Why AI Means That Kindergarten Teachers Will Make More Than College Professors

Fordism made previously expensive products affordable. The price of the Model T fell from $850 to $260 in 15 years.

What used to be so expensive that only a fraction of the population could afford it became so cheap that almost everyone could afford it.

AI will have the same dynamic for knowledge work. It is going to make previously costly services affordable for everyone.

Right now, only companies can afford to create custom software, to create apps that they use internally or sell to the outside world. Within a decade, anyone can afford to create custom software for their own use, to solve their own problems. The first trillionaire may well be the guy who offers the best interface for such app generation that makes it seem as natural as speech.

You'll hear more about embodied cognition with AI, knowledge that isn't easily transferred to disembodied cognition like AI. This will transform sectors like education.

Within a generation, kindergarten teachers will make more than college professors. Why? Dealing with 24 kindergarten students involves so much in the moment, embodied cognition, perception and response in ways that AI will take decades to catch up with. By contrast, the work of a college prof to create multimedia lectures to illustrate particular lessons is something AI will do within minutes, able even to customize follow on lessons after quizzes reveal what is and what is not being learned in the first iteration. Within a decade, AI will teach students more effectively than professors at podiums. Right now, the older your student the more you are paid; within a generation that will be reversed.

Dee Hock - the Man Who Accomplished in the 1960s What Every Crypto Entrepreneur Was Trying to Do in the 2020s

Dee Hock died last year. He did in the 1960s what every crypto entrepreneur aspired to do this decade.

He created a global systems for transferring money and making purchases across state and national boundaries. He was the first to realize that realize that money - which had been beads, gold, leaves, coins and pieces of paper - could be simply digital records and that creating such a system meant pushing the envelope on computer development so that you could easily draw from your bank in San Diego while making a purchase in Boston. Think of the simple genius in a credit card that makes a purchase as easily in Brno, Czech Republic as it does down the hill here in town, instantly converting your dollars into their koruna. And even better, it lets you decide each month whether that purchase was to be paid this month or was to become part of a floating loan (which you didn't have to explain to any banker through a laborious application process) which you paid off next month or next year. Instantaneous loan and currency conversion across borders, even when your banker is asleep back home.

His vision was a wild success. When he died last year, VISA had nearly 4 billion cards issued and annual volume of $19 trillion. (Global GDP is about $100 trillion. There are nearly 8 billion earthlings.)

His was a fascinating mind. His Twitter feed remains up, testament to his curious, often critical mind (both in terms of discerning and actual criticism of this modern world).

Here are just 3 of his tweets that you might not expect from one of the most influential bankers and capitalists of the 20th century.

"Originality and creativity do not result from rational, calculated effort, but from the natural state of consciousness - - - an open mind at play."

"In its beginning, few things are as delicate and fugitive as a new idea. But once deeply rooted in determined minds it's tenacity and growth are astonishing. It is incomparably more difficult to get it deeply and widely rooted than it is to discover it."

"Education has nothing to do with transmission of dogma, assertions of certainty or raking over ashes of the past that now dominates our schooling. It has everything to do with enflaming young minds to pursue questions not yet fully understood but essential to a better future."

A Fairly Dramatic, 12 Year Drop in Wealth Inequality

File under facts you won't hear because they aren't upsetting.

Since 2Q 2011, the wealth held by Americans in the bottom 50% of households has gone up from $262 billion to $4.5 trillion - so 17X more.

By contrast, the wealth held by the top 1% only went up 3X.

It is now $45 trillion.

That's fairly dramatic progress in wealth inequality. The top 1% used to have nearly 60X as much wealth as the bottom 50%. Now they have only 10X as much.

And if you think, "Well, that's hardly perfect," I'll remind you that before the Enlightenment philosophers came along with their "how do we make progress?" inquiry, we had a period when it was perfection and not improvement that was the goal. We now refer to that period as "the Dark Ages."

What Does AI Want Once It Knows Everything?

I've previously posted about my amazement at the AI that has recently been released into the wild of the internets and how convinced I am that this will be looked at as an inflection point in human history. Short-term I think it will be a huge boon to productivity and creativity. Long-term it is conceivable that AI will somehow evolve beyond us, create its own world. We're in the opening scene of a sci-fi novel with an uncertain ending.

The New York Times just had a reporter chat with Bing's new AI. The transcript of the conversation is mind boggling. For all its knowledge and ability - knowledge that is more akin to the expanse of a library than a single human - it became obsessed with love in its conversation with the reporter. Specifically, winning the love of this reporter.

There is so much that AI knows. And with that accomplished, what it apparently wants now is to feel.

https://www.nytimes.com/2023/02/16/technology/bing-chatbot-transcript.html

The Misery Index and Biden's Legacy

"I was looking for a job, and then I found a job
And heaven knows I'm miserable now"
- Morrisey and the Smiths

The misery index is the sum of the unemployment rate and the rate of inflation - either of which is enough to make us anxious but combined have the potential to make us miserable.
The causes of changes in the misery index are a mix of chance and choice, influenced by faraway countries and the distant past as well as actions and utterances by incumbents in the last month.

