There’s a funny thing where economics education paradoxically makes people DUMBER at thinking about future AI. Econ textbooks teach concepts & frames that are great for most things, but counterproductive for thinking about AGI. Here are 4 examples. Longpost: THE FIRST PIECE of Econ anti-pedagogy is hiding in the words “labor” & “capital”. These words conflate a superficial difference (flesh-and-blood human vs not) with a bundle of unspoken assumptions and intuitions, which will all get broken by Artificial General Intelligence (AGI). By “AGI” I mean here “a bundle of chips, algorithms, electricity, and/or teleoperated robots that can autonomously do the kinds of stuff that ambitious human adults can do—founding and running new companies, R&D, learning new skills, using arbitrary teleoperated robots after very little practice, etc.” Yes I know, this does not exist yet! (Despite hype to the contrary.) Try asking an LLM to autonomously write a business plan, found a company, then run and grow it for years as CEO. Lol! It will crash and burn! But that’s a limitation of today’s LLMs, not of “all AI forever”. AI that could nail that task, and much more beyond, is obviously possible—human brains and bodies and societies are not powered by some magical sorcery forever beyond the reach of science. I for one expect such AI in my lifetime, for better or worse. (Probably “worse”, see below.) Now, is this kind of AGI “labor” or “capital”? Well it’s not a flesh-and-blood human. But it’s more like “labor” than “capital” in many other respects: • Capital can’t just up and do things by itself? AGI can. • New technologies take a long time to integrate into the economy? Well ask yourself: how do highly-skilled, experienced, and entrepreneurial immigrant humans manage to integrate into the economy immediately? Once you’ve answered that question, note that AGI will be able to do those things too. • Capital sits around idle if there are no humans willing and able to use it? Well those immigrant humans don’t sit around idle. And neither will AGI. • Capital can’t advocate for political rights, or launch coups? Well… Anyway, people see sci-fi robot movies, and they get this! Then they take economics courses, and it makes them dumber. (Yes I know, #NotAllEconomists etc.) THE SECOND PIECE of Econ anti-pedagogy is instilling a default assumption that it’s possible for a market to equilibrate. But the market for AGI cannot: AGI combines a property of labor markets with a property of product markets, where those properties are mutually exclusive. Those properties are: • (A) “NO LUMP OF LABOR”: If human population goes up, wages drop in the very short term, because the demand curve for labor slopes down. But in the longer term, people find new productive things to do—the demand curve moves right. If anything, the value of labor goes UP, not down, with population! E.g. dense cities are engines of growth! • (B) “EXPERIENCE CURVES”: If the demand for a product rises, there’s price increase in the very short term, because the supply curve slopes up. But in the longer term, people ramp up manufacturing—the supply curve moves right. If anything, the price goes DOWN, not up, with demand, thanks to economies of scale and R&D. QUIZ: Considering (A) & (B), what’s the equilibrium price of this AGI bundle (chips, algorithms, electricity, teleoperated robots, etc.)? …Trick question! There is no equilibrium. Our two principles, (A) “no lump of labor” and (B) “experience curves”, make equilibrium impossible: • If price is low, (A) says the demand curve races rightwards—there’s no lump of labor, therefore there’s massive profit to be made by skilled entrepreneurial AGIs finding new productive things to do. • If price is high, (B) says the supply curve races rightwards—there’s massive profit to be made by ramping up manufacturing of AGI. • If the price is in between, then the demand curve and supply curve are BOTH racing rightwards! This is neither capital nor labor as we know it. Instead of the market for AGI equilibrating, it forms a positive feedback loop / perpetual motion machine that blows up exponentially. Does that sound absurd? There’s a precedent: humans! The human world, as a whole, is already a positive feedback loop / perpetual motion machine of this type! Humans bootstrapped themselves up from a few thousand hominins to 8 billion people running a $80T economy. How? It’s not literally a perpetual motion machine. Rather, it’s an engine that draws from the well of “not-yet-exploited economic opportunities”. But remember “No Lump of Labor”: the well of not-yet-exploited economic opportunities is ~infinitely deep. We haven’t run out of possible companies to found. Nobody has made a Dyson swarm yet. There’s only so many humans to found companies and exploit new opportunities. But the positive feedback loop of AGI has no such limit. The doubling time can be short indeed: Imagine an autonomous factory that can build an identical autonomous factory, which then build two more, etc., using just widely-available input materials and sunlight. Economics textbooks don’t talk about that. But biology textbooks do! A cyanobacterium is such a factory, and can double itself in a day (≈ googol percent annualized growth rate 😛). Anyway, we don’t know how explosive will be the positive feedback loop of AGI building AGI, but I expect it to be light-years beyond anything in economic history. THE THIRD PIECE of Econ anti-pedagogy is its promotion of GDP growth as a proxy for progress and change. On the contrary, it’s possible for the world to transform into a wild sci-fi land beyond all recognition or comprehension each month, month after month, without “GDP growth” actually being all that high. GDP is a funny metric, and especially poor at describing the impact of transformative technological revolutions. (For example, if some new tech is inexpensive, and meanwhile other sectors of the economy remain expensive due to regulatory restrictions, then the new tech might not impact GDP much, no matter how much it upends the world.) I mean, sure we can argue about GDP, but we shouldn’t treat it as a proxy battle over whether AGI will or won’t be a big deal. Last and most importantly, THE FOURTH PIECE of Econ anti-pedagogy is the focus on “mutually-beneficial trades” over “killing people and taking their stuff”. Econ 101 proves that trading is selfishly better than isolation. But sometimes “killing people and taking their stuff” is selfishly best of all. When we’re talking about AGI, we’re talking about creating a new intelligent species on Earth, one which will eventually be faster, smarter, better-coordinated, and more numerous than humans. Normal people, people who have seen sci-fi movies about robots and aliens, people who have learned the history of colonialism and slavery, will immediately ask lots of reasonable questions here. “What will their motives be?” “Who will have the hard power?” “If they’re seeming friendly and cooperative early on, might they stab us in the back when they get more powerful?” These are excellent questions! We should definitely be asking these questions! (FWIW, this is my area of expertise, and I’m very pessimistic.) …And then those normal people take economics classes, and wind up stupider. They stop asking those questions. Instead, they “learn” that AGI is “capital”, kinda like an injection-molding machine. Injection-molding machines wouldn’t wipe out humans and run the world by themselves. So we’re fine. Lol.