"This is a technology that could replace a sizable fraction of humamkind as a labor input."
And if it does? What happens when a sizable fraction of humamkind is hungry and can't find work? It usually doesn't turn out so well for the rich.
And if it does? What happens when a sizable fraction of humamkind is hungry and can't find work? It usually doesn't turn out so well for the rich.
But it's pretty obvious wealth can be created and destroyed. The creation of wealth comes from trade, which generally comes from a vibrant middle class which not only earns a fair bit but also spends it. Wars and revolutions are effective at destroying wealth and (sometimes) equitably redistributing what's left.
Both the modern left and modern right seem to have arrived at a consensus that trade frictions are a good way to generate (or at least preserve) wealth, while the history of economics indicates quite the contrary. This was recently best pilloried by a comic that showed a town under siege and the besieging army commenting that this was likely to make the city residents wealthy by encouraging self-reliance.
We need abundant education and broad prosperity for stability - even (and maybe especially) for the ultra wealthy. Most things we enjoy require absolute and not relative wealth. Would you rather be the richest person in a poor country or the poorest of the upper class in a developed economy?
I'm not sure to what extent you meant this, but I don't know that I'd agree with it. Trade allows specialization which does increase wealth massively, no doubt. And because of how useful specialization is, all wealth creation involves trade somewhere. But specialization is just one component of wealth creation. It stands alongside labor, innovation, and probably others.
> I'm not sure to what extent you meant this, but I don't know that I'd agree with it.
At a very foundational level, all wealth comes from trade, even when there is no currency involved.
When two parties voluntarily make a trade, each party gets more value out of the trade than they had before, so the sum total of value after the trade is, by definition alone, greater than the sum total of value before the trade.
Small example: I offer to trade you a bag of potatoes for 2 hours of your time to fix my tractor, and you accept.
This trade only happens because:
1. I value a running tractor more than I value my bag of potatoes
2. You value a bag of potatoes more than you value 2 hours of your time.
After the trade is done, I have more value (running tractor) and you have more value (a bag of potatoes), hence the total value after the trade is more than the total value before the trade.
The only thing that creates value is trade. It's the source of value.
All we have done is become more elaborate and sophisticated in this stuff but at the core, its been the same throughout much of time.
It's not a deficit if the value they assign to what they get is higher than the value they assign to what they give.
If they are giving away something they value highly for something they value less highly, then it's not a voluntary trade, now is it?
That's still a value assignment: they value eating and paying rent more highly than job satisfaction.
The value comes from doing the thing. Fixing the tractor creates value. Growing and harvesting the potatoes creates value.
Trading the potatoes for something you value more, yes, also creates additional value. But notice that potatoes have value to you even if you don't trade them for anything.
If you choke on a grape and a helpful volunteer saves your life, they create value. Nothing was exchanged, but they sure as hell generated wealth right there.
Labour and voluntary trade both create value. I wonder what sort of mindset one must have to forget that labour exists.
The value from value doesn't come by default; it's not a given.
Neither of those things create value unless they are actually used.
Fixing a tractor you neither use nor trade does not create value.
Growing potatoes you will never eat does not create value.
So, sure, labour can create value, but it's not a guarantee. Trade, OTOH, always creates value.
Value can be created either way: through labour or trade.
Regardless, your statement that all wealth is created by trade is false.
Scenario: You are a medium level engineer, who got laid off from a company betting on AI to replace a significant portion of their junior/medium level developers. You were also employing a middle-aged woman, to help with the kids after school and around the house, until you and your wife come back from work. She now needed to be let go as well, as you can't afford her anymore. The same thing happened to a large portion of your peers and work in the same industry/profession is practically no longer available. This has ripple effects on your local market (restaurants, caffes, clothing stores etc).
How do you see this as empowering and a net positive thing for these people individually, and for the society? What do they do that replaces their previous income and empowers them to get back to the same level at least?
More likely automatic stabilizers and additional stimulative spending would have to happen in order to fully utilize all the new productive capacity (or reduce it, as people start to work less). It's politically hard to sustain double digit unemployment, and ultimately the government can always spend enough or cut enough taxes to get everyone employed or get enough people to leave the labor force.
On a larger level, I would just ask your fictitious medium-level engineer what are they able to do today, with an AI/LLM, that they were unable to do before? As a very basic example, and one that is already true with existing LLM's, a mid-level engineer who wanted to build an app might've formerly struggled with building a UI for their app. Now, sans designer, a mid-level engineer can spin up an app UI much more quickly, and without the labor of finding and actually paying a designer. That's not to say there's no value left in design, but if you're starting out it's similar to how bootstrap (dating myself here) was an enabler because you were no longer in need of a designer to build a website (was still a huge time suck and pain in the ass though). You can multiple that by a bunch of roles and tasks today because LLM's make it possible to do things you just formerly wouldn't have been able to do on your own.
Last thing is the much more high level. Every time some new tech is introduced there's a lot of concern about displacement. I think, again, that's valid and perhaps moreso with AI. But it does seem to me like major new tech always seems to create a lot of opportunity. It might not be for the exact same people like your mid-level engineer (although I think it might for him/her), but I stay hopeful that the amount of opportunity created will offset the amount of suffering it will cause. And I don't say that in some kind of "suffering is ok" way, but just like revenue growth is the be all end all for so many companies, tech brings change and some suffering is a part of that. Prior skills become less important, new skills are preferred. Some folks adapt. Others thrive. Some are left behind.
If you're still checking in on this thread, and you actually read my diatribe, do you think I'm totally full of it? Again, I don't know that I would bet it would work out this way. Actually I probably would bet on that. But I'm definitely hopeful it will.