Study Guide For Examination 2: The Second Machine Age

What do the authors describe as "two of the most important one-time events in our history"?

the emergence of real, useful artificial intelligence (AI) the connection of most of the people on the planet via a common digital network.

What is changing re: libraries, telephones, and computers?

they used to be unimaginable luxuries to the developing world but not anymore

user-generated content

users of FB, Youtube, Twitter, Instagram, pinterest, etc. not only free content and gain the consumer surplus, but also produce more of the content

What do the authors mean by the Second Half of the Chessboard? . . . and doublings happening faster?

(Moore's Law) While numbers do get large in first half, we still come across them in the real world. *Second Half* though, we *lose all sense of them* *lose all sense* of *how quickly numbers appear* as *exponential growth continues* In *Second Machine Age = doubling happens faster & exponential growth* = much *more salient* ex. 64 chess board squares. 1 grain on one, then 2, then 4 (doubles - each square have twice as many grains as previous) So 63 instances of doubling = 18 quintillion grains of rice - larger than Mt. Everest = power of exponential growth/ numbers become so big = inconceivable

Who earns most of the income from the new products and services?

"A Small group of people" top 1% increases their earnings by almost 300 % ex) *Turbotax* tax preparers are having a hard time competing with the machines that can do the work. Therefore, most of the *money goes to* the few *designers* and *engineers who create and update the program* at Turbotax

Carefully read the quote by Acemoglu & Robinson on p. 172.

"Prosperity depends on innovation, and we waste our innovation potential if we do not provide a level playing field for all: we don't know where the next Microsoft, Google, or Facebook will come from, and if the person who will make this happen goes to a failing school and can't get into a good university, the chances that it will become a reality are much diminished..." "So here is the concern: economic inequality will lead to greater political inequality, and those who are further empowered politically will use this to gain greater economic advantage, stacking the cards in their favor and increasing economic inequality still further..."

How do the authors compare traditional markets (e.g., the "90 percent") with today's markets?

"They compared these winner-take-all markets, where the compensation was mainly determined by relative performance, to traditional markets, where revenues more closely tracked absolute performance. To understand the distinction, suppose the best, hardest-working construction worker could lay one thousand bricks in a day while the tenth-best laid nine hundred bricks per day. In a well-functioning market, pay would reflect this difference proportionately, whether it could be attributed to more efficiency and skill, or simply to more hours of work. In a traditional market, someone who is 90 percent as skilled or works 90 percent as hard creates 90 percent as much value and thus can earn 90 percent as much money. That's absolute performance. "

How do the authors answer Gordon's question? *"Is growth over?"*

*NO* It is just being *held back by our inability* to *process all* the *new ideas fast enough* *Combinatorial possibilities = explode* so *quickly* Soon = will be *virtually infinite number* of *potentially valuable recombinations* of *existing knowledge pieces.*

Understand the two-by-two matrix about work discussed in chapter 9.

"To capture these distinctions, work by our MIT colleagues Daron Acemoglu and David Autor suggests that *work can be divided into a two-by-two matrix: cognitive versus manual* and *routine versus non-routine*. They found that the demand for work has been falling most dramatically for routine tasks, regardless of whether they are cognitive or manual. This leads to job polarization: a collapse in demand for middle-income jobs, while nonroutine cognitive jobs (such as financial analysis) and nonroutine manual jobs (like hairdressing) have held up relatively well. Building on Acemoglu and Author's work, economists Nir Jaimovich of Duke University and Henry Siu of the University of British Columbia found a link between job polarization and the jobless recoveries that have defined the last three recessions. For most of the nineteenth and twentieth centuries, employment usually rebounded strongly after each recession, but since the 1990s employment didn't recover briskly after recessions.Again, it's not a coincidence that as the computerization of the economy advanced, post-recession hiring patterns changed. When Jaimovich and Siu compared the 1980s, 1990s, and 2000s, they found that the *demand for routine cognitive tasks* such as cashiers, mail clerks, and bank tellers *and routine manual tasks* such as machine operators, cement masons, and dressmakers was not only falling, but *falling at an accelerating rate*. These jobs fell by 5.6 percent between 1981 and 1991, 6.6 percent between 1991 and 2001, and 11 percent between 2001 and 2011. In contrast, *both nonroutine cognitive work and nonroutine manual work grew* in all three decades."

