If machines can produce every useful good and service better than humans -- including manufacturing copies of themselves -- then the global economy (denominated in units of currency) might be under threat, but people will materially prosper. It's not dollars or euros or renminbi that people really need. People need goods and services. If the machines-do-everything technology gets invented once, copies will soon spread globally [1].
The real problem is more likely to be the transitional turbulence. If self-driving vehicles do wipe out millions of truck driver jobs in the year 2029, but automated doctors aren't ready until 2059, large groups of workers lose income without seeing deflationary relief in the prices of services they need.
[1] The spread of maker machines could happen "legitimately" -- Gates Foundation or a similar organization financing freely shareable re-implementations. It could also happen "illegally" -- a government in a poorer country will just decide to tell international patent/copyright holders to pound sand in favor of their own domestic constitutents. This would be similar to South Africa's treatment of HIV drug patents in the 1990s.
Exactly. Those machines/processes/knowledge are a form of capital, and failure to redistribute it through taxes has known consequences in inequality, poverty, etc.
Not arguing that inequality is not an issue, it certainly is. But to say that only the wealthy have benefited distorts the picture. Rockefeller or Getty could have spent all their billions and never owned an iPhone, or had a child in vitro, or videoconference with a person in another continent, things taken for granted by everyday non-billionaires.
The average person's "wealth" -- as measured by life expectancy, access to vaccines, medicines, and advanced procedures, clean food, safe shelter, labor laws (in most countries) plus an enormous variety of entertainment and leisure options -- continues to increase over time, even if wealthy people get the majority of the gains.
Yes, increasing efficiencies of production have mostly benefited owners and a relatively small slice of high skill workers. (Like the engineers who build systems to remove human labor from processes.) Displaced workers in high income economies have seen their prosperity diminish because they lose a lot of earning power without seeing it fully counterbalanced by lower prices. In fact, inflation targeting efforts (and a host of other factors) keep inflating the costs of health care, housing, and higher education in an era where improved techniques "should" be making everything cost less.
Quoting from the article, Elon Musk has apparently said "There will certainly be a lot of job disruption because what’s going to happen is robots will be able to do everything better than us." I don't think that the story is "more of the same for ordinary people, and even worse" if machines can take all routine, productive jobs [1]. If owners don't need ordinary people as employees, then neither do ordinary people need owners. If machines do everything, then the cost (and price) of goods and services falls toward the costs of raw materials and energy. And raw materials and energy themselves fall precipitously in cost if machines can perfectly build more nuclear reactors or solar farms and batteries and mine even low-grade ore deposits without wages or breaks.
In this scenario, ordinary people don't even need to seize the existing assets of rich people to start living well without them. Just have the robots make copies of everything. There are a few edge cases of positional goods where robots can't duplicate things (you can't make more Old Master paintings or Manhattan real estate), but those don't really stand in the way of broad prosperity. If robots do everything routine, then everyone can have good medical care, clean water, plenty to eat, safe and climate controlled housing, abundant electronic entertainment... pretty much everything that the median adult citizen of highly developed countries currently enjoy today.
Keep in mind that I'm not saying that machines will replace human workers in all routine, productive jobs. I'm just thinking about the effects if they can.
[1] Routine, productive jobs would include things like driving trucks, diagnosing and treating leukemia, picking apples, and running experiments as planned by a principal investigator. It wouldn't include things like writing new poetry or coming up with a novel line of research as a principal investigator. But nonetheless, the "routine" jobs include most of today's economic activity, including most that are currently high pay and considered high skill.
This is a bit like the arguments economists made for globalisation. Very sound theory but by experiment it is being proven wrong. The focus was too much on the demand side. There will always be some cost for things and if you are not a supplier then you are out. The machines put too many people out in any particular location. Same as globalisation.
This will only be true in societies where the government interests of developing things like surveillance technology do not outweigh the interest of fulfilling their basic responsibilities.
Look at how financially powerful a city like Hong King is compared to the issues they’ve struggled with over the last several years.
If we can’t agree on some basic human rights questions, there’s just no way that technology will proliferate in a way that universally benefits everyone.
