Timmy elsewhere

At CapX:

The other worry is that the owners of the robots will get all the money, leaving us starving in a howling wasteland. Fortunately, a rather decent economist, William Nordhaus, has looked at this. If the robots really do start doing all the jobs and the capitalists get all the money, then the capital share of the economy will asymptotically approach (jargon for get ever closer to but never reach) 100%. That’s our starving wasteland scenario right there. Except exactly the same process means that real wages will have to be rising at 200% a year at the same time. For we’ll only use the robots if they’re more productive and greater productivity in the economy means, by definition, higher wages. Which isn’t, when we come to think about it, something likely to bring us peons out into the streets in revolution nor actually something that we’d worry about very much.

17 thoughts on “Timmy elsewhere”

  1. If the owners of the robots get all the money, then only the owners of the robots have money to purchase the production of the robots.
    No problem.
    Robot owners have walled themselves off in a closed economy..
    Rest of the people can get on with their lives, producing & consuming for each other & ignore them.

  2. BiS

    Pretty much sums it up.

    The ‘scenario’ doesn’t worry me in the slightest. The kale and tomatoes and other stuff that I grow will still have an outlet. My profeesional services too. If they (other people like me) can’t buy them with euros, they will use ‘the new money’.

    Only progressives and silly leftists (I believe there are some intelligent ones) think/hope capitalism is going to finish that way!

  3. As a person who chose the handle “CayleyGraph” for himself, it’s depressing that you have to explain to people what it means to “asymptotically approach” something.

  4. Technology has been replacing jobs forever, and we are getting wealthier, so where is the argument against this?

  5. Once you take this scenario to the extreme conclusion, it all gets a bit head spinning. Because a market economy is predicated on people having productive utility to others, and if we imagine a case where nobody at all has any utility to anyone else, nobody can earn anything, and then *head asplode*.

    Every time I find myself carefully thinking this whole thing through, I seem to end up with a different conclusion. One of the problems is that for instance, a robot cannot produce land. So the whole economy ends up in the hands of those with a land title, and nobody else has anywhere to stand (because they have no production to trade as rent) and so on and so on, head asplode.

  6. Runcie: when you challenge someone on that the answer usually boils down to either “it’s different this time” or “it’s too fast for us to adapt this time”. Both of them are bollocks of course.

  7. The big problem is that Corbyn will lead the fight for votes for robots then program all the poor sods to Vote Labour.

    Worked in Scotland till another programmer took over…

  8. So Much For Subtlety

    John miller – “The big problem is that Corbyn will lead the fight for votes for robots then program all the poor sods to Vote Labour.”

    Yes, but the important questions need answering. Will they be transsexual robots?

  9. Bloke in Costa Rica

    Ian B: perhaps robots can produce land. How about enormous land-reclamation robots building polders, or turning marginally-exploitable land into arable?

  10. How about enormous land-reclamation robots building polders, or turning marginally-exploitable land into arable?

    I laugh at your ‘land-reclamation robots’.

    Mine will be dismantling planets and building a Dyson Sphere.

  11. I appear to be in need of edjumercation – if robots are producing everything worth producing, how does anybody end up getting paid anything, let alone getting pay rises? And where does that 200% come from, it appears to be plucked from thin air (I’m not saying it is, mind; I’m saying that I don’t understand, so that what Tim has said appears to be nonsense. Knowing that Tim doesn’t generally spout nonsense, I’m assuming ignorance on my part, and hence – please enlighten me!).

  12. All this was sorted a hundred years ago when factory director Major Douglas came up with the scheme of Social Credit whereby it didn’t matter if average wages dropped with mechanisation, everybody would get , from the State, unearned income sufficient to fill the gap between the level of the wage fund and the value of potential production of mechanised factories working at full capacity. TW has recently opined that this would be much too difficult for those poor dear technocrats in the Treasury to work out , even with the computers that have taken over their brains. At least the old argument that the State has no right to issue money because this function rightfully belongs to the private sector banks has now been officially abandoned.
    We have ,from sheer ignorance, kept the Land Value Tax at bay for 300 years and the National Dividend for 100 and we wonder why things are such a mess now with houses too expensive for people to live in and wages too low to buy the products of their fellow workers’ labour and machine production..

  13. Doesn’t DBC, the actual historic fact of what happened, outweigh the deranged maunderings of some early C20th nut job?
    Mechanisation meant we all got wealthier. Without Social Credit or National Dividends or any of the other bollocks.
    So, going on precedent, exactly the same will happen.

  14. “if robots are producing everything worth producing, how does anybody end up getting paid anything, let alone getting pay rises?”

    “Real wages” is the average income divided by the average cost of living. That is, it doesn’t matter if wages are low if goods are cheap, and it doesn’t matter if goods are expensive if wages are high. It’s not what happens to wages or prices that matters, but what happens to the ratio.

    If robots are producing everything, then everything is free because robots don’t need to be paid. 0/0 = whatever you like.

    If robots are producing almost but not quite everything, then the price of goods will be very low but not quite zero, as will wages. The critical question is, which approaches zero faster? And Nordhaus is saying that the cost of goods goes to zero faster (and hence the wages/prices ratio rises) because people will only use robots if it makes a profit to do so. Everything has to get more efficient, in the sense of more goods for less cost, because that’s why people use robots in the first place.

  15. We already have firms that rely for production on mechanisation.
    I do not think our elite businessmen are going to invest in all that machinery and give a way the products for nothing. Just a hunch. Perhaps I am being overly suspicious of their motives.

  16. “… everybody would get , from the State, unearned income sufficient to…”

    Everybody? Fascinating. Where would the money come from, if everyone gets a net income? Unless you plan to give back to everyone exactly as much you take from them in taxes? (Minus your administration costs, of course.)

    “At least the old argument that the State has no right to issue money because this function rightfully belongs to the private sector banks has now been officially abandoned.”

    We have no problem with the state issuing money. The problem is with the state issuing money that is doesn’t intend to later honour with something of real value.

    “we wonder why things are such a mess now with houses too expensive for people to live in and wages too low to buy the products of their fellow workers’ labour and machine production.”

    You might. We don’t.

    Houses are too expensive because the government artificially restricts the supply of planning permission, over which it has a monopoly.

    The wages of some people are too low to buy the fruit of other people’s labour because they have no skills of comparable rarity and value to society to offer in exchange. People are poor because they don’t produce anything of value; they contribute nothing to the rest of society.

    Money is both justice and motivation for production. Just, because society gives fair value in return for the good you do for society, for mutual benefit. Motivation, because it motivates people to contribute more to society, in order to get more back. If they know they’re going to get the same fixed amount from society anyway, why would they want to contribute more than they’re going to get? And if nobody contributes, where is all the free loot everyone’s supposedly going to get going to come from?

    When I was at school, the teachers used to hand out marks, which were widely seen as a passport to the favour of parents and teachers, happiness, and a bright future. So we worked hard to earn them. But some kids got more marks than others, and some kids got very few marks indeed.

    So the headmaster intervened and insisted that the teacher give every student a minimum ‘unearned’ mark, which would be culled from the marks of the brightest. This would ensure all the students had their shot at that bright future. Indeed, his goal was that ultimately every student should get exactly the same marks, redistributed from the brightest to the dimmest.

    Funnily enough, the scheme didn’t work quite as the headmaster expected. Can you see why?

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