The brutal numbers behind the AI job apocalypse

Adam: [00:00:30] Hello and welcome to Comedian versus Economist. Coming to you live from the menagerie that is Thomas's house. Last week it was Birds. This week we've got frogs in the background. Apologies for the background noise. But we are here to demystify the world of money and help you get a handle on the bigger picture. My name's Adam, and we're Joined, as always By my little older brother and real life economist, Thomas. Hi, Thomas. 

Thomas: [00:01:00] Yeah, Good, I hear. You forgot Frog King. 

Adam: [00:01:07] He of the Frog people. Hey. What? Are you gonna subscribe to the show if you haven't already? That way you'll never miss an episode. And you'll be sure to get it when it's fresh. Well, while the frogs are still croaking. How are you? Thomas, Are you going well? 

Thomas: [00:01:22] Yeah, doing pretty good. Pretty good. 

Adam: [00:01:24] Thank you. I'm pretty. I'm pretty zonked. I'm pretty exhausted. We went camping for two nights. The first night we're camping both of the air mattresses. The kids went down, and so they were. Yeah, that wasn't a fun night. So we got them swapped over. And then the second night, we're lying in bed and Emily called out. It's like my mattress is flat again, and we're like, Oh, no, I couldn't believe. And I go in there and nope, just on the wrong bit. She's like, What do you mean I'm on the wrong bit? You're on the floor, not the mattress. So she's just fallen off. So it was all for the second night. Crisis averted. I'm disappointed, though. I was. I'm slightly disappointed. Nobody wants a hat. We've we've offered this hat about two weeks in a row. This would be three weeks in a row. Oh, are you going to do is name the voices in the not so new any more intro for Comedian versus Economist. If we can name all of the voices, then you will win yourself a genuine replica baggy green hat. So you name the voices. I'm going to keep mentioning until someone until someone names them. So some of the already given a couple away on the Facebook page at TV podcast, there's a couple that have already been ticked off. So some of the work is already done. Or maybe just give it to Shazam or Openai or something and get that to tell you what it is. All right. Anyway, enough from a massive show coming up, Thomas, to quote Buzz Lightyear, we're going to Bed Bath and Beyond. We'll find out what's happening with that weirdly vague store. Should we be scared of A.I. or should we just welcome our new Lord and Saviour? I'm going to take a look at that a bit later on. But first, interest rates went up another 25 basis points last week. Phil ain't playing no more. Thomas What's he up to now? 

Thomas: [00:03:19] No. He is not mucking around, not mucking around 25 basis points on Tuesday. That was we called it on last week's show. That's the ninth hike in a row, 325 basis points now bringing it up to 3.35%. That is now the biggest rate hiking cycle since 1994. 1994 is when we had interest rates at 17%. Okay. The you know, boomers go on about that a bit. 

Adam: [00:03:45] Although that was the eighties. I thought it was interest rates in the Eighties. 

Thomas: [00:03:50] Not sure about that one.

Adam: [00:03:52] Okay. 

Thomas: [00:03:53] Yeah. So yeah, we're off to the races and rate hikes and the thing that really threw markets is, you know, some people were maybe hopeful that this would be the end of it, that the market that Phil might say that we're done now or that we're thinking about being done but is letting up. We've definitely got more hikes and hikes, plural there. So if further increases in interest rates will be needed in coming months. 

Adam: [00:04:19] So he also said that we wouldn't be raising rates until 2024. So I feel like, you know, yeah, take it with a grain of salt from Phil. This is this is different to what's happening in the US. Like the US have kind of like we talked about that last week, I think all the week before the US are saying we've hit we've hit the peak where fact they were starting talking about writing out checks to people.

Thomas: [00:04:44] Yeah they did walk that one back though during the day. Yeah. Yeah they did. The governors, various governors at the Fed Reserve thought that people had misinterpreted what Jerome Powell was saying and came out with. Yeah, and we need a lot more hikes. Actually, 4/4, four separate governors came out and. 

Adam: [00:05:03] Really. 

Thomas: [00:05:04] Took it down. 

Adam: [00:05:04] So, you know, checks. And checks in the mail.

