Alex Imas: evaluation

Transcript context

…Why is it implausible that a company can save money by laying off a bunch of software engineers? And in the long run, there’s a Jevons paradox, and we can’t anticipate in advance what we’d do with more software, and surely there will be more uses. But in the short run, the effect is just that a lot of people are laid off, and they still need to figure out how they can use a million times more JavaScript tokens. Phil and I have been writing about these things, and we have mathematical models in the back of these things. We don’t have any political economy in any of our models. Andy Hall wrote a really nice blog post about the politics of AGI, and he made a really interesting observation. If there’s a 2% increase in unemployment, the political winds completely change. Unemployment has a huge effect on what happens politically. Referring to Molly’s excellent essay, I think in some ways one of the worst scenarios is a drip scenario because of the political economy piece. What you might see is people not really being unemployed en masse, but moving into sectors that pay them less money. This is what happened with phone operators between 1920 and 1940. Phone operators were completely automated, but it took 20 years, even though the technology existed. There was this drip. It wasn’t like this giant sector just disappeared. There’s a really nice QJE paper on this showing that they got reabsorbed into the economy, but at lower salaries, and they were mostly underemployed. That’s the scenario Molly was writing about, this messy middle where things aren’t a disaster. We saw with COVID that the fiscal response can move quickly if there’s an emergency. An emergency is a quick uptick in unemployment, which could even look like 2-3%. That becomes a national emergency if it happens fast. The concern is that whatever you’re saving on those white-collar workers, if that’s not growing the economy but just creating saved resources that can be allocated elsewhere, is that enough to do a broad-based redistribution scheme? You have the money you’ve saved off a couple of people. Unless you can figure out exactly how to get it to them specifically, you have the problem of, “Can I do a UBI off the money I saved by laying off…?”…

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