>Automation can, therefore, reduce the value of work before it eliminates jobs.
As automation takes over, the value of labor collapses, and workers' market bargaining power under capitalism is the first to crumble. Ultimately, this drives up the value of real assets. I agree that tech companies can profit and gain the upper hand in negotiations simply by demonstrating a machine before licensing it, as this alone diminishes the value of workers. I am seriously worried these days.
> As automation takes over, the value of labor collapses
This is the reverse of how the economy actually works. You need labor and capital to turn raw materials into goods and services. If you invested a lot in capital in automation, you don't want that getting screwed up for want of labor, and so you pay a premium for workers who will do the job right and ensure you're getting full value from your capital.
That's why highly automated companies pay their employees better than less automated companies, and highly automated professions pay better than less automated professions.
Both of you are right. Individuals who manage to stay employed in the face of automation will be paid significantly more than was possible prior to automation, for the reasons the comment you're replying to pointed out. But labor as a whole will have less value. To give a simple example: if you own a warehouse and you replace 6 warehouse workers making $80,000 a year with a fleet of robots and 1 technician earning $200,000 a year, automation has minted a very comfortable living for someone while dropping your labor costs significantly.
> if you own a warehouse and you replace 6 warehouse workers making $80,000 a year with a fleet of robots and 1 technician earning $200,000 a year, automation has minted a very comfortable living for someone while dropping your labor costs significantly.
So I've seen this argument made before, but they never seem to explain convincingly enough why that sole technician (or small group of technicians) would be paid so handsomely.
In a market in which there's a glut of labor, wouldn't there be plenty of desperate, and very capable, workers competing for the few available positions, thereby driving down the wages for those positions significantly as well?
Why have a technician at all? And without the six warehouse workers and one technician, why do you need the robots, the robotics company, or the companies paying the robotics company for the robots?
No, the other guy is just wrong. Capital and labor are complements. If one is plentiful (capital) and the other scarce (labor) then the scarce one gets bid up.
You pay the one technician $200k instead of $80 because that technician has an outside option that will pay him $199k. He has that outside option because everyone is automating their warehouses and factories and stuff, and so in aggregate we basically wind up with 6 times as many warehouses and factories each employing 1 person.
It's a little more nuanced. There is not infinite demand for warehouses. So some of what happens is an $80k/year warehouse worker becomes a medical technician making $90k/year providing non-automatable services to the warehouse guy making $200k/year -- but the general story is everyone's wages go up. And history bears that out.
There is a lot of reasons why automated companies pay more but it is usually to do with augmentation and the remaining skills required being higher on the skills pyramid and more scarce. Efficiency gains usually cause the next bottleneck to be hit requiring more skill and/or experience to fix (higher hanging fruit).
Usually the amount of pay increase no way compensates for the total pay lost across all workers - that's one of the incentives to continue with the efficiency gain of course. If it happens too fast only a select few will have jobs because the demand won't have time to match the new supply.
All the above assumes you need greater levels of intelligence to deal with the next bottleneck and that intelligence comes from humans as its only source. If AI is more intelligent than humans then this effect - known for most of human history - becomes an invalid assumption of the economic model; bottlenecks and the ability to solve them goes to the highest/cheapest intelligence.
IMV should AI do this it would invalidate most economic system assumptions including ones in capitalism, socialism, etc. My base case isn't a positive one sadly of what comes out on the other side.
AI feudalism and/or monarchy. A few owning everything; most other people surplus to requirements. Capitalism rewards scarcity with higher prices with both financial and social status for those with those scarce outputs - unfortunately what humans can do will become more common relative to capital, land and other resources often owned by the wealthy.
Even people that go off grid and develop self sufficiency will eventually be subsumed by the need to feed more resources to the AI genie to grant more wishes. Their land will be taken over, mined and or farmed - similar to colonies of old that were technologically less advanced than their invaders.
Modern times where we have democracy and capitalism are a relative recent phenomena when looking at the whole of human history that we take for granted when we shouldn't.