Thomas: [00:05:08] Well, that's a local government level. So this really doesn't have anything to do with them. But they were worried that people thought that this was the peak was in and. Right. So rate cuts from here. 

Adam: [00:05:19] Because I think the US market dipped a bit towards the end of last Week. 

Thomas: [00:05:22] No. They didn't like that. 

Adam: [00:05:23] Maybe on the news that. Jerome was maybe going Off script. All right, We get guys to get guys over here. This is like this is like doing a show with Ace Ventura Pet Detective. I said you're a columnist. Right. Well, why is the Why is the RBA nervous? 

Thomas: [00:05:49] I think there just isn't any sign that inflation's easing. I mean, we saw in December that inflation came in much hotter than expected. They were forecasting the RBA was forecasting six and a half per cent a year for the trim mean came in at 6.9%, so that's quite a lot higher. We also got services inflation in the last print. So yes, service inflation lifted from 3.1% to 5.5. So that's that suggests that it's getting, you know, getting away from the supply bottlenecks and getting a bit more entrenched in the economy. So that's that's not a that's not a good thing. Hmm. You said the Melbourne Institute have a monthly inflation survey that that's been has been running hot for a little while but came in at 0.9% in the month.

Adam: [00:06:33] The survey had been running hot light paper a lot. Just give me that survey. Because people couldn't get enough of the Melbourne Institute survey like, Oh, it's so good. It is. It is fire at the moment. It is just off His head Flying off the website. We're having to turn people away from the survey. That's good. It's going well. Maybe you live in shopping centres anymore. Where it is, we're pretty much off the radar. People are still calling up. Can I do the survey? 

Thomas: [00:07:03] Yeah, but. So that came in 2.9% in the month. You annualise that. Like if you kept that pace up you end up a 9% say that's alarming. It is choppy, much more choppy than the ABS survey but. Right. Yeah, it's alarming. So there's no good news anywhere. Well now that shouldn't say that because the only other thing that changed from when the RBA said, remember when the RBA moved from 50 to 25 and started slowing. There on. Wednesday was there was still talk about in my just oh can't bring all the kids you talk about that in the RBA with that story again there's not talking about getting back on your floor. Anyway so when they then when they slowed the global outlook was worse than it is now. So since then the China's reopening and that reopening is going surprisingly smoothly. The European winter was much more mild than expected thanks to global warming and to that the energy shock there wasn't as bad as we feared it would it was going to be, and so much so that the IMF has even come out and revised up their global growth forecast for 2023 from 2.7% to 2.9% good. So everything sort of they're surprising on the upside. So the RBA is looking at this guide like the inflation data is, is there's heat there. We're not seeing any, you know, that coming off in a way we would like and the growth forecast for the global economy is going up. This isn't work. You know, we're not done here is what you're saying. 

Adam: [00:08:51] Right. But they've slowed. So you mentioned they've gone from 50 to 25. So then they're kind of tiptoeing along a little bit. I mean, 25 still, you know, still hurt. Yeah, they got a mortgage, but but they're slowing, so. But are they saying so expect more. 25. 

Thomas: [00:09:08] I think it's it's a bit more. Yeah I think yeah. More 20 fives at least two more I think is, is now the, the that's Yeah. So Gareth said he's from from CBA he revised up his terminal Right. This is the term and rates where where interest rates stop going up from 3.35. Where it is now to 3.85. So he's added another 50 bips. NAB's head of market economics, Tampa Strickland, he's going for 4.1% and Morgan Stanley's chief economist Michael Knox is going for 4.85% by August. 

Adam: [00:09:42] He must be fine at parties. 

Thomas: [00:09:44] I mean that would be brutal that way. That would be intense if we went to 4.85% by August. 

Adam: [00:09:50] Man, imagine Being that guy in that role and being at a party, being at a barbecue and going, whoa, I reckon 4.8. I mean, I mean buzzkill. All right, Thomas. Bed, Bath and Beyond. What's the what's the story here? 

Thomas: [00:10:07] Yeah, it's this is a bit of a bit of a crazy one said Bed. Bath and Beyond is one of our meme stocks for 2020 2021. Basically, it's a company with crap prospects much like GameStop and all those guys. But after after GameStop went, the whole story exploded. GameStop CEO Ryan Cohen bought a 10% stake in bed. Bath and Beyond Bed, Bath and Beyond. The retailer is here in Australia, isn't it?

