What?!
The primary resource needed to build a home is land. Do we have infinite availability of land in desirable areas to build on?
What?!
The primary resource needed to build a home is land. Do we have infinite availability of land in desirable areas to build on?
In a world where it’s dramatically cheaper to build infrastructure like roads, power, and plumbing, lots more land becomes desirable as a place to live.
Take Phoenix, for example, once air conditioning became cheap and pervasive.
> In a world where it’s dramatically cheaper to build infrastructure...
You can not make things dramatically cheaper by bringing only the cost of labor to zero. Your argument is circular!
The argument isn’t that AI brings the labor cost down to 0 in isolation. It brings the labor cost of the same amount of production down. So you get more production (more things = more supply -> lower prices) out of less labor.
> So you get more production out of less labor.
We don't need "AI" to figure out that technological advances increase productivity. The problem with yout argument is assuming that increased productivity mean overall reduced costs. It does not.
Healthcare, housing, education all have gone up despite increased productivity. Then you have things that are already so automated that there is no way to make them cheaper unless sacrificing quality - food, clothing, etc.
Then we have all the types of consumer products that have prices completely decoupled from the cost of labor. No one in their right mind the "cost of labor" has any relation whatsoever with Apple charging $1000 for an iPhone and/or Motorola charging $180 for a Moto G.
Healthcare, housing, education all have gone up despite increased productivity.
The hypothesis of Baumol’s Cost Disease is that these industries are exactly where we should expect prices to rise because they’re still dependent on low-productivity-growth human labor.
Baumol's Cost Disease is about relative costs. We are talking about productivity enabling absolute reduction in costs. Don't mix them up.
We were talking about infrastructure costs under increasing labor productivity. Now what are we talking about?
If the premise is that AI won’t improve productivity in industries like healthcare, education, and housing construction, then why are we worried about “the dead economy”?
No. You are getting it backwards. The premise is: even if AI improves productivity, we the people are not going to benefit from it.
The mistake you are making is that you are assuming that a system where productivity per unit of labor is higher automatically translates into increased global output. It does not. This idea of a dead economy theory is precisely the concern we are heading to a world where machines can make practically everything on the cheap, but it won't matter because the moneyed class won't need to satisfy the demands of the general populace.
So we have a bunch of billionaires sitting around, surveying a world where a much smaller amount of labor will produce a much larger amount of output, and they collectively decide not to hire that labor or spend capital on the technology that generates that output in combination with that labor because… they have enough money already?
No, ffs. You are missing that if they can do whatever they want with just "a small amount of labor", then the whole system gets to a point where Capital becomes the bottleneck for global productivity. People can not be trained faster than the machines can be created, so all that capital will go to an increasingly smaller number of workers.
To illustrate the point: Facebook laid off thousands of developers at the same time that it was hiring AI researchers, paying them tens of millions of dollars as a signing bonus.
Facebook (Meta) mostly “makes” ad space. So in that case, they’re making more / better ad space for the same inputs.
Online advertising is a competitive business, so that means more bang for the buck for Facebook’s advertisers. Now those advertisers have more money to invest in making more / better of whatever they make.
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Its also the 'labor theory of value'. That's the economic theory that Communism is based on. It has never been accurate and wasn't even considered legitimate during Marx's lifetime. It has possibly the worst track record of predictions of any theory ever conceived by people. Yet somehow academics still reference it. Nobody who actually is impacted by making the wrong economic predictions does though. Funny that...
Solve the diamond/water paradox?
Enough that it's effectively infinite, yes. Especially if we are imagining a world where subways cost 1/20th of what they do today.
> where subways cost 1/20th of what they do today.
1) We are talking about reducing the cost of labor, not overall costs.
2) Your logic only applies in the micro, not on the macro. If the cost of producing one thing goes down while population keeps their purchasing power, then what you are saying would make sense. The whole point of the article is that accelerated automation can bring a scenario where the cost of producing "things" would go down, but the economically active population would shrink drastically.