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This can be effectively implemented by the government accumulating tax revenues (largely from the rich) in good times and spending them on disaster relief (largely on the poor) in bad times. It lets price remain a signal while also expanding supply.
Taxation is better than a ban, but in this case it remains an attempt at price control. "Documented" cost increases is doing a lot of work. Better than "vibes about price," but it is the same deal: the government "knows better" what prices should be than what is revealed by the market. I'd argue that if the government doesn't like what the market is yielding, it can get involved in the market and help expand supply itself, which we see governments attempt during disaster relief already.
Agree, we're not so shy about pursuing a good vibe, bad vibes are also informative.
Thanks, you had mentioned the short- vs. long-run before, but after this discussion it is more foregrounded and the "racing" explanation makes sense. :) Though I appreciated the references to marginal value and marginal cost.
You’re assuming that the economy will produce new jobs faster than the factories will produce new chips and robots to fill those jobs.
Well, the assumptions are primarily that the supply and demand for AI labor will vary across markets and secondarily that labor can flow across markets. This is an important layer separate from just seeing who (S or D) wins the race. If there is only one homogenous market, then the price trajectory for AI labor (produced through the racing dynamics) tells you all you'll need to know about the price trajectory for its human substitute. So the question is just which is faster.
But if there are heterogenous markets, "which is faster" is informative only for that market and the price of human labor as a substitute in that market. The price trajectory for AI labor in other markets might be subject to different "which is faster" racing dynamics. Then, because of composition effects, the trajectory for the average price of AI labor that is performed may diverge from the trajectory for the average price of human labor that is performed.
This is true even if you assume the economy has no vacancies and will not produce new jobs (i.e., labor cannot flow across markets). For example, average hourly earnings spiked during COVID because the work that was being performed was high-cost/value labor, an increase seemingly entirely due to composition [BLS]. Although I am alleging that predicting the price trajectory remains difficult even if you take a stance on the racing dynamics because you need to know what the alternative human jobs are, in that world where jobs are simply destroyed, the total value accruing to human laborers certainly goes down. This is why I think the labor flows could be considered a secondary assumption for the left-side depending on how much you think that side would be arguing - they are not dispositive of what the price changes will be (the focus of the post was on price), but they definitely will affect whether human labor commands the same total value.
I like that this post lays out the dilemma in principles A (marginal value dominates) and B (marginal cost dominates). One quibble is that the effects are on the supply and demand curves, not on the quantities supplied and demanded, i.e., it's not about the slopes of the curves but the location of the new equilibrium as the curves shift left or right. It's not about which part "equilibrates" faster (with what?) but about the relative strength of the shifts.
If AGI shifts the demand for AI labor to the right, under constant supply, we'd expect a price increase and more AI labor created and consumed. If AGI shifts the supply for AI labor to the right, under constant demand, we'd expect a price decrease and more AI labor created and consumed. Both of these things would happen, so there is a wide range of possible price changes (even no change in price) consistent with more AI labor created and consumed, but what happens to the price depends on which shift is "stronger."
Still, with the quantity of AGI labor created and consumed increasing, you might wonder about how the experience curve impacts it - that's just more right-shift in the supply curve, so maybe we don't have to wonder after all. What about the effect on substitutes like human labor? Well, if the economy has a set number of jobs, you'd expect a lot of human labor displaced, but if the economy can find other useful work for those people, they will do those other jobs, which might be lower-paying (no more coding tasks for you - enjoy 7/11), reducing the average price of human labor, or might be higher-paying (no more coding tasks for you - enjoy this support role for AGI that because of its importance requires, increasing the average price of human labor.
Can those niches exist? Yes, the supply and demand curves are curves of heterogeneous values and production functions. And markets are imperfect. Won't those niches eventually disappear? Well, rinse and repeat. See ATMs and bank tellers, also see building luxury housing supply and the effects on rents throughout the housing supply.
I don't think it's only talking past each other - it's a genuine ton of uncertainty.
I'm here to say, this is not some property specific to p-values, just about the credibility of the communicator.
If make a bunch of errors all the time, especially those that change their conclusions, indeed you can't trust them. Turns out (BW11) that are more credible than , the errors they make tend not to change the conclusions of the test (i.e., the chance of drawing a wrong conclusion from their data ("gross error" in BW11) was much lower than the headline rate), and (admittedly I'm going out on a limb here) it is very possible the errors that change the conclusion of a particular test do not change the overall conclusion about the general theory (e.g., if theory says X, Y, and Z should happen, and you find support for X and Y and marginal-support-now-not-significant-support-anymore for Z, the theory is still pretty intact unless you really care about using p-values in a binary fashion. If theory says X, Y, and Z should happen, and you find support for X and Y and now-not-significant-support-anymore for Z, that's more of an issue. But given how many tests are in a paper, it's also possible theory says X, Y, and Z should happen, and you find support for X and Y and Z, but turns out your conclusion about W reverses, which may or may not really have something to say about your theory).
I don't think it is wise to throw the baby out with the bathwater.
Supply side: It approaches the minimum average total, not marginal, cost. Maybe if people accounted for it finer (e.g., charging self "wages" and "rent"), cooking at home would be in the ballpark (assuming equal quality of inputs and outputs across venues..), but that just illustrates how real costs can explain a lot of the differential without having to jump to regulation and barriers to entry (yes, those are nonzero too!).
Demand side: Complaints in the OP about the uninformativeness of ratings also highlight how far we are from perfect competition (also, e.g., heterogeneous products), so you can expect nonzero markups. We aren't in equilibrium and in the long run we're all dead, etc.
I'm a big proponent of starting with the textbook economic analysis, but I was surprised by the surprise. Let's even assume perfect accounting and competition:
Draw a restaurant supply curve in the middle of the graph. In the upper right corner, draw a restaurant demand curve (high demand given all the benefits I listed). Equilibrium price is P_r*. Now draw a home supply curve to the far left, indicating an inefficient supply relative to restaurants (for the same quantity, restaurants do it "cheaper"). In the bottom left corner, draw a home demand curve (again the point is I demand eating out more than eating at home). Equilibrium price for those is P_h*. It's very easy to draw where P_h* < P_r*.
Cooking at Home Being Cheaper is Weird
I like the argument that the scaling should make the average marginal cost per plate lower in restaurants than at home, but I find cooking at home being cheaper not weird at all. First, there are also real fixed costs to account for, not just regulatory costs.
More importantly, the average price per plate is not just a function of costs, it's a function of the value that people receive. Cooking at home does give some nice benefits, but eating out gives some huge ones: essentially leisure, time savings (a lot of things get prepped before service), no dishes, and possibly lower search costs ("what's for dinner tonight?").
1A classic that seemingly will have to be reargued til the end of time. Other allocation methods are not clearly more egalitarian and are less efficient (depends on the correlation matrix of WTP, need, time budget, etc., plus one's own judgment of fairness, but money prices come out looking great a lot of the time). In some cases, even prices don't perform great (addressed in some comments on this post), but they're better than the alternatives.
For more reading: https://www.lesswrong.com/posts/gNodQGNoPDjztasbh/lies-damn-lies-and-fabricated-options?commentId=nG2X7x3n55cb3p7yB
I really like this succinct post.
I intuitively want to endorse the two growth rates (if it "looks" linear right now, it might just be early exponential), but surely this is not that simple, right? My top question is "What are examples of linear growth in nature and what do they tell us about this perception that all growth is around zero or exponential?"
A separate thing that sticks out is that having two growth rates does not necessarily imply generally two subjective levels.