> The first is that we automate everything. This is implausible, but let's consider what would happen. Well then necessities would be free, because there is no labor cost to produce arbitrarily many solar panels or skyscrapers or mine asteroids to get unlimited raw materials etc. So then you don't need taxes because nothing costs anything.

Well, you still have to pay for the energy (to extract raw material and transform it into final product, and move final product into your hands). So unless we assume energy cost is 0 and raw materials are not scarce, the final product has a cost, and a price, now my understanding is that if everyone uses dark factories, the margin would go down, and so the gain per "company" would drop too, hence the limited tax base.

My guess is from the 2 ends of the spectrum that you listed, we are moving from "there is still work you need people to do, and then they do that, and still have jobs." to "we automate everything". And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement).

If we do not change how we tax things, I do not see how we would sustain a society where the majority is materially (gizmos) rich, but financially poor (no job, no retirement, no social security, no education).

While dark factories keep producing high volume of gizmos for next to nothing...

I am curious how we can manage that transition, which I believe could happen way faster than politicians can move.

> Well, you still have to pay for the energy (to extract raw material and transform it into final product, and move final product into your hands).

But then you're back to having something that isn't automated. If machines do this then it's free. If you need people to do it then people have jobs.

> And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement).

But things would also cost less, in the same proportion.

Suppose healthcare is 20% of the economy, can't be automated, and we automate everything else. Then tax revenue goes down by 80%, but so do costs, so people only need 20% as much in government services or those services only cost 20% as much to provide.

Meanwhile you still need people to be doctors and nurses but not other things, so more people become doctors and nurses. This drives down wages there, but that's fine when the doctors and nurses are also paying 80% less for everything. And at the lower wages you can justify more work to be done. More people do medical research, doctors get to spend more time with each patient, etc. Soon everyone has a job again.

Let's even consider the hypothetical where that can't happen. There are 8 billion people and only a million jobs. No other jobs are possible, somehow. How much are those million people going to get paid? Peanuts, because like everyone else they'd have negligible living expenses and they'd be in competition with 8 billion people for who would be willing to do it for the least amount of compensation. Their payment would be something like bragging rights, or all the slots would be filled by volunteers.

But in practice we would never "run out" of jobs because the supply curve always intersects with the demand curve somewhere. If demand goes down then price goes down because there is higher demand at the lower price.

> > Well, you still have to pay for the energy (to extract raw material and transform it into final product, and move final product into your hands). > But then you're back to having something that isn't automated. If machines do this then it's free. If you need people to do it then people have jobs.

Not sure to follow, machines need energy as input. So unless energy is free and unlimited, even if the machines run without people, there is a cost for the products. It is not free, even if that is 100% automated. At the very least you have to pay for the energy, if not for the raw materials.

> > And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement). > But things would also cost less, in the same proportion.

Yes, things (material) and services would cost less. But still cost the energy to produce those things and services.

> Suppose healthcare is 20% of the economy, can't be automated, and we automate everything else. Then tax revenue goes down by 80%, but so do costs, so people only need 20% as much in government services or those services only cost 20% as much to provide.

Not sure why healthcare would not be 100% automated, but for the exercise, let's assume it still needs some people. Unless you also assume that unemployed people could get some ABI or SNAP from government (in US already 1 out 8 adult receives SNAP) to pay for food (cost less with 100% automation, but still cost the energy for fertilizer, tractors, transport, transformation), for shelter, etc. and pay for healthcare.

I am not sure if the gov lose 80% of its tax collection, it could sustain the population basic needs.

> Meanwhile you still need people to be doctors and nurses but not other things, so more people become doctors and nurses.

Not sure why we need doctors or nurses ? Doctors are mostly a sensor + decision tree... that speaks to the patient. I could see doctors and nurses to disappear eventually. It might take longer for robots to do surgery, but it should eventually come. So the cost should drop. Drugs manufacturing should be 100% automated too. Lab work automated.

> This drives down wages there, but that's fine when the doctors and nurses are also paying 80% less for everything. And at the lower wages you can justify more work to be done. More people do medical research, doctors get to spend more time with each patient, etc. Soon everyone has a job again. Let's even consider the hypothetical where that can't happen. There are 8 billion people and only a million jobs. No other jobs are possible, somehow. How much are those million people going to get paid? Peanuts, because like everyone else they'd have negligible living expenses and they'd be in competition with 8 billion people for who would be willing to do it for the least amount of compensation. Their payment would be something like bragging rights, or all the slots would be filled by volunteers. But in practice we would never "run out" of jobs because the supply curve always intersects with the demand curve somewhere. If demand goes down then price goes down because there is higher demand at the lower price.