I think, it's way more complicated. Different people could have a very different definition of prosperity. Someone would fine with a dorm bed, while others would strive towards buying that 3-storey mansion they dreamed about since childhood. Earth simply doesn't have enough resources for everyone to have any level of luxury they could imagine, so there has to be some capping mechanism. So far, the deal was doing something that others would find useful, getting others to pay for it and using that money to pursue your own dreams. If we take that mechanism out of equation, we might be opening a much bigger can of worms.
If you would accept my analogy with a farm, the crop yield per worker may get higher, but instead of working at the field together because we all want that bread at the end of the day, we will be spending most of our time arguing on who's more entitled to get served first.
The truck drivers who lose their jobs will get new ones. Same story has been told for generations and it is never true. So-called AI won’t eliminate the need for workers, they will just shift into new jobs.
No one shed a tear when the carriage drivers lost their jobs. Except maybe the carriage drivers and their families.
> The truck drivers who lose their jobs will get new ones. Same story has been told for generations and it is never true.
The idea that new jobs will always arise is not a law of nature, it's only an empirical observation that keeps on being true, until one day it doesn't.
It seems very clear to the man on the street, the fights are getting more fierce. Assets prices increase and the bottom 80% are getting squeezed out of many things, slowly but surely: education, housing and with that also out of participation in society.
There is literally nothing, that hints at progress at this point: Tech and internet will has turned into permanent surveillance, the home surveillance is rolled out, the internet of things and workspace will be next, allowing for google analytics on labor.
And if workers complain too much, increase investments in software and data tools and replace a bunch of wet ware with some tool; heck, half of the "knowledge workers" today might be obsolete already.
The average person won't have much to laugh for the next few decades. We live in a sad time, where the most miraculous things man can create (machines that "think") will be the prime weapons of the owners against the non-owners. I fear this will be a costly battle.
The hilarious part to me is the elites saying "but look at the data". No. The whole point is that we've reversed engineered the economy so that "inflation is under 2%", meanwhile an entire generation is basically condemned to never own their dwelling. Unemployment is "historically low" but that's because you have people with Masters degrees driving for Uber and in the "gig" economy. The stock market is performing tremendously, but that's because we've pumped nearly 4 Trillion dollars into it beginning with Obama's presidency.
I am not sure how much longer it goes, but if there is an uprising it's going to be brutal. It's not going to be just bankers and politicians, it's going to come after the technocrats who helped engineer all this and the celebrities that pretended everything was okay.
With the insane property taxes the left wants to levy on personal dwellings, you never really own anything anyway. It's not a problem with just the elites - it's a problem with the leftists pretending to be on the side of the worker but then implementing 2% to 4% yearly property tax bills. See: Illinois.
Germany had boom times and 1/3 of a few regions already voted for a right wing, borderline fascist party. Imagine what will happen (in a few years) if economy tanks and people seek to punish previous governments even more.
>He sees “transferring money to people who are unproductive” [universal basic income, UBI] as less optimal than finding a way for them to be productive.
Why can't we let the individual find a way to make themselves productive? And, why do they need to be productive? Some of my best times in life are watching and playing games with my friends. Socializing. Loving people.
I, and most people I know, can look around and see things that need to be done. If our lives aren't so focused on paying the bills all the time, we can relax a bit and be creative.
I remember I used to get great school lunches. I knew the cafeteria staff by name and they knew me because I went back for seconds and thirds and fourths... skinny as a bean pole. Lunches were made fresh every day. The staff were there at 6am cooking for the kids. Fresh bread. I used to love watching that dough bounce around in the industrial mixer. It was bigger than I was.
A decade after I was out of school, I saw one of the ladies and asked how the school lunches were. She said they don't get to make them anymore. The menus are decided in Washington DC now and they have very little control over what is cooked or eaten. Kids don't come back for seconds and thirds and fourths anymore.
The federal government took local control away from the schools and homogenized everything and basically ruined it from what I remember.
Why do we think the federal government knows better how to manage our day to day lives than we do ourselves? Get out of our kitchens and homes.
The government doesn't need to find a way for me to be productive. People who need to be productive to keep their sanity will find a way. They'll clean their bedrooms, volunteer in their communities. They won't be judged by what their job is, but rather, what they do for themselves and the people around them.
The need to grind out a day at the office or the shipyard or in the truck hauling cargo saps a person's freewill.
