Tyler Cowen — The #1 bottleneck to AI progress is humans

**Dwarkesh Patel** (0:00)
Tyler, welcome.

**Tyler Cowen** (0:01)
Dwarkesh, great to be chatting with you.

**Dwarkesh Patel** (0:03)
Why won't we have explosive economic growth, 20 percent plus because of AI?

**Tyler Cowen** (0:08)
It's very hard to get explosive economic growth for any reason, AI or not. One problem is that some parts of your economy grow very rapidly, and then you get a cost disease in the other parts of your economy that, for instance, can't use AI very well. Look at the US economy, these numbers are guesses, but government consumption is 18 percent, health care is almost 20 percent, I'm guessing education is six to seven percent. The non-profit sector, I'm not sure of the number, but you add it all up, that's half of the economy right there. How well are they going to use AI? Is failure to use AI going to cause them to just immediately disappear and be replaced? No, that will take, say, 30 years. So you'll have some sectors of the economy less regulated where it happens very quickly, but that only gets you a modest booth and growth rates, it's not anything like, oh, the whole economy grows 40 percent a year, in a nutshell.

**Dwarkesh Patel** (0:57)
The mechanism behind cost disease is that there's a limited amount of laborers, and if there's one high productivity sector, then wages everywhere have to go up, so your barber also has to earn twice the wages or something. With AI, you can just have every barber shop with 1,000 times the workers, every restaurant with 1,000 times the workers, not just Google. So why would the cost disease mechanism still work here?

**Tyler Cowen** (1:17)
Cost disease is more general than that. Let's say you have a bunch of factors of production, say five of them. Now, all of a sudden, we get a lot more intelligence, which has already been happening, to be clear, right? Well, that just means the other constraints in your system become a lot more binding, that the marginal importance of those goes up, and the marginal value of more and more IQ or intelligence goes down. So that also is self-limiting on growth, and the cost disease just one particular instantiation of that more general problem that we illustrate with talk about barbers and string quartets and the like.

**Dwarkesh Patel** (1:48)
If you're talking to a farmer in 2000 BC and you told them that growth rates were 10x, 100x, you'd have 2% economic growth after the Industrial Revolution, and then he start talking about bottlenecks. What do you say to him in retrospect?

**Tyler Cowen** (2:03)
He and I would agree. I hope. I think I would tell him, hey, it's going to take a long time. And he'd say, hmm, I don't see it happening yet. I think it's going to take a long time. And we'd shake hands and walk off into the sunset. And then I'd eat some of his rice or wheat or whatever, and that would be awesome.

**Dwarkesh Patel** (2:19)
But the idea that you can have a rapid acceleration in growth rates and that bottlenecks don't just eat it away. I mean, you could agree with that, right?

**Tyler Cowen** (2:28)
I don't know what the word could mean. So I would say this, you look at market data, say real interest rates, stock prices. Right now, everything looks so normal, startlingly normal, even apart from AI. So what you'd call prediction markets are not forecasting super rapid growth anytime soon. If you look at what experts on economic growth, right? We had Chad Jones here yesterday. He's not predicting super rapid growth that we thinks AI might well accelerate rates of growth. So the experts and the markets agree. Who am I to say different from the experts in the market?

**Dwarkesh Patel** (2:59)
You're an expert.

**Tyler Cowen** (3:00)
Yeah, but I'm with the other experts.

**Dwarkesh Patel** (3:02)
In his talk yesterday, Chad Jones said that the main variable, the main input into his model for growth is just population. If you have a doubling, an order of magnitude increase in the population, you plug that number in, in his model, you get explosive economic growth. Why not buy the models?

**Tyler Cowen** (3:17)
His model is far too much a one factor model, population. I don't think it's very predictive. We've had big increases in effective world population in terms of purchasing power. A lot of different areas have not become more innovative. Until the last, say, four years, most of them became less innovative. So it's really about the quality of your best people or institutions, as you and Patrick were discussing last night. There it's unclear what's happened, but it's also fragile. There's the perspective of the economist, but also that of the anthropologist, the sociologist. They all matter. But I think the more you stack different pluralistic perspectives, the harder it is to see that there's any simple lever you can push on, intelligence or not, that's going to give you breakaway economic growth.