Regarding the second point, here is my 2p on “The Lights in the Tunnel”:
“The Lights in the Tunnel” is a whole book about a topic I am interested in: the effects of automation. However, there is a serious flaw that pervades the book’s whole analysis:
Martin argues that the economy will crash—as machines take the jobs of consumers, they no longer have any money to spend on things—and cash flows spiral downwards.
Martin says: “Another way of expressing this is to say that although machines may take over people’s jobs, the machines—unless we are really going to jump into the stuff of science fiction—do not participate in the market as consumers”—page 24.
However, machines still participate in the market indirectly—via people. Humans buy fuel, spare parts, add-ons and “consumables” for their machines. Machines still “consume”—even if they don’t have bank accounts and can’t go to the shops. The resulting effect on the economy is much the same as if the machines were themselves consumers.
This seemingly-simple point destroys much of the book’s DOOM-mongering analysis. There are some other good things in the book—but IMO, the author damages the reader’s view of his competence by making this kind of mistake.
This is Martin Ford, the author of The Lights in the Tunnel. I just wanted to respond to your comment here:
If the average consumer is unemployed and has no income, he is obviously not going to be purchasing stuff for his machines. In fact, ownership of the machines will concentrate into a shrinking elite as machines take the jobs of average people.
Remember that the focus here is on what we might call “end consumption.” If you consider GDP, consumer spending is about 70% of that. It is important to note that that is only END consumption by PEOPLE.
When General Motors purchases steel for its cars that is not consumption and is NOT added to GDP. The value of the steel gets accounted for ONLY when someone buys a car. The same argument applies to this idea of machines using resources. If the machines are used in production—and if they replace human workers—then what the machines “consume” is not END consumption and does not drive the economy. It is intermediate consumption. A PERSON still has to purchase the end product. Machines cannot do this. If too few people have the ability to purchase END products, the mass market economy will collapse.
Everything produced by the human economy is ultimately consumed by individual human beings. This applies even to government spending since the services provided by government are consumed by people. The only other factor is business investment, and that occurs in response to anticipated future consumer spending—businesses will invest only if they anticipate future demand.
Anywone who is interested can read the book for free in PDF at http://www.thelightsinthetunnel.com. If you prefer to buy the book at Amazon, I would like that even bettter.. ;-)
I hate to seem rude about you or your book, which I must commend you for for going to the time and trouble of writing and publishing, but it seems that the thesis presented is contradicted by a simple piece of economics.
To see the mistake, look at this paragraph summarizing the chapter on “Make Work Bias” from The Myth of the Rational Voter
Make-work bias
Caplan refers to the make-work bias as a “tendency to underestimate the economic benefits from conserving labor.” (p40) People tend to equate economic growth with job creation, even if those jobs are wasteful or outright detrimental to growth. Economists argue that this is precisely wrong: growth comes from increases in the productivity of labor. The resulting increase in productivity, ceteris paribus, causes people to be dismissed from existing jobs and encourages them to seek more socially valuable opportunities. Caplan makes special emphasis of the movement away from farming over the past two hundred years—from 95% of Americans as farmers to just 3%—as an illustrative example. Those millions who are no longer farming can be employed to make iPods, maintain communication networks, and run restaurants
Just because the average consumer is unemployed doesn’t mean he has no income. For example, he might own shares in robot companies that pay a big dividend. Why would they pay a big dividend? Because, by assumption, the robot company makes extremely useful products. The person might also get a government handout, which would be financed by heavy government taxes on these extremely productive robot/AI companies.
Furthermore, just because Robots and AI-systems can do all of the pragmatically necessary work, it doesn’t follow that no-one will want a human to do something. For example, you might want a real human musician rather than a robot, etc.
In this happy state of affairs, people would probably cease to be motivated by money, and instead be motivated in part by pursuit of other scarce resources, such as the time of people who had rare and desirable traits, or by “making a difference to the world”-type considerations. Though I suspect that most of the motivation would come from just wanting to go and have a good time. Drinks are served, time to party, etc.
Re: “Just because the average consumer is unemployed doesn’t mean he has no income. For example, he might own shares in robot companies that pay a big dividend. Why would they pay a big dividend? Because, by assumption, the robot company makes extremely useful products.”
Most depend for their income on revenue from work—or government handouts. Few can live for long off interest on their savings. Increased production levels in the future are unlikely to make all that much difference to that situation. Martin makes a broadly similar point here.
Martin is also already well aware of the possibility of government handouts supported by taxation:
“In The Lights in the Tunnel, I argue that we will ultimately have to provide supplementary income to the majority of the population; if we don’t do so, we won’t be able to sustain consumption. That type of scheme, obviously, would have to be supported by some type of taxation …”—source
We’ve been through this before. Very high returns by themselves give no guarantee that you’ll be able to live off the interest on a modest amount, since the price of whatever you require for subsistence may be increasing at an even higher rate.
In a competition for limited resources, those relying on interest payments from capital seem likely to get progressively poorer—relative to those with interest payments from capital and income from work—even if the work income is taxed and redistributed.
Yes, the poor can vote in tax increases—but the rich can lobby the government, perform tax dodges, seek out tax havens—and so on. I know which position I would rather have.
