5 min read

Asking the wrong questions

Are we asking the right questions about artificial intelligence; creative destruction in the labour market; why the fuel excise tax suspension is an idea worth rejecting; and Elon Musk sat down for a sobering Q&A session.

Note: This is the final trial issue ahead of an official launch on 25 July 2022 1 August 2022 (update: the coronavirus has swept through our house so we're delaying the launch by a week).. If you have any feedback, please get in touch.

1—Asking the wrong questions

Should we be concerned about artificial intelligence (AI)? A Google engineer was so worried that the search giant's in-house model had become sentient that he thought it "ought to be equipped with an attorney to help it vindicate its rights".

"But Google did not take kindly to his thoughts on the matter, so now he’s gone."

So wrote Matthew Yglesias in a long post on AI, in which he claims that people are both underestimating AI and overrating humans in terms of their respective abilities. Yglesias' particular concern is that the standard we set for AI sentience is a bar that is also out of reach for most humans, meaning that as AI gets better "we will keep reassuring ourselves that they are not 'really' sentient and don't 'really' understand things or 'really' have desires".

But Yglesias' conclusion that by underestimating AI "we could stumble into a massive crime or an extinction-level catastrophe" is not unique to AI. In fact, any form of automation carries those risks – the recent collapse of so-called 'algorithmic stablecoin' Terra is evidence of that!

AI as it's referred to today is nothing but sophisticated pattern matching powered by linear algebra. The risk is not that AI becomes too powerful and destroys humanity of its own accord; it's that humans put far too much trust into an algorithm and destroy themselves. If anything, we're overestimating AI.

You can view Yglesias' full post here (~11 minute read).

2—While we're on AI

In terms of bullshit, surely AI is second only to crypto (sorry, Web3)? Source.

3—Creative destruction

In the US, the share of workers in farming/mining fell from about 18% in 1940 to less than 2% in 2018, and more than half of the jobs in farming/mining jobs in 2018 didn't exist in 1940. Overall "more than 60% of employment in 2018 was found in job titles that did not exist in 1940".

That's from Timothy Taylor summarising an essay by David Autor in the recently released report titled An Inclusive Future? Technology, New Dynamics, and Policy Challenges. It fits nicely with the Schumpeterian concept of creative destruction, which is the "process of industrial mutation that continuously revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one".

According to the authors, AI and how it reshapes economies remains the great unknown going forward:

"For example, one possibility is that middle-skill workers, equipped with artificial intelligence can be empowered to become more productive, while some some high-skill workers will find the value of their knowledge and expertise will be eroded. Perhaps artificial intelligence will substitute for many workers and the middle- and high-skill level, but will have a hard time substituting for low-skill personal service jobs, and thus will make those workers relatively better off. It is quite unclear what kinds of new jobs and tasks might be facilitated and encouraged in an economy with greatly improved artificial intelligence capabilities."

How countries adapt will be key to their future success.

Read Taylor's full post here (~8 minute read) or the full report here (80 pages).

4—Worth rejecting

US President Joe Biden looks set to suspend the nation's federal petrol tax in response to rising prices. In real terms (i.e. taking into account inflation), prices at the pump are still well below the entire 2011-2014 period, but there are mid-term elections coming up and the public wants something to be done, so here we are.

Economist Greg Mankiw said the idea was "worth rejecting, for three reasons":

  • It will stimulate aggregate demand, undermining the Fed's ability to control inflation.
  • Supply is relatively inelastic in the short-run, so "the tax reduction would mainly benefit producers".
  • People will drive more, worsening climate change, congestion and accidents.

For even more on why it's worth rejecting, here's a post by Scott Sumner that strikes similar chords. Sumner adds that that removing the petrol tax would help Putin, worsen climate change, increase the deficit and enrich "oil refiners at a time when supply is constrained and they are already earning extraordinary profits".

But when has a bad idea ever stopped a politician? FWIW, Australia's government halved its fuel excise tax from 30 March to 28 September 2022.

Mankiw's full post is here (it's a short <1 minute read).

5—A sober tone

Elon Musk sat down for a sobering (by his standards) Q&A session with Bloomberg's Editor-In-Chief John Micklethwait earlier this week. Some key takeaways were:

  • "A recession is inevitable at some point. As to whether there is a recession in the near term, I think that is more likely than not."
  • Concerning his Twitter takeover, "there are still a few unresolved matters. You've probably read about the question as to whether the number of fake and spam users on the system is less than 5% as Twitter claims, which I think is probably not most people's experience when using Twitter".
  • "Tesla is reducing the salaried workforce roughly 10% over the next probably three months or so... a 10% reduction in the salaried workforce is only roughly a 3%, 3.5% reduction in total headcount."
  • "I'm working with closely to have a prototype humanoid robot ready by the end of September."
  • "I am very impressed with the car companies in China and just in general with companies in China. I think they're extremely competitive, hardworking and smart... I think we'll see just a large wave of products being exported from China in many industries."

The following day a recording of Musk taken at the end of May was released, in which he went on to claim that Tesla's new factories in Berlin and Austin, Texas "are gigantic money furnaces right now. It's really like a giant roaring sound, which is the sound of money on fire... [they're] losing billions of dollars".

Tesla's share price is down over 40% this year (from lofty heights!).

Check out the full Q&A on Bloomberg ($) (~11 minute read).

6—Further reading...

🌎 The Economist published its annual city liveability index. Last year's winner, Auckland, dropped 33 places to now sit below all five Australian cities. Chinese cities all fell hard, along with "strong border" island nations that "are suffering now".

💉 Oh those Russians: A new paper by researchers at UNSW found that the efficacy numbers reported in the original Sputnik V vaccine paper displayed patterns that were, to be kind,.. improbable.

🎰 "A Liberal-lite teal approach": James Morrow took a look at the big-spending NSW state budget, noting it's "a huge gamble and involves aiming a pitch at voters who probably aren't keen to hear it, while leaving the conservative base with nowhere to go".