When Robots are Better at Everything
Prerequisite: Comparative Advantage"
This post is in reference to the following articles:
http://www.asymptosis.com/are-machines-replacing-humans-or-am-i-a-luddite.html and http://www.overcomingbias.com/2010/03/econ-of-nano-ai.html
Professor Hanson gave a fascinating talk awhile back about the Economics of Nanotech and AI. Essentially, he attempts to predict what will happen to the economy after the singularity. His prediction for what will be the root cause for the singularity is "Ems" - whole brain emulations that can accurately replicate human thought. When that happens, mental work now done by humans will be able to be performed by specialized Ems, and thus humans will no longer have a comparative advantage in mental tasks that computers are currently unable to perform. He highlights the major distinction of complements and substitutes. If a production technology is complementary, it makes another factor of production more productive. For example, a hammer makes a carpenter more productive. If a production technology is a substitute, you can use it instead of another production technology. For example, cars are substitutes for horses. Technology has until this point substituted for some human labor, such as when automated looms displaced human weavers. It has also been complementary to human productivity, like how spreadsheets help accountants keep track of the money flows in a firm, or how backhoes help construction workers dig holes.
Here is his graph:
The blue-green area is done by humans, and the dark blue area is done by machines.
I do not think that is a good metaphor for technology (all economic stories are to some degree metaphors). Technology is the recipe humans use to turn raw materials into things we like to use. There are scarce resources that we have to make the stuff we want: land, minerals, energy, plants, animals, and most importantly: effort. The amount of land and raw materials humans have had to work with has not changed since the dawn of time. People get richer by minimizing the effort it takes to turn raw materials into goods.
Capital produces goods in a roundabout way. Instead of doing a calculation by hand, you can program a computer to do it. One way is direct, the other indirect, but in both situations, the scarce resource being used it human effort. Capital is not a substitute for effort, it is a form of effort. Capital itself does not need to be rewarded, only the effort it takes to produce it. No one pays the computer, but they do pay the programmers. The price of the capital is determined by the cost of supplying it and demand for the products it helps create.
In the post singularity, any universal constructor will be able to make copies of itself out of raw materials, and so the cost of UCs will drop to the price of the raw materials it takes to build one. If humans can make an EM and EMs can do anything humans can do, than EMs are self replicating. EMs make human effort non-scarce. Non-scarce goods have a 0 price. Thus, unless the holders of EMs have a monopoly on them, they will not be able to extract surplus rents. All rents will accrue to holders of natural resources (and goods EMs can't make). Robin Hanson states that "most income in the world is going to the machines" in post-EM society (25:20). It won't - because relative prices will shift.
Relative price shifts are always how groups of humans are made worse off by technology. When the Luddites were "replaced" by the machines, they could still make the same amount of clothing per worker. The reason their wages dropped was because they could not sell their output for the same high price they were used to. While the price of some goods can fall, the relative price of all goods cannot.
Robin's article assumes that robots will have such a strong absolute advantage that the relative prices of human produced goods will be driven so low that humans will not be able to earn enough *even at the very high productivity levels in the future* to pay for their own subsistence. Frankly, I don't find that plausible. Humans will have a clear comparative advantage in things that no one would use a robot for today - social interaction, art, sex, child care, and hospitality. In a post singularity work, robots will be able to make robots, so if a holder of a million robots would be willing to part with one of them for the frivolous use of a subsistence level human, that would be all that was required to lift them into the heights of luxury by modern standards.
Note: This essay too me forever to write. My original idea of using trade as a metaphor for high technology was more confusing than Robin's original explaination, so it didn't help.
This post is in reference to the following articles:
http://www.asymptosis.com/are-machines-replacing-humans-or-am-i-a-luddite.html and http://www.overcomingbias.com/2010/03/econ-of-nano-ai.html
Professor Hanson gave a fascinating talk awhile back about the Economics of Nanotech and AI. Essentially, he attempts to predict what will happen to the economy after the singularity. His prediction for what will be the root cause for the singularity is "Ems" - whole brain emulations that can accurately replicate human thought. When that happens, mental work now done by humans will be able to be performed by specialized Ems, and thus humans will no longer have a comparative advantage in mental tasks that computers are currently unable to perform. He highlights the major distinction of complements and substitutes. If a production technology is complementary, it makes another factor of production more productive. For example, a hammer makes a carpenter more productive. If a production technology is a substitute, you can use it instead of another production technology. For example, cars are substitutes for horses. Technology has until this point substituted for some human labor, such as when automated looms displaced human weavers. It has also been complementary to human productivity, like how spreadsheets help accountants keep track of the money flows in a firm, or how backhoes help construction workers dig holes.
Here is his graph:
The blue-green area is done by humans, and the dark blue area is done by machines.
I do not think that is a good metaphor for technology (all economic stories are to some degree metaphors). Technology is the recipe humans use to turn raw materials into things we like to use. There are scarce resources that we have to make the stuff we want: land, minerals, energy, plants, animals, and most importantly: effort. The amount of land and raw materials humans have had to work with has not changed since the dawn of time. People get richer by minimizing the effort it takes to turn raw materials into goods.
Capital produces goods in a roundabout way. Instead of doing a calculation by hand, you can program a computer to do it. One way is direct, the other indirect, but in both situations, the scarce resource being used it human effort. Capital is not a substitute for effort, it is a form of effort. Capital itself does not need to be rewarded, only the effort it takes to produce it. No one pays the computer, but they do pay the programmers. The price of the capital is determined by the cost of supplying it and demand for the products it helps create.
In the post singularity, any universal constructor will be able to make copies of itself out of raw materials, and so the cost of UCs will drop to the price of the raw materials it takes to build one. If humans can make an EM and EMs can do anything humans can do, than EMs are self replicating. EMs make human effort non-scarce. Non-scarce goods have a 0 price. Thus, unless the holders of EMs have a monopoly on them, they will not be able to extract surplus rents. All rents will accrue to holders of natural resources (and goods EMs can't make). Robin Hanson states that "most income in the world is going to the machines" in post-EM society (25:20). It won't - because relative prices will shift.
Relative price shifts are always how groups of humans are made worse off by technology. When the Luddites were "replaced" by the machines, they could still make the same amount of clothing per worker. The reason their wages dropped was because they could not sell their output for the same high price they were used to. While the price of some goods can fall, the relative price of all goods cannot.
Robin's article assumes that robots will have such a strong absolute advantage that the relative prices of human produced goods will be driven so low that humans will not be able to earn enough *even at the very high productivity levels in the future* to pay for their own subsistence. Frankly, I don't find that plausible. Humans will have a clear comparative advantage in things that no one would use a robot for today - social interaction, art, sex, child care, and hospitality. In a post singularity work, robots will be able to make robots, so if a holder of a million robots would be willing to part with one of them for the frivolous use of a subsistence level human, that would be all that was required to lift them into the heights of luxury by modern standards.
Note: This essay too me forever to write. My original idea of using trade as a metaphor for high technology was more confusing than Robin's original explaination, so it didn't help.