I was going to say something but then you captured my fear near the end with "what if AI replaces all the jobs" or more accurately "enough jobs the natural rate of both unemployment and non employed rates raise and never come back down", i.e. we don't have farms to factories to telephone operators to waitresses to strippers pipeline that historically has worked via creative destruction; some one has to afford to pay those strippers and not everyone can be a housewife. If the AI and it's physically controlled robots are "as good as people", at some point we just don't need people (because the AI is people at that point from an employment perspective) and (shades of Marx) both the bourgeois and proletariat aren't OK with 99% tax rates to fund middle class life styles for "bums that sit around and play video games and smoke meth all day because there are no jobs left"; i.e. we kind of marginally fixed Appalachia and it's peers after the great coal/steel bust via strip mall doctors cranking out counties with 95% disability rates and every one intentionally not looking too close as a backdoor welfare program but that's still barely sustenance living and I don't see us scaling that to 95% of America, even if we have the resources to do so (because to your point, AI makes everything so cheap, i.e. Star Trek replicators post-scarcity world) .. you still have the fundamental WASP spite / jealous dynamic that makes American's despise "free loaders" which is the root of so many of our problems, even currently.
Other things that jump to mind as I read your post is I really hate how we measure things in households rather than people, I think it masks issues and makes people look better off than they actually are economically. And like you on the washing machine thing, I think we are overestimating here in a big way. Large numbers of Americans rent and most renters don't have a personal "household" washing machine, likewise prisoners, servicemembers, students, traveling workers, etc. While sure nearly all have access via laundry matts, shared (often paid) communal machines in their buildings, laundry services, their parents or neighbors, etc I'd put it around 40% of households so let's say 60 million personal washing machines, if that. On your skyscraper front, I'm indifferent to home ownership, large parts of world get by just fine without it, it's not a virtue in my book that society should work towards especially given it destroys mobility. What you are telling me in your story (though yeah I get the economic theory behind it, I did have some formal schooling in it lol) is how does an infinite supply of housing push prices low enough that landlords will rent AT A LOSS to the millions that can't afford it even $1 because of the AI revolution, much less the security deposit, utilities, insurance, etc. Just how many skyscrapers do you need to build to entice me as a landlord to rent to an unemployed crack addict with no job, no income, and rental history of "puts holes in the walls and shits on the floor". At some point rents are so low that the investment is better off in savings bonds so why would I become a landlord?
I live in a building that is 83% unoccupied in a city with some of the highest rents in America couple with some of the lowest property taxes in American (effectively zero). Likewise it has the largest average household side not including minors as well as homeless rate because people can't afford to live even in shack hence multigenerational housing is the norm among relatives. Nearly every "sky scraper" in this city has vacancy rates well above 50%. They don't get rented because it's not worth the owners cost, they can just leave the units empty, vacation in them once a year, and make their money off appreciation. More skyscraper doesn't change that as it's about return on investment. If prices are pushed low enough, they simply won't get built at all because once again, if your poor can't even afford the HOA, who is going to rent or even sell to them? That goes for "can't afford to pay the property tax, cut the crass, replace the roof, etc" as well in the post-AI infinite output but we don't have jobs world.
It's not really a city specific comment, it applies universally. When ROI on landlording is negative AND our now unemployed post scarcity masses have to live somewhere besides urban camping, how many skyscrapers do you have to build?
"I live in a building that is 83% unoccupied in a city with some of the highest rents in America couple with some of the lowest property taxes in American (effectively zero). Likewise it has the largest average household side not including minors as well as homeless rate because people can't afford to live even in shack hence multigenerational housing is the norm among relatives. Nearly every "sky scraper" in this city has vacancy rates well above 50%. They don't get rented because it's not worth the owners cost, they can just leave the units empty, vacation in them once a year, and make their money off appreciation."
I asked what city, and you replied that it's an imaginary city. I think we are done here.
And no, your description does not apply "universally"--that's utter nonsense. For instance, in my city the property tax is not "effectively zero".
I have similar concerns, and the best remedy I have come across is indeed a UBI, which Scott mentioned. Like you, Peter, I worry that the American voter won't have the stomach for it, because we evolved in social structures based on human labor that therefore did not tolerate "bums." In my more optimistic moments, I simpy think that attitude will change fast once the majority of people see what they intended to do for a living become obsolete (as a thing for humans to do).
If you are concerned -- it could happen -- that AI substitutes rather than complements a sizeabe swathe of workers, the solution would be a higher EITC (rejiggled to be more of a wage subsidy.
UBI is a non-starter. People should really look at NIT. It's a much better system which reduces bureaucratic bloat in government (which most figures don't capture, because much of the spend/employment is hidden at the state level, the bait-and-switch approach uses incredibly low SSA costs to hide far more bureaucratically costly programs, and the figures never include civil service pensions).
The other thing is that NIT significantly reduces the incentives of the welfare trap.
Shifting welfare to an NIT system is actually an opportunity. This is a cost neutral analysis of replacing welfare with NIT. If we're talking about UBI, then presumably the NIT envisaged would be more generous than stated in the source, because we would be talking about additional funding.
People should also look at Coase Theorem. Eric Weinstein has been beating the drum about Coase as an alternative to UBI for dealing with displaced labour in a manner which preserves dignity.
Personally, I think we need to look at ways to supercharge the SME sector. For too long SME and the self-employed have been subject to government which inherently favours the dotted i's and crossed t's and innately orderly and bureaucratically compliant nature of economies of scale. Small is not just good. Small is great- at least for the purposes of employment.
UBI would do wonders for bloat/efficiency. How hard is it to check a SSN and add $1,000/month into a corresponding bank account? NIT would carry all the headaches of tax filing, to say nothing of conflicting incentives regarding finding employment ("Why get a job when my paycheck costs me my $12,000 handout?"). I agree with you that the tax structure needs to be considered, but in general the UBI should be offset by consumption taxes, VATs, etc., to minimize conflicting incentives surrounding work.
Scott, perhaps you are right, and of course there is a reason why the "current environment" doesn't include a UBI, and only dirty hippies like myself think it should. But as your man Bob Dylan might say, The Times, They Are A Changing, and the current environment won't be current much longer.
Ah, I see where you're going. You're arguing that UBI should displace conventional welfare. That's not the normal argument for UBI. The usual argument for UBI is that it should run parallel and in tandem with welfare.
I should also stipulate that the type of NIT I'm talking about would also require major reform to (nullification/replacement of the lower marginal tax bands). Globally, most bureaucracies are adamantly opposed to NIT trials because they know it spells an end for conventional welfare bureaucracies. There have been plenty of recent UBI trials, but the last major NIT trial ran from 1971 to 1982.
Unfortunately, by design or oversight the trial was poorly conceived. The phase outs coincided with tax bands. Any NIT which doesn't make sure that after tax take home is no less than two out of every three dollars isn't a true trial of NIT. That's the whole intention of NIT- to make work pay and removing the larger portion of the disincentives to work of the welfare trap, whilst alleviating poverty for the working poor.
EITC and other similar systems drew directly from the conceptual framework of NIT proponents like Milton Friedman, George Stigler, David Patrick Moynihan and MLK, although all them represent a major compromise of the original idea and intentions.
"The usual argument for UBI is that it should run parallel and in tandem with welfare."