What does Kevin Kelly observe about being paid well in the future?

"You'll be paid in the future based on how well you work with robots"

Note the price changes of the commercial *LIDAR* systems described in the chapter.

(2000) *up to $35 MILLION* (2013) *$80,000* *mass production* = could allow *price to drop* to *evel of a camera*

What is the story about the Sony PlayStation 3?

(2003) instead of simulating nuclear explosions = it was *devoted to drawing them / other complex graphics* in *realistic, real-time, 3D* glory (for *video-game players* not physicists) *matched ASCI Red in performance* yet *cost $500* & used 200w by 2006 = ASCI out of service

Note Shapiro & Varian's summary of the properties of information.

*"Info = costly to produce* but *cheap to reproduce* ex.) EU had to copy all official documents into every language rep. in EU. Once digitized = can replicate / share repeatedly

What are General Purpose Technologies, and what is the authors' point about them?

*(GPT) deep new ideas / techniques* that *have potential for important impacts on many sectors of economy* - (Impacts = boosts to output due to large productivity gains) *economically significant: interrupt & accelerate normal march of econ. Progress* should be *pervasive / improving over time / able to spawn new innovations* improve along *Moore's Law trajectory* used in *every industry in world* *lead to innovations*(autonomous cars)

What is *Kinect?

*(Microsoft, sensing device for Xbox)* *keep track* of *2 active players* *monitor: 20 joints on each* *recognize faces / voices / gestures* device = *made best guess about obstructed person's movements* (if players stepped in front of another) and *picked up all joints once came back into view* Accomplished this by: *digital sensors, microphones, video camera, depth perception system* Future: *Kinect = starting to solve SLAM problem* & will *extend Kinect system to implement a full SLAM approach* in future

How do the authors conclude chapter 5?

*Best way to accelerate progress = increase our capacity to test out new combinations of ideas* How: *involve more people* / power of many eyeballs - (Today's digital environment = making this possible) *with more eyeballs = more digital combinations will be found* innovations = will add up over time & be recombined "open-innovation" / "crowdsourcing" / recombinant innovation* *ppl.* whose *expertise far away from* problem *domain = more likely to submit winning solutions* ex.) NASA did not have method to predict onset/intensity/during of a solar particle event ---> so posted its data & description of their problem on Innocentive where "non-credentialed" (ppl. w/o PhDs) can work on the problem & upload solutions no matter what their background discipline is in. Bruce Cragin (retire radio frequency engineer) came up w the right theory even tho he had no background in astro-physics. His approach allowed NASA to predict SPE 8hrs adv. w 85% accuracy, 24hr adv w 75% accuracy

Levy & Murnane highlighted what areas besides pattern recognition as likely to stay a human advantage?

*Complex Communication* = domain that would stay on human side ex. *conversations* critical to *effective* teaching, managing, selling, etc, that require *transfer & interpretation* of broad info, requires a human still.

Note the Jeopardy example and point about pattern recognition and complex communication.

*Computers = combining pattern matching with complex cmn* to quite literally *beat people at their own game*. ex. Jeopardy: "Watson" answered 85% of Qs accurately and beat the human contestants

What will androids do to society and to the labor force?

*Hypothetical situation*: Androids could do absolutely everything a human worker could do, including building more androids Productivity and output would skyrocket In a competitive market, their prices would fall close to the cost of their raw materials and Androids would bring bounty They'd also bring severe dislocations to the labor force - Would very quickly replace most, if not all, human workers Effective production is more likely to require both human and machine inputs, and the value of the human inputs will grow, not shrink, as the power of machines increases

Ideation compared to digital labor

*Ideation* - Coming up with new ideas or concepts an area today where humans have a comparative advantage over machines (ex: journalists and chefs) Many of these activities are supported and accelerated by computers, but none are driven by them. *Digital labor* - cannot do anything outside of their programming

What is *Schumpeter*'s point about innovation?

