AI and the productivity paradox – Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

From The Wall Street Journal

Artificial intelligence is now applied to tasks that not long ago were viewed as the exclusive domain of humans, matching or surpassing human level performance. But, at the same time, productivity growth has significantly declined over the past decade, and income has continued to stagnate for the majority of Americans. This puzzling contradiction is addressed in “Artificial Intelligences and the Modern Productivity Paradox,” a working paper recently published by the National Bureau of Economic Research.

As the paper’s authors, MIT professor Erik Brynjolfsson, MIT PhD candidate Daniel Rock and University of Chicago professor Chad Syverson, note: “Aggregate labor productivity growth in the U.S. averaged only 1.3% per year from 2005 to 2016, less than half of the 2.8% annual growth rate sustained from 1995 to 2004… What’s more, real median income has stagnated since the late 1990s and non-economic measures of well-being, like life expectancy, have fallen for some groups.”

After considering four potential explanations, the NBER paper concluded that there’s actually no productivity paradox. Given the proper context, there are no inherent inconsistencies between having both transformative technological advances and lagging productivity. Over the past two centuries we’ve learned that there’s generally a significant time lag between the broad acceptance of new technology-based paradigms and the ensuing economic transformation and institutional recomposition. Even after reaching a tipping point of market acceptance, it takes considerable time, often decades, for the new technologies and business models to be widely embraced by companies and industries across the economy, and only then will their benefits follow, including productivity growth. The paper argues that we’re precisely in such an in-between period.

Let me briefly describe the four potential explanations explored in the paper: false hopes, mismeasurements, concentrated distribution, and implementation and restructuring lags.

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MIT competition addresses economic dislocation in the digital era — Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

From The Wall Street Journal

Few topics are as critical, and as challenging to anticipate, than the future of jobs in the digital economy. Along with its many benefits, the digital revolution has resulted in enormous dislocations in labor markets and a sharp polarization in job opportunities over the past several decades.

Recently the Initiative on the Digital Economy, an effort at MIT started three years ago to better understand the broad changes brought about by the relentless advances of digital technologies, launched a competition inviting organizations to envision the future of work. The competition aims to identify, celebrate and award prizes to “organizations that are inventing a more sustainable, productive, and inclusive future for all by focusing on improving economic opportunity for middle- and base-level income earners.”

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MIT to pioneer science of innovation — Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

From The Wall Street Journal

“Innovation – identified by MIT economist and Nobel laureate Robert Solow as the driver of long-term, sustainable economic growth and prosperity – has been a hallmark of the Massachusetts Institute of Technology since its inception.” Thus starts The MIT Innovation Initiative: Sustaining and Extending a Legacy of Innovation, the preliminary report of a yearlong effort to define the innovation needed to address some of the world’s most challenging problems. Released earlier this month, the report was developed by the MIT Innovation Initiative, launched a year ago by MIT President Rafael Reif.

I found the report quite interesting, both because I’ve been closely involved with innovation activities through a great part of my career, and because since 2005 I’ve been affiliated with MIT. Beyond MIT, the report should be of value to anyone interested in the growing importance of innovation to institutions, economies and societies around the world.

A decade ago I was part of the National Innovation Initiative, a major effort convened by the Council on Competitiveness to develop a U.S. innovation agenda. Its final report Innovate America: Thriving in a World of Challenge and Change, was released in December of 2004. The report did an excellent job in explaining the role innovation plays in U.S. competitiveness. It included more than 60 detailed recommendations in three major areas: talent, investment and infrastructure.

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Reflections on Bitcoin — Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

From Irving Wladawsky-Berger’s Blog

Ever since I joined Citigroup as a strategic advisor in March of 2008, I’ve been spending a lot of time thinking about the ongoing transition toward a global digital money ecosystem.  For over 2,500 years, money has played a central role in the rise of civilizations and in human affairs of all kinds.  As a result, the historical transition to digital money is among the most exciting and important societal challenges in the coming decades.  Its impact might well be up there with that of other major technology-based societal transformations, including electricity, radio and TV, and the Internet and World Wide Web.

The evolution to a digital money ecosystem involves a lot more than the transformation of money – cash, checks, credit and debit cards, etc, – from physical to digital objects that we will carry in our smart mobile devices.  It encompasses the whole money ecosystem, including the global payment infrastructures, the management of personal identities and financial data, the global financial flows among institutions and between institutions and individuals, the government regulatory regimes, security and privacy issues, and so on.

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