That is a stupid argument then. A UBI only makes sense if it replaces ALL transfer payments. I don't support a UBI, but could grudgingly support one, IFF it came with a constitutional amendment banning any other transfer payments.
Essentially, yes. I am agnostic on lots of the details, but yes, I think UBI would be a preferable alternative to welfare in general, and could even replace lots of market-distorting regulations such as the minimum wage.
I appreciate you giving me a few new concepts to read up on. A better, fairer economy with less human misery will require lots of input from knowledgable people such as yourself.
But I would challenge you to reconsider the old tropes surrounding "making work pay" and alleviating poverty for the "working poor." There is work that needs doing around here, no doubt, and robots cannot yet do it all. But the knee-jerk insistence some people display regarding making sure people work for their very lives, I think, results in more immiseration than is necessary.
Ok, your last point is fair, but I would counter. The results of high male unemployment in an area is almost always a recipe for catastrophic social outcomes. I don’t like the fact that other people use the hypergamy argument in a nasty way, but it is important for stable couple formation at a community level and although conservatives were somewhat wrong to focus on fathers in the home, fathers at the community level, and in terms of pubescent male peer group moderation, are absolutely vital- important for a number of key metrics like crime and social mobility. They even account for most disparate impacts by group. They also represent a form of unofficial safety net for shepherding kids who don’t do well in school into practical work.
Would you consider yourself more creative than most, by any chance? Creatives tend to imagine that most people experience similar feelings of being trapped in monotonous routines as they do. It’s the quiet lives of desperation line. Creatives are quite unusual in this respect. I’m the same. It wasn’t until I found a job which at least incorporated create problem-solving and which I found intellectual stimulating that I experienced anything other than despair at the drudge of most work.
But we’re different from most people. Most people who aren’t creatives can be perfectly happy in routine and monotonous roles, doing the same thing day in, day out. The fact that creatives are massively overrepresented in most discussions about UBI and other solutions colours the discussion. They see the loss of boring and repetitive jobs as no big loss. Nothing could be further from the truth.
Let’s try an interesting thought experiment. Let’s say we’re both 30 (I’m not). Someone gives us a choice between 3 million dollar and an interesting job which pays $300K a year for 10 years. My guess is we would both take the money. I know I would. But if we were to examine the two alternative scenarios 20 years from now, 9 times out of 10, the people wise enough to take the job rather than the money would be better off. The rare exceptions would be the people wise enough to invest the money in something productive. Definitely not property by the way!
The argument about UBI vs. work is the same thing, but on a more humble scale. It’s not the UBI, because often people do use the money to further personal ambitions like education or training. UBI tends to be net neutral in terms of results. But the evidence is quite clear- the deprivation of labour is absolutely toxic to the human experience. What Maslow got wrong was seeing self-actualisation as only occurring at the peak of the pyramid. Labour is a basic need, it just happens to scale and become more fulfilling for some further up the pyramid. It all depends on personal aptitude and inclination.
Unless someone can find a new way to generate purpose and meaning without labour, then we could be headed for catastrophic consequences.
I agree with you that work shouldn’t necessarily be forced as a matter of existential material needs, but it is vital to human flourishing. The key is finding outlets of labour which help people thrive. One of the reasons why work-related unhappiness is on the rise is because back in the 2000s a key indicator flipped. For the first time in American history the number of people who worked for large employers outnumbered those who worked for medium or small employers. Large employers are a recipe for human unhappiness, except for the lucky few who enjoy access to the decision makers with whom they can negotiate their own terms and input their own ideas occasionally.
As an additional note, most people on the Right also tend to drastically underestimate the percentage of people basically incapable of work for a few key reasons. At any given time it’s not as high as 10% for working age males, but depending on the circumstances of the environment and opportunities beyond immediate geography it can get close.
The other issue is chronically low morale. People often misdiagnose the belief that some people can form that they don’t have anything positive to offer the world as bone-idleness. I would say really bad morale is more common that sheer laziness. Otherwise morale building employment programs wouldn’t show such positive results compared to other types of approaches.
Training/development programs can work a lot better, but when they do fail it’s often due to a mismatch of ability to the program. This is the mistake government often makes. There’s absolutely no point trying to teach a random sample of people to learn to code, because only around 8% are capable and have the right type of personality.
The other issue is misdiagnosis. A lot of people think they have mental health issues, when they actually have physiological disorders. This is particularly true of sleep disorders like sleep apnea which can be causative to other symptoms like anxiety and/or depression.
I disagree. I think "welefare" (income transfer to people i specific circumstances) makes sense. It is social insurance taxint the eoncumption of people who are not sick to pay for medcal bill, people who are employed to those who are unemployed, from those who are not-old to those whoare old, not raising children to rasising childred,https://thomaslhutcheson.substack.com/p/social-insurance-and-redistribution
San Francisco? A lot of newer residential towers with no lights on in most units at night. Yet another article pointing the NIMBY finger. And yes, as Peter points out, many of our "homeless" here are barely able to stand up let alone use a door key.
San Francisco is a classic example of how rent control, regulation and NIMBYism can wreck a housing market. Cities like Houston have lots of inexpensive housing.
Honolulu. And yeah I get the local market specifics on the why (zoning and building code/size restrictions like height and view) mostly but it's irrelevant to the point here, even if housing is a $1, that's a dollar more than our AI unemployed post scarcity masses can afford. It's like getting a free mansion from your rich grandfather, you still can't afford the maintenance, property tax, utilities, etc.
How many skyscrapers do we have to build to make rents affordable to that homeless guy who care barely stand AND also provide a positive ROI to his landlord that he will even bother becoming a landlord verse just lighting the money on fire or putting it in bonds.
Comparative advantage. Even if AI mchines CAN be made to do better than people at everything, why WOULD they? They are still expensive machines using energy to compute.
In particular, there should probably be a forest of high-rise condos along the Los Angeles-area seafront.
And remember: decriminalize pushcart vending. Tyler Cowen just linked to a guy who went to Taiwan and wondered why there was so much cheap and good street food. He said it was the budget vendors. No amenities, or restrooms, just some guy with a barbecue.
Yea, this will have to change. With more frequent heat waves, it is a public health issue.
I realized most people don’t really need a dryer when mine broke. I realized many people in Europe don’t have them when I traveled there recently and stayed in several expensive air BnBs.
?? I have a pretty large house and we do dry a few things on a rack, but sheets? a bunch of shirts/blouses/underclothes?
I’m lookingo out the window of the apartment of my daughter in London. I don’t ee any cloes hanging out. She HAS a dryer, but before she had one she used a commercial site. It looks like an income difference to me.
I spent some time in London 20 years ago, and even in small apartments, a washer and dryer was considered a basic standard amenity for rentals. However, I more recently stayed at several very expensive properties in France that didn’t have one, and it’s hard to believe it was a matter of cost given the value of the properties. One property owner had a second property next door and told us he just hung his clothes out on a foldable rack, and they typically dried within an hour.
I myself have hung sheets to dry in an apartment. It’s easy to do and they dry quickly because they’re thin.
