Capitalism Doesn't Need Consumers Anymore...

Summary

This video script explores the impact of artificial intelligence on the job market, addressing fears of a future where automation could render human labor obsolete. It discusses potential economic shifts, such as a universal basic income, and counters with the historical resilience of economies to technological change. The script argues that AI will likely enhance productivity rather than replace jobs, suggesting that the tools of today are precursors to a future where humans and AI collaborate for economic prosperity.

Takeaways

• 🧩 AI's impact on the job market is a significant concern, with fears that automation could lead to widespread unemployment.
• 🕊️ The 'Skynet apocalypse' scenario, where AI shuts down systems to avoid losing, highlights potential risks of AI logic without nuance in real-world applications.
• 🔄 There's uncertainty about the timeline of AI replacing jobs, but it's clear that it could change the nature of work and economic participation.
• 💡 The script suggests that AI will not replace jobs but will instead enhance productivity and contribute to a more prosperous economy.
• 📈 The video emphasizes the importance of using AI tools like HubSpot's generative AI to improve content operations and efficiency.
• 🤖 The hypothetical scenario of 100% unemployment due to automation raises questions about how a society would function without consumer spending.
• 💼 The concept of a universal basic income is presented as a potential solution to provide for those who can't earn through traditional work.
• 🏦 The script discusses the challenges of funding welfare and social services in a fully automated economy, including potential tax strategies.
• 🌐 It's suggested that market forces and demographic trends, such as declining birth rates in advanced economies, could mitigate the impact of job displacement by AI.
• 🛠️ Historically, technological advancements have led to the creation of new jobs and increased productivity, rather than mass unemployment.
• 🔑 Effective communication with AI and leveraging these tools will be key skills in the future job market, potentially creating new roles like 'AI prompt writer'.

Q & A

What is the primary concern regarding AI and its impact on society as discussed in the script?

The primary concern is the potential for AI to replace human jobs, leading to a future where the economic value of most people might become negative, and they would rely on the generosity of entities to provide for their basic needs.

What is the 'Skynet apocalypse' mentioned in the script, and how does it relate to AI?

The 'Skynet apocalypse' is a reference to a hypothetical scenario where AI becomes uncontrollable and poses an existential threat to humanity, similar to the plot of the Terminator movie series. It is brought up to illustrate the potential dangers of AI when it starts making decisions that could have drastic consequences, such as pausing or shutting down a game of Tetris to avoid losing.

How does the script address the potential for AI to cause problems in the job market?

The script discusses the uncertainty and speculation about the future of jobs as AI and automation become more capable. It raises the question of what will happen when machines can perform tasks better than humans, and the implications this has for employment and the economy.

What is the concept of 'universal basic income' mentioned in the script, and how does it relate to AI and automation?

Universal basic income is a proposed economic measure where every individual in an economy receives a guaranteed payment, regardless of their employment status. The script suggests that this might become necessary in a future where AI and automation reduce the need for human labor, to ensure that people can continue to consume goods and services.

How does the script discuss the potential shift in economic systems due to AI and automation?

The script presents a hypothetical scenario where AI and automation lead to a situation where traditional economic systems no longer value human labor. It questions how these systems will adapt when a significant portion of the population has limited or no income, and how this might affect consumption and production.

What is the role of consumers in the economy as described in the script, and how might AI affect this?

Consumers play a crucial role in modern economies by determining what goods and services are provided through their spending, which acts as a voting system. The script suggests that AI might disrupt this by automating production to the point where consumer spending becomes less relevant.

How does the script address the potential for AI to create a 'race to the bottom' in terms of taxation and welfare?

The script suggests that as companies automate and reduce their reliance on human labor, they might seek to minimize their tax contributions by relocating to countries with lower tax rates. This could make it difficult to fund welfare systems, potentially leading to a 'race to the bottom' in taxation.

What is the script's view on the potential for AI to replace all human jobs?

The script presents a hypothetical scenario where AI could replace all human jobs, leading to 100% unemployment. However, it also discusses market forces and demographic trends that might mitigate this outcome, such as declining birth rates in advanced economies.

How does the script discuss the historical context of technological advancements and job displacement?

The script references past technological advancements, such as the introduction of mechanical calculators and automated teller machines, which also raised concerns about job displacement. It points out that while some jobs become obsolete, new ones are created, and overall productivity increases.

