11 ms·

Robot Macroeconomics: What can theory and economic history teach us?

44 points by jburgess777 10y ago

keyjsgnsgdgn 10y ago
>Technological progress won’t create mass unemployment ... In Krugman’s celebrated example, imagine there are... Stopped reading right there. Hypothetical scenarios are not a replacement for empirical evidence. I can just as easily imagine a scenario that runs contrary to the one given. This kind of baseless speculation cheapens economics as a science and is why a lot of people don't take macroeconomics seriously.
- mrslave 10y ago
  Then you'll just love Krugman's imagine we're at war with aliens economic stimulus!!!
- UK-AL 10y ago
  Empirical evidence is also on the side of not creating unemployment.
- mandem 10y ago
  If reasoning based on 'empirical evidence' were so good, economists and politicians would know everything that is going to happen. Yet they don't.
  - AstralStorm 10y ago
    1) They lack data and 2) sometimes they choose to ignore it. First happens because sociological data collection is hard, slow and expensive. Second usually due to various kinds of politics and lobbying.
Animats 10y ago
Yes, that's the conventional wisdom from economists. The real problem is simple: there are a lot of people now, and more in the future, who cannot generate enough value by working to be self-supporting, let alone have a good life. They're competing with machines which are better than they are. The conventional wisdom used to be that more education would fix this. That failed. Unemployment and underemployment of college graduates is high and growing. Trade schools like ITT, which went out of business yesterday, were even less effective. The number of educated people needed is limited, and we have more than enough. There was the assumption that new kinds of jobs would appear. They did, but not in large numbers. Information technology is only 1.8% of US employment, down from 2.2% ten years before. The only big growth area is health care and social assistance, which is a consequence of an aging population. Where this takes us, under standard economic assumptions, is the favela model - giant slums where most people are just surviving, with a small core group that's doing well. This is what many third world countries look like. The US is headed there, but is more spread out - the decaying slums are far from the successful cities. (That's where Trump voters come from. They're angry, and they found a demagogue. That's common worldwide, and seldom ends well.) Remember, capitalism is not optimizing for individual income. The fitness function is return on capital. Alternatives? Welfare was tried from 1960 to the mid-1980s; it ended up with third generation welfare mothers in giant housing projects. Having a large non-working group of poor people leads to a dysfunctional society. Higher minimum wage? Worth a try; the places that are doing it now should be monitored to see who gets laid off. Basic income? Same problem as 60s welfare. WPA-style government as employer of last resort? Maybe; Saudi Arabia does that, and they have a massive number of useless workers. Somebody had better think of something.
- oddpxl 10y ago
  Basic income may be the solution...if done right: focus on providing real independence and choice (unlike benefits). ..and someone did think of something: http://userpage.fu-berlin.de/~roehrigw/kennedy/english/ http://userpage.fu-berlin.de/~roehrigw/kennedy/english/
- js8 10y ago
  Not that I would disagree with the general gist of your comment, but: "Information technology is only 1.8% of US employment, down from 2.2% ten years before." Isn't this caused by globalization and outsourcing?
- contingencies 10y ago
  Yes, that's the conventional wisdom from economists. [...] Somebody had better think of something. Well said. :)
- dharma1 10y ago
  Perhaps machine learning can also disrupt economists and politicians and come up with better theories, models and solutions how to best re-allocate labour, capital and education for common good :) Societies in general are quite adaptive, but with robotics/ML one issue is that the shift will potentially happen within one generation - it's harder to retrain/adjust adults.
- yummyfajitas 10y ago
  The real problem is simple: there are a lot of people now, and more in the future, who cannot generate enough value by working to be self-supporting, let alone have a good life. They're competing with machines which are better than they are. Ok, where's my Robo-maid who's better than any human? How about my Robo-Taco-Truck, my robot laundry guy, and my robot driver? As other nations demonstrate, these are all things that humans could do. https://www.chrisstucchio.com/blog/2016/robots_didnt_take_our_jobs.html https://www.chrisstucchio.com/blog/2016/robots_didnt_take_ou... People aren't competing with machines, or with each other. Valuable work is just not getting done for a variety of reasons: people prefer to live off welfare/disability fraud, people are afraid of summary execution by the police for doing certain valuable jobs, etc. Technological unemployment may happen some day. But it hasn't happened yet.
jackcosgrove 10y ago
The article is blithe about how we overcome economic dislocation. During the first industrial revolution, farmers were made obsolete and had to crowd into cities looking for wages. Children worked in factories and poorhouses. I don't know if this was worse than farm life, but the art of the period depicted it as such. Some people never recover from economic dislocation. They either abstain from having children because they sense how marginal they are, or they have families anyways and raise children with few opportunities. I am using genetic propagation as a measure of human success, which of course is arguable, but which means a lot to many people. More importantly if a human line dies out, there is no voice for it anymore. Such losses are silent and largely ignored by the historical record. So this economist is gravely undercounting the human suffering that technological change can bring.
- TheCoelacanth 10y ago
  Saying that farmers were made obsolete kind of glosses over the real reason that they were forced into cities: enclosure. Land that they were previously free to use for subsistence farming was taken and combined into larger landholdings. Had they been properly compensated for the loss of the land, they would have been less desperate to rush to cities.
anotheryou 10y ago
So what are we doing with 33% additional hot dogs? I'm full already. Why should the market need the additional capacity? This is where i stopped reading.

