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AI adoption and Solow's productivity paradox

fortune.com

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Re: AI adoption and Solow's productivity paradox

#131

Post by vessenes »

torben-friis wrote: post #42
crazygringo wrote: post #21

Just to be clear, the article is NOT criticizing this. To the contrary, it's presenting it as expected , thanks to Solow's productivity paradox [1]. Which is that information technology similarly (and seemingly shockingly) didn't produce any net economic gains in the 1970's or 1980's despite all the computerization. It wasn't until the mid-to-late 1990's that information technology finally started to show clear benef…

The comparison seems flawed in terms of cost. A Claude subscription is 20 bucks per worker if using personal accounts billed to the company, which is not very far from common office tools like slack. Onboarding a worker to Claude or ChatGPT is ridiculously easy compared to teaching a 1970’s manual office worker to use an early computer. Larger implementations like automating customer service might be more costly, but…

Agreed.

We do have a way to see the financial impact - just add up Anthropic and oAI's reported revenues -> something like $30b in annual run rate. Given growth rates, (stratospheric), it seems reasonable to conclude informed buyers see economic and/or strategic benefit in excess of their spend. I certainly do!

That puts the benefits to the economy at just around where Mastercard's benefits are, on a dollar basis. But with a lot more growth. Add something in there for MS and GOOG, and we're probably at least another $5b up. There are only like 30 US companies with > $100bn in revenues; at current growth rates, we'll see combined revenues in this range in a year.

All this is sort of peanuts though against 29 trillion GDP, 0.3%. Well not peanuts, it's boosting the US GDP by 10% of its historical growth rate, but the bull case from singularity folks is like 10%+ GDP growth; if we start seeing that, we'll know it.

All that said, there is real value being added to the economy today by these companies. And no doubt a lot of time and effort spent figuring out what the hell to do with it as well.

Re: AI adoption and Solow's productivity paradox

#132

Post by Aurornis »

abraxas wrote: post #64
torben-friis wrote: post #42

Earlier quoted context omitted.

The comparison seems flawed in terms of cost. A Claude subscription is 20 bucks per worker if using personal accounts billed to the company, which is not very far from common office tools like slack. Onboarding a worker to Claude or ChatGPT is ridiculously easy compared to teaching a 1970’s manual office worker to use an early computer. Larger implementations like automating customer service might be more costly, but…

What if LLMs are optimizing the average office worker's productivity but the work itself simply has no discernable economic value? This is argued at length in Grebber's Bullshit Jobs essay and book.

> but the work itself simply has no discernable economic value? This is argued at length in Grebber's Bullshit Jobs essay and book.

That book was very different than what I expected from all of the internet comment takes about it. The premise was really thin and did't actually support the idea that the jobs don't generate value. It was comparing to a hypothetical world where everything is perfectly organized, everyone is perfectly behaved, everything is perfectly ordered, and therefore we don't have to have certain jobs that only exist to counter other imperfect things in society.

He couldn't even keep that straight, though. There's a part where he argues that open source work is valuable but corporate programmers are doing bullshit work that isn't socially productive because they're connecting disparate things together with glue code? It didn't make sense and you could see that he didn't really understand software, other than how he imagined it fitting into his idealized world where everything anarchist and open source is good and everything corporate and capitalist is bad. Once you see how little he understands about a topic you're familiar with, it's hard to unsee it in his discussions of everything else.

That said, he still wasn't arguing that the work didn't generate economic value. Jobs that don't provide value for a company are cut, eventually. They exist because the company gets more benefit out of the job existing than it costs to employ those people. The "bullshit jobs" idea was more about feelings and notions of societal impact than economic value.

Re: AI adoption and Solow's productivity paradox

#133

Post by nradov »

abraxas wrote: post #64
torben-friis wrote: post #42

Earlier quoted context omitted.

The comparison seems flawed in terms of cost. A Claude subscription is 20 bucks per worker if using personal accounts billed to the company, which is not very far from common office tools like slack. Onboarding a worker to Claude or ChatGPT is ridiculously easy compared to teaching a 1970’s manual office worker to use an early computer. Larger implementations like automating customer service might be more costly, but…

What if LLMs are optimizing the average office worker's productivity but the work itself simply has no discernable economic value? This is argued at length in Grebber's Bullshit Jobs essay and book.

Bullshit Jobs is one of those "just so" stories that seems truthy but doesn't stand up to any critical evaluation. Companies are obviously not hesitant to lay off unproductive workers. While in large enterprises there is some level of empire building where managers hire more workers than necessary just to inflate their own importance, in the long run those businesses fall to leaner competitors.

Re: AI adoption and Solow's productivity paradox

#134

Post by smashed »

Esophagus4 wrote: post #68
simonw wrote: post #61

Earlier quoted context omitted.

