“How do we fix what?”
*Gestures broadly at everything*
“Oh. That.”
Ok, I wont actually be trying to solve every problem ever. But I want to talk about a very simple and very fundamental one (the best kind) and give an equally simple “gesture” towards a solution. It’s an idea I haven’t been able to shake so I thought I’d write it down.
I want to look at one of the most important systems that affect human quality of life, the economy. Specifically, how there is a problem with runaway automation and how the economy, despite what most think, won’t be able to adapt to it. To do that, I’ll set up a hypothetical future world, and although I will make some pretty broad assumptions I encourage you to suspend your judgement for just a moment, and instead we’ll try dismantling the idea together afterwards.
Imagine a world in which all work is automated. There’s still money, people, and stuff to be bought. There are companies, but they are AI run, with robotic workers and legal-entity owners (not owned by people). This isn’t quite the same idea as a post-scarcity economy you might have heard of. There are still limits on the amount of stuff that can be made and there are equilibriums to be found in balancing how much food we should grow vs how many yachts we should build. So, we still want an economy in this world, we want people to express what stuff they want, and then they buy that stuff and the free market makes more of that stuff if demand is high. The usual. Here’s the question: Where do the people get the money to buy things with? They can’t work for a salary, every possible job can be done better by a machine.
I think it’s pretty self evident that the answer is taxation (and a UBI). We won’t worry about exactly how this UBI might look, it’s an interesting topic but we don’t have to solve it right now, all we need to know is that it gives money to people. The interesting next question is: what kind of taxation can we use? Income tax won’t work, there aren’t any “workers”. Land taxes, property taxes, tariffs, and a host of other taxes apply themselves disproportionately and probably won’t work either. In essence what we need to do is extract value from the revenue of these companies, and that leaves sales tax/VAT, corporate tax, or perhaps wealth tax1 as the only real options.2 These taxes will raise prices, but the balance that will then form is that things we don’t actually need much of will rise in price more than things we don’t (and, you know, people actually have money to buy anything at all).
We clearly don’t live in this world, but I would claim that there is some dimension of being closer vs further from this world, and the closer you are to it, the more you’re going to have to tax companies and give that money to people. My next bold claim is that we are closer to this world than we think, just as the frog doesn’t notice the temperature of the water rising, we spend more time attributing individual issues to smaller phenomena and applying patchworks of policy with varying degrees of success.
Usually we try to take historic cases and work forwards, and history tells us that even though automation can cause temporary disturbance (read: violent protests and sabotage) on balance people are better off and society progresses. The advantage of this imaginary world framing is we are instead working backward from some future that feels feasible even if we don’t know exactly what it looks like. There remains the task of combining the two though.
Why is this time different?
When people are historically displaced by machines, new kinds of jobs that those people couldn’t even imagine get created. The important distinction is that these new jobs were created in categories of work that as-yet could not be automated (artisanal labour into routine manual labour, into cognitive labour and non-routine manual labour as coarse categories). I would make the case that there is hardly any labour that is out of scope of automation, with the only possible exception of extremely high level reasoning.3 Even so, you can even pick another category as un-automatable and run the same idea. Creative work for example – can you have a poetry, music and art based economy? People make the art, robots do the rest. Maybe, but that would seriously skew wealth towards a small number of exceptionally popular celebrity artists if you didn’t also support people by tapping into the rest of the economy churning away happily in the background.
The reason this time is different is not only because we might be close to finishing automating all automatable categories, but because the coverage of possibly automatable categories is nearing totality.
Ok, time to try and break this idea apart.
“Where’s the unemployment?” OK, fair. People still have jobs and by and large are getting by. Wouldn’t we expect to see mass unemployment if this was happening at all? Here I would wonder if although the quantity of jobs remains the same, their quality is actually decreasing. There is evidence of wage stagnation and the hollowing out of the middle class. But in general i would say this (and similar it-aint-so-bad arguments) is the strongest case against the idea. So long as “something” worthwhile can be thought up for everyone to do then the economy should theoretically still function. You may suffer from massive wealth inequality and other economic instabilities but it’d probably still work. But if we return to fantasy land where all real jobs are automated, these new “something” jobs I would imagine as people working in “aesthetic for humans to do it” roles like creativity, service jobs, face to face interaction and that sort of thing. It’s hard to really feel that that world would be any good.
“Taxes won’t work” Taxes are hard. Many of them apply disproportionately and even if you can define some theoretically sound measure, accounting isn’t easy either. A company, even an AI one, will have incentives to retain as much money as possible. We also need to still extract value from mature industries as well as immature ones. A profit tax or wealth tax would disproportionately extract wealth from newer industries where margins are (temporarily) bigger as the sector expands. Actors where competition has brought down margins would not “contribute” back to our demand-side. We probably need a straight sales or revenue tax, but its still not going to be easy.
“This is just the same idea as in CGPGrey’s Humans Need Not Apply” Yeah, pretty much. But there is a notable difference. This isn’t something that’s starting now, as the video implies, but instead something that started decades ago when wages started stagnating and wealth inequality started growing. It’s happening more slowly and more imperceptibly than in the video, but with the same mechanism and total impact.
There’s probably a lot I’ve missed. I wrote this not because I’m any authority on this but just because I’m having a hard time convincing myself I’m wrong (something that is usually quite easy). Economists, if you’re out there, I’m sorry if you’re currently fuming out the ears. For the rest of you, if you’re looking for a more academic paper that tells a similar story, I liked this one: https://www.sciencedirect.com/science/article/abs/pii/S0040162516302244
- Wealth tax is interesting because in our fantasy world there presumably still are investment firms, banks, private equity or something akin to those (allocation of capital to new, perhaps risky ventures or approaches is still a system worth having). ↩︎
- You might still use other taxation methods to regulate behaviors (intentional market distortion), but for funding our economic loop our options are quite limited. ↩︎
- The extremes of invention, entrepreneurship, and academia perhaps. ↩︎