The Bot Brief

"There is no force on earth more powerful than an idea whose time has come."     

- Victor Hugo

Bots in the News: 

There was little movement week over week in both the Bot Index and the S & P 500. The broader market edged out the bots 1.11% to .65%. The primary differential was weakness within the Japanese components of the Bot Index and the two electric vehicle companies. Yaskawa Electric declined 9.45%, while Fuji Corp. fell 3.47%. As mentioned regarding EV manufacturers, Tesla was the largest loser within the Bot Index sporting a decline of 12.88%, while Chinese counterpart, NIO Inc., fell nearly 8%.

The only two gainers of noteworthy were Hiwin Technologies and NVIDIA Corp. Both companies are high-capacity chip manufacturers, employed heavily in the AI explosion, Hiwin, the Taiwanese company rose 9.23% while NVIDIA jumped 7.93%.

Clearly, You Have to Have a Cool Name to Win a Nobel Prize for Economic Science:

Daron Acemoglu of MIT was just awarded a Nobel Prize for his work on wealth inequality between nations. He joins other Nobel Laureates in the past decade with names such as Tirole, Holmstrom, Thaler, Nordhaus, Banerjee, Milgrom, Angrist and Bernanke. On a more serious note, Dr. Acemoglu just completed a tome published in the September 2024 issue of The American Economic Review Insights entitled Regulating Transformative Technologies. The authors (including Todd Lensman of MIT) claim the article is one of the initial serious discussions on the potential negative implications of transformative technologies. The authors recognize that advancements in technologies such Artificial Intelligence will likely produce advances in productivity, there are social risks and potential international strife. They recognize that there needs to be some equilibrium between the positive implications of productivity with the possible misuse of the technology which could lead to ‘high social damages’.

In their conclusion, “we consider the adoption decision of a new transformative technology that can increase productivity growth across all sections of the economy but also raises risk of misuse, which we model as the stochastic arrival of a disaster. If a disaster occurs some sectors, using the new technology, may be unable to switch back to the old safe technology. Whether a disaster will occur is unknown and society gradually learns about it over time. Consequently, adoption should be gradual and typically follow a convex path, initially growing slowly before accelerating later. Most surprisingly, a faster growth rate of the new technology could lead to slower adoption when potential damages are large. Although the planner is risk neutral, she has a precautionary motive as irreversible damages imply that it is better to wait and learn about the likelihood of a disaster. These irreversible damages are greater when new technology has a higher growth rate, strengthening the precautionary motive. Finally, if private firms internalize only part of the social damages from transformation technologies, equilibrium adoption is too fast and necessitates regulatory policies.”

We view this as a ‘breakthrough’ piece on Balcones Investment Research concern over the longer term implications regarding robots and the need to find ‘equilibrium’ regarding production and social implications such as universal income, employment and social wellbeing.

Member: American Economic Association, Society of Professional Journalists, United States Press Association. Institute of Chartered Financial Analysts, Robotic Industries Association (now A3 Automation), Member IEEE.

The Bot Brief is a weekly newsletter designed for economists, investment specialists, journalists, and academicians. It receives no remuneration from any companies that may from time to time be featured in the brief and its commentaries, analysis, opinions, and research represent the subjective view of Balcones Investment Research, LLC. Due to the complex and rapidly changing nature of the subject matter, the company makes no assurances as to the absolute accuracy of the material presented.

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