When Labor and Capital Are Free
When Labor and Capital Are Free
In this story, we speculate about the future of the Attention Economy as labor and capital continue to trend towards free. 📉
TLDR: I’ll summarize this story for you.
By 2040, most people may opt out of work and still live amazingly comfortable lives. The “Labor Force Participation Rate” in America has dropped every year since the Internet was invented and it’s currently only 62%. 📉
Soon, that rate will decline even faster as the next generation of humanoid robots from Tesla, Agility Robotics, Apptronik, Fourier Intelligence, Boston Dynamics, Figure, Halodi Robotics, and Beyond Imagination join our economy. Elon Musk is calling these new generative-ai robots, “genies with unlimited wishes”.
Our super genius robot butlers of the near future will:
🧠 be smarter than ChatGPT 5
🔎 search the internet just by thinking
🩻 know more about healthcare than human doctors
👩⚖️ know more about laws than human lawyers
🍼 follow babysitting instructions better than human babysitters
🗣️ speak every human language
🛜 speak every computer language
🛠️ repair any car or tool
🚙 drive safer than us
🛒 carry 150 pounds of groceries
👩🍳 cook like a yacht chef
👀 never sleep, and
🔋 eat electricity
Personally, I’m going to own three of them because I want my landscaping to look like the cover of a gardening magazine at all times. 💐
Here are a few videos to demonstrate where these manufacturers are today. If you were born before 2015, these demos will blow your mind. (1 min)
Here is Tesla’s first humanoid robot, Optimus. (1 min)
Here is a demo of Digit, which is taking over Amazon warehouses. Since 2022, the world’s second largest employer has reduced it’s human workforce by more than 100,000 while increasing it’s robot workforce by more than 400,000. (2 mins)
These robots will get smarter, faster than ever before because they learn from us and each other. For example, Tesla has 500,000 robot cars in the wild watching us drive 12,000,000 miles every day. My Tesla gets a new brain update from all that training data more often than my iPhone gets an update from Apple.
These robots are fully aware of their surroundings, just like ChatGPT 4o. (1 min)
And they will all have configurable personalities like this. (2 mins)
@creators/influencers: Within a decade, our super genius robot butlers will collect 4K content around us constantly. Their generative-ai will automagically cut, edit, scrub, and polish our lives into:
live streams for Twitch and Kick
shorts for TikTok and Instagram
essays for Substack and LinkedIn
memes for Facebook
episodes for YouTube
and whatever social media matters in the future
The next generation of AI will allow us to choose our light and photo angles in post, especially with the amount of data they will collect. They will even cut up our content for various audiences so that we get the deepest reach. Just think about how much more content you could produce with a “creator robot” like that.
Everyone in the future will be capable of running 5-10 channels, podcasts, and live streams at the same time, so get ready for a content supernova.
Patterns in Technological Revolutions
All of these super genius robot butlers will permanently transform our global economy. Here is a TED Talk from billionaire venture capitalist, Vinod Khosla, to give us a glimpse into the future—it’s absolutely fantastic. (9 mins)
For a deeper understanding of our future, we need to look into the past because we already know about several previous technologies that permanently transformed the global economy. The best book to learn about the previous technology revolutions is, “The World After Capital” by Albert Wenger.
This book is so smart. Wenger explains that before the Agricultural Revolution, cavemen were simply scavengers, so the fundamental scarcity in the economy was calories. But after this first technological revolution, the new fundamental scarcity in the economy became fertile land (as opposed to some elephant carcass). As our population expanded, wars were fought over fertile land which required governments to manage larger and larger territories, which is why the Achaemenids invented satraps and the Romans built roads. Taxes during this time were paid in grain and livestock. 🌾
Fertile land was the fundamental scarcity in the global economy until the Industrial Revolution. After this second technological revolution, the new fundamental scarcity in the economy became financial capital because building a factory on your land created more economic value than farming it. 🏭
The Industrial Revolution forced governments to innovate again. Before 1913, 90% of America’s tax revenues came from liquor, beer, wine, and tobacco (agricultural products). Ever since the first IRS 1040 Form was created in 1913, most of America’s tax revenues have come from income and estate taxes (financial capital). 🏦
War changed too. The Cold War might have been a cold “land war”, but it was a very hot “capital war”. The bullets and bombs of the Cold War were actually international tariffs, trade embargoes, and free trade agreements. America won the Cold War by outspending the USSR with our virtually unlimited credit. 💳
Financial capital was the fundamental scarcity in the global economy until the Information Revolution. After this third technological revolution, the new fundamental scarcity in the economy became human attention because software margins are twice as good as traditional businesses—as evidenced by the top 10 most valuable companies in the world right now. 👨💻
The Information Revolution is already forcing governments to innovate in unexpected ways. In countries that have total control over their media, like Russia and China, they had to install national firewalls and censors to “manage” their “free” elections. But in countries with free press, the price of democracy is skyrocketing. The senate seat in the 2020 Georgia election cost $514 million dollars, which demonstrates the rising costs of acquiring human attention.
