Macro Monkey Says
Maximum Fun Optimization
Don’t you just love it when normally boring things are actually genuinely fun? Take financial media, for example; you probably read the Peel because of our undeniably and blatantly well-polished, professional, and lethally insightful coverage of all things markets, and, I guess, maybe because we’ll crack a joke here and there, too.
But it turns out other media outlets are hopping on the fun train as well. Take the FT, for example.
After perusing fresh research from Goldman Sachs on the topic of AI and how much it’s gonna f*ck up every aspect of our lives, the FT didn’t just copy and paste the bullet points for an article - they had ChatGPT turn it into a sonnet.
And it’s pretty not-bad, too. Anyway, this example of making boring things fun with AI is arguably a hyper-meta example of what AI could (and should) do to our economy in the coming decades.
By the early 20th century (that’s the 1900s for those about to Google it), post-Civil War developments in crop yielding and other farming technologies absolutely exploded in the United States. The cotton gin had been around for a while, but when the tractor and others burst onto the scene in the 1890s, it was game over for farmers.
Let’s check the stats. It’s estimated that 43% of the U.S. worked in agriculture in 1890. 130 years later, in 2020, that number has plummeted to about 1.3%.
These technological developments in farming, along with those that followed, allowed unitary productivity in farming to skyrocket so far, so fast, that we almost didn’t know what to do with all these extra farmers laying around. Moreover, those farmers had no idea what to do with all the extra time they had on their hands now that machines could do in 15 minutes what took them a whole day.
In 2023, artificial intelligence poses the same challenge faced by farmers after they bought their very first tractors.
According to estimates, 36% of the U.S. is employed in “knowledge” jobs - in other words - desk jockeys with a lot of degrees. Now, let me preface this by saying that absolutely no one has any idea of how swift or vast the AI economy will emerge, but one thing we can all agree on is that it’s coming. According to Goldman:
- 7% of workers will lose their jobs in the decade after generative AI reaches 50% of employers
- About 2/3rds of the workforce is exposed to some AI replacement risk, with about 5% of the workforce expected to see AI replace >50% of their tasks
- Any job where >50% of tasks are replaced by AI will disappear
- Developed economies will experience this change harder and faster than emerging markets
- Basically, the more time you spend staring at a screen, the higher the chances are that ChatGPT is gonna take your job
As someone who stares at screens for 15.5 out of my 16 waking hours, this was a bit concerning at first. But, like anything, it’s probably not going to be as bad (nor as good) as expected.
Per that same FT article, 60% of workers today are employed in jobs that simply did not exist even less than 100 years ago, in 1940. This implies that 85% of employment growth in the last 83 years can be attributed to a myriad of technologies creating brand-new jobs. Meanwhile, the sheer size of our civilian labor force has nearly tripled in the same period.
Finally, the productivity growth expected out of generative AI is anticipated to double the current rate of annual productivity growth across the U.S. as a whole. Alone, that represents a 2x to the productivity growth rates we’re seeing now.
TLDR: A sh*tton of jobs are gonna be replaced by AI, and the productivity boosts we gain will mean we’ll have a whole lot more time for fun maximization on our hands, provided this thing doesn’t go full Terminator.
But just because your job is slowly getting automated away doesn’t mean you should start shopping for cardboard boxes to live in just yet. As farmers experienced around the turn of the last century, U.S. workers are set for a blistering change to their daily lives. Fingers crossed, this one goes as well as the last one.
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