Alex Imas

The other part that we really need much more data on, and I recently was quoted as saying we need almost like a Manhattan Project level effort on this, is this is a term from economists called elasticity of consumer demand.

And that basically means how much will people buy more of something when the price changes?

Mm-hmm.

Let's say a person becomes a lot more productive.

For the same sort of resources, they can make a lot more of the product.

Their wage rises.

What does that mean for the labor market?

If they become more productive, given the same kind of inputs, their wage rises, but also the firm's probably going to be paying less money to produce the same output.

If it's a competitive industry, the prices are going to go down.

If the consumers don't respond by buying a lot more of the product,

the firm is gonna fire a bunch of people because they can do more with less.

But when prices come down, people buy way more of the product

then they might hire more of the same people.

And in many sectors, we've seen kind of the second thing play out.

What's an example?

So people are arguing that software is actually one of those sectors.

So there's been a bunch of talk kind of looking historically at like, what does productivity mean for the technology sector?

It usually means a lot more consumer demand.

So there's this really active debate now about what are coding agents actually going to do to software engineers.

And some people are arguing, look, we have seen historically pretty elastic demand.