Afternoon Must-Read: Paul Krugman: The Pimco Perplex
Over at Equitable Growth: Ebola Virus Talking Points: Wednesday Focus for October 1, 2014

Talking Points: Robots, Wages, Technology, Peter Thiel

I was supposed to go on Bloomberg News this afternoon to talk about robots, wages, and is very smart but differently-thinking Peter Thiel. But 10 minutes before I was supposed to go on the air the CDC announced that a case of Ebola had been diagnosed in Dallas. So I had to play public health economist for five minutes...

  • Very smart but differently-thinking Peter Thiel is a techno-optimist--he sees the extraordinary increases in human productivity that robots and computers make possible, and seems that is driving an enormous increase in typical wages in the future.

  • I think he has fallen into the diamonds and water paradox--the average human will be highly productive in the robot world of the future but that does not mean that the typical human will be well-paid; just as the average gallon of water we consume is valuable, but the price of water is (usually) low.

  • we should not talk about whether computerization and robotization raises or lowers wages. We should distinguish among the wages for doing six different things

    1. Using our backs to move heavy things--the coming of the steam engine greatly reduced relative demand for this, and computerization and robotization will eliminate it.
    2. Using our fingers that manipulate things via skilled craftwork--Mass production greatly reduced relative demand for this, and computerization and robotization will eliminate it save for that fringe market where hand-made is of the essence.
    3. Using our brains as underemployed routine cybernetic control loops to make sure that material and accounting processes stay on track--the steam engine and mass production greatly increased relative demand for this, but computerization and robotization will greatly reduce it: human brains will remain the only supercomputers that fit in a shoebox and run on 50W, but most blue-collar machine-control and white-collar transactions-processing Jobs do not require a supercomputer.
    4. Using our mouths (and touch-typing fingers) that inform--and steam engines and mass productions supplied the size of the economy we also multiplied demand for such services, but computerization and robotization will transform this set of activities from one-to-one to one-to-many and so into an amplifier of global inequality.
    5. Using our smiles to make each other feel happy and valued, and keep us all pulling roughly in the same direction--personal services and human interaction and motivation will remain human unless the Singularity comes.
    6. Using our minds to have have genuinely original and useful thoughts--this might remain human unless the Singularity comes.
  • When I look at this, I see three ways that humans can make money in the computerized and robotized world of the future:

    1. Owning the computers and the robots.
    2. Having genuinely original and useful thoughts.
    3. Figuring out personal service-like things we can do that the people who do own the robots and thus have money to spend will be I willing to pay for--things that make them directly happy.