost. I think that what's happened now is a feeling that we don't have an equality of opportunity anymore, and that inequality levels now have risen much further than back then. So I think that it's always possible for some hopeful turn to take place, but I'd say that the problems this time are much deeper, and that's what I try and say: Why has this happened? The book is a deep investigation of why has this happened systematically over time. We've gotten to a point now where, across the Western world, leaders are universally, almost, unpopular, and they are also struggling to get reelected. This is happening in Europe, and I argue in the book that capitalism is in worse shape in Europe: much more statist, much more bureaucratic, much more intrusive, and Europe's an even greater regulatory hegemon than America is. So something which is going on across Western societies for this disaffection and feeling that the American government is more pro-business than it is pro-competition, which should be the essence of capitalism.Pain management (8:49)But where do you think it all went wrong?That’s the crux of the argument. As the tagline of the book goes, that capitalism did not fail, it was ruined. What ruined it? As I show, that it is the suite of government habits, that how the government's role in American society has come to resemble that of pain management, which is the fact that every time there is the slightest hint of pain, we administer opiates. That's one of the reasons we have the opiate crisis, where people are just hooked to opiates, because at the slightest pain, you give them opiate to relieve the pain without quite solving the underlying cause of the problem. I think, in a similar way, what's happened with American capitalism is the fact that the government has been trying to socialize risk and take risk out of the system to try and mitigate pain, and in doing so, it's got the economy hooked to constant stimulus, constant government intervention, which is leading to a lot of perverse consequences.What are those purpose consequences? One of them, as I've argued in the book, is that productivity has declined. Now remember, capitalism is supposed to generate lots of competition, lead to more creative destruction, lead to an increase in productivity, and productivity is the key to economic growth. But in the last 30 to 40 years, we have seen a big decline in productivity growth across the western world, including in the United States.On the other hand, we have seen a lot of deadwood being kept alive due to all these interventions. The culture of bailouts, the culture of regulation, has kept a lot of deadwood alive in the system, which is not only dampening productivity growth, but it's preventing the entry of new businesses and new firms to come. As a result, the pace of startups in this country today has gone down significantly. It's picked up a bit after the pandemic, but for the last 30 to 40 years, the rate of new startups in this country has declined.So I think that the systematic increase in the government's involvement in the economy has led to these perverse consequences, and those changes are quite recent. The American government was never this involved at a very basic level. The share of government spending in the economy was just three percent a hundred years ago. It has gone up over time, now we're closing in on 40 percent, the government spending, the share of the economy.But it's not just that. The culture of bailouts: America never believed that it should be bailing out private sector enterprises. And yet, from the 1980s onwards, it's been an increased culture of bailouts. Before that, America did not do bailouts of private-sector companies, but once the precedent was set with the large financial sector bailout of 1984 of Continental Illinois, you've seen one bailout after another, and get bigger and bigger with each crisis.And then, of course, you have the entire role that the Fed has played the, US Central Bank, in the way it has tried to micromanage the cycle and always try to act with policies where, on the upside, it's fine if markets rise, but on the downside, it's there to protect and socialize risk, which, once again, has undermined productivity and kept a lot of deadwood and possibly zombie companies alive.So it's this suite of government habits that I think has corroded capitalism and brought us to this position today where capitalism is so distorted.Famously, during the financial crisis, President Bush said, in his own colloquial way, “This sucker is going down.” Would you just have “let this sucker go down” rather than bail out banks back in 2008?Each bailout seems justifiable because, at that point in time, you're in the midst of a crisis, and there's always this fear that if you don't bail out, we will end up being like the liquidationists of the 1929s and lead to a Great Depression. And I think that“Liquidate farmers! Liquidate labor!” Andrew Mellon.Totally correct. But I think that the impulse now is the opposite, which is, “liquefy, liquefy, liquefy.” So even in 2008, if you needed to intervene to prevent a financial crisis, they can argue that was justifiable. But after that, look at what happened: the Fed continued to do quantitative easing, to lift asset prices, thinking that high asset prices will be good for economic growth, whereas it only increased inequality because the owners of asset prices tend to be the rich, and put many aspirants of the property market, or buyers of the property market, it put those things out of reach.And then also the fact that you had, in terms of the last year, when you had the Silicon Valley Bank problems, you intervened again to try and prevent it. And again, the fear is raised that if you don't intervene, you'll have the Great Depression. So I think we need to find a balance here, which is that you've gone from “liquidate, liquidate, liquidate” to now “liquefy, liquefy, liquefy.” And I think that we need to get back to some balance and, yeah, there is a role for government, like in a terrible crisis, but you can't have a government always be there to intervene at this slightest hint of trouble. That is what causes problems.Populist policy (14:38)If we indeed live in a populist political age, I would assume that I would see more intervention, and more bailouts, and more pain-prevention, because that's what populism is. Populism is saying that you've been taken advantage of by the elites, it's not your fault, and if it's not your fault, you shouldn't feel any pain, therefore we will intervene to help you. Government will help you. So wouldn’t you expect in the near future just to have more of this kind of thing: more pain-management public policy?I think that you're right that this trend can continue, because the default path of politicians is to keep doing what they've been doing unless there's a crisis which forces them to reverse course and forces, I'd say, American society then to wake up and say, “This is not working.” But to say that this is a populist thing, I'm not sure, because this is the strategy which has been pursued for the last few years, if not decades, which is what I've argued in the book. So if you're going to keep pursuing the same strategy, then you should not expect different outcomes. If the strategy of so-called populism of more intervention was working, then why should so many people be upset with what's going on?I've been in the last few days talking about this book. I'm surprised at how receptive people have been to the idea that it's not the government's business to be bail out private sector companies. It's not the government's business to be instituting 3,000 new regulations a year. The average number of new regulations that the government would put into a year has gone up dramatically over the last couple of decades. Now, again, it is not the job of the government to be putting in so many regulations because the more regulations you put in, the harder it is for small and midsize businesses to thrive, and it creates a barrier to entry, because the cost of regulation has gone up significantly, it can be borne only by big businesses, the average business finds it more difficult. And also the lobbyists, then, are able to rewrite regulations in their favor, and they're hired typically by the Big Tech firms or the people with all the money.I think a populist agenda would favor deregulation. A populist agenda would say that you can't have the Fed run monetary policy which keeps on inflating asset prices, particularly property prices, and makes it harder and harder for Americans to afford a home. And similarly, a populist agenda should be against bailouts, because bailouts typically help the entrenched powerful companies rather than the average person. And as I said, it's time to try something different also because what's been tried so far is clearly not working in terms of making Americans happy.Catalyzing change (17:32)Let me ask you this, then: What do you see, then, that makes you think we're going to do something differently?I don't see anything as yet in terms of tha…

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    ⚛ My chat (+transcript) with the US Energy Department's Mike Goff on powering the US with more nuclear energy Jul 11, 2024
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    ✈ A quick note: I will be traveling through the middle of the month and will be posting a bit less than usual and perhaps a bit shorter than usual.After decades of resistance to nuclear power, growing concern over climate change, rising electricity needs, and a desire for greater energy independence are spurring renewed public interest in a future powered by atomic fission (perhaps fusion, too). Today on Faster, Please! — The Podcast, I talk to Dr. Mike Goff about the state of US nuclear power, the developing advancements in nuclear technology, and what it will take to reach our vast potential.Goff is the acting assistant secretary and the principal deputy assistant secretary for the Department of Energy’s Office of Nuclear Energy. He previously spent over 30 years at Idaho National Laboratory, including a major advisory and management role. He has written over 70 publications on the nuclear fuel cycle.In This Episode* Atomic Age 2.0 (1:31)* Major concerns (7:37)* Out of practice (11:04)* Next-generation policy (17:38)* Human capital (21:48)* Fusion forecast (23:12)Below is a lightly edited transcript of our conversationAtomic Age 2.0 (1:31)The Energy Secretary recently spoke about adding a lot more nuclear capacity, tripling it, I think, by 2050 or so. And before we get into whether that's possible, I wanted to ask you: As you understand it, what is the current consensus explanation for why the Nuclear and Atomic Age of the ’50s and ’60s, why that kind of ended? Because when the secretary spoke about building more capacity, I thought about the — and this is something maybe a lot of people are unaware of, that President Nixon had a plan to build a lot of more