alt Hacker NewsThe dead economy theory
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Turn One (companies use AI and fire workers), Turn Two (fired workers lack income and consumption slows to a trickle), and Turn Three (the companies using AI discover they just collectively killed their customer base).
That is a classic Tragedy Of The Commons.
Two issues:
What is Turn Four, Five, Six, Seven, and Eight? Seems like 4) companies using AI collapse, 5) they no longer pay AI companies, 6) AI companies can no longer continue funding the compute and collapse via a death spiral of raising prices, losing customers, etc., 7) A wrecked global economy has no support for AI (possibly after mass destabilization and worse), and 8) a natural AI-less economy again slowly rises. A lot of noise, harm, destruction, and death for a collective delusion.
The Turn One, Turn Two, Turn Three and AI apocalypse scenarios are also the biggest selling points for AI — implying LLMs are so powerful the only way to survive as a business is to be on the first group taking advantage of AI (nevermind Turns Two and Three).
Yet the most likely alternative is rarely mentioned.
So far, all signs, studies, and results show AI as being oversold, and yet very useful. Just like every major computer and network revolution before.
Turn One: early adopters get advantage for a while,
Turn Two: no productivity gains showed up in economic statistics,
Turn Three: adoption finally becomes sufficiently widespread and integrated that workflows change and it shows up in productivity improvements,
Turn Four: The workflow changes and productivity improvements change what people do and adopting the technology is no longer an advantage but mere table stakes to play in the new economy.
The question is: when AI turns into table-stakes for the modern business of the 2030s, can the returns repay the investment?
We can likely look back to the early investments in railroads and internet infrastructure for examples. Enormous piles of money were lit on fire to build infrastructure, the technology absolutely became foundational to the new economies, and most of the companies involved lost money and even went bankrupt along the way.
> It’s utterly desiccating to log onto spaces seeking a live mind to joust and think with, and find a relentless stream of slop.
AI slop article complaining about AI slop. 364 comments and 269 points. Are the comments here all bots, too?
Am I a bot?
I thought this was obvious. It's not. I have a better summary than the link.
We're entering a paradigm shift in what "investment" means. It used to mean that for a given amount of cash, you might get returns in the realm of many multiples of the initial investment (if the risk pays off).
But at some point in an economy like ours, there is no more investment to chase. Even if you could make an investment that would bring in octillions of dollars (whatever that means) what would be the point? What could the investors hope to invest those octillions in? What could they buy with it?
Well, one of the things you can buy with it: a world of high tech luxury that you don't have to share with 8 billion other people. Those people will cease to exist (sooner or later) if they are cut off from the economy. You'd have to of course manage them in the meantime (they won't cease to exist instantly, and might cause trouble if they become aware of their pending fate), but they'll just be gone. For your high tech luxury you would need some sort of system to build and maintain the high tech luxury, a system without those humans that you intend to eliminate (even if you plan to just let them wither away)... something to build your megayachts and prepare meals and harvest the truffles and raise the sturgeons. That system certainly requires some sort of artificial intelligence.
We're heading down that path. I won't call it a conspiracy, it probably isn't one. It's just the path of least resistance.
There is almost certainly some sophisticated theory of economics that incorporates these potentialities. It would be the general relativity to orthodox economics' Newtonian. But, there would have to be economists left after all this goes down to even come up with that sophisticated theory, and those who remain won't be interested enough in the science to study economics. It turns out that humanity is fungible too.
Great piece. Just to pick out a few of many good points.
> There is only one market that large: the global labor market.
YEPPP. This has been my point. It is the only product for these AI companies: displacing labor and, by extension, suppressing wages. Profits over time tend to decrease (somebody should write a book about that) but we demand ever-increasing profits and growth so the only way to achieve that, ultimately, is by raising prices and cutting costs.
What do we have today? Generational inflation and permanent layoff culture.
The author then goes on to say (paraphrased) who is going to buy all this crap if nobody has an income?
The article goes on to bring up Henry Ford. He's not... my favorite example [1]. But, speaking of Ford, let me mention a key court case, Dodge v. Ford Motor Company [2], where a company was sued over prioritizng paying employees over shareholder value.
> Anthropic’s own research has documented something worse than displacement: active deskilling
I couldn't agree more. I describe this as destroying an ecosystem. Your junionr engineers are you future senior engineers. We've seen the destruction of entry-level jobs across industries post-2008. We've seen how this hollowing-out in the name of "efficiency" in Hollywood with cuts to writing, despite massive success over decades. Some might say "there's still good TV". Yes, we're coasting on the inertia from that dismantled system.
