{"id":1295,"date":"2023-03-28T02:03:35","date_gmt":"2023-03-28T02:03:35","guid":{"rendered":"https:\/\/halcyonpw.com.au\/?p=1295"},"modified":"2023-03-28T02:03:40","modified_gmt":"2023-03-28T02:03:40","slug":"market-update-rise-of-the-machines","status":"publish","type":"post","link":"https:\/\/halcyonpw.com.au\/market-update-rise-of-the-machines\/","title":{"rendered":"Market Update | Rise of the Machines"},"content":{"rendered":"\n
Key Points:<\/em><\/p>\n\n\n\n In this month\u2019s Market Insight<\/em>, we review recent developments in generative artificial intelligence and the potential impact on global economies and markets. From our perspective, the practical applications of this technology for businesses are greater than anything released since the original iPhone.<\/p>\n\n\n\n The pace of productivity enhancing technological development has been pretty disappointing over the past fifteen years. Video conferencing has got a lot better, workplace CRM, document management and chat has also improved. Much of this sort of improvement has enabled people to communicate with colleagues better, but doesn\u2019t necessarily generate more output. Many also find more communication distracting. Deep thinking work is difficult when constantly distracted by chat pop-ups and video calls. The cloud is useful, but for most people it\u2019s mainly used as an external hard drive that you don\u2019t have to plug in. Microsoft Office hasn\u2019t changed much over the period outside of prettier user interfaces. The more widespread ability to code and \/ or visualise data is useful, but most people can\u2019t do it, so the overall use case is limited. Nothing really stands out as truly ground-breaking.<\/p>\n\n\n\n Technology and Productivity<\/em><\/strong><\/p>\n\n\n\n Productivity is the magic that makes economies, and the people who live in them, rich. There are two ways to generate productivity. Pair people with more machines (or in economist talk, capital) and make people better at using the machines they already have. In a sweeping generalisation: In poor countries, adding lots of machines is the way to get richer (capital deepening). In rich countries, where there are already lots of machines, the way to get richer is for people to get more out of the people using the machines (multifactor productivity). The charts below decompose labour productivity into these component parts for the USA and Australia. There are two observations we would highlight from this data. First, overall labour productivity growth has been weak since the Financial Crisis, this has been due to weak multifactor productivity. Secondly, labour productivity growth was quite strong between the late 1980s and the mid-2000s, largely for the opposite reason. The likely, though by no means provable, conclusions from these observations are that:<\/p>\n\n\n\n\n
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