Yeah, I live in Poland, could afford a dryer any time but just don’t want one. This might change if I have children. But I also don’t get why places such as Spain or Italy choose heat deaths over air con.
to give you some ammunition/data on consumption taxes - in otherwise free-market oriented Singapore, cars are heavily taxed. The car (sales) tax starts at 100% of open market value and increases to a marginal 320% at not even Ferrari-level - more like, large-BMW-level prices. The license to actually use a car costs extra. It is auctioned off cap-and-trade style and currently stands at about 100,000 US$ for a 10 year license (no, it's not forever, so a 10 year old car currently costs you >=100,000 US$). So that would be an example of a highly progressive consumption / luxury tax (technically they run under "fees" and not "taxes" in the budget). Note 1, a third of Singapore households own at least one car. Note 2, interestingly, at least according to my AI (ahem) search, corporate and private income taxes still constitute over 50% of government revenue. The Goods and Services Tax (a VAT) plus car fees/taxes make up about 30% on their own, as what I would consider consumption taxes.
Good points. I'd add that while income taxes are a major source of revenue, total tax revenue is fairly low, and hence income tax rates are pretty low. And isn't there some sort of 401k type program that makes it more like a consumption tax?
Also, is there a property tax on high end single family homes?
- The 401k program is not related to the income tax. There is mandatory savings of a flat 37% of any payroll income - in the US you would call it social security / payroll tax, in Singapore it is the contribution to the Central Provident Fund CPF, effectively a 401k. But this "tax" / "401k" is highly regressive, as it only applies until a cutoff at about 4500 US$ salary / month. And right until that cutoff there isn't even any income tax.
- Property taxes on private homes: for the small private housing market (only 15% of total, as 85% of the population lives in government built housing bought on a 99 yr lease basis), fairly ordinary property tax rates, either flat or mildly progressive, based on annual imputed rental value (10-36 % marginal rate, low enough to be mild for typical home values).
- Property taxes from stamp duties on private home sales: For owner occupied homes it's ordinary stamp duties, 1-6 %. For the purchase of private property that is either a second/third etc property or owned by a foreigner, an additional stamp duty is levied that is substantial, and is closest to a consumption tax. It's really meant to deter people from buying housing "for investment", to cool down housing prices. The rates are 30 - 60% of the full home value (not rental value.... the full transaction value) and have moves up and down over the years depending on what the housing market is doing.
I think you are mistaken. You seem to assume that AI will automate many jobs, which increases supply and makes goods very affordable. You are right, but you ignore many aspects of economy.
We know without UBI, economy will collapse since no one will have money to afford even a supposedly affordable good. Without demand, supply doesn't mean anything.
Even assuming UBI, there will still be a high amount of inequality. This is because physical jobs need to be replaced using robotics, and robots are much more expensive than agents acting from some server. So people with physical jobs (electricians, cooks, etc.) would likely have more demand than others while also recieving same UBI.
In fact, it may be true for all capital owners, either land lords in cities or farmers in the countryside. UBI will increase their demand a lot, since they get extra income over UBI.
In other words, many services that knowledge workers take granted today may become luxuries for them after AGI, even as output of goods increases.
You misunderstand me. What I am saying is that even if there is UBI, knowledge workers are at a disadvantage because people with physical skills also receive the same amount of money, as well as money from their services. This means that services similar to those above will cost more than they do now (again, physical workers also have a base amount of income from UBI). The result is not an inflation because I still expect anything that can be fully automated to be nearly free (or easily available via UBI). Simply put, employing humans for anything will cost more.
It just so happens that I don't know any such physical trade, just like most people who are working in relatively highly paid jobs. I am thinking of software engineers, consultants, actuaries, etc. Such people cannot continue to afford to consume services which they enjoyed before, which really sucks. Even more so for those at beginning of their career who haven't saved/invested money yet.
I get that people don't like their jobs being automated away. That process has been going on for centuries, to the huge benefit of mankind. But no one claims it's costless.
Daniel Hannan has given by far the best speech on this particular subject. I think it might have been on the Intelligence Squared YouTube debating channel.
Well argued. I couldn't help but laugh at "The whole point of being rich is to get away from every single human being that doesn’t have to be nice to you." Funny and true.
Idk, i dont even know if there is right now. Plenty of people have dead end pointless jobs.
A bunch of robots for everyone sounds nice, but that reality is clearly not the one we're on track for. I see more drones watching, perhaps attacking us, than personal servants. But hey, im a pessimist.
Idk much about numbers(which is why i subscribed), but i do know numbers can hide the reality. Quality matters. Even if we got all the servant bots, is this going to make life "better"? Easier, sure. I guess it depends on how you define better.
Theres no having any science without a philosophy, and ours is severely malfunctioning. If we neglect one, the other will only get us so far.
Regarding pointless jobs, and taking a more optimistic approach, i suppose its possible ai will accelerate that coming crisis and force us to find a viable solution. Ubi seems to be the logical and popular choice, but as a devout pessimist(and a bit of a luddite) my expectations tend towards something more tragic.
There was an interesting small business survey in the UK a while back. It found that just shy of 80% of people who worked for small businesses were either very or extremely happy with their work/workplace.
It turns out people can be quite happy with pointless dead-end jobs provided they're not working for the boss of a boss of a boss. Smalls-scale working environments are naturally sympathetic and reciprocal to the individual and human heterodoxy provided this doesn't compromise self-interest. Larger business only care about metrics and imposing a systemised set of HR and legal rules on employees.
Of course, it's not all small business owners or bosses, hence the 20%.
I can second this. As a second generation family tree business operator, my *only* gripe over the years was my boss/father lol. Weve since "restructured" and while hes still the owner(hes 75 and wont quit!), hes no longer my boss. And yeah, i *love* my job.
But theres perhaps some ambiguity in the terms dead end and pointless. In my mind any job that provides *something* to the community or world isnt pointless, even if thats selling trinkets, and a person is happy doing it. I was talking more about positions in say a corporation that really are pointless, positions created to keep people busy but never actually *do* anything(i read a great article last year, i wish i could remember its name, about this. Maybe someone can help me out). Its that kind of pointless job i expect to see more of, as ai and greater efficiency make workers superfluous.
And who knows, maybe that will work. Im sure some people can be satisfied doing what amounts to nothing, so long as theyre doing *something*(games on phones come to mind lol) and "making a living", as it were. But im not so sure. I think we're headed for a mass existential crisis.
And this ties in with a conversation i had recently with chatgpt. It suggested we're headed for a society with elites on top(ofc), a smaller percentage of skilled workers, and the rest of the population being "managed"(its word) through busy work or entertainment(mainline ai feeds, anyone?). Granted, this is getting into some dystopian(or perhaps utopian, depending on ones views) future type shit, but chatgpt made a strong case for why this is already occuring.
Can the people be happy being placated? I tend to think yes, if the right stimulation for their brains is provided. But i also think some people wont go for it, and thats a setup for strife.
I completely agree with you on corporate make-work. There is great story about a baggage handlers dispute at Heathrow around the time terminal 5 went online. It turns out for every baggage handler there were two people sitting in an office with a computer and a phone dealing with baggage related issues (which interestingly is often a function of differing weather conditions and delayed luggage requirements due to fuel load and aviation needs, according to a pilot friend of mine). Anyway, the phone/computer handlers apparently rarely dealt with airline customers or baggage handlers. Apparently, they were spending 80% of their day emailing or phoning each other, or making sure they opened and were aware of irrelevant emails from *important* departments like HR.
After I wrote the comment, I played around quickly with an AI prompt hypothetical asking how much of the cost advantage of larger companies like Starbucks over single unit small coffee shops was due to government. It turns out it's 25-35%.
