Good morning. Andrew here. Yesterday, we detailed how cyberattackers used artificial intelligence agents to hack into companies and governments. Today, we’re thinking about the risks of something far worse. DealBook contributor Peter Coy speaks with a professor who has been modeling the costs of trying prevent what even A.I. proponents warn could be an existential danger. Also, DealBook’s Niko Gallogly interviews Kyle Chan, a fellow at the China Center at Brookings, about China’s big investment in renewables at a time when the U.S. is increasingly taking a back seat. And take today’s quiz — I got stumped on the first try. (Was this newsletter forwarded to you? Sign up here.)
An economist’s take on the A.I. apocalypse
The world is plowing trillions of dollars into speeding the development of artificial intelligence, even though the technology could eventually find humanity to be inconvenient. With the help of robots or unwitting humans, an A.I. system could unleash a killer virus or destroy the food supply. Can we get the good of A.I. without the bad? A lot of money might help. New research by Charles Jones, an economist at the Stanford Graduate School of Business, concludes that “spending at least 1 percent of G.D.P. annually to mitigate A.I. risk can be justified.” That would be about $300 billion, which for context is more than 30 times the annual budget of the National Science Foundation. Jones doesn’t suggest how so much money might be spent, but it would presumably include salaries for top-tier computer scientists as well as lawyers and diplomats who could negotiate binding international treaties to control A.I. That and some heavy computing horse power. Most of the safety spending today goes for developing algorithms that align A.I. systems with human needs, trying to understand how A.I. models arrive at decisions, and searching for ways to keep control of A.I. as it gets increasingly powerful. And so far these efforts have been running on limited funds. Global spending to mitigate the existential risk of A.I. was a little over $100 million last year, according to an estimate by Stephen McAleese, a software engineer, based on analyzing grant databases. That’s 0.03 percent of what Jones said could be justified. Jones presented his paper in September at a conference on the Stanford campus that brought together many of the top (human) brains in economics who are working on issues related to A.I. Rather than waiting for journals to review and publish papers from the conference, which could take years, the National Bureau of Economic Research is collecting them into a book, parts of which have already been published online. “There is some urgency to get things out,” Anton Korinek, a University of Virginia economist and co-organizer, told me. The power of artificial intelligence is increasing so rapidly that it’s hard to predict what things will look like even a year or two ahead. Jones admitted in his paper that when he started to think about how much should be spent to reduce the “existential” risks of A.I., the question “at first struck me as too open-ended to be usefully addressed by standard economics.” He took a shot anyway. He took into account how much nations spent to reduce the mortality rate from Covid-19. He gathered estimates, or guesstimates, of how likely A.I. is to wipe out humanity. He considered how effective risk mitigation spending is likely to be. In almost every scenario Jones looked at, spending at least 1 percent of gross domestic product annually for the next decade was justified. The average share in the simulations was 8 percent of G.D.P., a number Jones called “stunning.” The share would be even higher if society took into account the welfare of future generations, not just people alive today. Jones did find scenarios where spending a lot on risk mitigation would be a bad idea: If the extinction risk is low, or if the extinction risk is high but mitigation is hopeless. (God forbid.) Not every paper at the Stanford conference was that grim. Betsey Stevenson, a professor of public policy and economics at the University of Michigan, predicted that artificial intelligence would handle tedious work and free people up for more satisfying endeavors such as gardening, art or spending time with friends. Addressing a room full of intense economists, she noted that not everyone is as fulfilled by their occupations as they are. (A survey of more than 18,000 American workers this year concluded that only about 40 percent of jobs are “good.”) Another conundrum the conference addressed was how governments would raise revenue when A.I. and robots are doing all the work. Korinek and Lee Lockwood, a University of Virginia colleague, concluded that taxes on labor would be replaced with taxes on consumption, which in turn would eventually be replaced by taxes on capital — namely, computers and robots.