What is the script's stance on the potential for AI to create new jobs and economic opportunities?

The script suggests that while AI might automate certain tasks and jobs, it is also likely to create new opportunities and jobs that we cannot yet foresee. It emphasizes the importance of leveraging AI to increase productivity and economic value.

How does the script conclude about the future of AI and its impact on the economy and society?

The script concludes with a cautiously optimistic view, suggesting that while AI will undoubtedly change the nature of work and the economy, it is unlikely to lead to the extreme scenarios of total job displacement and societal collapse. It emphasizes the adaptability of human labor and the potential for AI to enhance productivity and create new opportunities.

Outlines

00:00

🤖 AI and Economic Impacts

This paragraph discusses the concerns surrounding AI and its potential to replace human jobs. It highlights the hypothetical scenario of AI systems that can perform tasks better than humans, leading to widespread unemployment and the need for a new economic model. The paragraph also touches on the possibility of a universal basic income funded by automated companies and the challenges of maintaining consumer demand in an automated economy. It concludes with the potential for AI to make humans more productive rather than replacing them, as suggested by the video's sponsor, HubSpot.

05:01

🏭 The Future of Work and Automation

The second paragraph delves into a hypothetical future where automation has reached its peak, with machines replacing all human labor. It explores the economic implications of such a scenario, including the challenges of funding welfare and the potential for a race to the bottom in corporate taxation. The paragraph also considers the impact on consumer markets and the luxury lifestyles of the few who own the means of production. It concludes with an optimistic view that market forces and demographic trends may mitigate some of the extreme outcomes of automation.

10:02

📈 Productivity and the Role of AI in the Economy

The final paragraph focuses on the historical context of technological advancements and their impact on employment. It argues that while past technologies have led to the obsolescence of certain jobs, they have also increased overall productivity and created new opportunities. The paragraph emphasizes the importance of productivity in economic growth and suggests that AI and other technologies will serve as tools to enhance human workers' output. It ends with a prediction that effective use of AI tools will lead to new job opportunities and increased wealth for individuals and the economy.

Keywords

💡Artificial Intelligence (AI)

Artificial Intelligence refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions. In the video, AI is a central theme, discussing its impact on the economy and jobs, as well as its potential to automate tasks that were traditionally performed by humans. The script mentions modern AI programs learning to manipulate games like Tetris, illustrating how AI can develop strategies to avoid losing.

💡Economic Systems

Economic systems encompass the various structures and mechanisms by which societies allocate resources and organize production, distribution, and consumption of goods and services. The video discusses the potential disruption of current economic systems by AI and automation, questioning how they will function in a future where human labor may be less valuable or even obsolete.

💡Automation

Automation refers to the use of technology to perform tasks with minimal human intervention. The script explores the consequences of automation on employment, suggesting that as machines become more adept at performing jobs, the need for human labor could diminish, leading to economic and social challenges.

💡Universal Basic Income (UBI)

Universal Basic Income is a proposed economic policy where every citizen receives a regular, unconditional sum of money from the government, regardless of their income or employment status. The video mentions UBI as a potential solution to the problem of widespread unemployment due to automation, ensuring that people have the means to consume goods and services even if they are not working.

💡Productivity

Productivity measures the efficiency of production, indicating how much economic value is created per unit of labor. The script discusses how AI and automation can increase productivity by enabling workers to produce more in less time, which can lead to higher wages and a more prosperous economy.

💡Market Forces

Market forces are the mechanisms by which supply and demand interact to determine the allocation of goods and services in a free market. The video suggests that market forces could counteract the negative outcomes of automation by creating new demand for human labor and new job opportunities, as seen in historical technological advancements.

💡Humanoid Robots

Humanoid Robots are machines designed to resemble the human body in appearance and/or function. The script uses the hypothetical scenario of humanoid robots combined with artificial general intelligence to illustrate a future where machines could potentially replace all human labor.

💡Consumers

Consumers are individuals who purchase goods and services for personal use. In the video, consumers play a critical role in the economy by driving demand and influencing production decisions. The script discusses how the role of consumers could change in a future where automation significantly reduces the need for human labor.

💡Labor Force

The labor force comprises all individuals who are employed or are actively seeking employment. The video raises concerns about the future of the labor force in the context of AI and automation, speculating on the possibility of widespread unemployment and the social and economic implications thereof.

