Debtmageddon vs the robot utopia.
December 28, 2012 8:10 AM   Subscribe

This marks the first time I have ever used "Flagged as fantastic post."
posted by wolfdreams01 at 8:19 AM on December 28, 2012

But I have to agree with the third comment, "I suspect the sort of changes called for by this article (or, indeed, any significant nationwide changes) will not happen until after the economy collapses".
posted by jfuller at 9:24 AM on December 28, 2012 [2 favorites]

posted by odinsdream at 9:36 AM on December 28, 2012 [1 favorite]

The article is exactly right except the part about "society has to decide" which to allow to happen. The rich already run society and they have already decided. The only way to fix it is "class warfare" (i.e. the non-rich fighting back).
posted by DU at 9:45 AM on December 28, 2012 [3 favorites]

I've been thinking about how we're supposed to earn money once few people need to work for a long time, but the idea that the money would, under our existing systems, concentrate in the hands of the "robot owners" didn't occur to me, nor the idea that it was already happening.

I do think what's missing from this analysis is the price of energy. There can't be a robot utopia without cheap energy. And the prosperity of the post war years in the US probably had to do with cheap energy and the new ways in which it could be exploited, as it did with the relative equality in wealth distribution. And we need to find a way to keep energy cheap (including the externalities like pollution) in the future if we want to be in a position to choose between the models if Norway and Saudi Arabia (both energy-rich!) rather and not, say, Afghanistan or Cambodia...
posted by OnceUponATime at 10:00 AM on December 28, 2012 [1 favorite]

There can't be a robot utopia without cheap energy.

The robot doesn't need 18 years of embedded energy followed by training along with "downtime" or "vacation".

Replication for mass production is far simpler with the robot. Unlike messy humans who can screw up.

Remember when Obama was stumpping and did a photo-op at Master Lock? How it was great that Master Lock production was returning to the US? A robotic factory is how that happened. Same with the Made in America Apple's.

And the prosperity of the post war years in the US probably had to do with cheap energy

Where there be peak oilers they'd take ya out to the woodshed and educate ya right proper so your probably became a 100%.

And we need to find a way to keep energy cheap (including the externalities like pollution) in the future

Perhaps the model of cheap energy that everything is built on was folly?
posted by rough ashlar at 10:16 AM on December 28, 2012 [1 favorite]

Since I missed the edit window and my post above is just hard to read, I'll do the dreaded "new post to correct typos" thing...

"Probably had as much to do with."

And "rather than," not "rather and not."

(Posting while nursing a newborn is hard.)
posted by OnceUponATime at 10:30 AM on December 28, 2012

I've been thinking about how we're supposed to earn money once few people need to work for a long time...

Before we come to "how" we should address "why". If robots can do all the basic work, why can't I have free food and healthcare? Presumably the answer is "because the rich want to get richer".
posted by DU at 10:43 AM on December 28, 2012 [6 favorites]

There can't be a robot utopia without cheap energy.

There's already an ecosystem of "robots" that run on cheap energy that literally falls from the sky.
posted by DU at 10:44 AM on December 28, 2012 [1 favorite]

If robots can do all the basic work, why can't I have free food and healthcare? Presumably the answer is "because the rich want to get richer".

"Because you're a dirty fucking hippy and didn't work for it"

There's no work anymore you say? The robots did it all? Well, you should've bought a robotic factory.

Stop breathing that air, you didn't pay for it either.
posted by T.D. Strange at 11:52 AM on December 28, 2012 [3 favorites]

I think the comparisons to Finland and Saudi Arabia are apt: both countries are inherently unremarkable in terms of population and natural resources until they stumbled upon a huge cache of wealth. What did they choose to do with it?

Productivity growth rate is dependent upon smart, creative people who want to live in largely progressive societies. MySQL (a hugely popular open source database, sold to oracle for hundreds of millions) came out of Finland, and the Finnish startup scene is only getting hotter and hotter. How about Saudi Arabia?