>”The need to grind out a day at the office or the shipyard or in the truck hauling cargo saps a person's freewill.”
I’m not sure of that.
Couple of things. I’ve worked with working class people. They may complain about the job or the boss, but if they didn’t do one of those jobs, they’d feel less empowered.
I’ve heard people essentially say I don’t want to be on welfare but I can’t get a job. So they'd prefer a job to being on the dole.
Two, people with lots of time and nothing to do tend to just while away time, either in the form of any kind of entertainment or some times in counter productive activities. Doing “make-work” actually gives people some purpose.
I’m saying UBI will bring other unintended problems. I think UBI could be like people who have dogs and give them all they need [like UBI] but don’t take them out for walks. Work, any kind of work is like taking the dog out for a walk.
People having "nothing to do" is a self-inflicted problem of modern societies. There's plenty of stuff to do, all over the place. Just because it might not meet some wholly-arbitrary standard of a 'living', 'sustainable' level of productivity doesn't mean it's "make-work".
People will leave the mundane and repetitive to automation and focus on what they find truly fulfilling, utilizing "creative intelligence".
Creative intelligence involves always striving for the new thoughts, fresh ideas, novel ways to solve problems....repetition makes people mentally weak and depressed.
Many of the problems we discuss today about humans in the era of automation have already been addressed in ancient Indian philosophy (many millennia ago). This isn't new....
> I’m saying UBI will bring other unintended problems. I think UBI could be like people who have dogs and give them all they need [like UBI] but don’t take them out for walks. Work, any kind of work is like taking the dog out for a walk.
I like what you are saying and thought that perhaps this is why politicians seem to be so hyper-focused on jobs. They may realise better than most people jobs have other roles except producing an income.
So how about we force people to dig holes and then fill them up again, in order to get their UBI?
Giving people pointless bullshit jobs for its own sake sounds like insanity to me. Yes being able to live without working will pose a challenge to humanity, but it's a challenge we should face. The alternative is mandating that people do something even if it is really useless or impedes a more efficient system because we don't trust their ability to figure out how to live well on their own.
What happens if someone wants to do make-work, especially if it's for something significantly greater than basic income?
Being on the current analog of UBI(SSI/SSDI) is not pleasant, as much as you might think. A decade of low income idleness, equally low job prospects, and low opportunity for change is very demoralizing.
If it meant that one was fine being the IT/CS equivalent of an overpaid toll booth operator, nothing wrong with that. Either they end up finding something better or finish off their career doing something more than being idle.
There's no such thing as a "current analog of UBI". SSI/SSDI forces you to be idle if you want to receive it, while you would definitely be allowed to work (and perhaps even expected to, because reasonable UBI proposals are quite on the lowish side) under UBI.
To work UBI needs to be a survivable income, and also granted even if you make more than it already. That way it can be used as a safety net for the helplessly poor, a very valuable additional source of income for the working poor, and a buffer to let people actually try to implement their ideas instead of do 'make work' like an overpaid toll booth operator. The people who want to do something more valuable than work a toll booth should be prioritized over the people who wish to impeded the entire progress of humanity so they can be overpaid to do make work (dont' know if those people exist as abundantly as you seem to assume)
When ever someone talks about Productivity they are measuring how many people in the population are obedient and fit into domination based hierarchies. Those that don't throughout history are unproductive.
Now the problem is "Productivity" is stagnating since the 80's[1]. Why? Because most people learnt they don't like being obedient or dominated and there are better and newly available routes to meet ones needs and values. We don't need to prop up a Mark Zuckerberg or Ray Dalio or the Queen of England to live a decent life anymore. You can even do it without exploiting someone else.
> "Now the problem is "Productivity" is stagnating since the 80's"
This is the exact opposite of what your chart shows. Productivity, in the economic sense, is growing since the 1980s. It's wages that have stagnated. The wealth generated by increased productivity is all flowing to top.
Dalio recognizes this: "Increased productivity will also substantially increase the wealth gap." He knows this trend is not sustainable.
It is the same damn thing. Wages is proxy for WORKER productivity.
Go and ask Dalio why wages/worker productivity has stagnated while sector(factory/org) productivity has increased.
