AI as a Productivity Tool and What Lies Ahead?
Casey Handmer, the author of the blog, examines how artificial general intelligence (AGI) and artificial superintelligence (ASI), together with fully general-purpose humanoid robots, could radically transform our economy. According to him, we are approaching another industrial revolution that could increase gross domestic product (GDP) many times over. Handmer refers to a 1930 prediction by economist Keynes, who expected automation to reduce working hours to just 15 hours per week by 2030. Today, we can see that people work fewer hours in less physically demanding jobs than their grandparents did, but the 40-hour workweek remains the standard, despite competitive pressures in some sectors.
Handmer emphasizes that Keynes was right that the cumulative growth of capital leads to radically higher GDP and living standards. However, he underestimated how inventive we would be in finding new things to spend money on. With modern technology, we could sustain an entire civilization at the level of abundance found in 1700—with most people free from hunger, but without real healthcare or technology, and with a life expectancy of 35 years due to high infant mortality—with minimal effort. The key, however, is maintaining the economic dynamism that drives technological progress and capital accumulation.
The Four Quadrants of Goods: Rivalry and Satiability
Handmer divides goods and services into four quadrants based on whether demand is satiable (it can be satisfied) or insatiable, and whether supply is rivalrous (consumption by one person limits consumption by another) or non-rivalrous. For example, rivalrous and satiable goods include housing, food before the agricultural revolution, credentialed education, and regulated childcare. Rivalrous and insatiable goods include untaxed land, healthcare, and education.
By contrast, non-rivalrous and satiable goods include LCD displays as an example of luxury consumer electronics that have become universal, high-quality, and inexpensive, as have automobiles and food since the agricultural revolution. Non-rivalrous and insatiable goods include software, aviation, inference computing power, and armies of robots. This model explains why the costs of some goods rise faster than inflation even as overall wealth grows—technology increases supply elasticity and transforms scarcity into abundance.
The Challenges of Scarcity: Housing, Healthcare, and Land
Handmer warns of a nightmare scenario in which a small group of AI "superusers" increases its productivity a hundredfold or a thousandfold, leading to an imbalance. If these people capture part of the financial benefit, they may increase demand for rivalrous goods, causing inflation. For example, in San Francisco, an intentionally constrained housing supply could be driven even higher by a generation of AI billionaires—an old, dilapidated apartment might cost not $5 million (approximately CZK 112.5 million), but $500 million (approximately CZK 11.25 billion).
The solution is to turn rivalrous goods into non-rivalrous ones. Historically, food was rivalrous and satiable, but the Haber-Bosch process and synthetic fertilizers made it abundant—shopping at Costco does not constrain anyone else. For healthcare, which is rivalrous and insatiable because of the limited number of doctors, he proposes AI doctors costing $0.10 per hour (approximately CZK 2.25), which would eliminate scarcity. The next step could be immortality technology, which would make healthcare satiable and non-rivalrous.
For land, which is rivalrous and insatiable, Handmer proposes Georgism (a land tax) or technological solutions such as massive desalination and irrigation, or potentially access to land in space. Housing can be addressed simply: relax zoning restrictions and build more, while rapid AI-driven economic growth will mitigate the impact on property owners.
Energy as a Key Factor
Energy is a key constraint on scaling AI. Handmer emphasizes that renewable energy sources, particularly solar power with batteries, are rapidly becoming cheaper and could be expanded to 5 to 15 times their current capacity, making electricity nearly free. This would remove constraints on AI and economic growth. Geopolitically, the competition for advanced chips and energy plays a role, with export controls between the US and China.
Handmer compares corporations to early forms of non-human superintelligence that operate with autonomy and at a scale beyond human capabilities. If AGI drives GDP growth as high as 50%, addressing physical and regulatory obstacles will be crucial to ensure that the resulting wealth benefits everyone.
From Scarcity to Abundance
The goal should be to help civilization absorb technological advances without creating an artificial class of "those left behind." Rapid AI-driven growth opens up opportunities for new companies and products that satisfy new desires. Instead of playing complex bureaucratic games to allocate scarcity or taxing people into poverty, we should let technology lift the burden of scarcity, ensure that supply grows alongside wealth, and allow everyone to share in the benefits. Handmer sees AI as an opportunity for change in which rivalrous goods become abundant, just as food did—all without artificial constraints.
Source: caseyhandmer.wordpress.com
