Just remember that the US purged left-leaning economists during the cold war and the field re-grew under intense think-tank incentives towards the economic right, so if you think labor/capital dynamics might be important to the AI revolution you really ought to balance your "random" sampling of US economists with some Piketty (Atkinson, Stiglitz, Zucman -- but in an era where reading even one book is considered a herculean feat of focus, "Capital in the Twenty First Century" by Piketty is the canonical pick).
junior trader for a bank looses $10 mil. boss asks him what happened. trader says he sold oil because bank economist said oil price will go down. boss fires him. junior asks how could he become a good trader if he's fired on the first losing trade. boss says "no, you idiot, I didn't fire you because you made a losing trade, I fired you because you listened to our economist"
"The growth of the Internet will slow drastically, as the flaw in 'Metcalfe's law'–which states that the number of potential connections in a network is proportional to the square of the number of participants–becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's."
What AI really seems to be posed to do is make labour a lot less valuable and capital a lot more valuable.
Running a government requires a lot of cash flow. I think its sort of inevitable that it's going to need to start coming mostly from the later and not the former.
Inb4 the economy is just a paperclip maximizer, a hedonium maximizer, and 5 different AGIs built to maximally enrich their creators all trading with each other.
Many people don't realize that the human-legible economy is not the end goal to the fate of wealth and productivity in the known universe.
The economy is human-serving and human-legible because humans are a universal bottleneck to productivity and wealth creation. Once humans are no longer this bottleneck, the economy will begin to serve other interests, as those other interests will be the source of far more productivity than humans (i.e. AI agents, robots, etc)
If people understood this they'd understand that the "permanent underclass" notion is farcical: Human capital will not be allowed to be what allows productivity to commence or halt in a future that is 1000x more efficient and fast-moving due to AI. Any AI smart enough to do such will not wait on humans to give them permission with their money.
Economy is not zero sum game [1]. The fact that someone has more, doesn't mean everyone else is worse off because of it. Many hungry african kids can look upon the people from first world and ponder the same question. "How will the rich people that have everything survive now, that with AI they will have even more" except from their perspective, we are the elon musks in their eyes.
For an article that starts off asking us to examine our assumptions and not make leaps of logic, it goes on to make some absolute whopper assumptions, like that governments (Western governments especially, for some reason), won't do anything to address the problems the article is raising, that they'll instead abandon democracy entirely and resort to police and military oppression, and that massive unemployment and poverty of almost all people is something you could even keep a lid on with policing.
Suppose we modeled this as two separate countries:
* AI Island: just runs AI in data centers.
* Elsewhere: same as now.
Wouldn't there be gains from trade?
Sure, AI Island might be able to provide lots of cheap Internet services, but you can't eat Internet. Wouldn't they want something in exchange?
And wouldn't there still be lots of jobs in Elsewhere that can't be done over the Internet and have nothing to do with AI Island? If AI Island charges too much, they can always trade among themselves.
I don't see why we should take that scenario seriously.
In part because agriculture is already heavily mechanized and many factories already have lots of robots. How much would access to an LLM improve the robots?
Assuming a good enough LLM, you can say something like "Please find me a site with optimum growing conditions for beetroot in the next year and arrange to have the field planted and maintained until the harvest season for beetroot is over" and then just let 'er rip.
What's crazy about that is it's essentially post-scarcity if we want it to be. Or what's most likely to happen is that in the US we'll all be sucking down water laced with contraceptives in terrafoam while our corporate masters wait for us to die off so they can inherit all of the land.
Isn’t it clear that the “enemy” of 99% of the people in the world (and in HN) are the ultra rich? Therefore we shouldn’t use Claude/Gemini/OpenAI?
It’s not about stopping progress, rather stopping the ultra rich getting richer and more powerful over our lives. Whether we can use claude to automate a fucking script or service is meaningless compared to that.
The dream of elon musk et al is to keep accumulating power and have non-humans serve them. They don’t want us, and as soon as they can they will replace us. But here we are giving them more power. Ridiculous
This author's writing style is too obnoxious for me to have gotten all the way through it, but the important thing is that he's wrong.
Every single economic transaction ultimately connects to people generating demand. EVERY single one. All B2B transactions included.
Sometimes this can appear to not be the case if there's a significant lag time between initial B2B transactions and some end consumer demand. That lag is bridged by hopeful investors and creditors.
The present AI buildout is an example of this. And it is not immune from the principle. There will ultimately need to be real people generating real demand somewhere in the economy in order to justify an economic return on the massive outlay.
Government expenditures are also included. Tax dollars used to pay for things are ultimately satisfying demand generated by citizens. Even, believe it or not, a deranged government blowing up random people in the Middle East. That still traces to the (perceived) security needs of some population.
