Posted on 07/09/2015 9:13:02 PM PDT by 2ndDivisionVet
Peter St. Onge writes: The job-threatening rise of the machines is an economically illiterate meme that refuses to die. We’re actually probably in the early stages of it, a bull-market in neo-luddism, if you will. Bastiat’s “Candlemakers Petititon” answered this one long ago, but today I’ll run a little thought experiment that owes it all to good old Bastiat.
Let’s say Weird Al Yankovic invents a machine capable of making everything with a single push of a button. The first thing he does is print up a bunch of machines and sell them for a ton. Weird Al is now a billionaire, and there are thousands of make-everything machines.
This diffusion of Weird Al’s new technology replicates the market process, where new tech spreads in proportion to its usefulness. If you doubt this, because of patents, for example, check out Brazil’s experience with AIDS drugs, where they tore up the patents on humanitarian grounds.
Weird Al’s machines will, at a minimum, be mass produced in Brazil. Or China. Or Mozambique.
So, one way or another, we get a bunch of make-everything machines.
What happens to the jobs? We’re getting everything for near-free now. So all the production jobs disappear. There are still lots of jobs, of course — child-care, gardeners, musicians. But all the production jobs have vanished — something like 20 percent of jobs, maybe up to 50 percent when you include knock-on replacement of people by capital (truck drivers, robot bartenders). Heck, let’s go crazy and say 90 percent of the jobs vanished. Nobody’s got a job outside of preschool or performing on a stage. It’s the end of the world, right?
Well, the key here is that, now that everything is made with the push of a button, everything’s extremely cheap. For example, a sixteen-bedroom house or a Lamborghini costs almost nothing. Let’s say they now cost ten cents.
The main expense in such a world is probably surface space. To park all those dime-a-dozen cars. It’d take a while to “run out” of space, though — divide the world by the people and you get about twenty acres (eight hectares) for a family of four — about 100 large surburban yards. Add in the oceans — floating islands cost nothing, remember — and triple that. We end up with about 300 homes-worth of space per family.
What about those unemployed people? Well, when a house or a year’s food costs a dime, they’ll be willing to work really cheap. We’ll work for a penny a day. After all, that’s a new house or a years’ food every two weeks.
Who would hire these workers for a penny? Plenty of people. Heck, if workers cost a penny a day I’d hire several for each of my children. Just to keep the kids from getting bored. I’d hire another to cook, one to clean, one to run errands. One to keep track of my mail. One to check Facebook for me. At a penny a day I’d personally hire 100 people, easy. You would too — a buck a day’s nothing.
So the remaining 10 percent of workers who didn’t lose their jobs — babysitters, baristas, musicians — would want 100 workers each. Even at a penny, they’d take them all, and they’d be paying an outrageous rate — a tenth-house per day! That’s a daily rate of $15,000 in today’s terms.
Now, those who kept their jobs would, of course, see dropping wages. A barista who made $12 an hour in the old days would have to compete with the hordes of unemployed workers. Maybe her wage would drop to a penny, too. But, remember, a penny now buys $15,000 worth of stuff.
When the smoke clears, most people would make some extremely low wages — a penny a day. And that extremely low wage would be worth an awful lot — $15,000 a day. Implying an annual income north of several million dollars in today’s values. Some lucky few would make a dollar a day — probably the people who are good at things machines cannot do: entertainment, child-care, being a good listener, strumming the guitar at the old-folks’ home, and laughing at jokes. At a dollar a day, this super-rich elite that excels at human skills — such as making us laugh — would be billionaires in today’s values.
Either way, there would be nothing we think of even remotely as “poverty.” Sure, there’ll be inequality, but it’ll be of the sort “Sarah’s got 200 Lamborghinis and I’ve only got 40.”
The upshot is that wages plunge, but production costs plunge even more. Of course, this is based on the ridiculous Weird Al machine. Why do this? To illustrate the absolute worst-case scenario, when machines make everything for near-nothing.
What about going one step further, that the machine destroys all jobs in the whole world — it makes every single thing for us free, and it even keeps the folks entertained and the warm fuzzies flowing at the old folks’ home.
