From chapter 13 of Singularity Rising, James Miller 2012:

“There’s this stupid myth out there that AI has failed, but AI is everywhere around you every second of the day. People just don’t notice it. You’ve got AI systems in cars, tuning the parameters of the fuel injection systems. When you land in an airplane, your gate gets chosen by an AI scheduling system. Every time you use a piece of Microsoft software, you’ve got an AI system trying to figure out what you’re doing, like writing a letter, and it does a pretty damned good job. Every time you see a movie with computer-generated characters, they’re all little AI characters behaving as a group. Every time you play a video game, you’re playing against an AI system.” –Rodney Brooks, Director, MIT Computer Science and AI Laboratory 288

…In the next few decades, all of my readers might have their market value decimated by intelligent machines. Should you be afraid? Fear of job-destroying technology is nothing new. During the eighteenth century, clothing manufacturers in England replaced some of their human laborers with machines. In response, a gang supposedly led by one Ned Ludd smashed a few machines owned by a sock maker. Ever since then, people opposing technology have been called Luddites. Luddites are correct in thinking that machines can cause workers to lose their jobs. But overall, in the past, job-destroying machine production has overall greatly benefited workers. “Destroying jobs” sounds bad - like something that should harm an economy. But the benefits of job destruction become apparent when you realize that an economy’s most valuable resource is human brains. If a businessman figured out how to make a product using less energy or fewer materials, we would applaud him because the savings could be used to produce additional goods. The same holds true when we figure out how to make something using less labor. If you used to need 1,000 workers to run your sock factory but you can now produce the same number of socks by employing only 900 workers, then you probably would (and perhaps even should) fire the other 100. Although in the short run these workers will lack jobs, in the long run they will likely find new employment and expand the economy.

The obliteration of most agricultural jobs has been a huge source of economic growth for America. In 1900, farmers made up 38% of the Americans workforce, whereas now they constitute less than 2% of it.289 Most of the displaced agricultural laborers found work in cities. Yet despite the massive decrease in farming jobs, the United States has steadily produced more and more food since 1900. Agricultural technology gave the American people a “free lunch,” in which we got more food with less effort, making obesity a greater threat to American health than calorie deprivation. Technology raises wages by increasing worker productivity. In a free-market economy, the value of the goods an employee produces for his employer roughly determines his wage. A farmer with a tractor produces more food than one with just a hoe. Consequently, modern farmers earn higher wages than they would if they lived in a world deprived of modern agricultural technology. In rich nations, wages have risen steadily over the last two hundred years because technology keeps increasing worker productivity. But will this trend continue? Past technologies never completely eliminated the need for humans, so fired sock workers usually found other employment. But a sufficiently advanced AI possessing a robot body might outperform people at every single task.

…If a Kurzweilian merger doesn’t occur, sentient AIs might compete directly with people in the labor market. Let’s now explore what happens to human wages if these AIs become better than humans at every task. Adam Smith, the great eighteenth-century economist, explained that everyone benefits from trade if each participant makes what he is best at. So, for example, if I’m better at making boots than you are, but you have more skill at making candles, then we would both become richer if I produced your boots and you made my candles. But what if you’re more skilled at making both boots and candles? What if, compared to you, I’m worse at doing everything? Adam Smith never answered this question, but nineteenth-century economist David Ricardo did. This question is highly relevant to our future, as an AI might be able to produce every good and service at a lower cost than any human could, and if we turn out to have no economic value to the advanced artificial intelligences, then they might (at best) ignore us, depriving humanity of any benefits of their superhuman skills.

Most people intuitively believe that mutually beneficial trades take place only when each person has an area of absolute excellence. But Ricardo’s theory of comparative advantage shows that trade can make everyone better off regardless of a person’s absolute skill because everyone has an area of comparative advantage. I’ll illustrate Ricardo’s nineteenth-century theory with a twenty-first-century example involving donuts and anti-gravity flying cars. Let’s assume that humans can’t make flying cars, but an AI can; and although people can make donuts, an AI can make them much faster than we can. Let’s pretend that at least one AI likes donuts, where donuts represent anything a human can make that an AI would want. Here’s how a human and AI could both benefit from trade: a human could offer to give an AI many donuts in return for a flying car. The trade could clearly benefit the human. If it gets enough donuts, the AI also benefits from the trade. To see how this could work, imagine that (absent trade) it takes an AI one second to make a donut. The AI could build a flying car in one minute.

Time needed for an AI to make a donut: one second

Time needed for an AI to make a flying: car one minute

A human then offers the following deal to the AI: Build me a flying car and I will give you one hundred donuts. It will take you one minute to make me a flying car. In return for this flying car you get something that would cost you 100 seconds to make. Consequently, our trade saves you 40 seconds. As the AI’s powers grew, people could still gain from trading with it. If, say, it took the AI only one nanosecond to make a donut and 60 nanoseconds to make a flying car, then it would still become better off by trading 100 donuts for 1 flying car. 292 In general, as an AI becomes more intelligent, trading with humans will save it less time, but what the AI can do with this saved time goes up, especially since a smarter AI would probably gain the capacity to create entirely new categories of products. An AI might trade 100 donuts for a flying car, but an “AI+” would trade this number of donuts for a wormhole generator. Modern economists use Ricardo’s theory of comparative advantage to show how rich and poor countries can benefit by trading with each other. Understanding Ricardo’s theory causes almost all economists to favor free trade. If we substitute “humanity” for “poor countries” and AI for “rich countries,” then Ricardo gives us some hope for believing that even self-interested advanced artificial intelligences would want to take actions that bestow tremendous economic benefits on mankind.

