Imagine 130M Washing Machines

Summary

There’s a great deal of recent discussion about how AI will affect the economy. Too often, the debate centers around the issue of who will profit from AI. I am much more interested in the question of what AI will do to output.Suppose you are applying for a job at Google, and they ask you to estimate the number of washing machines in America. You might think to yourself that the vast majority of American households have one washing machine, a much smaller number have either zero or more than one. So perhaps the number of washing machines is similar to the total number of households. You might recall that America has 340 million people, and guesstimate that we have somewhere around 130 million households, assuming an average of 2.6 people per household. (AI Overview says 132.5 million households and an unknown number of washing machines.)Similarly, if asked to estimate the number of calories consumed each day by Americans, I might multiply 3000 calories times the total population, say roughly a trillion calories. For India, I might multiply 2000 calories by 1.4 billion people, or 2.8 trillion calories. (I didn’t check this, so go ahead and laugh if I’m wrong.)Now suppose that Google asked me how many private yachts of longer than 200 feet were owned by Americans. I honestly would have no idea.What can we infer from these thought experiments? For many types of goods, gross output data provides a rough estimate of widely shared prosperity. You don’t hear people worrying “What would happen if 60 percent of the washing machines were owned by the top 1% of Americans?” That’s even more true of food consumption, given the constraints of stomach capacity. But this generalization is not true of big yachts, which are rare and owned by a tiny elite. Even in that case, countries with higher median incomes will tend to have more billionaires as well. Nonetheless, I could imagine a situation where a middle-income country like Turkey, Russia or Mexico might have more mega-yachts per...