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PaperclipPerfector  1mo ago (text post)   31397 thread views

Culture War Roundup for the week of September 30, 2024

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It may well be that a reasonable balance for ports vs port workers involves this thug and his hangers-on being sent off to prison for economic wrecking, mass sackings and prompt automation.

Good.

But similarly reasonable balances may be imposed on unruly, arrogant tech-bros by the rest of society.

Good.

Productivity is the source of wealth. Holding productivity back in pursuit of rents is how you get extended (ie. century long) periods of economic stagnation.

What happens when we automated the dock workers, automated the factory workers, automate the retail workers... who will be left to go on strike when they automate us? And then where is our leverage to negotiate anything in the future?

What does happen when they automate all the farm work? Where will we go?

-- Farm laborer, 1860, when 70% of the population worked in agriculture.

Productivity is the source of wealth. What happens when we, individual human beings without exceptional skills (and eventually them too), are no longer productive in any job? It's going to happen sooner or later, likely sooner.

When we are no longer productive, all we have are legal/moral claims to wealth that is fundamentally controlled by others. That's a precarious position to be in!

Competing states are absolutely advantaged by higher productivity but you and I aren't states or economies or large firms.

What happens when we, individual human beings without exceptional skills (and eventually them too), are no longer productive in any job?

I suggest you read about the microeconomic term "comparative advantage".

I suggest you read about the microeconomic term "comparative advantage".

Right back at you.

I hate it when people brandish "comparative advantage" as a talisman against the idea of technological unemployment, illustrating that they fail to understand it. Ricardo, the very economist who originally coined the term "comparative advantage" recognized that technological unemployment was still possible, even likely, despite it.

"Comparative advantage" says that the value of an individual's labor will never fall to zero, and that they will still be better off specializing in something, and trading the products of that specialty for the things they don't specialize in, than if they try to be fully self-sufficient. It does not at all guarantee that the maximum value of an individual's labor, when they specialize in their comparative advantage, cannot fall below their cost of living. Indeed, there are some people alive right now, among the most severely disabled, whose labor is worth less than what it costs to keep them alive. There's nothing in "comparative advantage" that prevents large portions of the population from joining them.

I'd point to this quote from economist Karl Smith back in 2012:

My longer thesis is that the rising return to unskilled labor is a function of industrialization and that industrialization is unique in this. The wage rate on unskilled labor never benefited before and its not immediately clear that it will ever benefit again.

This is because rents always accrue to the scarce factors of production. Industrialization meant that the only thing we were short on were “control systems” everything else in the production process was effectively cheap.

However, any mentally healthy human being is a decent control system. So, this meant huge returns to being a human. It also meant collapsing returns to being a horse. Though, people think of this as a difference in kind, I urge you not to. Horses are not so different than you and I.

As it so happened the wage rate for horses fell below sustenance and they died off. There is simply no basic reason this cannot happen to humans, save for the fact that other humans will enact policies to stop it. The market itself will not differentiate.

See also Smith in Forbes here. I can't find the specific passage at the moment, but I remember Gregory Clark in A Farewell to Alms also making a similar comparison to what happened to horses as an example of what could await most of us.

While human wants may be infinite, jobs depend on humans being able to meaningfully contribute to the production of those wants. Humans are finite, and thus, I would argue that our capacities are finite, and thus, the number of ways we can meaningly contribute to the production of goods and services is ultimately also finite. I'll point to Kevin Kohler's Substack post here:

So, are we destined to eventually follow the path of the horse in the economy? Daron Acemoglu & Pascal Restrepo (2018) argue that “the difference between human labor and horses is that humans have a comparative advantage in new and more complex tasks. Horses did not. If this comparative advantage is significant and the creation of new tasks continues, employment and the labor share can remain stable in the long run even in the face of rapid automation.” In other words, the high human general intelligence allows us to be more adaptive and shift to new tasks as the automation of more established tasks rolls forward.

The economists Anton Korinek & Donghyun Suh (2024) have created a model specifically considering why humans might run out of new tasks in the face of AGI and what would happen to wages in such a scenario. Their basic approach is that all possible tasks that could be performed by humans are ordered in terms of computational complexity and as digital computation expands more and more tasks can be automated moving the automation frontier from left to right. This is essentially a restatement of Moravec’s metaphorical landscape of human competences and automation (see figure below). In this metaphor the peaks reflect the most complex human competences, whereas AI automation is represented as a rising tide that continuously moves the shore line up.

