Innovation? A Watershed Event

As I read this morning's offering, I thought not of next week's trade or the possibility for growth next year but much further down the road.  I pondered the future for my children and my children's children.  All I have to say is I pray they stay in school. -kos

IBM's Ai project Watson “now applying for jobs at call centers, and getting them. In finance, and in law, and getting them.” - MIT’s Erik Brynjolfsson

When Growth Hits Zero

A Carter-era text called The Zero Sum ­Society, suggests a grim dystopia that emerges once economic growth hits zero point zero, at which moment to gain anything........................requires that you take it from somebody else. “Once you start to think about growth,” the Nobel laureate Robert Lucas has said, “it is hard to think about anything else.”

What if

The global economic slump that we have endured since 2008 might not merely be the consequence of the burst housing bubble, or financial entanglement and overreach, or the coming generational trauma of the retiring baby boomers, but instead a glimpse at a far broader change, the slow expiration of a historically singular event. Perhaps our fitful post-crisis recovery is no aberration. This line of thinking would make you an acolyte of a 72-year-old economist at Northwestern named Robert Gordon, and you would probably share his view that it would be crazy to expect something on the scale of the second industrial revolution to ever take place again.  (Note: for further reference see TED Talk by Robert Gordon entitled The death of innovation, the end of growth)

Economic Growth

One way to think about economic growth is as a product of human capital and technology: At moments like this, when human capital is not growing much (when the labor force is unlikely to grow, when it is not becoming more educated), all of the pressure rests on technology. For this reason, some economists who think Gordon greatly understates the potential of computers still agree that it will be hard for technology to sustain the growth rates we’ve become accustomed to. “We’re not going to get to 2.25 percent GDP growth—that’s way out on the tail,” Dale Jorgenson of Harvard told me. “There’s going to be a slowdown. It’s not a secular stagnation. It’s a change in demography.......this is a watershed event.”

The Computer Age

It sometimes take a while for humans to figure out how to use innovations, he said, and perhaps we are just now beginning to comprehend the full possibilities of computerization. We are now in the beginnings of the new machine age, an extended moment of revolution in artificial intelligence. “A child’s PlayStation,” he said, is more powerful than a military super­computer from 1996; a chess program contained on a cell phone can defeat every grandmaster.  Watson, the IBM AI project, having successfully amassed enough everyday knowledge to defeat the grand champions on Jeopardy!, was “now applying for jobs at call centers, and getting them. In finance, and in law, and getting them.

“The problem is jobs,”  Sixty-five percent of American workers,.........occupy jobs whose basic tasks can be classified as information processing. If you are trying to find a competitive advantage for people over machines, this does not bode well: “The human mind did not evolve to multiply triple-digit numbers,” he told me. The robot mind has. In other words, the long history of Marx-inflected pleas, from ­“Bartleby” through to Fight Club, that office work was dehumanizing may have been onto something. Those jobs were never really designed for the human mind. They were designed for robots. The existing robots just weren’t good enough to take them. At first.

“The grand challenge is: Can we scale them up?” Brynjolfsson said. “We haven’t seen that yet. Otherwise, employment would be going up rather than down.”  READ MORE......

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