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As Productivity Falters, Economists Ponder A.I. Devil’s Bargain
Before Donald Trump's trade war gave it the Dusko Markovic shove, AI was the only macro-market story
“AI = UBI = YCC . . .”
Lions and tigers and bears, oh my!
Didn’t you get the memo? Workers displaced by AI will happily assume new careers in the manufacturing arts and agricultural pastimes.
…or, given that Americans seem fine with letting some people starve and go homeless as opposed to taxing the wealthy, how about in future enhanced policing capabilities enabled by AI combined with the death of truth via deepfakes and targeted propaganda instead gradually disenfranchise everyone except the wealthy and political elite, forever, as human capital becomes obsolete and coordinated political opposition all but impossible, and robots can certainly control protesters with small arms in case people should riot.
The standard of living for many in US will go down and become closer to the rest of the world, particularly if others stop buying our debt. Alas, many Americans won’t be able to drive their big Chevy Suburbans to Costco for an amazing weekend of binge-shopping, followed by binging on fast food. The parking lot of the regional Costco is jammed on the weekends. Instead of raising income taxes which disincentivizes work, the most fair approach would be a flat wealth tax, which I realize will never be allowed to happen.
It seems that if LLMs offer a path to AGI and eventually lead to significant redundancies while policy is not altered to be significantly more redistributive (specifically wealth tax) then that seems to be a recipe for entrenched inequality, but policymakers do not generally have a great record of addressing inequality even though massive inequality already exists. I don’t know that current analysis of which jobs are exposed are terribly helpful when AI seems capable of entirely new things yearly. Simultaneously, AI offers great tools for keeping the masses distracted and under control and current trends seem to favor distracting people while maintaining inequality. That’s why I’m pessimistic. Doesn’t necessarily mean the newly redundant will be worse off in terms of purchasing power if productivity increases significantly, just the end of social mobility. It’s weird that this is a real scenario that needs to be considered now when it would have been sci-fi five years ago.
Productivity has long been a hobby horse for my riding pleasure. Look at the definition. Productivity is more output per hour worked (or more output for each unit of inputs used). The primary definition cannot be achieved without disadvantage to the the labor force. The last 50 years have seen labor force participation, especially among prime age men, decline significantly to 62%, while productivity has risen significantly. A primary factor driving these trends is the decline in low skill jobs, replaced by technology. Men’s participation in post-secondary education and training has fallen to less than 50%. As productivity has increased through advances in tech, the proportion of folks able to benefit from these trends has declined. Furthermore, we don’t pay those who produce that rising productivity for doing so. The decline in labor force participation down to 62% means that seven million people of prime working age are no longer in the workforce, nor are they seeking to return. Yet unemployment is nearly at the lower edge of practicality. Why? Men with the currently critical skills just aren’t needed. They have been replaced by tech, robots, automated machines, computers, AI, etc. just as predicted. Even if some of these millions are retrained to have great skills, the fact is, rising productivity has erased the demand for them. Productivity is great for growth in GDP … sort of … but it is creating an increasing underclass that tariffs won’t eliminate. What we need right now is a much smarter president … much smarter … with much smarter advisors who can lead the way to a real solution. Productivity is going to kill us, steadily, inexorably, until it stops and the good old American Dream is well and truly dead.
Thanks, Mr. Lucky…yet another outstanding comment and contribution…
Yes indeed. The future can be bleak but as long as conservatives stay in power nationally and in red states this will not happen.
I would like to think there is snark hidden here, but I fear there is none.
H-Man, for younger people this is truly a difficult time. The signposts for the future are not encouraging,