I guess the disconnect, for me the end of spectrum, is that all the products and services could eventually be 100% automated without human in the loop, expect for consuming the products/services. Those 100% automated product manufacturing or services, would cost energy (electricity basically) and raw material (arguably free, just need to pick it up on the ground using some energy). So, one machine would build everything and all services, with just energy as input. If energy is not free, then products and services would cost something. How people pay for product and services ?

> Not sure to follow, machines need energy as input. So unless energy is free and unlimited, even if the machines run without people, there is a cost for the products.

But where does energy come from? You would have machines that can make solar panels and install them and operate a power grid, or people would still have jobs doing those things.

> Unless you also assume that unemployed people could get some ABI or SNAP from government (in US already 1 out 8 adult receives SNAP) to pay for food (cost less with 100% automation, but still cost the energy for fertilizer, tractors, transport, transformation), for shelter, etc. and pay for healthcare.

If everything other than healthcare was automated then energy production, fertilizer production, tractor production, transportation, etc. would all be automated.

If everything is automated then everything is free. If there is still anything that can't be automated then people still have jobs doing that.

My problem is when you automate, the benefits are not passed on to the entire chain of people involved even though we start the discussion with that. So what do we do?

In a competitive market, efficiency gains are generally going to end up as lower prices to the customer, which is the main way that ordinary people benefit from them. That doesn't happen when the market is consolidated and the oligopoly keeps the gains themselves.

So, ensure competitive markets by thwarting regulatory capture and enforcing antitrust laws.

Yes, that has been the rule for now. But I am wondering that if the prices drop so much, but the price to pay for that abundance would be the loss of significant part of job market, then how can we keep the economy humming ?

We would need to find a way to give money to people so they can keep participating in the economy even though everything is cheap. If not UBI, we would need to find ways for the majority to do something that is not automated, and give them some coins in exchange.

For millennia the currency has been energy (human labor, then machines) and intelligence (human intelligence, then artificial intelligence). If energy and intelligence price goes down, and the amount of energy and intelligence increases, then what is left for humans to claim some reward/coins ?

> But I am wondering that if the prices drop so much, but the price to pay for that abundance would be the loss of significant part of job market, then how can we keep the economy humming ?

Money is an abstraction, so prices are always relative to wages. If prices go down, that's equivalent to wages going up. If your costs are $1000 and your wages are $1000, that's the same to you as if your costs are $100 and your wages are $100.

So the problem solves itself. You previously needed a job that would pay you $1000 to cover your costs, now you only need one that pays $100. And there is still $100 of work that needs to be done, because that's why things cost $100 instead of $0.

I agree, so the prices of everything would go down. People would be unemployed. Do we plan to give some money to pay for basic stuff (food, shelter) ?

Even if the cost for food and shelter is $1 per month, if there is no revenue, it is still too expensive, right ?

I am trying to understand the speed comparison between how fast the prices will go down, vs. how fast people will lose their jobs. If job loss goes faster than the price decrease, we might have a problem to solve.

> Even if the cost for food and shelter is $1 per month, if there is no revenue, it is still too expensive, right ?

Why would there be no revenue? Right now you need a job that pays at least e.g. $2500/month to afford basic necessities. If those jobs disappear but the cost falls to $1/month, you don't need those jobs, because a job that pays $3/month leaves you in fat city, much less one that pays $50/month.

> If job loss goes faster than the price decrease, we might have a problem to solve.

That would be a transient problem while the prices catch up, not a long-term problem. You could solve that by e.g. printing some money in the short term.

But if we fully automate how to make and sell and deliver TVs and blenders and now I can get a 200" TV for $2 and a blender for $0.05 but now I don't have a job so I can't afford even a basic apartment what do we do with our society?

Like sure all the goods are stupid cheap but things that are actually naturally rivalrous and exclusive like real estate continue to hold value most random people are pretty fucked it seems.

> But if we fully automate how to make and sell and deliver TVs and blenders and now I can get a 200" TV for $2 and a blender for $0.05 but now I don't have a job so I can't afford even a basic apartment what do we do with our society?

Delivery should be automated.

Rent would obviously crater as building housing craters too (robots making it, materials being extracted and manufactured by robots too). But again, it would still cost something (energy at very least and assuming energy is not free).