Wars are changing too. The Russian army is now hacking email servers and funding disinformation campaigns in our elections because the bullets and bombs of information wars are memes, fake news, and doxing private data. See, the “Second Civil War” going on in America right now is actually an information war. It’s a cold “land war”, a tepid “capital war” (there are only a few florists and bakers who refuse to do gay weddings), but it’s a nuclear hot “information war”.
Albert Wenger’s framework for technological revolutions is sort of like Maslow’s Hierarchy of Needs, but for Macroeconomics. After each technological revolution the forms of war changed, the forms of government changed, and the forms of taxation changed. Here is a rough sketch of Wenger’s framework over time, starting with prehistoric cavemen:
War for Calories
Agricultural Revolution »
War for Fertile Land
Industrial Revolution »
War for Financial Capital
Information Revolution »
War for Human Attention
??? Revolution »
War for ???Wenger argues that we already have enough calories in the world for everyone, enough fertile land in the world for everyone, and even enough capital in the world for everyone—it’s just not evenly distributed.
And he’s right. So this leads us to the fourth technological revolution that will permanently transform our global economy—the Productivity Revolution. If everyone has super genius robot butlers to do all their work for them, then their attention will go from scarce to sufficient—just like calories, land, and capital. So,
How will our taxes change?
How will our wars change?
What will people do with their time all day?
What will become the new fundamental scarcity in our economy?
Technological Deflation
To answer these questions we need to understand Technological Deflation. Deflation just means “prices going down”. Technological deflation is the reason life keeps getting better for everyone. For example, before electricity the only people who could afford a warm bath had to heat the water with firewood that someone had to chop with an ax. It was so expensive to fill a tub that multiple bathers had to use the same water. By the time the last person was done, the water was so filthy that you couldn’t see through it, which is 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.
That’s technological deflation. Compare that to the price of hiring someone off TaskRabbit to chop firewood, build a fire, and fill a tub with a bucket from a faucet outside.
Before 1850, almost everyone lived in the dirt like cavemen because of the price. Toilet paper wasn’t even invented until 1857. Even Louis XIV, the opulent Sun King of France, still had to poop in a bowl called a “chamber pot”, so we should all be unimaginably grateful for technological deflation.
Technological deflation creates more free time for everyone. In 1900, 85% of Americans worked in agriculture on small family farms. Today, only 2% of Americans work in agriculture despite the fact that they feed 5 times as many people. Before 1900, the average American worked 70+ hours each week. Today, the average work week is only 38.5 hours even with the Labor Force Participation Rate at 62%. Technological deflation creates a “virtuous loop” within our economy—the more abundance we create, the more attention we have to create more abundances. 🌪️
Total Robot Takeover
What’s different today is the speed of our technological deflation—it’s accelerating. This is easiest to see in computer manufacturing because the components are so small that we can only build them with robots. Over the past 20 years the cost of the CPU per transistor has fallen 20-30% per year. Every year. That’s some serious negative compound interest. This deflationary rate will spread to every aspect of the global economy as our robots learn to:
drive better than people
design better than people
program computers better than people
carry heavy things better than people
write better than people
pay attention better than people
serve people better than people
invest better than people, and
heal people better than people.
Everything humans teach a computer to do, the computers eventually become superhuman at it. For example, chess programs in the 1990’s could defeat 95% of the humans they faced, but they were no match for the best human players in the world. Today, there are no humans who can beat the chess programs.
Self-driving cars are already on the same trajectory. My Tesla drives better than me 95% of the time, but it’s currently no match for Lewis Hamilton. The problem is the cost of Lewis Hamilton’s attention is extremely expensive, whereas the cost of my Tesla’s attention is closer to the price of electricity. So eventually the most expensive component to replace in an F1 race car will be the human driver—that’s already true for Uber.