Your AI prompt is highly suggestive- it's reflective of the attitudes prevalent in the left-dominated information production centres which dominate the internet. There are some really interesting surveys out there on the authoritarian attitudes of the top 10% compared with those of the other 90%.
George Carlin said "You don't need a formal conspiracy when interests converge. These people went to the same universities and fraternities, they're on the same boards of directors, they're in the same country clubs, they have like interests. They don't need to call a meeting—they know what's good for them, and they're getting it."
If he was saying it today he probably would have added "They control all the information production centres which train AI, and they are almost always wrong about everything."
It's almost exclusively white collar workers who are going to get hit. Yes, robots are important and they will play a role, but not at anywhere near the scale that people imagine. However, there is one key metric which people need to look at: industrial robot density, or robots per 10,000.
Nations which have high industrial robot density will prosper. Nations which don't will crater. Energy prices are also a key factor. My country, the UK, is fucked!
The article i mentioned was very much the same. She talked about meetings about meetings, emails about emails, so on and so forth, much like the baggage office staff. She spent *years* doing this, getting raises and promotions, but never actually providing anything to the company. Its gonna bug the shit outta me that i cant remember the name f the article, but you already know the point.
It turns out it's 25-35%. And it really pisses me off they stack the deck against small business. And its not just about winning/$, its about the *threat* of people doing for themselves. The exploitation class really are cowards.
George carlin was a goddamn prophet! Im often floored by how prescient his remarks are. Back when comedians were on the front lines of social critique.. i was about to say where are they now but ik theyre still out there. Its more that no one can get a loud enough voice to be heard over the din of the algorithmic feeds.
Im going to read this them vs us thing, but i know its just going to confirm what i already suspect.
And i agree its white collar thats about to be decimated by ai(chatgpt agreed as well lol). And while that will be painful, i think its needed. I think people will be happier if they can get back to a more physical way of living. If i were a young man id be looking at professions that require both brain and body(like tree work! Oh lucky me!) but dont require hundreds of thousands of dollars worth of education. Smart people should be pivoting already, bc theres no way this isnt going to happen.
Man i sure miss the quiet and nice world of my youth. I think about what we used to bitch about back then and its comical. I recall my dad griping about g hw bush and i told him, someday we're going to *wish* we had a president like him. Even back then, the signs of where we were heading werent hard to see. People like to hold on to their myths though..
I was watching the Carlin 'people of colour' bit the other day. Fuck, the man was funny!
I agree with you on the physical work. At one point I was a factory administrator and superuser for a windows and doors factory. Even though I wasn't physically making the products there was a real sense of achievement from many of my daily duties. Lots and lots of firefighting!
It turns out that one of the happiness surveys showed that farmers in America were the people happiest with their work. Bloody hard work though! I did farm labouring when I was kid- short stints between jobs doing gardening maintenance or site clearances didn't even come close.
I was watching a clip of Niall Ferguson the other day in Canada. He made a joke about the dangers of saying anything positive about Trump in Canada. Apparently, back in the 2000s he used to ask his colleagues where were the populists? As a historian who had looked closely at economic history he simply couldn't understand why there weren't any politicians addressing/exploiting the major downsides of neoliberalism for significant swathes of the population. Too much buy-in to neoliberalism by the political and institutional classes. Too little focus on labour economics, the effects on the socioeconomic spectrum, and the non-technological aspects of living standards.
Don't get me wrong. There were real positives to neoliberalism. But the West was mad to give away huge chunks of medium and high value assembly. The Chinese are offshoring now- making East Africa China's China- but they've learned from the mistakes of the West and are only offshoring in low value areas like non-branded textiles.
Somebody like Trump was inevitable at some point. After all, some version of Trumpism, Left or Right is happening everywhere in Europe. A while back Mark Blythe coined the phrase Global Trumpism and noted there were two versions- Right and Left populism.
People underestimate the importance of the blue collar class. It's collapse heralds the decline and fall of Empires.
For years I've been pointing out that nationalism leads to militarism. People responded "But Trump opposes all that neoconservative nation building. He wants peace." How many wars has Trump started so far?
So the point of luxury taxes actually should be to hurt employment in the "pandering to rich people's egos" sector of the economy, so that people will have to get jobs doing something more useful?
Thank you so much for writing this! I feel like more pieces and more opinions like this are needed to be shared to help people understand the right levers to pull
I think that at a certain point in an AI takeoff, we can’t rely on purely economic models and have to take questions of power and state capacity seriously. While I agree with many of your points about output, you seem to assume that if there is some large increase in output -- ultimately we can abstract away from distributional concerns because it will eventually get distributed "even if it takes a UBI to make it happen."
If massive manufacturing of capable robots & some sort of 'AGI' comes into existence, it seems to me that we can no longer rely on the implicit compact between the 'outputters' and the public (ie. the state) to hold. Wealth holders agree to redistribution due to the implicit threat of coercion/violence. If they come to control essentially the capacity to fully neutralize these threats, what actor would be in the position to compel them to redistribute? How can we count on an inevitable UBI?
Granted, perhaps most of the probability mass is in other forms of AI diffusion -- but the story you are telling doesn't seem inevitably true to me. That said, I'm a worrier at heart and the world I'm describing is perhaps far afield from our current one.
This is a great post. I wanted--rather insolently, given how much more you know about economics than me--to offer a slight amendment. You say:
"And how about dryers? Matt Yglesias keeps telling us that America is richer than Europe because we have many more dryers."
I think it would be better to say that America is more equal because we have more dryers! That is, I take the real point to be that, although Europe may ostensibly be more equal as measured by income or wealth, dryers, central air conditioning and heating units, etc. are rarer in Europe and are therefore exclusive use of these is an experience available only to the wealthy as luxury goods, whereas the vast abundance of these goods in America means vastly more Americans have these products.
I was going to say something but then you captured my fear near the end with "what if AI replaces all the jobs" or more accurately "enough jobs the natural rate of both unemployment and non employed rates raise and never come back down", i.e. we don't have farms to factories to telephone operators to waitresses to strippers pipeline that historically has worked via creative destruction; some one has to afford to pay those strippers and not everyone can be a housewife. If the AI and it's physically controlled robots are "as good as people", at some point we just don't need people (because the AI is people at that point from an employment perspective) and (shades of Marx) both the bourgeois and proletariat aren't OK with 99% tax rates to fund middle class life styles for "bums that sit around and play video games and smoke meth all day because there are no jobs left"; i.e. we kind of marginally fixed Appalachia and it's peers after the great coal/steel bust via strip mall doctors cranking out counties with 95% disability rates and every one intentionally not looking too close as a backdoor welfare program but that's still barely sustenance living and I don't see us scaling that to 95% of America, even if we have the resources to do so (because to your point, AI makes everything so cheap, i.e. Star Trek replicators post-scarcity world) .. you still have the fundamental WASP spite / jealous dynamic that makes American's despise "free loaders" which is the root of so many of our problems, even currently.