Extractive, oligarchical economies like Saudi Arabia will not be able to support longterm productivity gains due to brain drain to more progressive societies like Finland.

For us Americans, lets hope we look to Finland instead of Saudi Arabia for what to do with our productivity windfall.
posted by Freen at 12:47 PM on December 28, 2012 [1 favorite]

Stop breathing that air, you didn't pay for it either.

so the use value for air is very high...

Izabella Kaminska: In an economy not so far, far away - Will we see a system like 'Star Trek' or the dystopia of 'Star Wars'?
A novel interpretation of this trend is starting to gain credibility among some economists: it is not that technology is stagnating but that monopoly interests are suppressing innovation. And the incentives for them to do so are increasing.

Put a different way, companies have an interest in sabotaging progress and efficiency because not doing so could lead to the sort of abundance that might make it impossible to monetise anything. After all, how can you mark up manna that falls from heaven?

As Harvard's Kenneth Rogoff noted recently: "I worry about how overweening monopolies stifle ideas, and how recent changes extending the validity of patents have exacerbated this problem."


As economists continue to scratch their heads over the implications of such technological trends, it is interesting to note that the world of science fiction may have long anticipated almost all of them.

In Star Trek, for example, Captain Kirk lives in what can be described as a "post capital" economy. Money no longer has a role because technological advances such as replicators, artificial intelligence, teleportation and warp speed travel have ensured a consistent level of material abundance that has rendered currency meaningless.

The crew of the Starship Enterprise don't "boldly go where no man has gone before" because they are paid to do so. They go because they are driven by a sense of purpose and adventure.

Contrast Star Trek's universe with the Manichean dystopia of Star Wars. Technology is arguably equally advanced but it seems to be accessible only to certain factions. Scarcity, crime and inequality are rife. Money and profit continue to be the primary motivating factors for most galactic citizens. A case in point: Han Solo's financial demands for transporting Luke Skywalker to Alderaan in the first Star Wars film.

That the Sith have ended up controlling the patent rights to the ultimate technology in the galaxy, the Death Star, meanwhile, is hardly surprising when you consider their path to power. As Star Wars aficionados will tell you, gaining control of the Trade Federation, a galactic cartel that held a monopolistic grip over the galaxy's resources and technology for the longest time, proved to be a critical stepping stone in that journey.

What do these fictional worlds have to do with our reality? It may be a stretch but perhaps they once resembled earth today: a place of abundance faced with a choice. Should technology and resource rights be democratised or should they be held in ever fewer hands?

As Paul Krugman, the economist, argued, too much market power can easily end up raising average rents to capital while reducing the return on investment perceived by corporations.

This notion resonates well with today's crisis because it is consistent with the paradox of rapidly rising profits amid low real interest rates, stagnant real wages and persistent unemployment.

It also explains rising inequality. After all, when human capital is replaced by physical capital, the fruits of innovation have to flow to the owners of the technology that produced it. A new rentier class is born and the economic problem, rather than be resolved, continues.

Yet, as Mr Spock might say, isn't that ultimately illogical?
-Paul Krugman: Asimov's Foundation novels grounded my economics
-Technology or Monopoly Power?
-Technology and Wages, the Analytics (Wonkish)
-Robots, capital-biased technological change and inequality
-The Political Economy of Inequality
-The Distributional Issue is Extremely Important
-Jobs, Productivity, and the Great Decoupling
-Cautionary Details on U.S. Manufacturing Productivity

previously [1,2,3]

