[m4nu3l]

>We are not there, yet, but if AI could replace a sizable amount of workers, the economic system will be put to a very hard test. Moreover, companies could be less willing to pay for services that their internal AIs can handle or build from scratch. Nor is it possible to imagine a system where a few mega companies are the only providers of intelligence: either AI will be eventually a commodity, or the governments would do something, in such an odd economic setup (a setup where a single industry completely dominates all the others).

I think the scenario where companies that own AI systems don't get benefits from employing people, so people are poor and can't afford anything, is paradoxical, and as such, it can't happen.

Let's assume the worst case: Some small percentage of people own AIs, and the others have no ownership at all of AI systems.

Now, given that human work has no value to those owning AIs, those humans not owning AIs won't have anything to trade in exchange for AI services. Trade between these two groups would eventually stop.

You'll have some sort of two-tier economy where the people owning AIs will self-produce (or trade between them) goods and services. However, nothing prevents the group of people without AIs from producing and trading goods and services between them without the use of AIs. The second group wouldn't be poorer than it is today; just the ones with AI systems will be much richer.

This worst-case scenario is also unlikely to happen or last long (the second group will eventually develop its own AIs or already have access to some AIs, like open models).

If models got exponentially better with time, then that could be a problem, because at some point, someone would control the smartest model (by a large factor) and could use it with malicious intent or maybe lose control of it.

But it seems to me that what I thought time ago would happen has actually started happening. In the long term, models won't improve exponentially with time, but sublinearly (due to physical constraints). In which case, the relative difference between them would reduce over time.

[Davidzheng]

Sorry this doesn't make sense to me. Given tier one is much richer and more powerful than tier two, any natural resources and land traded at tier two is only at mercy of tier one not interfering. As soon as tier one needs some land or natural resources from tier two, tier two needs are automatically superseded. It's like animal community bear human civ

[m4nu3l]

The marginal value of natural resources decreases with quantity, and natural resources would only have a much smaller value compared to the final products produced by the AI systems. At some point, there would be an equilibrium where tier 1 wouldn't want to increase it's consumption of natural resources w.r.t. tier 2 or if they did they'd have to trade with tier 2 at a price higher than they value the resources. I have no idea what this equilibrium would look like, but natural resources are already of little value compared to consumer goods and services. The US in 2023 consumed $761.4B. of oil, but the GPD for the same year was. $27.72T

There would be another valid argument to be made about externalities. But it's not what my original argument was about.

[Davidzheng]

I thought the assumption is that tier two has nothing to offer tier one and is technologically much inferior due to tier one being AI driven. So if tier one needs something from tier two I don't think they need to even ask. Wrt market equilibrium. Indeed i think it will be at equilibrium with increasing cost of extraction so indeed they will not spend arbitrary amounts to extract. But this also means probably there will be no way way for tier two to extract any of the resources which tier one needs at all bc the marginal cost is determined by tier one

[m4nu3l]

> So if tier one needs something from tier two I don't think they need to even ask

You mean stealing? I'm assuming no stealing.

> But this also means probably there will be no way way for tier two to extract any of the resources which tier one needs at all bc the marginal cost is determined by tier one

If someone from tier 2 owns an oil field, tier 1 has to pay them to get it at a price that is higher than what the tier 2 person values it, so at the end of the transaction, they would have both a positive return. The price is not determined by tier 1 alone.

If tier 1 decides instead to buy the oil, then again, they'd have to pay for it.

Of course, in both these scenarios, this might make the oil price increase. So other people from tier 2 would find it harder to buy oil, but the person in tier 2 owning the field would make a lot of money, so overall, tier 2 wouldn't be poorer.

If natural resources are concentrated in some small subset of people from tier 2, then yes, those would become richer while having less purchasing power for oil.

However, as I mentioned in another comment, the value of natural resources is only a small fraction of that of goods and services.

And this is still the worst-case, unlikely scenario.

[Davidzheng]

OK let's assume no stealing (which is unlikely). I think the previous argument was a little flawed anyhow, so let me start again.

I mean fundamentally if tier 2 has something to offer to tier 1, it is not yet at the equilibrium you describe (of separate economies). I think it's likely that tier 2 (before full separation) initially controls some resources. In exchange for resources tier 1 has a lot of AI-substitute labor it can offer tier 2. I think the equilibrium will be reached when tier 2 is offered some large sum of AI-labor for those resource production means. This will in the interim make tier 2 richer. But in the long run, when the economies truly separate, tier 2 will have basically no natural resources.