Listening to him is like listening to some member of British Royalty while Empire winds down having no clue why the colonies want independence. They too will say the British Empire's increased productivity will increase of the wealth gap. That's just another way of saying nobody wants to work to prop up the British Empire. People have found better things to do in life.
The only thing under threat is their model of reality. And there is no point paying attention to them about what comes next, because they can only see the empire based on obedience and domination as the best model.
> Despite the sharp wrangling that the National School Lunch Program often stirs up, the meals coming out of it are more nutritious — and a lot more adventurous — than they were 10 years ago. “It absolutely is a brighter day for school foods,” says Bettina Elias Siegel, a lawyer turned advocate and author of the book “Kid Food.”
> A major federal study recently came to much the same conclusion, finding that school lunches have improved significantly since implementation of the 2010 Healthy, Hunger-Free Kids Act. And the schools with the healthiest menus have the greatest rates of student participation.
I don’t care what anyone says; in NYC school lunches are basically inedible. Having been exposed to the public school system here for over six years, I can say with confidence that no one who has any choice will allow their kids to eat the garbage that schools put out during lunch. My kid tells me that she’d rather go hungry than eat lunch at school. I’ll be packing lunch for another six years as needed, and that’s okay by me. I just wish we weren’t wasting all this money to haul garbage to schools on a daily basis.
As a french person who's been to a few schools in the US, the US has such a long way to go it's almost non funny. I would never subject my kids to the food the local super-rich-tech-company daycare gives to toddlers.
>He sees “transferring money to people who are unproductive” [universal basic income, UBI] as less optimal than finding a way for them to be productive.
¿Por qué no los dos? One of the issues with the current system is that it does not serve people who are only somewhat productive, if only for the time being. We expect that every job (more generally - every production opportunity, at the margin) will pay for itself, but there's no law of economics that says this has to happen.
Because the entire global economy is premised on having enough growth to pay off the debt incurred by previous generations. If people choose to be less productive the whole edifice comes crashing down.
This is true if human productivity is the only thing driving growth. The suggestion here is that automation replaces that human input as most jobs are actually more about supporting the innovation rather than innovation itself - if you remove the need for those supporting jobs many, many more people can work on the innovation bit instead. Society would benefit greatly.
Some people, maybe even most, won't actually achieve much or contribute anything to the furthering of the human race, but that cost is worth paying for if enough actually do. We probably have hundreds of Einsteins, Turings, and Musks working in the roles supporting the innovators because they can't get out of those roles. That's bad for all of us.
Given the things GP described as being unproductive, things that almost all of us find humanly valuable at a very basic level, perhaps the edifice needs some serious refactoring if that's the case. I love life, I don't love work. Work is part of life, but I can't love life fully if I don't love my work.
A system based on the idea that every member of society must be productive is so hideous and inhuman to me it makes me angry to think of someone seriously propounding this productivist dogma. Why, exactly, is society structured in such a way that most of my waking hours are spent getting ready for work, commuting and working? It's a tragedy to be born, grow up, and spend your days grinding away just to stay alive. That's the one life you have, and I'm wasting it just for the fact of staying alive?
It's no surprise that young people aren't happy with this.
Maybe the key is to change what we consider productive. Our main measure of productivity is GDP and it has some really perverse methodology. If a defense manufacturer builds a bomb and sells it the government, that is considered positive GDP. If next year that bomb is taken and dropped on one's own country thus destroying value is it considered negative GDP? No, again it's positive production because the pilot and bombadeer sold their services to the government too!
Meanwhile, if one parent in a relationship stays home to care for the couple's children thus rendering a highly valuable service to the family, it is not counted!
Only academics who have furvent faith in the dogma they've been handed down can see such a contradiction and maintain their faith. Recently we have been seeing economists trying to augment gross measures like GDP. And we've seen the rise of behavioral economist who are trying to better integrate human factors into economics.
Seems like you mixed up a bunch of stuff, like cost cutting vs. federal government overreach. Lunches are bad today at schools because no one wants to spend any money on anything in the public sector.
If everybody got to do what their freewill told them to do, pretty soon we'd have lots of artists but no plumbers. Or butchers, or morticians, or laborers.