Other things that jump to mind as I read your post is I really hate how we measure things in households rather than people, I think it masks issues and makes people look better off than they actually are economically. And like you on the washing machine thing, I think we are overestimating here in a big way. Large numbers of Americans rent and most renters don't have a personal "household" washing machine, likewise prisoners, servicemembers, students, traveling workers, etc. While sure nearly all have access via laundry matts, shared (often paid) communal machines in their buildings, laundry services, their parents or neighbors, etc I'd put it around 40% of households so let's say 60 million personal washing machines, if that. On your skyscraper front, I'm indifferent to home ownership, large parts of world get by just fine without it, it's not a virtue in my book that society should work towards especially given it destroys mobility. What you are telling me in your story (though yeah I get the economic theory behind it, I did have some formal schooling in it lol) is how does an infinite supply of housing push prices low enough that landlords will rent AT A LOSS to the millions that can't afford it even $1 because of the AI revolution, much less the security deposit, utilities, insurance, etc. Just how many skyscrapers do you need to build to entice me as a landlord to rent to an unemployed crack addict with no job, no income, and rental history of "puts holes in the walls and shits on the floor". At some point rents are so low that the investment is better off in savings bonds so why would I become a landlord?
I live in a building that is 83% unoccupied in a city with some of the highest rents in America couple with some of the lowest property taxes in American (effectively zero). Likewise it has the largest average household side not including minors as well as homeless rate because people can't afford to live even in shack hence multigenerational housing is the norm among relatives. Nearly every "sky scraper" in this city has vacancy rates well above 50%. They don't get rented because it's not worth the owners cost, they can just leave the units empty, vacation in them once a year, and make their money off appreciation. More skyscraper doesn't change that as it's about return on investment. If prices are pushed low enough, they simply won't get built at all because once again, if your poor can't even afford the HOA, who is going to rent or even sell to them? That goes for "can't afford to pay the property tax, cut the crass, replace the roof, etc" as well in the post-AI infinite output but we don't have jobs world.
Does your city have rent control?
No
Because I don't know what city you are describing, I cannot comment.
It's not really a city specific comment, it applies universally. When ROI on landlording is negative AND our now unemployed post scarcity masses have to live somewhere besides urban camping, how many skyscrapers do you have to build?
You said:
"I live in a building that is 83% unoccupied in a city with some of the highest rents in America couple with some of the lowest property taxes in American (effectively zero). Likewise it has the largest average household side not including minors as well as homeless rate because people can't afford to live even in shack hence multigenerational housing is the norm among relatives. Nearly every "sky scraper" in this city has vacancy rates well above 50%. They don't get rented because it's not worth the owners cost, they can just leave the units empty, vacation in them once a year, and make their money off appreciation."
I asked what city, and you replied that it's an imaginary city. I think we are done here.
And no, your description does not apply "universally"--that's utter nonsense. For instance, in my city the property tax is not "effectively zero".
I have similar concerns, and the best remedy I have come across is indeed a UBI, which Scott mentioned. Like you, Peter, I worry that the American voter won't have the stomach for it, because we evolved in social structures based on human labor that therefore did not tolerate "bums." In my more optimistic moments, I simpy think that attitude will change fast once the majority of people see what they intended to do for a living become obsolete (as a thing for humans to do).
If you are concerned -- it could happen -- that AI substitutes rather than complements a sizeabe swathe of workers, the solution would be a higher EITC (rejiggled to be more of a wage subsidy.
UBI is a non-starter. People should really look at NIT. It's a much better system which reduces bureaucratic bloat in government (which most figures don't capture, because much of the spend/employment is hidden at the state level, the bait-and-switch approach uses incredibly low SSA costs to hide far more bureaucratically costly programs, and the figures never include civil service pensions).
The other thing is that NIT significantly reduces the incentives of the welfare trap.
Shifting welfare to an NIT system is actually an opportunity. This is a cost neutral analysis of replacing welfare with NIT. If we're talking about UBI, then presumably the NIT envisaged would be more generous than stated in the source, because we would be talking about additional funding.
https://www.niskanencenter.org/universal-basic-income-is-just-a-negative-income-tax-with-a-leaky-bucket/
People should also look at Coase Theorem. Eric Weinstein has been beating the drum about Coase as an alternative to UBI for dealing with displaced labour in a manner which preserves dignity.
Personally, I think we need to look at ways to supercharge the SME sector. For too long SME and the self-employed have been subject to government which inherently favours the dotted i's and crossed t's and innately orderly and bureaucratically compliant nature of economies of scale. Small is not just good. Small is great- at least for the purposes of employment.
I agree that a $10,000 UBI makes no sense in the current environment, it would require AI to massively transform the economy.
UBI and NIT are mathematically equivalent.
UBI would do wonders for bloat/efficiency. How hard is it to check a SSN and add $1,000/month into a corresponding bank account? NIT would carry all the headaches of tax filing, to say nothing of conflicting incentives regarding finding employment ("Why get a job when my paycheck costs me my $12,000 handout?"). I agree with you that the tax structure needs to be considered, but in general the UBI should be offset by consumption taxes, VATs, etc., to minimize conflicting incentives surrounding work.
Scott, perhaps you are right, and of course there is a reason why the "current environment" doesn't include a UBI, and only dirty hippies like myself think it should. But as your man Bob Dylan might say, The Times, They Are A Changing, and the current environment won't be current much longer.
Ah, I see where you're going. You're arguing that UBI should displace conventional welfare. That's not the normal argument for UBI. The usual argument for UBI is that it should run parallel and in tandem with welfare.
I should also stipulate that the type of NIT I'm talking about would also require major reform to (nullification/replacement of the lower marginal tax bands). Globally, most bureaucracies are adamantly opposed to NIT trials because they know it spells an end for conventional welfare bureaucracies. There have been plenty of recent UBI trials, but the last major NIT trial ran from 1971 to 1982.
Unfortunately, by design or oversight the trial was poorly conceived. The phase outs coincided with tax bands. Any NIT which doesn't make sure that after tax take home is no less than two out of every three dollars isn't a true trial of NIT. That's the whole intention of NIT- to make work pay and removing the larger portion of the disincentives to work of the welfare trap, whilst alleviating poverty for the working poor.
EITC and other similar systems drew directly from the conceptual framework of NIT proponents like Milton Friedman, George Stigler, David Patrick Moynihan and MLK, although all them represent a major compromise of the original idea and intentions.
"The usual argument for UBI is that it should run parallel and in tandem with welfare."
That is a stupid argument then. A UBI only makes sense if it replaces ALL transfer payments. I don't support a UBI, but could grudgingly support one, IFF it came with a constitutional amendment banning any other transfer payments.
Essentially, yes. I am agnostic on lots of the details, but yes, I think UBI would be a preferable alternative to welfare in general, and could even replace lots of market-distorting regulations such as the minimum wage.
I appreciate you giving me a few new concepts to read up on. A better, fairer economy with less human misery will require lots of input from knowledgable people such as yourself.
But I would challenge you to reconsider the old tropes surrounding "making work pay" and alleviating poverty for the "working poor." There is work that needs doing around here, no doubt, and robots cannot yet do it all. But the knee-jerk insistence some people display regarding making sure people work for their very lives, I think, results in more immiseration than is necessary.
Ok, your last point is fair, but I would counter. The results of high male unemployment in an area is almost always a recipe for catastrophic social outcomes. I don’t like the fact that other people use the hypergamy argument in a nasty way, but it is important for stable couple formation at a community level and although conservatives were somewhat wrong to focus on fathers in the home, fathers at the community level, and in terms of pubescent male peer group moderation, are absolutely vital- important for a number of key metrics like crime and social mobility. They even account for most disparate impacts by group. They also represent a form of unofficial safety net for shepherding kids who don’t do well in school into practical work.