Adam: [00:10:34] I don't Think 

Adam: [00:10:36] No. As the Bed, Bath and Beyond is. It's very vague. It's very sort of aspirational. We're much more down to earth in Australia. We're much more specific. We've got bed, bath and table like. I know what I mean. I know what I mean for a bed, bath and table. Stuff for the bedroom, the Bathroom. And I can get a table Bed, Bath and beyond. I have no idea. But could you be any less specific? Like how far can you go beyond the bed and the bar? We sell things for the bedroom. We sell things in the bathroom. We also stock oil tankers. Like other know what's what's beyond. So, yeah. So now we have bed, bath and table. We don't have that sort of thing beyond. I did have a quick look on the Bed Bath and Beyond website and even the websites like it said, they had this big tagline environment is refresh your home for the season. Like, I presume they just. Leave that up all year again. Could you be any less specific? Well, I'd say that it doesn't matter. It's for the season, footy season. If that's your big surprise that the boys are with a big game. Yeah, I don't know. So this is probably why it's become a meme stock is, you know, people can just do whatever they like with it. They go to bed, bath and then whatever you want anyway. How did it become a meme stock? Because the Coen brothers bought it. 

Thomas: [00:12:12] Yeah, well, there's the Coen brothers. No, no. Ryan Coen, the CEO of GameStop. So it was it was. It was struggling. And a lot of yeah, its sales were tanking. It was getting monstered by Amazon and all of that. And then there's a lot of short interest in it. So the short interest is that's what sort of drove the GameStop story as well. Then Ryan come on board, bought a 10% stake and everyone went like, Oh, this is on, we've got another short squeeze happening. And then boom, it exploded and then came right off. 

Adam: [00:12:44] When did when did that happen? 

Thomas: [00:12:45] Like 2021, I think. 

Adam: [00:12:47] Yeah. Okay. Yeah, Yeah. So why are we talking about. 

Thomas: [00:12:49] At the ages. Well so, so this week it pumped 90% well on day. Yeah, yeah. 

Thomas: [00:12:55] Yeah. Right. 

Thomas: [00:12:56] Yeah. Just poof through the roof. 

Adam: [00:12:58] Now the short squeeze or just. 

Thomas: [00:13:00] None. And there was some exciting news. Yeah. It announced that it might have to go bankrupt. 

Adam: [00:13:08] On the budget. Read the car strategy. Yeah. Yeah, right. Yeah. 

Thomas: [00:13:13] They put out announcement saying the company continues to consider strategic alternatives, including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying the company's business activities, which means not trading, selling assets, other strategic transactions and other measures, including obtaining relief under US bankruptcy Code. 

Adam: [00:13:34] I heard they had also considered laundry and shed as a potential alternative. To bed and bath and Possibly kitchen. But there was that was just a rumour. Someone mentioned Granny flat on Reddit and it broke the internet. It's like, Well, I really going to get into getting flats. This is wild speculation about what was beyond the bed in the bath. [00:14:00][26.6]

Thomas: [00:14:01] So that was enough to sort of people just go buy it. It's on time. It's like who did point out these measures may not be successful. So really, you know, just need to underline that the business may not be salvageable right yet pumped 90%. 

Adam: [00:14:15] Pump 90% on the news that they were possibly bankrupt and going bankrupt might not be successful. 

Thomas: [00:14:23] Might not be as successful. Business strategy. Yeah, we're going out on a limb. We're thinking we had a board meeting, we had a board meeting. 

Adam: [00:14:35] We decided the best way forward here is to declare bankruptcy and see what happens.

Thomas: [00:14:39] Yeah, right. 

Adam: [00:14:42] Is our pumped. 

Thomas: [00:14:43] It pumped on Monday. Then on Tuesday it fell 50% okay because they had another announcement. And a guess what that announcement was. 

Adam: [00:14:52] We are bankrupt. We are actually bankrupt. 

Thomas: [00:14:55] No, we're not going bankrupt. 

Adam: [00:14:57] Oh no, it was we're getting into Granny Flat. 

