Smith: AI productivity boom requires reorganizing production processes, not replacing workers
Noah Smith · Is AI Really Taking Our Jobs? — With Noah Smith · Jul 2, 2025 · at 6:33
Economics writer Noah Smith draws an analogy to the decades-long lag in factory electrification to explain why generative AI has not yet produced major macroeconomic productivity gains.
0:00 / 0:26exact quote · 26.4s
▶ Watch the full episode on YouTube → 720p mp4 · rendered on demand · StarZero watermark
“Eventually we may like people will come along and say, you know what? I could just organize my company entirely different to take more advantage of AI. And I don't just have to replace my humans with AI. I just have the humans do different things and the AI do different things. And I reorganize the production process in ways that I know a Smith sitting here in 20, 25. I'm unable to imagine. And so then we will see amazing productivity growth at that point, but it would, you know, with electricity, it took 20 years for people to sort of think of it.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Noah Smith
Smith: Predictions that AI will replace 40-60% of jobs are 'hooey'
“This is complete hooey, and they all come up with really huge percentage, like, 40%, 60% of your jobs are gonna be replaced by AI, so, you know, every, there's a million groups doing this, and they'll come up with different things, and it's hooey for a number …”
Smith: Government-run grocery stores will drain public funds and crush bodegas
“So if you make government run grocery stores, it'll do two things. Number one It will outcompete all the little indie grocery stores and bodegas, thus like a meager source of capital and wealth accumulation for like poor people in poor neighborhoods... And the…”
Smith: AI-vulnerable occupations continue rising as share of US jobs
“Returning to a measure reintroduced in two, 20, 23, we examine American data on employment by occupation, singling out workers that are believed to be vulnerable to AI. These are white collar employees, including people in back office support, financial operat…”
Smith: IBM fired workers for AI automation and had to rehire
“So we saw this thing where IBM fired all these people because it thought they could replace their jobs with AI and then had to hire them all back, had to hire like a ton of people back. Maybe not the exact same people, not doing the exact same things, but for,…”
Smith: Automating human tasks does not imply mass labor displacement
“Conceptually the idea of like, well, we made this thing to do all these tasks that humans do is not a, is not by itself a reason to think human labor is going to be masterplaced.”
Noah Smith: US Wage Inequality Has Decreased for Over Ten Years
“Right around the time that this thesis started becoming very well accepted and popular, wage inequality started to go down and wages started rising more at the bottom of the distribution than at the middle or top. And so we've seen that for now over 10 years. …”