Tuesday, March 08, 2011

In a pinch, upgrade the humans or redistribute the robots

In my last post, I took a somewhat dim view of economic theories that rely on extremely specific but unobservable changes in technology to make them tick. Let's not be futurists until we absolutely have to.

BUT, that said, it's really fun to be a futurist! I read a lot of science fiction, and as an economist I love speculating about how our economy and society would respond to various technological advancements. So I'm going to take off my scientist's hat for a minute, and put on my fun-but-ultimately-useless futurist's hat, and with that caveat I'll try to answer the question: what do we do when robots replace workers?

Will Wilkinson explains how automation can increase inequality:
[S]uppose [as a factory owner] I replace all my workers with machines. Questions of distributive fairness disappear! I own the machines; I don't owe the steely suckers anything!...Now, I don't know what all those workers I laid off are doing...Certainly my demand for robots...has created vigorous growth in the robot manufacturing sector. But...job growth there can last only as long as it takes to come up with robots that build robots that build robots, and so on. So workers are slowly squeezed out of manufacturing by automation...This squeeze has many implications, one of them being that here is an important sector of the economy in which more or less all the gains accrue to the owners of capital and more or less none to the working class, simply because the working class doesn't work here anymore...the robot-owning class moves up a bit relative to the no-longer-manufacturing working class...
In the past, technological improvements have never made human labor obsolete; no matter how big the change, there's always been something new for us to do. But that may not always be the case, because humans are fundamentally limited beings. Yes, some human or another will always be needed as labor, but that might end up just being a few really brilliant people working on robot improvement.

So if that day comes, what do we do to prevent the massive inequality that will result? As I see it, there are two basic approaches:

1. Improve the human being, or

2. Redistribute capital ownership rights among human beings.

Following Bruce Sterling, I will call these the "Shaper" and "Mechanist" approaches* (which just goes to show that anything economists think of in 2011 was thought of by sci-fi authors three decades earlier).

The Shaper approach is simple: use technology to make humans smarter, or otherwise more capable, so that we maintain our usefulness even in an era of better and better robots. Alex Tabarrok makes this case:
Will robots and artificial intelligences take human jobs? Perhaps but the nature of humanity is not carved in stone. Genetic enhancement (GE) is within a hairsbreadth of reality...In the not so long run it's not about computers substituting for labor or even complementing labor, it's about designing labor to complement computers (and vice-versa). 
This option is attractive because it allows us to preserve the same sort of labor market we have now. Workers are valuable, so capitalists hire them; workers get both money and a sense of personal worth and dignity

One problem with the idea, of course, is that humanity has all kinds of moral hangups about this kind of human enhancement. Though Tabarrok believes that the market, and competition among nations, will eventually overcome our qualms, I'm not so sure. There is a vast web of institutions that we have created to slow the progress in human sciences - human subjects review boards, the FDA, the entire medical system for that matter. In any rich country, research into human improvement is severely curtailed, and technologies are strictly regulated. It may be that markets will eventually win out and give us superbabies who will be able to hold their own against robots, but we might have to wait for quite a long time. 

A second problem, of course, is that human improvement might create its own form of inequality.  If left to the market, superbaby technology would be available only to the rich, locking in inequality across generations. That is something we will want to avoid. But if governments were to appropriate and distribute the best baby-enhancing technology, it would go a long way toward creating equality of opportunity.

The Mechanist response to an automated society, on the other hand, is to redistribute ownership of the robots (Tyler Cowen favors this approach). As Will Wilkinson points out, robots are slaves (even if self-aware, self-motivated artificial intelligence is possible, there's not necessarily any need for us to use it). Given a world where every product and service is produced by robot slaves, we'll have massive inequality between those who own the robots and those who don't. But if we simply redistribute ownership of the robots amongst society, equality will be back. This would be a real, working version of George Bush's failed "ownership society" concept.

There are, of course, problems with this approach as well. How do we accomplish this redistribution fairly? Won't people who get fewer robot-shares try to seize others by force? Will this redistribution severely reduce the efficiency of the robots' use? What happens if some people sell all their robot-shares, only to spend all the proceeds and see their children become poor again? It's clear that widely-distributed capital ownership isn't stable over the long run. Labor tends to create an egalitarian society because everyone gets a brand-new endowment of labor when they're born. It would be difficult to replicate this happy coincidence with widely distributed capital ownership.

