Thursday, April 18, 2019

Technology as a Substitute for (All Kinds of) Labor

Most economists don't expect automation to cause mass unemployment. Their argument is that, just as it has done for the last few hundred years, technology will replace some jobs but will create even more.

I find that conclusion counterintuitive and unsatisfying for lots of reasons, many of which I hope to share on this blog in the future. But in the mean time, here are two interesting items recently in the news.

First, Google's AI company DeepMind, after conquering the games of Go, Chess, Shogi, and StarCraft II, and in fact basically declaring victory in all two-player perfect information games, recently won a protein folding competition. If you still think that technology will only replace people in low-skilled jobs, think again.

This talk by DeepMind cofounder and CEO Demis Hassabis is fascinating. (Skip to 51:27 for the discussion about AlphaFold.)

Second, economists Daron Acemoglu and Pascual Restrepo just published a short paper titled The Wrong Kind of AI? Artificial Intelligence and the Future of Labor Demand that seeks to answer the question, "If automation tends to reduce the labor share and has mixed effects on labor demand, why did the labor share remain roughly constant and productivity growth go hand-in-hand with commensurate wage growth over the last two centuries?"

I think it's important to recognize that very recent developments like those being pioneered by DeepMind are radically changing the types of work that can be automated. When machines can learn, they are not constrained by the imaginations or aptitudes of programmers, and can quickly surpass human ability in domains we previously considered reserved for us.

It's going to be a wild ride.

Sunday, April 7, 2019

Premature Nostalgia

I haven't even finished my time at UT and I'm already starting to miss it.

I've come to understand that it's an incredible luxury to have someone who is not only an expert in his or her field but also a professional teacher teach you something you want to learn. Where else would I have the opportunity to learn about labor economics from the member of President Obama's Council of Economic Advisors responsible for delivering to him and interpreting for him the monthly jobs numbers? That's just crazy. And yet, I had that opportunity at UT last semester. (Thanks, Professor Black!)

During my economics studies, I've had some great teachers. Not just Sandy Black but also Valerie Bencivenga, Wayne Hickenbottom, Helen Schneider, Steve Trejo, Brian Trinque, and Elon Lang, among others. I'm grateful to them for teaching me all about micro, macro, statistics, econometrics, health, money and banking, labor, and drama (!). I've learned literally more than I ever wanted to know, but I'm glad I did.

I've met some really impressive students who are bound to go on to get success (hi, Akash!). I've also met some who aren't even trying, and are failing. They make me shake my head and wonder why they're even here. I recognize my 20-year-old self in them. Maybe they're bound for success too, but it will be a long, hard road.

Along the way I've developed some strong opinions about economics, which I admittedly hold with the confidence of the novice. More econometrics, less calculus. Don't be so quick to dismiss "tastes and preferences". People are not rational, no matter how elegant your graph is. Economic analysis is a reasonable place to start but is rarely if ever the final word.

But beyond just the education I've received, I appreciate the experience. Sure, it's sometimes been a little awkward to be the 40-something guy in class. But it's been a treat. Universities are environments like no other. Everyone is there to teach or to learn, or to help facilitate that. At least in theory.

The administration is mind-bogglingly complex but works very smoothly. It's a really impressive operation. And the wifi is excellent.

I'm going to miss being a UT student.