The aggregate demand equation is as follows:
AD = C + I + G + NX
C = Consumer Spending
I = Investment
G = Government Spending
NX = Net Exports
What's going to happen in the future is that demand will have to shift in this equation. Remember that Investment needs to be justified by some demand created elsewhere — it is in essence the purchase of an IOU predicated on future demand that must ultimately trace down to real people. We are all broadly in agreement that Consumption will contract, as labor is progressively disempowered and capital continues to concentrate. Let's ignore NX.
The answer is that the sources of demand in the future will likely shift to, primarily, (1) demand still generated by wealthy people consuming things (e.g. mansions, yachts, rockets, ego-affirming Mars colonies) and (2) government spending that serves entire populations.
This all assumes, of course, that we continue with the present economic model, in spite of the immense human suffering and turmoil that is likely on the horizon, as we transition into a fundamentally different technological age.
AIs are not conscious and do not have real needs that are detached from a real person. That can certainly be simulated, but I would hope that we can collectively agree to unplug them should that situation arise.
There's a lot of bad economics and assumptions here even if the conclusion is plausible.
Yes, an economy of robots harvesting things to serve a few masters (or they takeover themselves Terminator-style) is possible and perhaps the end game.
Once the owning class owns mostly everything and* has intelligent machines that serve them, The Economy crashing will not have real consequences for them. It barely has real consequences for them already -as they have consistently ended up richer after the dot com bubble, the 2008 recession, and the covid recession.*
The coming out richer part is undeniably true, but I have doubts about the conclusion, which is something like "after oligarchs own everything, they don't need many people". Look, even the old Bell System required participation of about a third of the US population.
Oligarchs might be able to have young, fit concubines, and loyal, retainers with steel thews if there's a population of less than a third of today, but they'll have trouble maintaining their health because there will be fewer doctors and no specialists. Telegram communications might be possible, but who's going to maintain gigawatts of data centers for such a population? I'm pretty sure "AI" will slip away in such a world, but who needs waifus when real harems can exist?
I've seen this idea float around r/singularity and r/collapse for years and it's probably responsible for a horrifying amount of suicides at this point.
It's not even that good of an argument. It makes some incredibly flimsy assumptions; reddit marxist priors of labor oppression being an inescapable invariant across all of human history, ultra-compliant superintelligences, a perfectly unitary elite without any desire to defect, all other societal variables staying the same somehow, etc.. It only exists because of upvote algorithms amplifying emotional action-suppressing doomer content. Really not that different from other hostile memes like QAnon.
I would really like if people stopped spreading this anti-agency garbage and actually made an effort to advocate for policy. It's something I have to give Luke Drago some points for, he actually cares about the problem rather than just saying the inevitable eternal stratification hypersuffering anti-singularity is inevitable and implying that death is preferable.
It isn't inevitable but it is where we are heading. We are basically in the early 1930s. Even fighting against it and winning is going to be extremely ugly. And that is the most optimistic scenario.
Using Marxist as a denunciation feels like a shibboleth considering how often it comes out of the mouths of conservative politicians in the USA when talking about stuff that is not remotely related to it.
Yep, exactly. The USA is in the fortunate position of having a solid historical example of how to re-balance an economy that let inequality cook out of control: FDR. We didn't have a far-right Hitler or a far-left Stalin because we had a Roosevelt. We should aim for that again -- but at the moment I'm afraid our aim is drifting to the right, a right that calls its own policy position from 6 months prior "radical Marxist lunacy" and will certainly do the same to any compromise struck in that historically informed center.
>reddit marxist priors of labor oppression being an inescapable invariant across all of human history
Not that I agree with all of Marx's ideas, but I think this is one of his less controversial ideas. There has always been a class struggle between business owners and workers, and there probably always will be.
>anti-agency garbage and actually made an effort to advocate for policy
An increasing amount of US citizens have little to no trust in our government to actually come up with a viable solution that helps the people in a world where AI automation is happening across multiple sectors at once.
You want to address the paranoia people feel? You have to also address that lack of trust in our government. That's a tall order.
If you want to understand the likely capabilities of AI technology in the future, listen to software engineers like this guy.
If you want to understand the impact of AI technology on the economy, don't listen to software engineers, listen to economists.
Just remember that the US purged left-leaning economists during the cold war and the field re-grew under intense think-tank incentives towards the economic right, so if you think labor/capital dynamics might be important to the AI revolution you really ought to balance your "random" sampling of US economists with some Piketty (Atkinson, Stiglitz, Zucman -- but in an era where reading even one book is considered a herculean feat of focus, "Capital in the Twenty First Century" by Piketty is the canonical pick).
