hello and I'm back all right so today we're going to talk about uh the next kind of segment of post labor economics it's what I call the economic agency Paradox so uh without burying the lead here's the formula it's very simple a plus b equals c so a is better faster cheaper and safer this is what I've been talking about for a couple years now but for anyone who's new it's basically that as Ai and Robotics become Superior to humans in both cognitive and physical domains the economic implications are inescapable machines will simply outperform humans
at virtually every task making automation the only economically rational Choice it isn't really a choice it's mathematical inevitability so tldr when machines become better faster cheaper and safer than humans it becomes economically inevitable that they will replace human labor this has happened many times throughout history this is why humans have delegated to machines in terms of tractors or computers we actually invented computers because we suck at math um so again but as the frontier of automation continues to expand then it just it takes more and more uh jobs from us so then this leads to
the economic agency Paradox so I've talked about economic Agency for a while but this is kind of a new component of this which is looking at the demand side which is as productivity goes up wages go down and consumer demand dries up so therefore the economy stalls so this creates a critical Paradox while automation promises unpe unprecedented productive efficiency it simultaneously threatens to eliminate human labor income without waited without wages there we go where does hum where does Consumer purchasing power come from traditional Solutions like Ubi provide basic subsistence but fail to address the fundamental
need for genuine economic participation in other words Ubi is basically like just getting an allowance from your parents and that's not good I mean it's it's a start you know it's better than nothing but that is no way to live um and there's all sorts of other problems with that so yes I'm all for Ubbi um as a way of bootstrapping this new system so therefore so that's a plus b so better faster cheaper and safer leads to the economic agency Paradox therefore we need some alternative so to provide a little bit of context I
thought through of like okay well you could have all these like robot taxes and mandated participation um and those sorts of things but those create market inefficiencies and they're like very top down um inelegant Solutions uh which basically distorts the market and requires a lot of government intervention and oversight and therefore it's going to be inefficient so I thought I was thinking what's the most efficient solution and so the most Market efficient solution is an investment-based future so the solution emerges by transforming everyone from laborers to investors we already have a mental model for investors
so if if nobody's going to be working what if we all become investors um so if we all become investors in the automated economy through AI assisted investing and Universal asset tokenization people maintain economic agency by directing resources rather than providing labor instead of trying to preserve human jobs in an economy that no longer needs them we need a new form of economic participation so uh and you might say well where do you get the money to start with that and we'll cover all of that um but here are the core principles so the the
seven core principles for adopting this um so number one is universal asset tokenization uh basically if if something is not tokenized it should be um this is an extension of neoliberalism where it says anything outside of the market should be brought into the market um and we can extend that with cryptocurrency blockchain Dows and all that other fun stuff um basically one way to look at it is there are 8,000 companies on the New York Stock Exchange but there are millions of other companies and other um monetizable assets that are not now one thing that
uh someone pointed out to me is that we need to be careful with this because this will uh this could magnify the tragedy of the commons so imagine you have a forest that you tokenize and then people just buy off all the trees and say well I bought this tree so now I'm going to cut it down uh and so by monetizing everything you could actually drastically magnify the problems that we have today but this is where responsible consensus-based governance will it actually uh be a major component um basically instead of the AI saying we're
going to just selfishly cut cut everything down we're going to find a more efficient way and sustainable way of of managing these resources um still the incentive structure is there number two AI enhanced Market agency this is basically what a lot of people are already working on which is all the um all the the ground infrastructure to enable AIS to do stuff on our behalf so this is all the experiments with AI agents and and decentralized autonomous organizations and so on and so forth so this this technology is already coming really um decentralized infrastructure this
is uh the open protocols for agent to agent communication um so instead of you know we have B2B um and B to C so that's businesses to business and business to customer we're soon going to have a TOA transactions which is Agent to agent uh transactions so we need open protocols for that I actually know some people that are working on this we also need blockchain networks that can allow all of this to happen um and one of the reasons that you want it on blockchain uh some of it not all of it you do
need some level of privacy but you want a lot of the stuff out in the open just so that you can automatically see who you can trust who actually delivers on the goods and so on and so forth um just in the same way that in any Open Marketplace you can see the transactions happening uh legal framework modernization so this one is actually really critical because the federal government right now is very hostile to what they they would basically if you were to to build this right now they would call it a Securities Exchange and
sue you out of existence and so since the federal government is not particularly supportive of these things um the federal government needs to get out of the way and become supportive of these things um you know we look at examples uh like Sam bakman freed had the book thrown at him he deserved it but at the same time it also had a chilling effect because there's no legal pathway forward right now for uh cryptocurrency and blockchain and that sort of thing um part of the reason that there's no legal pathway forward right now is because