…

If the complexity of economic tasks performed by humans is bounded (in other words, if there is no infinitely high mountain in Moravec’s landscape of human competences), automation will eventually cover all tasks, leading to complete automation. In the short term, automation increases productivity and boosts wages for non-automated tasks. In the long term, humans run out of tasks at which they can outperform machines and the labor share of income collapses fairly steeply as we approach full automation.

…

My judgement is that it’s likely that AI will eventually be able to outperform humans even on tasks with unbounded complexity and irreducible uncertainty. First, in some domains the ability of AI to perform complex tasks can already not be matched by humans. No human can filter mails or social media posts based on 10’000-dimensional decision boundaries. Second, the exponential growth of parameters in artificial neural networks means that, given enough training data and compute, AI can represent an exponentially growing amount of complexity, whereas our biological neural networks have fairly fixed upper limits.

…

If, at some point in the future, AGI can work at or below the cost of human labor and masters the meta-ability to learn novel tasks at least as quick and as well as humans, we have permanently lost the reskilling race. Then, new tasks can be automated as quickly as they are created.

And what this leaves out, is that human capacities are not only finite, but unequal; some of us will "run out" of ways to meaningfully contribute — again, the value of contributing will never hit zero, but it can fall below subsistence — before others. (As a disabled individual surviving by parasitizing of hard-working taxpayers via the public dole, this is quite an acute point for me.)

Ok, let's work through this. Let's actually start here:

Indeed, there are some people alive right now, among the most severely disabled, whose labor is worth less than what it costs to keep them alive.

I agree that there are, and have always been, severely disabled people who are simply unable to support themselves.

"Comparative advantage" says that the value of an individual's labor will never fall to zero, and that they will still be better off specializing in something, and trading the products of that specialty for the things they don't specialize in, than if they try to be fully self-sufficient.

Here, you acknowledge, but skip right over something key. You acknowledge that being fully self-sufficient is a lower bound. That is, excepting the severely disabled, the vast vast majority of able-bodied humans can, indeed, be self-sufficient, as evidenced by millennia of history. Comparative advantage means that you will be better off than being self-sufficient, by your own acknowledgement.

It does not at all guarantee that the maximum value of an individual's labor, when they specialize in their comparative advantage, cannot fall below their cost of living.

But here is where you contradict yourself. You just said that they will be better off than being self-sufficient. That is, better off than their cost of living.

humans are horses

Humans are not horses. They're still not horses. This is literally a meme on the badecon subreddit, for good reason. Humans have agency, can understand (or at least act as if they understand) opportunity cost and comparative advantage. Like, the primary things under discussion here are a major reason why humans are not horses. Horses are more like hammers than they are humans.

Humans are finite, and thus, I would argue that our capacities are finite, and thus, the number of ways we can meaningly contribute to the production of goods and services is ultimately also finite.

Sure. Irrelevant, but sure.

automation will eventually cover all tasks, leading to complete automation

You're telling me that delivering me an even better standard of living than I currently have is going to be fully automated? And the marginal cost of such automation is going to be basically zero? (At the very least, lower than the cost of convincing someone to switch from their life of abundance and leisure to helping out.) Huh. Sounds pretty nice.

Like, what is even your model here? A magic robot that can provide all your food, shelter, luxury desires, etc., it costs how much? Why does it cost that much? Who is being paid when one is purchased? It must be obscenely cheap to beat out how cheap those things would be otherwise. $10? $100?

some of us will "run out" of ways to meaningfully contribute — again, the value of contributing will never hit zero, but it can fall below subsistence

Nah, you already agreed that subsistence is a lower bound for anyone who is not severely disabled.

Here, you acknowledge, but skip right over something key. You acknowledge that being fully self-sufficient is a lower bound. That is, excepting the severely disabled, the vast vast majority of able-bodied humans can, indeed, be self-sufficient, as evidenced by millennia of history.

He said:

than if they try to be fully self-sufficient.

To try is not to be.

