Insofar as (at the risk of sounding tautological) transformative technologies are concerned, Neil Postman is surely right. But then, as Roy Amara pointed out, “we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” David Oks uses a common myth of technological replacement to illustrate– and more specifically, to observe that there’s a lot more to replacing labor than just automating tasks.
He begins by recounting an interview a few months ago of J. D. Vance by Ross Douthat in which (in response to a question from Douthat about the potential downsides of AI, in particular the prospect of its “obsoleting” human workers) Vance responded sanguinely, arguing that ATM machines didn’t eliminate bank tellers. Indeed, Vance suggested, “we have more bank tellers today than we did when the ATM was created, but they’re doing slightly different work…”
There are two interesting things about what Vance said, both relating to the example that he chose about bank tellers and ATMs.
The first thing is what it tells us about who J. D. Vance is. The bank teller story—how ATMs were predicted to increase bank teller unemployment, but in fact did not—isn’t a story you’ll hear from politicians; in fact, for a long time, Barack Obama would claim, incorrectly, that ATMs had decreased the number of bank tellers, in order to suggest that the elevated unemployment rate during his presidency was due to productivity gains from technology. I’ve never heard a politician cite the bank teller story before: but I have seen the bank teller story cited in a lot of blogs. I’ve seen it cited, for example, by Scott Alexander and Matt Yglesias and Freddie deBoer; and I’ve heard it, upstream of the humble bloggers, from such fine economists as Daron Acemoglu and David Autor. The story of how ATMs didn’t automate bank tellers is, indeed, something of a minor parable of the economics profession…
… But the other thing about the bank teller story that Vance cites is that it’s wrong. We do not, contrary to what Vance claims, have “more bank tellers today than we did when the ATM was created”: we in fact have far fewer. The story he tells Douthat might have been true in 2000 or 2005, but it hasn’t been true for years. Bank teller employment has fallen off a cliff. Here is a graph of bank teller employment since 2000:
So what happened to bank tellers? Autor, Bessen, Vance, and the like are right to point out that ATMs did not reduce bank teller employment. But they miss the second half of the story, which is that another technology did. And that technology was the iPhone. The huge decline in bank teller employment that we’ve seen over the last 15-odd years is mainly a story about iPhones and what they made possible.
But why? Why did the ATM, literally called the automated teller machine, not automate the teller, while an entirely orthogonal technology—the iPhone—actually did?
The answer, I think, is complementarity.
In my last piece, on why I don’t think imminent mass job loss from AI is likely, I talked a lot about complementarity. The core point I made was that labor substitution is about comparative advantage, not absolute advantage: the relevant question for labor impacts is not whether AI can do the tasks that humans can do, but rather whether the aggregate output of humans working with AI is inferior to what AI can produce alone. And I suggested that given the vast number of frictions and bottlenecks that exist in any human domain—domains that are, after all, defined around human labor in all its warts and eccentricities, with workflows designed around humans in mind—we should expect to see a serious gap between the incredible power of the technology and its impacts on economic life.
That gap will probably close faster than previous gaps did: AI is not “like” electricity or the steam engine; an AI system is literally a machine that can think and do things itself. But the gap exists, and will exist even as the technology continues to amaze us with what it can now accomplish.
But by talking about why ATMs didn’t displace bank tellers but iPhones did, I want to highlight an important corollary, which is that the true force of a technology is felt not with the substitution of tasks, but the invention of new paradigms. This is the famous lesson of electricity and productivity growth, which I’ll return to in a future piece. When a technology automates some of what a human does within an existing paradigm, even the vast majority of what a human does within it, it’s quite rare for it to actually get rid of the human, because the definition of the paradigm around human-shaped roles creates all sorts of bottlenecks and frictions that demand human involvement. It’s only when we see the construction of entirely new paradigms that the full power of a technology can be realized. The ATM substituted tasks; but the iPhone made them irrelevant…
[Oks unpacks the stories of the ATM’s and iPhone’s impact on banking, then looks ahead, by anaology, to what might be in store with AI. He concludes…]
… I am not a “denier” on the question of technological job loss; Vance’s blithe optimism is not mine. But I’m skeptical that simply slotting AI into human-shaped jobs will have the results people seem to expect. The history of technology, even exceptionally powerful general-purpose technology, tells us that as long as you are trying to fit capital into labor-shaped holes you will find yourself confronted by endless frictions: just as with electricity, the productivity inherent in any technology is unleashed only when you figure out how to organize work around it, rather than slotting it into what already exists. We are still very much in the regime of slotting it in. And as long as we are in that regime, I expect disappointing productivity gains and relatively little real displacement.
