Robo$cs, AI, and the Macro-‐Economy
Jeffrey D. Sachs Columbia University
Beneficial AI 2017 Asilomar, California
Three Great Trends of Modern Economic Growth: (1) Capital (Human and Physical) Replacing Labor (Labor Share from ≈50% to ≈30%)
(2) Steeply Declining Work Time (Roughly 3 hours 10 minutes per 15yr+ pop)
(2) Sharply Falling Manual Labor (From around 70% to ≈10% of the Labor Force)
Manual work has declined from around 70% of the popula$on as of 1900 to around 10% today
On any given day, 3 hours 10 min work 42% of Adult Americans are at work, averaging 7 hours 34 min at work The rest are in leisure, caregiving, re$rement, school, unemployment, incarcera$on, etc. Average Work is probably down > 50%
In general, these are major gains to life quality … BUT Unemployment of low-‐skilled workers Rising income inequality Side effects (e.g. obesity epidemic)
DECLINING LABOR SHARE: CONVENTIONALLY MEASURED
1900
Human Capital Physical Capital Labor Rough es$mates for 1900, 2017, 2050
2017
Human Capital Physical Capital Labor
ONE REALISTIC POSSIBILITY IS A DECISIVE SHIFT AGAINST BOTH LABOR & HUMAN CAPITAL
2050?
Human Capital Physical Capital Labor
AUTOMOBILE ASSEMBLY LINE
LABOR SHARE OF VALUE IN MOTOR VEHICLE PRODUCTION (SMOOTHED OVER PEAK YEARS)
0.40
0.45
0.50
0.55
0.60
0.65
0.70
0.75
1987
1988
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1997
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1999
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2015
SOARING SHARE OF THE TOP 1%
As AI/Robo$cs Technology Advances: (1) The returns to (human and physical) capital rise (2) The returns to (raw) labor diminish (3) The overall economy grows with dispropor$onate gains by capital owners
and their children (via bequests) (4) The big losers are the children of the poor
and of the working class
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1 2 3 4 5 6 7 8 9 10
ROBOT/AI REVOLUTION & INEQUALITY
UTILITY OF THE RICH
UTIITY OF THE POOR
BEUQESTS BY THE RICH
BEQUESTS BT POOR
In order for all parts of society to benefit from the advancing technologies: Tax the capital owners and redistribute the earnings to the young through free tui$on for skill training and tax credits for lower-‐wage workers Without such transfers, income inequality will rise and large parts of the society will be immiserized
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