Average income in the world changed little for millennia until the industrial revolution, which began in England around 1760. While world average GDP per person (in 2011 US dollars) was unchanged from $1,200 in the time of Jesus until a thousand years later, it rose to $1,700 by 1800 and roughly doubled to $3,300 by 1900. The most recent figure (end of 2022) is an astounding $16,677 (also in 2011 dollars). What happened?
As governments became able to protect individual property rights, thus providing an incentive to develop and adopt tools that increased each worker’s output, investments in such innovations began to grow. Deirdre McCloskey argues that the broader acceptance of the ideas of liberty and dignity for ordinary people was also critical. But from the beginning of the creation of tools that enhance an individual’s output, there was pushback.
“William Lee (1563–1614) was an English inventor and alleged clergyman who invented the stocking frame knitting machine. Framework knitting, as the use of Lee’s machine in stocking production was called, was the first major stage in the mechanization of the textile industry, a process that 200 years later precipitated the Industrial Revolution.” https://en.wikipedia.org/wiki/William_Lee_(inventor)
But twice Lee was denied a patent on his invention by Queen Elizabeth I. She stated that she had “too much love for my poor people” who earned their bread by hand knitting to grant a monopoly that would ruin their employment. James I also refused him after Elizabeth’s death, so Lee moved with his workers and machines to France under the patronage of Henry IV, who did grant him privileges. Henry’s assassination in 1610 destroyed his support, and Lee died in Paris in poverty around 1614.
New technologies that increase the output of individual workers obviously mean that fewer workers are needed to produce the same output. But what are the implications of that? The same number of workers can now produce more of what they were producing, increasing overall output, or (some of them) will be freed up to produce other (perhaps new) things. One way or the other such improvements in productivity will increase overall wealth.
New technologies thus require some adjustments. Some workers are likely to need to retrain for new tasks. In addition, the most productive uses of new tools will need to be determined. Consider the hammer. Hitting someone on the head is bad but hitting a nail is good. These challenges have been faced over and over with each new technology and our incomes have grown as a result.
The latest technology is AI. The challenges posed are significantly larger. The potential benefits and risks are significantly larger. But the story is basically the same. The workers freed from their existing tasks must move on to new ones and we must learn how best to protect against the risks posed. Identifying what is real and what is AI/fake will be an important challenge. But we will again rise to the challenges and become still richer.