these Technologies are not mature enough and you might say well they've been around for a while but look at the fact that the internet was around for about 30 years before it really became commercially viable blockchain is only about years old uh at least Bitcoin as we know it today the roots of blockchain go back to the 90s um so anyways my point though is that these Technologies are not quite mature yet they're not they're not stable enough um to really be used to replace existing infrastructure number five is radical Market transparency so this is
basically if there's information outside of the market information should be brought into the market and this again is just so that everyone can make better choices this is not in intellectual property Market information is different from intellectual property um but at the same time um waiting for quarterly reports is way too slow we need you know hourly daily real-time reports that are machine readable to make decisions um to make rational informed decisions because as pretty much everyone agrees more information leads to better Market choices so okay cool maximize Market transparency and by the way blockchain
is intrinsically transparent this is why I say we really need open protocols in blockchain to enable this uh this decision because then you just have an an AI agent running on your phone or on the cloud and you say hey go find me some solar Farms to invest in and it has access to all the information it needs in real time without the gatekeeping of Terminals and that sort of thing uh number six this is pretty boilerplate but it's still necessary which is democratic access uh making sure that everyone has practical ability to participate through
education technology and initial Capital this is where Ubi comes in um if Ubi becomes necess then it's like okay everyone has a subsistance wage coming from the government but now you actually have you have to have opportunities to invest it the simplest access would be through your bank so let's say you know you have a bank account you get $2,000 a month from the government you could tell your bank hey just automatically invest 10% of that for me I don't want to think about it and then the bank's AIS will go and invest it for
you based on your risk profile cool now if you want to be more active you can either you know have your bank app and and help your AI agent find Investments for you um or use a third party service or whatever I don't really care um but that's that's again that's what democratic access means is giving people investment options as well as ways to make it automatic and transparent so again while it is an investment-based future it's not necessarily that like your your work is going to be finding good Investments so that's what everyone's new
investment is going to be and you might say well how does that run the economy it's because you're decentralizing value creation um and then finally value capture protection design Sy systems uh and I would I would I I had an oversight I would say Design Systems and Implement policies that Direct Value to legitimate stakeholders rather than extractive intermediaries this is going to be particularly uh important as there's going to be plenty of rent Seekers basically people saying oh just give your money to me like crypto hedge funds basically give your money to me and I'll
invest it for you no get the hedge funds out of the way and let the AI invest directly um now you might you might have legitimate vehicles for drisking so for instance um you might have investment trusts that say okay we will allocate more broadly in a way that you couldn't do on your own and it's insured and yada y y but that's rent seeking and one of the most basic uh kinds of rent seeking that we see today is uh the credit card companies um transaction fees so every time you swipe a a credit
card or a debit card the company the the the like Visa or Mastercard or whatever they they skim 2 to 3% off the top that an additional 2 to 3% tax that you're paying for the privilege of being able to use your money um if we switch to blockchain and crypto currency that drops to 0.1% so that's an additional 2 to 3% that goes directly back to GDP and is directly usable to everyone so we need to get those old systems out of the picture Okay so the whole generation so that that's that's the whole
theory in a nutshell now let me walk you through how I got to all of this so first a lot of people talk about post scarcity economics and post scarcity just really doesn't fit the bill so post scarcity by definition is after we've solved all constraints and there is no longer any scarcity however if you Le if you read some real economic uh economics then this is not really the way that it works there's always constraints there's always some scarcity and the example that I give is Malibu beachfront property why do you think uh you
know Santa Monica is so expensive it's because it's desirable real estate and so then you end up with ordinal and price competition and blah blah blah blah blah you get it so um and another example that I give is horses versus cars horses are relatively cheap and easy to make but cars are just so much better that it's worth the extra cost to build a car than it is to just grow another horse horses require a lot of care and maintenance and upkeep they get sick um they need a lot of uh cars need maintenance
too but in terms of miles maintenance cars are much cheaper so uh so post scarcity just doesn't work there's always going to be some constraint um hyper abundance well we can think of some hyper abundance so air wind water in some places gravity uh basically the the rule for hyper abundance is a resource that is too cheap to meter um and yes some things are going to become hyper abundant cognitive labor is going to become hyper abundant so cognitive labor is everything from law medicine um even even uh things that I do all the thinking
that I do um because guess what a lot of this wouldn't work without the aid of tools like Claude and chat GPT so they're already doing about half of the cognitive labor that goes into this now I wrote all this by hand um but a lot of the brainstorming happened with the help of AI so it's not going to be too long excuse me before AI is able to just take this over from me um so hyper abundance that's not really the goal because wood is still going to grow slowly there's still going to be