This thing about natural resources being small fraction is current day breakdown. I think in the future where AI autonomously increases efficiency of the loop which makes more AI-compute from natural resources, its fraction will increase to much higher levels. Ultimately, I think such a separation as you describe will be stable only when all natural resources are controlled by tier 1 and tier 2 gets by with either gifts or stealing form tier 1.

[m4nu3l]

> Ultimately, I think such a separation as you describe will be stable only when all natural resources are controlled by tier 1 and tier 2 gets by with either gifts or stealing form tier 1.

For that to happen tier 1 would have to buy all of the resources from tier 2. Would you sell your house and be homeless so that you can have a highly efficient humanoid robot? I don't think so. And sooner or later, what tier 2 would want from tier 1 is what they need to build their AIs, and then they'd be more similar to tier 1.

[rootusrootus]

If tier 2 amounts to 95% of the population, then the amount of power currently held by tier 1 is meaningless. It is only power so long as the 95% remain cooperative.

[yks]

In practice the tier 1 has the tech and know-how to convince the tier 2 to remain cooperative against their own interests. See the contemporary US where the inequality is rather high, and yet the tier 2 population is impressively protective of the rights of the tier 1. The theory that if the tier 2 has it way worse than today, that will change, remains to be proven. Persecutions against the immigrants are also rather lightweight today, so there is definitely space to ramp them up to pacify the tier 2.

[Disposal8433]

> the amount of power currently held by tier 1 is meaningless.

It's happening right now with rich people and lobbies.

> It is only power so long as the 95% remain cooperative

https://en.wikipedia.org/wiki/Television_consumption#Contemp... I rest my case.

[rootusrootus]

This only works as long as people are happily glued to their TVs. Which means they have a non-leaking roof above their head and food in their belly. Just at a minimum. No amount of skillful media manipulation will make a starving, suffering 95% compliant.

[Lichtso]

Not just land and natural resources: All means of production, including infrastructure, intellectual property, capital, the entire economy.

[m4nu3l]

I'm assuming no coercion. In my scenario, tier 1 doesn't need any of that except natural resources because they can self-produce everything they need from those in a cheaper way than humans can. If someone in tier 1, for instance, wants land from someone in tier 2, they'd have to offer something that the tier 2 person values more than the land they own.

After the trade, the tier 2 person would still be richer than they were before the trade. So tier 2 would become richer in absolute terms by trading with tier 1 in this manner. And it's very likely that what tier 2 wants from tier 1 is whatever they need to build their own AIs. So my argument still stands. They wouldn't be poorer than they are now.

[Sincere6066]

pretty sure the economic system has already failed all the tests

[iwontberude]

I think the bigger relief is that I know humans won’t put up with a two tiered system of haves and have nots forever and eventually we will get wealth redistribution. Government is the ultimate source of all wealth and organization, corporations are built on top of it and thus are subservient.

[m4nu3l]

Having your life dependent on a government that controls all AIs would be much worse. The government could end up controlling something more intelligent than the entire rest of the population. I have no doubt it will use it in a bad way. I hope that AIs will end up distributed enough. Having a government controlling it is the opposite of that.

[azemetre]

Why would this be worse than the current situation of private actors accountable to no one controlling this technology? It's not like I can convince Zuckerberg to change his ways.

At least with a democratic government I have means to try and build a coalition then enact change. The alternative requires having money and that seems like an inherently undemocratic system.

Why can't AIs be controlled with democratic institutions? Why are democratic institutions worse? This doesn't seem to be the case to me.

Private institutions shouldn't be allowed to control such systems, they should be compelled to give them to the public.

[m4nu3l]

>Why would this be worse than the current situation of private actors accountable to no one controlling this technology? It's not like I can convince Zuckerberg to change his ways.

As long as Zuckerberg has no army forcing me, I'm fine with that. The issue would be whether he could breach contracts or get away with fraud. But if AI is sufficiently distributed, this is less likely to happen.

>At least with a democratic government I have means to try and build a coalition then enact change. The alternative requires having money and that seems like an inherently undemocratic system.

I don't think of democracy as a goal to be achieved. I'm OK with democracy in so far it leads to what I value.

The big problem with democracy is that most of the time it doesn't lead to rational choices, even when voters are rational. In markets, for instance, you have an incentive to be rational, and if you aren't, the market will tend to transfer resources from you to someone more rational.