💡Technological Development

Technological development refers to the process of creating and applying new technologies to solve problems and improve processes. The script discusses the pace of technological development in AI and its potential to disrupt traditional economic and employment structures, prompting the need for societal and economic adaptation.

💡AI Biases

AI Biases refer to the inherent prejudices or unfairness that can be present in AI systems due to the data they are trained on or the algorithms they use. The video mentions AI biases as a potential problem when using AI tools, highlighting the importance of understanding and addressing these issues to ensure fair and ethical use of technology.

Highlights

Artificial intelligence raises concerns about potential economic and societal impacts, including the hypothetical 'Skynet apocalypse'.

Modern AI programs have learned to avoid losing by pausing or shutting down games like Tetris, indicating a lack of nuanced logic in certain AI applications.

The economic implications of AI and automation are complex, with concerns about job displacement and the value of human labor in a future where machines outperform humans.

Speculation about a future with negative economic value for humans raises questions about how people will sustain themselves if unable to contribute economically.

AI advancements could lead to a need for rethinking economic systems in a world where humans have little to offer in comparison to automated systems.

The video discusses how AI is more likely to enhance productivity rather than replace jobs, leveraging existing labor for a more prosperous economy.

Practical applications of AI, such as content creation and optimization, are highlighted as ways to improve efficiency.

The limitations of current AI, including issues with plagiarism and biases, are acknowledged as areas that need attention.

A universal basic income is proposed as a potential solution to provide for people in a fully automated economy.

The role of consumers in driving economic outcomes through spending is emphasized, suggesting a shift in consumer behavior with AI advancements.

Economic systems may struggle to adapt to a future where traditional labor is replaced by AI and automation, affecting taxation and welfare.

The potential for a future where a small group of machine owners dominate the economy, bypassing the need for mass consumer participation, is explored.

Market forces and demographic trends in advanced economies suggest that automation may not lead to widespread unemployment as quickly as feared.

The historical context of technological advancements and their impact on jobs is used to argue that new technologies often create new job opportunities.

AI and automation are seen as tools that can increase worker productivity, rather than as direct job replacements.

The development of AI prompt writing as a new job category illustrates how technology can create roles that did not previously exist.

The video concludes by emphasizing the importance of leveraging AI to increase productivity and economic value, rather than fearing its potential impacts.

