Difference Engine: Luddite legacy
economist.com
economist.com
Further I think the negative tone is not justified; I think a world without labor is a desirable world. That's also why I think all statements along the line »we have to create more jobs (in the sense of more work)« are ridiculous - why on earth would we desire to have more work to do?
The final state - a world without labor where everything is produced by machines - poses no direct problems; all goods are free and everybody is free to do what ever he desires. (There will probably be some indirect problems when billions of people are on holiday everyday, resource constraints, one must probably ensure that no one starts to hoard all kinds of goods reducing the supply for others and surly a thousand things I don't think about but this is probably all manageable.)
The real challenge is the change from status quo. The first jobs ceasing to exist or beginning to be unprofitable are naturally the ones comprising of mostly unskilled work and than expanding towards higher and higher required skills. This in turn split the society in two groups - one group still working and one group no longer working or doing unprofitable work. This on its own is not a problem but it is a major problem in connection with the way our society currently works.
The economy does not only produce goods to satisfy the demand of the population but although permits laborers to consume these goods by paying them. Consequently we have to either find a way to detangle these both responsibilities of the economy or ensure that all people are able to do a fair share of the remaining work (this is more jobs in the sense of splitting work fairly). The later option is probably the one that is harder to implement because the remaining work will require higher and higher skills and therefore more and more people will not able to do any of this work successfully.
Making all goods very inexpensive (necessities for pennies/day) solves the problems of "free".
Of course it's also a very dangerous idea, because it's so similar to the present system that it invites one to change it. Here's a small exercise:
1. Choose a product (potatos, t-shirts, rockets, diamonds, *anything*).
2. Imagine you pay modern prices for it, but made in a totally automated
factory.
3. Using your knowledge of business, ask yourself: When that money
eventually reaches a person, who is it? Who ultimately gets your
consumer dollar? The person who installed the solar panels?
Mined the ore? Ponied up the capital? Built the building? Ran the
company?
4. You haven't fully thought out the implications of the AI economy. Automate
that person's job and repeat.
Contrast this with the "free" economy (à la Roddenberry's 'Star Trek'), which is non-threatening because there's no clear plan of action from here to there.
There will still be some limited resources and things will remain having a value that could be equated with an currency, but this will be different from our current money. For example it could be the case that we are only able to mine 10 grams of diamond for everybody. Whoever desires to have more diamonds is free to exchange them with others not caring about their share of diamonds probably involving some currency.
I still have the feeling that I am missing your point; maybe you could elaborate it a bit more.
Not true. Labor is one way to earn money. But not the only way.
People also earn money from capital investments, and spend money on capital investments. The robotic car factory still pays the robotic smelter who pays the robotic miner. None of their prices are quite zero, because there are real capital costs in building and maintaining their own infrastructure.
Why else would anyone build an automated economy in the first place, if not in pursuit of capital returns? The first person to build a fully automatic widget factory gets to sell widgets at the prevailing price, but with much lower costs, giving him fat profit margins. As his competitors also automate, the prices eventually fall and his margin goes away.
We can expect to see this cycle repeat many, many times. It has already been happening for a long time. "Fully automated" is just one end of a long continuum we've already been travelling.
It may be questionable if we ever reach full automation but in this hypothetical scenario money as we know it will be worthless.
Of course you are correct. But you still pay the company that owns the robots. (Unless you're suggesting that there will be robots with no owner? I don't have to point out the problems with that, do I?)
The relevant question is, "what expenses does a company that runs a robotic factory have?"
This was Step 3 of my exercise. I offer it as a tool someone might use to answer their own questions.
That's actually what I had in mind - we build some robots doing all the work, maintaining themselves and what not. They would happily continue building iPhones even after the last human died. And they are owned - if you want to call it that - communistically by all humans. From time to time everybody can vote if he prefers to have more iPhones or more Android phones, vanilla ice cream or strawberry to actually produce the desired goods and that's it.
You are hinting at some problems with that scenario but I am unable to see them - would you mind to elaborate on this?
This is the crux of the problem: it's not just final consumer goods that need to be chosen, but every intermediate good up and down the value chain. And each of those choices is subject to differences of opinion, rapidly changing inputs, and shifting technologies.
And even at the consumer-goods level, the complexity of the voting would be astounding. It's not going to be a question of simple two-way elections -- you really need to measure a gigantic matrix of relative preferences for each person, and nobody has enough information about relative inputs costs to even accurately fill out their own matrix.
This is precisely why market pricing is so useful, and why it is unlikely to ever disappear entirely.
And you'll need a way to rationally allocate resources that takes into account new innovation, when people disagree.
For both these reasons, you'll still want market pricing. Even if all basic consumer goods become non-scarce (and therefore free), there will always be some upper bound at which goods are still scarce.
Another way to say this is that prices will get very, very low, but not zero. If energy costs zero, then anyone who wants can launch a mission to Alpha Centauri. But if energy costs the average person $0.10/year, it's practically free, while still being rationally allocated among really big users.
There will always be things that are so ambitious they have a price. Star Trek's moneyless economy is fundamentally contradictory: in a truly scarcity-free world, anybody who wanted could own their own Enterprise-class starship.
