Breaking Down the Economics of AI

Jacob and Igor tackle the wild claims about AI's economic impact by examining three main clusters of arguments: automating expensive tasks like programming, removing "cost centers" like call centers and corporate art, and claims of explosive growth. They dig into the actual data, debunk the hype, and explain why most productivity claims don't hold up in practice. Plus: MIT denounces a paper with fabricated data, and Grok randomly promotes white genocide myths.

• (00:00) - Recording date + intro
• (00:52) - MIT denounces paper
• (04:09) - Grok's white genocide
• (06:23) - Butthole convergence
• (07:13) - AI and the economy
• (14:50) - Automating profit centers
• (29:46) - Removing the last cost centers
• (47:16) - "This time is different" (explosive growth)
• (57:55) - Alpha Evolve, optimization, and slippage

Links

• University of Chicago working paper - Large Language Models, Small Labor Market Effects
• OECD working paper - Miracle or Myth? Assessing the macroeconomic productivity gains from Artificial Intelligence
• Epoch AI blogpost - Explosive Growth from AI: A Review of the Arguments
• Business Insider article - Anthropic CEO: AI Will Be Writing 90% of Code in 3 to 6 Months
• Preprint - Transformative AGI by 2043 is <1% likely

Automating profit centers

• Pivot to AI blogpost - If AI is so good at coding … where are the open source contributions?
• Ben Evans' Mastodon post - "Show me the pull requests"
• NY Times article - Your A.I. Radiologist Will Not Be With You Soon
• FastCompany article - More companies are adopting 'AI-first' strategies. Here's how it could impact the environment
• Forbes article - Business Tech News: Shopify CEO Says AI First Before Employees
• Newsroom article - IBM Study: CEOs Double Down on AI While Navigating Enterprise Hurdles
• PNAS research article - Evidence of a social evaluation penalty for using AI
• Ars Technica article - AI use damages professional reputation, study suggests

Removing cost centers

• The Register article - Anthopic's law firm blames Claude hallucinations for errors
• Fortune article - Klarna plans to hire humans again, as new landmark survey reveals most AI projects fail to deliver
• Wikipedia article - The Market for Lemons

AlphaEvolve

• Deepmind press release - AlphaEvolve: A Gemini-powered coding agent for designing advanced algorithms
• Deepmind white paper - AlphaEvolve: A coding agent for scientific and algorithmic discovery

Off Topic

• VelvetShark blogpost - Why do AI company logos look like buttholes?
• MIT Economics press r