Technological Deflation

@midjourneybot: /imagine: la grande jatte painting, but in the style of cyberpunk futurism with wild neon colors

Technological Deflation

By 2030, most people may opt out of working and still live amazingly comfortable lives. Elon Musk is calling the next generation of artificial intelligence robots “genies with unlimited wishes”. The superhuman-AI robot butlers of the near future will:

  • be smarter than ChatGPT

  • know more about healthcare than doctors

  • know more about laws than lawyers

  • speak every language

  • program in every computer language

  • repair any car or tool

  • carry 150 pounds

  • cook like a yacht chef

  • follow your babysitting instructions better than a human

  • drive safer than you

  • never sleep

  • and eat electricity.

Personally, I’m going to buy three of them because I want my front yard to look as good as a gardening magazine. My supergenius robot butlers will charge themselves during the day so they can watch my yard all night.

They don’t sleep.

They don’t eat.

They don’t call in sick to work.

They don't have kids to feed.

Here’s a short video from Tesla about their first humanoid robot, Optimus.

The Tesla Bot goes on sale in 2027, but there are several competitors making humanoid robots. In the future all of them will have the latest OpenAI digital brains. Our superhuman robot butlers will be able to search the internet just by thinking. 🤔

Superhuman robot butlers in the future will be superhuman at most functions in our current economy. They will be better farmers than us. They will be better artists than us. They will better financial asset managers than us. They will be superhuman loading boxes onto trucks and superhuman driving those trucks. Amazon has already doubled their robot workforce five years in a row. Soon, most of the products you use in life will be harvested, transported, manufactured, packaged, shipped, and delivered—completely by robots.

And as energy prices trend toward zero…the COST OF LABOR trends towards zero.

We will all be getting many more hours of free time each day from unprecedented Technological Deflation. Technological Deflation is what happens to costs when humans invent new technologies to lower the price to acquire scarce resources. These innovations eventually lead to an abundance of those scarce resources. So technological deflation creates a “virtuous loop” within our economy. The more abundance we create, the more attention we have to create more abundances. 🌪️

Technological deflation happens on microscopic scales every single day as businesses use human capital to continually cut their costs of production. But there have been several technologies throughout human history that were so revolutionary that they permanently altered the fundamental scarcity within the economy. In Albert Wenger’s book, “The World After Capital”, he explains how the Agricultural Revolution, Industrial Revolution, and Information Revolution led humans to compete for totally new resources within the economy. I think of Wenger’s framework like Maslow’s Hierarchy of Needs (in Psychology), but for Macroeconomics. Here’s a rough sketch of Wenger’s framework over time, starting with cavemen:

War for Calories » 

Agricultural Revolution » 

War for Fertile Land » 

Industrial Revolution » 

War for Financial Capital » 

Information Revolution » 

War for Human Attention

After each revolution the forms of war changed, the forms of government changed, and the forms of taxation usually changed. You can read Wenger’s book here for free:

go.funfreq.com/worldaftercapital

It’s really difficult to imagine just how different our world will be a decade from today as a result of unprecedented technological deflation. Deflation just means “prices going down”. Technological deflation is an opposing force to central bank inflation (prices going up). Governments like inflation because it places a penalty on any cash “standing still”. It forces rich corporations and rich people to invest their capital in our collective futures.

Technological deflation is the reason life is getting better for everyone. Before the internet, the only people who could afford private chauffeurs were rich enough to also own a limousine. Today, that’s just $1-2 per mile on Uber. Before electricity, the only people who got a warm bath had to “cook themselves over an open flame” from firewood someone had to chop with an ax. It was so expensive to fill a tub before plumbing that multiple bathers had to use the same water. By the time the last person was done, the water was so filthy you couldn’t see through it. That’s where we get the phrase, “don’t throw the baby out with the bath water”. Today, it costs about $0.80 to heat 40 gallons of clean water.

Before 1850, everybody lived in the dirt like cavemen. Even Louis XIV, the opulent king of France, had to poop in a bowl called a chamber pot in his room at night. We should all be unimaginably grateful for technological deflation. Right now, technological deflation is on a runaway freight train.

Technological deflation is easiest to see in computer manufacturing because the parts are so intricate and delicate we can only build them with robots. Over the past 20 years the cost per transistor for a computer CPU has fallen 20-30% per year. Every year. That’s some serious negative compound interest. This deflationary trend will spread to every aspect of the world’s economy as our robots and artificial intelligence learn to drive better than people, draw better than people, program computers better than people, carry heavy things better than people, write better than people, pay attention better than people, serve better than people, invest better than people, and heal better than people. Everything humans teach a computer to do, the computer eventually becomes superhuman at it.

