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From Subsistence to Post-Scarcity
How AI Might Revolutionize Our Economic Systems
As we continue to see, artificial intelligence advances relentlessly, paving the way for inevitable job loss. On one hand, the effectiveness of the newest Large Language Models (LLMs) to be able to predict text in a somewhat accurate manner is just needed to solve a lot of corporate needs in many different businesses. So let’s dive into what a potential future like this might look like, but I don’t want to be either a doomer talking about job loss or a somewhat naive optimist claiming it will all be perfect and rainbows (Looking at you Marc Andreessen) let us explore how embracing this shift can propel us toward a post-scarcity economic system, and see what other economists say about this and what “solutions” could there be to the problem of rising automation and systemic unemployment for larger and larger percentages of humanity.
Embracing Job Automation:
It will come as no surprise to us that more and more companies are adopting AI as a tool to enhance the productivity of their workers. If you can accelerate your rate of response by answering customer complaints, or maybe reduce the time using the new AI autofill function on Photoshop. You now have workers that can do more in less time which means great a company increases its productivity and keeps the same costs on human resources then which means it could hire even more people and increase its productivity and grow in an ever-increasing competitive marketplace.
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But inevitably a lot of companies will be with an excess of “productivity” that might not be met by enough demand by the market due to its very chaotic and unpredictable nature. So that means that companies will logically make the decision that better suits them to keep themselves afloat and fire people. This because a company just like any other for-profit or efficient organization will only hire and keep someone employed as long as that person brings value equal to or larger than the cost it is required to keep that person on the staff is the basic understanding of how firms function and try to keep themselves alive by being profitable.
So of course we will be seeing more and more how AI becomes an enhancement for human capabilities but for many cases (specially in middle management and for mediocre workers) AI could straight up replace the need for humans in certain jobs. The problem is just how much will it replace or how many humans could be replaced by an AI. I think this is a moot question because given enough time I think most if not all jobs could and will be automated, and we have seen time and time again that this happens it could come faster or slower than some people predicted, but the inevitable and relentless advance of technology helping, enhancing, and eventually surpassing humanity.
Liberating Humanity from Mediocrity and Enabling Growth:
Now, don’t get me wrong I’m all for Team Human all the way, but what if the loss of jobs to automation isn’t the end of the world but just the end of a system that we’ve been living and that has given value to human life by its capacity of being productive under a certain criteria. Because if done properly this massive job loss could mean the liberation of millions of people around the world who are currently living “in the grind” day in and day out, almost like subsistence farmers from centuries ago, but living paycheck to paycheck without a moment of peace but a relentless and endless struggle to keep the wheels spinning in some bullshit job that adds close to no value to humanity as a whole. So why should we cry about those mediocre jobs being lost?
We shouldn’t no job has any intrinsic value, but what comes out of the job itself, how it can help create new products and develop new scientific discoveries, jobs themselves are just ways that humans can collaborate and work together for common goals and make a living out of it.
And that’s not even counting the repetitiveness of so many jobs that humans have created in our organizations and institutions that will be eradicated freeing people from a slow road to burnout. Also not considering how real valuable human activities such as artistic endeavors, scientific discoveries, and similar things that add to the compendium of the human experience and knowledge will be greatly enhanced by the use of AI as assistance and enhancement tools. (unlike most corporate jobs which are just lubricant oil for increased efficiency of the manufacturing and managerial organizations we’ve built, but not adding a whole bunch of value for our species if we’re honest)
Also this increased usage and efficiency and productive capabilities humanity as a whole could unleash in the coming decades, could soon enough enable an efficient and effective fulfillment of many basic human needs, from digitizing a lot of current physical services or by the speed of development of solutions to problems currently facing humanity we could be seeing the rise of a post-scarcity economic system in some places. This aligned with what some economists have claimed that AI could help economic growth through the acceleration of scientific and innovative development. And eventually, with this exponentially advancing technological development, we will reach a point of efficient and creative solutions for so many of the problems facing humanity that we will uplift our species from the current state of affairs.
