First-level thinking. It ignores the complete economic and social upheaval when more than ~30% (my wild guess of the tipping point) of humans have nothing of value to offer each other.
What drives automation improvements when most consumers have nothing of value to provide in return? How do we part the current owners from their capital wealth in order to let non-workers choose allocations?
Some people have a very weird understanding of economics that works for high-level analyses when considering situations similar to our current economic situation, but isn’t grounded all the way down to the level of individual people working. What they consider economics is only the highest level of abstraction, and they don’t realize that when you are talking about gigantic changes in the economic regime, you can’t assume that the top levels of abstraction will be mostly correct or even useful. Even professional economists sometimes forget this fact, so it’s excusable.
GDP is an abstraction that grounds out in people doing work, period. In America, 125 million people go to work every day for an entire year, and all that work goes into creating our $18T of GDP. That GDP accounts for all the movies you watch, the food you eat, the police that protect you, the bombs you drop and everything else. If you want 30% of those people to literally stop working, it’s going to come out of GDP somehow, and GDP is a decent but not perfect proxy for things we want as a society. Sure, the 30% of people who stop working are the least productive so the impact on GDP will be less than 30% reduction, but even so you would be left getting dramatically less stuff each year than you otherwise could have. If you consider the effect this would have on technological development, it is even more dramatic, because technological progress compounds.
GDP is an abstraction that grounds out in people doing work, period
No. GDP grounds out in currency-denominated trading of a somewhat arbitrary set of goods and services. It’s exactly the measure that works at a high level in situations similar to the recent past. Work done for one’s own value, or work bartered rather than sold is completely missing from GDP.
But work is the wrong focus anyway. It’s all about value provided to other decision-making entities. Money is the current medium of exchange for such value, and paid work is the common indirection in order to collect the rewards for providing the value.
The question of what happens when a significant portion of human population is not providing any measurable value to other humans is a big and unanswered one.
I don’t think we disagree, fundamentally. The fact that GDP is a measure of currency-denominated trading IS the abstraction layer. The fact that it doesn’t capture barter and value you create for yourself is part of the friction in the abstraction. (In the European Union GDP figures actually include estimates for black market transactions and barter, but not housework and the like.)
Taking value created as a focus, my conclusion is much the same. If 30% of people leave the labor force, the amount of value being generated for other people will decrease by some amount between 0% and 30%. If those people continue doing “activities that benefit other people but are technically not paid work” that amount will be smaller than if they just sit around watching TV, for sure.
People who are no longer “working” but still “creating value” face a couple big sources of inefficiencies that would certainly mean that they produce less value:
The pricing function is a useful technology they would no longer have access to. It’s likely that the work they choose to do for others will be less valuable than if they kept working. If instead they are working for an alternative currency, such as in a reputation economy, they can’t be said to have stopped working in the way the article posits.
If you strip the bizarre political grab-bag of issues and economic misinterpretation from the article, it is definitely pointing at an issue we will face. What do we do when people no longer provide a net economic benefit from working? There are already people who are completely unemployable (and there always have been, e.g. the severely intellectually disabled), but with better technology that group will continue to grow. But if the answer to that is to give everyone the right to leisure, tens of millions who actually are on-net productive are going to take that option and we will be left dramatically poorer than otherwise. It’s that answer that I take exception to, not the issue.
“And we’ve believed that, even if it sucks, a job gives meaning, purpose and structure to our everyday lives – at any rate, we’re pretty sure that it gets us out of bed, pays the bills, makes us feel responsible, and keeps us away from daytime TV.
These beliefs are no longer plausible. In fact, they’ve become ridiculous, because there’s not enough work to go around, and what there is of it won’t pay the bills – unless of course you’ve landed a job as a drug dealer or a Wall Street banker, becoming a gangster either way.”
I would still like to see a economy wide Kickstarter system where folks could up-vote projects that intrigue them, and the people that actually produce the item would get credits and cash for perks and travel....
