Will America Spend 9% of Its GDP on AI? The Industry Is Counting on It
wsj.com
wsj.com
My question is WHY ? Why does everyone need a shrink every few days ? Why does everyone need AI ?
Most jobs and activities are plain and simple. How exactly is AI going to help cleaners, who clean toilets or hospitals or shopping centers ? Same question replace plumbers, why does a plumber need AI. Fixing taps, installing a toilet or laying down new pipes, no plumber is going to spend hundreds of dollars on tips from AI.
Why would every worker or employee spend thousands a month on AI for their work, WHY ?
One thing tech has always done is reduce the skill level needed to be useful, for example cheap electric calculators made it possible to work as a cashier without being any good at mental arithmetic.
So, hypothetically speaking, why would you hire an expensive plumber if you knew some random person wearing AR glasses and getting tips off an AI assistant was 1/3rd the price?
Im not labelling any job stupid, im simply saying they are simple and there is no justification to pay hundreds of dollars a week for anything that AI may help.
> One thing tech has always done is reduce the skill level needed to be useful, for example cheap electric calculators made it possible to work as a cashier without being any good at mental arithmetic.
No argument about calculators, but most job wouldnt pay hundreds of dollars a week for the utility of a calculator.
Even an accountant who adds numbers all day, wouldnt pay 1/2 their wages on a calculator.
> So, hypothetically speaking, why would you hire an expensive plumber if you knew some random person wearing AR glasses and getting tips off an AI assistant was 1/3rd the price?
Your friend might be good with their hands, but they are not going to have the equipment for most jobs. WHen you buy the services of a plumber or any other tradesperson you are not only buying their skills, you are also leveraging their equipment.
Its not actually cost effective to buy the tools you need and invite your friend, even if they work for a pizza, the actually cost will be more.
WHats next do you also think your friend with AR glasses can also do brain surgery because all they need is a knife ? Hospitals carry very expensive equipment, its far more than just a knife and a YT video.
Neither was I; I was saying that the US spending 9% of its own GDP looks a bit silly if that AI is only used within the USA's own economy.
> No argument about calculators, but most job wouldnt pay hundreds of dollars a week for the utility of a calculator.
Today vs. before the tech existed?
Today: That's because calculators cost single-digit dollars/pounds/euros.
Yet if you took a calculator back in time a century, it's not inconceivable that businesses whose job involves lots of arithmetic would value it at 10-15% of average wages, given the labour it would save.
However, as you may have noticed, a calculator doesn't do every job.
I see the same applying to AI, at least for now: for jobs where it's useful, it's worth 10-15% of wages. This isn't all jobs. Regardless of if it was all jobs or not, the tech gets cheaper, and just as nobody can charge more than a single digit $£€ for a basic 4-function calculator, nobody will be able to charge 10-15% of average wages for 2026 AI even a year from now let alone a century.
> Your friend might be good with their hands, but they are not going to have the equipment for most jobs. WHen you buy the services of a plumber or any other tradesperson you are not only buying their skills, you are also leveraging their equipment.
I don't mean "your friend". I mean pretend you're founding a new house repair firm: do you hire expert plumbers, or do you hire (presumably in a few years because neither the AI nor the AR is good enough today) random people willing to follow instructions from their AR glasses? You've bought all the equipment etc. the same in both cases. Who do you hire?
And when everyone does that, do you as a customer prefer to hire the cheap company whose staff are as described, or the traditional firm that's 3x the price?
Before you scoff: this kind of thing has happened repeatedly with previous technologies. The main difference with the current architecture of modern AI is how general purpose it is, not that this is new. Previous architectures of AI were more like a normal technology, making one thing obsolete at a time, like manually reading letters in a post sorting office, but just that and nothing else.
High-skill roles get some automation, that turns them into low-skill roles. Suddenly, their bosses don't need to spend so much on wages to get the tasks done.
That's the point with my cashier example. Someone working as a cashier in 1876 needed to be good at mental arithmetic, if I showed them a pocket calculator they might be impressed but in this context I'd expect them to be insulted: why would they need that for their job? Then the mechanical one was invented (to avoid embezzlement), and suddenly their bosses didn't need to hire people with that skill.
In my country (Australia) all plumbers require a license and i would expect them all to be experts.
I dont think you appreciate that doing any skill such as plumbing is more than just watching a video. Nobody is going to become a brain surgeon or plumber just because they wear any sort of glasses or goggles or new age technical equipment.
> That's the point with my cashier example. Someone working as a cashier in 1876 needed to be good at mental arithmetic, if I showed them a pocket calculator they might be impressed but in this context I'd expect them to be insulted: why would they need that for their job? Then the mechanical one was invented (to avoid embezzlement), and suddenly their bosses didn't need to hire people with that skill.
I think you fail to comprehend, that the market value of AI is over a trillion.
THe only way they can even pay the interest on those investments is to charge EVERYONE thousands, and thats my point.
Yes a calculate is worth a few dollars, but when you spend trillions you require thousands if not more from everyone just to make the payments on the interest you owe. The value divided across all the people of America is significantly more than the value of a calculator.
This is serious money.
