4 ms·

> The dark factory does not make much capital gains, even as it produces 1,000 gizmo per second. But that's good, right? It means that the difference between w

> The dark factory does not make much capital gains, even as it produces 1,000 gizmo per second. But that's good, right? It means that the difference between what workers get paid when they do work and what they pay when they buy things is small. > Sure the 4,995 unemployed might be able to afford the gizmo, but the state does not receive the same taxes. So what happens to those 4,995 unemployed people ? who is paying for their health benefits and social security (retirement) ? Let's consider the two possibilities here. The first is that we automate everything. This is implausible, but let's consider what would happen. Well then necessities would be free, because there is no labor cost to produce arbitrarily many solar panels or skyscrapers or mine asteroids to get unlimited raw materials etc. So then you don't need taxes because nothing costs anything. The second is that there is still work you need people to do, and then they do that, and still have jobs. And the more stuff you do automate, the less expensive it is to produce things, and the less assistance anyone needs to afford the now-lower cost of necessities. So if you get halfway between one and two then that's still fine because costs go down in proportion to the lower demand for labor. The real problem is if the cost of necessities are held artificially scarce through regulatory capture and zoning rules. But that's not an automation problem, that's a government problem.

unsungNovelty 11mo ago
My problem is when you automate, the benefits are not passed on to the entire chain of people involved even though we start the discussion with that. So what do we do?
- AnthonyMouse 11mo ago
  In a competitive market, efficiency gains are generally going to end up as lower prices to the customer, which is the main way that ordinary people benefit from them. That doesn't happen when the market is consolidated and the oligopoly keeps the gains themselves. So, ensure competitive markets by thwarting regulatory capture and enforcing antitrust laws.
  - llsf 11mo ago
    Yes, that has been the rule for now. But I am wondering that if the prices drop so much, but the price to pay for that abundance would be the loss of significant part of job market, then how can we keep the economy humming ? We would need to find a way to give money to people so they can keep participating in the economy even though everything is cheap. If not UBI, we would need to find ways for the majority to do something that is not automated, and give them some coins in exchange. For millennia the currency has been energy (human labor, then machines) and intelligence (human intelligence, then artificial intelligence). If energy and intelligence price goes down, and the amount of energy and intelligence increases, then what is left for humans to claim some reward/coins ?
    - AnthonyMouse 11mo ago
      > But I am wondering that if the prices drop so much, but the price to pay for that abundance would be the loss of significant part of job market, then how can we keep the economy humming ? Money is an abstraction, so prices are always relative to wages. If prices go down, that's equivalent to wages going up. If your costs are $1000 and your wages are $1000, that's the same to you as if your costs are $100 and your wages are $100. So the problem solves itself. You previously needed a job that would pay you $1000 to cover your costs, now you only need one that pays $100. And there is still $100 of work that needs to be done, because that's why things cost $100 instead of $0.
      - llsf 11mo ago
        I agree, so the prices of everything would go down. People would be unemployed. Do we plan to give some money to pay for basic stuff (food, shelter) ? Even if the cost for food and shelter is $1 per month, if there is no revenue, it is still too expensive, right ? I am trying to understand the speed comparison between how fast the prices will go down, vs. how fast people will lose their jobs. If job loss goes faster than the price decrease, we might have a problem to solve.
        AnthonyMouse 11mo ago
fragmede 11mo ago
The problem with that is that it operates from a wrong idea of how to set prices for a product. From first principles, you make a widget, figure out how much it costs to make it, including your time, then add some amount of margin on top, and you have a business. That is incorrect. No, you have product, and then you just make up a number based on circumstances. If you're lucky, the price you manage to sell your widget for is above what it costs to make it. If you're not lucky, it isn't, and you have a sale, and lose less money than if you didn't sell anything. However, if you're lucky, you sell your widget for way more than it costs to make it, because of branding, aka luxury fashion brands. The numbers though, are just made up. That's the trick of capitalism. You just... make up a number! Once you understand that, the world starts to make even less sense than it did before. If pricing were cost-plus, branding and timing wouldn’t matter, and empirically they matter a lot.
- AnthonyMouse 11mo ago
  You're describing what happens in uncompetitive markets (or for status goods, which have inherently weird behavior because they're a signaling mechanism that relies on waste and artificial scarcity as a mechanism of operation, but also inherently nobody actually needs them). In an ordinary competitive market, margins are thin because sellers are fungible, so charging slightly less than the competition results in a disproportionate increase in sales because customers are just choosing the lowest price, and then sellers keep lowering prices until margins are thin because it's more profitable to get a $0.05 margin on a thousand units than a $0.10 margin on a dozen units.
  - fragmede 11mo ago
    This assumes income still exists. Automation drives goods toward zero while destroying the wage base, as Ricardo warned: gains flow to owners (das capital) of scarce resources. Today that’s Ricardian rents on land, housing, zoning, healthcare, education. $2 TVs ain't gonna pay rent. Antitrust decides who captures surplus, not how people access it once wages stop working. And UBI would just be stapling cash onto a broken distribution system. So what actually replaces labor as the primary claim on surplus?
llsf 11mo ago
> The first is that we automate everything. This is implausible, but let's consider what would happen. Well then necessities would be free, because there is no labor cost to produce arbitrarily many solar panels or skyscrapers or mine asteroids to get unlimited raw materials etc. So then you don't need taxes because nothing costs anything. Well, you still have to pay for the energy (to extract raw material and transform it into final product, and move final product into your hands). So unless we assume energy cost is 0 and raw materials are not scarce, the final product has a cost, and a price, now my understanding is that if everyone uses dark factories, the margin would go down, and so the gain per "company" would drop too, hence the limited tax base. My guess is from the 2 ends of the spectrum that you listed, we are moving from "there is still work you need people to do, and then they do that, and still have jobs." to "we automate everything". And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement). If we do not change how we tax things, I do not see how we would sustain a society where the majority is materially (gizmos) rich, but financially poor (no job, no retirement, no social security, no education). While dark factories keep producing high volume of gizmos for next to nothing... I am curious how we can manage that transition, which I believe could happen way faster than politicians can move.
- AnthonyMouse 11mo ago
  > Well, you still have to pay for the energy (to extract raw material and transform it into final product, and move final product into your hands). But then you're back to having something that isn't automated. If machines do this then it's free. If you need people to do it then people have jobs. > And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement). But things would also cost less, in the same proportion. Suppose healthcare is 20% of the economy, can't be automated, and we automate everything else. Then tax revenue goes down by 80%, but so do costs, so people only need 20% as much in government services or those services only cost 20% as much to provide. Meanwhile you still need people to be doctors and nurses but not other things, so more people become doctors and nurses. This drives down wages there, but that's fine when the doctors and nurses are also paying 80% less for everything. And at the lower wages you can justify more work to be done. More people do medical research, doctors get to spend more time with each patient, etc. Soon everyone has a job again. Let's even consider the hypothetical where that can't happen. There are 8 billion people and only a million jobs. No other jobs are possible, somehow. How much are those million people going to get paid? Peanuts, because like everyone else they'd have negligible living expenses and they'd be in competition with 8 billion people for who would be willing to do it for the least amount of compensation. Their payment would be something like bragging rights, or all the slots would be filled by volunteers. But in practice we would never "run out" of jobs because the supply curve always intersects with the demand curve somewhere. If demand goes down then price goes down because there is higher demand at the lower price.