The result of keeping the Carrier plant in Indiana open is a $16 million investment to drive down the cost of production, so as to reduce the cost gap with operating in Mexico. (i think there was also a 9k per employee year pledged by state, and retraining and extended benefits promised)
What does that mean? Automation. What does that mean? Fewer jobs, Hayes acknowledged.
From the transcript (emphasis added):
GREG HAYES: Right. Well, and again, if you think about what we talked about last week, we’re going to make a $16 million investment in that factory in Indianapolis to automate to drive the cost down so that we can continue to be competitive. Now is it as cheap as moving to Mexico with lower cost of labor? No. But we will make that plant competitive just because we’ll make the capital investments there.
JIM CRAMER: Right.
GREG HAYES: But what that ultimately means is there will be fewer jobs.
The general theme here is something we’ve been writing about a lot at Business Insider. Yes, low-skilled jobs are being lost to other countries, but they’re also being lost to technology.
a micropayment scheme that uses a fones sim card id , to construct a token that you can transfer between folks.
We designed a system, Digitally, where Alice can pay Bob by exchanging eight-digit MACs that are generated, and verified, by the SIM cards in their phones. For rapid prototyping we used overlay SIMs (which are already being used in a different phone payment system in Africa).
Many CEOs believe technology will make people ‘largely irrelevant’
“According to Korn Ferry’s study, a number of CEOs have allowed technology to occupy anywhere from 40 to 60 percent of their priorities when it comes to strategic focus, financial investment and their time. The firm also compiled a list of the top five assets of companies according to these CEOs which did not even list human talent as an asset and instead included Real Estate, Brand, Product / Service, R&D/ Innovation and Technology as the number one asset.”
First-level thinking. It ignores the complete economic and social upheaval when more than ~30% (my wild guess of the tipping point) of humans have nothing of value to offer each other.
What drives automation improvements when most consumers have nothing of value to provide in return? How do we part the current owners from their capital wealth in order to let non-workers choose allocations?
I predict a lot of violence.
Some people have a very weird understanding of economics that works for high-level analyses when considering situations similar to our current economic situation, but isn’t grounded all the way down to the level of individual people working. What they consider economics is only the highest level of abstraction, and they don’t realize that when you are talking about gigantic changes in the economic regime, you can’t assume that the top levels of abstraction will be mostly correct or even useful. Even professional economists sometimes forget this fact, so it’s excusable.
GDP is an abstraction that grounds out in people doing work, period. In America, 125 million people go to work every day for an entire year, and all that work goes into creating our $18T of GDP. That GDP accounts for all the movies you watch, the food you eat, the police that protect you, the bombs you drop and everything else. If you want 30% of those people to literally stop working, it’s going to come out of GDP somehow, and GDP is a decent but not perfect proxy for things we want as a society. Sure, the 30% of people who stop working are the least productive so the impact on GDP will be less than 30% reduction, but even so you would be left getting dramatically less stuff each year than you otherwise could have. If you consider the effect this would have on technological development, it is even more dramatic, because technological progress compounds.
What about a robot doing assembly line work in a lights-out factory? Slavery is not well captured by GDP.
No. GDP grounds out in currency-denominated trading of a somewhat arbitrary set of goods and services. It’s exactly the measure that works at a high level in situations similar to the recent past. Work done for one’s own value, or work bartered rather than sold is completely missing from GDP.
But work is the wrong focus anyway. It’s all about value provided to other decision-making entities. Money is the current medium of exchange for such value, and paid work is the common indirection in order to collect the rewards for providing the value.
The question of what happens when a significant portion of human population is not providing any measurable value to other humans is a big and unanswered one.
I don’t think we disagree, fundamentally. The fact that GDP is a measure of currency-denominated trading IS the abstraction layer. The fact that it doesn’t capture barter and value you create for yourself is part of the friction in the abstraction. (In the European Union GDP figures actually include estimates for black market transactions and barter, but not housework and the like.)
Taking value created as a focus, my conclusion is much the same. If 30% of people leave the labor force, the amount of value being generated for other people will decrease by some amount between 0% and 30%. If those people continue doing “activities that benefit other people but are technically not paid work” that amount will be smaller than if they just sit around watching TV, for sure.