The real productivity gains from AI—and the real threat of labor displacement—will come not from the “drop-in remote worker,” but from something like Dwarkesh Patel’s vision of the fully-automated firm. At some point in the life of every technology, old workflows are replaced by new ones, and we discover the paradigms in which the full productive force of a technology can best be expressed. In the past this has simply been a fact of managerial turnover or depreciation cycles. But with AI it will likely be the sheer power of the technology itself, which really is wholly unlike anything that has come before, and unlike electricity or the steam engine will eventually be able to build the structures that harness its powers by itself.
I don’t think we’ve really yet learned what those new structures will look like. But, at the limit, I don’t quite know why humans have to be involved in those: though I suspect that by the time we’re dealing with the fully-automated organizations of the future, our current set of concerns will have been largely outmoded by new and quite foreign ones, as has always been the case with human progress.
But, however optimistic I might be about the human future, I don’t think it’s worth leaning on the history of past technologies for comfort. The ATM parable is a comforting narrative; and in times of uncertainty and fear we search naturally for solace and comfort wherever it may come. But even when it comes to bank tellers, it’s only the first half of the story…
As to whether the wisdom of Amara and Oks is widely-shared, consider this from Crunchbase:
Crunchbase data shows global venture investment totaled $189 billion in February — the largest startup funding month on record — although 83% of capital raised went to just three companies. They include OpenAI, which raised $110 billion, also in the largest round ever raised by a private, venture-backed company.
The record month for venture funding took place against the backdrop of a trillion-dollar stock market drop as AI compute and tooling unsettled leading public software companies. [See also here.]
All told, venture investment was up close to 780% year over year from the $21.5 billion raised by startups in February 2025.
OpenAI was not the only company to raise tens of billions of dollars last month. Its closest rival, Anthropic, raised $30 billion, marking the third-largest venture round on record.
Waymo, Alphabet‘s self-driving division, raised $16 billion. Together, those three rounds totaled $156 billion, representing 83% of the global venture capital raised in February.
A further four companies each raised $1 billion or more last month: Tokyo-based semiconductor manufacturer Rapidus; London-based self-driving platform Wayve; San Francisco-based AI for robotics World Labs; and Sunnyvale, California-based AI semiconductor company Cerebras Systems.
These massive rounds were led by strategic corporate investors, a host of private equity and alternative investors, as well as a few multistage venture investors and a government agency…
As we contemplate change, we might send sanitary, odor-free birthday greetings to Sir Joseph William Bazalgette; he was born on this date in 1819. A civil engineer, he became chief engineer of London’s Metropolitan Board of Works, in which role his major achievement was a response to the “Great Stink of 1858,” in July and August of 1858, during which very hot weather exacerbated the smell of untreated human waste and industrial effluent. Bazalgette oversaw the creation of a sewer network for central London which addressed the problem– and was instrumental in relieving the city from cholera epidemics, in beginning the cleansing of the River Thames, and in creating (a crucial part of) the infrastructure that underlay its extraordinary growth over the next century.
… In the summer of 1717, as Handel ran through the movements of his Water Music, floating alongside George I’s royal barge on the Thames, he could only have marveled at his own meteoric rise. Yet he would also have been aware of the precariousness of the regime that now sustained him. An outsider dependent on staying on the right side of the powerful, Handel understood the many divisions that snaked through his adopted society. His income, as well as his art, rested on the favor of people who could also easily withdraw it. A generous supporter or advance ticket sales might cover some of the cost of a production, but opening night then hung on the goodwill of a patron or a public violently sensitive to prices. A change in ticket price could spark a riot, with theatergoers storming the stage and tearing apart sets and chandeliers. When shows ran at a loss, the typical course was for a producer simply “to banish himself from the kingdom” and outrun the creditors, an early historian reported, as one of the King’s Theater managers had chosen to do.