Hang on—before we were assuming that the Robots (ems) were consumers. Here we’re assuming the opposite, that humans and only humans consume. Therefore the consumption basket can’t go haywire.
Actually one way things could go wrong would be if an “elite” group of humans took the place of ems, and consumed 99.999999999999999999999% of output. So in order for things to be OK, economic disparity has to remain non-insanely-high. But even the modest taxes that we have today, plus wealth redistribution, would ensure this, and it seems that there would be stronger incentives to increase wealth redistribution than to decrease it.
Hang on—before we were assuming that the Robots (ems) were consumers. Here we’re assuming the opposite, that humans and only humans consume. Therefore the consumption basket can’t go haywire.
What counts as “consumption” is a matter of definition, not fact. Even if you book the “consumption” by machines as capital investment or intermediate goods purchases, it’s still there, and if machines play an increasingly prominent role, it can significantly influence the prices of goods that humans consume. With machines that approach human levels of intelligence and take over increasingly intelligent and dexterous human jobs, this difference will become an increasingly fictional accounting convention.
Land rent is another huge issue. Observe the present situation: food and clothing are nowadays dirt cheap, and unlike in the past, starving or having to go around without a warm coat in the winter are no longer realistic dangers no matter how impoverished you get. Yet, living space is not much more affordable relative to income than in the past, and becoming homeless remains a very realistic threat. And if you look at the interest rates versus prices, you’ll find that the interest on a fairly modest amount would nowadays be enough to feed and clothe yourself adequately enough to survive—but not to afford an adequate living space. (Plus, the present situation isn’t that bad because you can loiter in public spaces, but in a future of soaring land rents, these will likely become much more scarce. Humans require an awful lot of space to subsist tolerably.)
So in order for things to be OK, economic disparity has to remain non-insanely-high.
When it comes to the earnings from rent and interest, the present economic disparity is already insanely high. What makes it non-insanely-high overall is the fact that labor can be sold for a high price—and we’re discussing the scenario where this changes.
I’ll certainly agree that poorer humans might run out of land that’s all owned by a few rich humans. If the value of labor dropped to zero, then land ownership would become critically important, as it is one of the few resources that are essentially not producable, and therefore the who-owns-the-land game is zero sum.
But is land really unproducable in this scenario? Remember, we’re assuming very high levels of technology. Maybe the poorer humans would all end up as seasteaders or desert dwellers?
What about the possibility of producing land underground?
What about producing land in space?
The bottom line seems to be that our society will have to change drastically in many ways, but that the demise of the need for human labor would be a good thing overall.
But is land really unproducable in this scenario? Remember, we’re assuming very high levels of technology. Maybe the poorer humans would all end up as seasteaders or desert dwellers?
What about the possibility of producing land underground?
What about producing land in space?
Given a well-organized and generous system of redistribution, the situation actually wouldn’t be that bad. Despite all the silly panicking about overpopulation, the Earth is a pretty big place. To get some perspective, at the population density of Singapore, ten billion people could fit into roughly 1% of the total world land surface area. This is approximately the size of the present-day Mongolia. With the population density of Malta—hardly a dystopian metropolis—they’d need about 5% of the Earth’s land, i.e. roughly the area of the continental U.S.
Therefore, assuming the powers-that-be would be willing to do so, in a super-high-tech regime several billion unproductive people could be supported in one or more tolerably dense enclaves at a relatively low opportunity cost. The real questions are whether the will to do so will exist, what troubles might ensue during the transition, and whether these unproductive billions will be able to form a tolerably functional society. (Of course, it is first necessary to dispel the delusion—widely taken as a fundamental article of faith among economists—that technological advances can never render great masses of people unemployable.)
Now, you write:
The bottom line seems to be that our society will have to change drastically in many ways, but that the demise of the need for human labor would be a good thing overall.
I’m not at all sure of that. I hate to sound elitist, but I suspect that among the common folk, a great many people would not benefit from the liberation from the need to work. Just look at how often lottery winners end up completely destroying their lives, or what happens in those social environments where living off handouts becomes the norm. It seems to me that many, if not most people need a clear schedule of productive work around which they can organize their lives, and lacking it become completely disoriented and self-destructive. The old folk wisdom that idle hands are the devil’s tools has at least some truth in it.
This is one reason why I’m skeptical of redistribution as the solution, even under the assumption that it will be organized successfully.
Re: “Therefore, assuming the powers-that-be would be willing to do so, in a super-high-tech regime several billion unproductive people could be supported in one or more tolerably dense enclaves at a relatively low opportunity cost. The real questions are whether the will to do so will exist, what troubles might ensue during the transition, and whether these unproductive billions will be able to form a tolerably functional society.”
Organic humans becoming functionally redundant is likely to be the beginning of the end for them. They may well be able to persist for a while as useless parasites on an engineered society—but any ultimate hope for becoming something other than entities of historical interest would appear to lie with integration into that society—and that would take a considerable amount of “adjustment”.
It seems to me that many, if not most people need a clear schedule of productive work around which they can organize their lives, and lacking it become completely disoriented and self-destructive.
I think that that would just be another service or product that people purchased. Be it in the form of cognitive enhancement, voluntary projects or hobbies, etc. In fact lottery winners simply suffer from not being numerous enough to support a lottery-winner rehabilitation industry.