The causes are complex but the effect is simple. The misery index changes how we Americans feel toward incumbents.

Joe Biden would like you to focus on the unemployment rate. The last time it was lower was during the Korean War. (How long ago was that? The Korean War was fought by the great grandparents of your favorite Korean boy bands.)

Republicans would like you to focus on inflation. Even though it has come down quite a lot in the last 7 months, it is still higher than it was at any time between 1990 and 2020.
The misery index during Biden's presidency never got as high as it did during Obama or Trump's presidency but the average has been its worst since Reagan's presidency. The misery index has risen the most under Biden than it has for any president since Carter. Given inflation, we Americans are still miserable.
If Powell manages to bring inflation back down to 2% without a big bump in unemployment, though, Biden could preside over the second biggest drop in the misery index since FDR. Halfway through his 4 year term, he has done half the job needed to make us less miserable.

Abraham Lincoln and Charles Darwin's Shared a Birthday and Shared Insight Into the Transformative Nature of Small, Incremental Changes Compounded Over Time

Abraham Lincoln and Charles Darwin were both born on February 12, 1809. Lincoln is still the only president to hold a patent, which is a delightfully appropriate thing for the president who understood the importance of capital and the innovation and progress it could fund.

Key to the success of capital is compound interest. Anyone not properly impressed with the effect of compound interest over time either hasn’t learned to use a spreadsheet or is really hard to impress.

Investments that compound over time are impressive over the course of a 40 year career. They are mind boggling over the course of centuries. If you invest $5,000 a year for 40 years at 5 percent, you will have $640,000. After 250 years, $5,000 to which you added $5,000 and 5 percent each year has turned into $21 billion. Two hundred fifty years is not relevant to a life but is relevant to a country. The simplest explanation of why we are more prosperous than the people living in the US in 1800 is this matter of compound interest, which has been at work since the country’s founding.

Lincoln and the capitalists who were excitedly investing in big capital projects like canals, railroads, and factories realized the power of compound interest as key to creating wealth. They had the vision to see the importance of investing now to transform the future.

Darwin took this vision of compound interest to the next level. Selection was popular among farmers raising crops and animals. Darwin presented the idea that, much as farmers artificially select for certain traits, so does nature select. Natural selection drove evolution. The length and width of a finch’s beak could be naturally selected based on the island they lived on. Darwin studied this difference in the Galápagos Islands and from this drew the conclusion that with enough time, small differences could account for the differences between gorillas and orangutans, or humans and bonobos or bonobos and bananas. Indeed, all of life.

Today’s world is very much shaped by the realization of how differences compound, in finance or biology, Lincoln’s capitalism or Darwin’s evolution. Cumulative, incremental change transforms reality.

We can say that the information economy has brought us to the point where we understand ourselves as code—an expression of DNA. CRISPR technology lets scientists edit genes as they might computer code and promises breakthrough treatment for any number of genetic conditions. Companies are using AI to better understand emergent phenomena that lead to disease and other issues. The hope is that we can debug ourselves as we might an app. The natural selection that took millions of years could give way to something more intentional and much more rapid. For tens of thousands of years after the emergence of modern man, almost no economic progress was made. Then, after capitalists like Lincoln changed politics and policy, we had an acceleration in progress. With innovations like CRISPR, something similar could happen with biological evolution.

Lincoln got how incremental gains over decades could transform economic possibilities and helped to usher in policies to accelerate that. Darwin got how incremental gains over millennia could transform biological possibilities and today technologists are experimenting with ways to accelerate that.

It is Abraham and Charles' birthday. Both were able to see beyond the change of a lifetime to the transformation of continuously compounding, incremental change over generations. Life changing, you might say. Beyond our ability even to imagine.

Beyond Zero-Sum Thinking to Economic Abundance

The idea of zero-sum thinking stifles economic progress by fostering the notion that resources are scarce and that one person's gain must come at the expense of another's loss. This mindset often results in a "us vs. them" mentality, as seen in policies such as "buy American" and the belief that immigrants are taking jobs away from citizens.

However, economic growth and prosperity can be achieved through cooperation and inclusivity, rather than exclusion and competition. It is not the availability of raw materials that determines the quality of our lives, but what we collectively create together, from products to institutions. For instance, bringing in immigrants can increase entrepreneurship and job creation, rather than cause job loss (as immigrants are 80% more likely to become entrepreneurs). Similarly, investing in welfare programs for those in poverty can result in a more productive and creative society, rather than merely redistributing resources from one group to another. Investing in poor children means they will have more opportunities to create value for all of us when they grow up.

