What does heavy automation entail for the economy?

Economics Economics Questions
1

Has anyone read “The Lights In the Tunnel”? (http://www.thelightsinthetunnel.com/) The eBook can be downloaded from that website.

The author’s basic premise is that computer and software technology is fast catching up to human capabilities, and heavy automation is going to entail ever-increasing permanent unemployment. At some point, there will be severe disruption of the economy as more and more people no longer have employment, and therefore no longer have income with which to consume. In the end, everyone will lose out as masses of people are out of work and no longer able to purchase what is being produced.

The author posits that outsourcing is the beginning of this trend, and that the economic crisis is in part due to the fact that incomes have not kept up, and consumption was financed by borrowing rather than growth in real income.

He does not want to revert to communism; he prefers the free market, but among his suggested solutions is a tax on enterprises that will then be used to distribute income to everyone, which they can then use to consume and thus keep the motor going.

I’m just wondering what you guys think about the main premise of this book, and what an economy of abundance where most work has been replaced by machines means for us humans. What do you guys think?

2

Just because you have ubercomputers doesn’t make farming illegal. Everyone can keep doing what they’re doing now… if owners of supercomputers don’t want to trade with the unwashed masses, they can trade with themselves and still have division of labor. The invention of ultima-machines might be analogous to 25% of people withdrawing from the economy completely. But the same could happen if we had a large war or a rapture… economies would survive those things.

3

Knowing that there is a fundamental scarcity of labor, there is no reason to believe that automation of X amount of jobs would lead to permanent unemployment. In order for this to occur there would effectively have to be an elimination of scarcity, so all desires could be satisfied without applying labor of any kind. But, in a world of scarcity, based on the fact that there is scarcity of labor, there will always be employment opportunities. The idea is that the division of labor extends, and those displaced will find a job elsewhere. This increases overall productivity.

4

Viception: “If you want to discuss job exports, remember job imports. Job outsourcing helps poor people in other countries. You have been to job interviews. There was tough competition, but you accepted it. However, if your competitors were from different countries you do not want to compete. This is probably how milk deliverers felt about refrigerators, how candle makers felt about light bulbs, how typewriter makers felt about personal computers, and how the horse and buggy owners felt about cars. We are more prosperous because of those innovations. If we tried to protect the milk deliverers, the candle makers, the typewriter makers, and the horse and buggy owners, we would be poorer. This process is creative destruction. To stop job outsourcing to other countries, leads me to ask why stop there? Maybe, one city should not allow jobs to be exported to another. Maybe, one county should not allow jobs to be exported to another. Maybe, no one should compete with anyone else and everyone should be self-sufficient meaning living standards would fall. If people never lost their jobs due to government law, then current economic activity would have to stay constant. Consumers would not be allowed to change their spending patterns. New technology and population changes would be regulated. Anything that changes the demand for some industry would be illegal because demand reduction usually means production reduction and possible job losses. Before I had a brain-internet connection, I had a secretary. I was a better typist than her. I was better at managing my business and typing than her, but I had limited time. I focused on managing my business while she focused on typing. This labor specialization made my business more efficient. Even if one country is absolutely better at producing everything than another country, it can save time by using labor division, ensuring jobs for both countries. The benefit of free market anarcho-capitalism is a higher living standard historically that usually rises over time. Each person is allowed to choose what to buy, how much to buy, and when to buy. Investors and entrepreneurs may choose what to produce. A firm that fails to satisfy customers loses market share, maybe closes, unlike government agencies. The number of jobs in the United States in 1950 was about 60 million. Today it is over 100 million. The number of jobs is not fixed. Human desires create jobs. Demand for better clothing, food, healthcare, housing, entertainment, and transportation are a few examples. I could offer you the job to clean my property, cook my food, and do other things. You could decline. You could ask me for money to fund a new product you want to make. If you went back centuries ago and told people how there would be air conditioning, indoor plumbing, electric light sources, cars, airplanes, computers, and other things, they may think you were crazy.”

