AI and the economy

How about the stock market? I wanted to do one follow-up on that. My theory right now is that a pause wouldn't actually be that bad for the stock market, because the models are smart enough that demand isn't really limited by their capability, but by human ability to deploy them effectively. So it doesn't really matter if they succeed 10% of the time or 30% of the time on Millennium Prize problems — it's much more like, what can Bob in accounting do to get two people's worth of work done as one person? What do you think? I think the valuations of the companies — both the non-IPO companies and the publicly listed companies that are in the AI supply chain — probably rest on us doing more than that. They're probably not entirely AGI-pilled, but I do think they expect a per-GPU inference price, or whatever that is, that's a lot higher than what would make sense for Bob from accounting to pay for even Fable 5.1. If you want to make sense of the valuations, and if you want to make sense of the scale of the build-out, the shape of contract and the shape of demand you're expecting is more like millions and millions of dollars in R&D acceleration contracts with pharma and material science and so on, where they can make major contributions and help you find extremely profitable new drugs — that kind of thing. You're probably also expecting further internal uplift and actually competitively priced automated AI R&D uses — coding agents that are able to ask for much, much higher prices.

So let's talk about the rest of the world. You have this big report that just came out on transformative AI strategy for Europe, and there's been some discussion — I actually talked to one of your coauthors a bit back about the compute deficit that Europe has and the need to do something to be a live player going forward. But before we get into the strategy for what Europe should do — what's the worry if they do nothing? Because I also think whatever you think might happen to Europe if Europe stays the course is probably what happens to, like, 70%, maybe 80%, of the world's population by default. What does the future look like in your mind for Africa, Latin America, South Asia, etcetera? So the most immediate and obvious mechanism was always just to bet on the demographic differences — you had very rapid population growth, a fairly cheap workforce you'd be able to use to your comparative advantage, and then quickly bootstrap into hosting some foreign firms and exporting some valuable good into the global supply chain, predicated on the idea that you had this workforce you could put to use in a way that made you a comparatively beneficial country to conduct business activity in. And I just don't know whether that's going to remain the case. It's definitely not going to remain the case for most aspects of the menial services economy — I just don't see a stable way that that sector of the economy really exists once we have very powerful AI systems. There are definitely going to be new services jobs, human-preference jobs — you can think about all these labor-market effects in the long run. But this idea that you can just be immediately useful to global supply chains by do