(How does an unemployable human come up with even $0.10/year for their energy, etc? They, or their government, or a charity, just need to own a little bit of the robotic factories paying dividends.)
"But here is the question: if the pace of technological progress is accelerating faster than ever, as all the evidence indicates it is, why has unemployment remained so stubbornly high—despite the rebound in business profits to record levels? Two-and-a-half years after the Great Recession officially ended, unemployment has remained above 9% in America. That is only one percentage point better than the country's joblessness three years ago at the depths of the recession."
Unemployment has dropped a couple of points since then, but the answer to the question was this, "Is it over or isn't it?" And by "it" we mean the Recession. As far as I can tell the American economy has run in an unsustainable over utilized state for the last few years. People who had jobs so afraid of losing them that they do anything to keep them, employers so burned by the Great Recession they operate understaffed rather than risk putting precious capital at risk. That is an unsustainable point, workers burn out and businesses leave money on the table because they aren't at full production.
What we've seen is that as the job market started opening up there has been a lot of movement, and relaxation on the part of workers such that business is required to hire to keep productivity high. Much more along more 'normal' patterns than we've had over the last 5 years.
The lesson for me was that great spasms in the economy result in a lot of irrational behavior (from a market perspective not an individual perspective) which takes a while to work out. The next interesting lesson will be see what the US government learns from these forced budget cuts. Which, if you recall, had everyone gnashing their teeth about how it was going to put the economy back on the skids.
All in all it points out why economics is a great source of questions and a lousy source of answers :-)
Some of my hiking friends didn't like my solution: a broad socialist style safety net to cover only basic needs with (probably) stiff competition for the fewer jobs, assuming that most people would want as good of a lifestyle as possible for their families. A good job == money for travel and richer experiences.
I see such a future world as an exciting place!
There will always have to be some percentage of the population that works in order to keep all these machines programmed and maintained, and you don't want those people to be enslaved by the masses. Everyone should be required to work for what they need, but thanks to automation the amount of time people need to spend working to afford the stuff they need is a lot lower than it used to be.
Or so you assume.
>Everyone should be required to work for what they need,
Why? And how would you enforce that if the production of everyone's needs (at some level => subsistence) was so mechanized that there just wasn't enough actual work to go around?
Consequently, we can assume that space exploration for the sake of enjoyment would be plausible.
GB Shaw: "All professions are conspiracies against the laity."
The examples given, lawyer and radiologist, achieve high income largely through artificially induced market scarcity by limiting entrants into these professions.
Abraham Lincoln, one of the nation's greatest lawyers, never went to undergrad school, never went to law school. Today, in the US, to be a lawyer one has to attend 7 years of post-high school education (in Europe and Israel it is 3 years) at a cost of about $500,000 if attending private schools.
For doing image recognition on mammograms, one has to attend 4 years of difficult pre-med, 4 years of difficult med school, 5 years of a hard to get into (eg artificial scarcity) radiology residency, and perhaps 2 years mammogram fellowship. Does it really take 13 or 15 years of post-high school education and training to be able to do image recognition of mammograms?
In addition, there is a great deal of variation in results of radiology readings which machines will help to make more uniform.
We need only look at the wealthy to see what life is like when you don't have to work for a living. The change need not be scary. When the threshold from scarcity to abundance is crossed by the automated AI economy it will be as if every human was suddenly independently wealthy.
When will this myth die? He paid double so that he could retain employees because turnover was costing him too much. It's mathematically impossible to pay your employees and expect them to be the the purchasers of your product while remaining profitable.
It's easier to spread a rumor than it is to correct it... :(
You can see the same thing happening now in Shenzhen. Workers know that they can get a job easily if they have some experience, so many don't return to work after a holiday. Wages have also gone up rapidly there. I just returned from a month in Chana and managed to tour a couple of factories while I was there. The complaint from the factory owners was skilled labor and the price they had to pay to retain them.
<sarcasm> Sounds terrible! Imagine a world where labor restrictions and regulations are so loose that barely anyone faces unemployment and the companies must attract workers?! The unimaginable horror!
But why? Income tax is supposed to support the infrastructure needed to maintain and protect all of our great stuff. The fact that robots did all the work doesn't negate the need for roads and wars and bank bailouts. I wonder, if we still had slavery, would slave owners be required to pay income tax for the income generated by their slaves?
Ideally, the level will be set to what will produce the best outcome based on our current understanding of the world, where the precise parameters under which 'best' is determined is negotiated through a fair political and/or economic process.
In practice, the question is how we best approximate that. The shape of that should be informed by economics, and will likely depend on the particular country.
All of that said, I agree it's a key factor to look at when assessing a particular BI proposal; I don't think it's an unanswerable question.
The main problem with your scheme is that in the far future, free trade could mean that countries with only labor and no capital would get a bad deal, and that without restrictions on people taking their wealth to other countries, the rich could theoretically use this to bargain the tax rate down so low that there was no money for a basic income (i.e. a "race to the bottom"). I don't think this will be an issue for a long time though.
Reminds me of the debate between Thiel and Andreessen posted on here recently…