Very absurd notion given that most economists recognize personal computers and the internet have barely impacted labor productivity and global GDP outside of consumption spending
Embedded and industrial computing however have had a profound impact
Embedded and industrial computing however have had a profound impact
Could real GDP. Maybe...? I mean people need to dive into the details. How many products/services can be sold...? its not infinite dont be stupid.
Its easy talking about this stuff at a high-level, when you start going into the details you begin to get very uncomfortable. The math right now, simply does not math!
Firms will not wait forever to see what the value of frontier AI is - these scare tactics are wearing off.
Only that three quarters of the world economy [1]? (The only other component on a global scale is investment.)
Also, the claim is bullshit. Solow said his famous bit about seeing computers everywhere but in national productivity statistics in 1987. Yet the 1990s saw that growth [2]. We saw the paradox again in the 2010s [3]. (Total factor productivity grew 0.8% annually 2000 to 2007, 0.1% '11 to '19 and then roared back to 0.7% and 0.6% in 2024 and 2025, respectively [4].)
There are good arguments against AI increasing productivity to the point that it becomes revenue generating to AI in the near term. Mis-stating the Solow paradox is not one of them.
[1] https://data.worldbank.org/indicator/NE.CON.TOTL.ZS?end=2025...
[2] https://direct.mit.edu/rest/article-abstract/85/4/793/57428/...
[3] https://en.wikipedia.org/wiki/Productivity_paradox
[4] https://www.conference-board.org/pdf_free/TED-SummaryTables-...
Robert Gordon pointed out that the 90s productivity gains attributable to IT where overwhelmingly attributable to the manufacturing of computer hardware itself and secondarily the computerization of retail logistics
Daron Acemoglu's prediction is that Total Factor Productivity gains from AI will be a <0.55% increase over the next 10 years
https://web.archive.org/web/20230405154054/https://www.nytim... https://web.archive.org/web/20230405154056/https://www.nytim...
Krugman’s only long-term treatment of the topic in that article, looking “at 10-year rates of growth in labor productivity” concludes “that information technology did indeed produce a bump in economic growth between the mid-1990s and the mid-2000s, but one that was relatively modest and short-lived.”
When he eyeballs short-term (i.e. one-year) TFP growth he fails to see a pattern. But look above. This isn’t a short-term signal. It’s a short-lived bump in a long-term trend. There is proper statistical treatment of this compounding effect that reaches a clear and obvious answer.
I’ll also note the asymmetry in his treatment of the washing machine, which he judges on penetration and supposition (“circa 1920, only about one in five U.S. households had washing machines; by 1970, almost everyone had one, or access to one. circa 1920, only about one in five U.S. households had washing machines; by 1970, almost everyone had one, or access to one. Don’t you think that made a big difference?”) while with the internet we’re meant to visually discern a signal in a noisy and itself-derived source. Use internet and mobile-phone penetration as the washing-machine sign and ask the same rhetorical question.
I’m curious for your Gordon link. You seem to have posted Krugman twice.
> Acemoglu's prediction is that Total Factor Productivity gains from AI will be a <0.55% increase over the next 10 years
That’s fucking huge! Look at annual TFP growth above. 0.1% for a decade. In ‘24 and ‘25 rising to 0.7 and 0.6 percent.
An economy with TFP growing at 0.6% growing 0.55 percentage points faster winds up 12% larger in ten years; the one that starts at 0.1% winds up 7% larger. You’re pooh pooing a number that represents $7 to 13 trillion in surplus annual production after a decade. Integrating under the curve we find both worlds produced about $25 trillion more in that decade, though again, the compounding effect of that higher TFP level will continue compounding for decades.
55 basis points of new TFP is an incredibly bullish cash for AI, and single-handed sustains multi-trillion dollar valuations with a sub-10% take rate of caused growth.