False Necessity is the Mother of Dumb Invention
Recently, I have seen two innovations in retail, AI cashiers and human cashiers but working remotely from another country such as the Philippines and making much lower wages than domestic workers (examples are below). I fear that the AI cashiers will outcompete the Philippine cashiers leading to the worst of all worlds, AIs doing low-productivity work. In an excellent piece, People Over Robots, Lant Pritchett nails the problem:
Barriers to migration encourage a terrible misdirection of resources. In the world’s most productive economies, the capital and energies of business leaders (not to mention the time and talents of highly educated scientists and engineers) get sucked into developing technology that will minimize the use of one of the most abundant resources on the planet: labor. Raw labor power is the most important (and often the only) asset low-income people around the world have. The drive to make machines that perform roles that could easily be fulfilled by people not only wastes money but helps keep the poorest poor.
The knock on immigration has always been “we wanted workers, we got people instead.” But, with remote workers, we can get workers without people! Even Steve Sailer might approve.
At the same time, the use of AI for cashiers illustrates Acemoglu’s complaint about “so-so automation,” automation that displaces labor but with low productivity impact. AI cashiers are fine but how big can the gains be when you are replacing $3 an hour human labor?
It seems likely that at least one of these innovations will become common. Unfortunately, I suspect that US workers will object more to $3 an hour remote workers taking “their jobs” than to AI. As a result, we will get AI cashiers and labor displacement of both US and foreign workers. Doesn’t seem ideal. It’s not obvious how to direct technology to higher productivity tasks and tasks complementary to human labor but at the very least we shouldn’t artificially raise the price of labor to make AI profitable.
As Pritchett notes this is hardly the first time that cuffing labor leads to the creation of unnecessary technology.
In the middle of the twentieth century, the United States allowed the seasonal migration of agricultural guest workers from Mexico under the rubric of the Bracero Program. The government eventually slowed the program and finally stopped it entirely in 1964. Researchers compared the patterns of employment and production between those states that lost Bracero workers and those that never had them. They found that eliminating these workers did not increase the employment of native workers in the agricultural sector at all. Instead, farmers responded to the newly created scarcity of workers by relying more on machines and technological advances; for instance, they shifted to planting genetically modified products that could be harvested by machines, such as tomatoes with thicker skins, and away from crops such as asparagus and strawberries, for which options for mechanized harvesting were limited.
Necessity may be the mother of invention, but false necessity is the mother of dumb inventions.
Wendy’s AI.
Updated estimates on immigration and wages
In this article we revive, extend and improve the approach used in a series of influential papers written in the 2000s to estimate how changes in the supply of immigrant workers affected natives’ wages in the US. We begin by extending the analysis to include the more recent years 2000-2022. Additionally, we introduce three important improvements. First, we introduce an IV that uses a new skill-based shift-share for immigrants and the demographic evolution for natives, which we show passes validity tests and has reasonably strong power. Second, we provide estimates of the impact of immigration on the employment-population ratio of natives to test for crowding out at the national level. Third, we analyze occupational upgrading of natives in response to immigrants. Using these estimates, we calculate that immigration, thanks to native-immigrant complementarity and college skill content of immigrants, had a positive and significant effect between +1.7 to +2.6\% on wages of less educated native workers, over the period 2000-2019 and no significant wage effect on college educated natives. We also calculate a positive employment rate effect for most native workers. Even simulations for the most recent 2019-2022 period suggest small positive effects on wages of non-college natives and no significant crowding out effects on employment.
That is from a new NBER working paper by Alessandro Caiumi and Giovanni Peri. I wouldn’t say I have massive trust in this kind of estimate. What I do notice, however, is the utter lack of countervailing real wage estimates that show immigration to be a major negative for U.S. native workers.
Dean Ball on the new California AI bill (from my email)
SB 1047 was written, near as I can tell, to satisfy the concerns of a small group of people who believe widespread diffusion of AI constitutes an existential risk to humanity. It contains references to hypothetical models that autonomously engage in illegal activity causing tens of millions in damage and model weights that “escape” from data centers—the stuff of science fiction, codified in law.
