Counterparties: RoboCapitalists

By Ben Walsh
January 14, 2013

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The robots are coming for your job.

In the past few months there’s been a boomlet of very smart people worrying about the economic consequences of our increasingly robotic future. Kevin Kelly, in a cover story for Wired last month, describes this imminent — but not yet sentient — threat: “before the end of this century, 70 percent of today’s occupations will likewise be replaced by automation… robot replacement is just a matter of time”. He’s not worried, however, because “The one thing humans can do that robots can’t (at least for a long while) is to decide what it is that humans want to do”. You will always have a job; it will just consist primarily of telling robots what to do.

Robot servants and factory workers may give us more leisure time, but Noah Smith worries they’ll further erode labor’s declining share of national income. Even more problematic, they will cause “old mechanisms for coping with inequality break [to] down”. Paul Krugman agrees that a shift is necessary: if labor’s share if income continues to decline, “it makes nonsense of just about all the conventional wisdom on reducing inequality. Better education won’t do much to reduce inequality if the big rewards simply go to those with the most assets”.

How do you redistribute wealth from robots towards humans? Smith has a few suggestions, including incentivizing people to control their own capital (i.e. owning robots).

Today’s capitalists, however, might not be too pleased with technology’s ascendancy. Izabella Kaminska thinks that we have already reached the point where technology threatens business’s ability to generate returns on capital. That explains the rise of patent wars and other attempts to defend corporate profits with legal, rather than economic, moats. Kaminska has pulled together a great set of links examining the conflict between technology and capital.

This also isn’t the first boom in futurist, robo-economic theory. Bloomberg has a helpful look back at the American technocrats of the 1930’s. They thought increased productivity through mechanization had created the mass unemployment of the Great Depression, and that scientists should run the country as engineer kings. (A leading member of the movement turned out to be a fraud, and the movement was largely discredited academically).

This debate will continue, at least until the singularity arrives. Then humanity will end, or proceed infinitely, depending on your view. — Ben Walsh

On to today’s links:

Wonks
Finally, Nate Silver is wrong about something of national importance - ESPN
Very good reasons to delay the canonization of Tim Geithner – Mike Konczal
“Overthinking this sort of thing is exactly the right response. But they haven’t overthought it enough” – New Statesman
Mark Sanchez as a sunk cost – James Surowieki

JPMorgan
Jamie Dimon might have been responsible for something that wasn’t great – Bloomberg

Cephalopods
Goldman Sachs would like to delay, increase its UK bonuses by 5 percent – FT
Goldman’s new CFO excels at risk management and karate – Lauren LaCapra and Carrick Mollenkamp

#MintTheCoin
Sorry, the US won’t be getting a platinum coin and the attendant constitutional crisis anytime soon – Ezra Klein

Strange Bloomberg Headlines
“Brazilian Bikini Waxes Make Crab Lice Endangered Species” – Bloomberg

Alpha
Hedge fund leverage increases to highest level since 2004 – Bloomberg
Cat beats professional stock pickers, market – Guardian

Charts
A visual rundown of the relatively scarce data on gun control in the US – Liz Fosslien

Politicking
“Then they came for my assault rifle, and I said, “Assault rifles? You should have started with assault rifles” – McSweeney’s
Low growth delivers political paralysis, and political paralysis delivers low growth – Annie Lowrey

Unfortunate Because It’s True
“This dim view of America is sad-making” – Choire Sicha

4 comments

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For the love of god, please proof-read this post for typos.

Posted by FrancoisB | Report as abusive

“Paul Krugman agrees that a shift is necessary: if labor’s share if income continues to decline, “it makes nonsense of just about all the conventional wisdom on reducing inequality. Better education won’t do much to reduce inequality if the big rewards simply go to those with the most assets”.”

Where has that man (Krugman) been for the last 40 years?
“…IF the big rewards…” !!!!

http://www2.ucsc.edu/whorulesamerica/pow er/wealth.html
http://research.stlouisfed.org/fred2/gra ph/?id=GINIALLRH
http://economistsview.typepad.com/econom istsview/2012/04/the-wedge-between-produ ctivity-and-wages.html
http://www.bloomberg.com/news/2010-09-21  /goldman-shareholder-a-loser-to-cd-rate s-when-blankfein-earned-125-million.html
http://www.ft.com/intl/cms/s/2/1a8a5cb2- 9ab2-11df-87e6-00144feab49a.html#axzz1XG dEgqJS

Posted by fresnodan | Report as abusive

“Where has that man (Krugman) been for the last 40 years?
“…IF the big rewards…” !!!!”

Um….he’s been writing ubiquitously about this very problem.

Where have YOU been the last 40 years?

Posted by EconomistDuNord | Report as abusive

Inequality is at the lowest level in human history in part due to things like automation. When people like Krugman speak of “inequality,” he’s speaking of “income inequality” an “wealth inequality” which are ways of just manipulating the statistics to give a protrayal of society that isn’t real. For example, saying that this or that percent of Americans (itself just a statistic that is not representative of actual flesh-and-blood human beings) makes this or that percentage of the “national income,” that is like saying that the poor have an abnormally high proportion of “society’s weight.” Or that some percentage has an high proportion of “society’s height.”

Are there statistical distributions of height and weight in society? Yes. Des that mean anything? No. Income is no different, as income is not something that exists in a pre-existing supply that is then divided up among society by some central authority. Same with wealth.

Posted by Kratos1256 | Report as abusive