I am confident that Anthropic make revenue from that $20 than the electricity and server costs needed to serve that customer. Claude Code has rate limits for a reason: I expect they are carefully designed to ensure that the average user doesn't end up losing Anthropic money, and that even extreme heavy users don't cause big enough losses for it to be a problem. Everything I've heard makes me believe the margins on in…

I always assumed that with inference being so cheap, my subscription fees were paying for training costs, not inference.

Doubtful

Re: AI adoption and Solow's productivity paradox

#135

Post by huflungdung »

jurschreuder wrote: post #124

Workers may see the LLM as a productivity boost because they can basically cheat a their homework. As a CEO I see it as a massive clog up of vast amounts of content that somebody will need to check. A DDoS of any text-based system. The other day I got a document of 155 pages in Whatsapp. Thanx. Same with pull requests. Who will check all this?

[dead]

Re: AI adoption and Solow's productivity paradox

#136

Post by nradov »

hattmall wrote: post #93
abraxas wrote: post #64

Earlier quoted context omitted.

What if LLMs are optimizing the average office worker's productivity but the work itself simply has no discernable economic value? This is argued at length in Grebber's Bullshit Jobs essay and book.

I find that highly unlikely, coding is the AIs best value use case by far. Right now office workers see marginal benefits but it's not like it's an order of magnitude difference. AI drafts an email, you have to check and edit it, then send it. In many cases it's a toss up if that actually saved time, and then if it did, it's not like the pace of work is break neck anyway, so the benefit is some office workers have a…

LLMs might not save time but they certainly increase quality for at least some office work. I frequently use it to check my work before sending to colleagues or customers and it occasionally catches gaps or errors in my writing.

Re: AI adoption and Solow's productivity paradox

#137

Post by Aurornis »

gruez wrote: post #46
torben-friis wrote: post #42

Earlier quoted context omitted.

The comparison seems flawed in terms of cost. A Claude subscription is 20 bucks per worker if using personal accounts billed to the company, which is not very far from common office tools like slack. Onboarding a worker to Claude or ChatGPT is ridiculously easy compared to teaching a 1970’s manual office worker to use an early computer. Larger implementations like automating customer service might be more costly, but…

How viable are the $20/month subscriptions for actual work and are they loss making for Anthropic? I've heard both of people needing to get higher tiers to get anything done in Claude Code and also that the subscriptions are (heavily?) subsidized by Anthropic, so the "just another $20 SaaS" argument doesn't sound too good.

I don't think the assumption that Anthropic is losing money on subscriptions holds up. I think each additional customer provides more revenue than the cost to run their inference, on average.

For people doing work with LLMs as an assistant for codebase searching, reviews, double checks, and things like that the $20/month plan is more than fine. The closer you get to vibecoding and trying to get the LLM to do all the work, the more you need the $100 and $200 plans.

On the ChatGPT side, the $20/month subscription plan for GPT Codex feels extremely generous right now. I tried getting to the end of my window usage limit one day and could not.

> so the "just another $20 SaaS" argument doesn't sound too good

Having seen several company's SaaS bills, even $100/month or $200/month for developers would barely change anything.

Re: AI adoption and Solow's productivity paradox

#138

Post by heresie-dabord »

crazygringo wrote: post #21

Just to be clear, the article is NOT criticizing this. To the contrary, it's presenting it as expected , thanks to Solow's productivity paradox [1]. Which is that information technology similarly (and seemingly shockingly) didn't produce any net economic gains in the 1970's or 1980's despite all the computerization. It wasn't until the mid-to-late 1990's that information technology finally started to show clear benef…

> It wasn't until the mid-to-late 1990's that information technology finally started to show clear benefit to the economy overall.

The 1990s boom was in large part due to connectivity -- millions[1] of computers joined the Internet.

[1] _ In the 1990s. Today, there are billions of devices connected, most of them Android devices.

Re: AI adoption and Solow's productivity paradox

#140

Post by acjohnson55 »

azuanrb wrote: post #114
acjohnson55 wrote: post #81

It's weird being on here and seeing so much naysaying, because I see a radical change already happening in software development. The future is here, it's just not equally distributed. In the past 6 months, I've gone from Copilot to Cursor to Conductor. It's really the shift to Conductor that convinced me that I crossed into a new reality of software work. It is now possible to code at a scale dramatically higher than…

Curious why you like Conductor. I’m trying it out, but since I primarily live in the CLI, I might not see much value in it.

Fair point. What it really does for me is give me a better UX for having a bunch of parallel workstreams. I could achieve a similar effect thing with scripting, and maybe some clever ways of getting something like the sidebar for seeing the status of everything on a single pane. But Conductor packaged it up in a way that I found much improved over multiple Cursor or VSCode windows.
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