[Bill,
January 24, 2012]
Thought experiment on globalization and automation
One thing we're all starting to realize is that the rules have fundamentally changed, economically, for the U.S. What happened to the lower classes in the 70s and 80s happened to the middle classes in the OOs. But this decade looks like the big squeeze, no matter who is president and which party is in charge.
We have issues related to globalization -- both parties are in favor of it -- and automation. http://www.theatlantic.com/business/archive/2012/01/why-the-united-states-will-never-ever-build-the-iphone/251837/?google_editors_picks=true
We moved from hunter-gatherers to subsistence farmers to agrarian economies to the industrial revolution. In each case, despite severe dislocations, we moved from one to the other. But what's next -- a service economy? I think we all know that low-paid service sector jobs won't allow for a middle-class lifestyle. I'm afraid -- yes, afraid -- that what's happened to the cities is going to happen to the country as a whole. Even the nation-state is under attack -- from the massive Wikileaks to globalization to terrorism.
Where are we heading? That's actually pretty easy -- we are headed into severe dislocation, followed by a highly distributed network. The nation state will continue to exist, but it will create false boundaries on a network that knows virtually no boundaries. Individually, we are nodes on a network. You can live anywhere -- and will, if you can afford it.
Let's do the thought experiment, and I don't know the answer. I am thinking out loud here. Suppose a freak of nature is born with 10,000 orders of magnitude more intelligence than anyone else. He invents robots capable of all agriculture, all manufacturing and all ordinary services -- the entire supply chain from drilling oil out of the ground to raise cows to packaging them and selling them to automated checkout. Say he can do this extremely cheaply. A house can be manufactured for $1,000, capable of generating its own power indefinitely, creating water from air (dehumidiers) and handling its own garbage and sewage. There really is no need for anyone to do anything.
Now, here's been my bugaboo with economics, and the limits of my thinking: Who can afford that $1,000 -- because none of us have real jobs. Say he can product enough food for everyone in the world for $1,000 per year, too. Who can buy his food? The guy's robots are so smart and powerful we can't even hold a gun to the guy's head.
So it's lose/lose. He doesn't have much of an economy to sell into, and we don't have the cash to pay his very small invoices.
What goes on with globalization and automation is like that. If people can't afford the products they make, then the people who can afford to buy the products are steadily undermined, until, logically, no one has any money and thus there can be no payment for these great services.
We have to hope the smart guy just flat-out does it on his own ... with no hope of renumeration for his work.
The only industries left will be entertainment and creative services, artisan work, illegal drug distribution, gambling, that sort of thing. We'd have to be a world of artisans and monks and very disciplined family types.
But knowing human nature, we'd have idle hands. Not good.
I can't understand how globalization is supposed to work. The people who build the products can't afford them, and the people who buy them are sitting in quicksand because there's less and less need for jobs like theirs.
That's why I can't see the future, except dislocations, which if we don't blow ourselves up, will be followed by an extremely automated world that's inhuman, has little to no need for us, and will likely impoverish us.
But again, I'm at the end of my thinking ...
We have issues related to globalization -- both parties are in favor of it -- and automation. http://www.theatlantic.com/business/archive/2012/01/why-the-united-states-will-never-ever-build-the-iphone/251837/?google_editors_picks=true
We moved from hunter-gatherers to subsistence farmers to agrarian economies to the industrial revolution. In each case, despite severe dislocations, we moved from one to the other. But what's next -- a service economy? I think we all know that low-paid service sector jobs won't allow for a middle-class lifestyle. I'm afraid -- yes, afraid -- that what's happened to the cities is going to happen to the country as a whole. Even the nation-state is under attack -- from the massive Wikileaks to globalization to terrorism.
Where are we heading? That's actually pretty easy -- we are headed into severe dislocation, followed by a highly distributed network. The nation state will continue to exist, but it will create false boundaries on a network that knows virtually no boundaries. Individually, we are nodes on a network. You can live anywhere -- and will, if you can afford it.
Let's do the thought experiment, and I don't know the answer. I am thinking out loud here. Suppose a freak of nature is born with 10,000 orders of magnitude more intelligence than anyone else. He invents robots capable of all agriculture, all manufacturing and all ordinary services -- the entire supply chain from drilling oil out of the ground to raise cows to packaging them and selling them to automated checkout. Say he can do this extremely cheaply. A house can be manufactured for $1,000, capable of generating its own power indefinitely, creating water from air (dehumidiers) and handling its own garbage and sewage. There really is no need for anyone to do anything.
Now, here's been my bugaboo with economics, and the limits of my thinking: Who can afford that $1,000 -- because none of us have real jobs. Say he can product enough food for everyone in the world for $1,000 per year, too. Who can buy his food? The guy's robots are so smart and powerful we can't even hold a gun to the guy's head.
So it's lose/lose. He doesn't have much of an economy to sell into, and we don't have the cash to pay his very small invoices.
What goes on with globalization and automation is like that. If people can't afford the products they make, then the people who can afford to buy the products are steadily undermined, until, logically, no one has any money and thus there can be no payment for these great services.
We have to hope the smart guy just flat-out does it on his own ... with no hope of renumeration for his work.
The only industries left will be entertainment and creative services, artisan work, illegal drug distribution, gambling, that sort of thing. We'd have to be a world of artisans and monks and very disciplined family types.
But knowing human nature, we'd have idle hands. Not good.
I can't understand how globalization is supposed to work. The people who build the products can't afford them, and the people who buy them are sitting in quicksand because there's less and less need for jobs like theirs.
That's why I can't see the future, except dislocations, which if we don't blow ourselves up, will be followed by an extremely automated world that's inhuman, has little to no need for us, and will likely impoverish us.
But again, I'm at the end of my thinking ...