Also not only thinking of the economic perspective of freeing people from monotonous tasks and monotonous lives but helping people who have been struck by health and other ailments that limit their capabilities in life, it is c virtuous cycle of improvement for humanity in our quality of life and of ourselves as a species too.
Exploring Solutions and Economic Models
Now, for the moment I find the number of solutions to the question of AI-based unemployment rather lacking. For once I’ve been reading about this topic since 2010 when I read the great book “The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future” by Martin Ford and he has an interesting scenario:
Given rising automation more and more people will lose the means for them to be able to afford products and services in the market. This reduction of sales will move companies towards developing products to the upper echelons of the economic pyramid but eventually, that will not be enough to sustain ALL of the economy, and as AI continues to eliminate more and more jobs you’ll have an extremely tiny percentage of people concentrating the gains of this increased productivity and wealth created by AI without the need of other humans.
This can lead to an all-out revolution or a breakdown of our entire economic system. In either scenario, it means A LOT of dead people either by the slow rise of extreme poverty or under the boots of the mob of the revolution. But how can we prevent this?
On one hand, there are claims for the creation of a new economic system like a Fully Automated Luxury Communism where most of the boring tasks are done by robots and AI and humanity can just use the gains of these productive automatons in lives of extreme luxury. It sounds interesting and if anyone ever saw star trek it seems somewhat similar to how humanity was living in that future. But with the track record of communism as an idea and philosophy,ly doubt this will be adopted unless they do a very strong PR campaign or just straight-up rebrand it as a whole.
Another solution is the creation of a Universal Basic Income, something like taxing AI companies and wealthy individuals for their gains and the job loss they have brought upon the economy. Then redistributing that so each citizen has the bare minimum to cover their basic needs and maybe have some more which they can alter to use for consumption of other goods or look for creative endeavors to fulfill their need to be doing something or learn something new or whatever. This seems like the most conservative since it keeps most of the economic institutions we know today while reshifting the source of income of people.
Now UBIs have been used as experiments in different ways ann different countries with a somewhat mixed bag of results. But my question is how can this solution ever be implemented? Automation is a complex issue, just as a simple scenario y: a company from Silicon Valley in the US creates an AI that does customer service assistance and companies in Bangladesh, India, and Costa Rica hire these services and fire all of their employees, will the taxes to fund an UBI come from the American company? Or from the companies who hired the service? And how would you transfer that money from one country to another? And what about exchange rates and cost of living? A UBI for a citizen in Germany might give her rent for a flat, transport, food, and extra for consumption but the same UBI might allow the same person to buy a plot of land in Guatemala and have her very own estate. (with a white Panama hat of course if not you cannot be a Terrateniente)
But then again I hope for more research and proposals to be developed in the coming years by more and more economists getting into the field of AI-related topics such as AI ethics (in a couple of months I’ll be sharing a copy of my thesis or parts of it over here) Macroeconomic modeling with the consideration of AI-driven job loss. And plain old economic growth with AI as a factor. How can we develop and create new and better economic models for the coming years it should be one of the key areas of research in all of economics if we ever want to reduce the harm that will happen during the coming years and with the transitions we will se towards better economic systems.
Safeguarding Democracy and Human Welfare in the Age of AI:
Now, many of these concepts we’ve discussed might be still very much far-fetched fantasies at this point, but humanity must be discussing and analyzing these things today while we are still at the dawn of the age of AI and not when the changes are happening faster and faster and we can’t adapt our institutions, our systems and ourselves accordingly and instead of being a rising tide that floats all ships it is a violent tsunami that destroys everything in its path and the people are being swept by it.
There are risks as we’ve mentioned before for an extreme wealth inequality concentration to be made in the coming years by certain companies and their most valuable shareholders. Also a concentration in certain countries where AI-backed technologies are abundant and they have been able to seduce and retain the high-value human capital required to build these systems.