unsungNovelty 11mo ago

My problem is when you automate, the benefits are not passed on to the entire chain of people involved even though we start the discussion with that. So what do we do?

AnthonyMouse 11mo ago
In a competitive market, efficiency gains are generally going to end up as lower prices to the customer, which is the main way that ordinary people benefit from them. That doesn't happen when the market is consolidated and the oligopoly keeps the gains themselves. So, ensure competitive markets by thwarting regulatory capture and enforcing antitrust laws.
- llsf 11mo ago
  Yes, that has been the rule for now. But I am wondering that if the prices drop so much, but the price to pay for that abundance would be the loss of significant part of job market, then how can we keep the economy humming ? We would need to find a way to give money to people so they can keep participating in the economy even though everything is cheap. If not UBI, we would need to find ways for the majority to do something that is not automated, and give them some coins in exchange. For millennia the currency has been energy (human labor, then machines) and intelligence (human intelligence, then artificial intelligence). If energy and intelligence price goes down, and the amount of energy and intelligence increases, then what is left for humans to claim some reward/coins ?
  - AnthonyMouse 11mo ago
    > But I am wondering that if the prices drop so much, but the price to pay for that abundance would be the loss of significant part of job market, then how can we keep the economy humming ? Money is an abstraction, so prices are always relative to wages. If prices go down, that's equivalent to wages going up. If your costs are $1000 and your wages are $1000, that's the same to you as if your costs are $100 and your wages are $100. So the problem solves itself. You previously needed a job that would pay you $1000 to cover your costs, now you only need one that pays $100. And there is still $100 of work that needs to be done, because that's why things cost $100 instead of $0.
    - llsf 11mo ago
      I agree, so the prices of everything would go down. People would be unemployed. Do we plan to give some money to pay for basic stuff (food, shelter) ? Even if the cost for food and shelter is $1 per month, if there is no revenue, it is still too expensive, right ? I am trying to understand the speed comparison between how fast the prices will go down, vs. how fast people will lose their jobs. If job loss goes faster than the price decrease, we might have a problem to solve.
      - AnthonyMouse 11mo ago

