There is no shortage of confusion around AI and what impact it will have on economic growth and, more importantly, the labor market. The reality, of course, is that no one really knows how this will play out. What we can do is construct a few stylized scenarios, select the one we mostly agree on as being the best for humanity, and with government intervention (nudges, guardrails, tax policy, and regulation) start to drive in that direction.
A recent viral post seems to suggest that the economic stagnation experienced during the first industrial revolution (dubbed Engels’ pause) is the inevitable outcome of the current AI revolution. In this Economics Weekly, Richard de Chazal constructs a few scenarios around the current AI revolution and why we should not view that outcome as an unfortunate accident, but rather as a result of the decisions we make today.