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Comment by wcoenen | Hacker News Reader

If I understand correctly, this paper is arguing that investors will desperately allocate all their capital such that they maximize ownership of future AI systems. The market value of anything else crashes because it comes with the opportunity cost of owning less future AI. Interest rates explode, pre-existing bonds become worthless, and AI stocks go to the moon.

It's an interesting idea. But if the economy grinds to a halt because of that kind of investor behavior, it seems unlikely governments will just do nothing. E.g. what if they heavily tax ownership of AI-related assets?

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It seems more general than that. Right now returns go partly to capital, partly to labor. With "transformative AI" the returns go almost entirely to capital. This is true whether it's mostly from labor shrinking or total output increasing.

Since most returns go to capital, we can expect returns on capital to increase.

How does that even work? If labor has no income to spend on goods and services. where is the return on capital coming from? Isn't this halting velocity of money, thereby making it useless? Can someone smarter explain this to me.

>If labor has no income to spend on goods and services, where is the return on capital coming from?

Some goods and services are sold to another business, not a consumer. Right now, these "B2B" sales represent about 30% of sales volume in the economy, but there is probably no impediment to that number rising to 90%.

How many of those B2B exist entirely isolated from the consumer market though? I would guess few to even zero to some degree of association with an end consumer. Even government contractors building bombs to sell to the government and such depend on the American consumer generating their own income and paying taxes ultimately.

>Even government contractors building bombs to sell to the government and such depend on the American consumer generating their own income and paying taxes ultimately.

That's just the thing though: if we transition to a reality in which 90% or 99% of economic activity does not involve consumers, governments will adapt by taxing consumers (i.e., employees) less and investors and corporations more. It's also possible that corporations will escape the governmental oversight and control that they are currently under, which means governments of the world would shrink because they have to survive on taxes on the 1% of the economy that remains under the control of employees and consumers.

I certainly want most of the economy to serve people, but there is nothing contradictory or impossible about the possibility that 99% of it is a competition between ultra-wealthy corporations.

Fat chance we see corporate America tax itself sufficient to support the entire country. Isn't that their main talking point, to actively do the opposite of that?

I think the future is less a utopia where all our needs are met and more like what happens in the third world. Where most people are desperate and impoverished save for whoever owns the underlying mineral rights and can afford to squeeze them for profit. The incentives of business all point to this outcome and there is plenty of precedent already. Zero precedent for a utopia.

when there is no labor, there is no money, and no capital. AI does not work with capitalism, AI fundamentally is communism XD

What do you mean by having a large group of robots working for you? to produce products? to trade for what?

It seems unlikely because it isn't even rooted in precedent. If this were the case why didn't the world divest from everything and invest into petroleum related investments exclusively after 1900? The reality is that diversification has advantages for an investor. One might say with this same logic why does anyone buy any stock that doesn't perform as well as nvda today? Because past performance doesn't guarantee future returns and there is sense in diversification.

Correct. As a thought experiment, this becomes the most likely (non violent) way to stave off the mass impoverishment that is coming for the rest of us in an economic model that sees AI subsume productive work above some level.

Well, i really dont want to be the dystopian guy any more but doesnt this political correction require political representation of such an idea? Looking at the past, cybernetic socialism appears very unlikely to me.

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