AI could mean free doctors and lawyers for everybody in 10 years, OpenAI investor Vinod Khosla has said.
People tend to look into the future when they are exposed to a new technology and extrapolate the worst. The only time I didn’t see this talked about was with social media. Everyone was hunky dory about it and didn’t see the consequences.
Like society breaking down.
But, new AI products are being rolled out continuously now. I am not afraid of them. I do understand there might be some bias programmed into them but that can be worked out.
wrote today about empathy being integrated into medical AI.Here is the point of this post. Technological revolutions usually take out layers of distribution that are toll-takers. They usually put market participants closer to a live bid/ask spread which means they are nearer to the market price. They are freer to interact with that market price, and that changes their behavior allowing the behavior of the entire market to change. The invisible hand sweeps in.
You don’t believe me, do you?
There is an entire body of economic research that has persisted for over half a century on human capital and decision-making. Gary Becker was initially the one who took the concepts of economics and applied them to human behavior. Kevin Murphy and others carry that torch today.
In one of the first mini-lectures I ever sat through at Chicago Booth, Kevin Murphy talked about markets. Everyone was primed to get their MBA and be “numbers” people or “business” people. Business is about markets.
But, Murphy turned the entire concept on its head and said there is a “marriage market”. Yes, true love is a market. There is a supply curve and a demand curve. Where they intersect is the market clearing price.
You had standards for yourself and the person you desired to marry. Those standards form a continuous supply curve. Other people in the market have their standards, and that forms the demand curve. Boom, you have a market and a bid/ask spread around that price. Some people in the market hold out for what they deem is the best deal. Others might over bid. Still others are afraid to make a market, and are just price takers. There are costs and opportunity costs, and most importantly there are constraints. There is freedom of choice of exit and entry. It’s perfectly competitive. It’s all over the place and it really is a market.
Hence, when you see a crazy woman in a social media video say that if you don’t spend $500k on her wedding ring, it’s not crazy. She’s just making an “ask” in the bid/ask spread. You don’t have to say yes.
Everything you do in life has a bid/ask spread. You just don’t think about life in those terms. When you go to a grocery store, what is the bid/ask spread?
Certainly, the items you desire to purchase. Often there are substitutes for some items and you might purchase them because they are cheaper. Everyone realizes that this is a part of the economic equation of life.
But, how long do you want to spend in that grocery store? How long will you search for an item or substitute before you quit? Time is certainly one of the opportunity costs that most people don’t intuitively think about when they go shopping. Some people hate going to the grocery store, others enjoy it. Their opportunity costs of time for that endeavor are different, and that changes the bid/ask spread of going to the store.
When I see people say that some technological innovation is going to totally turn some occupation into a wasteland, I tend to disagree with them.
First off, I am a person who lost their line of work via technological innovation. Floor trading ended. You are reading the blog of a dinosaur. So, if anyone can understand the fear of tech, it’s me!
Here is what I see happening in law and medicine. The great lawyers/doctors who learn how to harness the tech will get even better. They will make more money than they dreamed of. They will be able to apply their unique expertise faster and to more clients than ever before. Conversely, more people who didn’t have access and had to settle for a lesser substitute good will be able to get their services at a price they can afford.
Lawyers/Doctors who don’t evolve with the tech will either find a niche they can play in to keep working or they will have to find a new career.
Traders did the same. Some went to really illiquid marketplaces and made markets there. Some changed their trading style and were able to survive. Some harnessed electronic trading and made big money. A small minority of traders were able to transition from the pit to the screen doing exactly what they used to do and are making more money than they did in the pit. Most exited.
Instead of focusing on who is going to get put out of a job, or disintermediated, focus on where the bid/ask spread in that particular market is actually happening. That can be hard to do because sometimes it isn’t a hard money figure. If you can ascertain it, you see better whom technological change might affect, and who can take advantage of it. It might allow you a vision of which adjacent competitors can enter, and which existing ones might leave.
AI is here. It’s not going away. Years from now when quantum computing gets perfected and AI systems use that tech, it will be even more robust than it is today. Better to figure out how to use it, and harness it for your own good than try and kill it.
The ones that want to kill it can start with AI, and get rid of cellphones and computers. Then, they can kill washing machines, ovens, cars, and any other invention that makes your life better. Finally, we will all be living in grass huts or caves again, farming our vegetables and cooking them over an open fire.
Agree with all of this. Looking at a dinosaur style exit myself, most likely. But the overall truth remains. Every major change has costs and benefits. The benefit of technological change has dwarfed the costs over time. If the costs fall on you, personally, like seeing the open outcry trading pits close, it's hard or sometimes fatal. But the process is the point, and the aggregate on-net should be the policy basis. Like many things, you cannot get the good things if you are sentimental about the price to be paid. I read a book once called Americans and Horses written around 1940. There was still a large equine economy, but it was clearly fading. Huge swathes of the economy were built on horses -- breeding, selling, feeding them, disposing of the carcasses, building and repairing carts, wagons and carriages. All but a tiny fraction of those jobs, ancient jobs which went back centuries in many cases, are dead, gone, forgotten, and unlamented. But at the moment of its death, that whole way of life did have its mourners. But no one tried to keep it going. People in those days had hard lives, and they liked progress, safety, comfort, convenience, reliability, because they grew up in the painful, cold, risky old world, which had no glow of nostalgia for them. They knew and appreciated improvement when they say it. My Dad lived through the transition from horses to motor transport. Zero regrets from him! He had to clean out barns as a kid. Most of our current economy will go the way of the horse in a generation or two. We should not cry about that. Bring it. It will be worth it.
The market view of the world is a useful lens. To make the market work, you have to create and harness competition -- such as competitive bidding.
When I was building high rises, I would always put the plans in the hands of a number of competent builders -- companies who had built tons of high rises.
I never had a consistent winner -- meaning one company who was the low bidder all the time.
Oh, I had my favorites, but unless I drove them to sharpen their pencils I never got the "right" price.
I even see it in smaller projects like re-pointing the brickwork on my century old home. The smoothest operator literally priced the job at 10X the eventual mason.
You have to make the market work for you.
I believe the potential for gigantic strides in medicine via AI is gigantic. We will have constant monitoring of our vitals and AI will tell us when we are getting sick and what to do before we are hopelessly ill.
Couple this with digital medicine and we will all live to 150.
Take care of yourself.
JLM
www.themusingsofthebigredcar.com