The Robot Question

The Robot Question

Originally published at Project-Syndicate | August 6, 2020

The robots are no longer coming; they are here. The COVID-19 pandemic is hastening the spread of artificial intelligence (AI), but few have fully considered the short- and long-run consequences.

In thinking about AI, it is natural to start from the perspective of welfare economics – productivity and distribution. What are the economic effects of robots that can replicate human labor? Such concerns are not new. In the nineteenth century, many feared that new mechanical and industrial innovations would “replace” workers. The same concerns are being echoed today.

Consider a model of a national economy in which labor performed by robots matches that performed by humans. The total volume of labor – robotic and human – will reflect the number of human workers, H, plus the number of robots, R. Here, the robots are additive – they add to the labor force rather than multiplying human productivity. To complete the model in the simplest way, suppose the economy has just one sector, and that aggregate output is produced by capital and total labor, human and robotic. This output provides for the country’s consumption, with the rest going toward investment, thus increasing the capital stock.1

What is the initial economic impact when these additive robots arrive? Elementary economics shows that an increase in total labor relative to initial capital – a drop in the capital-labor ratio – causes wages to drop and profits to rise.

There are three points to add. First, the results would be magnified if the additive robots were created from refashioned capital goods. That would yield the same increase in total labor, with a commensurate reduction in the capital stock, but the drop in the wage rate and the increase in the rate of profit would be greater.

Second, nothing would change if we adopted the Austrian School’s two-sector framework in which labor produces the capital good and the capital good produces the consumer good. The arrival of robots still would decrease the capital-labor ratio, as it did in the one-sector scenario.

Third, there is a striking parallel between the model’s additive robots and newly arrived immigrants in their impact on native workers. By pushing down the capital-labor ratio, immigrants, too, initially cause wages to drop and profits to rise. But it should be noted that with the rate of profit elevated, the rate of investment will rise. Owing to the law of diminishing returns, that additional investment will drive down the profit rate until it has fallen back to normal. At this point, the capital-labor ratio will be back to where it was before the robots arrived, and the wage rate will be pulled back up.

To be sure, the general public tends to assume that “robotization” (and automation generally) leads to a permanent disappearance of jobs, and thus to the “immiseration” of the working class. But such fears are exaggerated. The two models described above abstract from the familiar technological progress that drives up productivity and wages, making it reasonable to anticipate that the global economy will sustain some level of growth in labor productivity and compensation per worker.

True, sustained robotization would leave wages on a lower path than they otherwise would have taken, which would create social and political problems. It may prove desirable, as Bill Gates once suggested, to levy taxes on income from robot labor, just as countries levy taxes on income from human labor. This idea deserves careful consideration. But fears of prolonged robotization appear unrealistic. If robotic labor increased at a non-vanishing pace, it would run into limits of space, atmosphere, and so on.

Moreover, AI has brought not just “additive” robots but also “multiplicative” robots that enhance workers’ productivity. Some multiplicative robots enable people to work faster or more effectively (as in AI-assisted surgery), while others help people complete tasks they otherwise could not perform.

The arrival of multiplicative robots need not lead to a lengthy recession of aggregate employment and wages. Yet, like additive robots, they have their “downsides.” Many AI applications are not entirely safe. The obvious example is self-driving cars, which can (and have) run into pedestrians or other cars. But, of course, so do human drivers.

A society is not wrong, in principle, to deploy robots that are prone to occasional mistakes, just as we tolerate airplane pilots who are not perfect. We must judge costs and benefits. For efficiency, people ought to have the right to sue robots’ owners for damages. Inevitably, a society will feel uncomfortable with new methods that introduce “uncertainty.”

From the perspective of ethics, the interface with AI involves “imperfect” and “asymmetric” information. As Wendy Hall of the University of Southampton says, amplifying Nicholas Beale, “We can’t just rely on AI systems to act ethically because their objectives seem ethically neutral.”Sign up for our weekly newsletter, PS on Sunday

Indeed, some new devices can cause serious harm. Implantable chips for cognitive enhancement, for example, can cause irreversible tissue damage in the brain. The question, then, is whether laws and procedures can be instituted to protect people from a reasonable degree of harm. Barring that, many are calling on Silicon Valley companies to establish their own “ethics committees.”