nuclear reactors in this country back in the ’70s during the oil crisis; that didn't happen, and we all know about Three Mile Island. But is there a consensus as to why Atomic Age 1.0 came to an end? Obviously we still get a lot of energy from nuclear, but not what people had imagined 40 years ago.There are a variety of reasons. We did build a lot at one point, and we were building 10 plants a year, pretty extensive builds out there. We did then have Three Mile Island in the late ’70s, and then we got costs started going up, and schedules started increasing on the builds, and we ended up not having a lot of energy growth, in fact, we went for a long period where we weren't having a lot of energy growth, and we had a lot of other energy sources, natural gas, coal, and all. We had a lot of other energy sources out there as well. So yeah, we became pretty stagnated around 20 percent of the electricity. But now, like you say, yeah, there's been a big change in what we think the needs are for nuclear going forward, for a variety of reasons.My background is journalism, and as a journalist I’ve written, I know, multiple stories in my life about a Nuclear Renaissance. So I'm wondering why this time looks to be different. You suggested in your previous answer that there might be some reasons. What are those reasons that we may be entering a new age where we will see an expansion in the nuclear sector?I do think we will see that expansion, and, in fact, I think we have to see that expansion, and it's because of a lot of the positive attributes of nuclear right now. Obviously there's a lot of focus on trying to get more clean energy out there, and nuclear is a large base load source of clean energy. And it's not just CO2 emission, but it doesn't emit particulates and all, as well, so it's good air, good quality of life. So it has those key attributes. But there are other clean energy sources as well: renewables, hydro, and all that. But I think the recognition that, if you are going to go toward decarbonization, you need still base load electricity too. You need base load electricity to help intermittent sources like renewables to be able to expand more as well. So nuclear is very good at enabling decarbonization, not just by adding clean electricity to the grid, but enabling you to expand out other renewables like wind and solar and all, as well.Additionally, nuclear is very reliable. Of the energy sources, it has the highest capacity factor of any of the energy sources. In the United States, we run 93 percent of the time, so the existing fleet that we have out there of 94 plants, they're producing a 100 percent of the power 93 percent of the time, which dwarfs what any other energy source does out there as well.Nuclear is safe. At times people are concerned about safety, but, in reality, it's actually one of the safest energy sources out there and continues to demonstrate that.It's resilient for different weather-related events. It can still produce electricity out there as well. It also has a lot of energy security. And as we've learned, unfortunately, from Russia's unprovoked and unjustified invasion of Ukraine, we recognize energy security is national security, so nuclear really does help us on that national security front. It provides an energy source that we can largely on-source from us and our allies. We’ve got assured fuel supplies, and provides that long-term power. You can put fuel in it and it can last for two years or so.And I guess one other thing I'll add out there as well, is it's a job creator. Of the different energy sources, the amount of jobs associated with nuclear are some of the highest on the amount of electricity produced. And when you actually start building nuclear, like we saw in Vogtle in Georgia where they were building the two plants, it creates huge amounts of jobs. In fact, I heard a stat recently that 35,000 union workers were trained as part of the construction of the Vogtle power plant, so it's a good job creator in all, as well. And again, the power density is great, it doesn't take up a lot of space, and with the advanced technologies that we've developed in the United States, you've continued to increase in the safety, you can have plants of a variety of different sizes that can be easily deployed to, say, retiring coal plants. It just has a lot of flexibility that it hasn't had in the past, but also it's that key recognition of its clean energy attributes, but its energy security attributes as well.Major concerns (7:37)I did not major in nuclear science, I majored in history and political science, but I remember I took a class as an undergraduate at Northwestern University on the nuclear fuel cycle, and I remember to this day that my professor — of course, this was obviously a while ago, and I think what most of the students knew about nuclear energy was probably Three Mile Island — and I remember to this day distinctly the professor saying, “If they wanted to build a nuclear reactor in my backyard, I would be totally fine with it.” He had zero fear on the safety issue. Now when you give that rap that you just gave me about the wonders of nuclear energy before regular people, what is their response? Do they worry about the nuclear waste? Do they worry about safety? Are they immediately sold, or what are the concerns that typically get raised to you?You brought them up. I mean, safety is brought up because you do see these high profile accidents like Three Mile Island, Chernobyl, Fukushima, which were accidents. They weren't good things that you want to have happen, but the industry's also a very learning industry. The improvements that come out of those events have just made the industry even safer and safer. And again, it's still safer than most any other electricity-producing industry out there as well.Waste does get brought up. We have not implemented a final disposal solution for the spent fuel from our reactors, but we have safely stored and managed the spent fuel over the last six decades, and the amount of fuel that's generated, I think the stat that gets tossed around, you could fit it all in a Walmart parking lot. This is not a lot of material because it's a high energy-density fuel. It's not a lot of material, and again, we safely manage that and store that. We have countries now that are moving forward with geological repositories, which we need to be doing in the United States. In fact, just last week, I went and visited the repository that hopefully will be operating next year in Finland for disposing of their spent fuel. We can do that, it’s not a technical issue, so we can safely manage the spent fuel.The other issue that always comes up is still cost. We do have to demonstrate now that we can build these plants safely, and efficiently, and at a reasonable cost. On the Vogtle plant there were cost overruns and schedule overruns, but between Vogtle Unit 3 and Unit 4, there was about a 30 percent reduction in costs between those plants, so we are starting to get to where we can be deploying nth-of-a-kind cost plants out there as well. And hopefully with some of the small modular reactor designs and all that are going to rely more on modular construction, we can even get to nth-of-a-kind cost even quicker. It still takes some pushing and understanding to make sure that people do understand the advancements that have been made on nuclear technology, that it's not our parents' nuclear technology, there's a new round of technology out there.Out of practice (11:04)You raised two good points there. The cost issue, and that's a great stat about the Vogtle plant and the reduction between the two reactors. Is it your sense that the fact that we haven't been consistently building reactors and learning from the previous build, and having trained people who've worked on multiple reactors, that each one has become like this bespoke mega project? It’s my sense, and it seems logical, at least to me, that that has been a cost driver, that we haven't been able to churn these out like 10 a year, every year, decade after decade, because clearly, if that was the case, I don't see how we don't learn how to build them better, faster, and more efficiently. But that's not what we've been doing, obviously.That's right. It's not. Even when I say with Vogtle, you had to stand back up the whole supply chain, you had to retrain the workforce, so there was a lot of learning in that process, even though, too, we did recognize on that plant you need to have designs very well finalized and standardized as well. One of the problems we realized from the buildout of the 90-something plants that we have now is no two plants were ever that similar. Everyone wanted to make a tweak in their plant, so we never got to where we had standardized designs. So I think now that we're getting that trained workforce, getting the supply chain up there, and our vendors are really saying, “We're doing standardized plants. If someone else wants to make a tweak on this plant, they have to go somewhere else,” that people are going to go with standardized designs so we can really replicate these and get that cost benefit from it. The challenges that you brought up, we have to overcome, and I think we're set up now to be able to overcome that. I appreciate all the effort that went into building Units 3 and 4 at Vogtle. We've got enough benefit from that learning there and hopefully build very soon here.There's a world where we have tripled our nuclear generating capacity, as Secretary Granholm said. Can that be a world where we get all our nuclear power from light water nuclear reactors, or must there be different kinds of reactors? You mentioned the small modular reactors, and I've interviewed startups doing microreactors, I don't know, maybe they'll be used to power data centers, but can that world of greatly increased nuclear generation, even with improvements in light water reactors, must there be different kinds of reactors?I wouldn't say “must.” I think there will be. I think we will have that variability. I think we will still have large plants being built. I think maybe five years ago you wouldn't hear that people were talking about building gigawatt-sizes plants again. I think we'll have the gigawatt-size plants, we'll have the small modular reactors that are water-cooled, but I think we will get some of those advanced reactors out there: the Generation IV reactors, the sodium-cooled fast reactors that have the capacity to be able to burn waste better and also increase the sustainability of the amount of fuel they use. I think you’ll also have the high-temperature gas reactors that are helium-cooled, that use TRISO fuel. You'll have those because we need to not only decarbonize the electricity sector, we've got to decarbonize the industrial sector. That's much more challenging, and the high temperatures that can be provided from those reactors will help us in that decarbonization process. So I think we will have a mixture out there. There are cases where the