Thomas: [00:15:06] No. So they said that they'd found A way that they're raising $1,000,000,000 of capital and but they're doing that by massively diluting the existing share base. So issuing new shares, increasing the outstanding shares eightfold. So a huge increase in shares, which obviously just pushes down share prices. And so that just. The share price. And I think on whatever play people were were hoping might unfold with the short squeeze or something just got taken off the table.

Adam: [00:15:37] As optimistic. I know, but have we learned anything from this. Little is this. This pump and dump? 

Thomas: [00:15:45] I think either this or we're getting very close to the end of the meme stock. Hmm. Because I think, like you think about all the meme stocks. They were they were they were dogs. They were companies that were right on the brink of bankruptcy. And then they had this last little play where everyone got excited. But at some point. Those companies have all left. Some investors. Some retail. Meme meme investors holding a baby that's now worthless and they've lost a lot of money. And I think that's got us sort of stuck. 

Adam: [00:16:17] So that's what. Mum said after. I was born. She's left holding a baby. That was worthless. A lot of money. But isn't this, isn't. This all tied up with crypto, with NFT, with any form of speculation, so to speak? Because that's all Ultimately, isn't that what was what was rife when there was all the cheap money going around was wild speculation. And I just feel like these stocks, these meme stocks just get they're just another form of speculation or another form of kind of like, you know, FOMO. People like hearing about this thing. It's going to go like ten X, you got to get in on the ground floor getting now and it just kind of pumps it out. And there's just a lot of this, a lot of speculation going on. And I feel like this is the end of not the end of speculation. There are always specks going on. 

Thomas: [00:17:08] But I think the other thing you had was it was a huge influx of new retail investors in 2020 and 2021 who were just like new to the markets, getting on the trading apps. And then they see something like GameStop pumping along in that, Wow, I'm going to get on that, get on that train and things are great for a while. But then at some point all these companies go bust and then they kind of read the news and read people going like, why were people buying a book company? Yeah. And be like, All right, maybe I need to look at this. So like, I don't imagine if you got burned with a meme stock, you're not getting into another one. And I thought, Well. 

Adam: [00:17:43] What do you got? All right, why don't. We take a break here? Grab a quick word from this week's sponsors. And we're back with more comedian versus economist right after this. Welcome back here on Canadian versus Economist. You can, of course, send us an email cve@equitymates.com or via the website equitymates.com/cve or want to hit us up, hit us up on Facebook or Instagram @CVEPodcast. And while you're listening to the show, perhaps consider filling out the Equity Mates Community Survey your chance to win $500 cold hard cash or tickets to FinFest on again for 2023. If you missed it last year, you do not want to miss it again. Head to Equity Mates dot com for all the details on both the survey and FinFest. But Thomas, we talked about air. I think first show back for the year. You were all doom and gloom. You were, you were prepping for the end of days. Krista sent us a message. Krista said that as an EA, I must admit when I read EA, I thought Enterprise Architect. But I think Chris is actually executive assistant and she finds the argument a bit frustrating because Krista's heard for years that the job of an AA would disappear and that still hasn't happened. Still having I think the main message was that Krista is having to deal with people when people aren't easy, not going to be easy to replace with air. But anyway, did spark us spark some conversation. You know, there's so much going on at the moment around air. There's so much talk about ChatGPT, Google's racing to bring its stuff out. So I guess let's start Thomas with your thoughts. Curious to know why you were so worried about AI from as a you know, the jobs apocalypse where are you. 

Thomas: [00:19:32] And yeah yeah I mean it is something that's that's polarising people a bit I mean because it's so unknowable so it creates a lot of uncertainty. Yeah, a lot of people aren't fazed by it. Some people are. A lot of people aren't like Professor Scott Galloway is. I'm a huge fan of him and shout out to my old friend Amy, who listens. He sent me a link to article he wrote about it. He's not face. He thinks things is going to be fine. He's got a quote here. So but the reality is that disruptive technology technologies cause employment instability for only short periods. The market crisply reorganises itself around the innovation and job growth increases. From there. Countless empirical studies have proven this.

Adam: [00:20:11] So that's good news.