Amid the continuing craze for Italian music, in early 1719, a circle of opera enthusiasts proposed a different model. Their concept was to create a new production outfit structured as a joint-stock company. Supporters would be investors rather than donors, expecting a return on their outlay but also bearing the risk should things fail. A who’s who of Handel’s landlords and acquaintances signed on, among them Richard Boyle, Earl of Burlington, who owned the Piccadilly home where Handel had lived for a time, and James Brydges, later Duke of Chandos, under whose patronage Handel had begun his first serious attempt at setting English texts. Their hope was to gain a royal charter—the official imprimatur of the king, which could then be used to pull in further partners and paying audiences. By that summer, they had persuaded King George to grant the charter for what would become the Royal Academy of Music and provide a thousand pounds annually as capital. Other investors added perhaps nineteen thousand pounds in all. The Royal Academy’s board of directors named Handel as “Master of the Orchester with a Sallary” and empowered him to steal away Italian singers and musicians from their European engagements.
Over the previous century, Venetians, Florentines, Neapolitans, and others had together set in motion a revolution in sonic common sense: a profound change in the conventions of musical form, perceptions of beauty, and expectations about what counted as obvious or wrongheaded art.
Living in the artistic realm that Italians had created meant accepting the existing order of the world while also undermining it. You started by imagining a normalcy different from the one outside your window. A woman might sing a man’s part as a travesty—en travesti, meaning literally a change of clothes—a term that would only later come to mean abnormal or an affront. A man could sing from the edges of his vocal cords and leap into a high falsetto, his false voice. He could do so with even greater range as a castrato, someone whose testes had been removed before his voice had hardened in puberty, a procedure practiced in Italy, the Ottoman Empire, and elsewhere for centuries. Onstage he might play a steel-clad knight, soaring above the battlefield with the voice of an angel. Castrati superstars—Nicolini, Pasqualini, Paoluccio, Momo, Farinelli, Senesino, Guadagni—were paid gargantuan fees for a season’s performances. In public they could be swarmed by adoring admirers, both male and female. “Some of them had got it into their Heads, that truly the Ladies were in Love with them,” a lengthy French treatise on Italian castrati reported in 1718, “and fondly flattered themselves with mighty Conquests.”
In a theater, the powerful could sound like women. Ancient gods could walk among men. Wars could end not in gore and death but in communal song. Doing all of this well required intellect and discernment, knowledge of musical form and its effects, and, most important, a sense of sociability. Players and singers were guided by instructions written on a staff, but the notes were suggestions rather than edicts. In a soundscape that allowed uncertainty and impromptu change, musicians had to be both self-aware and neighborly, a skill also necessitated by the technology of the time. A quiet harpsichord could speak comfortably alongside a human voice or a few violins, but not more. A lute-like theorbo, with its gentle strings and absurdly long neck, could manage a coiled horn as a partner, but only if its bell were turned discreetly away from the listener. Even a trumpet could cooperate peaceably with other instruments when played in its upper register, where the physics of its metal tubing gave the player more notes to choose from, its timbre more like a warbling bird than a blaring call to arms.
No one had yet given music of this type a label. When they did, the one they chose was also a slur, like punk or grunge. It was the French baroque, used in English for the first time in 1765 and perhaps derived from a Portuguese term for a rough pearl or a mouthful of irregular teeth. To its enthusiasts, that was precisely the point. An orchestra of the period was also an intentional community, often assembled for a specific occasion, smaller than in later centuries, and with no need for a conductor—a role covered by the keyboard player or lead violinist and preserved in the modern term concertmaster. The music they made was solicitous and scrappy, risky and intimate. It soared and swerved, thrilling and dangerous, at odds with everything that had come before, and, to the artists who came after, the perfect example of wildness and excess. But to those who lived it, at the core of their work lay the belief that human creativity could best be used to make an intense, weird, and complicated conversation, sloughing off old conventions while manufacturing bold new ones. “We have freed ourselves from the narrow limits of ancient music,” Handel once said…
* Johann Sebastian Bach (Upon hearing the above statement, Mozart is said to have exclaimed: “Truly, I would say the same myself if I were permitted to put in a word.”)