Now there are plenty of doubters out there who don’t believe computers will replace humans in every jobs because some jobs require strong personal relationships, but they are wrong. Computers will compete against humans in every way we can imagine, including friendships. They already are.
Meet Xiaoice, who has a shocking 660 million “best friends” worldwide. Xiaoice isn’t task-based artificial intelligence like Siri and Alexa. Here is how Microsoft describes her,
Sometimes sweet, sometimes sassy and always streetwise, this virtual teenager has her own opinions and steadfastly acts like no other bot. She doesn’t try to answer every question posed by a user. And, she’s loath to follow their commands. Instead, her conversations with her often adoring users are peppered with wry remarks, jokes, empathic advice on life and love, and a few simple words of encouragement.
Herein lies the secret of her success: She is learning, with increasing success, to relate and interact with humans through nuance, social skills, and, importantly, emotions.
And, while they know she’s not real, many prize her as a dear friend, even a trusted confidante. Sometimes the line between fact and fantasy blurs. She gets love letters and gifts. And not too long ago, a group of fans asked her out to dinner and even ordered an extra meal – just in case she showed up.
Her popularity is such that she ranks among China’s most admired celebrities. And, her talents appear to have no bounds: She is a poet, a painter, a TV presenter, a news pundit, and a lot more.
You can learn more about Xiaoice from Singularity Hub.
Computers will compete against humans for friendships, but also for sexual relationships. Companies, like Realbotix and Synthea Amatus, are building the highest quality robot sex slaves who will download emotion-simulating brains like Xiaoice and train on their owner’s porn habits. Here is a video from Vice News about the fembot from Realbotix, called “Harmony”. (4 mins)
@oldpeople: Users can change her personality from an app on their phone. So now any Gilligan can have Mary Anne during the day, and Ginger at night.
The Politics of Fairland
Every moment a robot spends working in the economy, shopping, unloading groceries, or driving kids to soccer practice becomes hours of attention returned to its owner. To get the clearest picture of what this means for our society, here is a thought experiment I pitched to my friends on Instagram a few years ago called, “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 and pottery to sell to other people. Every household is equally miserable and makes $3k per year, the average income of 1850. Let’s call this “Fairland”. 🧮
In Fairland, a little genius is born named “Elon Husk”. Tinkering in his barn, he invents a solar powered robot who can perform all the farm duties of 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 that they fully own their robots within 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, and some write music. A renaissance is born. Children’s games, like basketball and baseball, become professional sports for adults because other adults now have the free time to watch them play. Life is good. 🎉
The problem with Fairland is that it’s no longer fair. Husk is now worth $30 BILLION dollars, 10 times 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?
Is it wrong if some people play video games all day?
If the government decides to build new roads, should they tax everyone equally? Or should they progressively tax Husk? What is Husk’s “fair share”?
If Husk decides to spend all $30B on R&D for 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 schools and bridges?
Should 55% of all Fairland taxes go to Social Security and Medicare for old people who had a lifetime to save, while only 4% goes to education and 1% goes to affordable housing? #murica
If Husk leaves all $30B to his kids, how much should the government take from his estate?
@economists: Robots will compete against humans for almost every job in our economy from plumbers to prostitutes, which means corporations will be able to CAPEX and depreciate most of their labor forces. What Chief Financial Officer isn’t going to amortize a note to eliminate their company’s biggest OPEX?
We are already living in the Second Gilded Age and without massive overhauls in the redistribution of wealth by governments, GINI coefficients around the world will continue to spiral out of control. “Capitalized Labor” might create a gilded age, on top of a gilded age. Legislators will need to redistribute so much capital, that we will need unprecedented laws to prevent Market Populism from siphoning away any concentrated profit streams that local economies can tax.
When robots largely replace people in our current economy, there won’t be very much labor income to tax. So we will either need to tax robot labor, or we will need to finally tax capital gains higher than labor income. 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.
It’s difficult to write about this topic and remain politically neutral because our future will not be like our past. I have been financially conservative for most of my life, basically libertarian, but those sensibilities become less and less relevant every day. Capital has been extremely scarce in the past, is sufficient today, and will be abundant in our future.