more recently...
-Smart Machines, A New Guide to Keynes, and The Inefficient Markets Hypothesis [1,2,3,4,5]
-Kevin Kelly on replacing human jobs with robots: "Seven Stages of Robot Replacement"
  1. A robot/computer cannot possibly do the tasks I do.
  2. OK, it can do a lot of them, but it can’t do everything I do.
  3. OK, it can do everything I do, except it needs me when it breaks down, which is often.
  4. OK, it operates flawlessly on routine stuff, but I need to train it for new tasks.
  5. OK, it can have my old boring job, because it's obvious that was not a job that humans were meant to do.
  6. Wow, now that robots are doing my old job, my new job is much more fun and pays more!
  7. I am so glad a robot/computer cannot possibly do what I do now.
-Robot Workers: Coexistence Is Possible
-Why Making Robots Is So Darn Hard
-Robots and Liberalism
-An Imagined Community
-Rise of the cyborgs
-Heckman on predistribution
-When government does things better than private enterprise
-Defying Gravity
-The Mystery of Our Declining Mobility
-The Great Migration of the 21st Century
-Jorge Luis Borges and the Emerging Virtual Age
-The Great Labor Reset: Labor Laundering, Self-Sourcing, and Other Tales of Woe
-Why economics can't tell you how much to tax—only to make taxes simpler
-Defending the Romans
-What have the Romans ever done for us?
-Self-driving cars can navigate the road, but can they navigate the law?
-Larry Page on Google
-How Google Builds Its Maps—and What It Means for the Future of Everything
-High-Tech Factories Built to Be Engines of Innovation
-Inside The World's Biggest Consumer 3D Printing Factory
-The next productivity revolution: The 'industrial internet'
-No Longer Vaporware: The Internet of Things Is Finally Talking
-The Internet of Everything: Let's Get This Right
-The grid of 2030: all renewable, 90 percent of the time
-Global Trends 2030: Alternative Worlds
-On Understanding the History of Technological Change
-Offshoring and Directed Technical Change
-Economics may be dismal, but it is not a science
-Models Behaving Badly
-What Does The Regression Equation Mean? Causality? Something Else?
-110 Predictions For the Next 110 Years

also btw...
-How to win at forecasting
-The financial system: Market failure
-Proof that most methods of making stock market predictions don't work: "hundreds of thousands of people – and vastly more computers – are seeing exactly the same information. In my opinion, that is the main reason why most of these prediction methods are useless..."

Big data bonanza: The information revolution and the invisible hand
In 1945, as a long stand-off between regulated capitalism and socialist state planning was setting in, Friedrich von Hayek explained in a celebrated article why markets would ultimately triumph. The dispersed nature of knowledge, held by millions of separate individuals, meant central planners could never process enough information to allocate resources efficiently. The price mechanism, free and decentralised, gives everyone an incentive to act on what they individually know, and in turn reflects their actions. This allows markets to do the job vastly better.

Hayek was proved right by the socialist bloc's collapse in 1989. But as the Financial Times' "Big Data" series ( this week shows, the ability of individuals, companies and states to collect, store and analyse information has undergone a revolution since then. Free markets will continue to outperform central planning on the whole, but no longer only for the reasons Hayek gave.

Ever more powerful information technology now allows consumers to carry gigabytes in their pockets and businesses to organise and analyse data on a scale never seen before... The greater the ability to process information centrally, the more realistic the prospect of centralised control by companies or states. Both are ramping up their capacity to monitor the behaviour of customers or citizens. Policy battles will increasingly be fought over the use and ownership of data. Already, governments intervene to protect privacy...

Such contests will grow stronger before they are settled. Meanwhile, big data is empowering individuals, too. If the information revolution makes data more amenable to centralised analysis, it also gives individuals the knowledge better to exercise their economic freedom – price comparisons, for example. Even when companies use data to charge consumers different prices for the same good, this can enable exchanges that would be impossible at a uniform price, thereby making the market more efficient.