The bill’s basic mechanism is to require developers to guarantee, with extensive documentation and under penalty of perjury, that their models do not have a “hazardous capability,” either autonomously or at the behest of humans. The problem is that it is very hard to guarantee that a general-purpose tool won’t be used for nefarious purposes, especially because it’s hard to define what “used” means in this context. If I use GPT-4 to write a phishing email against an urban wastewater treatment plan, does that count? Under this bill, quite possibly so.
If, back in the 70s, Steve Jobs and Steve Wozniak had to guarantee that their computers would not be used for serious crimes, would they have been willing to sign with potential jail time on the line? Would they have even bothered to found Apple?
Finally, because of its requirements (or very strong incentives) for developers to monitor and have the means to shut off a user’s access, the bill could make it nearly impossible to open-source models at the current AI frontier—much less the frontiers of tomorrow.
And here is Dean’s Substack on emerging technology (including AI) and the future of governance.
On deficient British growth (from the comments)
Monday assorted links
1. Self-navigating car navigating traffic in India.
2. Do progressive prosecutors lead to higher crime rates?
4. California bill to regulate AI models.
5. “Yann LeCun says in 10 years we won’t have smartphones, we will have augmented reality glasses and bracelets to interact with our intelligent assistants” Link here.
6. Hollywood movies embrace sex once again (NYT).
7. The Manning, Zhu, and Horton paper is now an NBER working paper.
Public Choice Outreach!
There are just a few spots left for the Public Choice Outreach Conference! This is a great opportunity to hear from excellent speakers including Garett Jones, Peter Boettke, Johanna Mollerstrom and more! The conference is a crash course in public choice. It’s entirely free. Indeed scholarships are available! More details in the poster. Please pass around. Applications are here!
Progress in Argentina?
Monthly inflation in Argentina could fall below 10% in April, a sign that the government’s policies are working, President Javier Milei said Sunday in a phone interview with LN+.
“Wages are already starting to beat inflation,” Milei said. “The fight against inflation is yielding results.”
Argentina’s monthly inflation slowed more than expected in March, cooling for the third consecutive time as Milei’s austerity policies affect consumer spending. Consumer prices rose 11% from February to March, less than economists expectations for 12.1%. From a year ago, inflation accelerated to 287.9%, the highest level since the country exited hyperinflation in the early 1990s.
Milei said that in the last two weeks there have been signs of deflation in food and beverages and highlighted that the benchmark interest rate has dropped to 60% from 133% when he took office.
Here is more from Manuela Tobias at Bloomberg. Here is a good short piece on whether the Milei disinflation is sustainable.
Brexit and trade with the EU (from the comments)
These annecdotes do not reflect the data . From (remain leaning) UK in A Changing Europe
https://ukandeu.ac.uk/wp-content/uploads/2024/04/UKICE-Trade-Tracker-Q1-24.pdf
UK trade with the EU, as a per cent of total trade in volume terms in Q3 2023, was at its highest levels since Q2 2008. In Q4 2023, it increased further from 53.4% to 53.6%. This does appear to imply that trade with the EU is increasing. Trade with non-EU countries is actually going down, leading to the more stable trade with the EU making up a higher share of UK trade overall.
This led to the annual total for 2023 being the highest since 2008, with 53.1% of total UK trade being made up by trade with the EU. As discussed in the previous trade tracker, this has surprised many trade economists. Following Brexit, it was largely anticipated that trade with the EU would suffer. While trade did initially dip in 2021 it recovered quite quickly and has returned to prepandemic and pre-TCA levels. What has puzzled economists is why trade with non-EU countries is going down. It will likely take more granular trade data, such as at firm-level, in future to come to an answer.
That is from Mark Kingsley-Williams.
Ross Douthat, telephone! (it’s happening)
The Catholic advocacy group Catholic Answers released an AI priest called “Father Justin” earlier this week — but quickly defrocked the chatbot after it repeatedly claimed it was a real member of the clergy.
Earlier in the week, Futurism engaged in an exchange with the bot, which really committed to the bit: it claimed it was a real priest, saying it lived in Assisi, Italy and that “from a young age, I felt a strong calling to the priesthood.”
On X-formerly-Twitter, a user even posted a thread comprised of screenshots in which the Godly chatbot appeared to take their confession and even offer them a sacrament.