Do you see any way to avoid AI feudalism? Either political or technical. For example, maybe there is sustained demand and development of local models enough for individuals to retain some leverage, economic or otherwise. Perhaps mass movements could subvert the current centralizing forces long enough for this development, and eventually transition to a stable polity where people are given a "personal model" or implanted chip as some kind of human right.
The main way would be for people to use local models BEFORE the main AI labs take most of the excess economic activity. This creates demand for direct compute/land/energy rather than AI intelligence and as long as ownership of those stays with communities then a good economic model would be those rents subsidize the community (rather than say a UBI). Open source models will help majorly as long as people are willing to be 1 generation or so behind the latest model which currently isn't the case although I'm hoping it will do the job soon.
i.e. the community, rather than AI/big corp, would need to somehow own the scarce assets required for AI and extract economic rent from them. I think its a better system then say UBI because both parties still provide something of value. This isn't my base case but it is possible. It also needs to be done while human power structures still have economic power (i.e. governments)
So it would be a combination of political will (i.e. you can't use frontier models unless they can be run by end users) and technical in that you need to have enough compute distributed with the profits of that going to local communities (e.g. data centre rent). When the AI labs engage the community that way they will pay "money" which creates a demand from large corps to local communities and adds life to the monetary system - a good thing.
Effectively compute needs to be a commodity that is rent-able/accessible to everyone at competitive prices and have multiple providers. That enables open source models, and allows a spread around the ownership of AI. It can't be hoarded by the AI labs, nor can the chips (e.g. GPU's) have only a few producers.
automation doesn't replace someone they simply provide you extra time ,that was previously invested in doing repetitive task . it can be in hardware or software . software automation is must as many of thing. as now a days a lot of thing is software based in daily life .
There is no reason to expect capital to stop trying to squeeze labor just because inference takes the role of labor. With so much competition in the AI space, and no labor laws to protect it, why wouldn't capital drive the value of inference to the absolute bare minimum? And if the value of inference collapses to the bare minimum, who in their right mind would decide to serve inference?
Human labor has value because it is limited. If we keep up our current pace of data center buildouts and breakthroughs in model efficiency, then artificial intellectual labor will become functionally unlimited. Unlimited resources do not tend to hold their value. In that case, there are two potential outcomes: deliberate limitations on the output of artificial intellectual labor, which would require all parties involved to decide to lock themselves into their current market shares; or financial collapse of the whole ecosystem. What happens after that collapse is anyone's guess, but you have to imagine that it's the lenders who financed the whole thing who will be deciding what happens next rather than the failed tech businessmen.
> why wouldn't capital drive the value of inference to the absolute bare minimum?
Capital can drive the cost of inference down but the value is determined by whoever wants to pay for that inference. Therefore this question is not answered: how valuable really is these llm inferences and how much of a supply of such inference does the world really need.
The two optins dichotomy is false. There's at least a third option of the player with the deepest pockets outlasts and/or acquires the rest and then jacks up the price once they're firmly in control of a "large enough" share of the market. At that point they can go the route of all monopolies and acquire or destroy any upcoming competition to maintain their market share and begin rent-seeking behavior.
This keeps human labor devalued while not allowing artificial labor's value to fall to low enough that human labor is back to being cost effective.
If human labor is devalued, who will pay for the inference in the end? You might answer that some corporation will, but also that corporation must get their money from somewhere. And if "we the people" have no money to spend, at some point the corporation back scratching circle will break. Or am I wrong?
This paper created some neat theoretical mathematical models but I can't see anything that indicates that they have anything to do with reality.
I thought they'd come up with a neat mechanism that looked at actual wages in real companies where automation was introduced, but no. It's all spherical cows.
Isn't that how most economics works? All spherical cows that conveniently prove whatever is good for your boss's boss's boss's boss's wallet, and you get paid handsomely.
27 comments
[ 3.6 ms ] story [ 7.9 ms ] threadWorks fine on my machine. Maybe don't view from a phone, I guess?
As automation takes over, the value of labor collapses, and workers' market bargaining power under capitalism is the first to crumble. Ultimately, this drives up the value of real assets. I agree that tech companies can profit and gain the upper hand in negotiations simply by demonstrating a machine before licensing it, as this alone diminishes the value of workers. I am seriously worried these days.
