SINCLAIR Davidson dabbles in Meat Loaf, Essendon, whiskey and the dismal science. His work in recent years at the prang-strewn crossroads of economics, official humbug, zombie prohibitionism and especially the blockchain has been truly stellar. For this reason – and given my lack of fitness for wrestling with the suddenly everywhere topic of AI – I decided to get into shape by studying his working paper on the prospective role of artificial intelligence in macroeconomics. The subject has become critical in the discipline and few people are better at distinguishing re-badged errors from disruptive novelties than RMIT’s Professor Davidson. He says the treatise was “rushed out” and is a preliminary version. I expect it to be fattened up into a book eventually. Running to eleven pages, ‘The Economic Institutions of Artificial Intelligence’ (PDF) steals a march on all the finest minds in Canberra – whose acuity was on glorious display last week.
Davidson’s conclusion is that, no, AI is not capable of making the statist fantasy of central planning any more possible than it was in the days of Engels, Keynes and their many harebrained imitators. The ‘information problem’ of attempting to command efficacious, universal outcomes – identified long ago by von Mises and Hayek – will not be cracked even by the masses of data at AI’s disposal. That isn’t to say AI will not revolutionise economies top to bottom by powering through countless ‘bounded rationality’ limitations as the crow flies at firm and industry levels. Problems that human beings have dealt with as best they can using fallible heuristics will henceforth be solved, or at least optimally handled, as never before. Political corollaries are less predictable. Just because AI cannot unbound every irrationality doesn’t mean it won’t be asked.
As ‘decarbonisation’ and the covid panic starkly demonstrate, states now have the communications infrastructure and the gall to convince publics that a sciency authority above interrogation already exists. Increasingly, our political and woke corporate leaders like to be regarded not as advocates of subjective ideals but disinterested conduits of objective programs. To a Chris Bowen or a Dr Fauci, the heuristics of mere opinion are effectively obsolete. Even if central planners will not be rendered omniscient by AI, then, they will be empowered by it to delude themselves and damage societies on grander scales. As for accountability, it could become weaker than it already is (not one Premier or CHO having been jailed for the ‘pandemic’ catastrophe). After all, what will be left to contest when ministers start citing bots of the non-Amanda kind in Parliament?
Thanks for the paper C.L. and S.D.
Will read it with interest.
You may also be interested in Harvey Risch, My Conversation with AI Over Hydroxychloroquine
Unfortunately, AI will be used along with the other Fantasy Sciences as you allude C.L.
Thanks for the big-picture approach, C.L.
At the micro level lots of changes are taking place. Two rellos are effected – a multilevel marketer whose social media posts can be written by ChatGBT and therefore sales of advice on how to write posts have slumped: and a school teacher whose assessment programme of senior school students has had to quickly change from take-home written work to in-class tests.
The Harvey Risch article is informative. AI persistently gave incorrect or incomplete answers and then refused to say why it did this.
It was simply a voice of The Narative.
Marxists will simply use AI algorithms to present their ideological positions as fact.
Personally I’m far more worried about unbounded irrationality, but jokes aside, as someone who managed money professionally (macro manager in rates and FX, here and OS), the problem Ai confronts is much the same as what traders face today (humans bounded by their investing frameworks, the challenge of devoting sufficient time to assess price or value, and opportunity to assess risk versus reward). They’ll just auto-cluster and push prices against their own interests like the rest of us.
If we substitute every aspiring Charlie Munger for Ai we’ll inevitably get monkeys versus dartboards, the eventual cumulative effect being to reduce natural market volatility to rational market jump-shifts at each new data point (which is what we mostly see today). Unless Ai can develop some form of clairvoyance, global market returns will eventually reflect long run return on invested capital with modest lifts and falls around the annual return mean. Nobody can be a Charlie Munger, including Ai (no more outperformers because nothing can be unknown).
Taking this into the field of public policy, Ai driven policy formulation might improve things. For example, it should take a calculative nanosecond for a free Ai to determine that Chris Bowen’s energy wet dreams are actually impossible, that Phil Lowe’s 0.10% rates policy is inflationary, that tramlines to Randwick are unsustainable.
The result? Politics becomes boring. Progressive nonsense remains progressive nonsense.
Before AI were the computer models, which were used for the exact same lipstick-on-pig strategy.
2000: “computer model says Earth is melting, waahhh!”
2025: “AI says Earth is melting, waahhh!”
It’s the GIGO principle being used for propaganda. False arguments from false authority, which is designed to bamboozle ordinary people. The Earth is not burning up, but the AIs all think it is because they have been trained on the same garbage. About the only good thing is they do seem to have some ability to be convinced otherwise when real world data is presented to them.
Even if central planners will not be rendered omniscient by AI, then, they will be empowered by it to delude themselves and damage societies on grander scales.
I don’t know if you’ve noticed, but our Central Planners are currently in the process of the total destruction of the West – society, military, and economically . Don’t know how they could go to a “grander scale”…
Texas Jack,
I think you are assuming AI is rational and objective, when the article referenced by NFA shows that it is designed to push the narrative that the ruling elites want.
It is far more deceptive and manipulative, precisely because people think it must be objective.
