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Flipnash comments on Politics Discussion Thread February 2013 - Less Wrong
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We've lost, by my count, 1,394,100,000 jobs in the US in the last two hundred years. You may notice that is a larger number of jobs than people actually exist; this is because, if all those jobs actually existed, we'd still be farmers. (Value calculated by dividing current median income in the US by an estimation of sustenance income necessary to a lifestyle appropriate to, say, the 1700's. Not terribly accurate, as it doesn't account for the increased value of leisure time, or the automation of non-economic tasks; the actual figure in these terms may be as much as 30x rather than 9x the labor force. Additionally, I didn't include the massive reduction in work hours over the past two hundred years, which could as much as double that figure again)
The challenge isn't to figure out how many jobs automation will eliminate; it's already eliminated nine times more jobs than there are people doing jobs in this country. That's what permits our high standards of living; each person is enjoying the fruits of the labor of at least eight additional counterfactual people whose jobs are being performed by automation.
The challenge is to figure out to what extent this trend can continue; there's obvious room for improvement in that most of the world still has substantial improvements to be made to its standard of living. The challenge is to figure out whether or not the most fundamental tenet of economics - that demand is unlimited - holds true.
I always thought demand was limited by factors such as the size of one's stomach the speed at which clothes wear out or go out of fashion, and most importantly income among other things. I'm actually kind of surprised to hear that unlimited demand was a fundamental tenet of economics.
The problem seems to be confusion as to what economists mean by demand and "unlimited demand". What they mean by demand is not a static number but a demand curve relating how much of something you would buy depending on its price, i.e., not just what you're buying now but also what else you would buy if you could. Thus by "unlimited demand" they mean that there is always more you would buy if you could afford it.
Historically it has never worked out that way. When a society gets richer the people eat more and better food, buy more clothes, live in bigger houses, buy cars and appliances, travel more, and so on. Based on the behavior of rich people we can see that a x10 or even x100 increase from current wealth levels due to automation would just continue this trend, with people spending the excess on things like mansions, private jets and a legion of robot servants.
Realistically there's probably some upper limit to human consumption, but it's so far above current production levels that we don't see much hint of where it would be yet. So for most practical purposes we can assume demand is infinite until we actually see the rich start systematically running out of things to spend money on.