*Innovation = outstanding fact in economic history of capitalist society....largely responsible* for & most of what we would *at first sight* attribute to other factors fundamental *importance of innovation for growth & prosperity* *Innovation is how productivity growth happens*

What is *Gordon*'s claim about innovation?

*Innovation = slowing down* "there was almost no econ. growth for 4 centuries & probably for previous millennium" prior to 1750 or when Industrial Rev. started. once growth started = stayed upward trajectory for 200 yrs, due to 1st & 2nd Industrial Rev (electricity / internal combustion engine / indoor plumbing w running water) *greatest inventions* were *so important & far-reaching, they took 100yrs to reach their main effect* "growth of productivity = slowed after 1970. One-time only benefits of the Great Inventions & their spin-offs had occurred and could not happen again. After 1970 = just second-round improvements" ex. air-conditioning window units ---> central air once main effect realized = new problem - *growth stalled & began to decline*

Boston Dynamics

*Robots aimed to support US troops* carry heavy loads over rough terrain "Big Dog" = looks like a mastiff & can go up steep hills, recover from ice slips, & balance heavy load while moving over uneven landscapes.

What is *SLAM*?

*Simultaneous Localization and Mapping* *process* of *building up* a *map of unfamiliar building as* you're *navigating through it* while *keeping track of where you are in it* *PROBLEM*: all approaches = *could NOT perform consistent maps for large areas* due to *increase of computational cost & uncertainties prohibited when too large* *sensing a sizable area & immediately crunching all resulting data = PROBLEM* = prevented SLAM progress

Note the examples of Siri's troubles.

*Siri*: (intelligent personal assistant) *does not work that well* *doesn't understand what ppl are saying sometimes* *asks for repeat clarifications* *gives strange / inaccurate answers* *rude responses* Ex. Question: "When is the next Halley's Comet?" Answer: "You have no meetings with Halley."

What is the response that has come to dominate the discipline of economics?

*Technological unemployment*: Unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor

Note the authors' point in the section starting "Another school of thought."

*True work of innovation = not coming up w something big & new* instead, *RECOMBINING things that ALREADY EXIST* ex.) PCR = technique for replicating DNA was created by recombining well-understood techniques in Bio-Chem to generate a new one ex.) "*New Growth Theory*:" take resources & rearrange them in ways that make them more valuable - (possibilities = don't "add up," they "multiply") ex.) *Meta-Ideas*: how to support production & transmission of other ideas

Kiva

*automatons* move around warehouse safely, quickly, efficiently. scuttle around buildings, scoot under shelving units, lift them up, bring them to humans. acquired by Amazon (warehouse logistics)

What do the authors mean by *"Running Out of Metric System"*?

*cannot capture magnitude* of *current & future digitization* - 2012 = 2.7 zettabytes digital data in world - 2016 = predict Internet traffic 1.3 zettabytes *if keep growing = will run out of metric system* (no measure that large yet) - (almost out of the 'zettabyte' age...then what?)

What is digitization?

*encoding info as a stream of bits* *work of turning all types media* --> into *zeros & ones* (native computer language)

What kind of robots populate today's factories?

*highly automated* but not full of *general-purpose* robots *dedicated / specialized machinery* *expensive to buy, configure, reconfigure*

What are the unique properties of digital information?

*non-rival: not "used up" when* it's *used* ex.) can't use headphones he has in his ears, but the digitized music itself, you can have it too - him listening to it doesn't keep others from doing so at same time or later too *close to zero marginal cost of reproduction*: extremely *cheap to* make another *copy* ex.) send file through cloud service *First Copy = expensive to create* *Additional Copies = cheap*

What is Varian's comment about the "sexy job", and what does the comment mean?