44 points by jburgess777 10y ago

>Technological progress won’t create mass unemployment ... In Krugman’s celebrated example, imagine there are... Stopped reading right there. Hypothetical scenarios are not a replacement for empirical evidence. I can just as easily imagine a scenario that runs contrary to the one given. This kind of baseless speculation cheapens economics as a science and is why a lot of people don't take macroeconomics seriously.

mrslave 10y ago
Then you'll just love Krugman's imagine we're at war with aliens economic stimulus!!!
UK-AL 10y ago
Empirical evidence is also on the side of not creating unemployment.
mandem 10y ago
If reasoning based on 'empirical evidence' were so good, economists and politicians would know everything that is going to happen. Yet they don't.
- AstralStorm 10y ago
  1) They lack data and 2) sometimes they choose to ignore it. First happens because sociological data collection is hard, slow and expensive. Second usually due to various kinds of politics and lobbying.

Animats 10y ago

Yes, that's the conventional wisdom from economists. The real problem is simple: there are a lot of people now, and more in the future, who cannot generate enough value by working to be self-supporting, let alone have a good life. They're competing with machines which are better than they are. The conventional wisdom used to be that more education would fix this. That failed. Unemployment and underemployment of college graduates is high and growing. Trade schools like ITT, which went out of business yesterday, were even less effective. The number of educated people needed is limited, and we have more than enough. There was the assumption that new kinds of jobs would appear. They did, but not in large numbers. Information technology is only 1.8% of US employment, down from 2.2% ten years before. The only big growth area is health care and social assistance, which is a consequence of an aging population. Where this takes us, under standard economic assumptions, is the favela model - giant slums where most people are just surviving, with a small core group that's doing well. This is what many third world countries look like. The US is headed there, but is more spread out - the decaying slums are far from the successful cities. (That's where Trump voters come from. They're angry, and they found a demagogue. That's common worldwide, and seldom ends well.) Remember, capitalism is not optimizing for individual income. The fitness function is return on capital. Alternatives? Welfare was tried from 1960 to the mid-1980s; it ended up with third generation welfare mothers in giant housing projects. Having a large non-working group of poor people leads to a dysfunctional society. Higher minimum wage? Worth a try; the places that are doing it now should be monitored to see who gets laid off. Basic income? Same problem as 60s welfare. WPA-style government as employer of last resort? Maybe; Saudi Arabia does that, and they have a massive number of useless workers. Somebody had better think of something.

oddpxl 10y ago
Basic income may be the solution...if done right: focus on providing real independence and choice (unlike benefits). ..and someone did think of something: http://userpage.fu-berlin.de/~roehrigw/kennedy/english/ http://userpage.fu-berlin.de/~roehrigw/kennedy/english/
js8 10y ago
Not that I would disagree with the general gist of your comment, but: "Information technology is only 1.8% of US employment, down from 2.2% ten years before." Isn't this caused by globalization and outsourcing?
contingencies 10y ago
Yes, that's the conventional wisdom from economists. [...] Somebody had better think of something. Well said. :)
dharma1 10y ago
Perhaps machine learning can also disrupt economists and politicians and come up with better theories, models and solutions how to best re-allocate labour, capital and education for common good :) Societies in general are quite adaptive, but with robotics/ML one issue is that the shift will potentially happen within one generation - it's harder to retrain/adjust adults.
yummyfajitas 10y ago
The real problem is simple: there are a lot of people now, and more in the future, who cannot generate enough value by working to be self-supporting, let alone have a good life. They're competing with machines which are better than they are. Ok, where's my Robo-maid who's better than any human? How about my Robo-Taco-Truck, my robot laundry guy, and my robot driver? As other nations demonstrate, these are all things that humans could do. https://www.chrisstucchio.com/blog/2016/robots_didnt_take_our_jobs.html https://www.chrisstucchio.com/blog/2016/robots_didnt_take_ou... People aren't competing with machines, or with each other. Valuable work is just not getting done for a variety of reasons: people prefer to live off welfare/disability fraud, people are afraid of summary execution by the police for doing certain valuable jobs, etc. Technological unemployment may happen some day. But it hasn't happened yet.

jackcosgrove 10y ago

The article is blithe about how we overcome economic dislocation. During the first industrial revolution, farmers were made obsolete and had to crowd into cities looking for wages. Children worked in factories and poorhouses. I don't know if this was worse than farm life, but the art of the period depicted it as such. Some people never recover from economic dislocation. They either abstain from having children because they sense how marginal they are, or they have families anyways and raise children with few opportunities. I am using genetic propagation as a measure of human success, which of course is arguable, but which means a lot to many people. More importantly if a human line dies out, there is no voice for it anymore. Such losses are silent and largely ignored by the historical record. So this economist is gravely undercounting the human suffering that technological change can bring.

TheCoelacanth 10y ago
Saying that farmers were made obsolete kind of glosses over the real reason that they were forced into cities: enclosure. Land that they were previously free to use for subsistence farming was taken and combined into larger landholdings. Had they been properly compensated for the loss of the land, they would have been less desperate to rush to cities.

anotheryou 10y ago

So what are we doing with 33% additional hot dogs? I'm full already. Why should the market need the additional capacity? This is where i stopped reading.