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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

#741

Post by aurareturn »

alternatex wrote: post #644
aurareturn wrote: post #464

Earlier quoted context omitted.

Acquisition rate, retention rate, revenue, profit margin?

By those metrics, Microsoft lost 20% of it's value due to hopping on the AI coding assistance train. I'm not saying it is the case, just making it apparent how unreliable it is to measure productivity by comparing what's happening at the lowest level in a company to its financials.

Microsoft is mostly a SaaS company. Many SaaS businesses have lost much more in market cap since due to AI disruption.

Imagine if Microsoft didn't invest in AI? Maybe they'd be down 50% now.

Re: AI adoption and Solow's productivity paradox

#742

Post by 8note »

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…

the expensive work is reorganizing organizations to be able to make use of the improved output.

Re: AI adoption and Solow's productivity paradox

#743

Post by jama211 »

t43562 wrote: post #560
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.

That would be a way to get "the right answer." i.e. it's not the LLM, it's that they're not being used properly. I get accused of the no true Scotsman argument because I think agile can be done right, for example. Is work bullshit because an LLM doesn't help it?

Exactly. So much terrible usage is out there and no one is talking about it. It takes skill to use, and I bet accountants were way slower when they were learning how to use spreadsheets for the first time too.

Re: AI adoption and Solow's productivity paradox

#744

Post by aurareturn »

gzread wrote: post #734
aurareturn wrote: post #693

Earlier quoted context omitted.

But I don't see any receipts from the opposite side either.

You don't see any good software made by people who know how computers work?

You don't see any good software made by people who don't know how CPUs, GPUs, networking work at a deep level?

Re: AI adoption and Solow's productivity paradox

#745

Post by efreak »

bandrami wrote: post #308
transcriptase wrote: post #215

Earlier quoted context omitted.

It’s comical that Microsoft inserted Copilot buttons throughout all of their productivity suite, and none of them are able to do the bare minimum that you would hope for. “Oh cool, copilot is in excel! I’m going to ask it a question about the data in the spreadsheet that it’s literally appearing beside natively in-app, or for help with a formula!” “Wait what, it’s saying it can’t see anything or read from the current…

Meta's AI can't search posts on Meta's properties (or at least couldn't a few months ago). I'm not really sure what it's point is unless it's meant as a kind of help desk for the site (which they already also have).

I was looking at Dell's website earlier trying to find out what hardware is inside a specific model (the list of hardware doesn't say, just a bunch of post numbers with cryptic descriptions), and there's a video at the bottom of the page on how to use their AI assistant. I didn't see any links to an assistant.

Re: AI adoption and Solow's productivity paradox

#746

Post by efreak »

robinwhg wrote: post #277
carefree-bob wrote: post #34

It's not just technology, it's very hard to detect the effect of inventions in general on productivity. There was a paper pointing out that the invention of the steam engine was basically invisible in the productivity statistics: https://www.frbsf.org/wp-content/uploads/crafts.pdf

The first steam engine was invented by a Turk and he used it solely to make kebab spin. Never thought about using it for anything else.

On the contrary, this was actually used for something. The aeliopile is quite a bit older and was used for precisely nothing.

Re: AI adoption and Solow's productivity paradox

#747

Post by gsf_emergency_6 »

reg_dunlop wrote: post #736
PowerElectronix wrote: post #461

Earlier quoted context omitted.

GDP growth measurements have a big bias due to tariffs on, tariffs off, tariffs on again policies wrecking imports and exports numbers. Consumer spending is up, too, so I too fail to see that gdp growth while jobs are not as up as expected is due to AI making us more productive and not just people spending more after months of increased savings due to tariffs.

I'm curious how "consumer spending" is quantified here. Is consumer spending measured in total dollars spent? If so, isn't that curious wrinkle in an economy of rising prices, and decreasing purchasing power? If true, I believe less quantity could be purchased at a higher cost per person, making it appear that consumer spending is up. Presumably these numbers are benchmarked/peg to some sort of constant and/or standa…

Nominal spending:PCE price index

https://en.wikipedia.org/wiki/Personal_consumption_expenditu...