I agree that such optimistic scenarios are possible; my gloomy comments aren’t meant to prophesy certain doom, but rather to shake what I perceive as an unwarrantably high level of optimism and lack of consideration for certain ugly but nevertheless real possibilities.
Still, one problem I think is particularly underestimated in discussions of this sort is how badly the law of unintended consequences can bite whenever it comes to the practical outcomes of large-scale social changes and interventions. This could be especially relevant in future scenarios where the consequences of the disappearing demand for human labor are remedied with handouts and redistribution. Even if we assume that such programs will be successfully embarked upon (which is by no means certain), it is a non-trivial question what other conditions will have to be satisfied for the results to be pretty, given the existing experiences with somewhat analogous situations.
Re: “before we were assuming that the Robots (ems) were consumers. Here we’re assuming the opposite, that humans and only humans consume.”
More accurately, Martin Ford was assuming that—and I was pointing out that trucks, fridges, washing machines, etc. are best modelled as consumers too—since they consume valuable low-entropy resources—and spit out useless waste products.
The idea that machines don’t participate in the economy as consumers is not a particularly useful one. Machines—and companies—buy things, sell things, consume things—and generally do participate. Those machines that don’t buy things have things bought for them on their behalf (by companies or humans) - and the overall effect on economic throughput is much the same as if the machines were buying things themselves.
If you really want to ignore direct consumption by machines—and pretend that the machines are all working exclusively for humans, doing our bidding precisely—then you have GOT to account for people and companies buying things for the machines that they manange—or your model badly loses touch with reality.
In practice, it is best to just drop the assumption. Computer viruses / chain letters are probably the most obvious illustration of the problem with the idea that machines are exclusively “on our side”, labour on our behalf, and have no interests of their own.
The mis-handling of this whole issue is one of the problems with “The Lights in the Tunnel”.
Would this analysis apply to the ecosystem as a whole? Should we think of fungus as consuming low entropy plant waste and spitting out higher entropy waste products? Is a squirrel eating an acorn part of the economy?
Machines, as they currently exists, have no interests of their own. Any “interests” they may appear to have are as real as the “interest” gas molecules have in occupying a larger volume when the temperature increases. Computer viruses are simply a way that machines malfunction. The fact that machines are not exclusively on our side simply means that they do not perfectly fulfill our values. Nothing does.
Not without some changes; yes—and: not part of the human economy.
Various machines certainly behave in goal-directed ways—and so have what can usefully be described as “vested interests”—along the lines described here:
Can you say what you mean by “interests”? Probably any difference of opinion here is a matter of differing definitions—and so is not terribly interesting.
Re: “The fact that machines are not exclusively on our side simply means that they do not perfectly fulfill our values.”
That wasn’t what I meant—what I meant is that they don’t completely share human values—not that they don’t fulfill them.
By interests, I mean concerns related to fulfilling values. For the time being, I consider human minds to be the only entities complex enough to have values. For example, it is very useful to model a cancer cell as having the goal of replicating, but I don’t consider it to have replicating as a value.
The cancer example also shows that our own cells don’t fulfill or share our values, and yet we still model the consumption of cancer cells as the consumption of a human being.
If you really want to ignore direct consumption by machines—and pretend that the machines are all working exclusively for humans, doing our bidding precisely—then you have GOT to account for people and companies buying things for the machines that they manange—or your model badly loses touch with reality.
I think I might have the biggest issue with this line. Nobody is pretending that machines are all working exclusively for humans, no more than we pretend our cells are working exclusively for us. The idea is that we account for the machine consumption the same way we account for the consumption of our own cells, by attributing it to the human consumers.
The idea being criticised is that—if a few humans dominate the economy by commanding huge armies of robot minions, then—without substantial taxation—the economy will grind to a halt—since hardly any humans are earning any money, and so therefore hardly any humans are spending any money.
The problem with that is that the huge armies of robot minions are consuming vast quantities of material while competing with each other for resources—and the purchase of all those goods is not being accounted for anywhere in the model—apparently because of the ideas that only humans are consumers and most humans are unemployed .
It seems like a fairly straightforwards modelling mistake to me. The purchase of robot fuel and supplies has GOT to be accounted for. Account for it as mega-spending by the human managing director if you really must—but account for it somewhere. As soon as you do that, the whole idea that increassed automation leads to financial meltdown vanishes like a mirage.
We already have a pretty clear idea about the effect of automation on the economy—from Japan and South Korea. The machines do a load of work, and their bodies need feeding—creating demand for raw materials and fuel—and the economy is boosted.
How does needing raw materials create employment for the rest of the population? If everything is mechanized, then raw materials come from those who own mines/wells, and the extraction is done by robot labor. That doesn’t involve very many people.
It doesn’t create employment for the rest of the humans. In this scenario, most humans are unemployed—and probably rather poor—due to the hypothesised lack of “substantial taxation” and government handouts. The throughput of the economy arises essentially from the efforts of the machines.
Well, for one thing, most people on the planet don’t have very much in the way of savings—and for another, sustained annual returns of 1,000% are a fantasy—for some actual figures, see here.
Sustained substantial growth rates seem highly unlikely. Resources—at best—go according to t cubed—so growth is likely to relatively quickly flatten out to close to 0% - a la Malthus.
I won’t estimate peak growth rates here—but the higher they are, the shorter their duration will be.
