Alex Imas: prediction

Transcript context

…Do economists have any advice for countries which are not in the AI production chain? If you’re not either producing the AI models, you’re not producing the hardware that goes into AI models, if you’re not Korea making HBM or Taiwan with the fabs or the Netherlands with ASML. India or Nigeria, what should they be doing right now? If you’re talking to Modi right now, what do you say? I think the biggest lack of resources that we have allocated in the economics profession is thinking about middle-income developing countries in the age of AI. This is something I fault myself with as well. There’s not enough people thinking about this question. There are scenarios where you get AI technology being allocated and dissipating to Nigeria and developing countries, leveling the playing field, essentially giving them a level up as far as capabilities. But there’s another world where, because they don’t have enough resources, they’re not training the models, they don’t have the hardware, and they just completely get left behind. And because of automation, we can produce commodities in developed countries now. Then we don’t even have the consumer market. That world looks pretty bad. This seems to me like an extension of the messy middle case. One of the ways in which the messy middle might only be bad in a narrow range of scenarios isn’t just that it would be easy to redistribute because the pie would be bigger, but because the interest rate would be way higher, and/or, equivalently, the price of everything except human-intrinsic goods would be falling really rapidly. They’re sort of two sides of the same coin. A little bit of savings would turn into a lot of consumption next year. Things have to go really wrong for us to just get over the threshold of capital being productive enough to automate lots of work, but not be productive enough that the interest rate is high and the price of capital-produced goods is falling a lot. Even without redistribution, a little bit of savings will save a lot of people.…

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