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In case you haven't heard, the software giant Google has debuted a new fully automated, driver-less car. Not only are the prototypes fully functional, they have also already logged a combined 140,000 miles of unassisted driving on U.S. roads. Google itself estimates that the system may be ready for full-scale production in eight years, before the decade is even out.
An eight-year period may seem overly optimistic, but it actually makes a lot of sense in context of computer systems. An observed phenomenon known as 'Moore's Law' states that the processing power of a standard desktop computer roughly doubles every two years, for the same cost. If Moore's law remains constant, then by 2020, the standard desktop should have the processing power of somewhere between the mind of a monkey and of a human - in other words, more than enough power to navigate traffic with the right software.
What does this mean for the economy? On the one hand, it will mean more efficient roads, lower costs of transportation, and cheaper costs of goods. On the other hand, there are an estimated 3.5 million truck drivers currently employed in the U.S., and this field is one of few which offers prospects of a middle-class income without a college degree. On top of this, consider the hundreds of thousands of bus, taxi and limousine drivers - and that similar technology will likely be simultaneously be rolled out for shipping, rail, forklift, crane operations, etc (indeed, to small degrees it already has).
You might remember how a few years ago, a GPS unit or a smart-phone were extravagant luxuries, but now are so common as to be unremarkable. There is no reason to believe that driver-less car technology will not be adopted with similar speed. Unlike smart phones, however, automated driving will cause massive and simultaneous layoffs.
If this were only happening in the transportation sector, I would not argue that it constitutes a paradigm shift in economics. This trend is however driven by computing speed, which is applicable to the great majority of fields and sectors. In other words, job destruction is and will be happening more rapidly than job creation in the majority of economic fields. The Google Car is a case in point - reportedly, only 15 engineers are responsible for the creation of its working prototypes, while it may someday soon make 15 million or more jobs obsolete around the world.
In the twentieth century, increased production by capitalists required increased labor forces, and increased payrolls, which created an automatic feed-back loop where more production led to more economic demand, and so on. Computer technology, and to a lesser degree other advances, are breaking this feedback loop.
This is presenting us with an entirely new economic paradigm, where production of goods is only loosely linked to human labor, and it is presenting us with two divergent paths as a species.
The first path is where 20th century economic paradigms remain in place long after their practical obsolescence, and consumption of goods remains rigidly connected to production or ownership. In this world, there are fewer and fewer decent jobs available except to a technocratic elite, and corporate cyborg-like entities compete with one another to enrich a shrinking ownership class to the exclusion of the growing underclass. If you look, you can see evidence of this taking place all around you.
In the second path, productivity gains are partially socialized while markets remain free - in other words, a portion of the increased productivity made possible by the new technologies is redistributed into a guaranteed national income, or welfare which is available to all, permanently, regardless of ability or even desire to find employment. In this world, work becomes wholly a choice, as subsistence is possible and even guaranteed regardless, but markets remain free and wealth accumulation is otherwise uninhibited, except through nominal (and possibly decreasing) tax rates. A musician for example could choose to charge at his concerts and become wealthier (or afford better equipment), or play for free and subsist happily on his guaranteed income. A capitalist could accumulate major holdings of industry, become world famous, accumulate toys and properties, be a player in the advancements in the latest fields, and he could also rest assured knowing that even if all his investments go bankrupt tomorrow, he can still live a full and comfortable life without the charity of others.
In any case, it is doubtful that millions of truck drivers unemployed en masse will take it lying down, or be content with a few months of unemployment checks and little prospects beyond that. Which direction society takes is likely to depend heavily on politics. Democratic nations (in the sense of nations which implement the desires of the majority as polivy, as distinguished from nations with mere formalities like elections) will tend toward the second path, while nations where money decides policy will tend towards the first, and the morass of third-worldism.
