The Singularity and Macroeconomics
Two sides of the same transdimensional hypercoin
Every time discussion goes into automation and how it will destroy all jobs and destroy economics as we know it, people tend to take opposing sides. Some look back at the previous times that such outrageous claims have been made and point how such worries have always turned out to be wrong.
Others look at the very specific technologies and tell a story on how it will be different this time. Both sides are represented by brilliant people who make good points. Let's look at both sides quickly before looking at my approach to this discussion, representing a third way to look at the problem.
At first, looking at the past. Since ancient times technological innovation has caused economic displacement (“destroyed jobs” in newspeak). Over time, this newly created labor surplus (“unemployed people”) has transformed into new types of jobs filling in new types of needs paid for people who benefited from the initial job destruction.
And then sometime later, it happens again. And every time, it is a harrowing process for those people losing jobs and can cause genuine damage to livelihoods of entire cities and generations of people.
First, farming became more productive due to various agricultural innovations — animal husbandry, plow, setting aside fields to rejuvenate, better crops, etc. This allowed farms to become more productive, and one farmer could finally support much more than one family.
This led to the rise of towns and cities and various tradecrafts — shoemakers, tailors, brewers, jewelers and so on could start to create their wares much more efficiently now, once they were focusing on one skill, and trading with farmers, instead of doing it as an extra chore to farming. Everybody was better off.
The same cycle repeated multiple times, with professions with a large number of workers becoming more and more productive and requiring less and fewer workers to produce the same amount of goods and services.
Farmers were first, then various other trades. And each time, one large profession was minimized and replaced by multiple smaller professions completely unrelated to the minimized job but paid for by the productivity gains of that change.
One of the most famous cases when such a large change happened during the industrial revolution, where large parts of the jobs done by workers involved in the textile industry were replaced by mechanisms driven by water and steam energy.
This lead to the movement epitomized by John Ludd, that were fighting against the change. They become known as Luddites, and they were crushed by the army and by the unstoppable force of history.
This is most often one example cited by many economists that ridicule fears of “robots taking all the jobs.” And note that nobody could ever predict what professions would appear to fill the void, which leads directly to a similar prediction nowadays — when some industries are robotized, some new, yet unknown, jobs will pop up, and the world will go on.
And history does prove this happening even relatively recently. For example, we see the traditional ad-driven media industry shrinking in size and new professions like online marketing specialist, native advertisement management, and social media influencer taking appearing to fill the void. And none of those things had a name twenty years ago.
One of the most famous economists ridiculing those who worry about automation is Paul Krugman (New Youk Times, Twitter). Brilliant scientist, worth every second of time you spend listening to him and reading his work. His views on automation can be heard in five minutes here.
If we look at the other side of the debate, then the discussion goes into a specific way on how the next wave of automation will destroy jobs, not about the jobs themselves. The argument goes that previously it was physical or repetitive jobs that were getting eliminated by productivity gains.
People had a chance to move to do higher-value jobs requiring intellectual skills more than muscles. That new professions that were created were more likely to be created in a white-collar slash hipster space instead of new and better blue-collar industries.
But this time, it is going to be different. Artificial intelligence is going to eliminate “thinking jobs” for the first time. And by “robots” in this context, people mostly mean AI software instead of those large dumb and preprogrammed industrial robots you can see in “how are things made” type of shows.
The software would destroy and replace jobs of journalists, writers, artists, musicians, painters, actors, lawyers, and product designers. And it would be unlikely that new, more creative professions could appear to replace them when a lot of smart people are out there thinking what to do in that post-AI creative wasteland. This is known as “The Singularity” among the people that worry.
The AI technology is not yet so powerful, but it is developed enough to show us that some part of this prediction can certainly be achieved.
Maybe only some of it, or maybe all of it, depending on how fast general artificial intelligence breakthrough can be achieved. When software would stop being just a productivity multiplier for a person doing the job and replace the person entirely.
This view's most famous proponent is Elon Musk (Twitter), a brilliant engineer and visionary entrepreneur. His thoughts on this topic are to be inhaled with a fully open mind. His thoughts on AI are compiled in this video.