No such mechanism exists in a democracy; I have no incentive to do research and think hard about my vote. It's going to be worth the same as the vote of someone who believes the Earth is flat anyway.

[azemetre]

What is your alternative to democracy then?

I also don't buy that groups don't make better decisions than individuals. We know that diversity of thought and opinion is one way to make better decisions in groups compared to individuals; why would there be harm in believing that consensus building, debates, adversarial processes, due process, and systems of appeal lead to worse outcomes in decision making?

I'm not buying the argument. Reading your comment it feels like there's an argument to be made that there aren't enough democratic systems for the people to engage with. That I definitely agree with.

[m4nu3l]

> I also don't buy that groups don't make better decisions than individuals.

I didn't say that. My example of the market includes companies that are groups of people.

> We know that diversity of thought and opinion is one way to make better decisions in groups compared to individuals; why would there be harm in believing that consensus building, debates, adversarial processes, due process, and systems of appeal lead to worse outcomes in decision making?

I can see this about myself. I don't need to use hypotheticals. Time ago, I voted for a referendum that made nuclear power impossible to build in my country. I voted just like the majority. Years later, I became passionate about economics, and only then did I realise my mistake.

It's not that I was stupid, and there were many, many debates, but I didn't put the effort into researching on my own.

The feedback in a democracy is very weak, especially because cause and effect are very hard to discern in a complex system.

Also, consensus is not enough. In various countries, there is often consensus about some Deity existing. Yet large groups of people worldwide believe in incompatible Deities. So there must be entire countries where the consensus about their Deity is wrong. If the consensus is wrong, it's even harder to get to the reality of things if there is no incentive to do that.

I think, if people get this, democracy might still be good enough to self-limit itself.

[iwontberude]

Very defeatist but I agree it’s easier to pretend democracy doesn’t work.

[kortilla]

Governments are not the source of wealth. They are just a requisite component to allow people to create it and maintain it.

[azemetre]

This doesn't pass the sniff test, governments generate wealth all the time. Public education, public healthcare, public research, public housing. These are all programs that generate an enormous amount of wealth and allow citizens to flourish.

[m4nu3l]

In economics, you aren't necessarily creating wealth just because your final output has value. The value of the final good or service has to be higher than the inputs for you to be creating wealth. I could take a functioning boat and scrap it, sell the scrap metal that has value. However, I destroyed wealth because the boat was worth more. Even if you are creating wealth, but the inputs have better uses and can create more wealth for the same cost, you're still paying in opportunity cost. So things are more complicated than that.

[azemetre]

This isn't related to what I was commenting on where the other poster came across as not seeing government by the governed as having economic worth.

[andsoitis]

Synthesizing between you two’s thoughts, extrapolating somewhat:

- human individuals create wealths

- groups of humans can create kinds of wealth that isn’t possible for a single indovidual. This can be a wide variety of associations: companies, project teams, governments, etc.

- governments (formal or less formal) create the playing field for individuals and groups of individuals to create wealth

[kortilla]

No, I said it was a requisite to generate wealth, but it does not generate it directly.

[m4nu3l]

>governments generate wealth all the time. Public education, public healthcare, public research, public housing. > These are all programs that generate an enormous amount of wealth and allow citizens to flourish.

I thought you meant that governments generate wealth because the things you listed have value. If so, that doesn't prove they generate wealth by my argument, unless you can prove those things are more valuable than alternative ways to use the resources the government used to produce them and that the government is more efficient in producing those.

You can argue that those are good because you think redistribution is good. But you can have redistribution without the government directly providing goods and services.

[iwontberude]

The value of a dollar and how it can be invested and created is literally the job of the government. It’s the baseline for all wealth in the world.

[azemetre]

I think I'm more confused. Was trying to convey the idea that wealth doesn't have to limited to the idea of money and value. Many intangible things can provide wealth too.

I should probably read more books before commenting on things I half understand, my bad.

[kortilla]

Those programs consume a bunch of money and they don’t generate wealth directly. They are critical to let people flourish and go out to generate wealth.

A bunch of well educated citizens living on government housing who don’t go out and become productive members of society will quickly lead to collapse.

[AlexandrB]

None of these are unique to the government and can also be created privately. The fact that government can create wealth =/= the government is the source of all wealth.

[thatfrenchguy]

I mean, you can imagine a public bureaucracy being bad at redistributing too, that’s a lot of governments in the world