you know limited real estate some resources namely intelligence are going to become hyper abundant but that's not really a solution for the rest of it so then I looked back at history and I said okay well what have the previous industrial revolutions um have done so the first Industrial Revolution was basically the steampunk Revolution um where mechanical devices and steam and coal became uh you know economically relevant so we had access to a new new uh source of energy so uh previous uh industrial revolutions were somewhat largely about the ability to exploit new energy sources
so the first Industrial Revolution was how do we harness coal the Second Industrial Revolution was how do we harness petroleum but that didn't that Paradigm didn't really stand up because the third Industrial Revolution was more about data and information um yes we invented nuclear energy um but that that was not necessarily considered part of the third Industrial Revolution that was an evolution of the uh energy infrastructure um so and then you end up during the Second Industrial Revolution was actually pretty awful um in terms of uh human cost so first Industrial Revolution steampunk uh Second
Industrial Revolution is diesel Punk this is what allows you to have industrial scale Wars World War I and World War II were direct consequences of the Second Industrial Revolution as well as all the tenement housing and you know dismembered children working in factories um so the Second Industrial Revolution was Far and Away the most destructive um in terms of social cost and and cost of human life so you know when you think like oh well another Industrial Revolution that's not necessarily a good thing I would tend to agree with you because of the Second Industrial
Revolution um the third Industrial Revolution is more like the cyberpunk revolution so this is everything from Silicon to internet to data and you know all those other things so if we characterize each Industrial Revolution and with a with a moniker like steampunk or diesel Punk or cyber Punk then that's not necessarily a good thing um so the fourth Industrial Revolution we might end up with a more cyberpunk future um so then I was like okay well looking at how labor evolved so labor evolved where did I go okay so we started with agrarian to Industrial
to service based so now instead we'll go agrarian Industrial Service investment based so the economy of the future is an investment-based economy where you use the monetary resources that you have access to and control over to direct you know or invest in other people to find other economically productive things to do which keeps the economy going because then you get a return on investment which Shores up your consumer demand all right following along great so after all that I came up with a pretty solid definition of post- labor economics I keep redefining this this thing
by the way just as I get these new insights so let me just read this because this is one of the the densest definitions of post- labor economics so post labor economics decide describes sorry a fundamental transformation in of economic systems in which artificial intelligence and automation render human level labor costs effectively NE negligible so basically labor Trends toward zero um across all sectors of the economy in this Paradigm machine capabilities exceed human capabilities by orders of magnitude in both cognitive and physical domains creating cost differentials where automated Solutions are thousands of times more cost
effective than human labor this represents not merely an incremental Improvement in productivity but a categorical shift where human labor becomes economically irrational due to the vast efficiency Gap this transformation represents a complete decoupling hence the name of the book that I'm working on with Julia the great decoupling uh represents a complete decoupling of economic growth from Human labor participation Capital fully subsumes labor as a factor of production requiring a fundamental revision of how we measure and understand economic productivity including metrics like GDP the traditional wage labor relationship that has underpinned modern e uh economies becomes
obsolete as does the social contract built upon the exchange of labor for wages in other words just because you have the right to work doesn't mean anyone's going to hire you uh finally post- labor economics uh primarily concerns itself with two key challenges number one the efficient allocation of capital in a system where Capital has fully absorbed the role of Labor and the economic welfare of individuals in a society where market demand for human labor has collapsed this Paradigm Shift forces a reconstruction of economic models around the reality that machines can perform virtually any task
orders of magnitude more efficiently than humans creating unprecedented deflationary pressure on both cognitive and phys physical labor markets in other words in uh a post uh a labor and consumption model of economic growth might simply cease to function now most importantly what I point out here is on the surface isn't this what we wanted all along fully automated luxury space communism is actively predicated on the availability of total automation that's what Ai and Robotics are the vehicles of total automation therefore the inevitable disintegration of the need for human labor is by definition a stepping stone
to fully automated luxury space communism so having outlined the problem or at least kind of what's coming um this then allows me to define the economic agency problem or the economic agency paradox so again this is one of the key insights of the article so let me just read it out all out the economic agency problem in post labor economics represents a fundamental Paradox where technological advancements simultaneously solves and creates existential economic crisis while artificial intelligence and automation can theoretically solve production challenges by enabling the creation of goods and services with unprecedented efficiency this very
efficiency undermines the traditional economic me mechanisms that generate consumer demand as human uh labor becomes economically irrelevant due to machine superiority the wage labor relationship that historically uh provided purchasing power to Consumers begins to disintegrate so by the way wage labor will be uh will switch to investment Direction um so that's kind of the new paradigm is rather than directing your time and labor you're directing your Investments um so next this disruption reveals that the challenge lies not in the production capabilities but in maintaining meaning meaningful economic participation and demand in a world where labor