Gen IV systems are going to be better than the gigawatt-sized plants for the needs that are out there, but large power plants are going to be needed as well. Especially, like you say, you bring up the data centers, the amount of growth that we're hearing for electricity right now, I think again, we'll see gigawatt-sized plants will be needed to be able to meet that growth.Yeah, I tell you, nothing frustrates me more than reading about what AI could perhaps do for our economy and then having people say, “Well, but we know we can't do it because we can't supply the power” or “We can't supply enough clean power,” I mean, well then it’d be sure great to have more nuclear energy. And I wonder, as you sort of tick off some of the potential advances and new kinds of reactors, maybe I look backward too much, but I can't help but wonder what nuclear reactors would be like today, where we would be today, maybe we would already have fusion reactors had we proceeded with this kind of momentum every decade since 1980. It drives me crazy, and you're a nuclear engineer, that must drive you crazy.It does, I've been doing this . . . my first job in the nuclear industry was almost 40 years ago when I was still in college, and there have definitely been ups and downs in funding. In fact, there were some periods where there was almost zero research and development dollars spent in the government on nuclear energy. Luckily, though, the thing that we have is, under the four presidential administrations, there's been a real steady climb in the recognition of the importance of nuclear, and the funding to support it. So I'm happy that we have had this period that goes back to the early 2000s that's been really steady growth in recognition of nuclear. If we would've not had some of those laws in the late ’80s and ’90s, yeah, we could probably be further ahead, especially on some of the advanced technologies. Because yes, some of those advanced technologies started on research that was back in the ’50s, ’60s and ’70s: the sodium-cooled fast reactor, the molten salt reactor, all of those were based on R&D that we did back in the early days, as well.Next-generation policy (17:38)Which leads me to this question: You work for the government. I work for a public policy think tank, so of course I'm going to think about: Given where we are today, what government needs to do going forward, both on the R&D front and on the regulatory front, are we doing enough basic research for whatever the next, or the next next generation of nuclear is, and do we now have the kind regulatory framework we need for that next generation of reactors?I'll go to the research one first—and I should note, my background is, I'm an R&D person, I came out of the national labs, so of course we always need more research and development. But that said, we have been blessed by funding fr…

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    🤖 My chat (+transcript) with Google economist Guy Ben-Ishai on seizing the historic AI moment Jun 28, 2024
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    Artificial intelligence may revolutionize the American economy, but whether we see that potential actualized depends on a few key factors: whether generative AI is a general purpose technology, whether the labor force makes a smooth pivot, how employers prioritize their resources, and whether the US chooses to take the lead in AI’s deployment. These are just a few of the topics I cover on the podcast today with Guy Ben-Ishai.Ben-Ishai is the head of economic policy research at Google. He previously served as a principal at the Brattle Group and as chief economist in the office of the attorney general of the state of New York. He is also a co-author of the paper “AI and the Opportunity for Shared Prosperity: Lessons from the History of Technology and the Economy.”In This Episode* Is gen AI a general purpose tech? (1:22)* Risks and benefits (7:46)* Barriers to a boom (14:27)* Investing in employees (19:16)* Human-complimenting AI (25:29)Below is a lightly edited transcript of our conversationIs GenAI a general purpose tech? (1:22)Pethokoukis: Do you have any doubt that generative AI, and perhaps machine learning more broadly, is an important general purpose technology that will eventually make a substantial and measurable impact in the economic statistics and productivity and economic growth? Ben-Ishai; The immediate response is absolutely, but let me unpack that: Do I have doubts about the immense potential of the technology? No, and I'm saying that very confidently, which is uncommon for an economist. We put together the paper that you've initially cited at Google to look exactly at that question: When we say that AI marks a pivotal moment in human history, what does that actually mean for an economist? And I think the conclusion there that we're looking not in an ordinary technology, but rather at a general purpose technology, that is immense. That means that we're probably looking at the most transformative economic development of our generation. And to think, Jim, that the two of us are having a conversation about that today, that is historic. I feel incredibly privileged and lucky to think and work of these issues in our day and age.But the second part of your question alluded to not the potential, but actually the actual impact. And if there's one takeaway from that exercise from the paper that we put together and from my conversation with so many academics and policymakers around the world, is that this is not just a watershed moment, it's not just a pivotal moment in human history, it's a fragile moment as well. This story can easily be a story of missed opportunity. I think that we so easily take for granted the fact that, yes, we will of course develop AI and deploy it and apply it very successfully. And it's so easy to get caught in the moment, particularly as the nation that advanced the science, I think somewhere in the back of the minds of all of us, there's that presumption that we will be the global leaders in deployment of AI. I am actually worried about that. To ensure that we are, it’s a tumultuous, fragile, and careful process that we’ve got to be really thoughtful about, with a lot of deliberate action about what we do, how do we proceed, and how do we ensure that we are indeed the ones that capitalize on the potential?It's remarkable how quickly the narrative around American tech has shifted. Not long ago, Silicon Valley faced criticism for focusing on social media rather than groundbreaking innovations like the Apollo program or cancer cures. Now, they've unveiled generative AI, potentially the most significant technology of our era.Regarding fragility, it's worth considering why AI might need special handling. Unlike the seamless diffusion of technologies like the internal combustion engine or electricity, AI seems more akin to nuclear power - a technology that was stifled by regulation. Do we need a proactive agenda to prevent AI's potential from being similarly constrained?That's a great question, Jim. I'm so tempted to go back to your first part of the question about the importance of digital technologies, and economists get a really bad rap, but try to be a librarian these days. We tend to overlook the tremendous importance of information as a driver of economic growth in our economies. And even if you look just at small businesses and the tremendous opportunities that digital technologies have provided them. To think that a mom and shop store today can actually run a marketing campaign, analyze its customer base on large databases, export products to far markets, those are things that used to be the exclusive domain of just a few large companies that today are actually available broadly and widely through digital technologies. And maybe it's the fault of economists that we are not shouting off the tops of mountains frequently enough about the tremendous power of information and digital technologies and the accumulation of knowledge as a driver of economic growth.The application of knowledge and intelligence — that seems to me to be pretty important.I cannot agree more! And I think, to a great degree, it explains some of the tremendous optimism around AI as a technology that really reduces the barriers to interact with technology and democratizes its use in a way that we haven't seen before.Risks and benefits (7:46)We quickly shifted from marveling at AI's potential to fixating on its risks — existential threats, job losses, and disinformation. But let's step back for a moment. Can you elaborate on why you see this as an exciting technology with significant benefits? It seems many people aren't fully aware of its upside potential.That's a great question, this is really the reason why we at Google, too, we paused for a minute and kind of wanted to think about this. We're at a sector where enthusiasm is in no short supply, so what does it actually mean when we say that this is a pivotal moment in human history? What does it mean for economists? I think it really boils down to this question of: Is AI an ordinary technology, or is it really a general purpose technology? That is the term of art that economists use, and I think it's actually important to pause for a minute and think about that, because it's critical. A general purpose technology is not just pervasive in use, it is a technology that enables productivity-enhancing applications to be applied across all segments and entire economies in ways that are not just advancing and accelerating economic growth, but are also expanding the frontier of innovation and technology. It's a source of ongoing and continual innovations.And if you think about it for a minute, if you think about the prior general purpose technologies that we've had, if it's electricity, if it's personal computers, or it's the steam engine, their impact was tremendous. And at the time that they were launched, I think nobody had the perfect vision of where . . . we of course knew where we started, in the very same way that we do today about AI, but it's really difficult, if not impossible, to know where we will end. The compounding nature of these technologies is immense, particularly when you're looking at a general use technology and multi-domain technology that can lead to applications on such a broad basis. I don't think that today we can envision what new occupations, new applications, new sectors will emerge as a result of AI. And I think the fact that it's not an ordinary technology, but rather a general purpose technology, that is important, that does imply that we're probably looking at the most profound economic transformation in our generation. That is huge.It's relatively straightforward to assess AI's ability to replicate current human tasks. But predicting the new possibilities it might unlock, like accelerating scientific discovery, is far more challenging. These potential upsides are difficult to quantify or model economically.While we can more easily