Anton Korinek is an economist at UVA and the Brookings Institution who focuses on the macroeconomics of AI. This is a lightly edited transcript of a recent lecture where he lays out what economics actually predicts about transformative AI — in our view it's the best introductory resource on the topic, and basically anyone discussing post-labour economics should be familiar with this.

The talk covers historical development of what the bottlenecks are: for most of history, land was the bottleneck and humans were disposable. The Industrial Revolution flipped this. AI may flip it again: if labor becomes reproducible, humans are no longer the bottleneck.

Korinek walks through what this implies for growth (potentially dramatic), for wages (likely positive effects until some threshold of automation, then a sudden collapse), and for policy (e.g. our entire tax system assumes labor income exists). He also addresses some confusions: "prices falling" and "productivity rising"; "post-scarcity" is a misnomer since even cheap resources have prices; and no, there's no economic law that technology must create jobs—that was just an empirical regularity when humans were the bottleneck.

The uncomfortable conclusion is the economy doesn't need us. It can run perfectly well "of the machines, by the machines, and for the machines." Whether that's what we want is a different question.

Transcript is under the video

I want to start by talking about some high-level lessons about the economics of transformative AI—or the economics of AGI, which are not exactly the same but close substitutes to each other. I've split this into three big themes which I call "the good", "the bad," and "the ugly".

What do I mean by that? There is the productivity and growth impact of AGI, transformative AI—that's "the good". There is the labor market disruption and inequality aspect—which is "the bad". And then there are the TAI risks and alignment. I unfortunately don't have very much to say on that, but I'm still including it—which is "the ugly". It also has some economic repercussions. So let's first jump into the good, so that we can end on a high point.

Three Categories of Economic Impacts: Productivity and Growth (the good), Labor Market Disruption and Inequality (the bad), TAI Risks and Alignment (the ugly)

The Good: Productivity and Growth

I'll start with some economics 101. You can forget about the equations, but maybe some of you have seen this in your undergraduate econ. The way that we economists think about the economy is that we produce output Y by combin...

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