Assuming any kind of physical resource limits on real value (and this would include physics imposed computational limits so simulation is no get out) it can’t go on for very long.
“why couldn’t economic growth of 1% (or 10%) continue forever in simulations? In the real world, we can’t all be emperor of an infinite universe. But I don’t see why every one of us couldn’t preside over our own simulated utopias?”
“The universe is made of atoms—and other particles. Virtual reality—and all the things economists study—is made of that stuff. You can’t have simulations or value without things being ultimately made out of matter.”
However, that doesn’t prevent simulated high-utility worlds. It seems like the wirehead problem. Yes: we could go into a virtual world and award ourselves a centillion utility points—but then we and our simulated utopias would most likely be obliterated by the very first aliens that come across us—if a meteorite didn’t dispatch us long before that.
Right—but there are practically bound to be aliens out there somewhere who just want to conquer the universe—and couldn’t care less about ecstacy or utopias. Those folk seem likely to eat utopias for breakfast, lunch and dinner. Unless we are a lot more confident that those folk are nowhere nearby, we should probably behave conservatively.
but then we and our simulated utopias would most likely be obliterated by the very first aliens that come across us
I doubt you’d have to wait for aliens—humans, trans-humans or AIs who stayed outside the simulation would likely do the job first. One reason I’d have no desire to enter a simulation.
I have to say I’m still missing the means by which the surplus of goods and services is transferred to people who are no longer needed. To be sure, in the long run labor-saving devices have increased the surplus of available goods, but each generation of workers which has its skills obsoleted by machines seems to undergo a permanent drop in standard of living; even very early automation had massive deletorious social effects.
Minimaxing the standard of living does not automatically flow forth from technological process; at best, it takes careful planning.
Re: “If the average consumer is unemployed and has no income, he is obviously not going to be purchasing stuff for his machines. In fact, ownership of the machines will concentrate into a shrinking elite as machines take the jobs of average people.”
Sure—but that was not the point which you were making that I was criticising:
You argued that unemployment would mean that spending would decline—and the economy would plummet or crash.
Whereas a more accurate analysis suggests that those in charge of the machines will ramp up their spending to feed the demands of their machines—thereby contributing to expenditure in the economy. In other words, the machines will buy and sell things—if not directly, then via companies or humans. This is not really a “jump into the stuff of science fiction”—people regularly buy things to “feed” their machines today.
The machines act as consumers—in that they consume things—even if there is a human or corporation who is buying the things involved somewhere. So: the whole idea that the economy will collapse because nobody is earning money and buying things falls down. Machines will still be earning money and buying things—even if they will be doing it by proxy agents in the form of corporate or human masters.
This idea is a fairly central one in “The Lights in the Tunnel”—and it is based on unsound thinking and bad economics :-(
Re: “Everything produced by the human economy is ultimately consumed by individual human beings.”
That seems like a rather muddled way of looking at the situation. Machines have needs too. They slurp up gas, oil, electricity, raw materials. They consume—and excrete—along with all other agents in the biosphere. Companies act as non-human consumers too. It could be argued that machines and companies are slaves to humanity (to some extent—though the inverse perspective—that they are using us to manipulate the machine world into existence—also has considerable validity) - but that doesn’t mean that we consume their waste products.
Re: “If too few people have the ability to purchase END products, the mass market economy will collapse.”
No: the issue is not the number of human consumers, but their total spending power. Rich minorites commanding huge squads of machine minions could generate a large demand for resources—and the also ability to produce those resources—thus lubricating the economy very effectively.
Of course in a human democracy, voters would try hard to ramp up corporation taxes—in order to resist such huge inequality—but that is another issue entirely.
So, if say a million people owned all of the machines in the world, and they had no use for the human labor of the other billions of people in the world, you would still classify the economy as very effective?
I guess the question is what counts as an economic crash? A million extremely well off people with machines to tend to their every need and billions with no useful skills to acquire capital seems like a crash to most of the people involved.
The following quotation illustrates the context of the discussion:
“once full automation penetrates the job market to a substantial degree, an economy driven by mass-market production must ultimately go into decline. The reason for this is simply that, when we consider the market as a whole, the people who rely on jobs for their income are the same individuals who buy the products produced.”
“THE LIGHTS IN THE TUNNEL”, page 24
This claim relates to the state of the marketplace—and not to the status of the unemployed humans. My comment about “lubricating the economy very effectively” was not intended to imply anything about human welfare.
The argument of the book looked to me on a brief eyeballing like a woolly mass of words, but the question it asks seems fair enough: If the material needs and desires of the whole population can be met by the labour of a small fraction, how do the rest of the population get the stuff they want? But this question has been asked since mass production was invented, and the scenario has still not come to pass. Somehow, the work has always expanded to use most of the population of working age.
Even if this time, massive technological unemployment really is going to happen, I’m not convinced by the book’s answers. From the blurb:
The book directly challenges nearly all conventional views of the future and illuminates the danger that lies ahead if we do not plan for the impact of rapidly advancing technology.
Planning fallacy? We’ve had rapidly advancing technology for at least 200 years. What dangers of our rapidly advancing technology have in the past been avoided by planning? If automation does get to near-AGI levels, and a small fraction of the population can produce everything, the resulting society will look very different from today’s, but I don’t expect government planning to have much to do with the process of change.