People who are no longer “working” but still “creating value” face a couple big sources of inefficiencies that would certainly mean that they produce less value:
The pricing function is a useful technology they would no longer have access to. It’s likely that the work they choose to do for others will be less valuable than if they kept working. If instead they are working for an alternative currency, such as in a reputation economy, they can’t be said to have stopped working in the way the article posits.
If they aren’t working for an organization, they don’t benefit from the efficiencies that naturally arise from organization.
If you strip the bizarre political grab-bag of issues and economic misinterpretation from the article, it is definitely pointing at an issue we will face. What do we do when people no longer provide a net economic benefit from working? There are already people who are completely unemployable (and there always have been, e.g. the severely intellectually disabled), but with better technology that group will continue to grow. But if the answer to that is to give everyone the right to leisure, tens of millions who actually are on-net productive are going to take that option and we will be left dramatically poorer than otherwise. It’s that answer that I take exception to, not the issue.
The author is an idiot.
I agree that this article is sensationalist, manipulative, & not very rigorous.
I usually expect to find this kind of arguments on Facebook, not on LW.
It’s not an argument at all, it’s a warning so that people don’t waste too much time on this.
Invoking arguments against idiots is futile, first they drag you down to their level and then beat you with experience :-P
Great article, even like the style...
“And we’ve believed that, even if it sucks, a job gives meaning, purpose and structure to our everyday lives – at any rate, we’re pretty sure that it gets us out of bed, pays the bills, makes us feel responsible, and keeps us away from daytime TV.
These beliefs are no longer plausible. In fact, they’ve become ridiculous, because there’s not enough work to go around, and what there is of it won’t pay the bills – unless of course you’ve landed a job as a drug dealer or a Wall Street banker, becoming a gangster either way.”
And UBI as a capital investment vehicle
https://www.project-syndicate.org/commentary/basic-income-funded-by-capital-income-by-yanis-varoufakis-2016-10
I would still like to see a economy wide Kickstarter system where folks could up-vote projects that intrigue them, and the people that actually produce the item would get credits and cash for perks and travel....
The result of keeping the Carrier plant in Indiana open is a $16 million investment to drive down the cost of production, so as to reduce the cost gap with operating in Mexico. (i think there was also a 9k per employee year pledged by state, and retraining and extended benefits promised)
What does that mean? Automation. What does that mean? Fewer jobs, Hayes acknowledged.
From the transcript (emphasis added):
GREG HAYES: Right. Well, and again, if you think about what we talked about last week, we’re going to make a $16 million investment in that factory in Indianapolis to automate to drive the cost down so that we can continue to be competitive. Now is it as cheap as moving to Mexico with lower cost of labor? No. But we will make that plant competitive just because we’ll make the capital investments there.
JIM CRAMER: Right.
GREG HAYES: But what that ultimately means is there will be fewer jobs.
The general theme here is something we’ve been writing about a lot at Business Insider. Yes, low-skilled jobs are being lost to other countries, but they’re also being lost to technology.
http://www.businessinsider.com/united-tech-ceo-says-trump-deal-will-lead-to-more-automation-fewer-jobs-2016-12
a micropayment scheme that uses a fones sim card id , to construct a token that you can transfer between folks.
We designed a system, Digitally, where Alice can pay Bob by exchanging eight-digit MACs that are generated, and verified, by the SIM cards in their phones. For rapid prototyping we used overlay SIMs (which are already being used in a different phone payment system in Africa).
https://www.lightbluetouchpaper.org/
Many CEOs believe technology will make people ‘largely irrelevant’
“According to Korn Ferry’s study, a number of CEOs have allowed technology to occupy anywhere from 40 to 60 percent of their priorities when it comes to strategic focus, financial investment and their time. The firm also compiled a list of the top five assets of companies according to these CEOs which did not even list human talent as an asset and instead included Real Estate, Brand, Product / Service, R&D/ Innovation and Technology as the number one asset.”
http://betanews.com/2016/12/03/ceos-think-people-will-be-irrelevant/
Is it true that 50% of employed adults in the USA are eligible for food stamps? That surprises me.