Forget the dot-com boom (and bubble) of the 1990s. Artificial intelligence (AI) has that surge in excitement and investment beat by a mile.
Since November 2022, when ChatGPT was introduced, the market value of AI-heavy companies like Nvidia and Microsoft has increased by 169%. "The spending spurred by that wealth, and the massive sums those companies are plowing into data centers, are why the hard data on economic growth and household finances looks pretty healthy," reports the Wall Street Journal.
So why is consumer sentiment at a near record low?
A 1995 Pew Research poll found 72% of respondents were comfortable with the new technology during the dot-com boom. Just 24% were not. Indeed, Americans embraced the internet with gusto, seeing it as a new frontier, which is something that has always excited us. Everyone had an idea for making money online.
Contrast that with the 31% of Americans who are comfortable with AI, while 68% were not. While everyone during the dot-com boom wanted in, the AI revolution is very tech-specific. It's little understood by most of us. Talk of "Large Language Models" and "transformer architecture" makes my eyes glaze over.
Along with anxiety over the cost of living, the anxiety of not knowing what impact AI will have on the workforce is what's driving the current unhappy state of mind that Americans have.
Americans have always had mixed feelings about technology. They appreciate the convenience and features while worrying about the costs: to privacy, to mental health, to social cohesion. In that sense, AI is no different from personal computers, the internet or social media.
Most people also get that tech inevitably makes some jobs obsolete. But what about a technology that could make humans obsolete? In a recent report, economists at Goldman Sachs, mapping out downside and upside scenarios to AI, say the latter means an acceleration in productivity that “eventually makes human input in knowledge-based work tasks redundant.”
And here is Yale University economist Pascual Restrepo imagining the consequences of “artificial general intelligence,” where machines can think and reason just like humans. With enough computing power, even jobs that seem intrinsically human, such as a therapist, could be done better by machines, he concludes. At that point, workers’ share of gross domestic product, currently 52%, “converges to zero, and most income eventually accrues to compute.”
"These, keep in mind, are the optimistic scenarios," claims the Journal's Greg Ip.
The problem with the doom-and-gloom scenarios is that they fail to take into account the potential actions that the government will take to forestall those dire outcomes. Does anyone really believe that Republicans and Democrats are going to allow 50% of their constituents to lose their jobs? If politicians have to break the internet to keep their constituents employed and paying taxes, they will do it.
There's also the question: Are we panicking unnecessarily?
"Relative to the investments of AI companies, actual corporate adoption has been modest, feeding suspicions of a bubble," writes Ip. No one wants to be too far out on a limb if the tree branch snaps.
Peter Atwater, a lecturer at the College of William and Mary, said that the more his students learn about AI, the less comfortable they become with it.
“AI has gone from being a useful, timesaving tool for papers and research to a threat to entry level jobs, higher utility bills, environmental concern about water and farmland turned to data farms,” Atwater said. “I suspect the reasons not to like AI will likely grow.”
There's already a ready-made political opposition to advanced AI, and it's getting bigger. A politician looking to advance their interests won't have to look very far to find an enthusiastic constituency.
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