grasp potential downsides like job automation (which isn't necessarily negative), the upsides are less tangible. They depend on entrepreneurs creating new businesses and scientists leveraging AI for breakthroughs. This makes it harder to definitively argue that the benefits will outweigh any drawbacks.Oh my God, Jim, I cannot agree more, and I think that there's two issues, and you have written about this just recently, and I think that there's really two issues that come up, at least in my mind, as a reaction to some of the studies that really focus on the measurement. We're trying to really drill this question of, “What will be the productivity gain from AI over the next five or 10 years?” I don't want to dismiss that question —And can you give it to me within three decimal points, right?Exactly! But we're doing such a huge disservice as economists when we focus on that. I think it really pertains to two reasons that you brought up. The first one relates to measurement. We are really looking, these studies are primarily based on occupational exposure of existing work streams. Little do we know today about what new work streams, occupations, tasks, creativity, or human endeavors will actually be triggered by this new technology. In a way, we're really just looking under a flashlight rather than thinking about the broader issue, the broader economic benefits that will emerge, kind of like the unknown unknowns that we know today about this technology.Just to put it in perspective, think about the printing press that led to a scientific revolution. Think about the steam engine that led to an industrial revolution, to an electronic circuit that led to the digital age. We are at that point with AI today, and to think that we're looking at SOC, standard occupational codes, to look at the future impact on productivity, I think minimizes the value of our profession.The other point that you touched on, which I think is so incredibly important: We're missing the point. It's really not about the third decimal point of our estimates. It's about the fact that we can reshape technology. Rather than measuring its benefit, let's actually make sure that we can capitalize on the potential. That is far more important than anything else. And at some point, we'll go back to your other question about fragility, but there are genuine barriers that we need to address collectively as a society. And if we are not going to do it, other countries will, right? And I think economists have a role in that conversation. I think that is the critical issue that we need to focus on.Barriers to a boom (14:27)We have a technology that seems, right now, it's fast evolving, but it seems pretty darn important. It's hard to believe that we've only really been having the specific conversation about generative AI for maybe a year and a half or so publicly. So what are the barriers? If this turns out not to be an important technology that's widely diffused throughout the American economy, what went wrong? What are the barriers that concern you?I think there are three main categories that we focus on. First and foremost, you need digital infrastructure. I think it's a misconception, and I think we will learn that very quickly over the next few years, that AI or digital infrastructure is limited to broadband. It is increasingly becoming more so about access to data, large data centers, and compute power. And I think not just the US, but many other countries, will realize, or are in the process of understanding very soon, that those are the type of investments that one needs to make in order to deploy the technology. That's one category.Another one is the regulatory environment and the legal standards. You know Jim, and this is something you've of course written about a lot, I don't think that no single country deliberately chooses to fall behind, and I think that we often fail to recognize the long-term impact and unintended consequences of regulations. We, of course, have a duty to protect, and there are areas that raise concern, but we have to balance that duty to protect with the desire to capitalize on the potential, to foster innovation, and to make sure, at the end of the day, that we emerge as the global leaders of this technology, that we lead its deployment. I think that the legal ecosystem is incredibly important in that respect and an important current dimension of competition between countries and the future over the deployment of AI.And the third one is our workforce readiness. We need a workforce transition strategy. Let me pause here for a minute. If our workforce is not ready for an AI transition, our employers and our companies would find it very difficult to actually implement and adopt AI. It's simple as that. And if our companies do not adopt AI applications or technologies, we will quickly find out that we will fall behind. If you're looking at the history of our labor markets, we have been not just resilient, consistently resilient in our institutions and labor market operations, but we've also been highly effective at transitioning individuals from low-productivity to high-productivity occupations.We used to be a primarily agrarian economy in the 19th century. We transitioned successfully to manufacturing, which at some point was about 27 percent of our workforce, now it's below 10 percent. From there, we switched on to services. We absorbed women into the workforce in an effective way. We have highly effective labor markets, which is a competitive advantage when we're thinking about global competition.At the very same time, it's not without a cost. And in a lot of ways, I do think that it can be a double-edged sword, because the competitiveness of our labor markets also implies, at least factually, that the relationships that we have between employer and employee tend to be less permanent than they are in other economies, and that implies that employers have less of an incentive to actually invest in employees. That may put us at a relative disadvantage compared to other countries that have longer relationships between employers and employees and can afford for actually employers to participate, to take part, whether it's through apprenticeships or training programs, in making sure that their workforce is ready for an AI transition. That, Jim, worries me. I think it's more than just making sure that individuals that may lose their job get reinstated in the workforce, it's really an economic strategic objective for us. Unless we take care of our workforce, we will find it exceedingly difficult to implement AI on an economy-wide basis.Investing in employees (19:16)While Washington isn't dictating data center construction, companies are investing heavily in this infrastructure. Shouldn't the same logic apply to workforce development? If understanding and working with AI technology is crucial for business survival, there's a strong private incentive to invest in employees' skills. This holds true even considering the unique structure of the American labor market compared to, say, Europe's.Let me pause for a minute, take it back one step so that we can think about why is investment in worker training and vocational programs are so difficult? Why are they so challenging, and why do they perhaps create externalities, the way that we just discussed, more broadly? Why are they ultimately a strategic concern for the US economy? So look, these programs are exceptionally difficult to get right in an ordinary course of business. And we at Google have invested a tremendous amount of resources on these programs, which are not a core product for us. They're not even a m…

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    🏙 My chat (+transcript) with ... economist Jason Barr on the skyscrapers of tomorrow Jun 14, 2024
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    The image of the skyscraper is the hallmark of the modern city. Futuristic depictions of urban landscapes nearly always feature towering structures high above the clouds. Today, however, developing countries seem to be putting the greatest effort into building the most impressive skyscrapers, from the Burj Khalifa in the UAE, to the future Jeddah Tower in Saudi Arabia. Whether you love them or hate them, it’s worth asking why we build skyscrapers and what their role will be in future cities. Today on Faster, Please! — The Podcast, I sit down with Jason Barr, author of Cities in the Sky: The Quest to Build the World’s Tallest Skyscrapers.Barr is a professor of economics at Rutgers University – Newark, and is a member of the Rutgers Global Urban Systems PhD program. He is also the author of Building the Skyline: The Birth and Growth of Manhattan’s Skyscrapers.In This Episode* Demand for the skyscraper (1:35)* The end of the skyscraper (9:00)* Pillars of commerce (14:05)* The sky’s the limit (18:36)* Manhattan extension (23:04)* Trends and styles (24:23)Below is a lightly edited transcript of our conversationThe image of the skyscraper is the hallmark of the modern city. Futuristic depictions of urban landscapes nearly always feature towering structures high above the clouds. Today, however, developing countries seem to be putting the greatest effort into building the most impressive skyscrapers, from the Burj Khalifa in the UAE, to the future Jeddah Tower in Saudi Arabia. Whether you love them or hate them, it’s worth asking why we build skyscrapers and what their role will be in future cities. Today on Faster, Please! — The Podcast, I sit down with Jason Barr, author of Cities in the Sky: The Quest to Build the World’s Tallest Skyscrapers.Barr is a professor of economics at Rutgers University – Newark, and is a member of the Rutgers Global Urban Systems PhD program. He is also the author of Building the Skyline: The Birth and Growth of Manhattan’s Skyscrapers.Demand for the skyscraper (1:35)Pethokoukis: You obviously love skyscrapers, you're fascinated by them. You wrote a whole book on them. So I want to just start the very basic question: Why do skyscrapers fascinate you, and the people who aren't fascinated by them, what are they missing?Barr: Great questions. Well, I grew up on Long Island, and so I was always really fascinated with Manhattan. I grew up in the ’70s, and so New York back then was a very dark, mysterious place for a youngster. So when I grew up, actually when I was in college, I started hanging out in the city. So to me, the skyline of Manhattan and New York City, they're just two sides of the same coin. I really developed an interest in tall buildings through my interest and fascination with Manhattan’s and New York City's history.So when I came to Rutgers Newark, I just started doing research on tall buildings, especially in New York City: what was driving the heights of these buildings; there's all these interesting height cycles over the last 150 years. So I wrote my first book on the Manhattan skyline, that was called Building the Skyline, and then after that I thought, let's see what's happening