. . .

“If machines largely, if not completely, replace the human workforce, humans will have little to no income. Who will purchase any machine-produced stuff, if humans have little to no income? The likelihood of a large, if not complete, machine workforce seems highly unlikely because few to no human consumers results in little to no profits for machinery owners. The goal of production is consumption, not employment. If the goal of production was employment, not consumption, then a construction site manager should order construction workers to use spoons, not shovels, to create jobs.”

5

The author assumes that more employment for the sake of employment is better for the economy. In that case we can get rid of all shipping trucks and have people ship goods by walking from place to place and we’d have everyone employed. But we’d all be poor.

If machines manufactured everything then guess what, prices would drop to the floor. I mean this is really the premise that this author and others like him have had every single time there is an advancement in technology:

Businessman starts business and has a huge robot only workforce. He laughs maniacally as his prices are so high that no one can afford them since everyone is unemployed and his business goes bankrupt. ← Is this the fear?

If robots did everything and no one had to lift a hand to do any work- we’d be in a sort of paradise.

6

  1. Computers are limited in what they may compute. (See complexity theory)

  2. Since the development of high level languages (and the push for them by Djikstra and others), programmer productivity has increased, along with programming jobs. The automation that used to be done by programmers is now done by computers, and the job of programming has actually gotten more complex/harder as a result. But again, that allowed an increase in productivity and an increase in the demand for such labor.

Naw. Prices of things produced will drop so that people can buy them. Why would it make sense to price people out of buying food?

7

Sure, you could farm for rustic reasons, but why would you want to do it when you would have hi-tech alternatives like 3D printers and in vitro meat?

8

The author’s argument against this is that there will be no new jobs elsewhere, as those will be automated, too. There is a certain amount of human potential, and humans cannot easily go beyond that. Janitors cannot become rocket scientists. What do the garbage men, sales clerks, truck drivers, forklift drivers, etc… all do, when a large degree of that work is automated.

I think he also made an example where the most highly-skilled work is that which is more likely to be automated, since it can be replicated in software. His example is that of a radiologist interpreting images. This would be easier to automate than a house cleaner’s work, yet it takes decades of training to become one.

9

Agreed. His main point is on automation; outsourcing is simply a precursor, but automation eliminates the job entirely rather than helping poor people in other countries.

10

As one marketer to another, you would probably get better results community marketing as you are, if you didn’t try to insert your book into nearly every one of your responses, but instead tried to engage the other people in the discussion personally.

11

Ultima,

The author’s argument against this is that there will be no new jobs elsewhere, as those will be automated, too.

The job has to exist before the technology is developed to replace the worker. Automation, to a large degree, occurs when invetors who understand the process of production mimick repetitiveness through the utilization of the machine. Also, the decision of whether or not to replace a worker with a machine has entirely to do with the different in cost between wages and the cost of running and buying the machine. As labor becomes more expensive in one sector, a capital-good may be purchased to replace it (which, in turn, elevates the cost of capital-goods).

It’s also worth asking who builds the machines? Who maintains them? Et cetera. Other machines? If so, I’d call that paradise. The author is assuming the existence of super abundance!

But, sadly, this isn’t a really realistic prognostic.

What do the garbage men, sales clerks, truck drivers, forklift drivers, etc… all do, when a large degree of that work is automated.

The division of labor extends, and they go into new sectors of production, offering previously inconceivable goods and services. This is what has happened throughout history. Why didn’t mechanization in American agriculture cause permanent unemployment? Because, these workers were soaked up into the increasing industrialization of the United States (even though many of these jobs were also automated).

His example is that of a radiologist interpreting images. This would be easier to automate than a house cleaner’s work, yet it takes decades of training to become one.

When that happens, and if it happens, that radiologist will find employment in another sector.

The issue here is eliminating the scarcity of labor. If scarcity of labor is eliminated then there is superabundance.