Re: AI adoption and Solow's productivity paradox

#748

Post by Wilder7977 »

aurareturn wrote: post #460
Wilder7977 wrote: post #452

Earlier quoted context omitted.

And those companies will do what? Produce products in uber-saturated markets? Or magically 9900 more products or markets will be created, all of them successful?

Go back to a time at the start of Youtube. Now answer these questions: And what will those people who make videos on Youtube do? Produce videos in uber-saturated categories? Or magically 9900 more media channels will be created, all of them successful?

YouTube is a platform, it's not a product. And in this case, created a new market. A market in which, by the way, still very few people (relative to those who try) are successful. In fact I wouldn't be surprised if the percentage would be much smaller than 10%.

A quick search leads to different answer, but https://alanspicer.com/what-percentage-of-youtubers-make-mon... suggests that 0.25% of all YouTube channels makes any money (not good money, any money). Which means 99.75% earns 0$.

Basically I would flip the question and ask: if you could produce videos now very simply with AI and so could other 10000 people, how many of the new channels do you think will be successful? If anything, the YouTube example shows you exactly that it doesn't matter than 1000000 people now can produce content with low overhead, just a handful of them will be successful, because the market of companies available to spend money to sponsor through channels and the men hours of eyeballs on videos are both limited.

Talking about companies that just produce products, either you come up with something new (and create a new market), or you come up with something better (you take shares of an existing market). Having 10000 companies producing - say - digital editing software won't make suddenly increase by 10000x the number of people in need of digital editing software. Which means that among those 10000 there will be a few very good products which will eat all the market (like it is now), with the usual Paretian distribution.

The idea that many companies with smaller overhead can split the market evenly and survive might (and it's a big hopeful might) work on physical companies selling local and physical products (I.e., splitting the market geographically), but for software products I cannot even imagine it happening.

New markets are created all the time, and it's great if maybe smaller companies (or co-ops) could take over those markets rather than big corporations, but the way the market distribution happens I don't think will be affected. I don't see any reason why this should change with many more companies in the same market. I also don't think that 10000 new companies will create 10000 new markets, because that depends on ideas (and luck, and context, and regulation, etc.), not necessarily on resources available,

Re: AI adoption and Solow's productivity paradox

#749

Post by Wilder7977 »

csa wrote: post #661
Wilder7977 wrote: post #452

Earlier quoted context omitted.

And those companies will do what? Produce products in uber-saturated markets? Or magically 9900 more products or markets will be created, all of them successful?

> And those companies will do what? Produce products in uber-saturated markets? > Or magically 9900 more products or markets will be created, all of them successful? Yes. Products will become more tailored/bespoke rather than a lot of the one size fits all approach that is pervasive now.

And if it's so cheap and bespoke, why buying it and not making it in house? What about access to people with know-how of that product? You use a product that only 4 other companies use, you can be sure you won't find any new hire that knows how to use it.

To me it seems the reality works in the opposite way. Among the many products built, some will be successful and will swallow the whole market, like now with basically any software or SaaS product.

Re: AI adoption and Solow's productivity paradox

#750

Post by Wilder7977 »

aurareturn wrote: post #691
snarf21 wrote: post #594

Earlier quoted context omitted.

Serious question: but aren't there thousands of other guys doing almost the same thing and getting almost no views? Even if there are lots of new channels, there aren't going to be lots of winners

But there are many Youtubers making a decent living doing it as a one person shop or a small team. In the past, you needed to a large team with a large budget and buy in from TV/DVDs/VHS to get an audience.

https://alanspicer.com/what-percentage-of-youtubers-make-mon...

Claims 0.25% of channels makes any money at all. The amount that make a decent living is realistically even smaller, possibly To me the YouTube example seems to be the exact demonstration that markets saturate and market distribution is still a winner-takes-all kind of deal.

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