Re: “Somehow, the work has always expanded to use most of the population of working age.”
Machines are still very stupid in many work-related domains—relative to humans. The issue of what on earth the unemployed will do is likely to arise with greater acuity once machine capabilities shoot past our own in most industry-related domains—retail, farming, distribution, mining, etc.
Regarding the second point, here is my 2p on “The Lights in the Tunnel”:
“The Lights in the Tunnel” is a whole book about a topic I am interested in: the effects of automation. However, there is a serious flaw that pervades the book’s whole analysis:
Martin argues that the economy will crash—as machines take the jobs of consumers, they no longer have any money to spend on things—and cash flows spiral downwards.
Martin says: “Another way of expressing this is to say that although machines may take over people’s jobs, the machines—unless we are really going to jump into the stuff of science fiction—do not participate in the market as consumers”—page 24.
However, machines still participate in the market indirectly—via people. Humans buy fuel, spare parts, add-ons and “consumables” for their machines. Machines still “consume”—even if they don’t have bank accounts and can’t go to the shops. The resulting effect on the economy is much the same as if the machines were themselves consumers.
This seemingly-simple point destroys much of the book’s DOOM-mongering analysis. There are some other good things in the book—but IMO, the author damages the reader’s view of his competence by making this kind of mistake.
Hi,
This is Martin Ford, the author of The Lights in the Tunnel. I just wanted to respond to your comment here:
If the average consumer is unemployed and has no income, he is obviously not going to be purchasing stuff for his machines. In fact, ownership of the machines will concentrate into a shrinking elite as machines take the jobs of average people.
Remember that the focus here is on what we might call “end consumption.” If you consider GDP, consumer spending is about 70% of that. It is important to note that that is only END consumption by PEOPLE.
When General Motors purchases steel for its cars that is not consumption and is NOT added to GDP. The value of the steel gets accounted for ONLY when someone buys a car. The same argument applies to this idea of machines using resources. If the machines are used in production—and if they replace human workers—then what the machines “consume” is not END consumption and does not drive the economy. It is intermediate consumption. A PERSON still has to purchase the end product. Machines cannot do this. If too few people have the ability to purchase END products, the mass market economy will collapse.
Everything produced by the human economy is ultimately consumed by individual human beings. This applies even to government spending since the services provided by government are consumed by people. The only other factor is business investment, and that occurs in response to anticipated future consumer spending—businesses will invest only if they anticipate future demand.
Anywone who is interested can read the book for free in PDF at http://www.thelightsinthetunnel.com. If you prefer to buy the book at Amazon, I would like that even bettter.. ;-)
Martin,
I hate to seem rude about you or your book, which I must commend you for for going to the time and trouble of writing and publishing, but it seems that the thesis presented is contradicted by a simple piece of economics.
To see the mistake, look at this paragraph summarizing the chapter on “Make Work Bias” from The Myth of the Rational Voter
Just because the average consumer is unemployed doesn’t mean he has no income. For example, he might own shares in robot companies that pay a big dividend. Why would they pay a big dividend? Because, by assumption, the robot company makes extremely useful products. The person might also get a government handout, which would be financed by heavy government taxes on these extremely productive robot/AI companies.
Furthermore, just because Robots and AI-systems can do all of the pragmatically necessary work, it doesn’t follow that no-one will want a human to do something. For example, you might want a real human musician rather than a robot, etc.
In this happy state of affairs, people would probably cease to be motivated by money, and instead be motivated in part by pursuit of other scarce resources, such as the time of people who had rare and desirable traits, or by “making a difference to the world”-type considerations. Though I suspect that most of the motivation would come from just wanting to go and have a good time. Drinks are served, time to party, etc.
Re: “Just because the average consumer is unemployed doesn’t mean he has no income. For example, he might own shares in robot companies that pay a big dividend. Why would they pay a big dividend? Because, by assumption, the robot company makes extremely useful products.”
Most depend for their income on revenue from work—or government handouts. Few can live for long off interest on their savings. Increased production levels in the future are unlikely to make all that much difference to that situation. Martin makes a broadly similar point here.
Martin is also already well aware of the possibility of government handouts supported by taxation:
“In The Lights in the Tunnel, I argue that we will ultimately have to provide supplementary income to the majority of the population; if we don’t do so, we won’t be able to sustain consumption. That type of scheme, obviously, would have to be supported by some type of taxation …”—source
Why? If your savings of $50,000 start yielding 1000% returns per year, then I don’t see a problem.
We’ve been through this before. Very high returns by themselves give no guarantee that you’ll be able to live off the interest on a modest amount, since the price of whatever you require for subsistence may be increasing at an even higher rate.
I generally approve of this analysis.
In a competition for limited resources, those relying on interest payments from capital seem likely to get progressively poorer—relative to those with interest payments from capital and income from work—even if the work income is taxed and redistributed.
Yes, the poor can vote in tax increases—but the rich can lobby the government, perform tax dodges, seek out tax havens—and so on. I know which position I would rather have.
Hang on—before we were assuming that the Robots (ems) were consumers. Here we’re assuming the opposite, that humans and only humans consume. Therefore the consumption basket can’t go haywire.
