Unfortunately, I think this optimistic way of looking at the matter depends on confusion about who “we” are.
Oversimplified picture: Alex owns a business, Bill works in it, Chris is a customer. Alex buys a machine that does Bill’s job better and cheaper. She benefits (higher profits). Chris benefits (lower prices). Bill loses (no job). In the (common?) case where the machine is only a little better at Bill’s job than Bill was and Alex chooses to keep most of the profits, Alex benefits a lot, Bill loses a lot, Chris benefits a little, and the whole thing is sllightly positive-sum.
Now, suppose this happens on a large scale. There are lots of Bills and Chrises; there are way fewer Alexes. So a few Alexes get a lot richer; a lot of Bills-and-Chrises get a lot poorer (from losing their jobs) and a bit richer (from cheaper or better products). The whole thing is indeed positive-sum, but all the gains go to the Alexes, and along with those gains they also take a whole lot more from the Bills.
It’s an oversimplification to say that all the businesses are owned by a small number of Alexes. Many of them will be publicly traded, which means that their ownership is widely distributed. However, substantial share ownership is the preserve of the wealthy, and the picture remains one of a large-scale wealth transfer from poorer people to richer ones.
For sure, the gains could instead be used to enable everyone to work shorter hours for the same pay, or to stop pollution, or whatever. But only if someone makes that happen. What the market will do, left largely to itself, is to allocate all the gains, and more, to those who are already wealthy. Distributing those other benefits to ordinary workers (who generally aren’t already wealthy) and less-developed countries will depend on the generosity of those people. Or on large-scale government regulation of the sort that, in the US at least, is currently absolutely unthinkable politically because it looks too much like SOCIALISM!!!111eleven!!! to survive in the face of public opinion.
Do you see an actually-achievable way in which these technological changes end up bringing the benefits you hope for?
Like most people who believe in widespread market failures you’ve stopped your analysis too early. So Alex automates Bill’s job away and pockets most of the savings, leaving Bill unemployed and some large number of Chrises slightly better off. What happens next?
Well, obviously Bill looks for work, and Alex’s competitor Dave decides he needs to automate too. A year later Bill is working some other (possibly less desireable) job, and Alex and Dave are locked in a price war that gradually transfers most of the savings from automation to their customers. So as long as the automation process is gradual there’s no particular need for intervention.
Or, a year later Bill is still unemployed—I hear that’s been happening a bit lately—and Alex and Dave have found other ways of competing that don’t require commoditizing their products and not taking any profits.
Does it look to you as if (e.g.) Microsoft, Apple and Google are taking minimal profits while their customers pocket all the benefits of their cleverness?
IIRC, the last three recessions have had largely-jobless recoveries, and the pattern of unemployment they’ve left behind them looks a whole lot like what you’d expect if people’s jobs are being taken away by technical progress without new opportunities arising to give a lot of those people new jobs. And I don’t see any sign that (e.g.) typical working hours are getting shorter to absorb all that surplus leisure.
At least in the US, the current long-run employment is caused by a severe ongoing recession that’s being exacerbated by massive deficit spending, increased regulation and tax hikes. None of this has anything to do with technology one way or the other. While it’s true that at some point you could have so much automation that you run out of jobs for people, we’re not remotely close to approaching that point yet. Instead we see a few % of current jobs become obsolete each decade, most of which are replaced by new jobs that didn’t exist before.
As for profit margins, my point was simply that degree of automation is irrelevant. Profit magins in a given industry are determined by a complex interplay between number of competitors, barriers to entry, regulation and dozens of other factors, none of which are much afected by the details of production. For instance, manufacturing has already seen 1-2 orders of magnitude increase in automation in the last 200 years but their profit margins generally don’t show it.
Finally, you won’t see people trading work hours for extra leisure unless their pay is already high enough that they’d prefer more free time to more money, which isn’t going to happen unless average incomes are at least an order of magnitude higher than they are now. Most people don’t start running out of things to spend money on until they have a mansion, several luxury cars and a few $100K of assorted toys, after all.
Microsoft does not meaningfully compete, Google doesn’t seem to be taking excess profits, and Apple’s mostly based on ripping off people who have too much money anyways. But look at the giants of a few decades ago—are GM and American Airlines known for excess profits today? Competing margins down takes time, but it does happen.
Yeah, we’re basically screwed. I’ll try to think of something anyway.