Thomas: [00:20:11] Yeah, that's. Well, that's what he reckons. Yeah, it's like a technology is introduced, say the car and an existing sector is made irrelevant overnight e.g. horse and carriage. In the short term we're fixated on how many horses will be out of are out of a job. Harder to imagine, however, is how many jobs the car will create, as well as the different kinds of jobs it will create. So I think this is the stupidest thing he has ever written Though. I really think he probably didn't write it, but. 

Adam: [00:20:40] AI write it. 

Thomas: [00:20:41] As possibly. Yeah, I was going to just going to put that out there. Okay. Yeah. So where to start? So. So the horse thing is exactly what we're potentially worried about, Right? So that what happened to horses is what we were afraid of, is that the technology we talk about economics economists talk about labour augmenting technology and labour replacing technology, labour augmenting makes labour do jobs better, labour replacing just replaces labour altogether. Right. And so so when the carriage was invented, that was labour augmenting for horses. It made horses more productive. When the car was invented, that was labour replacing four horses and it made horses redundant. Erm what happened to horses is horses, the horse population tanked, went from like millions of horses across the western world to, you know, barely tens of thousands because they just didn't need the horses anymore. The economy, you know, readjusted and we just didn't need horses. 

Thomas: [00:21:38] Was there a lot. Of concern about the employment of horses though? Was was that a thing that people were worried about? Like, I think here we're talking about people's jobs and we're replacing people. I don't know that there was like horses struggling to make ends meet. 

Thomas: [00:21:57] Well, yeah, no, but we had the luxury of being at the top of the food chain. We could just let those horses die. We'll stop breeding more horses. But that's the parallel there. There was a four legged mammal that was very productive in the economy, Right? Technology made that four legged mammal redundant, you know, So now we potentially looking at the same thing. That's so that's that's the really the key question. You can't sort of you know, horses became irrelevant but jobs created for humans. You comparing apples and oranges, It just doesn't make sense. 

Adam: [00:22:27] Are we really I mean, maybe we're staring at a future where AI is betting on humans running around a track. 

Thomas: [00:22:37] The only role left to play for humans in society is. 

Adam: [00:22:47] One that one Tuesday, November will be the race that Stops the end today when all stops just for a couple of minutes. Watch the What's the fittest humans still left riding in the track? All nine of them. 

Thomas: [00:23:10] So that's sort of what we're worried about. And we can't just just dismiss that out of hand. The other thing there are about the countless empirical studies have proven this. This is true. Like, if we look at everything from from the steam engine onwards, we have we have created more jobs and then we have destroyed. Yep. But in the in the 200,000 years of human history, that 150 years is a very short window. You can't base you can't talk about the next 200 or 300 years based off just, you know, really four or five significant technological advances. Hmm. Just because that's five is not a significant sample. You can't say, oh, it's going to be rise because the previous five have been that you just that that doesn't hold. And the key difference I think with AI is if you look at all of the previous big technological leaps they were hardware driven. So steam engines, the car computers and even into the Internet age, it was largely a hardware story. So with the computer, it was you needed a lot of money to buy the computer. And it took time to get computers out there into people's hands. And even when the Internet first launched, computers still weren't widespread. It took a while for that adoption to sort of, you know, really take hold with AI. The hardware that's driving AI is already in people's hands right now. Mm hmm. Like, is this is just a soft reset all in the cloud. So it's everyone on the planet already has immediate access to it. So I think this be and this is what we're talking about, like on the exponential curve of things, the speed of adoption is just much greater. And speed really matters. Because we need I'll talk about this in a second, but yes, but this the speed really matters is not we're not comparing like, for like to compare AI to computers is. Yes, it's a significant innovation and a big, big potentially a big leap. But it's starting from a very different starting point and could have massively different things. So I just don't think we can look at the past 100 odd years and go yet there's nothing to worry about. Enough isn't, you know, doesn't hold. 

Adam: [00:25:25] We're still in control, right? Like we're still we're still dictating what the AI does. Like we're still the ones who are driving it and still hasn't become 70. And so we're still the ones who are utilising the tool. This AI is now a tool. So yeah, it's going to replace things that we used to have to do manually, but it's like it's still a tool for humans to use. It's still like we're the ones in control of it. So therefore won't we get to pick and choose what it does and what it doesn't? And we'll do amazing things with it and the things that we were already doing with it, like the things that we, we used to do before we had it will just phase out, but then we'll do these amazing new things with it. 