The horror scenario of big data enabling state or corporate power cannot be dismissed. More likely, the IT revolution is too powerful for its benefits to be monopolised.
-Big Data: Real-time information supersedes admen
-Data open doors to financial innovation
-'Gamification' looks to make work fun :P
posted by kliuless at 2:56 PM on December 28, 2012 [20 favorites]

In 1945, as a long stand-off between regulated capitalism and socialist state planning was setting in

Isn't the increasing concentration of wealth and power into fewer hands essentially creating a centrally planned economy? Even buying stocks leaves the money in the hands of the same elite club of CEOs, board members and bankers.
posted by psycho-alchemy at 3:50 PM on December 28, 2012

robots vs. capital linkfest
posted by kliuless at 4:32 PM on December 28, 2012 [2 favorites]

Some additional links to think about the role software plays. Unfortunately, most don't realize that software in many contexts plays the same role as robotics. Kevin Slavin: How algorithms shape our world

BloombergBusinessweek: This Tech Bubble Is Different Marc Andreessen on Why Software Is Eating The World

YouTube: Why & Are Changing the Rules on Overnight Shipping

And a fantastic book by Erik Brynjolfsson and Andrew McAfee, "Race Against The Machine".

zoo, thanks for posting the Debtmageddon article, it succinctly puts together a few thoughts I've had related to technology, globalization, big data, governance and capitalism.
posted by kmartino at 7:24 AM on December 29, 2012

Kevin Kelly on why Robert Gordon is wrong

Andrew McAfee: Are droids taking our jobs? [1,2,3]

Will robots take over our economy?

What are the policy implications of capital-biased technological change? "Paul Krugman has a very interesting post on this topic, so I will add a few points..."

Are robots and aging demographics self-cancelling problems? "there is too much talk of 'productivity growth' per se and not enough of either distribution or political economy. If robots concentrate wealth in the hands of IP owners, wages for many workers might fall or remain stagnant. That is a problem. Similarly, if robots concentrate wealth in the hands of IP owners, it may be hard to drum up the tax revenue to support a higher dependency ratio. The wealthy may produce a blocking political coalition or capital simply may be harder to tax for mobility, accountancy, and Laffer curve-like reasons."

Robots In Middle Management - "My prediction that robots will dominate management before they dominate blue collar jobs is based on The Dilbert Principle which observes that the least skilled employees are promoted to management. You need your most skilled people doing interface design, engineering, and the hard stuff. Management is mostly about optimizing resource allocation, and that is something a robot can learn relatively easily, at least compared to most skilled jobs."

The gamification of life - "Many businesses are using gamification to get people hooked on their products and services — and it is working, thanks to smartphones and the Internet."

Big Data Is Great, but Don't Forget Intuition - "It is easier than ever to measure and monitor people and machines, but the technology of Big Data is not without its shortcomings."
The quest to draw useful insights from business measurements is nothing new. Big Data is a descendant of Frederick Winslow Taylor's "scientific management" of more than a century ago. Taylor's instrument of measurement was the stopwatch, timing and monitoring a worker's every movement. Taylor and his acolytes used these time-and-motion studies to redesign work for maximum efficiency. The excesses of this approach would become satirical grist for Charlie Chaplin's "Modern Times." The enthusiasm for quantitative methods has waxed and waned ever since.

Big Data proponents point to the Internet for examples of triumphant data businesses, notably Google. But many of the Big Data techniques of math modeling, predictive algorithms and artificial intelligence software were first widely applied on Wall Street... The problem is that a math model, like a metaphor, is a simplification. This type of modeling came out of the sciences, where the behavior of particles in a fluid, for example, is predictable according to the laws of physics.

In so many Big Data applications, a math model attaches a crisp number to human behavior, interests and preferences. The peril of that approach, as in finance, was the subject of a recent book by Emanuel Derman, a former quant at Goldman Sachs and now a professor at Columbia University. Its title is "Models. Behaving. Badly."

...Thomas H. Davenport, a visiting professor at the Harvard Business School, is writing a book called "Keeping Up With the Quants" to help managers cope with the Big Data challenge. A major part of managing Big Data projects, he says, is asking the right questions: How do you define the problem? What data do you need? Where does it come from? What are the assumptions behind the model that the data is fed into? How is the model different from reality?

Society might be well served if the model makers pondered the ethical dimensions of their work as well as studying the math, according to Rachel Schutt, a senior statistician at Google Research.

"Models do not just predict, but they can make things happen," says Ms. Schutt, who taught a data science course this year at Columbia. "That's not discussed generally in our field."

