Artificial intelligence can change everything, but it may not change very quickly

“Artificial intelligence (AI) is already having a significant impact on the economy and its influence is expected to grow considerably in the coming years…

In general, the effects of AI on the economy will depend on a variety of factors, including the rate of technological advancement, government policies, and the ability of workers to adapt to new technologies.

Well, now, who said that?

No one, unless we're willing to start calling big language models people.

What I did was ask ChatGPT to describe the economic effects of artificial intelligence;

Microsoft founder Bill Gates.

REUTERS/Julia Nikhinson/File Photo

that's just an excerpt.

Many of us who have played with large language models—much talked about under the rubric of artificial intelligence—have been struck by how much they manage to sound like people.

And it is very likely that in time they or their descendants will take over many of the tasks that humans now perform.

Like previous technological leaps, this will make the economy more productive, but it is also likely to hurt some workers with skills that have fallen in value.

What will be the magnitude of these effects?

And how quickly will they occur?

As for the first question, no one knows for sure.

Predictions about the economic impact of technology are notorious for being unreliable.

As for the second, history suggests that the big economic effects of AI

than many expect.

Consider the effects of previous advances in computing.

Gordon Moore,

one of the founders of Intel, the company that introduced the microprocessor in 1971, predicted that the number of transistors on a computer chip would double every two years, a prediction that was astonishingly accurate for half a century.

The consequences of Moore's Law are all around us, especially in the smartphones that almost everyone carries with them today.

However, for a long time, to the surprise of many, the economic benefits of this staggering increase in computing power were elusive.

For at least two decades after Moore's Law began to take effect, the United States, far from experiencing a productivity boom, suffered a

.

The boom didn't come until the 1990s and even then it was a bit disappointing.

Why did a huge and prolonged increase in computing power take so long to pay off for the economy?

In 1990, economic historian

published one of my favorite economics articles, "

In

it he drew a parallel between the effects of information technology and those of an earlier technological revolution,

As David noted, the availability of electric motors became widespread in the 1890s.

However, it is not enough to have a technology.

You also have to

To get the most out of electrification, manufacturers had to rethink factory layouts.

Pre-electrification factories were multi-story buildings with cramped workspaces, because that was necessary to make efficient use of a basement steam engine that drove the machines through a system of rods, gears, and pulleys.

It took a long time for them to realize that if each machine ran its own motor, it was possible to have huge single-story factories with wide aisles that facilitated the movement of materials and assembly lines.

As a result, the large productivity gains from electrification did not materialize until after World War I.

Unsurprisingly and essentially predicted by David, the economic benefits of information technology finally kicked in in the 1990s, as file clerks and dictation-taking secretaries gave way to cubicle farms.

The delay in these economic benefits even ended up being similar to the delay in the benefits of electrification.

However, this story continues to present some enigmas.

One is why the first IT productivity boom (perhaps there's another one close, if the enthusiasm for chatbots is warranted) was so short-lived;

in essence, it only lasted for about a decade.

And even while it lasted, productivity growth during the IT boom was no higher than it was during the generation-long boom after World War II, which was remarkable because it didn't seem like no radically new technology will drive it.

The big boom from the 1940s to the 1970s seems to have been largely based on the use of technologies, such as the internal combustion engine, that had been around for decades, which should make us even more skeptical about try to use recent technological developments to predict economic growth.

This is not to say that artificial intelligence is not going to have huge economic impacts.

However, history suggests they won't happen fast.

ChatGPT and what comes after it is likely to be an economic story for the 2030s, not the next few years.

c.2023 The New York Times Company

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