At the East Bay Futurist meetup today, we discussed a non-Singularity scenario  similar to the vision in Lights in the Tunnel.  In this scenario, automation eliminates enough jobs that the economy stops functioning.  The idea that automation causes macroeconomic harm is known as the Luddite Fallacy.   Historically automation has lead to short term unemployment, but the resulting lowered cost of goods supposedly created more demand and the displaced workers were able to find jobs in other sectors.

We were discussing this topic last year around this time at the East Bay Futurists.  It may be that the fall brings out these melancholy thoughts.  Maybe the damp and cold produces some malevolent mold or something.  But I am still looking  for an economist who can show that automation is continuing to create jobs.  It looks like the world employment to population ratio has decreased from 62% to 60% between 1991 and 2011.

Blogger Steve Roth offers a couple of reasons why the Luddite Fallacy argument might be running out of steam:

1. The limits of human capabilities (Not everyone can get a PhD in Computer Science and eventurally there may be nothing that machines can’t do.)
2. The declining marginal utility of innovation and consumption. (All the important stuff has been around since the 60’s and really how many more mansions do you need?)

Now supposedly there is some sort of argument that says consumption by the super rich can continue to drive the economy.  But I like how Roth dissects that argument using Marginal Propensity to Consume.  Basically poor people spend a greater portion of their income.  Apparently the third Lamborghini is somewhat less satisfying to the rich than having enough food is to the poor.

Now there is also this idea that we can somehow transition from a work based economy to an asset based economy.  Robin Hanson alludes to this during this discussion with Martin Ford (see 21:20 for the asset argument).  Hanson’s point about machines generating more net wealth may be true.  Poverty is  decreasing, the number of people living below the poverty line worldwide has decrease from 52% to 28% between 1981 and 2008.  How do we transition from adding value through labor to just owning assets?  It’s especially hard for me to understand how this new asset economy works for the poor.  Do they switch from owning goats to owning GoatBots in order to survive?  A lot of people will get left out in the cold in that sort of economy.  Asset management is tricky and the sheep will soon get fleeced of their assets.

So we need to fundamentally restructure our economy in the face of accelerating automation.  Is it still possible to salvage the work model by finding ways to monetize what people do with their hearts and minds as Lanier suggests?  Or should we just give everyone $25,000 a year to drive consumption as Marshall Brain has suggested?

A lot of people seem to think that some sort of stipend will be required to keep the economy flowing.  However, I am fairly skeptical that this will come about.  Look how the EU is pushing austerity.  Here in the US, half the population demands freedom FROM health care.  I honestly think that us Americans will choose to go Mad Max before we turn (more) socialist.  But I could be wrong.  The Great Depression brought about a bunch of social programs.  Maybe something like that will happen again.

But, Lanier’s argument is interesting:monetize heart and minds, etc.  As I said before, Vinge thinks that the only thing humans can do which machines won’t be able to do is want things.  How do you monetize that?  And even if the SuperRich did suddenly decide to get all loving and start handing out stipends, what about well being?  I think of the youth rioting in England in 2011.  Those kids had the dole, but they weren’t happy.

Seligman’s PERMA (Positive emotions, Engagement, Relationships, Meaning, and Accomplishment) model of well being comes to mind.  We can hand people money and then what?  Star Fleet won’t be recruiting for a while yet. Where does accomplishment come from?  Games?  The arts?  But still this is all premised on a bunch of meglomaniacal sociopaths handing over a bunch of money.  I’m not holding my breathe.  I am just saving as much money as I can in the hopes of affording an adequate KillBot(tm) once ThunderDome time comes.