Re: A Challenge To All Extropians/Free Martketeers

Dan Fabulich (
Sat, 25 Apr 1998 14:55:48 -0400


Paul Hughes wrote:
>I would love to read your "aboliton of work" post, but I just re-joined
this list
>a few hours ago. Could you re-send it to me?

It's on the archives at

>Wow, as for the rest of your post, it is very well written and thought-out.
>However, perhaps I'm missing a key element to your argument, but I somwhow
>how it addresses the trend of increasing automation. My concern will take

I do understand this concern. However, there's also lots of evidence that
we should still see lots of humans in many different areas of production,
even in the areas which you consider the most easily automatable. It
involves the theory of "comparative advantage," originally posited by David

Suppose 10 robots could make 100 cars in a day or 100 supercomputers, where
10 comparably equipped humans could make only 80 cars in a given day and 50
supercomputers. Obviously, the robots are better at making cars AND better
at making supercomputers. They have "absolute advantage" over humans.

However, examine this from a different perspective. If the humans decides
to make 80 cars, they need sacrifice 50 supercomputers; they can make 1.6
cars for every supercomputer they give up. However, if robots decide to
make 100 cars, they must sacrifice 100 supercomputers; they can only get 1
car for every supercomputer. What we see then is that the humans have
COMPARATIVE advantage over the robots in making cars; the humans need
sacrifice fewer computers to make more cars. In contrast, the robots have
comparative advantage over the humans in making supercomputers.

To demonstrate this, let's see what happens when humans make only cars, and
robots only make supercomputers. Clearly, the robots and the humans will
get 100 supercomputers and 80 cars. Whereas if they tried it the other way
around, society gets 100 cars and 50 supercomputers.

What the theory of comparative advantage shows is that trade and
specialization work to increase productivity, even if one producer has
absolute advantage over the other. While there is ample evidence to
suggest that robots may have absolute advantage over us in all goods and
services (maybe even in programming themselves!), it is profoundly unlikely
that they will have comparative advantage over us in all goods. So we will
specialize in the goods in which humans have comparative advantage, and
sell them to the robots. :)

>1) The Retail Sector:
>2) The Service sector
>3) Industrial Workers

Also, remember that the jobs aren't vanishing per se, but rather that the
wages are falling. And what I think you're overlooking here is the
trade-off here between falling wages and falling prices. Wages are getting
lower and lower, but they are able to buy more and more. So long as wages
aren't falling faster than the price level, we should be fine.

Sadly, I should mention that the market often gets stuck here, especially
where government is involved. Rather than accept lower wages, people use
unions and political pressures to force wages higher than they are worth.
This is the REAL source of involuntary unemployment. If firms find it more
politically acceptable to lay off workers than to cut their wages, or are
unable to accept low wages due to minimum wage laws, then involuntary
unemployment results. So to say that such transitions are smooth and clean
and costless would be false, and the government doesn't make this any
better. However, at least in this case the problem seems soluable: change
government policy and you eliminate this problem altogether.

>So here is my question:
>With the 100's of millions to be displaced by this sophisticated
automation, what
>kinds of jobs will they be able to do instead? Are you suggesting that
>all of us will become doctors, sceintists, engineeers, designers, artists and
>writers? Because those are the only types of jobs that I can see that
will be the
>last to succumb to automation.

If you're right, and these are indeed the areas in which humans will have
comparative advantage, then yes. Remember, the increasing automation will
also mean that it will be cheaper and easier to get an education than it
was in the past, and that doing an hour's worth of labor will be worth much
more than it was in the past. So in the not so distant future we can
expect that people will not only be able to accept lower wages and still
get by, but get an education on the side.

Version: PGP for Personal Privacy 5.5.3