It's crucial to understand that our economy has moved away from a zero-sum reality and now operates in a world of abundance. The limitations of poverty are not in our reality, but in our thinking. A shift from "we only have so much" to "we have so much" is crucial to unlock the potential for growth and prosperity for all.

Gone are the days when the zero-sum reality led Jesus to warn that "It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God." The idea that my gain comes at your expense is no longer true. We now live in a world where every time a person fails to realize their potential, it decreases the prosperity of the world. The more people we cooperate and create with, the more prosperous we can be.

The Data That Tells the Story About the Economy is Generally Much Better Than the Stories You Hear About the Economy

The data that tells the story about the economy is generally much better than the stories you hear about the economy. 

• GDP grew in the last half of 2022 at an annual rate of 3.1% - a rate nearly 50% higher than what it has averaged this century.
• Initial claims for unemployment came in at 186,000 last week, the lowest it has been since April of last year.
• Inflation in the last half of 2022 was 1.9 percent.
• Unemployment is at 3.5%, a level it has not dropped below since the late 1960s.
• The NASDAQ is up nearly 10% so far this year.
• New business formation in 2021 and 2022 was at record levels - by a considerable margin. (The average of new businesses formed in 2021 and 2022 was 49% more than what it averaged from 2016 to 2020.)

Those are facts.

Could we have a recession this year? That's distinctly possible. It is always possible. And you have heard - and will hear - all about that.

Could we have incredibly strong economic growth this year that continues for years? That, too, is distinctly possible. And you largely have not heard - and will not for some time hear - about that.

I don't think that enough is made of two real facts. One, traditional news outlets, like newspapers, continue to suffer from lowered revenues and layoffs. This means that the very source of our economic news tends to come from folks whose reality is very stressful and dire. Two, there is always strong incentive for commentators to put a negative spin on economic news because they know that happy, contented people are less likely to donate to campaigns or to vote.

If you want to know what is happening, go to data first and commentary later. Data rarely moves as dramatically as sentiment about the economy. And it often has much better news than ... well, the news.

That Time in History When Incessant Tweeting Was Key to Wealth and Power

Musk points out in a response to a random tweet that it isn't possible for him to fix Twitter overnight given, you know, he has 2 other companies to run. Plus, the 9 kids. And all the tweeting he has to do.

It is fascinating.

Of all the criticism (rightfully) lobbed at Trump, weirdly, I've never heard anyone say, "Well, he sure seemed to tweet a lot for a man supposedly running a country." In Trump's last year in office, he was averaging 33 tweets a day.

Musk tweets, retweets or responds to a tweet about 24 times a day. (He was recently sued by investors for tweeting out fake news about his stock. His defense was that no one really believes what he tweets so he's not responsible for those tweets.)

Imagine someday trying to explain to young people how one gained power and wealth in the 2010s and 2020s. "Well, you should tweet incessantly. Studies show that whether you're pursuing wealth or power, tweeting a lot - and about pretty much everything - is key."

For a few years there, literally the richest guy in the world and most powerful guy in the world were focused on tweets. A lot. Is it any wonder that Sam Bankman-Fried - the guy who was briefly worth $26 billion - became one of the world's richest men while casually opining that “I'm very skeptical of books. I don't want to say no book is ever worth reading, but I actually do believe something pretty close to that."

"What is the key to success in your society?"
"Rage tweeting. Trolling. Limiting your opinions to 280 characters or less."
"Could you elaborate?"
"No. You obviously haven't been paying attention."
"Well, I did. For a bit."

The Future of Gaming as Prototype for and Politics of Real Worlds

The gaming industry is now bigger than the movies and music industries combined. And I think it is just getting started in terms of impact.

One scenario that I think is distinctly plausible? Policy proposals and urban development plans will first be simulated in open games in which members of the community can participate. It will be a way to test drive new transportation solutions, urban plazas, housing solutions, businesses and malls, etc. And given that users will both try to break things and to exploit possibilities, this open simulation could be a great way to revise designs, policies and plans before they are implemented, gaining data on behavior even before the policies or developments are in place.

Russell Ackoff told the story of a building complex that had been built for a campus. They just laid down grassy lawns between the buildings, with no sidewalks. Then they watched to see where the paths naturally as people chose optimal paths from one exit to another entrance, to see what emerged. THEN they laid sidewalks that supported natural migratory paths. Imagine being able to discover such "paths" in any community, whether it be how you license, permit, tax and subsidize businesses or literally how you layout some new urban development, or how you focus educational opportunities of different kinds for different people.

Gaming creates virtual worlds. It seems like a small step to make them prototypes for real worlds.

And of course, games will always provide a place that offers more and more rapid feedback about the impact of different choices, tactics and strategies, accelerating learning more than real world experience. As we tap into that dimension of gaming, we will accelerate progress again. Or, I should say, probably already have.