Not everyone is or wants to be an artist. As my sibling comment states, the market takes care of this just fine. There won't be a sudden transfer to people not caring about money or social status. Plenty of people will still go for jobs where the income is better. The kinds of people who do trades are the kind of people who want to build a holiday house on the side, far away from the city. Art isn't the pinnacle of life for everyone.
Think further a few more steps. There will be an equilibrium around a pay where there is a long enough line for unskilled labor to fill all demand. Assuming an Econ 101 efficient transparent market.
The kind of menial unskilled labor that we're discussing here is far less appealing than any work involving advanced skills - that's what the higher pay would be compensating for. It all works out.
Because every day a typical person needs to consume about 9kJ worth of food We need a system that produces 9kJ food x number of people reliably and accurately. Food is somewhat metaphorical here, there are a bunch of other things that are needed.
Also, that system needs to be fair. The people responsible for producing the food are taking on extra hardships or risks and won't do it if they don't think they are getting a net-good deal.
And there is also the issue of taxes. We need people to be productive to support the institution of government which has become large end free-spending.
>transferring money to people who are unproductive
says the professional unproductive hedge fund manager. The parasite billionaire who spent his life capturing the profit made and value created by companies
Let me preface this by saying I agree with you in spirit but your first and second paragraphs have a contradiction in them. How are you going to get people to come in and cook meals for kids at 6am because that's almost certainly something people will not do unless coerced by circumstance.
The elites will go to great lengths to ensure you work hard so they can profit and keep the status quo. I’ve presented similar arguments and have had the VP of a FAANG (a friend of mine) argue that working is in people’s better interests, that it actually empowers them, etc etc.
I wonder if that VP even knows a single person who would be a net recipient under a UBI-like arrangement. It just sounds like the kind of comment that reveals a severe lack of understanding wrt. what UBI would actually be like.
Dalio unquestionably has had success with investing. But his ideas are often called crazy. (i.e. the bond-heavy nature of his 'All Weather Portfolio'.)
He's also at odds with stalwarts like Warren Buffet, who point out that gold doesn't really have a reason to be a hedge against a crash. It doesn't do anything, it just looks pretty. Once people begin to figure that the emporer has no clothes, gold will just be cheap, pretty metal.
Dalio is worth listening to, but with a large grain of salt, IMHO.
Why now though? Gold has been valuable for about 6,000 years.
We've had plenty of industrial era and information era catastrophes where "gold is useless" , yet a gold ring would still get you smuggled out of the communist regime, a length of gold wire would still get you food, and gold jewelry would still be the best way to move value when the government puts restrictions.
Gold is probably the best thing to hold in economic uncertainty - up until the point where social order breaks down and it becomes the second best thing to hold.
I mean gold will likely get expensive with the amount of outstanding debt worldwide, explicit and off-the-books like underfunded pension liabilites and health care costs. I.e. it's the value of all major currencies that will go down.
Japan cannot ever have anything even close to 2% interest rates because at 2% the central government will pay 100% of the tax take just to service interest payments. This, of course, cannot continue forever without pushing down the value of money, one way or another.
People taking seriously what a hedgefund manager says in a public speech... it is to laugh.
If productivity were going up because of automation to the point where mass unemployment is an issue, interest rates would be higher: the end. Anyone who disagrees doesn't understand how finance works.
:sigh: Interest rates are pinned at the zero lower bound by the central banks. They can't raise the rates without tanking the economy, because just about every country has massive private debt burdens in excess of 150% of GDP. Higher interest rates means higher debt servicing costs, which forces borrowers to delever, which reduces macroeconomic demand by precisely the rate of change in debt. When private debt is larger than GDP by 1.5x to 2x, even a small fraction of borrowers deleveraging results in a massive reduction in demand.
At the same time, the US stock market is at all time highs, due to $4 trillion dollars of QE (i.e. the Fed creating money to buy financial assets), making the filthy rich even more filthy rich. And the Fed can't reduce it's balance sheet without tanking the stock market, which would throw the economy, in general, into a tailspin. They tried, and now they're rapidly reversing that QT.
We're in a liquidity trap. And unless there's a modern debt jubilee or large UBI (or a world war), we're going to be stuck here for decades. https://youtu.be/Pfg04wJtz8c
As automation continues to grow, unemployment will grow and labor force participation will fall. The new jobs being created now are predominantly gig / contractor jobs. Worker's share of wages is at an all time low.