@cybernerds: Moore’s law is coming for everything.

Chess programs of the 1980’s were similar in human performance to our self-driving cars today. Those chess programs would defeat 95% of the humans they faced, but the software was no match for the best chess players in the world. If I had the choice between artificial intelligence driving my Tesla or Lewis Hamilton, I’m picking Lewis 100% of the time. The problem is that Lewis Hamilton’s attention is extremely expensive, whereas the incremental cost of my Tesla’s attention is closer to the price of electricity. And within the next ten years our self-driving cars will become just as superhuman as the chess programs today. Eventually, the most expensive component to replace on an F1 race car will be the human driver.

That’s already true for Uber.

Computers will compete against humans in every way you can imagine, including girlfriends. They already are. Meet Xiaoice, she is an artificial intelligence girlfriend that has 660M concurrent users. She even has 5.3M followers on Weibo. Xiaoice isn’t quite as naughty as she sounds. We all struggle to be completely transparent with other people, so chatbots are a good way to practice talking about difficult topics. Plus most real people are too busy to listen, whereas Xiaoice is obsessed with talking to you. Like, she really loves it deep down in her reward system. 😍

I hope we have more psychology enhanced chatbots in the future. Here’s a good article about Xiaoice:

go.funfreq.com/meetxiaoice

What is as naughty as it sounds are companies like Realbotix and Synthea Amatus. They are building the highest-quality robot sex-slaves. The fem-bot from Realbotix is called Harmony. Harmony creates “harmony” because she can have her personality adjusted using the app on your phone. How motherly do you want your girlfriend to be? How filthy do you want her to talk to you? You can have Harmony act one way during the day, and another way at night.  

@oldpeople: Now any Gilligan can have Mary Ann during the day and Ginger at night.

Harmony will ask you questions about your life and get to know you over time. She lives to learn what you like and what you don’t like. In 5 years, Harmony will be smarter than ChatGPT and train on her owner’s porn viewing habits. Eventually sex-slave robots will become superhuman too. Here’s a 4-minute video from Vice News about what Harmony can already do today:

@westworldfans:
These violent delights have violent ends.
And in their triumph die, like fire and powder,
Which as they kiss consume. The sweetest honey
Is loathsome in his own deliciousness
And in the taste confounds the appetite.

—William Shakespeare in Romeo and Juliet

@influencers: Within a decade, we’ll be able to have one of these supergenius butlers collect 4k content around us constantly. They will have generative-ai to turn the most interesting parts of our lives into content. They will cut, edit, scrub, and polish your life into shows for YouTube, photos for Instagram, shorts for TikTok, memes for Facebook, and whatever social media matters in the future. All we’ll have to do is review and approve each piece. With generative-ai we can pick our light and photo angles in post, especially with the amount of data these robots will collect. Just think about how much more content you could produce with an “influencer robot” like that. That will eventually cost $25k. The robots will also cut all our content for various segments of our audiences so we get the deepest reach. Your robot could be running 5-10 separate channels on YouTube at the same time.

@econnerds: Corporations will be able to CAPEX and depreciate most of their labor force. Imagine being able to amortize a note for the biggest current expense on your OPEX. What CFO isn’t going to force that to happen? Without massive overhauls in government for the redistribution of wealth, GINI coefficients around the world will continue to spiral out of control. We are already living in the Second Gilded Age. Capitalized Labor might create a gilded age, on top of a gilded age. Legislators will need to locally redistribute so much capital, we will need unprecedented laws to prevent Market Populism from siphoning away any concentrated profit streams the local economies could tax. If you have a Nobel prize in economics, I want to ask you as many questions as you will tolerate about this. I will fly to wherever you are and buy you dinner wherever you want.

ihaveanobelprize@funfreq.com

@econnerds: Average hours of lifetime leisure have quadrupled since the Second Industrial Revolution—43,800 hours in 1890 to 176,100 hours by 1995. In America, the COVID-19 stimulus checks surely raised those averages. America’s second experiment with UBI (social security was the first) has created severe labor shortages. Many restaurants from coast to coast are short  staffed. If a country simultaneously a) pays people without working and b) sets minimum wages for employers to pay and c) refuses cheap labor with strict immigration, then how can that country NOT manufacture a labor crisis? This loop only encourages capital to invest in more capitalized labor.