around the rest of the world. So to me, the tall building is an interesting thing because it's part and parcel with urbanization, and I just personally don't think you could have one without the other.I think some people might think that skyscrapers are, at least for rich countries, that they're kind of a 20th-century thing that we did as we were growing, and cities were getting bigger, and skyscrapers are a part of that, but now they're for other parts of the world, parts of the world which are still urbanizing, which are still getting richer. Are skyscrapers are still a thing for America?The short answer is yes, but, given how dense cities are, tall buildings are just being added a lot more slowly. In New York, the population's kind of slowly growing, and so tall buildings are either replacing old buildings that are wearing out, or there's always this push by big global corporations to be in the newest and latest tall building. And obviously there's this international demand from people abroad to have an apartment — or national demand — global demand to have some kind of residential presence in New York. But the thing is, people in other countries: cities, planners, residents in other countries, they look to New York, they look to Chicago, and I think, for many of them, they see New York as something they want to emulate, and New York is, on just about almost any metric, it's probably the top global city. And so I think cities today, especially in China, and Asia more broadly, they're trying to kind of replicate that, what you might call “the Manhattan magic,” and I don't really think people in this country realize how much tall building construction is going on in other cities around the world. People in this country are a little bit more cynical about the role of the tall building in urban growth and in housing affordability and stuff like this, but other cities are basically going gangbusters, is a way to put it.Is that driven by fundamental economic forces? Is it kind of a “national greatness” kinds of signaling projects? Are there fundamental reasons, not just to build skyscrapers, but to build very, very tall skyscrapers?“All of the above” is the answer. Fundamentally, if there's many, many people who want to be working, living, playing in the center, the only way to accommodate the demand to be in the center is to make more land in the center, so the skyscraper, at its heart, is what I would say is “land in the sky.” You just go vertical because there's constraints on how much land there is in the center.Having said that, definitely the skyscraper is seen as a kind of way to advertise, a way to increase confidence in the place, and so you boost foreign direct investment. Observatories are huge money makers, there’s a big tourism component. A lot of critics will say, “Oh, it's all about spectacle and ego.” But really, for the book, and just more broadly my research, when you drill down on the economics of these super tall buildings, not all of them are profitable or profit-maximizing, but they all have a strong economic rationale.Now, I just also want to say, China has its own thing going on, which sort of compounds the skyscraper construction-building there because of their unique governance structure and land ownership structure, but China is building tall buildings because, at the end of the day, there's a kind of, what I call, a “tall building bling.” There's just something that says, “This city is growing, this city is drawing population.” So we build a tall building and we boost confidence in the city. And it works, really.The pictures don't have to be too old, if you look at a picture of Shanghai, it looks a lot different not too long ago. It's almost as if a whole other city just kind of fell from the sky, a city of skyscrapers, and where there were once goats or something grazing, there's now a bunch of massive skyscrapers.Yeah, absolutely, and there's a few reasons for this. One is, I think Chinese residents more broadly see tall building as a natural way to live. I've talked to many Chinese residents, whether it's Shanghai or other cities, and to them, to own an apartment in the sky is like the greatest thing. It's their equivalent of the single family home in the United States. Living in the clouds is something many people aspire to. The other aspect of it is, Shanghai, and the Pudong neighborhood in Shanghai, was chosen basically to become a financial hub. Basically, the leaders were looking at Hong Kong and they thought it was a, to quote, I forgot the author, but to quote him in the book, the Shanghai officials and the National Party officials saw Hong Kong as that frustratingly free city, and so they wanted to create a kind of a financial hub in Shanghai. And so the Shanghai Tower, for example, is part of that plan to really draw people's attention to Shanghai, itself. So it was part of a master plan.The end of the skyscraper (9:00)I certainly remember that, after 9/11, I heard about “the end of the skyscraper,” and then during the pandemic, I heard about “the end of the city.” Now I'm guessing that cities will continue to exist and we're going to continue to build tall buildings.Absolutely. What 9/11 did was just make sure that we make our building safer with fire protection measures. In many Asian countries, every 20 floors, let's say, are mechanical floors, so you have the electric equipment, and the heating, and the cooling, and water tanks. They can also surround these in concrete, and so if something's on fire, if a floor is on fire, they can go to this hermetically sealed floor, a refuge floor, and stay there and be protected. And the elevator cores, they're made of concrete, and so you wouldn't have something like what happened on 9/11. So it didn't really impact the demand; 9/11 didn't impact the demand for the tall building, it just made us make tall buildings safer. And of course the downside is if you want to go into an office building, you have to have a swipe and you have to have an entry, so the negative of 9/11 was more about heightened security and increasing protections in a way that engenders a little bit more mistrust of us. But the demand didn't go away.Same thing with Covid. For big cities like New York and San Francisco, I'm sure the empty-office problem is going to dissipate. It'll take a while. This may be an overly broad statement, but the truth is, our present and future is in cities. The funny thing about the internet and social media and all that, it was supposed to allow us to suburbanize more, or run away from these big, overcrowded cities, but the truth is, social media and internet technology has just made cities even more important. So, as long as cities are growing, there'll be a demand for tall buildingsOf the tallest, I don't know, half-dozen buildings, have you been to all of them?That's a good question. I've been to the Shanghai Tower, which was the second-tallest building in the world, now is the third-tallest. The one that replaced it, I think it's [Merdeka 118] in Kuala Lumpur, I believe. I didn't go to that one yet because that just opened up recently. I've been to the Burj Khalifa, which is the world's tallest building. I'd have to look at the list. I've been to the Sears Tower, Empire State Building . . . Anyway, so I've been to a handful of them. I can't say I've been to every single one of the super-tall buildings in the worldAnd in any of those super-tall buildings, can you open a window? Why can't you open the windows in these skyscrapers?Well, the wind forces are just tremendous! The biggest problem engineering tall buildings is making sure that the building doesn't sway so that people feel it. The really fascinating thing about engineering tall buildings is this question: How do you allow the building to sway enough so that you don't have to — you don’t want to over-engineer a building so that you make it perfectly stiff because that's just completely uneconomic to do that, but you want to make sure the building sways just enough so if you're sitting there reading a newspaper or drinking a cup of coffee on the top floor, you don't feel it. And so the wind forces high, a thousand feet in the air, are just so tremendous. I think if you open the window, everything would just would just blow away.I was thinking about some of those very, super-skinny residential buildings, which I guess seem to be becoming more popular, and do those people really feel the motion?From what I can tell, the short answer is no. There's one lawsuit in Manhattan, in particular, where the engineering wasn't exactly perfectly right, but I think that represents the exception that proves the rule. The building is safe, that's not the problem, it's just that, when you're dealing with these super-skinny buildings — these are kind of a new kind of breed of super-tall buildings, so sometimes the engineering isn't perfectly right, so they will figure out ways to kind of fix those problems. The problems are solvable, but sometimes if you don't get it 100 percent right, people complain, and obviously there's lawsuits and you have to go back in and tweak the engineering. But these things are selling for 70, 80, 100 million dollars for a penthouse on the 90th floor, so people still value them, and if motion sickness was a problem, they'd be worthless.Pillars of commerce (14:05)In the book, you run through a number of myths: tall buildings being only for the rich, that they drive up housing prices in cities, again, that you mentioned a little bit earlier, that they're somehow bad economic deals. All these myths all tend to be very negative.I'm not going to rename your book, but I could call it “Cathedrals in the Sky,” I mean, I think these are beautiful buildings that say a lot about human aspiration and to create a sense of awe. Boy, but some people just do not see it that way.I think there's a few strands; I've been thinking about this. There's a kind of a NIMBY strand, and sort of a NIMBY/gentrification strand. So people in the middle income, let's say, they see their housing prices going up, their rent going up, and then they see these billionaire condos, and so they, in my opinion, or based on my research, there's a confusion of correlation and causation. So the most visible manifestation in people's minds of gentrification and affordability problems are the super-slim buildings, but New York City has something like 3.6 million housing units, and if you look at the outlying areas of Queens and Staten Island, they're just covered in one- and two-family homes. Those neighborhoods have added barely any housing. So all of the housing — I'm exaggerating here when I say the word “all,” but the vast majority of new housing units happens in the center where either the zoning is more permissive, or old industrial sites come online and things like this, so people don't realize that the problem of housing affordability is citywide, it just looks naturally to be in their neighborhood where high rises are going up.Then there's another strand, which I would say is kind of the “Jane Jacobs strand” / the anti-public-housing strand. Jane Jacobs has some great points in her book, The Death and Life of Great American Citiesabout walkability, about eyes on the street. She wasn't a big fan of tall buildings, and this has kind of given rise to this whole movement of “human scale,” where five-story Greenwich Village buildings, or 10-story Parisian mansard-roof-type buildings are perfect, and any other deviation from that is somehow destroying the city. So there's that part of it, that people see tall buildings as somehow destroying the feel or the perfect fabric of the city. And lastly, obviously, some of the failures with the public housing policy has made people convinced that it's unhealthy to live in these tall buildings. I think that gets at what you're inquiring about. I think there's those different strains.I wonder if part of it stems for a confusion about what are cities for, and I mean cities are, for a large part, are where people to come together for jobs and to conduct commerce. And if you think of them that way, then certain things make sense; but if you think of them as, I don't know, some sort of urban retreat, where it's kind of like a garden or . . . I don't know, but it's a very different view, and per…