The goal is to redistribute wealth, from the rich to the poor. Doing it directly seems impossible. But we could do it indirectly, by redistributing power.
I think one of the most powerful lever currently available is unemployment. Currently, employees fear it, so they accept lower wages. If unemployment where somehow less terrible, or less common, employees would have more power, and higher salaries. Of the top of my head, I see two ways:
Universal income. It makes unemployment less unpleasant. If it gives you enough money, one could chose to just retire early and live frugally. I agree it sounds too communist however. I don’t see it happening, especially in the US.
Reduce work hours. Go down to 4 days a week, while maintaining current salaries. There will be need for more people, which will mean less unemployment. When automation goes up again, go down to 3 days. And down. And down. This one sounds more plausible, but again, not in the US. The second someone talks about a 4 week day is the second you see some Republican stir up emotions about righten up the country through virtuous hard work. Maybe it could work in Europe (one country at a time), then spread. But we need to get past the idea that hard work is sacred first.
We could also spread basic rationality and basic political awareness. But frankly, this is difficult: most people don’t have the energy to think when they get back home. They just watch TV, and collapse until tomorrow morning. This would change if they worked less, but you see the chicken-and-egg problem here…
Another possibility is the internet. Compared to mainstream media, ideas flow unfiltered here. As more people learn to use it, we will have more and more meaningful many-to-many communications, of which 4chan is only a baby step.
doesn’t your predicition say unemployment will become much higher than currently? I think but don’t really know whether there are any large scale boycotts of profitable, unethical businesses.
I expect that as machines become able to do more jobs currently done by humans, unemployment will increase. In some cases, the machines’ new capabilities will lead to new jobs; in some of those cases there might be more jobs created than lost. But in the extreme case (which is the one actually being discussed here) of a change that makes almost all human jobs redundant, it seems unlikely that the number of valuable new jobs created will be close to the number lost.
Is your point that we shouldn’t expect mass boycotts yet because there isn’t mass unemployment yet? Perhaps that’s right. I’m claiming only that merely making big profits and keeping them instead of passing them to customers doesn’t seem to be enough to trigger large-scale protests or boycotts, because there are companies doing that and they don’t seem to be hated much for it.
Something like 95% of the jobs of 200 years ago have been destroyed by advancing technology—where’s the persistent unemployment that’s supposed to result?
Who says that persistent unemployment is supposed to result from that?
The hypothetical situation we’re discussing, unless I’m desperately confused, is one in which machines are better than humans at all the things humans need or want doing. Not one where various particular human capabilities have been exceeded by precisely focused technology (which is what we’ve had time and time again in the past) but one where machines are simply better than we are at everything. This is not at all the same.
That is indeed the ultimate hypothetical situation we’re discussing, but we’re also discussing other situations in the present or very near future where only some human job-skills have been obsoleted. From the Mechanical Engineering article, I got the impression the Race Against the Machine authors thought that jobs were being obsoleted faster than people could re-train for the new ones. Thus, increased unemployment.
I doubt that a major chunk of current unemployment is thus explained, but I like the fact that this might get people thinking. They can connect the dots to the possible future situation you’ve named, and perhaps start thinking more seriously about AI.
There are two separate effects here. In the short term, a new technology may put people out of work faster than they can retrain. That’s bad for them; it’s likely to be bad for the world as a whole in the short term; but it may very well be a good thing for everyone in the long term, e.g. if it creates more jobs than it destroyed. But it may also happen that a new technology destroys jobs without creating any new ones. In that case, even if it produces an increase in total wealth, it may be bad overall (at least for people whose values assign substantial importance to the welfare of the worst-off) -- in the long term as well as the short.
So the following two claims need to be treated quite separately. (1) “Recent technological progress is obsoleting more jobs than it’s creating, and lots of people are getting shafted as a result.” (2) “Future technological progress may obsolete more jobs than it ever creates, directly or indirectly, and lots of people will get shafted as a result if so.” And both are different from (1.5) “Recent technological progress is obsoleting more jobs than it’s creating, and that loss of jobs will persist way into the future”. It’s (1.5) that’s made less credible by observing that past progress doesn’t seem to have left us with a population that’s almost entirely jobless; that observation seems to me to have little to say about (1) and (2).
Unfortunately, I think this optimistic way of looking at the matter depends on confusion about who “we” are.