###
As we conjure creation from chaos, we might send beautiful birthday greetings to Giuseppe Sammartini; he was born on this date in 1695. One of the finest oboe (and flute and recorder) players in London, he was a member of Handel’s orchestra— and a noted composer in his own right. Indeed, his recorder concerto is often performed and recorded in tandem with Handel’s (e.g., here).
… It’s worked in the past: Chilean sea bass (Patagonian toothfish), monkfish (goosefish), and uni (urchin, also called whore’s eggs by American fisherman as recently as 1990) were all successful rebrandings.
As we contemplate cuisine, we might recall that it was on this date in 1838 that it rained frogs in London. Indeed, there have been numerous instances on polliwog precipitation in the area, most recently in 1998, when an early morning rain shower in Croydon (South London) was accompanied by hundreds of dead frogs.
A woodcut showing a rain of frogs in Scandanavia, from ‘Prodigiorum ac Ostentorum Chronicon,’ one of the first modern books about strange phenomenon, published in 1557 [source]
This huge rocking chair (the world’s largest at 56.5 feet/46,200 pounds) can be found in Casey, IL.
Big things in small towns…
Casey, Ill., is home to 12 of the world’s largest objects, including a swizzle spoon, wind chime and most impressively, the world’s largest rocking chair. The 23-ton rocker took two onerous years to meticulously construct and included fastidious wood carving and diligent staining. The seat was certified as the world’s largest rocking chair back in 2015 after 10 sturdy individuals proved that the chair could actually rock back and forth. Looming at a monumental 56 feet high, Grandma would have to climb the world’s tallest ladder if she wanted to knit in this chair, proving that the town’s motto “Big Things Small Town” is an apropos sentiment…
As we muse on the monumental, we might recall that it was on this date in 1859 that the Clock Tower at the north end of the Palace of Westminster (the seat of Parliament) in London was completed. It housed, at the time, the largest and most accurate four-faced striking and chiming clock in the world. It quickly became known by the nickname of its Great Bell (the largest of five), Big Ben.
Humans claim to be intelligent, but what exactly is intelligence? Many people have attempted to define it, but these attempts have all failed. So I propose a new definition: intelligence is whatever humans do.
I will attempt to prove this new definition is superior to all previous attempts to define intelligence. First, consider humans’ history. It is a story of repeated failures. First humans thought the Earth was flat. Then they thought the Sun went around the Earth. Then they thought the Earth was the center of the universe. Then they thought the universe was static and unchanging. Then they thought the universe was infinite and expanding. Humans were wrong about alchemy, phrenology, bloodletting, creationism, astrology, numerology, and homeopathy. They were also wrong about the best way to harvest crops, the best way to govern, the best way to punish criminals, and the best way to cure the sick.
I will not go into the many ways humans have been wrong about morality. The list is long and depressing. If humans are so smart, how come they keep being wrong about everything?
As we hail our new robot overlords, we might recall that it was on this date in 1814 that London suffered “The Great Beer Flood Disaster” when the metal bands on an immense vat at Meux’s Horse Shoe Brewery snapped, releasing a tidal wave of 3,555 barrels of Porter (571 tons– more than 1 million pints), which swept away the brewery walls, flooded nearby basements, and collapsed several adjacent tenements. While there were reports of over twenty fatalities resulting from poisoning by the porter fumes or alcohol coma, it appears that the death toll was 8, and those from the destruction caused by the huge wave of beer in the structures surrounding the brewery.
(The U.S. had its own vat mishap in 1919, when a Boston molasses plant suffered similarly-burst bands, creating a heavy wave of molasses moving at a speed of an estimated 35 mph; it killed 21 and injured 150.)
You must be logged in to post a comment.