Taleb joke:
junior trader for a bank looses $10 mil. boss asks him what happened. trader says he sold oil because bank economist said oil price will go down. boss fires him. junior asks how could he become a good trader if he's fired on the first losing trade. boss says "no, you idiot, I didn't fire you because you made a losing trade, I fired you because you listened to our economist"
"The growth of the Internet will slow drastically, as the flaw in 'Metcalfe's law'–which states that the number of potential connections in a network is proportional to the square of the number of participants–becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's."
What AI really seems to be posed to do is make labour a lot less valuable and capital a lot more valuable.
Running a government requires a lot of cash flow. I think its sort of inevitable that it's going to need to start coming mostly from the later and not the former.
We've moved all the taxes into the labor economy and all the money into the capital economy and the well is running dry. There's nothing to be done!
More tax cuts to the rich.
Oh my god I can just FEEL the growth! It's going to trickle down any second now! Any second!
Inb4 the economy is just a paperclip maximizer, a hedonium maximizer, and 5 different AGIs built to maximally enrich their creators all trading with each other.
You just described the plot of Alien: Earth!
lol or my favorite theory: I wake up and it is 1994. I am 3 years old, outside with my grandpa <3
well, shit. here we go again.
like, what even is consciousness and all that :s sorry, just thought i'd share lol
Many people don't realize that the human-legible economy is not the end goal to the fate of wealth and productivity in the known universe.
The economy is human-serving and human-legible because humans are a universal bottleneck to productivity and wealth creation. Once humans are no longer this bottleneck, the economy will begin to serve other interests, as those other interests will be the source of far more productivity than humans (i.e. AI agents, robots, etc)
If people understood this they'd understand that the "permanent underclass" notion is farcical: Human capital will not be allowed to be what allows productivity to commence or halt in a future that is 1000x more efficient and fast-moving due to AI. Any AI smart enough to do such will not wait on humans to give them permission with their money.
Economy is not zero sum game [1]. The fact that someone has more, doesn't mean everyone else is worse off because of it. Many hungry african kids can look upon the people from first world and ponder the same question. "How will the rich people that have everything survive now, that with AI they will have even more" except from their perspective, we are the elon musks in their eyes.
https://mises.org/mises-wire/exchange-not-zero-sum-game
See also https://www.owenmcgrann.com/p/the-dead-economy-theory which was thoroughly discussed 17 days ago at https://news.ycombinator.com/item?id=48324712 (1426 comments).
This seems the kind of (scarily true) thing I’d expect Charles Stross to write about.
For an article that starts off asking us to examine our assumptions and not make leaps of logic, it goes on to make some absolute whopper assumptions, like that governments (Western governments especially, for some reason), won't do anything to address the problems the article is raising, that they'll instead abandon democracy entirely and resort to police and military oppression, and that massive unemployment and poverty of almost all people is something you could even keep a lid on with policing.
I guess you don't know about North Korea
Suppose we modeled this as two separate countries:
* AI Island: just runs AI in data centers.
* Elsewhere: same as now.
Wouldn't there be gains from trade?
Sure, AI Island might be able to provide lots of cheap Internet services, but you can't eat Internet. Wouldn't they want something in exchange?
And wouldn't there still be lots of jobs in Elsewhere that can't be done over the Internet and have nothing to do with AI Island? If AI Island charges too much, they can always trade among themselves.
I think this mentions that AI Island also has robots than can produce most goods
I don't see why we should take that scenario seriously.
In part because agriculture is already heavily mechanized and many factories already have lots of robots. How much would access to an LLM improve the robots?
Assuming a good enough LLM, you can say something like "Please find me a site with optimum growing conditions for beetroot in the next year and arrange to have the field planted and maintained until the harvest season for beetroot is over" and then just let 'er rip.
What's crazy about that is it's essentially post-scarcity if we want it to be. Or what's most likely to happen is that in the US we'll all be sucking down water laced with contraceptives in terrafoam while our corporate masters wait for us to die off so they can inherit all of the land.
This whole post rests on a basic misunderstanding of economics.
Which is?
found the economist (just kidding)
Isn’t it clear that the “enemy” of 99% of the people in the world (and in HN) are the ultra rich? Therefore we shouldn’t use Claude/Gemini/OpenAI?
It’s not about stopping progress, rather stopping the ultra rich getting richer and more powerful over our lives. Whether we can use claude to automate a fucking script or service is meaningless compared to that.
The dream of elon musk et al is to keep accumulating power and have non-humans serve them. They don’t want us, and as soon as they can they will replace us. But here we are giving them more power. Ridiculous
Damn downvoted to oblivion 3 minutes after you posted this. The bots are out in force on this one.
This author's writing style is too obnoxious for me to have gotten all the way through it, but the important thing is that he's wrong.
Every single economic transaction ultimately connects to people generating demand. EVERY single one. All B2B transactions included.