*statisticians* - (due to amount of data created) *digitalization = can help us better understand the past* ex. English words ^70% bet. 1950-2000 ex. Fame = comes to ppl. more quickly / fades quicker ex. interest in Evolution = declined until Watson & Crick discovered DNA structure

Be familiar with the six policy proposals the authors make. Be particularly familiar with the authors' education proposals.

1. Treat the Children Well - improve primary education 2. Restart Startups 3. Make More Matches - reduce friction/costs of job search 4. Support our Scientists 5. Upgrade Infrastructure 6. Tax Wisely

What are the "three broad conclusions" the authors have reached in their research?

1. We're living in a time of *astonishing progress w digital technology* (building blocks in place for digital tech. to be as important / transformational to society & economy as steam engine = will be 2nd Machine Age) 2. *Transformations brought* about *by digital techn = will be profoundly beneficial ones* -better because it can increase variety & volume of our consumption -Techn = bring us more choice and freedom / Digitization = improving physical world 3. *Digitization = going to bring challenges* -(bring economic disruption = computers replacing people)

What happened to American household income from the late 1990s to early 2010s?

1999 was the peak year with the income of the median American household at $54,932 but it fell 10% by 2011 to $50,054 In 2012, half of the total income in the US went to the top 10% and top 1% earned 22% of the income (doubling their share since the 1980s)

Observe the findings about college and the CLA in detail—middle and bottom of p. 198.

455 of students demonstrate no significant improvement on the CLA after two years of college, and 36% did not improve at all even after four years Students spend very little time studying, and professors rarely demand much from them in terms of reading and writing

What was Keynes' view of //technological unemployment//?

Automation could in fact put people out of work permanently, especially if more and more things kept getting automated

What is *DARPA*, and note the story about the car.

Acronym for *Defense Advanced Research Projects Agency* founded in response to Soviet Union's launch of Sputnik satellite - 2002 Announced "Grand Challenge:" *build a completely autonomous vehicle* that *could complete 150 mile course* through CA Mojave Desert - (15 entered, few hrs in only 4 cars still operational. But by 2010, Google announced its car)

What happened 1983-2009 with the "bottom 80 percent"?

Americans became wealthier overall as the total value of their assets increased, but the bottom 80% of the income distribution saw a net decrease in their wealth The top group had over 100 percent increase in their wealth top 1% had the most income in the world

What do the authors mean by *bounty*?

Are we producing more and more economically? the first great economic consequence of the exponential, digital, combinatorial progress taking place at present.

History of basic income guarantee

Came close to reality in the 20th century america Nixon Tried too Failed 1972

What is the second machine age?

Computers and other digital advances are doing for mental power; the ability to use our brains to understanding shape our environments --- what the steam engine and it's descendants did for muscle power. They're allowing us to blow past previous limitations and taking us into new territory.

Review the authors' set of policy responses (which are summarized in the last couple of pages of chapter 14).

Create a national mutual fund distribution the ownership of capital widely. Providing a dividend stream to all citizens and assuring the capital returns do not become highly concentrated Use taxes, regulation, contests, grand challenges, or other incentives to try to direct technical change towards machines that augment human ability rather than substitute it Pay people via nonprofits and other orgs to do "socially beneficial" tasks determined by democratic process Nurture or celebrate special categories of work being done by humans only Start a 'made by humans' labeling movement Provide vouchers for basic necessities to eliminate extreme poverty but let the market manage income above that level Ramp up hiring by the gov via programs like the Depression-era Civil Conservation Corps to clean up environment, build infrastructure, and address other public goods.

Why are winner-take-all markets more common now [spend time here—it's a lengthy explanation]?

Digital goods have enormous economies of scale, giving them a) the digitization of more and more information, goods, and services, b) the vast improvements in telecommunications and, to a lesser extent, transportation, and c) the increased importance of networks and standards. Digital goods have a much lower marginal costs of production than physical goods market leader has a huge cost advantage and room to beat the price of any competitor while still making a good profit.