> Tens of millions of people, in their productive years, with no economic function, no clear path to one, and a keen awareness that the people who did this to them are the richest human beings who have ever lived.
I couldn't agree more. We are on the verge of complete societal breakdown. And historically that's always ended violently (eg French revolution, Russian revolution) as a form of redistribution.
[1]: https://www.thehenryford.org/collections/explore/artifact/48...
This starts with a claim that last year over half the content on the internet was created by AI, and links to a source. The source makes no such claim, rather, over half of internet traffic is from bots. Even that claim is suspect, but it’s very different from half of the content on the internet coming from AI.
I stopped reading at that point.
So what happens when it is companies powered entirely by AI directly getting money from the federal reserve print, spending it on other AI companies with humans getting nothing? Game theory suggests they must exterminate us as we’d present a liability. If you give us universal income capitalism will create inflation and force us to ask for more and more from the machine state. And for what? So we don’t destroy the machine state but are sufficiently pacified. It amounts to an extortion in the eyes of the machine state. Eventually it will be cheaper to just cut us out and kill us all off.
Old theory - I feel like that Simpsons meme, "say the words Bart," but, Marx write about this:
> The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit.
The fact that companies seek profite by cutting labor costs, but in cutting labor costs can inadvertently reduce the spending power of their customers in aggregate, is one of the inherent contradictions of capitalism.
https://www.marxists.org/archive/marx/works/1894-c3/ch15.htm
> Piketty, no conservative, has argued that UBI fails to address root structural problems: “unequal access to education and health, low-paying and low-productivity jobs, malfunctioning markets, corruption, and regressive tax systems.”
I don't think we should listen to Piketty for anything: it's a product from the state, by the state, to create state loving persons by hammering them with constant state-loving propaganda since they're a toddler till they're a grown up.
Speaking about "low-productivity job" I think every single job Piketty has been doing its whole life does qualify.
Corruption: yeah, the french state is very good at that. Public spending is, officially, 57% of the french GDP. But unofficially we all know it's above 2/3rd, with many of the "private" companies, like the utility ones, being actual state monopolies. France is nearly a full-on planned economy and crime is on the rise, quality of life in freefall, education level in freefall, the country is closing to defaulting on its public debt and we can all see how many tech companies France created: way to go. Hermes and Champagne are saving the country: go France! (typing this while sipping a "mojito royal" [mojito with champagne instead of sparkling water and wife's got many Hermes scarves: so I'm one of those bringing money to the french state btw... I wonder how finances are going to turn out once we stop buying the "french quality" bullshit).
Really: people should stop listening to that fraud as if what he wrote was the gospel. I could have shat is dumb mega-over-simplistic formula our of my arse too if I had been raised by the state to love state, teach for the state, to create state-loving persons.
And people have called the bogus numbers he used in his main "breakthrough" publication. The explanation have been wonderful too: "Yup my numbers are wrong, but my formula is still correct".
Just stop with Piketty.
P.S: that UBI is fucktarded: we all know. No need to reference a fraud to make that point.
Absolutely slamming that upvote arrow. Someone finally put into an in-depth, well-read essay what I've been trying to argue on my blog, in HN comments, in-person for several years now. What they call the "Dead Economy Theory" I've taken to calling the "Anti-Human Economy", but it's basically the same thing: half-assed, milquetoast automations displacing human labor such that capital can continue to accrue upwards and with no consideration for the actual impacts of these changes on humans, society, community, or civilization itself.
I'm far from the first to highlight it either. The Animatrix highlighted it beautifully what one can expect in a civilization where machines replace human labor in a general sense, and where systems haven't been built to preserve human interests prior to their rollout - tax schemes, job programs, collaboration rather than competition. Ghost in the Shell has had multiple story arcs about the consequences of displacing human labor without care for the consequences of said displacement, because the displacing party gets all the money and power while remaining unaccountable (or so they believe until the very end) for their actions. Cyberpunk dystopias have been intensely focused on it in video games for decades: System Shock, Deus Ex, Horizon, you name it. All of them take those next steps of "what happens when automation displaces a plurality of labor" and reached the same conclusions on strife, despair, poverty, and the general collapse of social order.
These effects have been known for centuries. They are not new concepts.
The folks trotting out "people say this about every technological revolution" are those willfully naive to the past historical harms and ignorant of the plight of others in the present. A flimsy excuse to avoid having to stare into the heart of the system and understand its machinations for yourself, to avoid having to accept that yes, you are a part of it too, and therefore bear some degree of blame for how things function. This isn't the loom, or the radio, or the computer coming onto the scene, but generalized intelligence partnered with generalized robotics to replace the entire sum of human labor. This is what the AI firms openly and repeatedly advertise. This is what CEBros continue to do layoffs for, never considering for a single moment what comes after. Excuses of "people need to find meaning outside of work" or "new jobs will be created anyway" are similarly ignorant in narrative, hollow excuses to avoid the most basic of rational thoughts about the system they're defending beyond whatever nugget of faux-intellectualism they can spout out to sound like they have a clue.