And finally, both of these remedies assume that humanity will still be in control of policy and will still own the means of production. True replacement of humanity would mean artificial intelligence - machines that can not only do everything we do, but can make decisions about what to do better than we ourselves can. If we manage to replace ourselves in every last respect, then we're out of the Bruce Sterling universe and into the Isaac Asimov universe. Or maybe Terminator or The Matrix. When two intelligent species share a planet, the result seems unlikely to be pretty...seen any Neanderthals lately?

In any case, if it ever does look like our species is becoming obsolete, I suggest we employ a hybrid of the "Shaper" and "Mechanist" approaches. We should get used to the idea that upgraded humans will command much higher wages, which they will use to support their unmodified parents in our old age. Government redistribution of human-upgrading technology could make equality of opportunity even more of a reality than it is now. And in the meantime, we can try more sensible approaches to creating a true "ownership society," one that is more than just a housing bubble...maybe by turning Social Security into a forced-contribution pension scheme that only buys shares in an index-fund-of-everything (and forcing companies of a certain size to go public)? And maybe by giving out welfare checks not as cash, but as shares in this omni-fund?

Anyway, fun goofy futurism aside, I think that the problem of robots replacing us is still MUCH MUCH farther away than many economists seem to think. The current global economic turmoil might be a tiny bit about the end of labor, but my hunch is that the vast majority is about rapid globalization and a good ol' once-in-four-generations financial crisis, with a few resource constraints and government policy mistakes tossed in. But if and when the robots do really replace us, rest assured that we have options. Options that are fair and equitable and safe, if more than a bit weird to our modern sensibilities.

(Unless Skynet takes over. In that case, all we can do is reach for the plug.)

* Actually, the Mechanists also boosted themselves with cyborg enhancement. My concept of human enhancement is that we'd use both genetic manipulation and cyborg technology. So I'm not exactly copying Sterling. Widespread distribution of the ownership of robotic capital is really more like a Vernor Vinge setting.


  1. Labor tends to create an egalitarian society because everyone gets a brand-new endowment of labor when they're born.
    I disagree. Suppose we legislate that everyone gets a brand-new endowment of capital (robot shares) when they're born, would that in itself solve the instability problems you mention? Hardly. The thing about the 'labour endowment' is that you normally can't spend it at a rate of more than 1 day/day, unless a slave market exists and you sell yourself into slavery. This avoids the fastest-growing instability modes. However, I think that much of the personal credit system — consumer credit, credit cards, mortgages etc. — has evolved to circumvent the absense of slavery and permit people to sell off their labour endowment at rates greater than 1 day/day, or liquidate whole chunks of it at a time.

  2. Anonymous4:01 AM

    Robots are good at menial repetitive tasks, but bad other tasks for which we like human beings. I'm thinking about art and design, services involving human interaction such as acting or waiting in a restaurant, or other creative tasks such as science.

    As long as these tasks are available, workers will still be needed. When robots become better at them than humans, they will be our masters.

  3. You forgot the third option: revolt and destroy the machines in a jihad that spans the known universe. But then I guess we'd have to replace them with Mentats, so that comes out to a Shaper scenario.

  4. @Anton: You're right.

  5. Anonymous7:33 PM


  6. Talking about AI and thinking anthropomorphically about robots is leading you astray, Noah.

    Let's first grant Acharya (in his Economist piece). No question: recent US labour history is explained by policy changes, with an icing of technology -- some say the internet; I think cellphones is the better explanation (greater pervasiveness).

    But in future there's good reason to think the recent rise in TFP will be sustained. Why? Not because AI is imminently about to invented. Rather, it is a group of 5 new-ish but existing technologies, that together amount to a new general-purpose technology: high-bandwidth digital radio (3G cellphones for example), robotics, machine vision, data search, and statistical machine reasoning.

    These five can be combined in various ways and used to substitute for labour in every sector of the economy. Some combinations: vision plus robotics: agriculture, forestry, mining, manufacturing, distribution, construction, medicine, personal services. With radio as well: safety services, military. Vision plus reasoning: retail sales, transport (autonomous freight), medicine, security, education, government. Search plus reasoning: law and government. (Radio and search underpin the others.)

