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<!-- received="Mon Oct 5 15:18:50 1998 MST" -->
<!-- sent="Mon, 5 Oct 1998 17:09:19 -0400" -->
<!-- name="Doug Bailey" -->
<!-- email="[email protected]" -->
<!-- subject="Re: Economic Growth Assuming Machine Intelligence" -->
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<html><head><title>extropy: Re: Economic Growth Assuming Machine Intelligence</title>
<meta name=author content="Doug Bailey">
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<h1>Re: Economic Growth Assuming Machine Intelligence</h1>
Doug Bailey (<i>[email protected]</i>)<br>
<i>Mon, 5 Oct 1998 17:09:19 -0400</i>
<p>
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<p>
(btw, this is Doug from my home-based address)
<p>
<a name="0099qlink1">Robin wrote:
<p>
<a href="0085.html#0088qlink1">>It is easier to get more variation in growth rates with endogenous</a><br>
<i>>growth models, and there is also less consensus on how to model</i><br>
<i>>endogenous growth. So to avoid the accusation that I cooked my big</i><br>
<i>>growth speedup implications, I choose to use exogenous growth.</i><br>
<i>>This may provide a conservative estimate of growth implications.</i><br>
<i>>But yes, it would be interesting to try the simplest endogenous</i><br>
<i>>growth model, which I think is the AK model.</i><br>
<p>
That seems like a good reason to use exogenous growth. Thanks</a> for the
clarification.
<p>
<a name="0091qlink1"><a href="0085.html#0088qlink2">>>What impact might a drastically increased</a><br>
<i>>>efficiency in capital utilization have on growth models?</a> How would this</i><br>
<i>>>potential effect of AI-development be factored in to growth models?</i><br>
<i>></i><br>
<i>>Unless you forsee particular reasons to expect a change in the *rate*</i><br>
<i>>at which such utilization becomes more efficient, this effect is already</i><br>
<i>>included in the standard models of exogenous growth.</i><br>
<p>
I suspect machine intelligence would radically alter capital utilization on
a variety of fronts. Machine intelligence with human-level cognitive
abilities would allow corporations to replace human MBAs with intelligent
agents capable of assessing scenarios faster and more thoroughly. Finance
agents might develop extremely complicated but effective capital asset
pricing models. Additionally, agents could constantly evaluate capital
allocation strategies on division by division, region by region, product by
product bases. The overall corporate capital allocation strategies could be
tweaked as quickly as new real-time data could be acquired. Manufacturing
would benefit from the increased diagnostic abilities of MI to tirelessly
evaluate raw materials availability, price, and related costs; manufacturing
capacity; marketing data; etc. resulting in optimized allocations of
manufacturing assets. MI might enable more protean manufacturing processes
to enable greater flexibility to respond to the new capabilities of market
analysis. Similar processes could be applied to all areas of corporate
capital (human, intellectual, information, etc.) to reap some increased
utilization. I admit, attempting to determine the extent of efficiency
increase is difficult, but I believe it is obvious that such increases would
occur.
<p>
I'm just wanting to your pick your brain as to how such increased capital
efficiency might be integrated into exogenous growth models and how this
efficiency might ameliorate the effects of diminishing returns without using
endogenous growth models. This effect seems the most palatable and obvious
of the effects produced by the development of MI. Additionally, it might be
savory enough to the finance gods of the corporate world to overlook
whatever skepticism they might have of the feasibility of MI.
<p>
Doug Bailey
<br>
<br>
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