Actually one way things could go wrong would be if an “elite” group of humans took the place of ems, and consumed 99.999999999999999999999% of output. So in order for things to be OK, economic disparity has to remain non-insanely-high. But even the modest taxes that we have today, plus wealth redistribution, would ensure this, and it seems that there would be stronger incentives to increase wealth redistribution than to decrease it.
Roko:
What counts as “consumption” is a matter of definition, not fact. Even if you book the “consumption” by machines as capital investment or intermediate goods purchases, it’s still there, and if machines play an increasingly prominent role, it can significantly influence the prices of goods that humans consume. With machines that approach human levels of intelligence and take over increasingly intelligent and dexterous human jobs, this difference will become an increasingly fictional accounting convention.
Land rent is another huge issue. Observe the present situation: food and clothing are nowadays dirt cheap, and unlike in the past, starving or having to go around without a warm coat in the winter are no longer realistic dangers no matter how impoverished you get. Yet, living space is not much more affordable relative to income than in the past, and becoming homeless remains a very realistic threat. And if you look at the interest rates versus prices, you’ll find that the interest on a fairly modest amount would nowadays be enough to feed and clothe yourself adequately enough to survive—but not to afford an adequate living space. (Plus, the present situation isn’t that bad because you can loiter in public spaces, but in a future of soaring land rents, these will likely become much more scarce. Humans require an awful lot of space to subsist tolerably.)
When it comes to the earnings from rent and interest, the present economic disparity is already insanely high. What makes it non-insanely-high overall is the fact that labor can be sold for a high price—and we’re discussing the scenario where this changes.
I’ll certainly agree that poorer humans might run out of land that’s all owned by a few rich humans. If the value of labor dropped to zero, then land ownership would become critically important, as it is one of the few resources that are essentially not producable, and therefore the who-owns-the-land game is zero sum.
But is land really unproducable in this scenario? Remember, we’re assuming very high levels of technology. Maybe the poorer humans would all end up as seasteaders or desert dwellers?
What about the possibility of producing land underground?
What about producing land in space?
The bottom line seems to be that our society will have to change drastically in many ways, but that the demise of the need for human labor would be a good thing overall.
Roko:
Given a well-organized and generous system of redistribution, the situation actually wouldn’t be that bad. Despite all the silly panicking about overpopulation, the Earth is a pretty big place. To get some perspective, at the population density of Singapore, ten billion people could fit into roughly 1% of the total world land surface area. This is approximately the size of the present-day Mongolia. With the population density of Malta—hardly a dystopian metropolis—they’d need about 5% of the Earth’s land, i.e. roughly the area of the continental U.S.
Therefore, assuming the powers-that-be would be willing to do so, in a super-high-tech regime several billion unproductive people could be supported in one or more tolerably dense enclaves at a relatively low opportunity cost. The real questions are whether the will to do so will exist, what troubles might ensue during the transition, and whether these unproductive billions will be able to form a tolerably functional society. (Of course, it is first necessary to dispel the delusion—widely taken as a fundamental article of faith among economists—that technological advances can never render great masses of people unemployable.)
Now, you write:
I’m not at all sure of that. I hate to sound elitist, but I suspect that among the common folk, a great many people would not benefit from the liberation from the need to work. Just look at how often lottery winners end up completely destroying their lives, or what happens in those social environments where living off handouts becomes the norm. It seems to me that many, if not most people need a clear schedule of productive work around which they can organize their lives, and lacking it become completely disoriented and self-destructive. The old folk wisdom that idle hands are the devil’s tools has at least some truth in it.
This is one reason why I’m skeptical of redistribution as the solution, even under the assumption that it will be organized successfully.
Re: “Therefore, assuming the powers-that-be would be willing to do so, in a super-high-tech regime several billion unproductive people could be supported in one or more tolerably dense enclaves at a relatively low opportunity cost. The real questions are whether the will to do so will exist, what troubles might ensue during the transition, and whether these unproductive billions will be able to form a tolerably functional society.”
Organic humans becoming functionally redundant is likely to be the beginning of the end for them. They may well be able to persist for a while as useless parasites on an engineered society—but any ultimate hope for becoming something other than entities of historical interest would appear to lie with integration into that society—and that would take a considerable amount of “adjustment”.
I think that that would just be another service or product that people purchased. Be it in the form of cognitive enhancement, voluntary projects or hobbies, etc. In fact lottery winners simply suffer from not being numerous enough to support a lottery-winner rehabilitation industry.
I agree that such optimistic scenarios are possible; my gloomy comments aren’t meant to prophesy certain doom, but rather to shake what I perceive as an unwarrantably high level of optimism and lack of consideration for certain ugly but nevertheless real possibilities.
Still, one problem I think is particularly underestimated in discussions of this sort is how badly the law of unintended consequences can bite whenever it comes to the practical outcomes of large-scale social changes and interventions. This could be especially relevant in future scenarios where the consequences of the disappearing demand for human labor are remedied with handouts and redistribution. Even if we assume that such programs will be successfully embarked upon (which is by no means certain), it is a non-trivial question what other conditions will have to be satisfied for the results to be pretty, given the existing experiences with somewhat analogous situations.
Re: “before we were assuming that the Robots (ems) were consumers. Here we’re assuming the opposite, that humans and only humans consume.”