Models can create what data scientists call a behavioral loop. A person feeds in data, which is collected by an algorithm that then presents the user with choices, thus steering behavior... Understandably, the increasing use of software that microscopically tracks and monitors online behavior has raised privacy worries. Will Big Data usher in a digital surveillance state, mainly serving corporate interests?
Why we got Facebook and not Mars colonies - "It's not true that we can't solve big problems through technology; we can. We must. But all these elements must be present: political leaders and the public must care to solve a problem, our institutions must support its solution, it must really be a technological problem, and we must understand it."

What would a socialist economy actually look like?
Radicals responded to the end of 'really existing socialism' mainly in two ways. Most stopped talking about a world after capitalism at all, retreating to a modest politics of piecemeal reform, or localism, or personal growth.

The other response was exactly the opposite — an escape forward into the purest and most uncompromising visions of social reconstruction. In certain radical circles, this impulse has lately heightened the appeal of a leap toward a world with no states or markets, and thus no money, wages, or prices: a system in which goods would be freely produced and freely taken...

It's safe to assume that humans display a mixture of cooperation and selfishness, in proportions that change according to circumstances. The lofty vision of a stateless, marketless world faces obstacles that are not moral but technical, and it's important to grasp exactly what they are.

We have to assume that we would not want to regress to some sharply lower stage of economic development in the future; we would want to experience at least the same material comforts that we have under capitalism. On a qualitative level, of course, all sorts of things ought to change so that production better satisfies real human and ecological needs. But we would not want to see an overall decline in our productive powers. But the kind of production of which we are now capable requires a vast and complex division of labor. This presents a tricky problem...
Planners' preferences - "We are pushed back, inevitably, to the planners having to make choices which express preferences or (in a different sense of the word) values. Or, said another way, there are values or preferences — what Nove called 'planners' preferences' — implicit in any choice of objective function. This raises both a cognitive or computational problem, and at least two different political problems..."

The socialized capital market
The problem is that for the longest time economists have applied the concept of creative destruction to the argument that mechanised labour is net disadvantageous to the economy (which very loosely was all of the above's argument). That is, it doesn't matter if technology kills jobs, because jobs in entirely new sectors — many not even thought of yet — spring up to replace them. Add that to comparative advantage effects and you get a process that leads to improving prosperity on all fronts.

And indeed, for the longest time the overriding wealth effect associated with this capitalistic process has been impossible to overlook.

But herein lies the problem: Those forces of "creative destruction" may now be pushing up against a brick wall. In capital terms, it's no longer the case that investment is flowing into industries that create new jobs and opportunities for capital returns. Rather, in many fields, investment is now flowing into industries that depend or make the most of voluntary or free input. Take social networking, where Facebook is an obvious example, or the crowdsourcing benefits drawn from the Encylopedia Galactica Wikipedia.

This one fact naturally has the potential to change everything since we go from a world where labour is expressly defined as activity that demands compensation, to a world where labour is increasingly redefined because it is a source of pleasure, needing no compensation at all. In this respect, if you follow Ricardian logic — which suggests that labour is the key determinant of value, not utility — then value itself must be redefined too.

Indeed, some have already argued that econometricians should start inputting alternative measures of value and wealth into their growth models. Quality of life, for example, should be assessed not only by consumption goods (for example, rice, TVs, train rides) but also more fundamental aspects of well-being (for example, health, emotional states, freedoms) — much harder to value in purely monetary terms.

But there's also the collaborative side of it... "Instead of creating new industries that are based on mechanization and thus require the production of new robots and machines as in the 20th century, what we are witnessing with the collaborative economy is a shift from jobs towards unpaid labor from a crowd of volunteers... Long story short, this is not about less work, but about having fewer paid positions."

Another way of looking at it, is having less work and more leisure time in an economy that can afford to keep an ever larger portion of the population out of work.

Which gets back to the point about the monopolisation of profits in such a world and how to equitably distribute the wealth that's created via the collaborative process.

