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What remains scarce after AGI?
Economists Alex Imas and Philip Trammell discuss how AI-driven abundance could reshape labor markets, capital shares, and wealth redistribution.
What: Alex Imas, Director of AGI Economics at Google DeepMind, and Philip Trammell, Head of Economics at Epoch, analyze scenarios for the future economy where automation may decouple productivity from human labor.
Why it matters: This conversation highlights the limitations of current economic models in predicting how AGI will influence labor share and the importance of data collection on consumer demand elasticities.
Deep dive
- Humans may retain economic value through a "relational sector" where human participation is an intrinsic good.
- Historical data shows labor share has remained stable despite automation, but AGI may create a qualitative shift where supply chains are fully automated.
- Economists lack quality data on consumer demand and job tasks to accurately forecast employment outcomes.
- The "Messy Middle" scenario suggests AI might automate jobs in a piecemeal fashion, creating political crises without achieving massive growth.
- Universal Basic Capital or a negative income tax are proposed methods to distribute AI wealth, though both face political and implementation challenges.
- The "Jevons paradox" explains why demand for compute increases as it gets cheaper, but this relies on high demand elasticity.
- The potential for "greedy" AI agents or firms that prioritize resource accumulation over consumption could lead to high capital concentration.
- Developing countries face risks of being excluded from the AI supply chain, potentially requiring them to gain access through index-based investment or open model proliferation.
Decoder
- Labor share: The portion of economic output paid to workers in wages.
- Capital share: The portion of economic output paid to owners of land, machines, and company stock.
- Kaldor fact: The observation that labor and capital shares of income have remained remarkably constant over long periods of industrial history.
- O-ring model: A theory suggesting production processes are highly sensitive to the failure of any single component, making automation difficult without near-perfect reliability.
- Jevons paradox: A phenomenon where efficiency gains in resource use lead to an overall increase in consumption rather than a decrease.
- Georgist tax: A tax system that taxes land value rather than income, intended to prevent speculative holding.
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