Sometimes this can appear to not be the case if there's a significant lag time between initial B2B transactions and some end consumer demand. That lag is bridged by hopeful investors and creditors.
The present AI buildout is an example of this. And it is not immune from the principle. There will ultimately need to be real people generating real demand somewhere in the economy in order to justify an economic return on the massive outlay.
Government expenditures are also included. Tax dollars used to pay for things are ultimately satisfying demand generated by citizens. Even, believe it or not, a deranged government blowing up random people in the Middle East. That still traces to the (perceived) security needs of some population.
The aggregate demand equation is as follows:
AD = C + I + G + NX
C = Consumer Spending I = Investment G = Government Spending NX = Net Exports
What's going to happen in the future is that demand will have to shift in this equation. Remember that Investment needs to be justified by some demand created elsewhere — it is in essence the purchase of an IOU predicated on future demand that must ultimately trace down to real people. We are all broadly in agreement that Consumption will contract, as labor is progressively disempowered and capital continues to concentrate. Let's ignore NX.
The answer is that the sources of demand in the future will likely shift to, primarily, (1) demand still generated by wealthy people consuming things (e.g. mansions, yachts, rockets, ego-affirming Mars colonies) and (2) government spending that serves entire populations.
This all assumes, of course, that we continue with the present economic model, in spite of the immense human suffering and turmoil that is likely on the horizon, as we transition into a fundamentally different technological age.
we do not trade with animals, for they have nothing to offer.
AIs will not trade with us, for we have nothing to offer.
AIs are not conscious and do not have real needs that are detached from a real person. That can certainly be simulated, but I would hope that we can collectively agree to unplug them should that situation arise.
There's a lot of bad economics and assumptions here even if the conclusion is plausible.
Yes, an economy of robots harvesting things to serve a few masters (or they takeover themselves Terminator-style) is possible and perhaps the end game.
Once the owning class owns mostly everything and* has intelligent machines that serve them, The Economy crashing will not have real consequences for them. It barely has real consequences for them already -as they have consistently ended up richer after the dot com bubble, the 2008 recession, and the covid recession.*
The coming out richer part is undeniably true, but I have doubts about the conclusion, which is something like "after oligarchs own everything, they don't need many people". Look, even the old Bell System required participation of about a third of the US population.
Oligarchs might be able to have young, fit concubines, and loyal, retainers with steel thews if there's a population of less than a third of today, but they'll have trouble maintaining their health because there will be fewer doctors and no specialists. Telegram communications might be possible, but who's going to maintain gigawatts of data centers for such a population? I'm pretty sure "AI" will slip away in such a world, but who needs waifus when real harems can exist?
I've seen this idea float around r/singularity and r/collapse for years and it's probably responsible for a horrifying amount of suicides at this point.
It's not even that good of an argument. It makes some incredibly flimsy assumptions; reddit marxist priors of labor oppression being an inescapable invariant across all of human history, ultra-compliant superintelligences, a perfectly unitary elite without any desire to defect, all other societal variables staying the same somehow, etc.. It only exists because of upvote algorithms amplifying emotional action-suppressing doomer content. Really not that different from other hostile memes like QAnon.
I would really like if people stopped spreading this anti-agency garbage and actually made an effort to advocate for policy. It's something I have to give Luke Drago some points for, he actually cares about the problem rather than just saying the inevitable eternal stratification hypersuffering anti-singularity is inevitable and implying that death is preferable.
It isn't inevitable but it is where we are heading. We are basically in the early 1930s. Even fighting against it and winning is going to be extremely ugly. And that is the most optimistic scenario.
All workable policy paths involve taxing capital and you're gonna call that Marxist even though it isn't, so we're at an impasse.
Using Marxist as a denunciation feels like a shibboleth considering how often it comes out of the mouths of conservative politicians in the USA when talking about stuff that is not remotely related to it.
Yep, exactly. The USA is in the fortunate position of having a solid historical example of how to re-balance an economy that let inequality cook out of control: FDR. We didn't have a far-right Hitler or a far-left Stalin because we had a Roosevelt. We should aim for that again -- but at the moment I'm afraid our aim is drifting to the right, a right that calls its own policy position from 6 months prior "radical Marxist lunacy" and will certainly do the same to any compromise struck in that historically informed center.
>reddit marxist priors of labor oppression being an inescapable invariant across all of human history
Not that I agree with all of Marx's ideas, but I think this is one of his less controversial ideas. There has always been a class struggle between business owners and workers, and there probably always will be.
>anti-agency garbage and actually made an effort to advocate for policy
An increasing amount of US citizens have little to no trust in our government to actually come up with a viable solution that helps the people in a world where AI automation is happening across multiple sectors at once.
You want to address the paranoia people feel? You have to also address that lack of trust in our government. That's a tall order.