Right in that first block quote is:

That is, excepting the severely disabled, the vast vast majority of able-bodied humans can, indeed, be self-sufficient, as evidenced by millennia of history.

That's your block quote. The second quote in my comment is from Capital_Room. They do not match as you say they do.

I'm really not following what you're trying to say. Can you try again? Capital_Room did, indeed, use the word "try". You pointed out that there is a gap between "try" and "be". I pointed out that I've already covered that gap with empirical evidence. I have no idea what you're trying to say.

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I don't know if I'm missing something, but I occasionally harp about how even in an opyimistic scenario, comparative advantage is not looking like Rats expect it to pan out. It's not going to be automating away the drudgery so we can devote ourselves to artistic and intellectual pursuits, if anything it's shaping up to be automating away artistic and intellectual pursuits, so we can artisinally mine quartz for the Quartz God.

Comparitive advantage only holds true in very limited circumstances that, quite frankly, simply do not exist in the real world; perfect interchangability of goods produced, infinitely elastic consumer demand for the goods in question, no risk in sudden changes in demand, and limited parties.

Hypothetically arguing that because America can produce wheat, and Japan can produce cars, so who cares if the Detroit auto industry collapses because "Comparative Advantage baby!" ignores that Detroit can't just immediately shift to production of wheat;even if they could, what happens when excess production pushes prices so low that it's simply not worth it to employ them as farmers; what happens if another country can grow wheat more efficiently (and these all just barely scratch the surface of the actual problems with Comparative Advantage)

Comparitive advantage only holds true in very limited circumstances

Nah, there's plenty of work that extends the concept to much more robust circumstances. And most of the time, when they're talking about limitations, it's like, "Yeah, gains from trade are still obviously positive and a major factor, but it's a bit trickier to make mathematically-precise statements that also work perfectly for predicting observational data, since there are all sorts of things like trade barriers and other refinements." This is throwing out all intuition gained for some strained belief that some fourth-order term that is mathematically-difficult to solve in closed form is going to actually magically reverse the sign of the result.

immediately

A claim literally no one has ever made.

what happens when excess production pushes prices so low that it's simply not worth it to employ them as farmers

Good news! We went from a world where some 90+% of people were employed as farmers to a world where ChatGPT tells me that the global figure is about 28%, but regions that are hardest hit by comparative advantage are down to 1-2%. I'm sure I would hate to live in one of those areas where it's down that low; those places probably suck from all the unemployment, starvation, etc.

what happens if another country can grow wheat more efficiently

That's literally the question of comparative advantage. Are you just worried about going beyond the two-country model in Econ 101? I'm pretty sure that even in Econ 301, they do multi-country models.

It has yet to happen anywhere, any time. There's always something else for people to do.

Competing states are absolutely advantaged by higher productivity but you and I aren't states or economies or large firms.

No, but we are advantaged by higher productivity, too. The 'golden age' of the post-war boom was possible because of higher than usual productivity growth from the 1920s through the 1970s.

People benefit from being wealthier. Higher productivity makes us wealthier. It's pretty straightforward.

I agree that it is bad for ports to be grossly inefficient. These dock workers probably do need to lose their sinecures. But we need a more sophisticated position than 'put it off till tomorrow' or 'make them humiliate themselves providing pointless services (Ubereats and 20 different fast food outlets) to the shrinking middle-class' or 'have them fill out some paperwork and pretend to be disabled'.

Higher productivity doesn't make everyone wealthier automatically, it just produces wealth. That wealth need not be distributed, it might just get turned into another 24/hour automated port, a factory with a few engineers overseeing the machinery, dividends, raising house prices another 20%. No law says that wages must keep pace with productivity.

There absolutely is such a law. Even in high theory, the situations where wages != Marginal labor product are situations of monopoly/monopsony, which are fought by breaking up the monopoly/monopsony. What do you think the proper word for a union with a chokehold on a service with an inelastic supply is? If you guessed monopoly, you'd be correct.

And it's funny you would bring up housing costs, which is an industry where construction productivity has been stagnant for most of a century and where severe supply restrictions are the underlying cause of price increases. This is another situation where the entrenched, rent-seeking interests need to be broken and the market allowed to function again, just like with the ports.

Breaking this union would be an unmitigated good for the country.