In other words, is it fair for a corporate that depends entirely on voluntary input for its capital returns, to suck up those profits entirely for itself? Or should that wealth somehow be shared amongst the collaborative community? Are these corporates becoming rentiers as some argue, or as others might counter social utilities, which need to make money to cover costs of operation and infrastructure.

There is one potential solution. You could call it the "common agricultural policy" response. A model in which people are compensated by the government for staying out of the "financially compensated" workforce if their occupational field is oversupplied and suffering the effects of overproduction and capacity, and thus become free to deploy leisure time as they see fit with no need for compensation.

Another way of achieving the same result, of course, is simply by debasing the rents collected by industry via permanent money creation — so as to offset the disproportional wealth effect on today's tech rentiers as well as older generations, which all things relative, appear to have over-benefited from the first mover advantage associated with their era. So not dissimilar to what's happening now, but with one important difference: that the newly created money flows directly to spending individuals rather than corporates, savers and banks, who do anything but spend.

In fact, not only do they avoid spending, they do their very best to avoid wealth "debasement" by crowding each other out in an ever limited pool of safe assets. This is ironic given that the process only deprives new industries from capital investment, while accumulating "wealth" amongst the older and less productive generation. What these safe asset investors fail to recognise, however, is that the process actually transfers the capital allocation decisions to government instead — since the other side of any safe asset investment is almost always government, meaning its existence is almost entirely dependent on government spending.

The very same government spending that most wealth preservationists — as the fiscal cliff drama has shown — have a major problem with.

We would imagine the die-hard capitalist retort would be: well, isn't this just state-managed wealth confiscation?

In a way, maybe it is. But, we daresay, that's the wrong way of looking at it. This isn't really an anti-capitalist phenomenon. It's more a process of capitalism's evolution. It's the consequence of collaborative forces coming into play in an economy that is no longer preoccupied with living hand to mouth.
Misunderstanding Financial Crises - "I think that to address this issue we really need new measurement systems for the economy. Remember that during the Great Depression President Roosevelt had no idea whether the economy was growing or shrinking because national income accounting had not yet been invented. He sent people out to count the number of freight cars on trains. The financial crisis revealed that in a world of derivatives and off-balance sheet vehicles our situation is now pretty much the same. We need a measurement system appropriate to the new world..."

Chairman Ben S. Bernanke: Economic Measurement
In many spheres of human endeavor, from science to business to education to economic policy, good decisions depend on good measurement. More subtly, what we decide to measure, or are able to measure, has important effects on the choices we make, since it is natural to focus on those objectives for which we can best estimate and document the effects of our decisions. One great pioneer in this subject area, of course, is Simon Kuznets, who was awarded the Nobel Prize in 1971 for his work on economic measurement, including the national income accounts. Over the years many economists have built on his work to further improve our ability to quantify aspects of economic activity and thus to improve economic policymaking and our understanding of how the economy works... Evolving technologies that allow economists to gather new types of data and to manipulate millions of data points are just one factor among several that are likely to transform the field in coming years.

As we think about new directions for economic measurement, we might start by reminding ourselves of the purpose of economics. Textbooks describe economics as the study of the allocation of scarce resources. That definition may indeed be the "what," but it certainly is not the "why." The ultimate purpose of economics, of course, is to understand and promote the enhancement of well-being. Economic measurement accordingly must encompass measures of well-being and its determinants... aggregate statistics can sometimes mask important information. For example, even though some key aggregate metrics--including consumer spending, disposable income, household net worth, and debt service payments--have moved in the direction of recovery, it is clear that many individuals and households continue to struggle with difficult economic and financial conditions. Exclusive attention to aggregate numbers is likely to paint an incomplete picture of what many individuals are experiencing. One implication is that we should increase the attention paid to microeconomic data, which better capture the diversity of experience across households and firms. Another implication, however, is that we should seek better and more-direct measurements of economic well-being, the ultimate objective of our policy decisions.
posted by kliuless at 2:23 PM on January 2, 2013

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