I had a nice "anti-debate" with @KelseyTuoc last week on whether we would have explosive economic growth from AI in the next five years. I say this is unlikely. One of the things I think is most useful in these discussions is supplying an "error theory" of the other side. What is it specifically that they get wrong that leads them astray? I think the error theory of people expecting an imminent economic boom is thinking about production in terms of tasks rather than theory of the firm. The intuition I ascribe to most of the bulls is that if we can do X percent of tasks Y percent more productively, output should go up by X percent times Y percent. Sure, there could be some unspecified "friction" or "inertia" so the effect isn't instantaneous, but that is what equilibrium looks like. Instead, I start from the observation that most of GDP is produced by companies, and particularly large companies. How these companies actually work is an important factor in the speed of production gains from powerful AI. My assumptions: * Most big companies (say, Fortune 500) are a giant tangle of complementarities. Think about Leontief production functions, but with many inputs, many of which are often intangible, stacked many layers deep. * The deep complementarity means that you generally cannot increase the output of one unit or division and increase the output of the firm. * The complexity of the giant tangle means that the company does not actually know its own production function. This is a radical assumption but I think it is realistic. Just as Leonard Read and Milton Friedman said no single person knows how to make a pencil, the CEO of a Fortune 500 company doesn't really know how his company works, no matter how much confidence he portrays publicly. The standard Coasian story is that the firm is "an island of central planning" but instead, I think giant firms are far more organic and far less rational than this implies. Every big, successful company is a minor miracle, and it is rare for CEOs to completely overhaul their main line of business because they know on some level they don't know how it works. * Middle management is not a great answer to how firms will overhaul themselves because authority is ambiguous, they lack insight into the whole-firm context, and they put themselves at risk if something goes wrong. Consequently, I think existing big companies are very unlikely to, say, lay off 80% of their employees and replace them with AI. Companies struggle with much more minor transitions, such as legacy US automakers trying to compete with Tesla. I think that most big companies simply won't overhaul their production systems in response to powerful AI. They will make changes at the margins but they won't make the kinds of changes the bulls expect. This means that a big part of the pathway by which powerful AI could generate economic growth is from new, AI-native firms. These will eventually drive some growth, but note that for many non-software products, scaling production and grabbing market share take time. An exciting fact is that we will soon find out whether I'm wrong. I have been awaiting explosive economic growth for nearly 40 years, since I was a second-grader. I would be delighted to be wrong.