Would you consider yourself more creative than most, by any chance? Creatives tend to imagine that most people experience similar feelings of being trapped in monotonous routines as they do. It’s the quiet lives of desperation line. Creatives are quite unusual in this respect. I’m the same. It wasn’t until I found a job which at least incorporated create problem-solving and which I found intellectual stimulating that I experienced anything other than despair at the drudge of most work.
But we’re different from most people. Most people who aren’t creatives can be perfectly happy in routine and monotonous roles, doing the same thing day in, day out. The fact that creatives are massively overrepresented in most discussions about UBI and other solutions colours the discussion. They see the loss of boring and repetitive jobs as no big loss. Nothing could be further from the truth.
Let’s try an interesting thought experiment. Let’s say we’re both 30 (I’m not). Someone gives us a choice between 3 million dollar and an interesting job which pays $300K a year for 10 years. My guess is we would both take the money. I know I would. But if we were to examine the two alternative scenarios 20 years from now, 9 times out of 10, the people wise enough to take the job rather than the money would be better off. The rare exceptions would be the people wise enough to invest the money in something productive. Definitely not property by the way!
The argument about UBI vs. work is the same thing, but on a more humble scale. It’s not the UBI, because often people do use the money to further personal ambitions like education or training. UBI tends to be net neutral in terms of results. But the evidence is quite clear- the deprivation of labour is absolutely toxic to the human experience. What Maslow got wrong was seeing self-actualisation as only occurring at the peak of the pyramid. Labour is a basic need, it just happens to scale and become more fulfilling for some further up the pyramid. It all depends on personal aptitude and inclination.
Unless someone can find a new way to generate purpose and meaning without labour, then we could be headed for catastrophic consequences.
I agree with you that work shouldn’t necessarily be forced as a matter of existential material needs, but it is vital to human flourishing. The key is finding outlets of labour which help people thrive. One of the reasons why work-related unhappiness is on the rise is because back in the 2000s a key indicator flipped. For the first time in American history the number of people who worked for large employers outnumbered those who worked for medium or small employers. Large employers are a recipe for human unhappiness, except for the lucky few who enjoy access to the decision makers with whom they can negotiate their own terms and input their own ideas occasionally.
As an additional note, most people on the Right also tend to drastically underestimate the percentage of people basically incapable of work for a few key reasons. At any given time it’s not as high as 10% for working age males, but depending on the circumstances of the environment and opportunities beyond immediate geography it can get close.
The other issue is chronically low morale. People often misdiagnose the belief that some people can form that they don’t have anything positive to offer the world as bone-idleness. I would say really bad morale is more common that sheer laziness. Otherwise morale building employment programs wouldn’t show such positive results compared to other types of approaches.
Training/development programs can work a lot better, but when they do fail it’s often due to a mismatch of ability to the program. This is the mistake government often makes. There’s absolutely no point trying to teach a random sample of people to learn to code, because only around 8% are capable and have the right type of personality.
The other issue is misdiagnosis. A lot of people think they have mental health issues, when they actually have physiological disorders. This is particularly true of sleep disorders like sleep apnea which can be causative to other symptoms like anxiety and/or depression.
I disagree. I think "welefare" (income transfer to people i specific circumstances) makes sense. It is social insurance taxint the eoncumption of people who are not sick to pay for medcal bill, people who are employed to those who are unemployed, from those who are not-old to those whoare old, not raising children to rasising childred,https://thomaslhutcheson.substack.com/p/social-insurance-and-redistribution
San Francisco? A lot of newer residential towers with no lights on in most units at night. Yet another article pointing the NIMBY finger. And yes, as Peter points out, many of our "homeless" here are barely able to stand up let alone use a door key.
San Francisco is a classic example of how rent control, regulation and NIMBYism can wreck a housing market. Cities like Houston have lots of inexpensive housing.
Honolulu. And yeah I get the local market specifics on the why (zoning and building code/size restrictions like height and view) mostly but it's irrelevant to the point here, even if housing is a $1, that's a dollar more than our AI unemployed post scarcity masses can afford. It's like getting a free mansion from your rich grandfather, you still can't afford the maintenance, property tax, utilities, etc.
How many skyscrapers do we have to build to make rents affordable to that homeless guy who care barely stand AND also provide a positive ROI to his landlord that he will even bother becoming a landlord verse just lighting the money on fire or putting it in bonds.
Comparative advantage. Even if AI mchines CAN be made to do better than people at everything, why WOULD they? They are still expensive machines using energy to compute.
I agree with this post.
In particular, there should probably be a forest of high-rise condos along the Los Angeles-area seafront.
And remember: decriminalize pushcart vending. Tyler Cowen just linked to a guy who went to Taiwan and wondered why there was so much cheap and good street food. He said it was the budget vendors. No amenities, or restrooms, just some guy with a barbecue.
Same thing in Thailand.
Lack of dryers is a choice btw. Even people with multi million dollar homes don’t have them.
Yeah, I don't share Matt's view that Europe is poor because of a lack of dryers. It seems like a trivial issue to me.
To be fair, Yglesias is probably more concerned with other items missing in Europe, such as air conditioners.
Yea, this will have to change. With more frequent heat waves, it is a public health issue.
I realized most people don’t really need a dryer when mine broke. I realized many people in Europe don’t have them when I traveled there recently and stayed in several expensive air BnBs.
?? Because of commercial/shared dryers?
Because it only takes a few minutes to place your clothes on a line or drying rack. The clothes are dry in a couple of hours without using any energy
?? I have a pretty large house and we do dry a few things on a rack, but sheets? a bunch of shirts/blouses/underclothes?
I’m lookingo out the window of the apartment of my daughter in London. I don’t ee any cloes hanging out. She HAS a dryer, but before she had one she used a commercial site. It looks like an income difference to me.
I spent some time in London 20 years ago, and even in small apartments, a washer and dryer was considered a basic standard amenity for rentals. However, I more recently stayed at several very expensive properties in France that didn’t have one, and it’s hard to believe it was a matter of cost given the value of the properties. One property owner had a second property next door and told us he just hung his clothes out on a foldable rack, and they typically dried within an hour.
I myself have hung sheets to dry in an apartment. It’s easy to do and they dry quickly because they’re thin.
Yeah, I live in Poland, could afford a dryer any time but just don’t want one. This might change if I have children. But I also don’t get why places such as Spain or Italy choose heat deaths over air con.
Scott,
to give you some ammunition/data on consumption taxes - in otherwise free-market oriented Singapore, cars are heavily taxed. The car (sales) tax starts at 100% of open market value and increases to a marginal 320% at not even Ferrari-level - more like, large-BMW-level prices. The license to actually use a car costs extra. It is auctioned off cap-and-trade style and currently stands at about 100,000 US$ for a 10 year license (no, it's not forever, so a 10 year old car currently costs you >=100,000 US$). So that would be an example of a highly progressive consumption / luxury tax (technically they run under "fees" and not "taxes" in the budget). Note 1, a third of Singapore households own at least one car. Note 2, interestingly, at least according to my AI (ahem) search, corporate and private income taxes still constitute over 50% of government revenue. The Goods and Services Tax (a VAT) plus car fees/taxes make up about 30% on their own, as what I would consider consumption taxes.