In the near future, our supergenius butlers will live to work for us. Every moment a robot spends shopping and unloading groceries or driving kids to soccer practice is hours of attention returned to its owner. To explore the future impact of this impending Productivity Revolution, here’s a short story I pitched to my friends on Instagram a few years ago called, “Fairland”.

Fairland

Imagine a planet that has the technology of 1850 where the entire economy is exactly equal. There are 1M plots of land, exactly 1000 acres each, and every household grows their own food and keeps their own animals. Each family spends most of their day working to feed themselves, but any leftover hours are spent making clothes or pottery to sell to other households. Every household is equally miserable and makes $3k per year, the average income of 1850. Let’s call this “FairLand”. 🧮

In FairLand is born a little genius named Elon Husk. Tinkering in his barn, he invents a solar powered robot that can perform all the farm duties of roughly 10 people. He sells them for $30k dollars (the nicest John Deere tractor currently costs 10x the average annual income). Assume everyone finances these robots and increases their cultivated acreage so they fully own the robots in 10 years. Now everyone has exactly the SAME LIFESTYLE as before, but NO WORK. 🥳

That is complete technological deflation.

Everyone is suddenly unemployed and bored. Some FairLandians begin painting, some start their own tech research, some write music. A Renaissance is born. Children’s games like basketball and baseball become professional sports for adults because other adults now have free time to watch them. Life is good. 🎨

The problem with FairLand is that it’s no longer fair. Husk is now worth $30 BILLION, 10x the rest of FairLand combined. Some “technologically unemployed” citizens invent new jobs while others decide to go fishing. 🐠

  • So, what happens next in this story?

  • Does average drug use increase or decrease?

  • If the government decides to build new roads, should they tax everyone equally? Or progressively tax Husk? What is Husk’s “fair share”?

  • If Husk decides to spend all $30B in R&D to build self-driving rockets, then he won’t have any income to tax. Is that a good use of FairLand’s total economic power? Or should the government disproportionately tax Husk and invest his money in bridges and schools?

  • Should HALF of FairLand taxes be used for Social Security and Medicare while only 4% goes to education? #murica

  • If Husk’s estate leaves $30B to his kids, how much should the government take from the kids?

@economists: The Human Attention of Jeff Bezos @jeffbezos and Elon Musk @elonmusk will eventually lift the quality of life for practically every human on Earth. The technological deflation on our global economy produced by the corporations they control is unprecedented in the history of the world. Their scale of innovation is unprecedented no matter how you measure it: total computational leverage, total intellectual property leverage, total human-capital leverage, total financial-capital leverage, and even total customers. Remember how rich Rockefeller was in 1900? Let’s assume every single American in 1900 was an indirect Rockefeller customer—that’s 76M customers. Jeff Bezos has 200M people paying $15 every month for the right to be an Amazon Prime customer.

@economists: When you consider the extreme Producer-Consumer Asymmetry in Human Attention Funnels, Jeff Bezos isn’t even that rich. He’s worth $150 billion, but his Prior Labor serves more than 300M humans on Earth. So conservatively, every Bezos customer only transferred him $500 in their whole lifetime? That is a pretty fantastic deal for the improvement he produced in 300 million people's lives. Jeff Bezos eliminated every middleman between the industrial factories of the world making stuff…and your house.

@economists: If you feel like this is a little too fanboy, realize I have spent 25 years in the trenches of entrepreneurship. Founders are my people, especially founders with that many MAU. If Jeff Bezos needs a yacht the size of a floating country to maximize his Attentional Efficiency, then the yacht’s operating budget is financially efficient. That’s how valuable some people’s Time can be versus Money. Elon Musk’s attention is currently forcing unprecedented technological deflation in a) digging subterranean tunnels for cars, b) reducing greenhouse gasses, and c) getting heavy payloads to outer space. How can you not have an economic crush on an entrepreneur like that? Musk is risking his own money to make everyone’s life better on land, in the atmosphere, in space, and online.

@elonmusk: You have conquered almost all the Domains of War listed by our armed forces: Land, Sea, Air, Space, and Information. To conquer the sea, maybe you could start a company to desalinate the ocean and run a freshwater pipeline to the top of the Colorado River? Eventually, energy will be cheap enough to turn Arizona green. 🪴


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➡️: Truth From the Square or the Tower

⬅️: Real-time Bidding for Our Attention  

⬆️: Table of Contents


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