12

I believe his point is that people must have the income to purchase what is produced, otherwise a wrench is thrown into the whole process. He does favor “incentive-based work”, where incentives would be on how healthy you are, how educated you are, etc… I believe it is all arbitrary and I don’t agree that this kind of thing should be centrally planned, but his premise here is since that there will be no real work to do, anyways, may as well give people something with incentives as we all desire status.

I agree with you. Prices will have to drop through the floor. The author seems to have a fear of that. Would businessmen really be so stupid as to commit suicide by refusing to lower prices and thus preventing anyone from purchasing their output?

On the other hand, what if you have no capital? How do you go about acquiring income to purchase even dirt-cheap goods when most jobs have been automated? I agree with one of the author’s premise in that many people don’t really have unlimited material wants. I personally don’t see what I would possibly do with 1000 homes or 1000 cell phones. The “unlimited desires” thesis might be more spiritual than anything else.

13

Computers can compute enough; not sure what limitations have to do with it. What happens when you have AI that can write code? You have a diminishing requirement for human programming skills. I do agree with you about dropping prices, though what happens if you have no capital and cannot generate income?

14

The fears of there being a non-ownership underclass are unfounded. The invention of new technology may make old technology obsolete, but it is still useful if you cannot acquire the new stuff.

15

Exactly, which is why all of this automation only improves their productivity, thus, raising their income. There may certainly be less labor but that’s a good thing. Not a bad thing. Less work for more income. That’s precisely what capital accumulation is all about.

16

Why not? Do you believe that humans will always be superior to machines? Maybe strong AI isn’t as far away as you think.

I agree with you regarding the past, but not regarding the future. There are large categories of jobs which are going to be wiped out and for which there is no conceivable replacement. If you work with your hands, you can do pretty much any sort of physical labour, but if you work with your mind, then you cannot transition so easily. I am a software developer, and spent years in educational training for it, but I know jack about being an MD or other highly specialized areas. The transition costs become significantly higher.

Of course, maybe we can envision a future where machines do all of the boring work and humans spend all their time socializing with each other; perhaps the owners of production will pay people to be their entertainers, and will always prefer human company to machine company. Perhaps money will filter down in that way; I don’t know. I don’t agree with the author in that central planning will be needed to distribute income in order for people to consume. The free market will work better for that, and always will, as it is based on everyone’s subjective values, rather than a small subset’s whims. I think we can both agree though that once most of what we call 'work" today is automated that things drastically change going forward. Yes, it is almost like superabundance or paradise. I believe that technology will make this possible within the next 100 years or earlier if we don’t blow ourselves up first.

17

If you try to explain that to a leftist they will look at you like an alien. It is why I call all leftist economics based on the class struggle anachronistic. Technological advances and capital accumulation are undermining the theories of wage slavery and proletariat poverty.

18

Does that work in practice? People seem to highly resent large disparities in wealth and income. How many people will be happy on their rustic farms when they see paradise within reach? FWIW, this is why I prefer a smooth transition to more freedom rather than letting everything burn down to the ground, because you usually end up with the opposite of freedom after that happens.

19

Why not? Do you believe that humans will always be superior to machines? Maybe strong AI isn’t as far away as you think.

It’s astonishing knowing that you are a software programmer, yet you believe that machines will be able to replace humans as entrepreneurs and innovators. In other words, that machines will become thinkers and rational. I don’t think that the human brain can be artificially mimicked.

I agree with you regarding the past, but not regarding the future. There are large categories of jobs which are going to be wiped out and for which there is no conceivable replacement.

Structural unemployment is not the same as permanent unemployment. I address this here. The change from an agricultural economy to an industrial economy represented a very large structural change. Those with his farming skills were not necessarily equally adept at highly specialized jobs in the industrial sector. Yet, this did not really pose a problem in absorbing all the structural unemployment which occured in the post-war industrial revolution in the United States (after the civil war).

20

Hey Liberty student would wages going up and less hours be an example of what you’re talking about? I’m still not that versed on economics.