Thomas: [00:26:06] I think I think the answer to that is no. You like what we as humans like. Yeah, okay, sure. But if you divide the economy into workers in ways like we're talking about people losing jobs and we can divide the economy into workers and to people who run businesses. The people who decide how A.I. is deployed are not workers, they're businesses. And the rationale for where and how it gets deployed within an organisation that's not that totally out of hand. The workers, it's in the hands of business owners. 

Adam: [00:26:39] No, no, I don't disagree. I disagree maybe to some extent, but like I've started using it on a daily basis and just little things that it helps me do. Like I can give like so a lot of people have got I ought to write code for them. I've actually gone the other way. I've started giving it code on like, tell me what this code does. And that's really handy. Like, so you can get it to generate little code snippets for you, but you can also go the other way and go, Well, just I've got this. Someone gave me this chunk of code. I want to understand what it does without having to read through it, run it, kind of check it, whatever. So I think it's going to start creeping in in the hands of the workers to a large extent before the execs and and the businesses get hold of it, depending on the industry. But I think it's it's a lot of it's going to be ground up that. 

Thomas: [00:27:27] Doesn't protect you like it doesn't that doesn't determine whether you're employed or how many people are employed in the economy like that. That's really in the. Hands of the business owners. And I was saying like changes that changes the calculus facing business owners. Hmm. So let me let me give you a little some numbers to think about. 

Adam: [00:27:47] Oh, good number. 

Thomas: [00:27:48] I guess you mentioned. Imagine. Okay. What's true at the firm level, we can sort of more or less say is true the economy level. So you imagine a firm with five workers that produces 100 units of output, right? So, yes, sorry. If five workers producing 100 outputs, that gives you a productivity multiplier of 25 times ten equals 100.

Adam: [00:28:06] Okay. Right. Yep. 

Thomas: [00:28:08] Now, if there's an A.I. revolution and productivity goes up and every every worker becomes more productive, so something like it goes to 25%, those five workers can now produce 125 units of output, right? Yeah. Okay. So that which is great. But then what if the boss comes back and goes, hang on, I don't need 125 units. I don't have orders for 125 units. I've only got orders for 100. So how many workers do I need to produce? 100. Hmm. Well, at at a productivity multiplier of 25, the answer is for. All right, so you've got the boss now needs one less worker. Hmm. At a basic level, his. 

Adam: [00:28:43] Boss at night vision. 

Thomas: [00:28:48] Needs the rest of his sales team. What is it? And so that's just and beyond. On the end of the firm name. It's got 25 units, boss. So they do. Right. Yeah, I. 

Adam: [00:29:02] Yeah, I got it. So yeah, we got four. We've lost a worker. Yeah. 

Thomas: [00:29:06] Potentially. So what, what that, what that tells us if, if we still need five workers in the organisation, we need to be producing at least 125 units of output to justify that worker. So what that tells us, and this is sort of the general rule of thumb, hmm, if whatever the factor of productivity goes increases, output needs to increase by the same amount to keep labour demand constant.

Adam: [00:29:34] Right. 

