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Without moralizing or assuming the worst intentions of oligarchs, globalists, evil capitalists, and so on, I still don’t understand how a consumption based econ

Without moralizing or assuming the worst intentions of oligarchs, globalists, evil capitalists, and so on, I still don’t understand how a consumption based economy continues to fund the build out (oil->Saudi Arabia->LPs->OpenAI) when the technology likely removes the income of its consumers. Help me understand.

antonvs 1y ago
Just channeling amoral billionaires here, so don’t shoot the messenger, but if everything is automated by machines that you control, you no longer need to farm humans for capital. Not saying that’s even remotely realistic over the next century, but it does seem to be how some of these people think. Excessive wealth destroys intelligence, it doesn’t enhance it, as countless examples show.
dotnet00 1y ago
It looks like they're planning on funding it through circular purchase agreements and looting the rest of the world.
- mrcwinn 1y ago
  All of “circular” those bets only work if there are real purchase orders and real revenue. In fact the two major deals are literally tied to that. So it doesn’t answer my question. Real GPUs are bought. Presumably because real consumption is taking place. Presumably because real value (productivity) is produced. Which in turn reduces knowledge work labor (maybe?). Which may destroy jobs. Which reduces excess income and consumption in… a consumer-driven economy. My point is, it’s actually not rational for the worst actors you could imagine. There’s a link in the chain missing for me logically and I think “billionaires” actually isn’t the answer.
  - kcexn 1y ago
    The theoretical link that is missing is that AI isn't supposed to reduce knowledge work, it is supposed to free labor to concentrate on higher value work and investment. Nobody knows what that work is though, and nobody wants to talk about it lest everyone realizes this all might be a house of cards.
coderenegade 1y ago
Nothing in capitalism suggests that consumers have to be human. In fact, the whole enshittification trend suggests that traditional consumers are less economically relevant than they've ever been.
- mrcwinn 1y ago
  So, okay, that’s interesting. Let’s play it out. Unilever buys a Facebook ad in hopes a robot will buy a razor and shave? And even if a robot needed to shave, what reason would a company have to pay it a wage where before it was only a capex?
  - coderenegade 1y ago
    More likely businesses than robots, but robots will consume on behalf of the business that owns them, same as currently happens with procurement. If people don't have the money to pay for shavers, shavers either won't be made, or they'll be purchased and owned by businesses, and leased for some kind of servitude. I'm not sure what kind of repayment would work if AI and machines can replace humans for most labor. Maybe we're still in the equation, just heavily devalued because AI is faster and produces higher quality output. Alternatively, government might have to provide those things, funded by taxes from businesses that own machines. I think, realistically, this is just a return to slavery by another name; it's illegal to own people as part of the means of production, but if you have a person analog that is just as good, the point becomes moot. I think it gets scary if the government decides it no longer has a mandate to look after citizens. If we don't pay taxes, do we get representation?
- mrcwinn 1y ago
  Actually you made me think of a fun scenario. A robot, who I will name Robort, over time becomes, say, 1/10th the price of human labor. But they do 10x the work quality and work 10x longer. In that scenario, you could pay them the same wage but produce significantly more economic value. The robot, who won’t care about material possessions or luxuries, could make purchases on behalf of a human - and that human, overworked in 2025 or jobless - has a significant quality of life improvement. Help, an economist or someone smarter, check my math.
tim333 1y ago
Either it doesn't remove the income of its consumers like it's not doing at the moment, or we get universal basic income or something like that.
- mrcwinn 1y ago
  And how is UBI funded? Higher corporate taxes on (over time, as gross margins improve from inference cost deductions) more profitable companies? Or rather than higher taxes, more money printing because inflation is just so incredibly low because of advancements in productivity. That’s the only thing I can imagine so far. All other paths in my mind lead me thinking about uprising and political unrest. (I’m not a doomer. I’m literally just trying to imagine how it will work structurally.)
  - tim333 1y ago
    I think either productivity advances and we get money printing/tax, or it doesn't and things continue as now.
throw234234234 1y ago
This one is easy. The new consumers will be capital holders, not wage holders as the bottleneck to production becomes energy, resources, land, capital, etc rather than labor. Capitalism rewards scarcity and inefficiency/bottlenecks via a higher price per unit (i.e. higher profits), the efficient at a macro level get optimized away -> value delivered can be negative correlated to price as supply overwhelms demand. You can see it already happening in economic statistics and if you think hard in general experience comparing to previous decades (e.g. previously it was the personal computer that was seen as the big market, now it is SaaS, B2B and high net work individuals). There are whole reports, and market commentary on this trend - it is a result of wealth inequality and firms trying to sell to the people that are left with capital and scarce required desired resources - this has been happening outside of the AI space as well. Rich people as a market size compared to others has only been growing, and AI should accelerate this trend. Its a big reason why there is a decent possibility that AI is dystopian for the majority of poor to upper middle class people. There will still be a market for things that are scarce (i.e. not labor) but the other factors of productions such as land, resources, capital, etc. People derive more income/wealth from these will win in an AI world, people who rely on their skills/intelligence/etc will lose. Even with abundance; there's no reason to think you will have a share of that.

