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Fundamentally I don’t understand how a new technology can claim to make everything more efficient but at the same time grow the economy. Shouldn’t we have loss

Fundamentally I don’t understand how a new technology can claim to make everything more efficient but at the same time grow the economy. Shouldn’t we have loss of jobs and reduction in consumption and GDP if we become way more efficient?

nine_zeros 3y ago
Because a lot of jobs are ridiculously inefficient. The efficiency gains make things (and money) move faster. Faster movement of goods, services, and money makes GDP grow.
mo_42 3y ago
If you can get done twice as much because you have a robot assistant, then, your basically producing twice the amount of goods or services. So, people can consume more. To be able to produce or consume more the abstractly growth GDP. I guess an important assumption here is that people get payed according to productivity. Otherwise this would go into the profit of the company. But still the increase in wealth would end up somewhere.
- wintogreen74 3y ago
  The funny part to me is that they assume this journey to uber-efficient utilization of labour will be super... efficient? How many decades will it take us to unlock the potential of all this displaced BS work?
wintogreen74 3y ago
They come up with a hypothesis like "Every hour of labor shaved off a job by AI gets converted to an hour at the highest value measure". Then they produce very complicated spreadsheets that show how many hours will be saved and multiply this by a very big per unit number. Then they report on the results with very little scrutiny of the methodology. The huge dollar $ign$ blind executive thought leaders, who will rush to adopt - at least for the next 6-9 months. source: former management consultant
ArekDymalski 3y ago
I think we can't assume the reduction in consumption. After all productivity increase is not an end itelf but a means to sell more or earn more producing stuff cheaper/faster. I expect that with increased productivity consumption will increase because people will want more and can afford more. As a result they will buy more, also due to lowering quality/durability. Low prices and efficient production lead to dispensable everything: clothes, devicesc car etc.
adam_arthur 3y ago
Real GDP is what matters in the end, not nominal GDP. Real GDP can grow via deflation, even if nominal GDP declines. AI -> lower cost of goods -> real GDP rises AI -> unemployment -> lower salaries -> lower nominal GDP -> workers reposition into new jobs Somehow the USA has the lowest unemployment ever after the industrial revolution destroyed millions of jobs... how did that happen? It's obvious from history that as real GDP per capita rises, new professions emerge or become more accessible such that displaced workers can find new jobs. Perhaps higher real GDP enables more creative professions, or more consumption of housekeeping/helper type roles.

nine_zeros 3y ago

Because a lot of jobs are ridiculously inefficient. The efficiency gains make things (and money) move faster. Faster movement of goods, services, and money makes GDP grow.

mo_42 3y ago

If you can get done twice as much because you have a robot assistant, then, your basically producing twice the amount of goods or services. So, people can consume more. To be able to produce or consume more the abstractly growth GDP. I guess an important assumption here is that people get payed according to productivity. Otherwise this would go into the profit of the company. But still the increase in wealth would end up somewhere.

wintogreen74 3y ago
The funny part to me is that they assume this journey to uber-efficient utilization of labour will be super... efficient? How many decades will it take us to unlock the potential of all this displaced BS work?

wintogreen74 3y ago

They come up with a hypothesis like "Every hour of labor shaved off a job by AI gets converted to an hour at the highest value measure". Then they produce very complicated spreadsheets that show how many hours will be saved and multiply this by a very big per unit number. Then they report on the results with very little scrutiny of the methodology. The huge dollar $ign$ blind executive thought leaders, who will rush to adopt - at least for the next 6-9 months. source: former management consultant

ArekDymalski 3y ago

I think we can't assume the reduction in consumption. After all productivity increase is not an end itelf but a means to sell more or earn more producing stuff cheaper/faster. I expect that with increased productivity consumption will increase because people will want more and can afford more. As a result they will buy more, also due to lowering quality/durability. Low prices and efficient production lead to dispensable everything: clothes, devicesc car etc.

adam_arthur 3y ago

Real GDP is what matters in the end, not nominal GDP. Real GDP can grow via deflation, even if nominal GDP declines. AI -> lower cost of goods -> real GDP rises AI -> unemployment -> lower salaries -> lower nominal GDP -> workers reposition into new jobs Somehow the USA has the lowest unemployment ever after the industrial revolution destroyed millions of jobs... how did that happen? It's obvious from history that as real GDP per capita rises, new professions emerge or become more accessible such that displaced workers can find new jobs. Perhaps higher real GDP enables more creative professions, or more consumption of housekeeping/helper type roles.