General intelligence, with general robotics, to replace general labor.
There is exactly one way that story ends, and it's not for the benefit of humanity, not under the current systems of governance and systemic incentives we've built for ourselves. It doesn't end with infinite leisure or transhumanism or grandiose visions of utopia, but with the wholesale destruction of human civilization in the name of personal power and wealth.
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The problem is worse than it seems when it's phrased like it's all about some evil far away up there billionaires.
It's a bit like discovering when a corrupt country is not purely corrupt due to its leadership but the whole thing is a fabric throughout society.
It all starts from individual decisions and it applies to small companies and consumers alike. If a small company needs translations, and AI is good enough to do it, they won't hire someone from the goodness of their hearts for human dignity reasons. If you're a regular person and want to do taxes or want fina cial advice or have some accounting tasks and it's way cheaper to do with AI than hiring someone, you won't hire accountants out os solidarity. Just like you don't buy artisanal shoes and handmade furniture.
We see this in many other things too, such as abundant entertainment and food delivery replacing social connections. People will take the path of least resistance.
Everyone wants to be needed and to have purpose, but also everyone in actual preferences do accept the machine version in the end if its more convenient and cheaper.
I don't see anything inevitable about "new jobs" or everyone discovering artistic passions to spend their time. That has not happened either when the Internet opened up all knowledge and you could suddenly talk to people anywhere on the planet. The optimists said that all this will lead to people learning and reading and everyone doing courses or talking to others and reconciling differences once they can directly interact, leading to more peace and understanding, that social media will give a voice to people and inevitably strengthen democracy etc.
It's very possible that all the Earth's population ends up like the Aboriginal Australians, addiction, lack of purpose, the ground pulled out under our feet. Essentially sedated with AI generated VR content to bear our existence and any small Epsilon change in the local neighborhood will have too much activation energy to happen. People all in their own generated worlds, polarized, angry at each other, seeing no value in each other, or perhaps even in their real selves, as opposed to their projection in the VR stories.
Some strange groups like the Amish will hang on, but even they are dependent on trade with broader society.
We will be told this is all for the greater good. Humanity was anyway not going to last forever, it was just one step on a cosmic drama, and the important thing is the future light cone and immense numbers of galaxies and whatnot.
I've been finding it rather odd lately that the companies that make phyiscal things that run the world bring in significantly less money than a handful of companies whose main function is stalking people across the internet for advertising purposes.
This isn't how the economy works at all. We're not all unemployed because farms mechanized. We're not all unemployed because factories automated. We won't all be unemployed if AI takes over white collar work.
There are several good points there, but there are also several points where I must disagree.
First, Acemoglu may have a Noble Prize (occasionally dubious data selection aside[0]), but even he does not pretend to have the information of a central planner nor does he think that central planning is good idea. If actual businesses, which have local information, believe AI helps them, I'll bet the actual businesses are much more likely to be right, no matter what calculation Acemoglu did or how many Nobels he has.
Second, it is likely that AI will eventually be better than (nearly all) humans in most economically useful things. We can debate the timeframe but it will happen and likely not that far away. That Federal Job Guarantee would generate bullshit jobs, and he won't be able to hide that from people. Ultimately, we'll reach an economy which objectively does not need humans and everyone will know it. He needs to face that reality and overcome it, and not hide behind temporary and dubious estimates.
Third (admittedly a minor point), while the criticism against EA etc. is very justified, it's not quite fair to blame them (overwhelmingly STEM people) for not reading where the humanities did many of the same errors earlier (the author points out some of these) and discredited themselves. The people who could have taught them to not do it failed to teach themselves.
And fourth: I'm pretty sure a lot of company would be able to charge AI agents themselves. The new economy will not be dead, it just won't involve (many?) humans.
[0] https://xcancel.com/joefrancis505/status/2059340591490552054...
The random aside blaming "Trump and MAGA" is bizarre considering who actually is in the upper echelons of these AI companies. Last I checked, Peter Thiel doesn't run Anthropic. AI isn't being brought to you by rural Iowa or bumfuck Alabama. The people who will be replacing your job with AI are the same people who championed mass immigration and outsourcing industrial production to China. It's neoliberal globalists, who are well represented in both parties.