Robots Taking Jobs? Nope. Technology Empowers Humans While Simultaneously Hiding Consequences.
With power, comes responsibility
Economics is a social technology for resource management. Like all technologies, including fictional magic, it gives you new powers that come with hidden consequences you must learn to master, or they will destroy you(bwahahaha!).
I’ve been watching The Magicians. This ‘unforseen consequences’ idea is a recurring trope in such magical stories.
Time and time again, people with good intentions end up triggering serious problems. The audience, cued in by good foreshadowing and other story telling hints, keeps telling themselves: “No! Don’t do it! It’s not worth it!”
Like the proverbial woman who swallowed a spider, The Magician’s lead characters: Quentin, Penny, Alice, and others, keep making bigger mistakes trying to fix their previous blunders. In a recent episode, they find themselves robbing a bank to pay for a magical abortion(banks are, of course, run by a secret society of magicians, that uses special safeguards to protect their assets).
I feel the same helpless anxiety watching the political drama of our world unfold. It’s not just about left or right. We tend to see the mistakes others make better than the mistakes we make ourselves. We all have blindspots. We should watch each other’s backs, and not just attack each other’s values.
Technology can empower greed, or discrimination, or laziness, or deception, or justification, or vanity, or indulgence, or pettiness, or negligence, or ignorance. I think these classic flaws are still central and root causes behind much of society’s ills.
Now, more than ever, we need to be aware of how we create these problems as groups and not just individuals. We need to understand the role of institutions and policies. We also need to understand complex technical issues related to finance, accounting, and social culture. We should support and encourage people engaged in this effort.
Colonialism, feudalism, serfdom, and even slavery are not just issues of the past, we face them today as well.
The “Automation kills jobs” scare hinges on an important social phenomenon: prices. Only when prices fall are people forced out of jobs they love.
To understand what is really going on, you need to know the difference between prices and costs. That is something I have been emphasizing repeatedly in this publication. Prices are the social costs of resource use, or, from a seller’s perspective, socially conferred benefits of fulfilling a request. Costs are resources expended or other negative consequences of actions made in choices.
Technology reduces the costs of production, this much is true. But if cost reductions happen evenly across all activities, no price changes need to happen.
Reasonably, technological cost reductions will not be completely uniform. Even so, prices don’t have to change. Prices are a deliberate social choice, though at times the power to set prices can shift between buyers, sellers, or society as a whole.
It is practical to adjust prices based on changing relative costs. The primary benefit of price changes, when done properly, is that you encourage people to pursue different opportunities, that are of greater benefit to society. The secondary benefit is that it permits people to consume more at the same income level.
Unfortunately, price changes often play out the wrong way. Instead of redistributing people, to where their time is most valuable, we end up redistributing things, to whoever enjoys the greatest advantage of legal or illegal control of the system.
As consumers and workers there are things we can do to fight back against this neoliberal trend. We can think of our spending in terms of paying people, based on how much they help us, instead of paying for things. We can choose our work based on objectives we value, and not just based on money, to the extent it still affords us a healthy lifestyle.
But at the heart of this issue is the lie that money is scarce and associated political efforts to censor the spending of public institutions. Public spending works as long as people are willing to do the work. Any price levels we deem appropriate are possible, so long as production matches the level of consumption, and truly scarce resources aren’t squandered.
If growth comes through public spending, then price adjustments will happen the right way, by increasing incentives and rewards for people to branch out into more diverse, socially beneficial, activities. The other option is a race to the bottom under fiscal conservatism.
How can we increase our wealth? Do we want more stuff in our garages and more tv shows in our netflix queue? Do we want to be consuming based on materialist lust, or fully engaged socially in rewarding endeavors?
The choice is on us, through our public institutions. Wealth in the commons works best with public spending and private savings. Any increase in public debt, like the national debt, is simply an increase in savings of the private sector. Whether this savings/debt is sustainable depends on a number of factors, but mostly how effective we are at building and preserving wealth in the commons. Public spending is always worthwhile if it employs people in worthy efforts. It is always affordable if it is the best way to use our available resources.
If resources become scarce we can then use prices, (in the worst case inflation), regulation, taxation, and conservation to prioritize those scarce resource allocations.