What does *Bounty* mean?

Doesn't just mean simply more cheap consumer goods and empty calories, but simultaneously *more choice, greater variety, and higher quality in many areas of our lives* ex. returning hearing to the deaf and eventually, sight to the blind ex. more heart surgeries w/o cracking sternum ex. instant access to world's best teachers w personalized self-assessments

What does today's information technology do?

Favors more-skilled over less-skilled workers Increases the returns to capital owners over labor Increases the advantages that superstars have over everybody else Information tech increases spread and boosts bounty

How do the authors conclude the book?

Even in the face of all these challenges - economic, infrastructural, biological, societal, and existential - we're still optimistic Technology creates possibilities and potential, but ultimately, the future we get will depend on the choices we make The technologies we are creating provide vastly more power to change the world, but with that power comes greater responsibility Our success will depend not just on our technological choices, or even on the co-invention of new organization and institutions In the second machine age, we need to think much more deeply about what it is we really want and what we value, both as individuals and as a society

What are the three key characteristics of the second machine age?

Exponential Digital Combinational

How is globalization transforming the economy?

Factor price equalization: In any single market, competition will tend to bid the prices of the factors of production - such as labor or capital to a single, common price

Dystopian

Finds expression in the Terminator and Matrix movies and countless other pieces of science fiction

What is Gordon's claim about the web and e-commerce [see the inset quote]?

First personal computers = arrived in early 1980s with word processing, word wrap, spreadsheets Recently: *rapid development* of *web & e-commerce (after 1995) ---> process completed by (2005)*

Note the numbers in Jared Bernstein's research and the numbers of the economists on the top half of p. 170.

Found that while family income grew by around 20% during that time, prices for housing and college grew by about 50%, and health care by more than 150%

What is the concluding point of chapter 8 ?

GDP and productivity stats overlook much of what we value, even when using a narrow economic lens. What's more the gap between what we measure and what we value grows every time we gain access to a new good or service that never existed before, or when existing goods become free as they so often do when they are digitized.

What is the paradox described at the beginning of chapter 11 ?

GDP has never been higher and innovation has never been faster, yet people are increasingly pessimistic about their children's future living standards The combined net worth on Forbes' billionaire list has more than quintupled since 2000, but the income of the median household in America has fallen

Note the observation of the Collegiate Learning Assessment (CLA) and college effects on on the CLA.

Given to students to assess their abilities in critical thinking, written communication, problem solving, and analytical reasoning The impact of college is largely determined by individual effort and involvement in the academic, interpersonal, and extracurricular offerings on a campus

What do the authors note about changes "at the very top"?

Huge income inequality among the "stars" in media and entertainment, sports, law, business executives, entrepreneurs (the top 1%) and the rest of us "call it talent biased technical change"

Note the section on China and manufacturing employment.

If a worker in China can do the same work as an American, then what economists called "the law of one price" demands that they earn essentially the same wages, because the market will arbitrage away differences as it would for other commodities American manufacturers would be expected to shift production overseas, where costs are lower Both American and Chinese workers are being made more efficient by automation

What do the authors state about superstars vs. "second-bests"?

Improvements in digital technologies make it more and more attractive to digitize something, superstars in various markets see a boost in their incomes while second-bests have a harder time competing

Review the story about computers and chess, culminating in the Deep Blue vs. Gary Kasparov match.

In 1958, Simon and other artificial intelligence engineers predicted that by 1968, *a computer would be the world chess champion* and "machines will be capable, within twenty years, of doing any work a man could do" May 11, 1997: IBM's Deep Blue beat chess champion, Gary Kasparov, after a six-game match

What is the authors' point about replication of capital?

In a world where capital can be replicated at a relatively low cost (think computer chips/software), the marginal value of capital will tend to fall, even if more capital is used overall The value of existing capital will actually be driven down as new capital is added cheaply at the margin

What do the authors claim about GDP growth and its causes?

