The Second Machine Age
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1 /3/5 AI and Economics Erik Brynjolfsson MIT Presentation for FLI Conference in San Juan, January, 25 MIT Initiative on the Digital Economy The Second Machine Age Changing the world requires two things: Power system: move or transform things Control system: decide where and how Industrial Revolution = Physical Power Steam engine (and Internal combustion engine, Electricity) Mostly a complement to humans Second Machine Age = Mental Power Computers, Software, Big Data, Machine Intelligence Complement or substitute? 2 MIT Initiative on the Digital Economy
2 /3/5 State of Understanding, 24 Uniquely Human Abili4es. Autonomous mobility and fine motor control 2. Language and complex communica4on 3. PaBern matching and unstructured problem solving 3 MIT Initiative on the Digital Economy 4 MIT Initiative on the Digital Economy 2
3 /3/5 Machine Intelligence Interacting with physical world Fine and gross motor control Vision and other senses Language Voice recognition Natural language processing Creating narratives Problem Solving Answering unstructured questions Rule based analysis Pattern recognition and classification Ø We re in the midst of the greatest one-time event in history! 5 MIT Initiative on the Digital Economy 6 MIT Initiative on the Digital Economy 3
4 /3/5 7 MIT Initiative on the Digital Economy Siri Voice recognition Lionbridge Transla/on Narra/ve Science Authoring News Stories 8 MIT Initiative on the Digital Economy 4
5 /3/5 9 MIT Initiative on the Digital Economy The Digital Frontier MIT Initiative on the Digital Economy 5
6 /3/5 Accuracy and Questions Answered on Jeopardy! % 9% Accuracy 8% 7% 6% 5% 4% Human champions /2 4/2 /29 5/29 2/28 8/28 5/28 3% 2/27 2% % 2/26 % % % 2% 3% 4% 5% 6% 7% 8% 9% % Percent Answered MIT Initiative on the Digital Economy The Digital Frontier 2 MIT Initiative on the Digital Economy 6
7 /3/5 3 MIT Initiative on the Digital Economy What does this mean for the economy? 4 MIT Initiative on the Digital Economy 7
8 /3/5 The Bounty 5 MIT Initiative on the Digital Economy $3 BILLION PER YEAR 6 MIT Initiative on the Digital Economy 8
9 /3/5 The Great Decoupling 7 MIT Initiative on the Digital Economy WHAT S GOING ON? 8 MIT Initiative on the Digital Economy 9
10 /3/5 The Hard Truth Digital progress makes the economic pie bigger. But there is no economic law that everyone, or even most people, will benefit. 9 MIT Initiative on the Digital Economy Three Sets of Winners and Losers. High Skilled vs. Low & Mid Skilled Workers 2 MIT Initiative on the Digital Economy
11 /3/5 Skill Disparities 2 MIT Initiative on the Digital Economy Three Sets of Winners and Losers. High Skilled vs. Low & Mid Skilled Workers 2. Capital vs. Labor 22 MIT Initiative on the Digital Economy
12 /3/5 Capital vs. Labor Corproate Profits as % of GDP Corporate Profits AKer Tax as % of GDP & Non- Farm Labor Share, Corporate Profit as % of GDP 2 2 Labor Share of GDP Labor Share (29 = ) 23 MIT Initiative on the Digital Economy Source: research.stlouisfed.org Three Sets of Winners and Losers. High Skilled vs. Low & Mid Skilled Workers 2. Capital vs. Labor 3. Superstars vs. Everyone Else 24 MIT Initiative on the Digital Economy 2
13 /3/ MIT Initiative on the Digital Economy 26 MIT Initiative on the Digital Economy Superstars
14 /3/5 WHAT IS TO BE DONE? 27 MIT Initiative on the Digital Economy 28 MIT Initiative on the Digital Economy 4
15 /3/5 Our View Digital technologies change rapidly, but organizations and skills aren t keeping pace. As a result, millions of people are being left behind. 29 MIT Initiative on the Digital Economy The New Grand Challenge Digital technologies will continue to accelerate. Our skills, organizations and institutions are lagging. Business as usual won t solve this problem. Ø We need to reinvent our economy and society to keep up with accelerating technology 3 MIT Initiative on the Digital Economy 5
16 /3/5 The Initiative on the Digital Economy 3 MIT Initiative on the Digital Economy The New Landscape What challenges and opportunities do you see? What are your concerns and questions? 32 MIT Initiative on the Digital Economy 6
17 /3/5 To learn more, visit: MIT Initiative on the Digital Economy 7
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