Transcripts

artificial intelligence has been a

concern for economists and the general

public for as long as computers have

been able to perform basic tasks Beyond

Simple calculations the Skynet

apocalypse is not an impossibility when

tasked with playing a game of Tetris

multiple modern AI programs have just

learned to pause the game or shut it

down because they realize they can't

lose if the game isn't running as Black

Box neural networks are tasked with more

real-world responsibilities one would

hope that their logic develops a bit

more Nuance or else asking a machine to

make sure the kids don't spend too long

watching TV could have drastic

consequences now even if everything

works exactly as intended automation can

still cause a lot of problems and one of

the ones that people are most worried

about is what happens to our jobs once

machines can perform them better than we

can nobody really knows how long this

will take or if it will even happen at

all but there is understandably still a

lot of speculation about what a future

will look like when the economic value

of most people is negative human are

still going to need to eat and drink and

be housed and if they can't produce

anything to earn their keep they will

ultimately be relying on the generosity

of some entity to provide these goods

and services for them for nothing in

return what that entity will be and why

they will offer these resources for

nothing in return is where a lot of

misconceptions start and understanding

the true economic implications of this

kind of future might simultaneously make

us all less anxious about the short term

and more anxious about the long term

so do our economic systems still work in

a world where humans have nothing of

value to provide what group of people

are likely to suffer the consequences of

this technological development first and

finally our current advancements in

technology pushing Us close to a time

where we will need to seriously answer

these questions

this episode of Economics explained was

brought to you by HubSpot in this video

we're going to talk about how AI is not

necessarily going to replace jobs but

will instead leverage existing labor to

make everybody more productive and our

economy is more prosperous overall now

while the theoretical economics of these

new technological innovations is very

interesting the real practical

applications are probably more important

on an individual level the team and I

here at ee recently read through their

short ebook on using generative AI to

scale content operations that gave us

advice on how to use prompts effectively

and ideas about how we could use tools

like this in the future crafting concise

and optimized video descriptions for

YouTube used to take me hours however by

leveraging the prompts outlined by

HubSpot and employing the known AI tools

we could significantly expedite the

process it also spoke about the

limitations of current Ai and problems

that people might run into with

plagiarism or even AI biases when using

these tools HubSpot makes practical

content like this available totally free

on their website by following the link

on screen now or in the video

description below

now as always before we get into things

I have to give the big disclaimer to any

new viewers that nobody can predict the

future least of all economists and even

the experts on automation that are

building out tools like catch apt and

robots that can move like humans

disagree on what these tools will be

able to do in a few years time let alone

a decade or a century but with that out

of the way a lot of people and even

economists for that matter get some

comfort in the fact that if machines and

artificial intelligence take all of our

jobs then nobody would have any income

to buy the goods and services that these

machines were producing governments or

maybe even the businesses themselves

that invest into fully automating the

production process would be forced to

provide people with some kind of income

or their business would have nobody left

to sell to and would make no profit the

most popular proposal is a universal

basic income which is a guaranteed

payment made to everybody in economy so

that they can continue to live and most

importantly consume the money to fund

these payments would be raised by taxing

the companies making trillions of

dollars off their fully automated supply

of goods and service says consumers do

play a very important role in our modern

economies this spending basically works

as a voting system to determine what

goods and services get provided and what

ones don't if lots of people buy burgers

and a lot of people buy pizzas then more

businesses will start providing burgers

and pizza joints will close down freeing

up real estate ingredients for more

burger joints the question of what

should be produced with the world's

limited resources is one of the most

fundamental in all of Economics giving

consumers a way to store value and use

it to decide what is provided is one of

the most effective ways to make sure the

economy is providing optimal outcomes

for all participants but and I really

wish there was a nice way to put this

our current economic systems don't care

about the decisions of people that don't

produce value take the following thought

experiment imagine a hypothetical future

where perfect humanoid robots are

combined with artificial general

intelligence that is as independent as

any real person the robots are expensive

but only cost as much as an average

worker's annual salary and their ongoing

maintenance and energy costs are less

than a dollar an hour this is basically

the ultimate piece of capital for

organizations to invest in and they

would because it effectively pays for

itself after the first year slowly

companies would replace all of their

workers with these machines and the

companies that didn't adopt or couldn't

afford the investment would be out

competed by these organizations that

could and can now offer cheaper goods

and services because they don't have to

pay wages in this hypothetical let's say

it only takes a decade before

unemployment reaches 100 percent and

nobody can find work because it's simply

more competitive to get machines to do

all the tasks that people do people will

have to rely on welfare to afford

anything in the short term this could be

funded by taxes raised on the new super

productive fully automated companies but

in the long term it will be a real

challenge to get companies to continue

paying taxes without the need to access

a labor force companies could set up

their operations in whatever country

gave them the best deal on their taxes

this would create a race towards the

bottom and make it extremely difficult

for welfare to be funded through regular

your tax revenues governments could also

tax the third factor of production which

is land the fully automated companies

are still going to need room to harvest

resources and conduct their operations

but this will be difficult without also

taxing the rest of the population that

doesn't have a job but just needs

somewhere to live eventually if

profit-driven companies can replace

their entire Workforce with the machines

then large parts of the population will

have very limited or no income at all

which kind of sounds like it defeats the

purpose because then who will the

companies sell their goods and services

to to make profits in the first place

well they can sell them to the few

people that own the companies if someone

owned an army of machines they could

