Archive for July, 2009

Why Equal Societies Almost Always Do Better

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The most intelligent thing I’ve read about economics in a long time. It also implicitly speaks to what role government can play to help alleviate the natural conflicts of the “free market”. Tags:

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I’d never heard that term before a few weeks ago, but I get the concept.

Sometimes jobs are not outsourced or offshored…they simply disappear and no one gets them…or at least that is the concept.

As I think about machines taking blue collar jobs, and computers taking increasingly white collar jobs….it is only a matter of time until no one’s job is safe.

The economic concept there is that the increasing technology is a good thing:  We don’t want people farming with oxen and mules.  We’d all be starving to death…not enough food to go around.

We also like the automation of more complex work.  We complain when someone’s job is replaced by an Excel macro, but was the work really that worthwhile anyway?

Also, I worked on one of those big enterprise platforms for years (like the ones that handle stock trades, account balances, cut paychecks, etc).  Trust me, without stuff like that our society wouldn’t exist.  If the virtual paper pushed by those systems became real paper that someone had to process….every single person in the US would be employed as a paper pusher.  That’s no life.

We need those things; every job that is “lost” makes our society better.

So what’s the issue?

Well, two things:

First, the easy one:  Offshoring is great because we save money by allowing Indians to program our software and China to manufacture our goods.  We spend that money elsewhere, hopefully in some productive pursuits in addition to enjoying a higher standard of living…and we’re a little better off on average.

Now it gets more conceptual:  China is learning to manufacture.  India is learning to program.  What are we learning?

The concept is that China manufactures cheap, basic goods, and India programs low level software…but where do you learn how to manufacture complex goods and high level software……you start with the cheap and low level.  We are exporting our expertise to them, and not replacing it here.

The second point is a bit further out:  Goods get cheaper as we get better at making them…and we are definitely getting better.  Economics also says that as the marginal cost of making one more item drops to zero, the cost can also drop to zero.

Will we ever get to zero?  Will things ever cost nothing (or close to it)?

It isn’t a dumb question.  We live like kings if you compare us to someone  200, 300, 1000 years ago.  The cost of stuff IS dropping…just not quite to zero, and we think up new crap to get, so we end up on the hedonic treadmill.

I used to think that would last forever, but I am not so certain anymore.  I’ve seen some real big ideas come out of bio-tech, alternative energy, nano-technology, artificial intelligence, etc.  If even a few of those hit……we’re in for a ride.

Let the price of energy drop to near zero and watch the price of all other goods drop dramatically.

Let bio-tech add 50 good, productive years to everyone’s life and watch the most productive of us invent/outsource/unsource things we never dreamed of.

The biggest (probably most far off) bets are in nano-tech and artificial intelligence.  Imagine a nano-tech printer that can “print” anything you can draw up (there is already work being done with these kind of general purpose printers).  Now imagine you didn’t even have to draw it up…you ask your artificial intelligence to think of something for you.

Some of this isn’t so far fetched.  The printer idea will come in some form.  So will AI to rival human intelligence.  There are already self-improving algorithms that you can give a problem to and generation over generation (all on a computer) it (being the algorithm) will get better at the task…in essence evolving.

When this hits the price of goods will fall to near zero, and basically humans will be worthless, vis a vis the Matrix and Terminator.

Anyone that thinks I am advocating that we attempt to  re-cork the bottle and protect jobs here at home or become subsistence farming Luddites misunderstands.  I am simply playing out scenarios.  Protectionism wouldn’t work anyway.  Societies rise and fall.  The US is on the downslope.  Nothing will change that.  As for humans being useful, frankly I don’t think it matters.  Just as societies rise and fall, so do species.  Perhaps it is time to give something else a chance.

Ok, I’m off to bed.


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