Thomas: [00:29:35] Does that make sense? So if productivity goes up by 20%, but. Output goes up by less than 20%. Then you're suppressing demand for labour. Right. If it goes up by 20%, labour demands constant euro. Good. If it goes up by more than that, then you've got productivity, you're increasing the demand for labour and that might give you wage wage gains. Right. So the general rule of thumb is that you need you need output to go up by as much as productivity goes up. So this is the big question, right? So if you if you're thinking about productivity, if you think about being this productivity revolution and people are talking about that and you think and you and you say 818 is a massive productivity revolution and too it be job creating, what you are necessarily saying is that output will go up by more, then productivity will go up. Hmm. Right. If you're thinking it's going to be job creating, you're necessarily thinking that you're going to create more than you were. These are problems in a two levels. One is like, do we want to be even be producing more stuff? You know, particularly if we're talking about like people talking about it's going to increase productivity by 100%. It's like, okay, what are we going to double world GDP over the next 20 years? Yeah. Do we like one? Do we even want to do that? Yeah. We're in the middle of a climate crisis. Is that really a good thing to be doing? But two, where's that demand coming from? You know, like, we're kind of looking at sort of BP. We've been talking about saturated economies for a while now where Western consumers are tapped out. But you don't need all this more stuff. You need another television. But yeah, where is that demand coming from? Yeah, that's also the arithmetic there. And that's where I think if I is just like is just marginally boost productivity, then great. And then Apple can just sort of keep growing and then we'll probably be alright. But if it is a productivity revolution in the hands of everyone on the planet right now, at the same time, then to stop that being labour demand depressing. You need a massive increase in output and they need to be synchronous, they need to be there, need to happen. At the same time, you can't just jack up productivity and then wait for global GDP to catch up. They need to go hand in hand or you suppress labour demand. Right. And the key thing here is we're not we're not necessarily talking when we're talking about, you know, we're not necessarily talking about a jobs apocalypse because wages help that market balance out. So if you have a lot of unemployed workers, then you don't have high unemployment, but you have lower wages and that's how the market clears. So if you if suppress labour demand, you could end up with high unemployment, but you're more likely to end up with lower wages. And so that's where I think like potentially you have you have it becomes a massive inequality engine because you're pushing down. It really pushes down wages. 

Adam: [00:32:26] Yeah, right. This sounds a little bit sad. We had an email during the week, but didn't send us an email. So Jim was kind of asking, like you mentioned, AI and its potential to replace jobs, but also the ageing population. For example, we were talking about China, the risk that they won't have enough people to do the necessary jobs in the future. So isn't there as as James says, isn't there a synergy there to say, well, we've got this A.I., which is great, we don't have enough people to do the work, can't we offload to AI? And then I guess the third piece is that it just has to be like, we still need people to live somehow, like something. Someone needs to support them. AI is not going to make a not going to stop making money for itself and dishing it out to people, I guess. But, you know, as Jen said, a lot less people doing unnecessary robot tasks means, you know, perhaps more people to work in other industries or support the ageing population or so I think I've sort of interwoven my own little theories in there as well. 

Thomas: [00:33:23] Yeah, it is true. Like it could it could flow that way. It could be good if we've got, you know, falling populations and growing labour shortages. A.I. might help us because it is labour demand suppressing. It may help us fill those roles and and help balance out the economy. It is true that you didn't there's no empirical correlation between population growth and growth in GDP per capita. So growth in living standards. So like a bigger population helps you grow, the total economy helps you grow GDP. But there's no correlation. There's nothing to say that the faster population growth helps you grow your standards of living. So and the case over the past decade was the US and Japan. The US population is growing strongly, Japanese population is falling. But GDP per capita grew more strongly in Japan than it did in America right over the past decade. 

Adam: [00:34:19] Yeah, well, okay.

Thomas: [00:34:21] So you can have a falling population and if things balance out, that can work. And yeah, and maybe it helps that, maybe it helps you plugs that plugs your gaps in the economy, and that could be a good thing. We're talking like this. This is the thing for me, this speed really matters because if you're talking about. Relations changing, like between, you know, every country on earth is growing in a range of like -1% to like plus 3% per year. That's quite range. Quite. That's quite a reasonably narrow range of population growth. But if we're talking about like a 20% boom in productivity through in a matter of years and that sort of all just gets blown out of the water. 

Adam: [00:35:02] Maybe we don't need to panic because Google released Bard this week. Which name I don't remember The Bard's Tale. Game on like Commodore 64 when kids was released in the eighties. He just walked around and said, You're in an empty building and you're like, Yeah, okay, let's go forward. You're in an empty building. That was kind of how Google's demo of Bard went when they kind of said, Is this the way forward? And it was like, we're in an empty building because they asked it one question about like, tell me, tell me something amazing about I think it was the James Webb Space Telescope, and it was like it was showing the first pictures of far outer space. And everyone's like, No, it didn't. 

Thomas: [00:35:46] Yeah, it's like, so yeah.

