Capitalism Doesn't Need Consumers Anymore...

artificial intelligence has been a concern for economists and the general public for as long as computers have been able to perform basic tasks Beyond Simple calculations the Skynet apocalypse is not an impossibility when tasked with playing a game of Tetris multiple modern AI programs have just learned to pause the game or shut it down because they realize they can't lose if the game isn't running as Black Box neural networks are tasked with more real-world responsibilities one would hope that their logic develops a bit more Nuance or else asking a machine to make sure the kids don't spend too long watching TV could have drastic consequences now even if everything works exactly as intended automation can still cause a lot of problems and one of the ones that people are most worried about is what happens to our jobs once machines can perform them better than we can nobody really knows how long this will take or if it will even happen at all but there is understandably still a lot of speculation about what a future will look like when the economic value of most people is negative human are still going to need to eat and drink and be housed and if they can't produce anything to earn their keep they will ultimately be relying on the generosity of some entity to provide these goods and services for them for nothing in return what that entity will be and why they will offer these resources for nothing in return is where a lot of misconceptions start and understanding the true economic implications of this kind of future might simultaneously make us all less anxious about the short term and more anxious about the long term so do our economic systems still work in a world where humans have nothing of value to provide what group of people are likely to suffer the consequences of this technological development first and finally our current advancements in technology pushing Us close to a time where we will need to seriously answer these questions this episode of Economics explained was brought to you by HubSpot in this video we're going to talk about how AI is not necessarily going to replace jobs but will instead leverage existing labor to make everybody more productive and our economy is more prosperous overall now while the theoretical economics of these new technological innovations is very interesting the real practical applications are probably more important on an individual level the team and I here at ee recently read through their short ebook on using generative AI to scale content operations that gave us advice on how to use prompts effectively and ideas about how we could use tools like this in the future crafting concise and optimized video descriptions for YouTube used to take me hours however by leveraging the prompts outlined by HubSpot and employing the known AI tools we could significantly expedite the process it also spoke about the limitations of current Ai and problems that people might run into with plagiarism or even AI biases when using these tools HubSpot makes practical content like this available totally free on their website by following the link on screen now or in the video description below now as always before we get into things I have to give the big disclaimer to any new viewers that nobody can predict the future least of all economists and even the experts on automation that are building out tools like catch apt and robots that can move like humans disagree on what these tools will be able to do in a few years time let alone a decade or a century but with that out of the way a lot of people and even economists for that matter get some comfort in the fact that if machines and artificial intelligence take all of our jobs then nobody would have any income to buy the goods and services that these machines were producing governments or maybe even the businesses themselves that invest into fully automating the production process would be forced to provide people with some kind of income or their business would have nobody left to sell to and would make no profit the most popular proposal is a universal basic income which is a guaranteed payment made to everybody in economy so that they can continue to live and most importantly consume the money to fund these payments would be raised by taxing the companies making trillions of dollars off their fully automated supply of goods and service says consumers do play a very important role in our modern economies this spending basically works as a voting system to determine what goods and services get provided and what ones don't if lots of people buy burgers and a lot of people buy pizzas then more businesses will start providing burgers and pizza joints will close down freeing up real estate ingredients for more burger joints the question of what should be produced with the world's limited resources is one of the most fundamental in all of Economics giving consumers a way to store value and use it to decide what is provided is one of the most effective ways to make sure the economy is providing optimal outcomes for all participants but and I really wish there was a nice way to put this our current economic systems don't care about the decisions of people that don't produce value take the following thought experiment imagine a hypothetical future where perfect humanoid robots are combined with artificial general intelligence that is as independent as any real person the robots are expensive but only cost as much as an average worker's annual salary and their ongoing maintenance and energy costs are less than a dollar an hour this is basically the ultimate piece of capital for organizations to invest in and they would because it effectively pays for itself after the first year slowly companies would replace all of their workers with these machines and the companies that didn't adopt or couldn't afford the investment would be out competed by these organizations that could and can now offer cheaper goods and services because they don't have to pay wages in this hypothetical let's say it only takes a decade before unemployment reaches 100 percent and nobody can find work because it's simply more competitive to get machines to do all the tasks that people do people will have to rely on welfare to afford anything in the short term this could be funded by taxes raised on the new super productive fully automated companies but in the long term it will be a real challenge to get companies to continue paying taxes without the need to access a labor force companies could set up their operations in whatever country gave them the best deal on their taxes this would create a race towards the bottom and make it extremely difficult for welfare to be funded through regular your tax revenues governments could also tax the third factor of production which is land the fully automated companies are still going to need room to harvest resources and conduct their operations but this will be difficult without also taxing the rest of the population that doesn't have a job but just needs somewhere to live eventually if profit-driven companies can replace their entire Workforce with the machines then large parts of the population will have very limited or no income at all which kind of sounds like it defeats the purpose because then who will the companies sell their goods and services to to make profits in the first place well they can sell them to the few people that own the companies if someone owned an army of machines they could just directly get those machines to produce anything they wanted chances are the machine owners in this hypothetical