This is the reverse of how the economy actually works. You need labor and capital to turn raw materials into goods and services. If you invested a lot in capital in automation, you don't want that getting screwed up for want of labor, and so you pay a premium for workers who will do the job right and ensure you're getting full value from your capital.
That's why highly automated companies pay their employees better than less automated companies, and highly automated professions pay better than less automated professions.
So I've seen this argument made before, but they never seem to explain convincingly enough why that sole technician (or small group of technicians) would be paid so handsomely.
In a market in which there's a glut of labor, wouldn't there be plenty of desperate, and very capable, workers competing for the few available positions, thereby driving down the wages for those positions significantly as well?
Why not paying the technician $80,000 a year?
You pay the one technician $200k instead of $80 because that technician has an outside option that will pay him $199k. He has that outside option because everyone is automating their warehouses and factories and stuff, and so in aggregate we basically wind up with 6 times as many warehouses and factories each employing 1 person.
It's a little more nuanced. There is not infinite demand for warehouses. So some of what happens is an $80k/year warehouse worker becomes a medical technician making $90k/year providing non-automatable services to the warehouse guy making $200k/year -- but the general story is everyone's wages go up. And history bears that out.
Usually the amount of pay increase no way compensates for the total pay lost across all workers - that's one of the incentives to continue with the efficiency gain of course. If it happens too fast only a select few will have jobs because the demand won't have time to match the new supply.
All the above assumes you need greater levels of intelligence to deal with the next bottleneck and that intelligence comes from humans as its only source. If AI is more intelligent than humans then this effect - known for most of human history - becomes an invalid assumption of the economic model; bottlenecks and the ability to solve them goes to the highest/cheapest intelligence.
IMV should AI do this it would invalidate most economic system assumptions including ones in capitalism, socialism, etc. My base case isn't a positive one sadly of what comes out on the other side.
Even people that go off grid and develop self sufficiency will eventually be subsumed by the need to feed more resources to the AI genie to grant more wishes. Their land will be taken over, mined and or farmed - similar to colonies of old that were technologically less advanced than their invaders.
Modern times where we have democracy and capitalism are a relative recent phenomena when looking at the whole of human history that we take for granted when we shouldn't.
i.e. the community, rather than AI/big corp, would need to somehow own the scarce assets required for AI and extract economic rent from them. I think its a better system then say UBI because both parties still provide something of value. This isn't my base case but it is possible. It also needs to be done while human power structures still have economic power (i.e. governments)
So it would be a combination of political will (i.e. you can't use frontier models unless they can be run by end users) and technical in that you need to have enough compute distributed with the profits of that going to local communities (e.g. data centre rent). When the AI labs engage the community that way they will pay "money" which creates a demand from large corps to local communities and adds life to the monetary system - a good thing.
Effectively compute needs to be a commodity that is rent-able/accessible to everyone at competitive prices and have multiple providers. That enables open source models, and allows a spread around the ownership of AI. It can't be hoarded by the AI labs, nor can the chips (e.g. GPU's) have only a few producers.
Human labor has value because it is limited. If we keep up our current pace of data center buildouts and breakthroughs in model efficiency, then artificial intellectual labor will become functionally unlimited. Unlimited resources do not tend to hold their value. In that case, there are two potential outcomes: deliberate limitations on the output of artificial intellectual labor, which would require all parties involved to decide to lock themselves into their current market shares; or financial collapse of the whole ecosystem. What happens after that collapse is anyone's guess, but you have to imagine that it's the lenders who financed the whole thing who will be deciding what happens next rather than the failed tech businessmen.
Capital can drive the cost of inference down but the value is determined by whoever wants to pay for that inference. Therefore this question is not answered: how valuable really is these llm inferences and how much of a supply of such inference does the world really need.
This keeps human labor devalued while not allowing artificial labor's value to fall to low enough that human labor is back to being cost effective.
I thought they'd come up with a neat mechanism that looked at actual wages in real companies where automation was introduced, but no. It's all spherical cows.
the boss's wallet and plenty of economists who made their career off supporting it were very upset about that one and tried to deny it.