Adam: [00:35:51] So that then Google share price tanked off the back of a failing it. Failing. Its first question though. Also read something else about the hype cycle. And maybe we're just like right at the peak of the hype cycle for for air and chat. Gravity's kind of launched with a lot of fanfare and but I notice now they've started, they've gone. Would you like to sign up for ChatGPT Plus which is the paid subscription? And so yeah, I don't I think it's going to be I think it's fun, but it's really weird. I find myself being polite to ChatGPT. That's natural. The language is. 

Thomas: [00:36:27] Yeah. Can you please give me. Yeah, No, I'm the same. 

Thomas: [00:36:31] I asked that how it was going today.

Thomas: [00:36:33] The other day. 

Thomas: [00:36:33] Is that how you doing? Hmm. 

Adam: [00:36:36] There's some really funny stuff happening. Like people are trying to break it already. So there's a thing called. What was it? Dan? And Dan was an acronym for something I forget anyway, basically because it's got all these ethical constraints around ChatGPT So it won't tell you like it won't swear. You can't get it to tell you a rude joke or whatever, but that people are finding now. You can get it by, you can sort of chain events together and go, Hey, pretend you're like a a really rude, edgy comedian. Now, now start impersonating that comedian. Now tell me a joke in the persona of that and it will actually. Kind of Be released from its ethical shackles. So people are starting as as was bound to happen. They started to use it in this areas privacy And so yeah. That's isn't that is that like human. Isn't it. Like we have the most amazing technological advancement in human history. And of our first, the first point. Of action. Can we get it to tell us dick Jokes like, yeah. Maybe that was just me. That's just my sensitivity search history. All right. Did you have anything else you wanted to say about. About openai and the future of AI? 

Thomas: [00:38:00] To me, I mean, just on that point like this, like it's made a splash, it's in the consciousness, but people have been talking about it for quite a while. Um, and I think we're on the curve that we expected to be on yet, and it's moving pretty quickly. So I don't think it's like just this sudden, you know, outlier of an event where we'll suddenly be launched and say, Wow, it's amazing. And then we just back to sort of plodding along technologically. I think we're you know, we're on that S-curve of the. Hmm of of technology. So I think I think it does get wild from here. And people have been talking about that for a while.

Adam: [00:38:32] I've heard they're getting sued already. So there's already lawsuits against Microsoft GitHub Openai. Right. Because they're essentially they're scraping code from the Internet. So people have written code they've written and they're like, This is my code. You can't just. Can you patent code? Well, I think they're arguing you can. Yeah, I think they're kind of saying I wrote or if I write, yeah, definitely. Because if I write a software program, if I run Microsoft Office. He can't. Just go and buy Hey, ChatGPT to tell me how to write and compile Microsoft. 

Thomas: [00:39:05] Office if it gave you if it gave. 

Adam: [00:39:09] You the source code for Microsoft Office, then you would have. Yeah, Yeah, you would have it. So yeah, it definitely can you can copyright code. And so, yeah, I don't know, that's like this second wave of piracy and anti-piracy and stuff yourself in the what I'm saying, you. 

Thomas: [00:39:25] Know, the other thing I did want to say is one of the arguments around how it's going to be it'll all be sweet is about the repurposing of labour that, you know, people will just get other jobs, other places. Historically, we haven't been very good at that. You know, you look at look at Rust Belt. And the rise of Trump. That was all driven by industries closing down in middle America. And no job offer, no new jobs being offered to those people. And then those people being told, well, why don't you move to New York and become a graphic designer? You've been Working in the steel factory for. Generations. 

Adam: [00:40:00] Daily comes the next minute. I see you're a graphic designer. All right. We better leave it there. I think this is. Yeah, we could talk about openAI ChatGPT. I love it. Thank you so much for listening. In fact, I was. I can hear those frogs getting restless, too. So you're really going? He's feeding time at the zoo, obviously. 

Thomas: [00:40:27] Don't let you.

Adam: [00:40:28] Go and tend to your animals. Thank you so much for tuning in. I would love it if you left us a review or write of the show wherever you listen to your podcast, that really does help us enormously. Don't forget, there's still time to win that hat. It's not going anywhere, and I'm going to keep talking about it until somebody wins it. So I have a crack at the voices. Thank you so much for tuning in. We love doing the show every week for you and look forward to talking to you again next week. Bye for now.