[Essay] AI - The End of the Beginning. A Case for Optimism.

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I believe we are living through one of the most significant and historic shifts in human history, a moment comparable in magnitude to the end of World War II or the fall of the Berlin Wall. As I look at the rapid evolution of artificial intelligence, I don’t see a looming shadow of displacement. Instead, I see the arrival of the “philosopher’s stone”. For centuries, alchemists like Isaac Newton obsessed over transmuting lead into gold, turning something common into something rare, but they never succeeded. Today, we have achieved a different kind of miracle. We have a technology that converts sand into thought, taking the most common material in the world and transmuting it into the most rare and valuable thing we possess.

My optimism about AI’s impact is rooted in a sober analysis of where we have been for the last half-century. I argue that we have actually been in a 50-year regime of very slow productivity growth that started with Woodstock, just four weeks after putting a man on the moon. This is not a coincidence! From that moment, it was only a struggle.

While we feel like we’ve seen massive progress, the statistical evidence of productivity growth (e.g. the mathematical expression of technology’s impact on the economy) tells a different story. In the US, productivity has been running at about half the pace it did between 1940 and 1970, and a third of the pace of the late 19th century. We have been stagnating, and at the same time, we are facing a global demographic collapse. Many countries, including the US and China, are heading toward depopulation. Without a breakthrough, a shrinking workforce would lead to a shrinking economy and a dystopian cycle of decline.

This is why I believe the timing of AI has worked out miraculously well. We are going to have AI and robots precisely when we need them to substitute for a shrinking population and to kickstart economic growth. In this future, I see human workers being at a premium, not a discount. The fear of "job loss" is, in my view, an overly simplistic model that ignores the reality of "task loss". Jobs are bundles of tasks. While AI will automate specific tasks, the jobs themselves persist and evolve. I look at the history of coding as a perfect example. We moved from machine code to assembly, then to high-level languages like C, and then to scripting languages like Python. Each layer abstracted away complexity, and rather than destroying the role of the programmer, it made them more productive and more numerous. AI is simply the next layer of abstraction, allowing one person to orchestrate an army of code-bots, making them 10 or even 100 times more effective than before. From this point of view, AI is augmenting humans, not replacing them.

I am particularly excited about the rise of the super-empowered individual also known as the “polymath”, who is a person good at connecting multiple areas of life, engineering,  business, and doing multiple things to deliver. We are entering an era where the talented specialist becomes a "triple threat”. As I often note, the additive effect of being good at two things is more than double. Being good at three is more than triple. By using AI to bridge gaps in our skill sets, we become non-fungible, that is, unique, irreplaceable contributors who can build entire products from scratch.

This empowerment extends deeply into education. I am fascinated by the Bloom two-sigma effect, which proves that one-on-one tutoring can raise a student’s performance by two standard deviations, taking them from the 50th percentile to the 99th.

Historically, this level of education was reserved only for royalty and aristocrats (e.g. Marcus Aurelius being tutored by Marcus Cornelius Fronto, Herodes Atticus, Junius Rusticus, Apollonius of Chalcedon, Sextus of Chaeronea, Alexander of Cotiaeum). AI provides the first real prospect of democratizing this "Socratic-level" tutoring for every child on the planet.

Beyond individual empowerment, I am optimistic about the macro-economic "good news process" that AI will trigger. Massive productivity growth leads to a collapse in prices for goods and services. When the cost of healthcare, housing, and education drops because of AI-driven efficiency, it is the equivalent of giving every citizen a massive raise. It makes the social safety net much easier to fund and dramatically increases the material wealth of society. Even if the transition is incremental, it is overwhelmingly positive. If it is radical, it results in an era of unprecedented abundance.

I also see AI as the ultimate lever for human agency. Our society has become wrapped in "red tape" and bureaucratic structures that prevent change. In the Western world, it sometimes feels like we’ve replaced “building things” with “having meetings about whether we’re allowed to build things”, and the official product of those meetings is a PDF that says “great point, let’s commission an impact study.” Which is why the June 2023 I-95 collapse in Philadelphia was such a delicious little glitch in the system: a huge, critical highway artery melts, everyone panics, and suddenly …miracle…government remembers it can, in fact, do capitalism. Emergency procurement! Parallel workstreams! Contractors on site immediately! “We will figure out the paperwork later, because cars are currently not going places”. And in 12 days the road is back. The lesson people took was “see, if you ignore the rules you can build”, but the funnier (and darker) lesson is that the rules are always ignorable when the television cameras show a smoking crater. The real problem isn’t that the West can’t build. It’s that we’ve designed a system where you can only build if something is on fire. 

However, AI gives individuals the initiative to be "live players" in the world again. It empowers people to lead projects, create new art, and solve complex scientific problems without waiting for permission from legacy institutions. I believe that if you give a person with agency the lever of AI, they can move the world.

Finally, I address the "moat" and competition in AI with a sense of open-ended discovery. While some worry about monopolies, I have seen how quickly "black magic" technology becomes commoditized. Within a year of ChatGPT’s launch, numerous companies in the US and China (the EU doesn’t exist in the AI game), as well as open-source communities, developed comparable models. This tells me that the field is wide open for entrepreneurs. My strategy is one of indeterminate optimism. I don't claim to know exactly which company will win or what the specific industry structure will look like in five years, but I am certain that by running thousands of experiments with AI products, the future will be better.

I choose to be a determined optimist when it comes to the work itself, but an indeterminate optimist regarding the collective outcome of human ingenuity.

We are at the very beginning of three major shifts:

1/ the collapse of legacy trust

2/ a revolution in free thought, and

3/ the arrival of AI.

I believe that if we lean into this technology, if we use it to "train ourselves up" and expand our scope, we will look back at this moment as the beginning of a new golden age. It is, quite simply, time to build.

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