Proof the robots will make us richer

Had an email asking me for some thoughts on this. So, here’s the proof that the robots will make us richer in aggregate.

GDP is production, consumption or income. The sum of all of them in the economy. And by definition they are equal to each other. Production equals consumption equals incomes.

And I think we all agree that the robots are going to increase production, yes? Thus they must increase incomes and consumption, cannot be any other way.

Sure, that still leaves the question of the income distribution but it’s market competition which leads to consumers getting the bulk of that.

23 comments on “Proof the robots will make us richer

  1. ‘Robots have been racist and sexist for as long as the people who created them have been racist and sexist, because machines can work only from the information given to them, usually by the white, straight men who dominate the fields of technology and robotics’.

    This is just sheer genius. I am hoping in the event of a substantial May victory the likes of Penny and other rentaquote gobshites like Jack Monroe and Owen Jones can be subjected to the kind of taxation that would force their emigration…… Go on Theresa – you know you can, and ideally should.

  2. I don’t see a simple exercise in economic logic as proof that robots will make “us” richer. I’m not sure such arguments apply to situations where consumers are non-productive.

  3. V_P
    “..because machines can work only from the information given to them, usually by the white, straight men ..”

    Sewing machines, washing machines, …. 😉

  4. Robots definitely raise the efficiency of production (otherwise you wouldn’t bother). That isn’t /quite/ the same as increasing production. And if it increases efficiency partly by reducing labour costs (which it does) then that results in an overall reduction in incomes. Increased efficiency and reduced income lead to price drops, not necessarily increases in production. The competition cycle could lead to hyper-efficient production of basic goods for a vast near-impoverished workforce of those whose jobs have been mostly automated away…. OK, it might not go that way, but I can’t see that it couldn’t.

  5. What incomes, Tim? A non-productive person has a real income of zero. Redistributing the wealth of productive persons to non-productive persons and calling it “income” is out of the Nancy Pelosi school of economics.

  6. @Matthew l

    Not one of them has stopped to think about the panoply of jobs that simply don’t exist anymore and yet more people are employed earning more per capita in absolute terms than ever before

    From nightsoil men to knockers up, via the 100,000 people alledgedly employed looking after horses in early 20th century London, whole swathes of jobs have disappeared and we still aren’t worse off

    I’ve no idea what people will be doing in the age of robots, in the same way that a drayman couldn’t imagine a computer games programmer. Whatever it is will be infinitely better than what went before

    Bring it on

  7. ‘Robots have been racist and sexist for as long as the people who created them have been racist and sexist, because machines can work only from the information given to them, usually by the white, straight men who dominate the fields of technology and robotics’.

    As usual Ms Penny confuses “create” with “dominate”. White straight men do not dominate the fields of technology and robotics. White straight men created it. While women were, I am sure, doing other equally valid things. Like playing tennis. Driving their budding lesbian daughter to soccer practice. That sort of thing.

    john malpas – “exterminate, exterminate.”

    Frankly at this point in the cycle Daleks would be a least bad outcome. Besides, they are the embodiment of the White heterosexual male!

  8. BobRocket – “what do you consider to be ‘A non-productive person’ ?”

    Anyone who reads the Guardian is a good start.

  9. “And if it increases efficiency partly by reducing labour costs (which it does) then that results in an overall reduction in incomes”

    The purchaser of the robot has higher income. Else, he wouldn’t buy it. It’s not about labour.

  10. The purchaser of the robot has higher income. Else, he wouldn’t buy it.

    True, but even that may be a malinvestment due to the ready supply of easy credit. If ti’s a choice between paying someone $20k a year to do a job, or borrowing $1,000,000 at 1% interest, they may well end up doing the latter even if it makes no long-term sense.

    Anyway, it’s all kind of silly. The whole ‘ROBOTS ARE TAKING OUR JOBS!’ thing is based around the idea that, in a world where robots can make anything, we’ll still have a big, centralized, industrial economy, rather than a world where everyone has their own robots to make things for them. The left believe that the world can radically change without radically changing, because their whole philosophy is tied to the Industrial Age.

  11. Do a simple thought experiment:

    The end-game, surely, is that robots do everything – including powering themselves, designing new versions, and producing everything humanity could want.

    Infinite supply, therefore zero price – for everything.

    Sounds great to me.

    Of course, it’s the end of economics, but who cares about that?

  12. “And if it increases efficiency partly by reducing labour costs (which it does) then that results in an overall reduction in incomes. Increased efficiency and reduced income lead to price drops, not necessarily increases in production.”

    The way to think about it is to draw supply and demand curves. You have a demand curve that starts high at zero price, and drops as the price rises. You have a supply curve that starts at zero for prices up to the cheapest you can make it, and then rises. If they cross, you’ve got a business, and where they cross tells you the price and volume of trade.

    Now change the supply curve to make the gradient steeper. What happens to the intersection point?

    “The competition cycle could lead to hyper-efficient production of basic goods for a vast near-impoverished workforce of those whose jobs have been mostly automated away…. OK, it might not go that way, but I can’t see that it couldn’t.”

    If there are a large group of people who don’t have the skills to contribute to the post-robot economy, they can still organise among themselves to do it the way we do today. They would have their own separate 21st century economy, separated from the 22nd century robot economy by price barriers, but still perfectly viable within its own domain.

    Those shut out of the robot economy would by 22nd century standards *count* as impoverished, but impoverishment for them would actually be richer than we are today.

    It works the same way as the division between the developing/developed world today. The people in the developing world mostly don’t have the skills to take part in the developed world’s economy, and as such they’re priced out of most of it. But they can still do everything they used to the old fashioned way, running a non-industrial economy among themselves, which is why even in the age of the tractor there are still subsistence farmers in the world using hand ploughs. They’re far better off today than they used to be, and so by the standards of a century ago they would count as “rich”. It’s only when you compare them to what’s possible for us in the West that they look impoverished.

  13. If there are a large group of people who don’t have the skills to contribute to the post-robot economy

    They’re called lefties. And they’re trying to prevent the rise of a robot economy because they know that the workers owning their means of production will eliminate any remaining power the lefty ‘leaders’ have.

    The very last thing the left want is for the West to become a rich, post-industrial economy where anyone has the machinery to make pretty much anything they want, and the only limit is the available resources. Because, in a world like that, there’ll be no more use for them.

  14. “They’re called lefties. And they’re trying to prevent the rise of a robot economy because they know that the workers owning their means of production will eliminate any remaining power the lefty ‘leaders’ have.”

    The lefty leaders have post-robot skills – the ability to get people to vote for them and hand them taxpayers money without having to produce anything for it. I doubt anyone’s going to automate that. They’re not at risk.

    “The very last thing the left want is for the West to become a rich, post-industrial economy where anyone has the machinery to make pretty much anything they want, and the only limit is the available resources.”

    They would just switch from poverty to inequality.

    Like I said, even though they’d be richer than we are today, the unskilled of tomorrow will appear impoverished, because they can only afford one of those old and cheap self-driving cars that looks like a moon buggy, and can only get a measly 100 GB link to the internet, meaning they miss out on all the the latest 3D full-360 soap operas because they don’t have the bandwidth. And left agitators will exploit the resentment that breeds, and demand government subsidised welfare bandwidth from the super-wealthy taxpayers. I mean, the robots are doing all the work, while they just sit back smoking big Cuban e-cigars and looking down on us all from their orbital penthouse space stations. That’s not fair!

    I mean, there’s no actual use for lefties *today*, but they still manage to hang on, nevertheless.

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