I will not argue one or another side, but I would like to offer a new way of thinking about the problem. The issue with the approaches outlined above is that the first view looks too much into the past. Economists basically think that this has always been resolved for the greater good of society and therefore, it will keep happening in the future again.
This way of thinking omits the fact that economics is a social science and deals with humans, not atoms or numbers. It might very well be that whatever worked out in the past will not repeat in the future, just because we are humans and not mathematical equations.
The next change might be too different for us to adapt to it in the same way as we have adapted in the past. Who knows.
And the second view has a problem of being too narrow. Yes, a worrying amount of high-skill jobs might be replaced by automation.
But what does it mean for society? Jobs exist only in the context of society, of community, where goods and services are exchanged in a free-as-much-as-possible market so all participants would benefit as much as their bargaining power allows. This fact is not going to go away, even if entire job classes are automated away. This needs to be thought about, as well.
This is the most surprising aspect of a discussion to me — why those noble winning economists are not even trying to humor the worriers and seeing if it would be possible to model a country or world economy in a situation where all creative jobs are automated, and many industries have become hundreds or thousands of times more productive.
It is such an interesting thought experiment, after all. “The economic model of The Singularity” is a paper title that might bring somebody a Nobel prize.
Let me outline the tooling to be used for such a thought experiment. At first, you have to imagine a situation where the singularity has happened.
AI can draw better paintings than the best artist, write a better screenplay than the best playwright, be a better CGI actor than the best Hollywood star, new medical drugs are created specifically for you on the fly, seeds of crops are adjusted to grow in different climates automatically and so on. Basically, the next Game of Thrones series is being generated as we speak. In 17 versions.
If this situation exists, then what could be the ideal model of the relationship between humans in society? What happens to patent laws designed to protect inventors? What about copyright if the work is fully generated by open-sourced intelligence? Who owns genetic information within potato seeds bioprinted in a teenage boy's bedroom and created by artificial intelligence provided as a part of his new fridge?
This society would live very differently, and probably many of the laws that we have today would make no sense in such a post-scarcity world. Relationships between humans would change, and they would learn to work together in new, better ways and enjoy new wealth as a community.
Or, things would go in a completely different direction. There would be a wasteland where former lawyers and doctors would fight it out with rocks and spears while competing for access to the magical cornucopia machine that would produce food, sex toys, and new tv shows automatically as long as you manage to kick the high priest guarding it into the head.
Economists writing their Nobel work would then explore those end game scenarios and describe relationships and market forces in such a society.
A more realistic and complex result could be a completely split world society. With some rich countries living with highly automated and robotized good and services production, while some poorer countries would be as poor as ever, cut off from modern innovation by copyright laws and with no more foreign capital inflow as the amount of international trade in goods would decrease due to massive robotization of domestic production and subsequent increase in productivity.
This is a scary world, where Swedes and Germans would go to India and Nigeria to look at the natural wonders, but never to buy any other exported good except natural resources or tourism services.
In extreme free-market economies like the USA, we would see the same division even within a single country. Robot fed, clothed, entertained, and healed elites would live side by side with people in extreme poverty, unable to ever buy even a single share of one of the corporations holding patents on general artificial intelligence.
How would you avoid that? How to ensure that everybody participates in this success instead of a select few? How to be sure that any redistribution is fair and doesn't stifle innovation? Those are hard questions, but it is much more interesting to look at them through the lens of the singularity event. Such a lens shows all our inequalities in a new and interesting light.
I can't solve the problem. But I would bet on intellectual property laws being amended over time. And new laws forcing large corporations to be owned by more people to spread the wealth around in a top-down manner.
Some of the wealth of the elites could be redistributed via guaranteed minimum income in a bottom-up manner, thus creating more market for the products and services, thus increasing overall wealth and prosperity.
Or maybe some much better policy would be invented that would itself rely on newer technologies to bring equality in participation in the singularity. And such reliance on technology would again bring the next cycle of discussion and disagreements.