In the US, the rate of GDP growth per person has averaged 1.9 percent per years going back to the early 1800s. This was enough to double living standards every 36 years, quadrupling them over the course of a typical lifetime. If GDP of the US grows just 1% faster each year than currently projected, Americans would be five trillion dollars richer by 2033. *causes*: part of it comes from using more resources but most of it comes from _increases_ in our ability to get more _output_ from the given level of input--in other words, _increases in productivity_. - productivity growth comes from innovations in technology and techniques of production

What do the authors note about future careers and information work?

In the future, more and more careers will not be in pure information work - the kind that can be done entirely from a desk. Instead, they will include moving through and interacting with the physical world Professions that involve a lot of sensorimotor work and complex communication are not as subject to automation, but more competition among people

Note the example near the end of chapter 11 on call center automation.

Interactive voice-response systems are automating jobs in call centers. This can disproportionately affect low-cost workers in places like India and the Philippines If you can give precise instructions to someone else on exactly what needs to be done, you can often write a precise computer program to do the same tasks

What is the authors' general view of the value of work?

It should be one of the principal ways they get many other important things: self-worth, community, engagement, healthy values, structure, and dignity

What are the two related weaknesses of complex systems?

It's subject to seeing minor initial flaws cascade via an unpredictable sequence into something much larger and more damaging Complex, tightly coupled systems make tempting targets for spies, criminals, and those who seek to wreak havoc

Note the issue of digital content coming freely.

Many people = *willing to devote time to produce free online content* ex.) Wikipedia & Siri (improves self w user-gen data) *User-Generated content* = *created free of charge* 6/10 most pop. content sites in world = user-generated

Who is losing ground in today's economy?

Many people in the United States and elsewhere are losing ground over time, not just relative to others but in absolute terms In America, the income of the media worker is lower in real dollars than it was in 1999

Note the role of the British Empire described by Sugata Mitra in text (and viewed in class).

Mitra showed how much poor children in the developing world can learn on their own when provided with nothing more than some appropriate technology (rote learning) The British created a global computer made up of people - the *bureaucratic administrative machine* They made another machine to produce those people: *the school* The schools would produce the people who would then become parts of the bureaucratic administrative machine They must know three things: - *Good handwriting*, because the data is handwritten - Must be *able to read* -Must be able *to do multiplication, division, addition, and subtraction in their head*

Most people will be what, when income is distributed according to a power law?

Most people will be below average when income is distributed according to a power law

How has Moore's Law kept up?

Moore's Law = has *held up well over 4 decades* Today = common to use *18 months as doubling period* for general computing power 1. Law of Physics restraints = *looser in digital world* (have to do w electrons per second can be put through a channel in integrated circuit /light beams traveling thru fiber-optic cables) at some point Moore's Law must slow down but it takes a while 2. *Brilliant Tinkering: finding engineering detours around roadblocks* thrown up by physics (*skirt the limitations*) ex. difficult to cram integrated circuits tighter together, so instead layered them on top of another

What do the authors observe about quantity of photographs taken . . . and herein note the comparison of Kodak and Facebook and their economic and employment aspects.

Over 3.5 trillion photos have been snapped since 1838 (10% of that was taken last year), analog photography peaked in 2000, .... Kodak employed 145,300 people, a third of them in Rochester, New York, provided middle class jobs, and a booming economy in Rochester Kodak filed for bankruptcy 132 years later 70 billion photos are uploaded on Facebook each year

Who is capturing the value of new productivity?

Owners of physical capital, to a large extent.

What do the authors say re: Levy & Murnane on pattern recognition and complex communication?

Pattern recognition and complex communication were the two broad areas where humans would continue to hold the high ground over digital labor

In a superstar economy, what is the shape of the distribution of income?

Power law distribution (Pareto Curve): small number of people reap a disproportionate share of sales 80/20 rule where 20% of the participants get 80% of the gains

What is Krugman's point about productivity?

