Marc Andreessen is (mostly) wrong this time

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I would be surprised if Andreessen’s highly educated audience actually believed the mass of labor fallacy, but he goes ahead and dismantles it anyway, introducing, as if new to his readers, the concept of productivity growth. He argues that when technology makes companies more productive, they pass the savings on to their customers in the form of lower prices, which leaves people with more money to buy more things, which increases demand, which increases demand. production, in a beautiful self-sustaining. virtuous circle of growth. Better still, because technology makes workers more productive, their employers pay them more, so they have even more to spend, so growth doubles.

There are many things wrong with this argument. When companies become more productive, they don’t pass the savings on to customers unless compelled to do so by competition or regulation. Competition and regulation are weak in many places and many industries, especially where companies are becoming larger and more dominant – think big box stores in cities where local stores are closing. (Not that Andreessen is unaware of this. His “Time to Build” message runs counter to “forces that hold back market-based competition,” such as oligopolies and regulatory capture.)

Also, large companies are more likely to have the technical resources to implement AI and see significant benefit from doing so, compared to smaller ones. After all, AI is most useful when there are large amounts of data to process. So AI can even reduce competition and make business owners who use it richer without driving down prices for their customers.

So while technology can do companies more productive, it only sometimes makes the individual workers more productive (the so-called marginal productivity). Other times, it only allows companies to automate some of the work and employ fewer people. The book by Daron Acemoglu and Simon Johnson Power and Progressa lengthy but invaluable guide to understanding exactly how technology has historically affected jobs, calls this “regular automation.”

For example, take supermarket self-checkout kiosks. They don’t make the other checkout staff more productive, nor do they help the supermarket get more shoppers or sell more products. They just allow you to drop some of the staff. Many technological advances can improve marginal productivity, but, the book argues, whether do it depends on how companies decide to implement them. Some uses enhance the abilities of workers; others, like regular automation, just improve the overall bottom line. And a company usually opts for the former only if its workers, or the law, force it to. (Hear Acemoglu talks about this with me on our podcast have a good future.)

The real concern about AI and jobs, which Andreessen completely ignores, is that while many people will lose their jobs quickly, new types of jobs, in new industries and markets created by AI, will take longer to emerge, and thus For many workers, retraining will be difficult or out of reach. And this has also happened with all major technological changes to date.

When the rich get richer

Another thing Andreessen would like you to believe is that AI will not lead to “crippling inequality.” Again, this is something of a straw man: inequality doesn’t have to be crippling to be worse than it is today. Interestingly, Andreessen shoots down his own argument a bit here. He says that technology does not lead to inequality because the inventor of a technology has an incentive to make it accessible to as many people as possible. As the “classic example,” he cites Elon Musk’s scheme to turn Teslas from a luxury brand into a mass-market car, which, he notes, made Musk “the richest man in the world.”

Yet while Musk became the world’s richest man by bringing Tesla to the masses, and many other technologies have gone mainstream as well, the last 30 years have seen a slow but steady climb on income inequality in the US In some ways, this doesn’t seem like an argument against technology fueling inequality.

the good things

Now we come to the sensible things in Andreessen’s work. Andreessen is right when he dismisses the idea that a super-intelligent AI will destroy humanity. He identifies this as the latest iteration of a long-running cultural meme about human creations gone mad (Prometheus, the golem, Frankenstein), noting that the idea that AI could even decide killing us all is a “category error” – it assumes the AI ​​has a will of its own. Rather, he says, AI “is mathematical code, computers, built by people, owned by people, used by people, controlled by people.”

This is absolutely true, a welcome antidote to the doomsday warnings of the likes of Eliezer Yudkowsky—and totally disagree with Andreessen’s aforementioned claim that giving everyone an “AI trainer” will automatically make the world better. As I’ve already said: if people build, own, use, and control AI, they’ll do exactly what they want to do with it, and that could include frying the planet to a crisp.