Phil Trammell: prediction

Transcript context

…You have had stuff be completely automated. There’s a sense in which nothing has yet been completely automated. Look at the network-adjusted factor shares of a good. Look down the supply chain and not just the final step and how much of that is done by capital and labor, but what went into the machines that can automate that final step. You’ll find that labor is adding a lot of value down the supply chain. Computer and electronic products in the US have a very stable network-adjusted capital share of around 50%. It’s not 100%. I do think there’s this qualitative shift that I think we agree is coming, which is that there will be at least some goods whose network-adjusted capital share goes to one. The whole supply chain can be automated, and there’s no part in it that we care intrinsically about having a human do. That will be a qualitative shift. Interestingly, the implications of that shift for the overall capital share are ambiguous. Let’s say we’ve got two sectors: the human-intrinsic sector with the ballerinas, and everything else. Right now, everything else has been scarce because of the lack of labor in it. But if we fully automate the supply chains for everything else, and we satiate in everything else really fast, then the quantity of everything that’s not a ballerina goes to infinity, but the marginal utility in that stuff goes to zero faster than the quantity is rising. I also want to move away from the ballerina example. The point I was trying to make in my post—working backwards from a particular scenario—was that the ballerina and the performer are the wrong reference class. Right now we have a lot of jobs where you have different tasks. This is the task-based model of jobs. Take a doctor, what is their job? They’re filling out insurance documents. They’re going and calling different pharmaceutical companies. One of their tasks is to see the patient and talk to them, but that’s not the main part of the job. You could have a job and a service or a good be a product of different types of tasks, and you can automate a ton of those tasks. If the consumer is willing to pay more for a product or service where every single task is automated except for that one part where the doctor is delivering the diagnosis and providing support, we would call that job part of the relational sector. People are willing to pay more for the human to stay in the loop in the job. We don’t have data to say, “Here are relational jobs, here are not.” You literally need to collect data of the following sort. Do a conjoint analysis of your willingness to pay for this service or good. Here’s the counterfactual where everything is produced by machine. Here’s the counterfactual where this one task is not produced by a machine. What is your willingness to pay? What is your elasticity for the human to not be in the loop? If I don’t have that data, what prediction am I going to make in this story?…

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