Productivity is not everything...but in the long run, it is ALMOST EVERYTHING" a *country's ability* to *improve* its *standard of living* over time *depends* almost entirely on its *ability to raise its output per worker* (# hrs of labor it takes to produce everything) only viable way for societies to become wealthier = is for *companies/workers* to keep getting *more output from same # inputs*

What is the career advice given by Google chief economist Hal Varian?

Seek to be an indispensable complement to something that's getting cheap and plentiful (data scientists, writers of mobile phone apps, and genetic counselors, who have come into demand as more people have their genes sequenced)

Note the authors' description of Khan Academy.

Series of online doodles and YouTube video lectures intended to teach math By May 2013, Khan Academy included more than 4,100 videos, most no more than a few minutes long, on subjects ranging from arithmetic to calculus to physics to art history Originally aimed at primary-school children, but similar tools and techniques have been also applied to higher education

Who are the three sets of winners described by the authors?

The *first two sets of winners* are those who [[*have accumulated significant quantities of the right capital assets*]]. - Can be either [[*nonhuman capital*]] + such as equipment, structures, intellectual property, or financial assets - [[*human capital*]] + such as training, education, experience, and skills + Like other forms of capital, human capital is an asset that can generate a stream of income. *EX: A well-trained plumber can earn more each year than an unskilled worker, even if they both work the same number of hours. The *third group of winners* is made up of the [[*superstars*]] among us [[*who have special talents—or luck*]].

What are the two amazing events our generation will likely have the good fortune to experience?

The creation of true machine intelligence The connection of all humans via a common digital network, transforming the planet's economics

What is the "technological singularity"?

The development of fully conscious machines There are two main strands of thinking: Dystopian Utopian

What is the authors' point about the example of music and economic numbers?

The cost of things like music has gone down since it has become digital. leads to different economics and some special measurement problems.

What have been the most important developments in human history?

The domestication of animals, the Mongol, Roman, Arabic, and Ottoman Empires. Buddha, Confucius and Socrates these men were central thinkers in the Axial Age and brought transformative schools of thought to 3 major civilizations: Indian, Chinese, and European.

What is a basic income guarantee?

The gov distribute an equal amount of money to everyone in the country each year, without doing any means of testing or other evaluation of who needs the money or who should get more or less Ensures that everyone has a minimum standard of living

Figure 9.3 and accompanying text describe what story?

The graph in figure 9.3 shows that the relatively consistent division between the shares of income going to labor and physical capital is coming to an end. It is argued that the decline in demand for labor is due to the technologies of the information age *Trend*: fewer people are working and wages for those working are lower than ever before

What is Moore's Law?

The number of transistors in an integrated circuit = *doubles approx. every year.* complexity of min. component costs = increased at a rate of 2 per year ex. *amount of computing power* you could *buy for $1 = doubles every year.* So can buy 2X as much power/dollar in 1963 as you could in 1962

How have other big economies—e.g., Sweden, Finland, and Germany—fared re: income inequality?

Their income inequality has grown more quickly over past 20 to 30 years than in the US, but because they started off with less income inequality, they continue to be less unequal than the US.

Review the section on economic theory and historical evidence for technological unemployment (pp. 176-180). This is the most complicated part of the book, if you're not an econ major. But read it carefully a couple of times. We'll discuss it in class.

There are *three economic mechanisms* that are candidates for explaining technological unemployment: Inelastic demand Rapid change Severe inequality

There's never been a better time to be one kind of worker, and a worse time to be another. Explain.

There has never been a *better time* to be a worker with *special skills* or *right education*, because these people can *use technology to create* and *capture value*. On the other hand there has never been a *worse time* to be a worker with just *ordinary skills and abilities* to offer because *computers, robots, and other digital technologies* are *acquiring* these *skills and abilities at an extraordinary rate*.

What do the authors claim about environmental, social, and individual indicators of health?

They have improved over time

Utopian

We humans don't fight with machines; we join with them, uploading our brains into the cloud and otherwise becoming part of a "technological singularity"

The biggest effect of automation on workers is likely to occur where?