So I suspect that even if 100% is automated, we would still need little money to pay for the basics (food, shelter).

There is only so much land where people actually want to live. Governments put restrictions on what can be built. It might end up costing $20 to build a 100-story apartment complex, but if the government says buildings can only be five stories high or you have to only build single family homes it doesn't matter.

> It might end up costing $20 to build a 100-story apartment complex, but if the government says buildings can only be five stories high or you have to only build single family homes it doesn't matter.

And that's the point. The problem isn't caused by automation, it's caused by zoning restrictions.

> but now I don't have a job so I can't afford even a basic apartment what do we do with our society?

Apartments aren't land, they're buildings. Buildings can be made arbitrarily tall; if we built tall buildings we'd have more housing units than people long before we ran out of land.

So if there is a machine that can build buildings for free, apartments should be cheap. If there isn't a machine that can build buildings for free, get a job building buildings for money.

Not really worry about having enough land.

Even if 100% automated, there might still be a residual cost to building as it needs energy (assuming than raw material is free). I do not think that because the building would be not free, it would allow human to compete (too slow, inaccurate, etc.)

The problem with that is that it operates from a wrong idea of how to set prices for a product. From first principles, you make a widget, figure out how much it costs to make it, including your time, then add some amount of margin on top, and you have a business. That is incorrect. No, you have product, and then you just make up a number based on circumstances. If you're lucky, the price you manage to sell your widget for is above what it costs to make it. If you're not lucky, it isn't, and you have a sale, and lose less money than if you didn't sell anything. However, if you're lucky, you sell your widget for way more than it costs to make it, because of branding, aka luxury fashion brands. The numbers though, are just made up. That's the trick of capitalism. You just... make up a number! Once you understand that, the world starts to make even less sense than it did before. If pricing were cost-plus, branding and timing wouldn’t matter, and empirically they matter a lot.

You're describing what happens in uncompetitive markets (or for status goods, which have inherently weird behavior because they're a signaling mechanism that relies on waste and artificial scarcity as a mechanism of operation, but also inherently nobody actually needs them).

In an ordinary competitive market, margins are thin because sellers are fungible, so charging slightly less than the competition results in a disproportionate increase in sales because customers are just choosing the lowest price, and then sellers keep lowering prices until margins are thin because it's more profitable to get a $0.05 margin on a thousand units than a $0.10 margin on a dozen units.

This assumes income still exists.

Automation drives goods toward zero while destroying the wage base, as Ricardo warned: gains flow to owners (das capital) of scarce resources. Today that’s Ricardian rents on land, housing, zoning, healthcare, education. $2 TVs ain't gonna pay rent.

Antitrust decides who captures surplus, not how people access it once wages stop working. And UBI would just be stapling cash onto a broken distribution system. So what actually replaces labor as the primary claim on surplus?

The only truly scarce things are time and energy/matter. Everything else can be made from those.

Labor is essentially the sale of time. If labor becomes cheaper then energy/matter becomes the bottleneck. Except that there is actually quite a bit of energy and matter in the universe and the main bottleneck on collecting more of it is labor, so if labor gets cheaper then so does energy and matter.

The things you're pointing to are the things that are artificially scarce. How expensive is a housing unit if you can build a 100 story building on any lot and the labor to do that is cheap? Now how expensive is it if building tall buildings is banned and there is an intentional regulatory bottleneck on more people getting trade licenses?

If you still need human labor to build housing then people can get jobs building housing until housing gets cheap. If you don't need human labor to build housing then housing would already be cheap. Unless you have the government artificially constraining the housing supply, in which case you need to fix that. And the same thing for medicine and education.

> Unless you have the government artificially constraining the housing supply, in which case you need to fix that. And the same thing for medicine and education.

That is the meat of it. Zoning laws are why every city doesn't look like Hong Kong, even if it cost $1 to make a sky scraper. There are artificial limits on supply of doctors, and we don't pay teachers enough which is a whole other topic. If that's what we have to fix in order to make progress, I'm suddenly doubtful of how much progress will really be made in the face of the singularity.

> Zoning laws are why every city doesn't look like Hong Kong

The reason every city doesn't look like Hong Kong is that Hong Kong has a population of 7.5 million and a US city is considered "large" if it has 50,000 people.

Zoning laws are why every city doesn't look like Lubbock or Boise, which is hardly a problem.

> If that's what we have to fix in order to make progress

That's what we have to fix in order to make progress. It is what it is.