MAGIC WANDS

In the previous scenario, I implicitly assumed that producing donuts doesn’t require the use of some “factor of production.” A factor of production is an essential nonhuman element needed to create a good. Factors of production for donuts include land, machines, and raw materials, and without these factors, a person (no matter how smart and hardworking) can’t make donuts. Instead of using the intimidating and boring term “factor of production,” I’m going to say that to make a good or produce a service you need the right “magic production wand,” with the wand being the appropriate set of factors of production. For example, a donut maker needs a donut wand.

If a relatively small number of wands existed and no more could be created, then all of the wands would go to AIs. Let’s say donuts sell for $1 each and an AI could use a donut wand to produce one million donuts, whereas a human using the same wand could make only a thousand donuts. A human would never be willing to pay more than $1,000 for the wand, whereas an AI would earn a huge profit if it bought a donut wand for, say, $10,000. Even if a human initially owned a donut wand, he would soon sell it to an AI. Human wand owners in this situation would benefit from AIs because AIs would greatly raise the market value of wands. Human workers who had never had a wand would become impoverished because they couldn’t produce anything.

The Roman Republic’s conquests in the first century BC effectively stripped many Roman citizens of their production wands. In the early Republic, poor citizens had access to wands, as they were often hired to farm the land of the nobility. But after the Republic’s conquests brought in a huge number of slaves, the noblemen had their slaves use almost all of the available land wands. Cheap slave labor enriched the landowning nobility by reducing their production costs. But abundant slave labor impoverished non-landowning Romans by depriving them of wands. Cheap slave labor contributed to the fall of the Roman Republic. As Roman inequality increased, common soldiers came to rely on their generals for financial support. The troops put loyalty to their generals ahead of loyalty to the Roman state. Generals such as Sulla and Julius Caesar took advantage of their increased influence over their troops to propel themselves to absolute political power. Caesar sought to reduce the social instability caused by slaves by giving impoverished free Roman citizens new lands from the territories Rome had recently conquered. Caesar essentially created many new wands and gave them to his subjects.

Although AIs will use wands, they will also likely help create them. For example, using nanotechnology, they might be able to build dikes to reclaim land from the ocean. Or perhaps they’ll figure out how to terraform Mars, making Martian land cheap enough for nearly any human to afford. AIs could also figure out better ways to extract raw materials from the earth or invent new ways to use raw materials, resulting in each product needing fewer wands. The future of human wages might come down to a race between the number of AIs and the quantity of wands. Economist and former artificial-intelligence programmer Robin Hanson has created a highly counterintuitive theory of why (in the long run) AIs will destroy nearly all human jobs: they will end up using all of the production wands (“Economic Growth Given Machine Intelligence”).

…What I’ve written so far about the economics of emulations probably seems correct to most readers. After all, if we can make copies of extraordinarily bright and productive people and employ multiple copies of them in science and industry, then we should all get richer. The results would be similar to what would happen if a select few nursery schools became so fantastically good that each year they turned ten thousand toddlers into von Neumann-level geniuses who then immediately entered the workforce.

Robin Hanson, however, isn’t willing to rely on mere intuition when analyzing the economics of emulations. Robin realizes that if, after we have emulations, the price of computing power continues to fall at an exponential rate, then emulations will soon become extraordinarily cheap. If you combine extremely inexpensive emulations with a bit of economic theory, you get a seemingly crazy result, something that you might think is too absurd to ever happen. But Robin, ever the bullet-eater, refuses to turn away from his conclusion. Robin thinks that in the long run, emulations will drive wages down to almost zero, pushing most of the people who are unfortunate enough to rely on their wages into starvation-because emulations will kick us back into a “Malthusian trap.” Arguably, humanity’s greatest accomplishment was escaping the Malthusian trap. Thomas Malthus, a nineteenth-century economist, believed that starvation would ultimately strike every country in the entire world. Malthus wrote that if a population is not facing starvation, people in that population will have many children who grow up, get married, and have even more children. A country with an abundance of food, Malthus wrote, is one with an increasing population. Unfortunately, in Malthus’s time, as the size of a country’s population went up, it became more difficult to feed everyone in the country. Eventually, when the population got large enough, many starved. Only when lots of people were dying of starvation would the country’s population stabilize. Consequently, Malthus believed that all countries were trapped in one of two situations:

Many people are starving. The population is growing, and so many will eventually starve.

