Is the great stagnation over?
Shortly after the 1918 "Spanish Flu" departed, the Roaring Twenties arrived. History may not rhyme, but even an echo of that powerful economic boom would be most welcome.
Here's one reason why I'm cautiously hopeful that a kind of Roaring Twenties Redux might follow the coronavirus pandemic: Artificial intelligence researchers at Google's DeepMind unit announced Monday that an AI program had cracked the long-term problem of predicting how proteins in the human body fold into 3D shapes. "This long-sought breakthrough could accelerate the ability to understand diseases, develop new medicines and unlock mysteries of the human body," The New York Times reports.
Well, not just that — as important as solving this 50-year riddle could turn out to be for human health and longevity. The possibly game-changing advance also suggests some legit reason for optimism that the apparent long-term slowdown in technological progress more broadly — the "I was promised flying cars but got Twitter instead" syndrome — might be ready to reverse. If that happens, get ready for faster economic growth and all the good things that go with it, such as higher wages. Or how about greater capacity to solve big problems that might not automatically show up in GDP numbers such as climate change and the threat of future pandemics?
To be sure, a long boom is not the current expectation from economists. Even the most bullish forecasts expect only a growth blip over the next couple of years as the economy rebounds from last spring's pandemic-induced shutdown. Maybe a boomy 2021 and 2022 before a deceleration back to the uninspiring 2 percent-ish pace we've been experiencing since the Global Financial Crisis of 2007-2009. The Congressional Budget Office recently predicted the economy's growth potential going forward will be almost a third slower than it has been over the past 50 years.
But AI could help change the gloomy forecast. Typically, the use case for AI is presented as automating operations such as customer service or improving decision-making through data analysis. And that stuff is important. Companies clearly think so, or they wouldn't be spending nearly $50 billion on AI systems this year. And the pandemic may be accelerating the trend. Moody's Analytics economist Mark Zandi said in a client note this week that many businesses "have taken advantage of the pandemic to more fully deploy technologies and process changes that they were investing in but reluctant to take full advantage of during the good times."
Maybe more important, however, is the role of AI as a super-researcher. In the paper "Are Ideas Getting Harder to Find?," economists Nicholas Bloom, Charles Jones, and John Van Reenen show how it's been getting harder to discover the big advances and breakthroughs that drive technological progress and economic growth. The low-hanging fruit have been picked. Their conclusion: "Just to sustain constant growth in GDP per person, the United States must double the amount of research effort every 13 years to offset the increased difficulty of finding new ideas."
But AI might go a long way toward solving this problem. Instead of thinking of AI as a general-purpose invention, some economists think of it as a general-purpose method of invention that can supercharge the research process. This protein-folding breakthrough is only the latest example. Back in February, MIT researchers announced they had discovered a new antibiotic using an AI approach similar to the one employed by DeepMind. "The computer model, which can screen more than a hundred million chemical compounds in a matter of days, is designed to pick out potential antibiotics that kill bacteria using different mechanisms than those of existing drugs," MIT's Anne Trafton reported. And in October, Wired magazine reported on InoBat, a Slovakia-based company using a U.S.-developed AI platform to analyze different lithium battery chemistries some 10 times faster than what was previously possible. This is only the beginning of the age of AI as the best-ever research assistant.
The 1918 influenza burned itself out. This time around, we are going to end a global pandemic ourselves through the application of technology — specifically the light-speed development of vaccines. It probably won't be the last stunning innovation to transform our lives for the better this decade.