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    🤖🌈 My chat (+transcript) with Nick Bostrom on life in an AI utopia Jun 06, 2024
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    The media is full of dystopian depictions of artificial intelligence, such as The Terminator and The Matrix, yet few have dared to dream up the image of an AI utopia. Nick Bostrom’s most recent book, Deep Utopia: Life and Meaning in a Solved World attempts to do exactly that. Bostrom explores what it would mean to live in a post-work world, where human labor is vastly outperformed by AI, or even made obsolete. When all of our problems have been solved in an AI utopia . . . well, what’s next for us humans?Bostrom is a philosopher and was founding director of the Future of Humanity Institute at Oxford University. He is currently the founder and director of research at the Macrostrategy Research Initiative. He also wrote the much-discussed 2014 book, Superintelligence: Paths, Dangers, Strategies.In This Episode* Our dystopian predisposition (1:29)* A utopian thought experiment (5:16)* The plausibility of a solved world (12:53)* Weighing the risks (20:17)Below is a lightly edited transcript of our conversationOur dystopian predisposition (1:29)Pethokoukis: The Dutch futurist, Frederik Polak famously put it that any culture without a positive vision of the future has no future. It's a light paraphrase. And I kind of think that's where we are right now, that despite the title of your book, I feel like right now people can only imagine dystopia. Is that what you think? Do I have that wrong?Bostrom: It's easier to imagine dystopia. I think we are all familiar with a bunch of dystopian works of fiction. The average person could rattle off Brave New World, 1984, The Handmaid's Tale. Most people couldn't probably name a single utopian work, and even the attempts that have been made, if you look closely at them, you probably wouldn't actually want to live there. It is an interesting fact that it seems easier for us to imagine ways in which things could be worse than ways in which things could be better. Maybe some culture that doesn't have a positive vision has no future but, then again, cultures that have had positive visions also often have ended in tears. A lot of the times utopian blueprints have been used as excuses for imposing coercively some highly destructive vision on society. So you could argue either way whether it is actually beneficial for societies to have a super clear, long-term vision that they are staring towards.I think if we were to ask people to give a dystopian vision, we would get probably some very picturesque, highly detailed visions from having sort of marinated in science fiction for decades. But then if you asked people about utopia, I wonder if all their visions would be almost alike: Kind of this clean, green world, with maybe some tall skyscrapers or something, and people generally getting along. I think it'd be a fairly bland, unimaginative vision.That would be the idea of “all happy families are alike, but each unhappy family is unhappy in its own unique way.” I think it's easy enough to enable ways in which the world could be slightly better than it is. So imagine a world exactly like the one we have, except minus childhood leukemia. So everybody would agree that definitely seems better. The problem is if you start to add these improvements and you stack on enough of them, then eventually you face a much more philosophically challenging proposition, which is, if you remove all the difficulties and all the shadows of human life, all forms of suffering and inconvenience, and all injustice and everything, then you risk ending up in this rather bland future where there is no challenge, no purpose, no meaning for us humans, and it then almost becomes utopian again, but in a different way. Maybe all our basic needs are catered to, but there seems to be then some other part missing that is important for humans to have flourishing lives.A utopian thought experiment (5:16)Is your book a forecast or is it a thought experiment?It's much more a thought experiment. As it happens, I think there is a non-trivial chance we will actually end up in this condition, I call it a “solved world,” particularly with the impending transition to the machine intelligence era, which I think will be accompanied by significant risks, including existential risk. In my previous book, Superintelligence, which came out in 2014, focused on what could go wrong when we are developing machine super intelligence, but if things go right—and this could unfold within the lifetime of a lot of us who are alive on this planet today—if things go right, they could go very right, and, in particular, all kinds of problems that could be solved with better technology could be solved in this future where you have superintelligent AIs doing the technological development. And we might then actually confront the situation where these questions we can now explore as a thought experiment would become pressing practical questions where we would actually have to make decisions on what kinds of lives we want to live, what kind of future we want to create for ourselves if all these instrumental limitations were removed that currently constrain the choices set that we face.I imagine the book would seem almost purely a thought experiment before November 2022 when ChatGPT was rolled out by OpenAI, and now, to some people, it seems like these are questions certainly worth pondering. You talked about the impending machine superintelligence—how impending do you think, and what is your confidence level? Certainly we have technologists all over the map speaking about the likelihood of reaching that maybe through large language models, other people think they can't quite get us there, so how much work is “impending” doing in that sentence?I don't think we are in a position any longer to rule out even extremely short timelines. We can't be super confident that we might not have an intelligence explosion next year. It could take longer, it could take several years, it could take a decade or longer. We have to think in terms of smeared out probability distributions here, but we don't really know what capabilities will be unlocked as you scale up even the current architectures one more order of magnitude like GPT-5-level or GPT-6-level. It might be that, just as the previous steps from GPT-2 to GPT-3 and 3 to 4 sort of unlocked almost qualitatively new capabilities, the same might hold as we keep going up this ladder of just scaling up the current architectures, and so we are now in a condition where it could happen at any time, basically. It doesn't mean it will happen very soon, but we can't be confident that it won't.I do think it is slightly easier for people maybe now, even just with looking at the current AI systems, we have to take these questions seriously, and I think it will become a lot easier as the penny starts to drop that we're about to see this big transition to the machine intelligence era. The previous book, Superintelligence, back in 2014 when that was published—and it was in the works for six years prior—at that time, what was completely outside the Overton window was even the idea that one day we would have machine superintelligence, and, in particular, the idea that there would then be an alignment problem, a technical difficulty of steering these superintelligent intellects so that they would actually do what we want. It was completely neglected by academia. People thought, that’s just science fiction or idle futurism. There were maybe a handful of people on the internet who were starting to think about that. In the intervening 10 years, that has changed, and so now all the frontier AI labs have research teams specifically trying to work on scalable methods for AI alignment, and it's much more widely recognized over the last couple of years that this will be a transformative thing. You have statements coming out from leading policy makers from the White House, the UK had this global summit on AI, and so this alignment problem and the risks related to AI have sort of entered the Overton window, and I think some of these other issues as to what the world will look like if we succeed, similarly, will have to come inside the Overton window, and probably will do so over the next few years.So we have an Overton window, we have this technological advance with machine intelligence. Are you as confident about one of the other pillars of your thought experiment, which is an equally, what might seem science-futuristic advance in our ability to edit ourselves, to modify ourselves and our brains and our emotions. That seems to hand-in-hand with the thought experiment.I think once we develop machine superintelligence, then we will soon thereafter have tremendous advances in other technological areas as well because we would then not be restricted to humans trying to develop new technologies with our biological brains. But this research and development would be done by superintelligences on digital timescales rather than biological timescales. So the transition to superintelligence would, I think, mean a kind of telescoping of the future.So there are all these technologies we can see are, in principle, possible. They don't violate the law of physics. In the fullness of time, probably human civilization would reach them if we had 10,000 years to work on it, all these science fiction like space colonies, or cures for aging, or perfect virtual reality uploading into computers, we could see how we might eventually . . . They're unrealistic given the current state of technology, but there's no (in principle) barriers, so we