In the @FT today, I argue that if AI is just another productivity tool, the productivity gains will be limited. For lasting economic expansion, AI must catalyze new industries and initiatives. "Had the 19th century focused solely on better looms and ploughs, we would enjoy cheap cloth and abundant grain — but there would be no antibiotics, jet engines or rockets. Economic miracles stem from discovery, not repeating tasks at greater speed."

And what is Europe doing to attract them?

My latest in the @FT today. I make four points: 1) Capitalism's great achievement was moving activity out of the household and into the market — turning domestic production into paid specialisation, creating jobs, and making output visible to the national accounts. AI-enabled self-service might quietly reverse that centuries-long trend. 2) When a technology automates tasks within a service, it can trigger a Jevons paradox: the service gets cheaper, demand expands, and employment grows. When it lets people do the work themselves, demand for the service collapses. 3) AI extends this even to the manual trades, the supposed safe haven of the AI age. If a homeowner can ask a chatbot why their boiler keeps losing pressure, heating engineers lose call-outs. 4) When work shifts to the consumer, it vanishes from the economy statisticians measure. Replace a billing department with a chatbot and a firm records lower costs and higher output per worker; the national accounts register a productivity gain. But the hours patients spend decoding their own test results appear nowhere — not in labour statistics, not in GDP. As self-service spreads into professional domains, that blind spot will grow.

AI is advancing at breakneck speed. So why is productivity growth still stagnating? 🎧 Listen to the latest episode of World in 30 Minutes with @carlbfrey as he explains that technological breakthroughs alone are not enough, and describes the role institutions and politics play. bit.ly/3QCMi9F

Thank you for featuring our work on the economics of AGI @carlbfrey @FT 🙏 w/@wu_jane @xianghui90

This is a great graph. The point is not time. The x axis is gdp per capita. The point is that growth does benefit all. The idea growth only benefits the rich is dramatically false. timely given Stieglitz, Pketty et al recent degrowth noise.

My latest in the @FT on how AI may usher a self-service economy

You read it as safety-motivated, I read it as a call for cartel. We are not the same

🎧 New #podcast: As everyone talks about the speed of AI, what if the bigger story is that productivity and innovation are slowing down? Mark Leonard speaks with @carlbfrey, author of How Progress Ends, about why technological progress is neither inevitable nor guaranteed. bit.ly/3QCMi9F

Competition is the only protection anyone has ever had against concentrated power. Anthropic's valuation only works if open weights get banned by law. Their safety case and their business case are the same case. We have four options: -Anthropic ruling the world as a monopolist (or a duopolist) is catastrophic. We are having the first inklings of that with Fable release. - The US government controlling the world by controlling the model releases (on the table right now): even worse. They will weaponize it and blackmail the hell out of everyone. - The world government solution is cute, but not going to happen. - So competition, with the open weights only a few months behind, is the only thing protecting us in the rest of the world. Models will need some regulation, like cars or planes do. As a European, the first two options scare me more than the technology does. OpenAI has not been making these ridiculous Effective Altruist noises, they have quietly released models which are on the whole superior to Anthropic's in my view and there have been no risk to the world. I think Anthropic protests too much.

Activity is not productivity. Many signs of a surge in knowledge work output post chat GPT, but no signs of any meaningful increase in the real sales per worker at the economy wide level.

I'm a huge fan of @JimPethokoukis work, and his most recent article sums up my take (though in a more erudite fashion than I could do). AI is advancing really, really quickly. But, it takes time (sometimes a really long time) for firms to adopt and implement AI.

I don't know what Piketty, Stiglitz, and co. are smoking. Global poverty rates have never been lower. Progress on basic global health and wellbeing measures has been amazing over the past few decades. "End of the road"?!? Come again!?! theguardian.com/commentisfre…

Best evidence I’ve seen so far that inflation was a major electoral driver in 2024

AI pessimism seems more pervasive in rich countries. Two possible reasons: AI makes knowledge work easier to offshore to where labor is cheaper —fewer accountants in London, more in Manila. In poorer countries, AI may expand access to services people lacked before (e.g. doctors)

I am still skeptical the smartphone explains much of recent drop in fertility. It may have contributed at the margin to the secular decline but the severe recession is a much more plausible explanation of the abrupt drop in 2008, coincidentally a year after iPhone was introduced.

Much enjoyed this session organized by .@ChathamHouse. Many insights on #AI and its implications for companies, people, and global economy. Huge thanks to panel speakers: .@carlbfrey, Baroness Minouche Shafik, Blake Lweit & moderator @MyStephanomics youtube.com/live/LYPxcDUnxog…

#AI #Work & the #Future of #Global #Competitiveness @UniofOxford Future of Work Director Dr. @carlbfrey @bloomberg Stephanie Flanders @MyStephanomics @LinkedIn Chief Global Affairs & Legal Officer Blake Lawit Chief Economic Adviser to UK PM Baroness Minouche Shafik @ChathamHouse

I really loved this article. A one-time increase in per capita growth from 2% to 2.1% for a single year, then dropping back to 2%, would permanently raises the level of GDP per capita - and because that small gain recurs and compounds every year afterward across the population, it would add up to roughly a trillion dollars in cumulative value. abundanceandgrowth.org/p/a-l… When people talk about pausing AI development, I can't help but think about the enormous cumulative value that would get lost over time, the higher rates of absolute poverty that would persist across the world, and the needless deaths from delayed medical advances. There may be worlds where some version of this is something to consider, but the evidentiary bar for delaying technological development should obviously be pretty high.

Let me get this straight. Climate change will lower GDP by 5% 100 years from now. So the answer is, lower GDP even more now?

This is a pretty striking shift toward Chinese models by American AI startups since the start of the year. substack.com/@profgmarkets/p…