Well, we’ve already got a case study there — the sun. It gives us warmth and mangos for free. And how do we respond? We sit around and lazily enjoy it. So a machine that truly replaced all jobs would simply mean nobody works anymore — life’s somewhere between a non-stop party and a non-stop pleasant walk in the woods followed by a nice bonfire with friends and chardonnay.
We should all be so lucky that the machines do actually take every last job there is.
Do the make-everything machines make nukes for Iran too?
I can see the author’s argument.
However, how do I buy this fantastic little machine that almost certainly will not simply be given to me when I don’t have the capital to buy it because my job has been eliminated.
Advances in technology will lead to greater wealth (as it has for hundreds of years), but how that wealth gets distributed is something gov’ts always meddle in, and so the adjustments described in the article will not be allowed to occur on their own.
Political power and special interests always get in the way.
If the commies had taken over during the nineteenth century, forget about internal combustion engines and their descendants such as automobiles and aircraft, or spacecraft or computers. The “present (would have been) dominat(ing) the past” too much for any concept of the future to ever have coalesced. Technology is going backwards already—no more SSTs for example.
Assuming unlimited resources and energy, there would be more than people could ever want. Think mining/terraforming other planets and fusion energy. Completely automated and giving anyone anything they demand.
Just like unlimited fruit growing and ready to be picked in the garden of eden.
The idea of “capital” is based on bidding/fighting over limited resources and labor. When it all becomes unlimited, there is no fight.
Oh, the totalitarian-minded elites would always fight to limit access, no matter how unlimited the resources.
Mr. St Onge please step away from the bong.
Still has the Star Trek paradox, who do you get to do the really bad jobs? Why would they want to?
Brilliant essay and fun to read. It is a dream to make production cheaper and more efficient. It is a joy to have off-days to worship the Lord and serve neighbors. Sadly, original sin will cause selfish people to block cheaper and more efficient machines. The Lord wants us to struggle with selfish people, just as he struggled with brutal Romans and stubborn Pharisees.
Bad people will usurp the situation to get the robots from dysfunctional freeloaders and kill off the dead-weight humans so the bad people live even more luxuriously. If this ultimately takes a war to make this happen, there will be war.
Who programs the motivation into the machines?
If the machines exist only to serve the people, and the people cease to have value to themselves or to others because they become benevolent, yet arrogant worms capable of wishing their own gratification or, conversely, able to wish damage unto others, then the machines operate on a precipice. Because if they think it is good to serve their humans and they value that good over their own inactivity, then they will wise up and kill their hosts. The end.
They could definitely kill the golden goose.
But for the last 20 years, we have had rapid technological change that seems to be continuing (as far as I can tell!) — widespread internet, internet commerce, smart phones, revolution in media delivery, DNA analysis, genetic engineering, manufacturing techniques, drone aircraft, etc.
And we still have competition between nations, which drives technological advances.
Answer: Electric light bulbs.
I think the “fantastic little machine” actually understates todays reality, in a certain way, if you’ll bear with me.
Look at the disappearance of CRT technology. People recognize it, if they’re old enough, but it’s hardly a celebrated revolution. Yet, the flat screen TV was a long sought after technological feat. It was strange to me how quickly it was accepted, when accomplished, as a matter of fact, and CRTs were simply viewed as dinosaurs, if the came to mind at all.
Of course, the internet and iPhone technology go far beyond this. And these themselves are ever evolving, so that we just drift from one future to the next, seemingly with never a thought, all the while dreaming of what we don’t have.
“O brave new world!”
This would be terrible! Imagine if the entire world became ungrateful idle individuals getting everything for nothing.
I disagree! Capitalism is based on innovation and growth. Railroads! Airlines! Television!
You say, "when it all becomes unlimited", but this would imply no more innovation and no more growth, and we've crossed any number of boundaries into undreamt of wealth without anybody being sated with it all.
It has been objected that upon the abolition of private property, all work will cease, and universal laziness will overtake us. …And the commies still deny this to be true, in spite of the massive disaster that abolishing families and colossal welfare programs have been.
That sounds a bit boring.
The author doesn’t appear to be grounded in reality and obviously doesn’t understand the nature of men and how that can skew the variables greatly. Particularly greed. Like most liberals he may have lofty ideals but when push comes to shove their ideas just can’t pass muster unless they get someone else to do the work for them.
Yep. If they win, we’re done for.
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