could imagine developing those if we had thousands of years to work on them. But all those technologies might become available quite soon after you have superintelligence doing the research and development. So I think we will then start to approximate the condition of technological maturity, like a condition where we have already developed most of those general purpose technologies that are physically possible, and for which there exists some in principally feasible pathway from where we are now to developing them. The plausibility of a solved world (12:53)I know one criticism of the book is, with this notion of a “solved world” or technological maturity, that the combinatorial nature of ideas would allow for almost an unlimited number of new possibilities, so in no way could we reach maturity or a technologically solved state of things. Is that a valid criticism?Well, it is a hypothesis you could entertain that there is an infinite number of ever-higher levels of technological capability such that you'd never be able to reach or even approximate any maximum. I think it's more likely that there will eventually be diminishing returns. You will eventually have figured out the best way to do most of the general things that need doing: communicating information, processing information, processing raw materials, creating various physical structures, et cetera, et cetera. That happens to be my best guess, but in any case, you could bracket that, we could at least establish lower bounds on the kinds of technological capabilities that an advanced civilization with superintelligence would be able to develop, and we can list out a number of those technologies. Maybe it would be able to do more than that, but at least it would be able to do various things that we can already sort of see and outline how you could do, it's just we can't quite put all the pieces together and carry it out yet.And the book lists a bunch of these affordances that a technologically mature civilization would at least have, even if maybe there would be further things we haven't even dreamt of yet. And already that set of technological capabilities would be enough to radically transform the human condition, and indeed to present us with some of these basic philosophical challenges of how to live well in this world where we wouldn't only have a huge amount of control over the external reality, we wouldn't only be able to automate human labor across almost all domains, but we would also, as you alluded to earlier, have unprecedented levels of control over ourselves or our biological organism and our minds using various forms of bio technologies or newer technologies.In this kind of scenario, is the purpose of our machines to solve our problems, or, not give us problems, but give us challenges, give us things to do?It then comes down to questions about value. If we had all of these capabilities to achieve various types of worlds, which one would we actually want? And I think there are layers to this onion, different levels of depth at which one can approach and think about this problem. At the outermost layer you have the idea that, well, we will have increased automation as a result of advances in AI and robotics, and so there will be some humans who become unemployed as a result. At the most superficial layer of analysis, you would then think, “Well some jobs become unnecessary, so you need to maybe retrain workers to move to other areas where there is continued demand for human labor. Maybe they need some support whilst they're retraining and stuff like that.”So then you take it a step further, like you peel off another layer of the onion and you realize that, well, if AI truly succeeds, if you have artificial general intelligence, then it's really not just some areas of human economic contribution that gets affected, but all areas, with a few exceptions that we can return to. But AIs could do everything that we can do, and do it better, and cheaper, and more efficiently. And you could say that the goal of AI is full unemployment. The goal is not just to automate a few particular tasks, but to develop a technology that allows us to automate all tasks. That's kind of what AI has always been about; it's not succeeded yet, but that's the goal, and we are seemingly moving closer to that. And so, with the asterisk here that there are a few exceptions that we can zoom in on, you would then get a kind of post-work condition where there would be no need for human labor at all.My baseline—I think this is a reasonable baseline—is that the history of technology is a history of both automating things, but then creating new things for us to do. So I think if you ask just about any economist, they will say that that should be our guide for the future: that this exact same technology will think of new things for people to do, that we, at least up to this point, have shown infinite creativity in creating new things to do, and whether you want to call those “work,” there's certainly things for us to do, so boredom should not be an issue.So there's a further question of whether there is anything for us to do, but if we just look at the work part first, are there ways for humans to engage in economically productive labor? And, so far, what has been the case is that various specific tasks have been automated, and so instead of having people digging ditches using their muscles, we can have bulldozers digging ditches, and you could have one guy driving the bulldozer and do the work of 50 people with a shovel or something. And so human labor is kind of just moving out of the areas where you can automate it and into other areas where we haven't yet been able to automate it. But if AIs are able to do all the things that we can do, then that would be no further place, it would look like, at least at first sight, for human workers to move into. The exceptions to this, I think, are cases were the consumer cares not just about the product, but about how the productThey want that human element.You could have consumers with just a raw preference that a particular task was performed by humans or a particular product—just as now sometimes consumers play a little premium sometimes if a little gadget was produ…

    Full show notes at the publisher

    🤖 My chat (+transcript) with tech policy analyst Adam Thierer on regulating AI May 30, 2024
    Show notes

    While AI doomers proselytize their catastrophic message, many politicians are recognizing that the loss of America’s competitive edge poses a much more real threat than the supposed “existential risk” of AI. Today on Faster, Please!—The Podcast, I talk with Adam Thierer about the current state of the AI policy landscape and the accompanying fierce regulatory debate.Thierer is a senior fellow at the R Street Institute, where he promotes greater freedom for innovation and entrepreneurship. Prior to R Street, he worked as a senior fellow at the Mercatus Center at George Mason University, president of the Progress and Freedom Foundation, and at the Adam Smith Institute, Heritage Foundation, and Cato Institute.In This Episode* A changing approach (1:09)* The global AI race (7:26)* The political economy of AI (10:24)* Regulatory risk (16:10)* AI policy under Trump (22:29)Below is a lightly edited transcript of our conversationA changing approach (1:09)Pethokoukis: Let's start out with just trying to figure out the state of play when it comes to AI regulation. Now I remember we had people calling for the AI Pause, and then we had a Biden executive order. They're passing some sort of act in Europe on AI, and now recently a senate working group in AI put out a list of guidelines or recommendations on AI. Given where we started, which was “shut it down,” to where we're at now, has that path been what you might've expected, given where we were when we were at full panic?Thierer: No, I think we've moved into a better place, I think. Let's look back just one year ago this week: In the Senate Judiciary Committee, there was a hearing where Sam Altman of OpenAI testified along with Gary Marcus, who's a well-known AI worrywart, and the lawmakers were falling all over themselves to praise Sam and Gary for basically calling for a variety of really extreme forms of AI regulation and controls, including not just national but international regulatory bodies, new general purpose licensing systems for AI, a variety of different types of liability schemes, transparency mandates, disclosure as so-called “AI nutritional labels,” I could go on down the list of all the types of regulations that were being proposed that day. And of course this followed, as you said, Jim, a call for an AI Pause, without any details about exactly how that would work, but it got a lot of signatories, including people like Elon Musk, which is very strange considering he was at the same time deploying one of the biggest AI systems in history. But enough about Elon.The bottom line is that those were dark days, and I think the tenor of the debate and the proposals on the table today, one year after that hearing, have improved significantly. That's the good news. The bad news is that there's still a lot of problematic regulatory proposals percolating throughout the United States. As of this morning, as we're taping the show, we are looking at 738 different AI bills pending in the United States according to multistate.ai, an AI tracking service. One hundred and—I think—eleven of those are federal bills. The vast majority of it is state. But that count does not include all of the municipal regulatory proposals that are pending for AI systems, including some that have already passed in cities like New York City that already has a very important AI regulation governing algorithmic hiring practices. So the bottom line, Jim, is it's the best of times, it's the worst of times. Things have both gotten better and worse.Well—just because the most recent thing that happened—I know with this the senate working group, and they were having all kinds of technologists and economists come in and testify. So that report, is it really calling for anything specific to happen? What's in there other than just kicking it back to all the committees? If you just read that report, what does it want to happen?A crucial thing about this report, and let's be clear what this is, because it was an important report because senator Senate Majority Leader Chuck Schumer was in charge of this, along with a bipartisan group of other major senators, and this started the idea of, so-called “AI insight forums” last year, and it seemed to be pulling some authority away from committees and taking it to the highest levels of the Senate to say, “Hey, we're going to dictate AI policy and we're really scared.” And so that did not look good. I think in the process, just politically speaking—That, in itself, is a good example. That really represents the level of concern that was going around, that we need to do something different and special to address this existential