Abstract

Eli Dourado presents the case for scepticism that AI will be economically transformative near term^[1].

For a summary and or exploration of implications, skip to "My Take".

Introduction

Fool me once. In 1987, Robert Solow quipped, “You can see the computer age everywhere but in the productivity statistics.” Incredibly, this observation happened before the introduction of the commercial Internet and smartphones, and yet it holds to this day. Despite a brief spasm of total factor productivity growth from 1995 to 2005 (arguably due to the economic opening of China, not to digital technology), growth since then has been dismal. In productivity terms, for the United States, the smartphone era has been the most economically stagnant period of the last century. In some European countries, total factor productivity is actually declining.

Eli's Thesis

In particular, he advances the following sectors as areas AI will fail to revolutionise:

Housing
- Most housing challenges are due to land use policy specifically
  - Housing factors through virtually all sectors of the economy
- He points out that the internet did not break up the real estate agent cartel (despite his initial expectations to the contrary)
Energy
- Regulatory hurdles to deployment
- There are AI optimisation opportunities elsewhere in the energy pipeline, but the regulatory hurdles could bottleneck the economic productivity gains
Transportation
- The issues with US transportation infrastructure have little to do with technology and are more regulatory in nature
- As for energy, there are optimisation opportunities for digital tools, but the non-digital issues will be the bottleneck
Health
- > The biggest gain from AI in medicine would be if it could help us get drugs to market at lower cost. The cost of clinical trials is out of control—up from $10,000 per patient to $500,000 per patient, according to STAT. The majority of this increase is due to industry dysfunction.
Synthesis:

I’ll stop there. OK, so that’s only four industries, but they are big ones. They are industries whose biggest bottlenecks weren’t addressed by computers, the Internet, and mobile devices. That is why broad-based economic stagnation has occurred in spite of impressive gains in IT.
If we don’t improve land use regulation, or remove the obstacles to deploying energy and transportation projects, or make clinical trials more cost-effective—if we don’t do the gr

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