The lag between technology adoption and productivity gain is known as the “productivity paradox. **Total factor productivity** doesn’t really increase until organizations and processes are redesigned to take full advantage of a new technological capability. The same will be true for AI, but it’s happening much, much faster. - ~50 year lag for electricity to factory productivity - ~20 years for computers to business productivity - Likely <5 years for AI to materially boost productivity across much of the economy --- In the 1980s, as businesses embraced computers, total factor productivity was growing at the slowest rate in decades. It took about 20 years for companies to realize that they needed to reorganize operations to take advantage of the power of computers. Once they did, productivity picked up. The productivity of factories didn’t materially increase from the adoption of electric motors until the 1920s, half a century after Edison invented the lightbulb. Factories needed to be redesigned, moving away from a single centralized source of power (massive steam engine or electric motor sitting in the middle of a factory and powering machines with belt drives) to a layout in which small electric motors powered individual machines. This enabled more efficient and agile operations that delivered significant cost savings and productivity increases. #concept [[Concepts MOC]]