Good points. I'd add that while income taxes are a major source of revenue, total tax revenue is fairly low, and hence income tax rates are pretty low. And isn't there some sort of 401k type program that makes it more like a consumption tax?
Also, is there a property tax on high end single family homes?
Ah, tricky subjects I ...
- The 401k program is not related to the income tax. There is mandatory savings of a flat 37% of any payroll income - in the US you would call it social security / payroll tax, in Singapore it is the contribution to the Central Provident Fund CPF, effectively a 401k. But this "tax" / "401k" is highly regressive, as it only applies until a cutoff at about 4500 US$ salary / month. And right until that cutoff there isn't even any income tax.
- Property taxes on private homes: for the small private housing market (only 15% of total, as 85% of the population lives in government built housing bought on a 99 yr lease basis), fairly ordinary property tax rates, either flat or mildly progressive, based on annual imputed rental value (10-36 % marginal rate, low enough to be mild for typical home values).
- Property taxes from stamp duties on private home sales: For owner occupied homes it's ordinary stamp duties, 1-6 %. For the purchase of private property that is either a second/third etc property or owned by a foreigner, an additional stamp duty is levied that is substantial, and is closest to a consumption tax. It's really meant to deter people from buying housing "for investment", to cool down housing prices. The rates are 30 - 60% of the full home value (not rental value.... the full transaction value) and have moves up and down over the years depending on what the housing market is doing.
Thanks for that info. That stamp duty on sales seems relatively progressive, as second and third homes would presumably skew toward the wealthy.
This is such a fantastic post.
Thanks!
So early in the year and this post sets a very high bar for creative solutions! Well done.
I think you are mistaken. You seem to assume that AI will automate many jobs, which increases supply and makes goods very affordable. You are right, but you ignore many aspects of economy.
We know without UBI, economy will collapse since no one will have money to afford even a supposedly affordable good. Without demand, supply doesn't mean anything.
Even assuming UBI, there will still be a high amount of inequality. This is because physical jobs need to be replaced using robotics, and robots are much more expensive than agents acting from some server. So people with physical jobs (electricians, cooks, etc.) would likely have more demand than others while also recieving same UBI.
In fact, it may be true for all capital owners, either land lords in cities or farmers in the countryside. UBI will increase their demand a lot, since they get extra income over UBI.
In other words, many services that knowledge workers take granted today may become luxuries for them after AGI, even as output of goods increases.
The Fed can always print more money. If supply is not the problem (as you seem to assume), that won't create inflation.
Again, I do not expect an AI supply miracle, I was merely describing the implications of that miracle, if it should occur.
You misunderstand me. What I am saying is that even if there is UBI, knowledge workers are at a disadvantage because people with physical skills also receive the same amount of money, as well as money from their services. This means that services similar to those above will cost more than they do now (again, physical workers also have a base amount of income from UBI). The result is not an inflation because I still expect anything that can be fully automated to be nearly free (or easily available via UBI). Simply put, employing humans for anything will cost more.
I'm confused. Why is lower pay for knowledge workers a problem? Shouldn't plumbers earn more than teachers or accountants?
It just so happens that I don't know any such physical trade, just like most people who are working in relatively highly paid jobs. I am thinking of software engineers, consultants, actuaries, etc. Such people cannot continue to afford to consume services which they enjoyed before, which really sucks. Even more so for those at beginning of their career who haven't saved/invested money yet.
I get that people don't like their jobs being automated away. That process has been going on for centuries, to the huge benefit of mankind. But no one claims it's costless.
Daniel Hannan has given by far the best speech on this particular subject. I think it might have been on the Intelligence Squared YouTube debating channel.
Well argued. I couldn't help but laugh at "The whole point of being rich is to get away from every single human being that doesn’t have to be nice to you." Funny and true.
Thanks Don.
Well said and welcome to your 70's!
There’d still be plenty of human work to be done.
Idk, i dont even know if there is right now. Plenty of people have dead end pointless jobs.
A bunch of robots for everyone sounds nice, but that reality is clearly not the one we're on track for. I see more drones watching, perhaps attacking us, than personal servants. But hey, im a pessimist.
Idk much about numbers(which is why i subscribed), but i do know numbers can hide the reality. Quality matters. Even if we got all the servant bots, is this going to make life "better"? Easier, sure. I guess it depends on how you define better.
Theres no having any science without a philosophy, and ours is severely malfunctioning. If we neglect one, the other will only get us so far.
"Plenty of people have dead end pointless jobs."
I'd expect that to continue in the future.
"Even if we got all the servant bots, is this going to make life "better"?"
I agree with you that this is very much an open question.
Regarding pointless jobs, and taking a more optimistic approach, i suppose its possible ai will accelerate that coming crisis and force us to find a viable solution. Ubi seems to be the logical and popular choice, but as a devout pessimist(and a bit of a luddite) my expectations tend towards something more tragic.
Housecleaning robots would be a boon for me.
Housecleaning is not that much of a chore and it gives me the opportunity to listen to more podcasts!😉
I went about 20 years in furniture-making, and indeed listened to a lot of podcasts, audio books, etc.
But the robots can have the housework. And take your mask off.
Plus, pray for Tehran to tumble.
There was an interesting small business survey in the UK a while back. It found that just shy of 80% of people who worked for small businesses were either very or extremely happy with their work/workplace.
It turns out people can be quite happy with pointless dead-end jobs provided they're not working for the boss of a boss of a boss. Smalls-scale working environments are naturally sympathetic and reciprocal to the individual and human heterodoxy provided this doesn't compromise self-interest. Larger business only care about metrics and imposing a systemised set of HR and legal rules on employees.
Of course, it's not all small business owners or bosses, hence the 20%.
I can second this. As a second generation family tree business operator, my *only* gripe over the years was my boss/father lol. Weve since "restructured" and while hes still the owner(hes 75 and wont quit!), hes no longer my boss. And yeah, i *love* my job.
But theres perhaps some ambiguity in the terms dead end and pointless. In my mind any job that provides *something* to the community or world isnt pointless, even if thats selling trinkets, and a person is happy doing it. I was talking more about positions in say a corporation that really are pointless, positions created to keep people busy but never actually *do* anything(i read a great article last year, i wish i could remember its name, about this. Maybe someone can help me out). Its that kind of pointless job i expect to see more of, as ai and greater efficiency make workers superfluous.
And who knows, maybe that will work. Im sure some people can be satisfied doing what amounts to nothing, so long as theyre doing *something*(games on phones come to mind lol) and "making a living", as it were. But im not so sure. I think we're headed for a mass existential crisis.
And this ties in with a conversation i had recently with chatgpt. It suggested we're headed for a society with elites on top(ofc), a smaller percentage of skilled workers, and the rest of the population being "managed"(its word) through busy work or entertainment(mainline ai feeds, anyone?). Granted, this is getting into some dystopian(or perhaps utopian, depending on ones views) future type shit, but chatgpt made a strong case for why this is already occuring.
Can the people be happy being placated? I tend to think yes, if the right stimulation for their brains is provided. But i also think some people wont go for it, and thats a setup for strife.