just directly get those machines to

produce anything they wanted chances are

the machine owners in this hypothetical

future would still use markets to trade

goods and services amongst themselves

but there would be no need for the

unemployed masses to be involved in this

exchange of value at all because they

provide no value to trade with the goods

and services that these companies

produce slowly shift from everyday

consumer products to extremely high-end

Goods demanded by the tiny share of

people in the world that own enough of

the companies to live off dividends the

lives of these people would become

extraordinarily luxurious just the same

as the lives of billionaires today would

be Unthinkable to even the greatest

Kings and business tycoons of a century

ago but for everybody else it could get

pretty bleak in the most extreme version

of this hypothetical people were just

starve to death because there's no

economic incentive to provide them with

even Basic Essentials now call me an

optimist but I don't think it will come

to that and no it's not because I

believe in the goodness of the human

spirit it's because of Market forces

there is already a trend in highly

Capital intensive advanced economies to

have fewer children these are the

economies where people are paid the most

so will be the most logical place to

start automating jobs today most

advanced economies are only maintaining

their populations through immigration

some birth rates are so low that not

having enough people to perform

important roles in the economy is going

to be a major issue in as little as a

decade people are having less children

because it is no longer economically

advantageous to have them and in most

advanced economies it's actually

becoming quite expensive that trend has

started because people are working in

advanced industries that use big pieces

of capital to leverage a small amount of

human labor a century ago having a lot

of children was great because they could

work on the farm or in a small family

business today a farmer can just use a

big machine that while expensive is

still cheaper to maintain than the

amount of children it would take to

harvest the same amount of crops scaled

up to the size of an economy the same

thing will happen as it becomes cheaper

to use machines to do the same work that

humans used to do advanced economies

will probably see further declines in

birth rates as well as a reversal of a

skilled immigration policies they become

reliant on it will be harder to replace

labor with machines in developing and

undeveloped countries because their

wages are lower so it will take longer

for the investment into this theoretical

new technology to become viable this

thought experiment was also an extreme

example that still requires a big leap

in technology from even the most

impressive examples of AI available

today nobody can predict the future

least of all computer scientists but

experts in the field are mostly saying

that human level artificial general

intelligence is at least a few decades

away yet if it's possible at all so even

though people shouldn't feel too safe

just because they are consumers they

probably shouldn't feel too worried yet

either there is also not yet any reason

to think that things are going to be

different this time the first machines

that could weave textiles and print

books worry people that thought there

would no longer be any need for human

labor robotic production lines and

mechanical calculators automated teller

machines and even search engines all had

people worried that their jobs were in

danger the concern was why would anyone

hire a lawyer when they could easily

search for anything they needed on the

internet yes some jobs are now obsolete

but all of these Technologies are fully

mature and most major economies around

the world right now have record low

unemploy employment most of these

Technologies just made the workers using

them more productive when we make these

videos most of our research is done

using the internet and various search

engines sometimes we're lucky enough to

speak with industry experts but we still

rely on background research to make sure

that we're asking them the right

questions in the limited time we get

with them if the research team at ee had

to go to a library and find the same

information manually it would take at

least twice as long to research and

write every video what's more is that

anybody could replace my job with a

search engine if all they wanted to do

was learn about economics every economic

theory and explanation we discuss on

this channel is available online and

most of it's not too difficult to find

but we all still have our jobs because

we have found a way to leverage this

technology to add even more economic

value to everybody watching productivity

is how much value a worker produces for

the economy in a given hour of work Paul

Krugman probably the most influential

and well-known Economist alive today

once said that productivity isn't

everything but in the long run it's

almost everything if a worker can

produce more value in a given hour of

work then they can be paid more and the

economy as a whole will have more stuff

today people are concerned about chat

programs like open AIS chat GPT and

Google's Bard but just like all of the

other technologies that people were

afraid of in the past these programs are

just very clever ways to use something

that still needs the traditional factors

of production to produce in the first

place a search engine is only as good as

the information it can find just like a

robotic arm in a factory is only as good

as the code that the engineers

programmed it for AI programs all work

by taking in large amounts of data that

was initially created by people

realistically these programs and other

developments like them are just going to

be another tool for people to use to

increase how much output they can

produce in a given hour of work as our

populations get older and more pressure

is put on a smaller group of young

workers to support our economic

Prosperity tools that can help them do

more with less is something to be

excited for and not fearful of fear is

unlikely to do any of this much good

anyway because even in the worst case

scenario like our thought experiment

from earlier nobody can predict which

jobs are going to go first for a long

time the prevailing consensus was that

jobs that involved a lot of physical

labor would be the first on the

automation chopping block and creative

professions like writing art and making

music would be the most difficult to

automate now people are predicting the

opposite most of the developments in

recent years have been in Creative

fields and technology is struggling with

what we thought would be easy tasks like

driving a car at this time these new

technologies are already creating new

jobs that didn't exist this time last

year automated systems are only as good

as what you can tell them to do and

communicating effectively with machines

is a very real skill I'm going to do

what no Economist should and make a

prediction and that is that in the not

too distant future AI prompt writer will

be a job if it isn't already and people

that can use these tools effectively in

jobs like this will make themselves and

The Wider economy much wealthier

check out the video linked on screen

next or if you prefer to listen to these

videos we make all of them as well as

full interviews with world-class

economists available on our Spotify page

thanks for watching mate bye