More accurately, Martin Ford was assuming that—and I was pointing out that trucks, fridges, washing machines, etc. are best modelled as consumers too—since they consume valuable low-entropy resources—and spit out useless waste products.
The idea that machines don’t participate in the economy as consumers is not a particularly useful one. Machines—and companies—buy things, sell things, consume things—and generally do participate. Those machines that don’t buy things have things bought for them on their behalf (by companies or humans) - and the overall effect on economic throughput is much the same as if the machines were buying things themselves.
If you really want to ignore direct consumption by machines—and pretend that the machines are all working exclusively for humans, doing our bidding precisely—then you have GOT to account for people and companies buying things for the machines that they manange—or your model badly loses touch with reality.
In practice, it is best to just drop the assumption. Computer viruses / chain letters are probably the most obvious illustration of the problem with the idea that machines are exclusively “on our side”, labour on our behalf, and have no interests of their own.
The mis-handling of this whole issue is one of the problems with “The Lights in the Tunnel”.
Would this analysis apply to the ecosystem as a whole? Should we think of fungus as consuming low entropy plant waste and spitting out higher entropy waste products? Is a squirrel eating an acorn part of the economy?
Machines, as they currently exists, have no interests of their own. Any “interests” they may appear to have are as real as the “interest” gas molecules have in occupying a larger volume when the temperature increases. Computer viruses are simply a way that machines malfunction. The fact that machines are not exclusively on our side simply means that they do not perfectly fulfill our values. Nothing does.
Not without some changes; yes—and: not part of the human economy.
Various machines certainly behave in goal-directed ways—and so have what can usefully be described as “vested interests”—along the lines described here:
http://en.wikipedia.org/wiki/Vested_interest
Can you say what you mean by “interests”? Probably any difference of opinion here is a matter of differing definitions—and so is not terribly interesting.
Re: “The fact that machines are not exclusively on our side simply means that they do not perfectly fulfill our values.”
That wasn’t what I meant—what I meant is that they don’t completely share human values—not that they don’t fulfill them.
By interests, I mean concerns related to fulfilling values. For the time being, I consider human minds to be the only entities complex enough to have values. For example, it is very useful to model a cancer cell as having the goal of replicating, but I don’t consider it to have replicating as a value.
The cancer example also shows that our own cells don’t fulfill or share our values, and yet we still model the consumption of cancer cells as the consumption of a human being.
I think I might have the biggest issue with this line. Nobody is pretending that machines are all working exclusively for humans, no more than we pretend our cells are working exclusively for us. The idea is that we account for the machine consumption the same way we account for the consumption of our own cells, by attributing it to the human consumers.
The idea being criticised is that—if a few humans dominate the economy by commanding huge armies of robot minions, then—without substantial taxation—the economy will grind to a halt—since hardly any humans are earning any money, and so therefore hardly any humans are spending any money.
The problem with that is that the huge armies of robot minions are consuming vast quantities of material while competing with each other for resources—and the purchase of all those goods is not being accounted for anywhere in the model—apparently because of the ideas that only humans are consumers and most humans are unemployed .
It seems like a fairly straightforwards modelling mistake to me. The purchase of robot fuel and supplies has GOT to be accounted for. Account for it as mega-spending by the human managing director if you really must—but account for it somewhere. As soon as you do that, the whole idea that increassed automation leads to financial meltdown vanishes like a mirage.
We already have a pretty clear idea about the effect of automation on the economy—from Japan and South Korea. The machines do a load of work, and their bodies need feeding—creating demand for raw materials and fuel—and the economy is boosted.
How does needing raw materials create employment for the rest of the population? If everything is mechanized, then raw materials come from those who own mines/wells, and the extraction is done by robot labor. That doesn’t involve very many people.
It doesn’t create employment for the rest of the humans. In this scenario, most humans are unemployed—and probably rather poor—due to the hypothesised lack of “substantial taxation” and government handouts. The throughput of the economy arises essentially from the efforts of the machines.
There is another take on the word “value”—which defines it to mean that which goal-directed systems want.
That way, you can say things like: “Deep Blue usually values bishops more than knights”.
To me, such usage seems vastly superior to using “values” to refer to something that only humans have.
Well, for one thing, most people on the planet don’t have very much in the way of savings—and for another, sustained annual returns of 1,000% are a fantasy—for some actual figures, see here.
Why do you think that 1000% annual returns are implausible in a fully automated world?
Sustained substantial growth rates seem highly unlikely. Resources—at best—go according to t cubed—so growth is likely to relatively quickly flatten out to close to 0% - a la Malthus.
I won’t estimate peak growth rates here—but the higher they are, the shorter their duration will be.
Assuming any kind of physical resource limits on real value (and this would include physics imposed computational limits so simulation is no get out) it can’t go on for very long.
Bryan says:
“why couldn’t economic growth of 1% (or 10%) continue forever in simulations? In the real world, we can’t all be emperor of an infinite universe. But I don’t see why every one of us couldn’t preside over our own simulated utopias?”
http://econlog.econlib.org/archives/2009/09/virtual_cornuco.html
My comment there was:
“The universe is made of atoms—and other particles. Virtual reality—and all the things economists study—is made of that stuff. You can’t have simulations or value without things being ultimately made out of matter.”