If you're in the US, take a look at Andrew Yang's campaign for president. The Freedom Dividend (UBI) is what this country needs in order to break the cycle.
> If productivity were going up because of automation to the point where mass unemployment is an issue, interest rates would be higher: the end. Anyone who disagrees doesn't understand how finance works.
Could you better explain the process by which you arrived at this conclusion? There's a lot of hand waving and little to no rigor in the proof that you provide.
If automation were increasing producitivity, you could invest capital in it and get giant returns, making capital more rare and valuable, as it would be tied up in productive ventures. It isn't. Even freaking google is basically punting on a basket of dumb ideas, absolutely none of which has worked out, and none of which are likely to pan out, and (rationally) sitting on a huge barrel of cash from their looting of the US media system. Therefore, negative interest rates. Negative interest rates = negative productivity increases. So it is, so it has always been.
That's what finance is! You loan money to people to do useful things with. If there's nothing useful to do, the money isn't worth as much. Most of it, these days, goes to dumb shit like real estate bubbles.
All you need do is look at times when human power over nature was obviously increasing; capital was dear and interest rates where high because you could invest in the Bessemer Process or the Concorde or the Haber process or, like, the invention of computers and telecommunications. These days, we have ... apps for your phone. Of course we have negative interest rates; there is literally nothing to invest in.
Propping up the industries that are losses but whose failure would cause massive instability and upheaval. Those in power, have no interest in this outcome while they are in power. So Quantitative Easing part X and punt to the next election cycle.
I made no statement on causality. It's a simple statement on returns. You can't pay out high interest rates, or, like returns on anything, unless you're going to get improved productivity. If your productivity is declining (it probably is, considering demographics), you'll get fun times like negative interest rates. And dumbass speculative bubbles.
And low interest rates DEFINITELY do not cause speculative investment in R&D projects which could increase productivity. c.f. for example, the present! Compared to the high interest rate era of Bell Labs and moon shots; we have zilch for large scale investment in R&D for future productivity improvements.
If I guy that got awfully rich by shuffling money around instead of actually producing anything of value gets scared, then I feel like perhaps the economy may get a bit more fair. Bring it on.
What you call "shuffling money around", other's call funding companies with potential so they can sustain or accelerate their business, hire more staff, develop new products, provide those products in new regions etc.
Investing is how you get rich in this world. Whether it's real estate, stocks, bonds or any other non-depreciating asset classes. Investing is not without risk. America would not be what it is today without investors risking their money since at least the 1920's. If you think continuously successful investors don't work for their money, then you are simply ignorant about the complexities and time consumption that continuously successful investing requires.
You mean the country where the rich get richer and are the only one enjoying education and healthcare? The country where poor is the new "middle class"?
Money makes money in our current (imho diseased) economy, but it is coming from somewhere.
There's a company in my town, hiring devs for a fully robotic kitchen setup. Ingredients are deposited, machines cook meals. A single person can take care of the joint. You can replace a $100k/month bill on personel for a mid-size fast-food outlet with $10k/month for a few guys helping the machine. No strikes, overwork, just ingredients, meals and a bit of maintenance.
Imagine, you are a 50 joint franchise, that's a whopping 50 mil per year in savings (and few hundred people desperately looking for jobs).
As long as the price of that food is lowered to reflect its mass-produced nature, it seems fair: win-win for society. Then on (those more rare) occasions when we want a superb michelin-level meal, we pay the fair price for a human to prepare it.
This is the same guy that wrote worthless self-help ("principles") and claims capitalism is bad, not practicing what he preaches he also benefits the most from it.
The real problem is more likely to be the transitional turbulence. If self-driving vehicles do wipe out millions of truck driver jobs in the year 2029, but automated doctors aren't ready until 2059, large groups of workers lose income without seeing deflationary relief in the prices of services they need.
[1] The spread of maker machines could happen "legitimately" -- Gates Foundation or a similar organization financing freely shareable re-implementations. It could also happen "illegally" -- a government in a poorer country will just decide to tell international patent/copyright holders to pound sand in favor of their own domestic constitutents. This would be similar to South Africa's treatment of HIV drug patents in the 1990s.