A technological singularity analogy

Imagine you have two sources of income: a job that initially pays $50,000 a year and a strange bond that initially pays you $1 a year. Let's say that your salary goes up by 3% a year but the amount the bond pays you each year doubles.

For the first several years the amount you receive from the bond will be trivial compared to what your job pays. For example, in year 5 you have a salary of $56,275 while your bond pays you only $16. In year ten your salary is $65,239 while the bond pays $512. So you might start to think that the bond, while paying a nice dividend, will never radically alter your standard of living.

But because the amount the bond pays each year doubles, while your salary grows by only 3% a year, the bond will eventually become far more important to you than your job. For example, in year 20 your salary is $87,675 but the bond pays $524,288. In year 50 your salary is $212,811 while the bond pays 563 trillion dollars.

Your salary in this example stands for the sum total of human intelligence whereas the bond represents total machine intelligence. Because of Moore's Law, the computational power you can buy for a fixed amount of money doubles every year.

Currently, machine intelligence is small compared to human intelligence. Consequently, very few people realize that machine intelligence will soon exceed human intelligence.

Intelligence drives our economy. Almost all of this intelligence is currently brain based. The total brain based intelligence of humanity does increase slowly, mainly because of increased educational opportunities for people in India and China. But the rate of growth of brain based intelligence is tiny compared to the rate of growth of machine based intelligence. Within a few decades machine intelligence will represent 50% of the total intelligence available to humanity.

And, within 50 years machine intelligence will be so much vaster than human intelligence (unless we can somehow use Moore's Law to improve our brains) that it will dominate our economy and produce wealth beyond our current imagining. When this occurs we will achieve what has been described as a technological singularity.

The single greatest problem with the economics profession is its near total ignorance of the possibility of a technological singularity. To partially remedy this my soon to be published introductory microeconomics textbook concludes with a discussion of the singularity.