…Pretend that someone emulates Robin and places the software in the public domain. Anyone can now freely copy e-Robin, although it still costs something to buy enough computing power to run him on, say a hundred thousand dollars a year. A profit-maximizing business would employ an e-Robin if the e-Robin brought the business more than $100,000 a year in revenue. After Moore’s law pushes the annual hardware costs of an e-Robin down to a mere $1, then a company would hire e-Robins as long as each brought the business more than $1 per annum. What happens to the salary of bio-Robin if you can hire an e-Robin for only a dollar? David Ricardo implicitly knew the answer to that question. Ricardo wrote that if it costs 5,000 pounds to rent a machine, and this machine could do the work of 100 men, the total wages paid to 100 men will never be greater than 5,000 pounds because if the total wages were higher, manufacturers would fire the workers and rent the machine.296 Applying Ricardo’s theory to an economy with emulations tells us that, if an emulation can do whatever you can do, your wage will never be higher than what it costs to employ the emulation. The question now is whether, if it’s extremely cheap to run an e-Robin, these e-Robins would still earn high salaries and therefore allow the original Robin to bring home a decent paycheck. Unfortunately, the answer is no because if an e-Robin were earning much more than what it costs to run an e-Robin, then it would be profitable for businesses to create many more of them. Companies will keep making copies of their emulations until they no longer make a profit by producing the next copy. A general rule of economics is that the more you have of something, the smaller its value. For example, even though water is inherently much more useful than diamonds because there is so much more water than diamonds, the price of water is much lower. If anyone can freely copy e-Robin, then the free market would drive the wage of an e-Robin down to what it costs to run one.

…Even if the emulations push wages to almost zero, lots of bio-humans would be much richer than they would be in a world without emulations. Though ancient Rome was in a Malthusian trap, its landowning nobility was rich. When you have lots of people and little land, the land is extremely valuable because it’s cheap to hire people to work the land and there is great demand for the food the land produces. Similarly, if there are a huge number of emulations and relatively few production wands, then the wands become extraordinarily valuable. True, the emulations will increase the number of production wands. But because it’s so cheap to copy software, if the price of hardware is low enough, there will always be a lot more labor than wands. Consequently, bio-people who own wands will become fantastically rich. Even though you would lose your job, the value of your stock portfolio might jump a thousandfold…Since bio-humans could earn almost nothing by working, our prosperity would depend on our owning property or receiving welfare payments. If bio-humans became masters of an emulation-filled Malthusian world, keeping most of the wealth for ourselves, then we would live like a landed aristocracy that receives income from taxing others and renting out our agricultural lands to poor peasants. Eliezer Yudkowsky doubts this possibility:

“The prospect of biological humans sitting on top of a population of [emulations] that are smarter, much faster, and far more numerous than bios while having all the standard human drives, and the bios treating the [emulations] as standard economic [value] to be milked and traded around, and the [emulations sitting] still for this for more than a week of bio time - this does not seem historically realistic.”301

Carl Shulman, one of the most knowledgeable people I’ve spoken to about Singularity issues, goes even further than Yudkowsky. He writes that since obsolescence would frequently kill entire categories of emulations, bio-humans could maintain total control of the government and economy only if the emulations regularly submitted “to genocide, even though the overwhelming majority of the population expects the same thing to happen to it soon.”302

…Robin thinks that if we behaved intelligently and maintained good relations with the emulations, bio-humans could safely take up to around 5% of the world’s economic output without having the emulations seek to destroy us. By appropriating 5% rather than the preponderance of the world’s income, we would ensure that the emulations would have less to gain from killing us and taking our stuff. But as power flows from money, having less income would make us less able to defend ourselves from any emulations that did wish to strip us of our wealth. Robin is optimistic about our ability to keep this 5%. He correctly notes that many times in history wealthy but weak groups have managed to keep their property for long periods of time. For example, many Americans over the age of seventy are rich even though they no longer contribute to economic production. These Americans, if standing without allies, would not have the slightest chance of prevailing in a fight in which Americans in their twenties joined together to steal the property of seniors. Yet it’s almost inconceivable that this would happen. Similarly, in many societies throughout human history, rich senior citizens have enjoyed secure property rights even though they would quickly lose their wealth if enough younger men colluded to take it from them. Even senior citizens whom dementia has made much less intelligent than most of their countrymen are still usually able to retain their property. Robin mentioned to me that tourists from rich countries are generally secure when they travel to poor nations even when the tourists are clearly undefended wealthy outsiders. A wealthy white American wearing expensive Western clothes could probably walk safely through most African villages even if the villagers knew that the American earns more in a day than a villager does in a year.

…As Robin points out, throughout human history most revolts broke out when conditions had improved for the poorest in society.305 And great revolutions have almost invariably been led by the rich. George Washington and Thomas Jefferson were wealthy landowners; Lenin’s father, born a serf, had risen through government service to the rank of a nobleman and married a woman of wealth, and Trotsky’s father was an illiterate but prosperous landlord; Julius Caesar was the first- or second-wealthiest individual alive at the time he overthrew the Roman Republic; and the mutiny on the Bounty was led by an officer. Perhaps bio-humans would have more to fear from the small number of wealthy emulations than from the emulations facing starvation.