This piece was previously published on my Substack.
Policymakers are rushing to regulate artificial intelligence (AI), but the economic impact of these regulations remains largely unexplored. While the European Union and the United Kingdom have produced cost estimates, recent developments in the United States offer important new benchmarks. Recent amendments to the California Consumer Privacy Act (CCPA) and regulations implementing President Biden’s Executive Order on AI offer crucial insights into what businesses might expect to pay for compliance. The financial burden could be substantial, running into billions of dollars across the economy. Especially as states push to adopt AI bills, understanding these costs is essential for crafting regulations that balance innovation, safety, and... (read 3069 more words →)
Interesting post. Some comments from an economist.
You note,
The key economic effect of AI is that it makes capital a more and more general substitute for labour. There's less need to pay humans for their time to perform work, because you can replace that with capital (e.g. data centres running software replaces a human doing mental labour).
And also,
Let's assume human mental and physical labour across the vast majority of tasks that humans are currently paid wages for no longer has non-trivial market value, because the tasks can be done better/faster/cheaper by AIs. Call this labour-replacing AI.
These are both incredibly strict assumptions. Jobs are bundles of related tasks and traditionally when capital has been... (read more)