I completely agree with you on corporate make-work. There is great story about a baggage handlers dispute at Heathrow around the time terminal 5 went online. It turns out for every baggage handler there were two people sitting in an office with a computer and a phone dealing with baggage related issues (which interestingly is often a function of differing weather conditions and delayed luggage requirements due to fuel load and aviation needs, according to a pilot friend of mine). Anyway, the phone/computer handlers apparently rarely dealt with airline customers or baggage handlers. Apparently, they were spending 80% of their day emailing or phoning each other, or making sure they opened and were aware of irrelevant emails from *important* departments like HR.
After I wrote the comment, I played around quickly with an AI prompt hypothetical asking how much of the cost advantage of larger companies like Starbucks over single unit small coffee shops was due to government. It turns out it's 25-35%.
Your AI prompt is highly suggestive- it's reflective of the attitudes prevalent in the left-dominated information production centres which dominate the internet. There are some really interesting surveys out there on the authoritarian attitudes of the top 10% compared with those of the other 90%.
I found it. It was a Rasmussen survey commissioned for Unleash Prosperity entitled Them vs. U.S. It really is some really chillingly authoritarian shit about the inherent authoritarianism of elites. Here's the pdf: https://committeetounleashprosperity.com/wp-content/uploads/2024/01/Them-vs-Us_CTUP-Rasmussen-Study-FINAL.pdf
George Carlin said "You don't need a formal conspiracy when interests converge. These people went to the same universities and fraternities, they're on the same boards of directors, they're in the same country clubs, they have like interests. They don't need to call a meeting—they know what's good for them, and they're getting it."
If he was saying it today he probably would have added "They control all the information production centres which train AI, and they are almost always wrong about everything."
It's almost exclusively white collar workers who are going to get hit. Yes, robots are important and they will play a role, but not at anywhere near the scale that people imagine. However, there is one key metric which people need to look at: industrial robot density, or robots per 10,000.
Nations which have high industrial robot density will prosper. Nations which don't will crater. Energy prices are also a key factor. My country, the UK, is fucked!
The article i mentioned was very much the same. She talked about meetings about meetings, emails about emails, so on and so forth, much like the baggage office staff. She spent *years* doing this, getting raises and promotions, but never actually providing anything to the company. Its gonna bug the shit outta me that i cant remember the name f the article, but you already know the point.
It turns out it's 25-35%. And it really pisses me off they stack the deck against small business. And its not just about winning/$, its about the *threat* of people doing for themselves. The exploitation class really are cowards.
George carlin was a goddamn prophet! Im often floored by how prescient his remarks are. Back when comedians were on the front lines of social critique.. i was about to say where are they now but ik theyre still out there. Its more that no one can get a loud enough voice to be heard over the din of the algorithmic feeds.
Im going to read this them vs us thing, but i know its just going to confirm what i already suspect.
And i agree its white collar thats about to be decimated by ai(chatgpt agreed as well lol). And while that will be painful, i think its needed. I think people will be happier if they can get back to a more physical way of living. If i were a young man id be looking at professions that require both brain and body(like tree work! Oh lucky me!) but dont require hundreds of thousands of dollars worth of education. Smart people should be pivoting already, bc theres no way this isnt going to happen.
Man i sure miss the quiet and nice world of my youth. I think about what we used to bitch about back then and its comical. I recall my dad griping about g hw bush and i told him, someday we're going to *wish* we had a president like him. Even back then, the signs of where we were heading werent hard to see. People like to hold on to their myths though..
I was watching the Carlin 'people of colour' bit the other day. Fuck, the man was funny!
I agree with you on the physical work. At one point I was a factory administrator and superuser for a windows and doors factory. Even though I wasn't physically making the products there was a real sense of achievement from many of my daily duties. Lots and lots of firefighting!
It turns out that one of the happiness surveys showed that farmers in America were the people happiest with their work. Bloody hard work though! I did farm labouring when I was kid- short stints between jobs doing gardening maintenance or site clearances didn't even come close.
I was watching a clip of Niall Ferguson the other day in Canada. He made a joke about the dangers of saying anything positive about Trump in Canada. Apparently, back in the 2000s he used to ask his colleagues where were the populists? As a historian who had looked closely at economic history he simply couldn't understand why there weren't any politicians addressing/exploiting the major downsides of neoliberalism for significant swathes of the population. Too much buy-in to neoliberalism by the political and institutional classes. Too little focus on labour economics, the effects on the socioeconomic spectrum, and the non-technological aspects of living standards.
Don't get me wrong. There were real positives to neoliberalism. But the West was mad to give away huge chunks of medium and high value assembly. The Chinese are offshoring now- making East Africa China's China- but they've learned from the mistakes of the West and are only offshoring in low value areas like non-branded textiles.
Somebody like Trump was inevitable at some point. After all, some version of Trumpism, Left or Right is happening everywhere in Europe. A while back Mark Blythe coined the phrase Global Trumpism and noted there were two versions- Right and Left populism.
People underestimate the importance of the blue collar class. It's collapse heralds the decline and fall of Empires.
For years I've been pointing out that nationalism leads to militarism. People responded "But Trump opposes all that neoconservative nation building. He wants peace." How many wars has Trump started so far?
He won't even rule out an attack on Denmark.
The issue isn't populism it's nationalism.
I recently wrote on this issue https://www.dawn.com/news/2002169/will-ai-kill-your-job Just today, I came across this excellent piece by Scott. Glad to know that we are on the same page
So the point of luxury taxes actually should be to hurt employment in the "pandering to rich people's egos" sector of the economy, so that people will have to get jobs doing something more useful?
Yes, that's the utilitarian argument for luxury taxes. Society benefits more from building 1000 new cars than one more yacht.
Thank you so much for writing this! I feel like more pieces and more opinions like this are needed to be shared to help people understand the right levers to pull
i wrote something quite similar: https://open.substack.com/pub/lydianottingham/p/vitae-per-person-vpp-a-new-way-of?r=1tmtjy&utm_medium=ios&shareImageVariant=overlay
I think that at a certain point in an AI takeoff, we can’t rely on purely economic models and have to take questions of power and state capacity seriously. While I agree with many of your points about output, you seem to assume that if there is some large increase in output -- ultimately we can abstract away from distributional concerns because it will eventually get distributed "even if it takes a UBI to make it happen."
If massive manufacturing of capable robots & some sort of 'AGI' comes into existence, it seems to me that we can no longer rely on the implicit compact between the 'outputters' and the public (ie. the state) to hold. Wealth holders agree to redistribution due to the implicit threat of coercion/violence. If they come to control essentially the capacity to fully neutralize these threats, what actor would be in the position to compel them to redistribute? How can we count on an inevitable UBI?
Granted, perhaps most of the probability mass is in other forms of AI diffusion -- but the story you are telling doesn't seem inevitably true to me. That said, I'm a worrier at heart and the world I'm describing is perhaps far afield from our current one.
This is a great post. I wanted--rather insolently, given how much more you know about economics than me--to offer a slight amendment. You say:
"And how about dryers? Matt Yglesias keeps telling us that America is richer than Europe because we have many more dryers."
I think it would be better to say that America is more equal because we have more dryers! That is, I take the real point to be that, although Europe may ostensibly be more equal as measured by income or wealth, dryers, central air conditioning and heating units, etc. are rarer in Europe and are therefore exclusive use of these is an experience available only to the wealthy as luxury goods, whereas the vast abundance of these goods in America means vastly more Americans have these products.