Will AI render humans obsolete?
This is something that is becoming more widely discussed. The impact on knowledge work due to the advancement of AI is certainly questioned. If we couple that with the projected advancement of robotics, we can see how the economic equation regarding labor is turned on its ear.
Traditionally, there are two basic components: labor and capital. Each works in tandem with the other, provide the fuel which drives economies.
Over the last 50 years, this have started to change. While much of the focus is upon the outsourcing of jobs, we overlook the fact that technology has destroyed many fields. With the introduction of AI, this is only accelerating.
Elon Musk jumped into the UBI debate by citing his view that we are going to see a high income for everyone. As technological deflation takes hold, the price of goods and services plummets. This is one standard of the digital world.
Software is simply much cheaper to run than physical labor.
But are we headed for a "universal high income" as Musk predicts? Or is our future one where a few control the majority of the capital, leaving the rest to depend upon the graciousness of others?
Humans Obsolete: The Role of Crypto
There is little doubt humans will become mostly obsolete when it comes to the labor equation. This is something that will unfold over the next 10-20 years. AI will transform the digital world at a faster pace than we see in the physical realm. Those jobs will vanish far before the physical counterparts.
The central thrust of Musk's thesis is the fact that AI and robots will push economic productivity to unseen heights. To me, we are watching another economic singularity in the making. My definition of this is a 10x in the standard rate of economic growth.
Of course, I have to mentioned the fact that it might not show up in GDP since that, in my view, is an obsolete metric. The deflationary nature of technology shows how another capture system is required.
This can be summed up by looking at the photography industry.
Everything Will Become Like Photography
Think about the history of images.
If we go back 200 years, they were portraits. These were expensive creations which required highly skilled individuals who dedicated a lot of time to creating each image.
During the 1800s, photography came into being. By the end of the decade, it was still a cumbersome process (i.e. expensive). Photos were mostly of the rulers, wealthy, or military leaders.
By the 1930s, the process was such that pictures of those suffering from the depression were taken.
Fast forward a half century and we find the cost per photo was still high. The ease of use was such that anyone could take a picture. That said, people had to buy film and pay to have it developed. Each photo cost 10-20 cents.
This changed with digital. No longer were the variable costs included since one simply bought the camera (later phone) and snapped photos. Today many smart devices are capable of images (and video).
The Internet also changed distribution. We can post something online and millions can view it for free.
Now we have generative AI creating images. This means, to get an original image, we do not even have to be in the physical proximity to what we are generating.
While we still have photographers, their roles are changing. The opportunities are dwindling.
Crypto And The Economy
As labor loses its hold on the economy, capital takes on greater capacity. Here is where the entire discussion comes to a central point.
What we will see is an offsetting of the impact due to price declines. The example of images shows where most industries will go. Per unit costs of different items will drop as automated processes take over.
This will only go so far. Even if something is cheap, it is out of reach if one has zero income. Many believe UBI will be the solution.
What if, however, we saw another model emerge. Tokenization presents all kinds of opportunities for innovative economic models. If we are likely to see a global reduction in costs, then having a basic revenue (income) model would go a long way.
Staking is one form of income generation. We also could see communities tokenized, bringing the capture of economic productivity to individuals. This can go exponential when the idea of automation is introduced.
My view is we can see the impact of technology through the lens of the labor force participate rate. This is something that has fallen significantly since 1998 in the US (since 1992 globally).
It is not likely to reverse course anytime soon. Actually, when we look at what is happening in the technology sector, the fact that Big Tech is laying off people by the thousands when their revenues are at all time highs tells me they are automating.
What happens when this spreads to the rest of the economy?
Obviously, this is where the discussion comes in. The time to consider this is now. By the end of the decade, it will likely be too late as things will already be in motion.