In neither case will there be top down, Soviet style control of the economy - in both cases markets will be free, on the one hand free to command humans, and on the other hand free to serve humanity. But one thing which is clear is that 20th Century paradigms will not work for understanding 21st Century economic crises, and these crises will not be resolved until the economically-minded stop looking towards long-dead theorists of long dead economic systems, and start looking at the object in front of their face they are typing into.
What you don't want to understand is that robots taking over jobs is a net benefit to the economy. Are people displaced and some jobs lost? Yes of course but this is a good thing. You are arguing that people would be better off if there was never any technological improvement because they'd have hard work to do. Unnecessary work is to be eliminated- necessary work stays in and stays profitable. That's the way the market works- and that's the way it will ALWAYS work regardless of any socio-economic policy put in place. The market/free trade is always present even when suppressed no matter what happens.This is the natural state of humanity- once you accept that, the light suddenly shines on all the economic problems of today.
What you're saying is that to have a better economy we should have mountains of paper instead of word documents, that the horse/buggy is better than the car, that a campfire is better than a microwave. You're saying that the light-bulb has ruined the economy by putting candle-makers out of business.
Yawn.
The forum has been inundated lately with posts about this resource based economics, Venus project, nonsense. Numerous forum members have already addressed the fallacies, the errors in economic thinking, on this subject.
Are we really going to go round this merry go round again?
Ravochol,
Food for thought. It is October, 1945. Millions of GI's will be returning home over the next few months. Defense production is winding down. Clearly, socialist planning is required to provide jobs. Right? What on Earth will all these men do when they get home?
Now, there is the Google car. You say millions of workers will lose their jobs with nothing to replace them.
Why would there be nothing to replace the jobs?
Ravochol:In the second path, productivity gains are partially socialized while markets remain free - in other words, a portion of the increased productivity made possible by the new technologies is redistributed into a guaranteed national income, or welfare which is available to all, permanently, regardless of ability or even desire to find employment.
Nonsense. Look at the words in bold. Maybe someone else will take the time to explain to you why the above statement is nonsensical.
"The market is a process." - Ludwig von Mises, as related by Israel Kirzner. "Capital formation is a beautiful thing" - Chloe732.
auctionguy10,
Ravochol is saying that we can have the best of what the free market has to offer along with socialist planning (he calls it redistribution of productivity gains) at the same time.
Entrepreneurs and capitalists will direct capital into new, exiting, and productive activities even though the resulting productivity gains will be confiscated and given to those sitting on their collective arsses. Never mind that the reason the capital was directed there in the first place was to obtain a return on investment that resulted from the productivity gains.
Utopia is near, if only ignorant people who cling to outdated 20th century economic theories could be, well, let's say "re-educated" or perhaps "neutralized".
Vee haf vayes of making you see zee truth.
One of my biggest flaws in participating in this forum is getting sucked into threads like this. It's just hard to stay silent with such economic drivel being laid out there.
Maybe if we all just remained silent, resource based economics will go away. My fear is that National Socialism did not just go away, and I'm sure most people thought the crazy Nazi's would never gain traction. Mises thought Keynesianism was so far fetched that no credible economist would accept it*, and Hayek thought Keynes would change his mind about his General Theory.
Now, with the collapse of totaliarian socialism, and the failure of democratic socialism, we have socialism cleaned up and dusted off: Resource Based Economics.
*I believe this narrative is correct, going from memory here.
I want you to debate Sieben, too. For all of us to see. Unless, you know, that would mean that we're all working too hard for too many hours like your last post suggested.
On the other hand, there are an estimated 3.5 million truck drivers currently employed in the U.S., and this field is one of few which offers prospects of a middle-class income without a college degree. On top of this, consider the hundreds of thousands of bus, taxi and limousine drivers - and that similar technology will likely be simultaneously be rolled out for shipping, rail, forklift, crane operations, etc (indeed, to small degrees it already has).
