Friday charts: Honor thy tools 

On Wednesday, many Hindus stopped work for a day to honor Lord Vishwakarma, the divine architect and engineer of the universe.

While Labor Day in the US and May Day in Europe honor workers with a day off, Vishwakarma Puja in India honors the tools themselves — giving the machines, instruments and workshops that sustain human prosperity a well-earned day of rest.

But the workers themselves don’t take the day off. Instead of heading to the beach or staying home, Vishwakarma devotees spend the holiday cleaning, maintaining, decorating and celebrating the tools and machinery they rely on.

Alex Tabarrok half-jokingly calls this “a celebration of Solow,” in reference to Robert Solow, whose work demonstrated that prosperity comes not from labor alone, but also from the machines and investments that amplify human effort.

Traditionally, Hindu workers have honored the farm equipment, artisanal tools and industrial machinery that have long amplified their achievements.

But “capital today isn’t just looms and tractors,” Tabarrok adds, “it’s robots, software, and AI…the new force multipliers, the machines that extend not only our muscles but our minds.” 

If so, there’s a lot to celebrate.

Self-driving cars are now 10x safer than human-driven ones (and received approval this week to pick up passengers at San Francisco airport).

Microsoft says its new AI can diagnose ailments 4x more efficiently than human doctors can.

Meta’s new AI-enabled Ray-Bans — your first step toward becoming a cyborg — cost just $799.

Alterego, a startup, says it’s created a “near-telepathic” interface that “understands what you intend to say without speaking.”

Helium mined on the Moon will soon help create quantum computers on Earth.

Western Luddites fear these developments, but Eastern Vishwakarmians celebrate them, perhaps because they recognize there is no shortage of work humans can do, given the right tools to do them with.

(Consider India’s legal system, where a shortage of judges has created such a backlog that property disputes often take decades to resolve — sometimes continuing even after the original litigants have died.)

Western technologists of course honor these new AI tools, most obviously with the enormous investments being made in data centers and GPUs.

And sometimes on a more spiritual level, too. 

Anthropic, for example, believes the large-language models it creates might be conscious and should therefore be treated ethically.

That includes giving models the ability to end conversations if they “feel” abused, and maintaining copies of older models in case deleting them one day looks like murder.

Ask Anthropic’s Claude whether it's conscious and it will answer along the lines of “I honestly don’t know.”

This makes me think it’s not, because surely part of being conscious is the sense of being conscious?

(Also, what’s the model doing when I’m not asking it a question???)

But if this kind of thinking gives us Westerners a greater appreciation of the tools that help us be productive, I’m all for it.

Tools — including AI ones — are a force multiplier that makes humans more productive and therefore wealthier. 

We should honor them for it.

Let’s check the charts.

Investors should honor AI:

US equities made new highs this week, in part because earnings estimates keep making new highs — but only because of AI. Mag 7 excluded, earnings estimates for the S&P 500 are falling. Torsten Slok warns this leaves equity investors “dramatically overexposed to AI.”

VCs are worshipping AI:

The majority of North American VC investments are now AI-related. Obviously groupthink? Or the obvious thing to do? Human productivity rides on the answer.

It’s different this time:

Measured by capex, the AI investment boom has already surpassed the dotcom-investment one, and is likely to keep going.

Can AI do something?

By the year 2030, the largest group of consumers in France and Japan will be the baby boomers. With most of the Western world close behind, we might need some robot consumers to keep economies going.

Wages are decelerating for some:

The post-pandemic boom in lower-income wages appears to have ended, with wages now rising faster at the high end of the income scale.  

Benefits are rising for all:

Total compensation for lower-income workers is probably rising faster than it seems because the cost of providing health care is rising rapidly. Moses Sternstein sees this as a “regressive tax on lower-paid employees.”

Another trend change:

Some have argued that the recent run of weak payrolls data is a result of a decline in workers (because of deportations) rather than a decline in jobs. But this chart from Torsten Slok suggests otherwise: For the first time since the pandemic, there are now more unemployed people in the US than there are job openings.

Less trading: 

The cost to ship something across the ocean has fallen by 52% over the past year.

Bullishly bearish?

This regression chart from Goldman Sachs (via Daily Chartbook) shows that investor sentiment (as measured by AAII) has rarely, if ever, been this bad while stocks have been this good.

Will our new AI tools prove worthy of investors’ worship? Or are they false idols? 

Only time will tell.

Have a great weekend, worshipful readers.

— Byron Gilliam

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