    Arguments against the idea that this will lead to unemployment, such as that of R.A. in the Economist -- "people are cheaper" -- are unconvincing in the long run. With the exception of robotics, the technologies are essentially computational. There are good reasons to think that Nordhaus's cost trend can continue for at least three more decades, so R.A's argument applies only to those parts of the economy that require physical movement.

    R.A. says that because people are cheaper than robots now, they always will be. This is most unlikely, but the 4096-char limit prevents me saying why.

    DeLong's argument from history is unconvincing too. The fact that something has happened does mean that it is possible. But it does not mean that it is certain. Brad would be much more convincing if he said "this is how entrepreneurs invent new industries, and in the situation we are now in, these are the new jobs that will arise."

    Even if Brad is right, adjustment will be painfully slow. Brad's own textbook points out that after a shock an economy takes 80 years to return to its balanced-growth path.

    The argument from social preference is also unconvincing. The budget is mightier than the whim. If people have the choice between a service of a known good quality, and a much more costly service that also includes human interaction, which will they choose? Some people will choose the latter, but they will be a minority.

    So until someone shows what the new mass employment occupations will be -- occupations that no combination of the five technologies can possibly compete in, and for the products of which there will be a mass demand -- large-scale technologically-induced unemployment has to be considered as a serious near-future possibility.

  7. Anonymous10:19 PM

    You, like so many, have entirely missed the real problem.

    The real problem is not automation replacing human labor - it's technology making human labor more productive. The latter has been happening since computers were first used - it doesn't have to wait for total automation via robotics.

    Let's say some technology augments human productivity by, say, 30%. All else being equal, the aggregate effect is that 30% fewer humans are needed to do the same amount of production. If, the technology involved is less expensive in any respect than non-augmented human labor, (e.g., one doesn't have to pay machines, just buy them), then there is economic incentive to do such augmentation.

    This becomes a problem when there is insufficient demand for increased production - as there now is - and it in fact was certain to cause this lack of demand. When there is no demand for increased production, the augmentation of human labor with technology displaces human labor to the extent of the augmentation, i.e., to the extent that productivity is improved by other than human labor.

    Automation via robotics is not the issue - technological and thus non-human improvement of productivity is the issue. If technology improves productivity _to any extent_ more economically than does human labor, it provides clear incentive to replace human labor to that same extent, however small.

    Really stupid IT can have this effect - indeed, it _has_ been having this effect for several decades now.

    The range of possible effects are myriad. E.g., I have a PhD in Computer Science. Much of the work that used to require my services can now be done adequately by a first-year college student working as an intern. The technology makes up the difference between my level of productivity and that of the much cheaper and much healthier intern. So there is economic incentive to replace me. There's still human labor involved, it's just devalued labor.

    That's generally what technology does - it devalues human labor. If you economists don't get the impact of that, you seriously need to step back and adjust your perspective.

  8. Anonymous10:31 PM

    To add to the thought - consider the extent to which speed, not intelligence, is the productivity advantage of machines. If one's job is adding numbers, a computer can do it orders of magnitude more quickly, which it can do orders of magnitude more work in a given amount of time.

    But very simple intelligence is also among the advantages of technology. Very simple calculations that might otherwise require an employee with a college degree in math or accounting or the like to do, can be done more quickly than the human mind can grasp, at the touch of a button. The human doesn't need to know how to do that calculation, just when to touch the button.

    This is the nature of the current situation. Whole lots of minor tasks requiring minor amounts of intelligence, that without technology would take hours, days, or weeks to do in useful volumes, can now be done instantly in many cases. That's productivity improvement, and it devalues and displaces human labor simply by making them faster at their existing jobs. There can just be many fewer of them, and with much lower skill levels.

    To look for a day when automation and robotics entirely replace humans is to miss what's been happening for years now, and is to entirely miss the real economic disaster this has already caused.

  9. Anonymous10:46 PM

    Agreed - the robots have already replaced the humans. If you figure how much actual value is created on Earth, almost all of it is created by machines converting raw materials into goods.

  10. Anonymous5:55 AM

    Instead of going through complicated schemes to give everyone shares in an omnifund and force the public listing of certain categories of companies, why not simply bring back the income tax system from the Eisenhower administration. The rich get to keep a proportion of their income, so there is still an incentive to do well, but there's enough wealth distribution to promote equality and economic demand.

  11. Anonymous1:09 AM

    I would like to know your opinion on the "Peoples' Capitalism" concept put forth by James S. Albus