Fed Chair Kevin Warsh’s speech in Jackson Hole last week captured a lot of headlines for its hawkish tone. His comments had a lot more than a description of the economy and policy rates, but I club that into another article soon. But what I am interested in is, what Warsh said about AI.
Warsh raised a lot of interesting questions about AI:
- Will it raise productivity, and if so, when?
- Will token usage be complementary, or competitive, with labor?
- Will the next generation of AI models be as capital intensive?
- What will be the equilibrium price of tokens, and will it diverge amongst tokens (“heterogeneity”), with growing sums paid for access to the best frontier models and token prices for older models falling to the level of their marginal cost?
- What will be the market structure around AI? How much value accrues to owners of scarce assets (chips, labs, energy) and how much to businesses and labor?
- What are the broad implications for workers and the employment side of the Fed’s mandate?
All of these have significant policy implications, and very interesting to see what Warsh will come up after their analysis to these questions.
But one thing is intersting to understand is, where are we today. Will AI be complementary or competitive with labour?
It’s hard to say one way or the other, but recent unemployment rate is near historical lows at 4.1% (US figures). There’s no jobs-apocalypse yet, and for now, AI seems to be complementary. Also, at my work place and in my daily routines, I see AI as a complementary tool than competitive with labour, for now.