Oversimplified picture: Alex owns a business, Bill works in it, Chris is a customer. Alex buys a machine that does Bill’s job better and cheaper. She benefits (higher profits). Chris benefits (lower prices). Bill loses (no job). In the (common?) case where the machine is only a little better at Bill’s job than Bill was and Alex chooses to keep most of the profits, Alex benefits a lot, Bill loses a lot, Chris benefits a little, and the whole thing is sllightly positive-sum.
Now, suppose this happens on a large scale. There are lots of Bills and Chrises; there are way fewer Alexes. So a few Alexes get a lot richer; a lot of Bills-and-Chrises get a lot poorer (from losing their jobs) and a bit richer (from cheaper or better products). The whole thing is indeed positive-sum, but all the gains go to the Alexes, and along with those gains they also take a whole lot more from the Bills.
It’s an oversimplification to say that all the businesses are owned by a small number of Alexes. Many of them will be publicly traded, which means that their ownership is widely distributed. However, substantial share ownership is the preserve of the wealthy, and the picture remains one of a large-scale wealth transfer from poorer people to richer ones.
For sure, the gains could instead be used to enable everyone to work shorter hours for the same pay, or to stop pollution, or whatever. But only if someone makes that happen. What the market will do, left largely to itself, is to allocate all the gains, and more, to those who are already wealthy. Distributing those other benefits to ordinary workers (who generally aren’t already wealthy) and less-developed countries will depend on the generosity of those people. Or on large-scale government regulation of the sort that, in the US at least, is currently absolutely unthinkable politically because it looks too much like SOCIALISM!!!111eleven!!! to survive in the face of public opinion.
Do you see an actually-achievable way in which these technological changes end up bringing the benefits you hope for?
Like most people who believe in widespread market failures you’ve stopped your analysis too early. So Alex automates Bill’s job away and pockets most of the savings, leaving Bill unemployed and some large number of Chrises slightly better off. What happens next?
Well, obviously Bill looks for work, and Alex’s competitor Dave decides he needs to automate too. A year later Bill is working some other (possibly less desireable) job, and Alex and Dave are locked in a price war that gradually transfers most of the savings from automation to their customers. So as long as the automation process is gradual there’s no particular need for intervention.
Or, a year later Bill is still unemployed—I hear that’s been happening a bit lately—and Alex and Dave have found other ways of competing that don’t require commoditizing their products and not taking any profits.
Does it look to you as if (e.g.) Microsoft, Apple and Google are taking minimal profits while their customers pocket all the benefits of their cleverness?
IIRC, the last three recessions have had largely-jobless recoveries, and the pattern of unemployment they’ve left behind them looks a whole lot like what you’d expect if people’s jobs are being taken away by technical progress without new opportunities arising to give a lot of those people new jobs. And I don’t see any sign that (e.g.) typical working hours are getting shorter to absorb all that surplus leisure.
At least in the US, the current long-run employment is caused by a severe ongoing recession that’s being exacerbated by massive deficit spending, increased regulation and tax hikes. None of this has anything to do with technology one way or the other. While it’s true that at some point you could have so much automation that you run out of jobs for people, we’re not remotely close to approaching that point yet. Instead we see a few % of current jobs become obsolete each decade, most of which are replaced by new jobs that didn’t exist before.
As for profit margins, my point was simply that degree of automation is irrelevant. Profit magins in a given industry are determined by a complex interplay between number of competitors, barriers to entry, regulation and dozens of other factors, none of which are much afected by the details of production. For instance, manufacturing has already seen 1-2 orders of magnitude increase in automation in the last 200 years but their profit margins generally don’t show it.
Finally, you won’t see people trading work hours for extra leisure unless their pay is already high enough that they’d prefer more free time to more money, which isn’t going to happen unless average incomes are at least an order of magnitude higher than they are now. Most people don’t start running out of things to spend money on until they have a mansion, several luxury cars and a few $100K of assorted toys, after all.
Microsoft does not meaningfully compete, Google doesn’t seem to be taking excess profits, and Apple’s mostly based on ripping off people who have too much money anyways. But look at the giants of a few decades ago—are GM and American Airlines known for excess profits today? Competing margins down takes time, but it does happen.
This is not a market failure, the situation is Pareto optimal. It’s just that capitalists get richer and laborers get poorer.
Yeah, we’re basically screwed. I’ll try to think of something anyway.