All of this reminds me of the criticism leveled at innovations throughout the history of free-market capitalism. One such critique, the book Gemeinschaft und Gesellschaft by the sociologist Ferdinand Tönnies, ultimately became influential in Germany in the 1920s and led to the “corporatism” arising there and in Italy in the interwar period – thus bringing an end to the market economy in those countries.

Clearly, how we address the problems raised by AI will be highly consequential. But they are not yet present on a wide scale, and they are not the main cause of the dissatisfaction and resulting polarization that have gripped the West.


Edmund S. Phelps: The 2006 Nobel laureate in economics and Director of the Center on Capitalism and Society at Columbia University, is author of Mass Flourishing and co-author of Dynamism.

17 Responses to The Robot Question

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  12. Did you understand these truths on CBD OIL and Full Spectrum CBD Hemp Oil? Cannabinoids are separated from hemp utilizing supercritical CO2 extraction. Thanks to contemporary technology, the resulting option is tidy, totally free of unneeded waxes and heavy metals, naturally present in the plant, and the sucked liquid has a normal, oily consistency. CBD oil includes cannabidiol as a base component and might contain only trace quantities of tetrahydroxycannabidiol (THC). Works as a memory enhancer, enhancing concentration and coordination of movements, removing swelling and reoccurring infections. It enhances the conduction of stimuli in the course of autoimmune illness (numerous sclerosis, amyotrophic sclerosis). It is suggested by medical professionals and pharmacists as an antioxidant and compound that obstructs the action of proinflammatory cytokines (proteins), e.g. in Crohn’s disease or ulcerative intestinal tract. RSO oil has a low CBD material, while high THC. Of course, the crucial task of RSO is to cause a psychoactive impact, although it can likewise stimulate “ill” brain structures. It deserves knowing that supplementation of this type is mostly utilized by individuals to whom standard therapy does not bring relief in illness. The synergistic (enhancing) action of CBD and THC relative to each other is used here. Both cannabinoids can do much more together than when utilized individually. In addition, they collectively stimulate the division of inactive afferent neuron, nurture the fatty envelope of the nerves, and prevent myelin swelling that triggers loss of function in some autoimmune illness. There are likewise stories where marijuana in its natural type softened spasticity, decreased the frequency of convulsions and seizures, and reduced undesirable scrapie in Parkinson’s disease. This is where the idea of getting RSO, meant just for chronically ill individuals, stemmed . Both marijuana oil type CBD and RSO also contain other cannabinoids, such as cannabichromene (CBC) and cannabigerol (CBG). The trick is not, nevertheless, that CBD frequently has a structure broadened to consist of flavones, flavonoids, terpenes, terpenoids, amino acids and omega acids. The distinction is mainly due to motives guiding humankind to utilize one or the other item. CBD medical cannabis oil is a rather useful mix of cannabinoids, created to secure against 21st century disease. It’s finest to utilize all of these compounds together, as nature created them and enclosed in cannabis inflorescences. Oil of marijuana in a kind of hobby APR includes small amounts of CBD, stabilized by the existence of THC. – Modern scientific research study shows that CBD + THC cope with serious autoimmune illness, while CBC or CBG reveal very little activity in the existence of both substances, just like terpenes, flavonoids or flavones, therefore their content in the service seems to be unnecessary. In addition, the marijuana strain from which THC and CBD are derived contain negligible quantities of other cannabinoids. Marijuana oil has actually currently marked a brand-new age in which guy ceased to fear what is unidentified, and began to uncover what our ancestors had actually already noticed and use the considerable potential, at very first look, a little bizarre relationships, associated generally with pathology. Medical cannabis, contrary to its name, does not suggest fermented female inflorescences and leaves consisting of psychedelic substances coiled in so-called “Joints”, but an advantageous oil without psychedelic THC. A basic person, after taking doses of medical cannabis and accomplishing the suitable state of cannabinoids in the blood, can delight in increased resistance, decreased susceptibility to cancer, postponed aging and reduced threat of stroke or heart attack. CBD oil consists of cannabidiol as a base ingredient and might contain only trace amounts of tetrahydroxycannabidiol (THC). RSO oil has a low CBD content, while high THC. Both marijuana oil type CBD and RSO likewise include other cannabinoids, such as cannabichromene (CBC) and cannabigerol (CBG). CBD medical cannabis oil is a rather beneficial mix of cannabinoids, created to secure against 21st century illness. Oil of cannabis in a kind of pastime APR contains little quantities of CBD, balanced by the presence of THC.

