WH Council of Economic Advisors on AI

Source: White House website, Jul 2016

… before turning to concerns about some of the possible side effects from AI, I want to start with the biggest worry I have about it: that we do not have enough of AI.

Measured productivity growth has slowed in 30 of the 31 advanced economies, slowing from a 2 percent average annual growth rate from 1994 to 2004 to a 1 percent average annual growth rate from 2004 to 2014. Notably, the United States still has the fastest productivity growth of any G-7 country, with annual productivity growth of 1.1 percent from 2004 to 2014 as compared to 2.3 percent from 1994 to 2004, as shown in Figure 1.

the recent advances in deep learning built on research on neural nets by university labs which was largely funded by the Defense Advanced Research Projects Agency (DARPA) and other government agencies in the 1980s and 1990s.

There is no reason the economy cannot generate substantial levels of employment at much higher levels of technology and productivity than we have today.

What matters, however, is how our labor market institutions cope with these changes, help support the creation of new jobs, and successfully match workers to them. Some of the policies along these lines proposed by the President were discussed extensively in the same recent CEA report, and include expanding aggregate demand, increasing connective tissue in labor markets, reforming taxes to encourage work, and creating more flexibility for workers (CEA 2016b).

Other policy responses include expanding education and training so more people have skills that complement and benefit from innovations, increasing the progressivity of the tax system to make sure that everyone shares in the overall benefits of the economy, and expanding institutional support for higher wages, including a higher minimum wage and stronger collective bargaining and other forms of worker voice (Furman 2016a).

… the socially optimal level of R&D investment—the amount that would produce the greatest rate of economic growth—is two to four times greater than actual spending (Jones and Williams 1998; Bloom, Schankerman, and Van Reenen 2013; Akcigit, Hanley, and Serrano-Velarde 2013). This gap is particularly large for basic research, since its role as the “seed corn” of future innovations means that it generates the largest spillovers.

The biggest worry I have about AI is that we will not have enough of it, and that we need to do more to make sure we can continue to make groundbreaking discoveries that will raise productivity growth, improving the lives of Americans and people throughout the world.

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