future would still use markets to trade goods and services amongst themselves but there would be no need for the unemployed masses to be involved in this exchange of value at all because they provide no value to trade with the goods and services that these companies produce slowly shift from everyday consumer products to extremely high-end Goods demanded by the tiny share of people in the world that own enough of the companies to live off dividends the lives of these people would become extraordinarily luxurious just the same as the lives of billionaires today would be Unthinkable to even the greatest Kings and business tycoons of a century ago but for everybody else it could get pretty bleak in the most extreme version of this hypothetical people were just starve to death because there's no economic incentive to provide them with even Basic Essentials now call me an optimist but I don't think it will come to that and no it's not because I believe in the goodness of the human spirit it's because of Market forces there is already a trend in highly Capital intensive advanced economies to have fewer children these are the economies where people are paid the most so will be the most logical place to start automating jobs today most advanced economies are only maintaining their populations through immigration some birth rates are so low that not having enough people to perform important roles in the economy is going to be a major issue in as little as a decade people are having less children because it is no longer economically advantageous to have them and in most advanced economies it's actually becoming quite expensive that trend has started because people are working in advanced industries that use big pieces of capital to leverage a small amount of human labor a century ago having a lot of children was great because they could work on the farm or in a small family business today a farmer can just use a big machine that while expensive is still cheaper to maintain than the amount of children it would take to harvest the same amount of crops scaled up to the size of an economy the same thing will happen as it becomes cheaper to use machines to do the same work that humans used to do advanced economies will probably see further declines in birth rates as well as a reversal of a skilled immigration policies they become reliant on it will be harder to replace labor with machines in developing and undeveloped countries because their wages are lower so it will take longer for the investment into this theoretical new technology to become viable this thought experiment was also an extreme example that still requires a big leap in technology from even the most impressive examples of AI available today nobody can predict the future least of all computer scientists but experts in the field are mostly saying that human level artificial general intelligence is at least a few decades away yet if it's possible at all so even though people shouldn't feel too safe just because they are consumers they probably shouldn't feel too worried yet either there is also not yet any reason to think that things are going to be different this time the first machines that could weave textiles and print books worry people that thought there would no longer be any need for human labor robotic production lines and mechanical calculators automated teller machines and even search engines all had people worried that their jobs were in danger the concern was why would anyone hire a lawyer when they could easily search for anything they needed on the internet yes some jobs are now obsolete but all of these Technologies are fully mature and most major economies around the world right now have record low unemploy employment most of these Technologies just made the workers using them more productive when we make these videos most of our research is done using the internet and various search engines sometimes we're lucky enough to speak with industry experts but we still rely on background research to make sure that we're asking them the right questions in the limited time we get with them if the research team at ee had to go to a library and find the same information manually it would take at least twice as long to research and write every video what's more is that anybody could replace my job with a search engine if all they wanted to do was learn about economics every economic theory and explanation we discuss on this channel is available online and most of it's not too difficult to find but we all still have our jobs because we have found a way to leverage this technology to add even more economic value to everybody watching productivity is how much value a worker produces for the economy in a given hour of work Paul Krugman probably the most influential and well-known Economist alive today once said that productivity isn't everything but in the long run it's almost everything if a worker can produce more value in a given hour of work then they can be paid more and the economy as a whole will have more stuff today people are concerned about chat programs like open AIS chat GPT and Google's Bard but just like all of the other technologies that people were afraid of in the past these programs are just very clever ways to use something that still needs the traditional factors of production to produce in the first place a search engine is only as good as the information it can find just like a robotic arm in a factory is only as good as the code that the engineers programmed it for AI programs all work by taking in large amounts of data that was initially created by people realistically these programs and other developments like them are just going to be another tool for people to use to increase how much output they can produce in a given hour of work as our populations get older and more pressure is put on a smaller group of young workers to support our economic Prosperity tools that can help them do more with less is something to be excited for and not fearful of fear is unlikely to do any of this much good anyway because even in the worst case scenario like our thought experiment from earlier nobody can predict which jobs are going to go first for a long time the prevailing consensus was that jobs that involved a lot of physical labor would be the first on the automation chopping block and creative professions like writing art and making music would be the most difficult to automate now people are predicting the opposite most of the developments in recent years have been in Creative fields and technology is struggling with what we thought would be easy tasks like driving a car at this time these new technologies are already creating new jobs that didn't exist this time last year automated systems are only as good as what you can tell them to do and communicating effectively with machines is a very real skill I'm going to do what no Economist should and make a prediction and that is that in the not too distant future AI prompt writer will be a job if it isn't already and people that can use these tools effectively in jobs like this will make themselves and The Wider economy much wealthier check out the video linked on screen next or if you prefer to listen to these videos we make all of them as well as full interviews with world-class economists available on our Spotify page thanks for watching mate bye

Channel: Economics Explained

Views: 1,031,070

Keywords: economics explained, ee, economics, explained, AI, Artificial Intelligence, ChatGPT, Dall-E, Technology, IT, Google, Microsoft, Open AI

Id: XySs_KgzyDc

Length: 12min 58sec (778 seconds)

Published: Sun Apr 30 2023