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timtyler comments on The President's Council of Advisors on Science and Technology is soliciting ideas - Less Wrong
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Regarding the second point, here is my 2p on "The Lights in the Tunnel":
"The Lights in the Tunnel" is a whole book about a topic I am interested in: the effects of automation. However, there is a serious flaw that pervades the book's whole analysis:
Martin argues that the economy will crash - as machines take the jobs of consumers, they no longer have any money to spend on things - and cash flows spiral downwards.
Martin says: "Another way of expressing this is to say that although machines may take over people’s jobs, the machines - unless we are really going to jump into the stuff of science fiction - do not participate in the market as consumers" - page 24.
However, machines still participate in the market indirectly - via people. Humans buy fuel, spare parts, add-ons and "consumables" for their machines. Machines still "consume" - even if they don't have bank accounts and can't go to the shops. The resulting effect on the economy is much the same as if the machines were themselves consumers.
This seemingly-simple point destroys much of the book's DOOM-mongering analysis. There are some other good things in the book - but IMO, the author damages the reader's view of his competence by making this kind of mistake.
Hi,
This is Martin Ford, the author of The Lights in the Tunnel. I just wanted to respond to your comment here:
If the average consumer is unemployed and has no income, he is obviously not going to be purchasing stuff for his machines. In fact, ownership of the machines will concentrate into a shrinking elite as machines take the jobs of average people.
Remember that the focus here is on what we might call "end consumption." If you consider GDP, consumer spending is about 70% of that. It is important to note that that is only END consumption by PEOPLE.
When General Motors purchases steel for its cars that is not consumption and is NOT added to GDP. The value of the steel gets accounted for ONLY when someone buys a car. The same argument applies to this idea of machines using resources. If the machines are used in production--and if they replace human workers--then what the machines "consume" is not END consumption and does not drive the economy. It is intermediate consumption. A PERSON still has to purchase the end product. Machines cannot do this. If too few people have the ability to purchase END products, the mass market economy will collapse.
Everything produced by the human economy is ultimately consumed by individual human beings. This applies even to government spending since the services provided by government are consumed by people. The only other factor is business investment, and that occurs in response to anticipated future consumer spending--businesses will invest only if they anticipate future demand.
Anywone who is interested can read the book for free in PDF at http://www.thelightsinthetunnel.com. If you prefer to buy the book at Amazon, I would like that even bettter.. ;-)
Re: "If the average consumer is unemployed and has no income, he is obviously not going to be purchasing stuff for his machines. In fact, ownership of the machines will concentrate into a shrinking elite as machines take the jobs of average people."
Sure - but that was not the point which you were making that I was criticising:
You argued that unemployment would mean that spending would decline - and the economy would plummet or crash.
Whereas a more accurate analysis suggests that those in charge of the machines will ramp up their spending to feed the demands of their machines - thereby contributing to expenditure in the economy. In other words, the machines will buy and sell things - if not directly, then via companies or humans. This is not really a "jump into the stuff of science fiction" - people regularly buy things to "feed" their machines today.
The machines act as consumers - in that they consume things - even if there is a human or corporation who is buying the things involved somewhere. So: the whole idea that the economy will collapse because nobody is earning money and buying things falls down. Machines will still be earning money and buying things - even if they will be doing it by proxy agents in the form of corporate or human masters.
This idea is a fairly central one in "The Lights in the Tunnel" - and it is based on unsound thinking and bad economics :-(
Re: "Everything produced by the human economy is ultimately consumed by individual human beings."
That seems like a rather muddled way of looking at the situation. Machines have needs too. They slurp up gas, oil, electricity, raw materials. They consume - and excrete - along with all other agents in the biosphere. Companies act as non-human consumers too. It could be argued that machines and companies are slaves to humanity (to some extent - though the inverse perspective - that they are using us to manipulate the machine world into existence - also has considerable validity) - but that doesn't mean that we consume their waste products.
Re: "If too few people have the ability to purchase END products, the mass market economy will collapse."
No: the issue is not the number of human consumers, but their total spending power. Rich minorites commanding huge squads of machine minions could generate a large demand for resources - and the also ability to produce those resources - thus lubricating the economy very effectively.
Of course in a human democracy, voters would try hard to ramp up corporation taxes - in order to resist such huge inequality - but that is another issue entirely.
So, if say a million people owned all of the machines in the world, and they had no use for the human labor of the other billions of people in the world, you would still classify the economy as very effective?
I guess the question is what counts as an economic crash? A million extremely well off people with machines to tend to their every need and billions with no useful skills to acquire capital seems like a crash to most of the people involved.
The following quotation illustrates the context of the discussion:
"once full automation penetrates the job market to a substantial degree, an economy driven by mass-market production must ultimately go into decline. The reason for this is simply that, when we consider the market as a whole, the people who rely on jobs for their income are the same individuals who buy the products produced."
This claim relates to the state of the marketplace - and not to the status of the unemployed humans. My comment about "lubricating the economy very effectively" was not intended to imply anything about human welfare.