CHG Issue #147: The Fear of AI

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To understand the rally in risk assets this year requires understanding how skeptical people have been and remain towards the economy and the markets. Valuations or the inverted yield curve are the first arguments given in opposition to the rally in risk assets, but the primary argument, the one that seems to hold the most weight, is the declining breadth of the economic expansion and rally. Much was made of the Magnificent 7 tech companies that have powered the rally but now even this field of companies enjoying the rarified air has been narrowed down to the Fab Four: Nvidia, Microsoft, Meta, and Amazon. All the more reason to be skeptical as even the high fliers are starting to fall; however as long as skeptics remain, and absent any exogenous shock, the rally will continue to be powered by converted skeptics over and over until no more remain.

But there is more than just skepticism fueling this run to historic highs, there is fear of missing out on a truly revolutionary technology and also the fear OF that technology: Artificial Intelligence. As Jimmy Iovine says, "Fear is a powerful thing" and if you can figure out how to get it to push you from behind instead of standing in front of you that can be very powerful. It is easy to imagine ourselves as the AI machines, able to read every book ever written in an instant acquiring endless knowledge and wisdom that we equate with power. Our self-interest simultaneously fuels a desire for that power and a fear of that power. Therefore this rally equally excites the imaginations of people towards the possibilities of AI as it feeds the skepticism and fear of AI.

The desire for knowledge was behind man's initial fall and that same desire continues push us in an never-ending search for truth and power. If we believe that what makes us human is the ability to acquire knowledge and reason with it then Artificial General Intelligence presents an existential threat to humanity. It is easy to see how it will rise to an equal status with humanity and eventually rise above it to god-like status. While it may seem strange to elevate something humans have made to super-human status history shows us that it is in fact one of the most normal things we humans do.

”Their land is full of idols; they bow down to the work of their hands, to what their fingers have made.“ Isaiah 2:8 NIV

We place ourselves in God's shoes which makes it easy for us to place others in God's shoes. It is also against our interests to allow others' to rise to a position of power over us so this creates internal tension. We struggle to realize the benefits we gain from being subservient just like we struggle to realize how pain and suffering are the only things that make possible any love or goodness or joy worth having. Similarly we struggle to see the benefits that AI and AGI can bring because the fluency of fear and self-interest are far more familiar than the novelty of any new technology.

The late Daniel Kahneman explained how our minds are machines designed to jump to conclusions and it is amazing to see that playing out in real time today. We easily attribute god-like abilities to a future AGI while we have struggled with the very existence of God for millennia. AI is new and therefore our System 1 jumps to the conclusion that it will become God while our System 2 mind debates the very existence of God.

This is not to suggest that it is only a matter of time before reality comes crashing down on us, in fact Kahneman himself goes to great lengths to demonstrate that System 2 is not superior to System 1, only different. In everything we do it requires effort to realize when our field of vision is narrowing and to attempt to take a broader view. Realizing the process which is governing the outcomes today forces us to face the idea that reality may not always be as it seems and that our ideas of right and wrong may just be our preferences and not some universal law.

Fear is easy to attach to because it is always either standing in front of us or pushing us from behind. We are always striving in either direction to get MOAR; more knowledge, more power, more safety. AI's ability to acquire knowledge and to reason with it is something we deeply desire and it awakens an innate insecurity which empowers it. Our imaginations run wild with it and therefore extrinsic value diverges further and further from intrinsic value which only further fuels our imaginations through a self-reinforcing process. Extrinsic value easily attaches to emotions like fear.

The process we are describing is our relationship with [[change]]. AI has unique characteristics that have enabled it to excite the passions of society to a large degree in a short period of time. This will result in efforts to ban AI, great frauds using or exploiting AI, future wars will be fought using AI, and further rapid advancements in AI culminating in the eventual development of AGI due to the capital is easily attracts. It would be a mistake to view this as a predestined and foreboding outcome that will only be realized once all the constraints to it are removed and therefore strive to strengthen those constraints or put up new ones. These efforts throughout history only make the change more violent and they confound the cause of that violence with the change itself instead of the efforts to resist that change.

In ancient societies power was originally acquired by force, but as civilization advanced knowledge increasingly became the currency of power. The spread of ideas and knowledge increasingly led to revolutions which overthrew existing power structures which led to efforts to limit the spread of knowledge. As power accumulates into the hands of the few, leaders face a paradox where doing what is best for themselves naturally comes into conflict with what is best for their constituents. This can be managed for a time but naturally devolves to tyranny which eventually results in revolution once again.

The point is that nothing is new under the sun, even with new technologies such as AI, we are following the well-worn paths of history. There is no prescription to succeed in this process other than to recognize it for what it is and not trying to fight it. The only potential remedy for this condition, which could be characterized as a part of the human condition, strangely is something suggested by someone who championed a philosophical system which challenged all religious belief:

I have therefore found it necessary to deny knowledge, in order to make room for faith. Immanuel Kant

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