At Bloomberg View Tyler Cowen has noticed something about the emergent Trump Administration policies:
I’ve seen hundreds of articles on President Donald Trump and trade, but the real significance of the Trump economic revolution — for better or worse — is a focus on investment. There is no coordinating mastermind, but if you consider the intersection between what the Trumpian nationalists want and what a Republican Congress will deliver, it’s this: wanting to make the U.S. a new and dominant center for investment, including at the expense of other nations.
Read the whole thing.
That would be exactly the right policy. My dissatisfaction with present economic policy, whether taxes or trade, is that it doesn’t do enough to encourage honest to gosh domestic business investment. Where the Bush tax cuts fell short was that they proceeded under the incorrect assumption that there had been a shortfall in personal consumption expenditures. There hadn’t been. As I said at the time there was a shortfall in business investment.
Right now there are at least two gold rushes going on. One is in artificial intelligence. Another is in blockchain. I’m skeptical that either will produce the enormous economic growth that the business investment in personal computers and networking made in the 1980s and early 1990s did in the late 1990s and early Aughts but who knows? I’m darned sure that money chasing itself in the financial sector will inflate balance sheets but won’t produce the sort of economic growth that we need.
Blockchain as a currency is as hidebound as gold, but unlike gold, it has no use other than as a currency.
Bitcoins (or any crypto-currency) is mined electronically, and it can be done by anybody. In the early days, a personal computer was sufficient, but as time progresses, more and more computing horsepower is needed. I believe that there is a limit to the number of bitcoins that can be created, but it could be that as the computing requirements approach infinity, production approaches zero.
Bitcoins are like tulip bulbs. Their inherent value is limited.
Artificial Intelligence is nothing more than an adding machine with a pretty face. It is an illusion. Video games are an animated set of rules.
“Artificial Intelligence” is a sort of grab bag. It includes natural language processing like Alexa, machine learning, rules-based systems, and a host of other technologies. Sort of a fad right now.
IMO neural nets are quite a bit more than an “adding machine with a pretty face” but their use is still in its infancy.
For those of you who aren’t familiar with it blockchain is a journalized, encrypted database with applications that go beyond cryptocurrencies like bitcoin (which uses blockchain). It’s a fad right now, too, but I also think it has some worthwhile applications.
I think there are 4 other goldrushes going on. 1 is in transportation infrastructure, ie drones, and self driving cars; they require AI but have other needs (sensors, mapping) that go beyond that. 2 is E-commerce as evidence by the growing war between Amazon and Walmart; 3 is biotechnology, Crispr / genome sequencing / immunotherapy, 4 is Cloud, the demand for Cloud is not stopping anytime soon
I’d lump autonomous vehicles with AI. I don’t think E-commerce is a gold rush. It would be a gold rush if every company thought it had to have an E-commerce strategy (or at least a large percentage) but that isn’t the case.
It could be that biotechnology is in the early stages of a gold rush. I think that may be premature. This
is basically just linear growth not a gold rush. The big question about cloud services is how quickly the market will mature. A “mature market” would be one in which every prospect is already using cloud services. Not every company or individual is a prospect.