The jobs have to go somewhere. There might be less "necessary" jobs, but then there are more unnecessary, leisurely jobs. Assuming I had to $10,000 per year on transportation and suddenly technology made transportation free, I'm going to join some awesome private gym or something like that with the extra money I'm saving. More workers are hired because of me (and the rest of the world) joining, etc.
EDIT:
Or like getting from New York to Chicago without 6 runners carrying you for a month. If we outlawed airplanes, there'd be practically no unemployment.
z1235, can you explain what you mean by this?
Thanks to automation, commies have more time to complain about factory fires, the unequal distribution of land/money/resources as well as the blatant injustice and crushing inhumanity of having to pay one's own way.
Again with the "people said similar things in the past" fallacy
This is not a fallacy my dear sweet man (LS edit). It's called empirical support. The fact that technological innovation has never lead to systemic structural unemployment, and in fact only increases real wages, supports our theory and directly contradicts yours. I understand that this can be quite inconvenient for someone that adheres to untenable and already refuted doctrines (labor and capital as competitive factors of production, rather than co-dependent factors of production), but that's your problem and not ours. Also, familiarize yourself with the notion of scarcity.
Your primitive arguments were refuted 400 years ago. It's time for you to educate yourself.
"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."
David Autor makes his case on C-SPAN, he starts at around 16:00:
http://www.c-spanvideo.org/program/293266-1http://www.c-spanvideo.org/program/293266-1
and the PDF of his report:
http://www.brookings.edu/~/media/Files/rc/papers/2010/04_jobs_autor/04_jobs_autor.pdf
only 15 engineers are responsible for the creation of its working prototypes, while it may someday soon make 15 million or more jobs obsolete around the world.
So the working prototypes will drive all over the country, replacing 15 million cars and trucks. No new cars will have to be made.
In the twentieth century, increased production by capitalists required increased labor forces,
So before the Industrial Revolution one man made one needle in one day [say]. Afterwards, increased production by capitalists required an increased labor force, so that more than one man was needed to make one needle in one day. This made the capitalists richer.
So nobody in China is doing any work, except for a technocrat here and there.
In the second path, productivity gains are partially socialized while markets remain free - in other words, a portion of the increased productivity made possible by the new technologies is redistributed into a guaranteed national income, or welfare which is available to all, permanently, regardless of ability or even desire to find employment. In this world, work becomes wholly a choice, as subsistence is possible and even guaranteed regardless, but markets remain free and wealth accumulation is otherwise uninhibited, except through nominal (and possibly decreasing) tax rates.
Redistributed into a guarenteed national income, hey? The Google car will get us that? Every man woman and child in the USA will be on Social Security from the day they are born. This is economically feasible.
Of course, everyone getting a check every month will not raise prices either. Because that monthly check to 350 million people will come from real wealth, not printed money. The Google car will make enough profits to support everyone in the USA.
And all those silly rioters all over Europe are wasting their energy. In just a little while, Google cars and unlit factories, along with other technological breakthroughs, will provide all the money they need to keep getting their promised benefits. This is the 21st Century, my friend. Surely you can wait a few weeks until Google cars zoom down the road and you can sit home and collect your checks. The money is there, or will be any minute.
In any case, it is doubtful that millions of truck drivers unemployed en masse will take it lying down, or be content with a few months of unemployment checks and little prospects beyond that.
True.
while nations where money decides policy will tend towards the first, and the morass of third-worldism.
Oh, so THAT'S what causes the morass of third-worldism. All those third world countries are filled with humming factories, employing the latest technology and thus requiring no labor. The capitalists there did that, after they came running to the third world, attracted by the ease of running a business there, the lack of corruption, the protection of property rights.
But one thing which is clear is that 20th Century paradigms will not work for understanding 21st Century economic crises, and these crises will not be resolved until the economically-minded stop looking towards long-dead theorists of long dead economic systems.
Nothing like being dead to make you wrong. And the longer you are dead, the wronger you are. Everything Euclid and Newton and all the other great minds wrote is just wrong. Those ideas decayed with time, along with the bodies of the men who discovered them.