  13. Hi! This is my first visit to your blog! We are a group of volunteers and starting a new initiative in a community in the same niche. Your blog provided us valuable information to work on. You have done a wonderful job!

  14. Aw, this was a very nice post. In thought I wish to put in writing like this additionally – taking time and actual effort to make an excellent article… but what can I say… I procrastinate alot and in no way appear to get something done.

  15. Did you know these realities on CBD OIL and Full Spectrum CBD Hemp Oil? Cannabinoids are isolated from hemp using supercritical CO2 extraction. Thanks to contemporary technology, the resulting option is tidy, devoid of unnecessary waxes and heavy metals, naturally present in the plant, and the sucked liquid has a normal, oily consistency. CBD oil consists of cannabidiol as a base component and may consist of only trace amounts of tetrahydroxycannabidiol (THC). It is recommended by physicians and pharmacists as an antioxidant and compound that obstructs the action of proinflammatory cytokines (proteins), e.g. in Crohn’s illness or ulcerative intestine. RSO oil has a low CBD content, while high THC. The synergistic (enhancing) action of CBD and THC relative to each other is used here. Both cannabinoids can do much more together than when utilized individually. Both cannabis oil type CBD and RSO also include other cannabinoids, such as cannabichromene (CBC) and cannabigerol (CBG). The secret is not, nevertheless, that CBD often has a composition broadened to include flavones, flavonoids, terpenes, terpenoids, amino acids and omega acids. The distinction is primarily due to motives assisting mankind to use one or the other item. CBD medical marijuana oil is a rather advantageous blend of cannabinoids, developed to safeguard against 21st century illness. It’s best to utilize all of these substances together, as nature produced them and confined in marijuana inflorescences. It turns out that cannabidiol enhances the effects of cannabichromene (CBC) and cannabigerol (CBG), and flavones or flavonoids improve the absorption of these compounds. Omega-6 and omega-3 extremely nourish the body and do not permit to alter, which accelerate the aging procedure of the organism and improve the development of cancer. Oil of marijuana in a kind of hobby APR contains little amounts of CBD, balanced by the presence of THC. – Modern clinical research study shows that CBD + THC cope with major autoimmune illness, while CBC or CBG show minimal activity in the presence of both compounds, simply like terpenes, flavones or flavonoids, for that reason their material in the service seems to be unneeded. In addition, the marijuana pressure from which THC and CBD are derived include negligible quantities of other cannabinoids. Cannabis oil has already marked a brand-new era in which guy stopped to fear what is unidentified, and started to rediscover what our ancestors had already observed and utilize the considerable capacity, initially glimpse, a little bizarre relationships, associated mainly with pathology. Medical cannabis, contrary to its name, does not mean fermented female inflorescences and leaves containing psychoactive substances coiled in so-called “Joints”, however a helpful oil without psychoactive THC. A basic individual, after taking dosages of medicinal cannabis and accomplishing the suitable state of cannabinoids in the blood, can take pleasure in increased immunity, decreased susceptibility to cancer, delayed aging and minimized risk of stroke or cardiac arrest. CBD oil includes cannabidiol as a base ingredient and may include just trace quantities of tetrahydroxycannabidiol (THC). RSO oil has a low CBD content, while high THC. Both cannabis oil type CBD and RSO also contain other cannabinoids, such as cannabichromene (CBC) and cannabigerol (CBG). CBD medical marijuana oil is a rather advantageous blend of cannabinoids, created to secure against 21st century illness. Oil of cannabis in a kind of pastime APR consists of small quantities of CBD, stabilized by the presence of THC.

Head Fake

Head Fake

The S&P 500 is down more than 7% in September, the Dow Jones 6% and the Nasdaq Composite more than 10%, into correction territory.  Continue Reading

The Economic Case for Biden

The Economic Case for Biden

US President Donald Trump has seeded the investment environment with uncertainty, trashed America’s trade relationships, blown up the fiscal deficit, and left American workers worse off than they were when he took office. He is the polar opposite of Joe Biden, a politician who understands precisely what the US economy needs. Continue Reading