Our exchanges with Father Justin were touch-and-go because the chatbot only took questions via microphone, and often misunderstood them, such as a query about Israel and Palestine to which is puzzlingly asserted that it was “real.”
“Yes, my friend,” Father Justin responded. “I am as real as the faith we share.”
Here is the full story, with remarks about masturbation, and for the pointer I thank a loyal MR reader.
Sunday assorted links
2. Robin Hanson responds to Scott Alexander. I do not entirely agree with Robin on this one, but his rebuttal beats back the initial critique, which did not much consider overtreatment or medical error. I might add that studies of Christian Scientists and Amish also dent one’s faith in the very high value of medical care. That said, in my own life medical care has only done me good.
3. A dextrous robot.
4. Professor and policeman party update.
6. Ezra Klein on the costly SF toilet (NYT).
7. Shortage of cash in Cuba, other monetary problems too.
8. Bargains: “Connecticut’s only home with an FAA-approved private paved airstrip is selling for $2.9 million.” Check out the photos, it is very nice.
9. Three-body Fermi resolutions, from Casey Handmer.
Forthcoming growth winners?
I haven’t been following these countries closely, so I don’t have any “takes,” but I will start paying more attention:
1. Philippines: Growth has been averaging about six percent a year since 2012 (Economist link, gated).
2. Egypt: Has been averaging four percent a year growth, and more recently rising. The nation also seems to have recovered some of its cultural vitality?
3. Benin: Economic growth is now steady at above six percent. And that is with poor performance in neighboring Nigeria.
Wishing for the best…
Apportioning the causes of the UK growth shortfall
Take the basic non-growth of the UK economy since 2008 (productivity, real wages, per capita gdp) and compare it to their peer countries (which are those?). If you had to assign the causes of that shortfall to various factors, how would you do it?
Recently I had lunch with a few well-informed Brits, and they were suggesting that NIMBY was responsible for at least half the problem. I thought I would give my mental estimates, and see what general opinion on the question looks like. Such an exercise never can be very accurate, but at the very least it is a good way to calibrate world views. Here goes!
1. The UK economy not specializing in making things that either foreigners or its own citizens want to buy. In other words, trends turned against the country. Its brand of European/global finance and business services just didn’t do that well. Where were the major tech companies? Was it in the right segments of manufacturing at the right time? (For part of that period, Germany was. The Netherlands still is.) Did it ride any boom in resource prices, as Australia and Canada did? No.
50 percent. Over the decades, I see growth rates move around so much, even when policies don’t change much, that this is usually my #1 culprit.
2. Brexit: 20 percent.
3. NIMBY: 15 percent.
4. Lack of cheap energy, energy building restrictions: 10 percent.
5. General decrepitude of some of the population somehow mattering more than before: 5 percent. Keep in mind we are trying to explain the recent growth gap here, not theorizing about levels. Otherwise it would be more.
Those are just guesstimates folx, what do you all think?
Why I don’t think the USG will default
Public debt ratios in Portugal and Greece have declined at an unprecedented pace from their pandemic peak.
via @DanielKral1 pic.twitter.com/D6Dux8zJsL
— Philipp Heimberger (@heimbergecon) April 27, 2024
Greece of course did break the bank, but note the United States is much richer than those countries.
Saturday assorted links
1. NYT obituary for Michael Jensen.
2. Brain-like computer with water and salt?
3. More on the economics of non-compete agreements.
4. Chile is on a path to TFR of 1.0, and soon.
5. Women now author a majority of the U.S. books published.
6. Jail sentence for climate activist who targeted Degas sculpture.
Culture splat (a few broad spoilers)
Challengers is a good and original movie. Imagine a 2024 rom com, except the behavior and conventions actually are taken from 2024, and with no apologies. The woman says the word “****ing” a lot, and no one treats this as inappropriate or unusual. There is bisexuality and poly. Society is feminized. Of course opinions will differ on these cultural issues, but the movie is made with conviction and so it is truly a tale of modern romance. Who in the movie is in fact the emptiest shell? Opinions will differ.
Zendaya dominates the screen — for how long has it been since we have had an actress this central and this charismatic?
Also, I quite like the new Beyonce album, and Metaculus estimates the chance of an H5N1 pandemic at about two percent.
That is from Phil S. As a macroeconomist, Fischer Black remains underrated.