However, that doesn’t prevent simulated high-utility worlds. It seems like the wirehead problem. Yes: we could go into a virtual world and award ourselves a centillion utility points—but then we and our simulated utopias would most likely be obliterated by the very first aliens that come across us—if a meteorite didn’t dispatch us long before that.
It’s not an either/or thing. You could spend, say, 1% of your resources on setting up a colonization wavefront.
Right—but there are practically bound to be aliens out there somewhere who just want to conquer the universe—and couldn’t care less about ecstacy or utopias. Those folk seem likely to eat utopias for breakfast, lunch and dinner. Unless we are a lot more confident that those folk are nowhere nearby, we should probably behave conservatively.
I doubt you’d have to wait for aliens—humans, trans-humans or AIs who stayed outside the simulation would likely do the job first. One reason I’d have no desire to enter a simulation.
Natural selection deals with most wireheads. However, there are scenarios where the entire civilisation does this sort of thing.
If there are no competitors in the short term then natural selection’s action could be delayed—until some turn up.
I have to say I’m still missing the means by which the surplus of goods and services is transferred to people who are no longer needed. To be sure, in the long run labor-saving devices have increased the surplus of available goods, but each generation of workers which has its skills obsoleted by machines seems to undergo a permanent drop in standard of living; even very early automation had massive deletorious social effects.
Minimaxing the standard of living does not automatically flow forth from technological process; at best, it takes careful planning.
Permanent drop in standards of living sounds implausible. Maybe a permanent relative drop. What evidence do you have for this?
Re: “If the average consumer is unemployed and has no income, he is obviously not going to be purchasing stuff for his machines. In fact, ownership of the machines will concentrate into a shrinking elite as machines take the jobs of average people.”
Sure—but that was not the point which you were making that I was criticising:
You argued that unemployment would mean that spending would decline—and the economy would plummet or crash.
Whereas a more accurate analysis suggests that those in charge of the machines will ramp up their spending to feed the demands of their machines—thereby contributing to expenditure in the economy. In other words, the machines will buy and sell things—if not directly, then via companies or humans. This is not really a “jump into the stuff of science fiction”—people regularly buy things to “feed” their machines today.
The machines act as consumers—in that they consume things—even if there is a human or corporation who is buying the things involved somewhere. So: the whole idea that the economy will collapse because nobody is earning money and buying things falls down. Machines will still be earning money and buying things—even if they will be doing it by proxy agents in the form of corporate or human masters.
This idea is a fairly central one in “The Lights in the Tunnel”—and it is based on unsound thinking and bad economics :-(
Re: “Everything produced by the human economy is ultimately consumed by individual human beings.”
That seems like a rather muddled way of looking at the situation. Machines have needs too. They slurp up gas, oil, electricity, raw materials. They consume—and excrete—along with all other agents in the biosphere. Companies act as non-human consumers too. It could be argued that machines and companies are slaves to humanity (to some extent—though the inverse perspective—that they are using us to manipulate the machine world into existence—also has considerable validity) - but that doesn’t mean that we consume their waste products.
Re: “If too few people have the ability to purchase END products, the mass market economy will collapse.”
No: the issue is not the number of human consumers, but their total spending power. Rich minorites commanding huge squads of machine minions could generate a large demand for resources—and the also ability to produce those resources—thus lubricating the economy very effectively.
Of course in a human democracy, voters would try hard to ramp up corporation taxes—in order to resist such huge inequality—but that is another issue entirely.
So, if say a million people owned all of the machines in the world, and they had no use for the human labor of the other billions of people in the world, you would still classify the economy as very effective?
I guess the question is what counts as an economic crash? A million extremely well off people with machines to tend to their every need and billions with no useful skills to acquire capital seems like a crash to most of the people involved.
The following quotation illustrates the context of the discussion:
“once full automation penetrates the job market to a substantial degree, an economy driven by mass-market production must ultimately go into decline. The reason for this is simply that, when we consider the market as a whole, the people who rely on jobs for their income are the same individuals who buy the products produced.”
“THE LIGHTS IN THE TUNNEL”, page 24
This claim relates to the state of the marketplace—and not to the status of the unemployed humans. My comment about “lubricating the economy very effectively” was not intended to imply anything about human welfare.
The argument of the book looked to me on a brief eyeballing like a woolly mass of words, but the question it asks seems fair enough: If the material needs and desires of the whole population can be met by the labour of a small fraction, how do the rest of the population get the stuff they want? But this question has been asked since mass production was invented, and the scenario has still not come to pass. Somehow, the work has always expanded to use most of the population of working age.
Even if this time, massive technological unemployment really is going to happen, I’m not convinced by the book’s answers. From the blurb:
Planning fallacy? We’ve had rapidly advancing technology for at least 200 years. What dangers of our rapidly advancing technology have in the past been avoided by planning? If automation does get to near-AGI levels, and a small fraction of the population can produce everything, the resulting society will look very different from today’s, but I don’t expect government planning to have much to do with the process of change.
Re: “Somehow, the work has always expanded to use most of the population of working age.”
Machines are still very stupid in many work-related domains—relative to humans. The issue of what on earth the unemployed will do is likely to arise with greater acuity once machine capabilities shoot past our own in most industry-related domains—retail, farming, distribution, mining, etc.
I go into these issues on: http://alife.co.uk/essays/will_machines_take_our_jobs/