A reopened government hasn’t ended data delays. While the Bureau of Labor Statistics is expected to publish its September jobs report within days, the release of data that paints a more recent picture of the economy, including the labor market and inflation, will be delayed and may be incomplete. That means the Fed will have an incomplete picture of the economy at its next meeting on Dec. 9 and 10. Corporate watchdogs come under attack. The Trump administration is said to be advancing efforts to limit the influence of proxy advisers. And The Wall Street Journal reported, citing unnamed sources, that the Federal Trade Commission is looking into whether ISS and Glass Lewis broke antitrust law as they advised clients on proxy issues like climate- and social-related policy. The A.I. spending spree continues. Anthropic said it would spend $50 billion building data centers in the United States, and OpenAI said it was planning $1.4 trillion in infrastructure investments. Not all investors seem to think that sort of massive spending will pay off: A.I. stocks were among the hardest hit in this week’s market tumble, and Michael Burry of “The Big Short” fame, who this week deregistered his hedge fund, Scion Asset Management, is betting big against the A.I. powerhouses Palantir and Nvidia. Congress releases a trove of Jeffrey Epstein’s emails. House Democrats first released a few emails that suggested President Trump knew of the convicted sex offender’s abuse (Trump has denied any knowledge of or involvement in Epstein’s sex-trafficking operation). Then Republicans made a tranche of emails from Epstein’s estate publicly accessible. Trump announced on Friday that he wanted the Justice Department to investigate high-profile Democrats who he said had ties to Epstein. More big deals: SoftBank sold its entire $5.8 billion holdings in Nvidia. Kim Kardashian’s Skims has a new $5 billion valuation. The penny died. And Walmart is getting a new C.E.O. The big theme at COP30: China’s renewables boomThe Trump administration did not send any representatives to this year’s United Nations climate summit, which wraps up next week. China, by contrast, registered 789 delegates — more than any nation other than Brazil, the country hosting the conference. That split-screen divide reflects a broader trend between the two superpowers: As the U.S. is turning its back on renewable energy, China has become a renewables powerhouse. What’s more, the country is exporting its relatively low-cost solar panels, electric vehicles and batteries to energy-poor countries around the world. Kyle Chan is a fellow at the China Center at Brookings who studies technology and industrial policy. He spoke with DealBook’s Niko Gallogly about what China’s new role as a clean energy leader means for the United States economy and role on the world stage. How did China become a renewable energy leader? In a way, China had no choice. The United States has a large endowment of oil and gas resources, and China has always faced this broader energy security challenge. China has also been pursuing industrial policy to build up its own industrial capacity and technological innovation in a whole range of industries. Renewable energy stood at the intersection of these two major goals. It’s a chance for China to, if not solve, at least strongly mitigate its energy security puzzle, and at the same time, develop a whole new set of economic growth drivers and become a world leader in technology. And in the U.S., which had a significant domestic natural resource supply, concerns about climate change weren’t enough to push renewable deployment forward at the same scale? For China, the energy transition was a way to solve a problem. The status quo was untenable. In the U.S., the idea of switching out our internal combustion engine cars to electric vehicles and switching our power plants from coal or gas to solar, wind, nuclear or hydropower was seen as extra costs with not so much direct upside, except for saving the world. That point of view misses the long-term economic gains of clean, abundant energy that China is now seeing. We are seeing more countries in the global south purchasing China’s technology. Why is that? China’s investment in clean technology drove down the cost of production. Just on a sheer economic basis, it makes sense for global south countries, compared to building out coal plants or burning other fuels. Take Pakistan. Right now the country is experiencing a rooftop solar boom. And this is not happening because of any kind of policy choice. It’s because electricity costs are high and also very unstable for a lot of households. So what a lot of households found is that it is more economical to buy imported Chinese solar panels. We forget hundreds of millions of people still don’t have electricity. What China is doing is to offer a way to have clean technology that is affordable and available on scale. Where does the U.S. sit in all this? In the U.S., we have a huge surge in demand due to A.I. and the build-out of new data centers, which is presenting a challenge because we frankly haven’t built out that much new energy. And building out energy supply from multiple sources, such as wind, solar and fossil fuels, has taken a back seat for this administration. They have been focused not only on promoting fossil fuels but also actively trying to shut down renewable energy projects, including offshore wind projects or solar projects. This will end up hurting us in a whole host of areas beyond climate, including E.V.s, drones and robotics, if we don’t have the battery capacity. If renewables will help build out additional energy capacity, why aren’t more tech leaders pushing for that? I think that they know that their businesses, their bottom lines, can be sharply affected by changes in the Trump administration or just changes in Trump’s mood. And I think they have other priorities, like forging ahead on A.I., and it’s better not to rock the boat. Quiz: The price of ‘DExit’On Wednesday, Coinbase became the latest company to announce it would move its incorporation from Delaware, which for more than a century has been known as the center of corporate law. As the state’s Chancery Court faces blowback over a string of decisions that some executives considered overreach, states including Texas, where Coinbase will reincorporate, have passed laws aimed at attracting corporate charters. Elon Musk, who moved Tesla’s incorporation to Texas after a Delaware judge voided his pay package, has been one of the loudest cheerleaders for the trend. Reacting to Coinbase’s announcement on Wednesday, Musk wrote on X that the state needs to “make major changes immediately or continue to lose its single biggest asset.” How much of Delaware’s revenue came from franchise taxes in 2024? We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times. Thanks for reading! We’ll see you Monday. We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.
|
