Austan Goolsbee: belief

Transcript context

…The next 10 to 20 years. Not next year. It’s zero for next year, right? I think it could be a decent . . . I gave a speech at Stanford that was kind of about the topic. We have seen, over the last two years, a pretty remarkable surge in productivity growth, faster than the pre-COVID trend, and on the first glance, a lot of people said, “Yes, of course, it’s faster than trend because it’s going to bring us back up to the trend of where we would’ve been, and then it will slow down.” But it didn’t slow down yet. It may still, but we’re actually up above the pre-COVID trend extended to the future. There are several explanations that the economists have come up with for that, most of which are one-time explanations, like people started working hybrid or working from home, and that raised productivity by X percent. If you’re a believer in that — I know you talked to Nick Bloom. Nick Bloom — in his head, he absolutely believes that, but that’s a one-time. The labor reallocation — suddenly we had the Great Resignation, and people could reallocate to jobs that they’re better suited to. Again, one-time. Increase in the level of business dynamism. New firm creation went from whatever — 100,000 to 150,000. Mostly one-time. Only a new technology has the potential, I think, to slowly work its way through the economy, going from sector to sector. If AI is a general-purpose technology like computers, like electricity, like telephones — that sort of thing — those played out over decades. There’s work done here at Chicago Fed, looking at the industry concentration of this surge of productivity. Is it broad-based or is it concentrated in certain industries? The answer is, it’s concentrated in certain industries. Despite the skepticism of economists that AI is not big enough yet to explain, it looks to be concentrated in a bunch of tech-related, AI-intensive areas. If true, it’s entirely possible that this goes like computers, where first you saw the productivity growth in the computer production sector. Then five, ten years later, you saw a surge of productivity in the computer-using sectors. Then, after a decade or more, Walmart incorporates IT into the inventory management system. The rental car companies — people are equipped with handheld computers. They’re coming out and checking in, and checking in your car, and you get productivity that’s spread through there. Could be a high number, but so far, I think the adoption rate is not high enough to explain very big. There is a risk of over-anticipation of productivity growth that, if equity values surge and business investment surges in AI infrastructure-type capital investment on the anticipation of the bounty that is to come, I think there’s a high danger that you encounter the over-capacity, the capacity constraint problem that we always face in the short run when you get a surge in demand. Or if wealth effect leads to a big increase in consumption here and now based on these high equity valuations, again, you can get overheating if you’re not careful. On 01 Pro If I gave, say, a 50-question quiz to new assistant professors at top-20 departments, and I gave the same quiz to o1 Pro, how many of the professors do you think could beat o1 Pro?…

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