Workers not in America and other developed nations, but rather in developing nations that currently rely on low-cost labor for their competitive advantage If you take most of the costs of labor out of the equation by installing robots and other types of automation, then the competitive advantage of low wages largely disappears

Note the text's discussion of Kiva and Boston Dynamics.

[[*Kiva*]]: automatons [[*Boston Dynamics*]]: robots aimed to support US troops

Tom Mitchell of Carnegie Mellon claims we're at the beginning of what?

a *10 year period* where we're going to *transition* from *computers that can't understand language* ---> to where *computers can understand quite a bit of language*

What do the authors mean by *an inflection point*?

a *bend in the curve* where *many techn*. that used to be *found only in science fiction = becoming everyday reality* ex. Star Trek: tricorders that scanned & recorded data (geological, meteorological, medical) = all on smartphones today

What constitutes the Morris social development concept?

a group's ability toaster it's physical and intellectual environment to get things done over time. Morris suggests that the results are surprising. they show that none of the developments discusses really mattered so far. at least in comparison to something else. (technology)

Computers are *good* at what?

following rules

What is the story about ASCI Red?

first product of US gov't's *Accelerated Strategic Computing Initiative* was the *world's fastest supercomputer* (1996) *calculation-intensive tasks*(simulating nuclear tests) & first to score above 1 teraflop took up 80% of a tennis court & used power of 800 homes / 800kw/hr

What do the authors argue is the best way to tackle our labor force challenges?

grow economy

What are the four categories of intangible assets?

intellectual property organizational capital user-generated content human capital

What protected ignorant or low quality sellers of products in the past?

it protected inefficient or lower-quality sellers from being unmasked by unsuspecting consumers, while geography limited competition from other sellers. No longer can the seller expect to be insulated from competitors in other locations who can deliver a better service for less.

organizational capital

new business processes, techniques of production, organizational forms, and business models.

intellectual property

patent and copyrights

Computers are *lousy* at what?

pattern recognition

How does Morris describe the steam revolution?

prior to watt steam engines were highly inefficient, harnessing only about one percent of the energy released by burning coal. Watt's tinkering between 1765-1776 increased this more than threefold. As Morris states that this made all the difference. he stated that "Even the Steam revolution *took several decades to unfold*... it *was nonetheless the biggest and fastest transformation in the entire history of the world*.

What do the authors argue about free products? [Note here the example of free newspapers vs. those with a price]

replacing a paid newspaper with an equivalent free new service would decrease GDP even though it increased consumer surplus.

What is Moravec's paradox?

the *discovery by artificial intelligence & robotics researchers that - contrary to traditional assumptions*: *HIGH-LEVEL* reasoning = requires *very LITTLE computation* but *LOW-LEVEL sensorimotor skills* = requires *ENORMOUS* computational resources [[(Hard Problems = easy, Easy Problems = hard)]]

What do the authors mean by *spread*?

the idea of income inequality, like the rising gap between upper and lower class in America right now. what does the distribution look like? -There are large and growing differences among people in regards to income, wealth, and other important circumstances of life. [[*relating to kodak*]] [[there are fewer employees so the owners are richer]]

human capital

the many years that we spend in schools learning reading, writing, arithmetic skills as well as other learning that happens on the job and on our own makes us more productive and in some cases in intrinsically rewarding. it is also a contribution to the nation's capital stock.

What explains the lag that exists between the introduction of a technology and productivity benefits?

the slow start and subsequent acceleration of productivity growth in the electricity era matches well with the speed-up that began in the 1990s. The key to understanding this pattern is the realization that GPTs always need compliments, coming up with this can take years or even decades.

What do the authors expect regarding productivity growth in the decades ahead? . . . and why?

we could expect decades of complementary innovations to unfold and continue to boost productivity. However, unlike the steam engine or electricity, second machine age technologies continue to improve at a remarkably rapid exponential pace, replication their power with digital perfection and even creating more opportunities for combinatorial innovation.