holds negligible economic value traditional proposed Solutions such as universal basic income or distributed ownership of automated systems uh merely create artificial mechanisms for Distributing purchasing power these approaches while potentially necessary as transitional measures introduce economic FR friction and inefficiencies that run counter to the very prod productivity gains that automation promises moreover they risk reducing humans to passive economic uh participants dependent on state or corporate allowances rather than maintaining genuine economic agency this situation creates a potentially devastating feedback loop and as automation increases productivity and reduces labor cost it simultaneously erodes consumer purchasing power which in
turn diminishes the economic values of those same productivity gains without a clear mechanism for maintaining consumer demand that doesn't rely on artificial wealth distribution schemes the entire economic system risks reaching an impass where unprecedented productivity uh capability coexists with collapse consumer demand this fundamental contradiction suggests that post- labor economics requires not just new distribution mechanisms but an entirely new paradigm for understanding and structuring economic participation and value creation okay so what is economic agency um I I actually workshopped this definition of economic agency because economic agency how you define it today would include a lot
of stuff about Labor rights my ability to form labor unions and um and earn uh income based on exchanging my labor for wages but in this future economic agency doesn't exist in that format so what are the criteria for economic agency in this post- labor economic future number one is Capital Access and control the ability to own control or benefit from automated production systems access to the means of deploying Ai and robots control over rights to the output of automated systems so again if Capital subsumes labor then in order to participate in the economy of
the future you need to own some of that Capital because there's not not going to be any labor next resource allocation rights the ability to make decisions about how automated resources are used this is that decentralized social brain um that really really uh pleases the Austrian Economist out there because rather than the government saying we're going to manage everything with AI and just give you an allowance this says no actually let's allow individuals to find U opportunities um so resource allocation rights the ability to make decisions about automated resources are used rights to claim or
direct the distribution of goods and services produced by automated systems access to basic necessities and luxuries in a world where human labor isn't a uh prerequisite the primary service here is going to be healthc care because again if Healthcare becomes a thousand times or 2,000 times cheaper because of AI then Healthcare will basically be too cheap to meter at that point you just subsidize whoever's providing Healthcare and the government just writes them a check and even if they do price gouging who cares um because in that case Healthcare becomes uh a basic service that you
can just go get anywhere you can probably have your own home health Droid in that future um you can have your own full-time doctor um okay so next is uh uh and finally system participation mechanisms ways to meaningfully participate in economic decision-making without being a labor contributor methods to express preferences and influence production and distribution and means to initiate new economic activities or Ventures even when human labor isn't the primary input so basically this would be the right to create a new cryptocoin this would be the right to create a new decentralized autonomous organization um
and so on and so forth and this is why I talked about how um uh legal framework modernization is required because right now if you were to try and set up a dow and actually do real business they would say well are you actually a company or are you a Securities Exchange and the SEC might sue you into Oblivion um and that's just that's just not going to work um in the long run so then tokenomics becomes U the way of the future um what I wanted to rest on here is this graph that um
came out a while ago this is by Anton corck over at um the uh I think IMF is what he the international monetary fund is where this was posted this is the economic agency Paradox in a graph form so on the left side you have output so productivity skyrockets under AGI productivity goes hyperbolic however also under AGI wages Trend to zero so this is the Paradox is while productivity goes up wages go down therefore the entire uh Jig Is up nothing works the entire economy grinds to a halt unless people have a way of participating
this is the economic agency Paradox visualized so that's very very important um I'll make sure that there's a link to this um in the description so then I um in the rest of the article I unpack a couple of protestations um which are actually you know just like kind of criticisms and stuff but intelligence too cheap to meter this is where that comes from Sam Alman so thank you for that term Sam Alman um and let's see yeah so then I just restate everything in in Greater detail better faster cheaper safer um so this is
this is the a plus b equals c so better faster cheaper safer plus economic agency Paradox therefore we need something else to shore up consumer demand which is an investment-based economy um and then I further unpack the principles for building this economy in Greater Det detail and that is that this is an extension of not a replacement of my post- labor economics Manifesto um so there you have it you are now up to speed on how we're going to build the economy of the future as best as I can tell and by the way I
have started socializing this with real living breathing economists with phds and many of them say this is good stuff they have some criticisms and complaints um but I didn't come up with this in a vacuum is what I'm saying is that I actually talk to real economists and other people who study this on a technology side um in order to shape and workshop this so this is not just my idea um but I'm the one putting it together I'm assembling the building blocks all right thanks for watching bye