fragmede 11mo ago

The problem with that is that it operates from a wrong idea of how to set prices for a product. From first principles, you make a widget, figure out how much it costs to make it, including your time, then add some amount of margin on top, and you have a business. That is incorrect. No, you have product, and then you just make up a number based on circumstances. If you're lucky, the price you manage to sell your widget for is above what it costs to make it. If you're not lucky, it isn't, and you have a sale, and lose less money than if you didn't sell anything. However, if you're lucky, you sell your widget for way more than it costs to make it, because of branding, aka luxury fashion brands. The numbers though, are just made up. That's the trick of capitalism. You just... make up a number! Once you understand that, the world starts to make even less sense than it did before. If pricing were cost-plus, branding and timing wouldn’t matter, and empirically they matter a lot.

AnthonyMouse 11mo ago
You're describing what happens in uncompetitive markets (or for status goods, which have inherently weird behavior because they're a signaling mechanism that relies on waste and artificial scarcity as a mechanism of operation, but also inherently nobody actually needs them). In an ordinary competitive market, margins are thin because sellers are fungible, so charging slightly less than the competition results in a disproportionate increase in sales because customers are just choosing the lowest price, and then sellers keep lowering prices until margins are thin because it's more profitable to get a $0.05 margin on a thousand units than a $0.10 margin on a dozen units.
- fragmede 11mo ago
  This assumes income still exists. Automation drives goods toward zero while destroying the wage base, as Ricardo warned: gains flow to owners (das capital) of scarce resources. Today that’s Ricardian rents on land, housing, zoning, healthcare, education. $2 TVs ain't gonna pay rent. Antitrust decides who captures surplus, not how people access it once wages stop working. And UBI would just be stapling cash onto a broken distribution system. So what actually replaces labor as the primary claim on surplus?

llsf 11mo ago

> The first is that we automate everything. This is implausible, but let's consider what would happen. Well then necessities would be free, because there is no labor cost to produce arbitrarily many solar panels or skyscrapers or mine asteroids to get unlimited raw materials etc. So then you don't need taxes because nothing costs anything. Well, you still have to pay for the energy (to extract raw material and transform it into final product, and move final product into your hands). So unless we assume energy cost is 0 and raw materials are not scarce, the final product has a cost, and a price, now my understanding is that if everyone uses dark factories, the margin would go down, and so the gain per "company" would drop too, hence the limited tax base. My guess is from the 2 ends of the spectrum that you listed, we are moving from "there is still work you need people to do, and then they do that, and still have jobs." to "we automate everything". And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement). If we do not change how we tax things, I do not see how we would sustain a society where the majority is materially (gizmos) rich, but financially poor (no job, no retirement, no social security, no education). While dark factories keep producing high volume of gizmos for next to nothing... I am curious how we can manage that transition, which I believe could happen way faster than politicians can move.

AnthonyMouse 11mo ago
> Well, you still have to pay for the energy (to extract raw material and transform it into final product, and move final product into your hands). But then you're back to having something that isn't automated. If machines do this then it's free. If you need people to do it then people have jobs. > And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement). But things would also cost less, in the same proportion. Suppose healthcare is 20% of the economy, can't be automated, and we automate everything else. Then tax revenue goes down by 80%, but so do costs, so people only need 20% as much in government services or those services only cost 20% as much to provide. Meanwhile you still need people to be doctors and nurses but not other things, so more people become doctors and nurses. This drives down wages there, but that's fine when the doctors and nurses are also paying 80% less for everything. And at the lower wages you can justify more work to be done. More people do medical research, doctors get to spend more time with each patient, etc. Soon everyone has a job again. Let's even consider the hypothetical where that can't happen. There are 8 billion people and only a million jobs. No other jobs are possible, somehow. How much are those million people going to get paid? Peanuts, because like everyone else they'd have negligible living expenses and they'd be in competition with 8 billion people for who would be willing to do it for the least amount of compensation. Their payment would be something like bragging rights, or all the slots would be filled by volunteers. But in practice we would never "run out" of jobs because the supply curve always intersects with the demand curve somewhere. If demand goes down then price goes down because there is higher demand at the lower price.