That’s right, Roger, hence my example that ” it should take a calculative nanosecond for a free Ai to determine that Chris Bowen’s energy wet dreams are actually impossible.”
If it’s not demonstrably free it won’t take long for people to realise it’s less a form of intelligence than a tool of oppression, and its value should drop accordingly.
Btw, I have friends who run money exclusively on algorithms. They are constantly having to tweak the code to ensure they stay market relevant (make reasonable risk-adjusted returns). As Bruce of Newcastle mentioned, it’s GIGO, but also when garbage comes out it’s a bit like being a petulant royal. Eventually, even progressive have to admit the truth and stop buying meaningless BS.
Which is why I’m not afraid of Ai in the way others here are.
Klaus Scchlob huss n idea. Here’s senior adviser to Scchlob, Navel Boah Farari, to explain:
WEF Calls for AI to Rewrite Bible, Create ‘Religions That Are Actually Correct’.
Corrected intro.
My apologies to the ghost of Meat Loaf (not Meatloaf). ¯\_(ツ)_/¯
That’s pretty much it in a nutshell. Reminds me of the episode of Futurama about the all-female planet ruled by an all-powerful ‘Femputer’ (voiced by Bea Arthur). Turns out the Femputer was just a potemkin front operated by a man-hating fembot. That show is actually so old that it had (factually accurate) jokes about nobody wanting to watch women’s sports.
Currently, AI is a marketing term.
The software such as ChatGTB are simply aggregating and summarising data.
It doesn’t think for itself.
It doesn’t think.
As Entropy says,
‘It doesn’t think.’
It calculates, and on the whole better than flesh and blood.
Something special about flesh and blood, though, a form of being not even granted to the brilliant-minded angels. It may be calculating envy, then, that is propelling the various forms of attack on human biology. In the context of ai, bodies though mortal and especially because mortal (for many reasons) are quite something, after all.
Bruce Lehrmann rape trial was ‘doomed to failure’, top judge says as he launches scathing attack on ‘naive’ Anthony Albanese and Scott Morrison for apologising to Brittany Higgins
https://www.dailymail.co.uk/news/article-12205051/Anthony-Albanese-Scott-Morrison-slammed-judge-Brittany-Higgins-apology.html#comments
This article should be titled Disinformation researchers find reasons to censor AI
Sorry this link https://www.nytimes.com/2023/02/08/technology/ai-chatbots-disinformation.html
AI and interest rates:
The whole question of who should and shouldn’t have responsibility for setting rates has become highly contentious precisely because the government doesn’t want to be blamed by the public for rises and the RBA Governor cannot go on being beaten up in the media for doing his job. Chalmers seemed chuffed to surrender his power to overrule the RBA board – almost as though this will decouple rate rises from political damage.
Enter artificial intell to take the heat (accountability) off everyone.
You have to assume that given AI’s power to ‘know’ the real-time savings, volumes of trade, sales and turnover in thousands of businesses and households, that it will eventually be crucial to monetary policy generally. While it cannot solve everything at an ‘ecological’ level universally (per central planners), this is an example of how AI could play a centrally commanding role nevertheless. It can never ‘know’ what people are going to do but it will eventually be able to ‘say’ what they have done, economically and financially, up until 5 p.m. yesterday.
It does make you wonder where the buck is going to stop.
WEF Calls for AI to Rewrite Bible, Create ‘Religions That Are Actually Correct’.
Righto – start with the Quran then fellas…solve most of humanities’ problems in one go.
So The New York Times fears AI will ‘say’ false and misleading things…
LOL.
We are drenched in AI already.I watched one item on the television which said that the average person has well over 100 AI interactions everyday.
Like the U.S. government and the Voice proponents?
LOL indeed.
Mrs Entropy is not an AI.
Ah, I thought you said “instructions”.
From TWIP
https://www.powerlineblog.com/ed-assets/2023/06/Screenshot-2023-06-15-at-2.25.10-PM.png
A Trilogy of Meditations on AI and Art (Part One)
Reminds me of a much older joke about the American president, Johnny Cash, Bob Hope and Stevie Wonder being killed in a plane crash.
Then America had no Cash, no Hope and no bloody Wonder! (All of which is probably about the current state of affairs.)
Now that I think about it, I am sure the punchline was actually “Now America has no future, no Cash, no Hope and no bloody Wonder!”
Indeed, not long ago, this article would have been an excluded topic for AI.
https://www.dailymail.co.uk/news/article-12205705/amp/Chinese-military-expert-filed-patent-Covid-vaccine-died-mysterious-circumstances.html
Biff Bowman at political work (photo op)
https://twitter.com/Bowenchris/status/1670347205759373316?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
What a lot of wankers and losers at that link!
In this fake and gay world theres a high chance “ai” is just a million Indians in india sitting on laptops googling answers to questions.
what twostix says…
“ai” – a million Indians googling
That’s a cheerful notion.
Garbage in, garbage out.
Exactly.
There was a brilliant UK mocumentary called People Like Us. One of the characters studied the causes and treatment of artificial intelligence. Still get a laugh out of that.
The so-called “information problem” as stated by Davidson and others is not that the necessary information cannot be collected but because, as von Mises noted, it isn’t there because factor markets no longer exist.
My Conversation with ChatGPT on Death Rates
PS from the above,