risk.And this was the leader of the Senate doing it and taking away power, in theory, from his committee members—which did not go over well with said committee members, I should add. And so a whole bunch of hearings took place, but they were not really formal hearings, they were just these AI insight forum working groups where a lot of people sat around and said the same things they always say on a daily basis, and positive and negatives of AI. And the bottom line is, just last week, a report came out from this AI senate bipartisan AI working group that was important because, again, it did not adopt the recommendations that were on the table a year ago when the process got started last June. It did not have overarching general-purpose licensing of artificial intelligence, no new call for a brand new Federal Computer Commission for America, no sweeping calls for liability schemes like some senators want, or other sorts of mandates.Instead, it recommended a variety of more generic policy reforms and then kicked a lot of the authority back to those committee members to say, “You fill out the details, for better for worse.” And it also included a lot of spending. One thing that seemingly everybody agrees on in this debate is that, well, the government should spend a lot more money and so another $30 billion was on the table of sort of high-tech pork for AI-related stuff, but it really did signal a pretty important shift in approach, enough that it agitated the groups on the more pro-regulatory side of this debate who said, “Oh, this isn't enough! We were expecting Schumer to go for broke and swing for the fences with really aggressive regulation, and he's really let us down!” To which I can only say, “Well, thank God he did,” because we're in a better place right now because we're taking a more wait-and-see approach on at least some of these issues.A big, big part of the change in this narrative is an acknowledgement of what I like to call the realpolitik of AI policy and specifically the realpolitik of geopoliticsThe global AI race (7:26)I'm going to ask you in a minute what stuff in those recommendations worries you, but before I do, what happened? How did we get from where we were a year ago to where we've landed today?A big, big part of the change in this narrative is an acknowledgement of what I like to call the realpolitik of AI policy and specifically the realpolitik of geopolitics. We face major adversaries, but specifically China, who has said in documents that the CCP [Chinese Communist Party] has published that they want to be the global leader in algorithmic and computational technologies by 2030, and they're spending a lot of money putting a lot of state resources into it. Now, I don't necessarily believe that means they're going to automatically win, of course, but they're taking it seriously. But it's not just China. We have seen in the past year massive state investments and important innovations take place across the globe.I'm always reminding people that people talk a big game about America's foundational models are large scale systems, including things like Meta’s Llama, which was the biggest open source system in the world a year ago, and then two months after Meta launched Llama, their open source platform, the government of the UAE came out with Falcon 180B, an open source AI model that was two-and-a-half times larger than Facebook's model. That meant America's AI supremacy and open source foundational models lasted for two months. And that's not China, that's the government of the UAE, which has piled massive resources into being a global leader in computation. Meanwhile, China's launched their biggest super—I'm sorry, Russia's launched their biggest supercomputer system ever; you've got Europe applying a lot of resources into it, and so on and so forth. A lot of folks in the Senate have come to realize that problem is real: that if we shoot ourselves in the foot as a nation, they could race ahead and gain competitive advantage in geopolitical strategic advantages over the United States if it hobbles our technology base. I think that's the first fundamental thing that's changed.I think the other thing that changed, Jim, is just a little bit of existential-risk exhaustion. The rhetoric in this debate, as you've written about eloquently in your columns, has just been crazy. I mean, I've never really seen anything like it in all the years we've been covering technology and economic policy. You and I have both written, this is really an unprecedented level of hysteria. And I think, at some point, the Chicken-Littleism just got to be too much, and I think some saner minds prevailed and said, “Okay, well wait a minute. We don't really need to pause the entire history of computation to address these hypothetical worst-case scenarios. Maybe there's a better plan than that.” And so we're starting to pull back from the abyss, if you will, a little bit, and the adults are reentering the conversation—a little bit, at least. So I think those are the two things that really changed more, although there were other things, but those were two big ones.The political economy of AI (10:24)To what extent do you think we saw the retreat from the more apocalyptic thinking—how much that was due from what businesses were saying, venture capitalists, maybe other tech . . . ? What do you think were the key voices Congress started listening to a little bit more?That's a great question. The political economy of AI policy and tech policy is something that is terrifically interesting to me. There are so many players and voices involved in AI policy because AI is the most important general-purpose technology of our time, and as a widespread broad base—Do you have any doubt about that? (Let me cut you off.) Do you have any doubt about that?I don't. I think it's unambiguous, and we live in a world of “combinatorial innovation,” as Hal Varian calls it, where technologies build on top of the other, one after another, but the thing is they all lead to greater computational capacity, and therefore, algorithmic and machine learning systems come out of those—if we allow it. And the state of data science in this country has gotten to the point where it's so sophisticated because of our rich base of diverse types of digital technologies and computational technologies that finally we're going to break out of the endless cycle of AI booms and busts, and springs and winters, and we're going to have a summer. I think we're having it right now. And so that is going to come to affect every single segment and sector of our economy, including the government itself. I think industry has been very, very scrambled and sort of atomistic in their approach to AI policy, and some of them have been downright opportunistic, trying to throw each other’s competitors under the busNow let me let you go return to the political economy, what I was asking you about, what were the voices, sorry, but I wanted to get that in there.Well, I think there are so many voices, I can't name them all today, obviously, but obviously we're going to start with one that's a quiet voice behind the scenes, but a huge one, which is, I think, the National Security community. I think clearly going back to our point about China and geopolitical security, I think a lot of people behind the scenes who care about these issues, including people in the Pentagon, I think they had conversations with certain members of Congress and said, “You know what? China exists. And if we're shooting ourselves in the foot, we begin this race for geopolitical strategic supremacy in an important new general-purpose technology arena, we're really hurting our underlying security as a nation. I think that that thinking is there. So that's an important voice.Secondly, I think industry has been very, very scrambled and sort of atomistic in their approach to AI policy, and some of them have been downright opportunistic, trying to throw each other’s competitors under the bus, unfortunately, and that includes OpenAI trying to screw over other companies and technologies, which is dangerous, but the bottom line is: More and more of them are coming to realize, as they saw the actual details of regulation and thinking through the compliance costs, that “Hell no, we won't go, we're not going to do that. We need a better approach.” And it was always easier in the old days to respond to the existential risk route, like, “Oh yeah, sure, regulation is fine, we'll go along with it!” But then when you see the devilish details, you think twice and you realize, “This will completely undermine our competitive advantage in the space as a company or our investment or whatever else.” All you need to do is look at Exhibit A, which is Europe, and say, if you always run with worst-case scenario thinking and Chicken-Littleism is the basis of your technology policy, guess what? People respond to incentives and they flee.Hatred of big tech is like the one great bipartisan, unifying theme of this Congress, if anything. But at the end of the day, I think everyone is thankful that those companies are headquartered in the United States and not Beijing, Brussels, or anywhere else. It’s interesting, the national security aspect, my little amateurish thought experiment would be, what would be our reaction, and what would be the reaction in Washington if, in November, 2022, instead of it being a company, an American company with a big investment from another American company having rolled out ChatGPT, what if it would've been Tencent, or Alibaba, or some other Chinese company that had rolled this out, something that's obviously a leap forward, and they had been ahead, even if they said, “Oh, we're two or three years ahead of America,” it would've been bigger than Sputnik, I think.People are probably tired of hearing about AI—hopefully not, I hope they'll also listen to this podcast—but that would all we would be talking about. We wouldn’t be talking about job loss, and we wouldn't be talking about ‘The Terminator,’ we'd be talking about the pure geopolitical terms that the US has suffered a massive, massive defeat here and who's to blame? What are we going to do? And anybody at that moment who would've said, “We need to launch cruise missile strikes on our own data centers” for fear. . . I mean! And I think you're right, the national security component, extremely important here.In fact, I stole your little line about “Sputnik moment,” Jim, when I testified in front of the House Oversight Committee last month and I said, “Look, it would've been a true ‘Sputnik moment,’ and instead it's those other countries that are left having the Sputnik moment, right? They're wondering, ‘How is it that, once again, the United States has gotten out ahead on digital and computational-based technologies?’” But thank God we did! And as I pointed out in the committee room that day, there's a lot of people w…

    Full show notes at the publisher

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