antonvs 1y ago

Just channeling amoral billionaires here, so don’t shoot the messenger, but if everything is automated by machines that you control, you no longer need to farm humans for capital. Not saying that’s even remotely realistic over the next century, but it does seem to be how some of these people think. Excessive wealth destroys intelligence, it doesn’t enhance it, as countless examples show.

dotnet00 1y ago

It looks like they're planning on funding it through circular purchase agreements and looting the rest of the world.

mrcwinn 1y ago
All of “circular” those bets only work if there are real purchase orders and real revenue. In fact the two major deals are literally tied to that. So it doesn’t answer my question. Real GPUs are bought. Presumably because real consumption is taking place. Presumably because real value (productivity) is produced. Which in turn reduces knowledge work labor (maybe?). Which may destroy jobs. Which reduces excess income and consumption in… a consumer-driven economy. My point is, it’s actually not rational for the worst actors you could imagine. There’s a link in the chain missing for me logically and I think “billionaires” actually isn’t the answer.
- kcexn 1y ago
  The theoretical link that is missing is that AI isn't supposed to reduce knowledge work, it is supposed to free labor to concentrate on higher value work and investment. Nobody knows what that work is though, and nobody wants to talk about it lest everyone realizes this all might be a house of cards.

coderenegade 1y ago

Nothing in capitalism suggests that consumers have to be human. In fact, the whole enshittification trend suggests that traditional consumers are less economically relevant than they've ever been.

mrcwinn 1y ago
So, okay, that’s interesting. Let’s play it out. Unilever buys a Facebook ad in hopes a robot will buy a razor and shave? And even if a robot needed to shave, what reason would a company have to pay it a wage where before it was only a capex?
- coderenegade 1y ago
  More likely businesses than robots, but robots will consume on behalf of the business that owns them, same as currently happens with procurement. If people don't have the money to pay for shavers, shavers either won't be made, or they'll be purchased and owned by businesses, and leased for some kind of servitude. I'm not sure what kind of repayment would work if AI and machines can replace humans for most labor. Maybe we're still in the equation, just heavily devalued because AI is faster and produces higher quality output. Alternatively, government might have to provide those things, funded by taxes from businesses that own machines. I think, realistically, this is just a return to slavery by another name; it's illegal to own people as part of the means of production, but if you have a person analog that is just as good, the point becomes moot. I think it gets scary if the government decides it no longer has a mandate to look after citizens. If we don't pay taxes, do we get representation?
mrcwinn 1y ago
Actually you made me think of a fun scenario. A robot, who I will name Robort, over time becomes, say, 1/10th the price of human labor. But they do 10x the work quality and work 10x longer. In that scenario, you could pay them the same wage but produce significantly more economic value. The robot, who won’t care about material possessions or luxuries, could make purchases on behalf of a human - and that human, overworked in 2025 or jobless - has a significant quality of life improvement. Help, an economist or someone smarter, check my math.

tim333 1y ago

Either it doesn't remove the income of its consumers like it's not doing at the moment, or we get universal basic income or something like that.

mrcwinn 1y ago
And how is UBI funded? Higher corporate taxes on (over time, as gross margins improve from inference cost deductions) more profitable companies? Or rather than higher taxes, more money printing because inflation is just so incredibly low because of advancements in productivity. That’s the only thing I can imagine so far. All other paths in my mind lead me thinking about uprising and political unrest. (I’m not a doomer. I’m literally just trying to imagine how it will work structurally.)
- tim333 1y ago
  I think either productivity advances and we get money printing/tax, or it doesn't and things continue as now.

throw234234234 1y ago

This one is easy. The new consumers will be capital holders, not wage holders as the bottleneck to production becomes energy, resources, land, capital, etc rather than labor. Capitalism rewards scarcity and inefficiency/bottlenecks via a higher price per unit (i.e. higher profits), the efficient at a macro level get optimized away -> value delivered can be negative correlated to price as supply overwhelms demand. You can see it already happening in economic statistics and if you think hard in general experience comparing to previous decades (e.g. previously it was the personal computer that was seen as the big market, now it is SaaS, B2B and high net work individuals). There are whole reports, and market commentary on this trend - it is a result of wealth inequality and firms trying to sell to the people that are left with capital and scarce required desired resources - this has been happening outside of the AI space as well. Rich people as a market size compared to others has only been growing, and AI should accelerate this trend. Its a big reason why there is a decent possibility that AI is dystopian for the majority of poor to upper middle class people. There will still be a market for things that are scarce (i.e. not labor) but the other factors of productions such as land, resources, capital, etc. People derive more income/wealth from these will win in an AI world, people who rely on their skills/intelligence/etc will lose. Even with abundance; there's no reason to think you will have a share of that.