The goal is to redistribute wealth, from the rich to the poor. Doing it directly seems impossible. But we could do it indirectly, by redistributing power.
I think one of the most powerful lever currently available is unemployment. Currently, employees fear it, so they accept lower wages. If unemployment where somehow less terrible, or less common, employees would have more power, and higher salaries. Of the top of my head, I see two ways:
Universal income. It makes unemployment less unpleasant. If it gives you enough money, one could chose to just retire early and live frugally. I agree it sounds too communist however. I don’t see it happening, especially in the US.
Reduce work hours. Go down to 4 days a week, while maintaining current salaries. There will be need for more people, which will mean less unemployment. When automation goes up again, go down to 3 days. And down. And down. This one sounds more plausible, but again, not in the US. The second someone talks about a 4 week day is the second you see some Republican stir up emotions about righten up the country through virtuous hard work. Maybe it could work in Europe (one country at a time), then spread. But we need to get past the idea that hard work is sacred first.
We could also spread basic rationality and basic political awareness. But frankly, this is difficult: most people don’t have the energy to think when they get back home. They just watch TV, and collapse until tomorrow morning. This would change if they worked less, but you see the chicken-and-egg problem here…
Another possibility is the internet. Compared to mainstream media, ideas flow unfiltered here. As more people learn to use it, we will have more and more meaningful many-to-many communications, of which 4chan is only a baby step.
wouldn’t mass protests be inevitable in such a situation, and boycotting the businesses that keep the profits to themselves?
I don’t see a lot of people boycotting very profitable businesses at the moment; do you?
doesn’t your predicition say unemployment will become much higher than currently? I think but don’t really know whether there are any large scale boycotts of profitable, unethical businesses.
I expect that as machines become able to do more jobs currently done by humans, unemployment will increase. In some cases, the machines’ new capabilities will lead to new jobs; in some of those cases there might be more jobs created than lost. But in the extreme case (which is the one actually being discussed here) of a change that makes almost all human jobs redundant, it seems unlikely that the number of valuable new jobs created will be close to the number lost.
Is your point that we shouldn’t expect mass boycotts yet because there isn’t mass unemployment yet? Perhaps that’s right. I’m claiming only that merely making big profits and keeping them instead of passing them to customers doesn’t seem to be enough to trigger large-scale protests or boycotts, because there are companies doing that and they don’t seem to be hated much for it.
Something like 95% of the jobs of 200 years ago have been destroyed by advancing technology—where’s the persistent unemployment that’s supposed to result?
Who says that persistent unemployment is supposed to result from that?
The hypothetical situation we’re discussing, unless I’m desperately confused, is one in which machines are better than humans at all the things humans need or want doing. Not one where various particular human capabilities have been exceeded by precisely focused technology (which is what we’ve had time and time again in the past) but one where machines are simply better than we are at everything. This is not at all the same.
That is indeed the ultimate hypothetical situation we’re discussing, but we’re also discussing other situations in the present or very near future where only some human job-skills have been obsoleted. From the Mechanical Engineering article, I got the impression the Race Against the Machine authors thought that jobs were being obsoleted faster than people could re-train for the new ones. Thus, increased unemployment.
I doubt that a major chunk of current unemployment is thus explained, but I like the fact that this might get people thinking. They can connect the dots to the possible future situation you’ve named, and perhaps start thinking more seriously about AI.
There are two separate effects here. In the short term, a new technology may put people out of work faster than they can retrain. That’s bad for them; it’s likely to be bad for the world as a whole in the short term; but it may very well be a good thing for everyone in the long term, e.g. if it creates more jobs than it destroyed. But it may also happen that a new technology destroys jobs without creating any new ones. In that case, even if it produces an increase in total wealth, it may be bad overall (at least for people whose values assign substantial importance to the welfare of the worst-off) -- in the long term as well as the short.
So the following two claims need to be treated quite separately. (1) “Recent technological progress is obsoleting more jobs than it’s creating, and lots of people are getting shafted as a result.” (2) “Future technological progress may obsolete more jobs than it ever creates, directly or indirectly, and lots of people will get shafted as a result if so.” And both are different from (1.5) “Recent technological progress is obsoleting more jobs than it’s creating, and that loss of jobs will persist way into the future”. It’s (1.5) that’s made less credible by observing that past progress doesn’t seem to have left us with a population that’s almost entirely jobless; that observation seems to me to have little to say about (1) and (2).