The social upheaval could be massive and global, to the likes of which we have never seen and as we have seen from our past no revolution is without thousands upon thousands that are trampled by the mob. Also, these revolutions are a great place for new authoritarian leaders to channel the frustrations of the crowd and channel that toward the old institutions and position themselves as the savior of the poor and downtrodden. So we have to be careful if we want to help democracy survive in our countries and how we can proactively prevent and mitigate the negative consequences of AI unemployment but at the same time capture its value and try to uplift as much of humanity as possible.
I believe that is one of the great challenges of economics, politics, and humanity as a whole in the coming years. Because as it seems today we need to develop better solutions for this. Retraining is NOT a viable solution for most people it is expensive, and slow and we might be able to retrain a small percentage of people from one job to new jobs that of course will be created in the coming years, but, it will probably not be enough and many hundreds of thousands will be left behind at first and then it will be millions who could become abandoned by the accelerating rate of progress.
So is UBI the best solution? No, I don’t think I have seen good enough solutions yet being proposed in the mainstream at least if you have seen something interesting please let me know in the comments.
Modeling New Societies.
Now I don’t think the rising Automation of most jobs is a bad thing, we know as a species we are capable of producing to be able to sustain most of humanity with a somewhat good quality of life the main problem is the logistics supply chain and economic incentives to figure and solve most of that stuff out. That is also due to the complexity of the world we live in, just because we can produce doesn’t mean we can or know how to deliver, distribute and keep that supply chain going. It is not an easy thing for us to do.
Hopefully, as the eternal optimist that I am, the rise of AI means also the rise of our capabilities of solving these quandaries. If we have AI-assisted researchers working in laboratories accelerating the rates of drug discovery, we can also have AI-assisted economists and social scientists unraveling the complexities of the problems that are troubling humanity here and now. We will be seeing a great rise in economic growth with the implementation and development of more and more AI-driven systems in different industries which will accelerate the rate of discoveries in scientific research which will in turn further accelerate economic growth and the development of innovative solutions. But how can this economic growth benefit all of humanity when people are without an income and means to afford the wonderful products and services that will be created?
Hopefully, we can come up with clever and imaginative solutions for these questions that go beyond the ideals of old German dudes from two centuries ago. But standing on the shoulder of giants we create new ideas of how our societies and economies should be structured to benefit and uplift humanity and to enhance and accelerate the rate of our technological growth. This, of course, will mean a point where our technology and ourselves will slowly be the same and hopefully, after that, we can expand beyond our planet and continue our explosive growth toward the cosmos expanding humanity’s reach far beyond the limitations we have today.
Are we on a doomed path?
In the end, I don’t think the elimination of a Job by AI is inherently a bad thing I don’t think a job is something valuable, I think that the person behind that job is what is valuable and what we should be concerned about. Jobs are just a means to an end to get income so people can thrive in our current economic system. So if we look beyond that we should be seeing how can we use the technologies and systems and institutions that we have and uplift ourselves as a species. How can we maximize and expand our growth while keeping most of humanity thriving and alive?
Hopefully in the coming years and before any Global Catastrophic Risk happens and wipes a large swath of humanity we can begin to discuss and develop the ideas that will give birth to better types of institutions and societal models that fit better to the world that we are creating. That enables humanity to continue to unleash its creative power and its endless curiosity. We need societies that are prepared for the coming challenges and are helping us to guide and solve the problems ahead instead of focusing solely on the here and now.
I hope that we sooner rather than later can use and channel the force of AI for the betterment of humanity and our institutions. Accelerate our rate of progress and create worlds beyond our wildest dreams, expand beyond our current limitations, and transcend the chains that have kept us from grasping the universe with our ambition. Hopefully, in the coming years, we will overcome these challenges and grow like nothing we have ever seen before.
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