I don't see a law saying that wages must keep pace with productivity:

"2. This means that highly productive workers are highly paid, and less productive workers are less highly paid."

There is a distinction between what I said (where productivity might have nothing to do with the workers personally) and what the statement in your link says. In a world of high automation, one could easily argue that all workers are less productive and deserve much lower wages. Or we could imagine two countries. One where workers get 50% higher wages from productivity rising 100% and one where 20%, that could fulfill what I said and what 2. says. We have observed a general trend in the last 50 years where productivity rises much faster than wages rise: https://www.epi.org/productivity-pay-gap/

Housing is indeed restricted by vested interests but it's just one example of an asset that could be bid up by increasing wealth. They could do it to shares or land as well. Pure market competition is not desirable in a situation where power and production is wildly, massively unequal. I am not going to be able to compete with a 200 IQ robot working 24/7 at $0.10 per hour. We have a mixed market economy to balance these competing interests. Now I don't want some govt planning board controlling automation and getting snookered by vested interests but I do want some kind of power/capital redistribution that preserves incentives for innovation without immiserating 90%+ of the population.

And I think the best chance we have of that is by not totally and unflinchingly embracing automation (even when it makes a lot of sense). We should establish a precedent where the gains of capital and automation are distributed even to wildly unsympathetic people.

I don't see a law saying that wages must keep pace with productivity:

Right there:

  1. The wage equals the value of the marginal product of labor.

In a world of high automation, one could easily argue that all workers are less productive and deserve much lower wages.

That's not the way productivity measurement works.

https://www.bls.gov/k12/productivity-101/content/how-is-productivity-measured/calculating-productivity.htm

Automation makes individual workers more productive.

A labor productivity index can be calculated by dividing an index of output by an index of hours worked

We have observed a general trend in the last 50 years where productivity rises much faster than wages rise: https://www.epi.org/productivity-pay-gap/

EPI is a bullshit factory think tank funded by labor unions to produce propaganda. Their """researchers""" are paid to sit around all to figure out how to twist economic statistics to push their ideological agenda.

If we're going to go for low quality sources, here's a reddit thread on that bullshit graph:

https://old.reddit.com/r/badeconomics/comments/6rtoh4/productivity_pay_gap_in_epi_we_trust/

The EPI graph is an embarrassment designed to draw in ignorant young people on the internet to believing something that isn't true because it's not like they can check it. Pretty much everything you've absorbed about the economy from the internet is bullshit lefty propaganda.

And I think the best chance we have of that is by not totally and unflinchingly embracing automation (even when it makes a lot of sense). We should establish a precedent where the gains of capital and automation are distributed even to wildly unsympathetic people.

And I think we should let consumer preferences drive the evolution of the economy.

The wage equals the value of the marginal product of labor.

So now you're taking a definition that axiomatically assumes the answer you're looking for? If the marginal product of labour is 0 because machines are doing all the work, the wages offered would logically be 0 but the productivity of the corporation or country would be enormously high! This is the common-sense conclusion, bereft of the economic jargon. If we take Xiaomi's automated phone factory as an example for the future of production, the value-adding is coming from the machinery, not the human workers because they aren't doing anything since they're not even there. Maybe there are a few engineers who fix whatever broken machinery the AI can't handle. They will not be earning a substantial portion of the returns from that factory. The paradigm of productivity you're invoking does not apply to the systems I'm describing, like how Newtonian gravity does not apply at high speeds.

OK, so the EPI graph is wrong and misleading in showing that wages haven't kept up with production. They're only counting production and non-supervisory roles... the easiest jobs to automate. And they ignore the massively overpriced non-wage healthcare that workers receive from their jobs as well, horrible! And everybody ignores the people who were automated out of work entirely, that falling male participation rate...

So what's really going on is that inequality between workers (and the no longer working) is rising massively, presumably due to technology substituting for human labour in value-creation and a shift towards highly skilled, highly renumerated human labour. This doesn't really counter my main point.

Pretty much everything you've absorbed about the economy from the internet is bullshit lefty propaganda.

I don't think you understand me. I am not a leftist. I have invested a large amount of money into NVIDIA, Tesla, Lockheed Martin and various cryptocurrencies. I believe in the market system. But I do not trust that it has my best interests at heart.

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