In fact, the Nobel Prize committee should go around stripping the dead winners of their prizes. "You are wrong now, fool. Just look at you, dead as a doornail. Weren't smart enough to outwit death, were you?"
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It's easy to refute an argument if you first misrepresent it. William Keizer
"The fact that technological innovation has never lead to systemic structural unemployment, and in fact only increases real wages, supports our theory and directly contradicts yours"
My point about Rome is that for quite a long time, one could say "barbarian warlords have never led to the fall of Rome, so the theories that they could are discredited - but eventually of course they did. Because things change. That barbarian warlords could not conquer Rome in the 4th Century is not evidence that they couldn't in the 5th - that certain economic systems didn't break down in the 20th Century is not evidence they aren't in the 21st.
If you watch the David Autor presentation, he's trying to explain a phenomenon which he sees as already having happened - the disappearance of stable, middle-class jobs - it's not a question of 'will automation cause structural unemployment from stable, middle-class jobs' but 'where did the stable middle-class jobs go?' So the evidence is already there I think, it's just a matter of how it's interpreted.
He's also not painting a picture where everyone is unemployed - but a world where you're either a high paid professional or capitalist, or a low paid dishwasher, with not very much opportunity in the middle.
Brian: Or like getting from New York to Chicago without 6 runners carrying you for a month. If we outlawed airplanes, there'd be practically no unemployment. z1235, can you explain what you mean by this?
I was being sarcastic, of course. If the implication is that technology "steals" jobs and creates unemployment, then it should follow that jobs could be created (back) by simply destroying (or outlawing) technology. Hence, all a genius central planner would need to do to create prosperity and zero unemployment would be to destroy (or outlaw) enough technological advances. In my example, if airplanes, engines, and wheels were outlawed, imagine how many jobs would be created as everyone starts using six-runner chairs for travel.
Z.
I thought I had read a similar thread recently. A little googling turned up this http://mises.org/Community/forums/t/19654.aspx
Seriously, stop posting the same stuff over and over again if you don't bother having actual arguments. You get responses from people, and then you ignore them and let your own threads die. Why do you bother?
How is "wage polarization" in and of itself a problem? We know technology increases the marginal productivity of labor, so even the dishwasher will benefit from more advanced dishwashing equipment that allow him to wash dishes faster, hence be more productive and earn a higher real wage. Moreover, as a consumer, goods will be far more abundant because of the overall increased productivity from technological advancement, which drives prices downward, so even if his real income remains stable, the dishwasher will be able to purchase a greater amount of goods. Even if the fear is that some individuals will benefit more from the increased productivity yielded by technology than others, seemingly there would still be Pareto improvement for everyone as long as there are still human wants that need to be satisfied.
Fred Furash:I thought I had read a similar thread recently. A little googling turned up this http://mises.org/Community/forums/t/19654.aspx Seriously, stop posting the same stuff over and over again if you don't bother having actual arguments. You get responses from people, and then you ignore them and let your own threads die. Why do you bother?
Indeed.
My response to this thread is the same as my response to the previous thread.
The keyboard is mightier than the gun.
Non parit potestas ipsius auctoritatem.
Voluntaryism Forum
Fred Furash: I thought I had read a similar thread recently. A little googling turned up this http://mises.org/Community/forums/t/19654.aspx Seriously, stop posting the same stuff over and over again if you don't bother having actual arguments. You get responses from people, and then you ignore them and let your own threads die. Why do you bother? Autolykos:Indeed. My response to this thread is the same as my response to the previous thread.
Autolykos:Indeed. My response to this thread is the same as my response to the previous thread.
The fish swim below, the boat circles above. Oh, the bait looks soooo good. The fisherman smiles and is amazed how good the catch is.
Suggestions for Dealing with Trolls - Scroll down and read the last reply to this thread.
Good definition! I rarely call people trolls but this might just be such an occasion.