Good for you.
This didn't work out for the stevadores whose (human) licensing requirement in some ports meant their ports became obsolete and the majority of shipping moved to other ports.
> I dont think you appreciate that doing any skill such as plumbing is more than just watching a video. Nobody is going to become a brain surgeon or plumber just because they wear any sort of glasses or goggles or new age technical equipment.
I didn't say "just watching a video", I said "AR glasses", and I write that for a good reason: augmented reality, even the poor versions we have now, can draw things in your field of view and walk you through stuff.
A video from a language tutor will teach you a certain amount; someone using Google Translate's augmented reality mode which they copied from Word Lens after buying it 15 or so years ago, that's a very different experience: high chance you learn little to nothing by using it, and yet the user can hold up their phone to some Arabic or Chinese text they absolutely never studied and see those words written in their own language on their phone's screen.
Similar with taxis: a huge fraction of the population needed to learn to drive, so when the specialist skill of "remembering a city's whole map" was rendered obsolete by cheap GPS, Uber was quick to follow, and Uber (etc.) drivers are famously not well compensated.
For me, plumbing is an illustration rather than a prediction. Given some (future!) AI and AR, this is how it could turn from a high-skill role to a low-skill role. But hey, we might get those robots first, and then it's a "humans need not apply" role. I think general-purpose robotic AI is at least a decade off, possibly more. Workplace AI assistance is already being rolled out, the question is the scale and impact, which could be anywhere from "why did we bother?" to "well that whole profession no longer exists" and everywhere between; we will only be sure after the fact.
And also note: you're the one introducing brain surgery here, when I'm staying on plumbing. Surgery also needs dexterity/steady hands (which robots already have) and quite an unusual personality to be psychologically able to cut someone apart in the first place (yes for their own good, but even done right it will look like a first-person horror movie), so when this tech is good enough for that, it's a fully robotic surgeon not some guy letting themselves be a meat puppet for an AI.
> I think you fail to comprehend, that the market value of AI is over a trillion.
> THe only way they can even pay the interest on those investments is to charge EVERYONE thousands, and thats my point.
Lol no. 9% US GDP is about 3 trillion USD/year; I'm saying this only works out if the world is buying from the USA, at which point it's $3e12/8e9 = $375/person/year.
I don't think it gets distributed equally over all jobs, and even 9% is pushing optimistic due to 60% of world nominal GDP (about 50% by population) being in countries which are extremely suspicious about the US these days, but even then it's not "thousands".
For example: you can eliminate about 1.3 trillion USD/year worldwide just by displacing the role of "software developer", just wages and similar direct to employee compensation.
Reducing plumbing from current wages to minimum wages would be, IDK, perhaps $100e9/year? Something like that. But as I say, illustration. You want a sum, pick whichever jobs (or more precisely, tasks) you think are most vulnerable to AI (not just today's AI but what you think will come to exist over the time it takes for these investments to get paid off) and add them up.
(Also, market cap != investments. I absolutely expect the market caps to undergo a 'correction' and come down significantly; but this is a separate question to interest on loans etc.)
Thats a completely different unrelated statement, which my answer did not attempt to address.
> I didn't say "just watching a video", I said "AR glasses", and I write that for a good reason: augmented reality, even the poor versions we have now, can draw things in your field of view and walk you through stuff.
This is completely untrue.
No company is replacing university or surgeons.
> Lol no. 9% US GDP is about 3 trillion USD/year; I'm saying this only works out if the world is buying from the USA, at which point it's $3e12/8e9 = $375/person/year.
Africa, 1/2 of Asia and 1/2 India pretty much accounts for 3/4 of the world. Most of those people dont even earn $375 a year. THe average hard working African farmer has no need for AI and is not going to spend anything on that nonsense. THe same is true for anyone in Yemen or Afghanistan etc.
When you eliminate all these people we are left with far less and your $375/person/year suddendly becomes conservatively $5000 a year.
I highly doubt the average Mexican is going to invest $5000 a year on AI.
Why would they ?
Why would a person who works in a cafe or works in Walmart need AI and why would they spend $5000 a year on it ?
You are making a lot of assumptions that this is possible.
If this was half true, why havent the AI companies rewritten and replaced all other software products ?
Why didnt Claude offer a bigger/faster/better software to replace the system used by airports and planes ?
Same question, replace Adobe and their graphics etc s/w ?
There are so many markets that AI could replace but they havent.
They havent because they cant.
Theres no value in the junk that AI delivers. Nobody needs cat videos with rainbows.
Microsoft & Google today still employ thousands of software types, pot, kettle, black.
Because I'd trust the plumber so much more. Not just in terms of doing the job at hand, but also knowing that I have some sort of recourse if they were negligent.
I wouldn't trust a random person wearing AR goggles and using an AI assistant at all. I'd fix it myself long before I'd even entertain that idea.
But for plumbing I want someone with enough experience of actually doing it. Or at least someone to take proper look after someone with less experience has done the work. And no I would not trust any AR system to be on that level...
Sure you saved a few dollars today, but when enough people save themselves a few dollar, you also get tragedies that cost everyone a lot more than the savings of today.