Stop pretending you know what AI does to the economy

Alarmism is everywhere, but a lot of it is just brainworms.

Cartoon by ChatGPT o3

Have you ever had a song stuck in your head? You just walk around humming it all day, and you can’t quite seem to get it out. I find that some intellectual ideas work kind of like that. Some people walk around all day reflexively applying the word “neoliberalism” to everything they don’t like about the modern world. Others are convinced that solar power and batteries will never be viable technologies. Still others blame immigrants for every way in which their country is not yet a paradise, or think that vaccines cause every health problem in society. And so on. Once an idea like this gets stuck in your head, confirmation bias takes over, and you begin to see it everywhere around you — which only reinforces the strength of the idea in your mind. Instead of an earworm, it’s a brainworm.

In the last decade, a new such idea has taken hold among many Americans. This is the idea that artificial intelligence is going to be bad for the economy and for society. To some people, AI is just an inherently suspicious and threatening technology, whose main function will be to deprive regular people of jobs and increase inequality, without boosting society’s overall productivity and wealth by a significant amount.

This AI pessimism is surprisingly common among people I’ve met in the AI industry itself. Although many engineers I talk to are excited about AI, some think that the products they’re creating are eventually going to make large segments of humanity obsolete; these folks’ goal is to make as much money as possible before their own creations inevitably destroy their own careers.

I also encounter a surprisingly large number of center-left thinkers who adopt a similar viewpoint. I remember going to a conference of center-left “progress” types a few years ago; while most of the discussions were about how America can overcome NIMBYism, when it came to AI, the conversation suddenly shifted to how we can restrain and slow down the development of that technology.

In the economics profession, the AI-pessimist viewpoint is being aggressively championed by none other than Daron Acemoglu, probably the top economist in the world, and a recent recipient of the Econ Nobel. Acemoglu wrote a book (with Simon Johnson) about how the grand sweep of economic history shows that society can’t leave the creation of AI to the entrepreneurs and venture capitalists. But although he argues that AI will destroy jobs and cause a massive rise in inequality, Acemoglu also thinks that all that automation won’t do much to raise productivity.

But AI-pessimist sentiment is hardly confined to a few elites; in fact, the average American is pretty negative about the technology:

Source: Pew

And in international comparisons, the U.S. stands out as almost uniquely apprehensive about AI:

Source: Ipsos

In other words, Americans are very primed with AI pessimism. Even the smartest among them tend to jump at any shred of evidence that AI is killing jobs, or turning society into a feudal hellscape, or any number of other negative effects.

But each time this happened so far, when we look closely at the evidence — or just waited for the results to come in — the panic turned out to be a false alarm. AI has not yet had a detectably negative effect on the job market, which remains just about as strong as it has ever been in the country’s history:

Now this situation may reverse; someday soon, AI might start killing jobs en masse and sending inequality to the moon. We don’t know. But it hasn’t yet, and it’s important to understand why each burst of AI pessimism so far has been a false alarm.

The “AI is killing jobs for new graduates” story probably wasn’t real