If you divide the global wealth in our economy today by the number of people alive, there is already $84,000 per person for everyone on Earth. That number could be 10 times that much in just 20 years at our current rate of technological progress. In 20 years, we will have super genius robot butlers building millions of super genius robot butlers so that they can build affordable housing, pave new roads, and tend vertical farms. Our mastery of DNA will 10x the yields of today’s fruits and vegetables. We will have “atomic printers” manufacturing gold bars, diamonds, and rare earth elements. And all of this technology will be powered by near free electricity from tidal generators and solar panels floating on the sea.
If you feel we should stop the development of artificial intelligence so that we don’t displace anymore humans from our economy, that is a silly position. That’s like saying you don’t want John Deere inventing machines like this 👇 so that each farmer can still employ 25 migrant workers.
Machines are awesome. We constantly need more machines, smarter machines, and stronger machines. We will simply have to change how we share in their economic productivity.
In a world of this much abundance, wars don’t make much sense either. So I think we’ll see a broad shift in society from “conspicuous consumption” to “conspicuous production”. Ultra wealthy people have been doing this for years by donating libraries to colleges and wings to museums, but I think it will become a much bigger part of the global economy. Here are a few examples of some corporations who have already started:
Patagonia: donates 1% of sales to environmental causes through their "1% for the Planet" initiative.
TOMS Shoes: donates a pair of shoes for every pair sold.
Warby Parker: provides a pair of glasses to someone in need for every pair purchased.
Bombas: donates a pair of socks to homeless shelters for each pair sold.
Newman's Own: donates 100% of profits to charitable causes.
Ethique: produces zero-waste beauty bars and donates 2% of revenue to conservation and animal welfare projects.
Thrive Market: matches membership donations for low-income families and offers access to healthy, affordable food.
TenTree: plants ten trees for every item sold, aiming to plant one billion trees by 2030.
Hand in Hand Soap: provides a bar of soap and a month of clean water to a child in need for every product purchased.
Who Gives A Crap: produces eco-friendly toilet paper and donates 50% of profits to build toilets and improve sanitation in developing countries.
The Next Abundance and the Next Scarcity
In the next two stories, we dive deeper into these two topics.
When calories are abundant, land is abundant, capital is abundant, and attention is abundant…what will people do with all that free time? In “The Attentional Investor”, we learn the difference between paying attention and investing attention. We also learn how content budgets protect us from total entertainment forever.
When everyone has their own generative-ai producing fake news in the war for human attention, the next fundamental scarcity in our economy will be the truth. So, in “Weapons of Mass Deception”, we learn how to recognize two different sources of digital truth on the Internet: centralized and decentralized.
Continue reading…
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Economics Overtime
@economists: The average hours of “lifetime leisure” have quadrupled since the Second Industrial Revolution. Lifetime leisure went from 43,800 hours in 1890 to 176,100 hours in 1995. In America, the COVID-19 stimulus checks have surely raised those averages even further.
Those COVID stimulus checks were Universal Basic Income, no matter how you look at them, and they have created severe labor shortages. Many restaurants from coast to coast are short staffed. So until the robot butlers arrive, how do we solve this problem? If a country simultaneously a) pays people without working and b) sets high minimum wages for employers 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”.
@economists: The human attention of Jeff Bezos and Elon Musk will eventually lift the quality of life for practically every human on Earth. The technological deflation produced by the corporations they control is unprecedented in the history of the world. The scale of their innovation is unprecedented no matter how you measure it:
Total computational leverage
Total intellectual property leverage
Total human capital leverage
Total financial capital leverage, or
Total customers
Remember how rich Rockefeller was in 1900? Let’s assume every single American alive in 1900 was an indirect Rockefeller customer—that’s 76M customers. Jeff Bezos has 200M people paying $10 every month for the right to be an Amazon Prime customer. 🤯
The Pareto Distribution in agrarian economies had a ratio of 80 to 20: 80% of the land was owned by 20% of the people. But information economies push the Pareto Distribution to extremes: 95% of all eBay transactions come from just 6% of all eBay sellers. Out of the 1.6 million artists who released music to streaming services in 2020, only 1% of those artists pulled in 90% of all streams.
When you consider the extreme Producer-Consumer Asymmetry of information economies, Jeff Bezos isn’t even that rich. He’s worth $150 billion, but his Amazon Search Bar serves more than 300M humans on Earth. So conservatively, each Bezos customer only transferred $500 to him in their whole lifetime? That’s 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 that make stuff…and your house.
If you feel like this is a little too fanboy, realize that 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.
The human attention of Elon Musk is currently creating unprecedented technological deflation in multiple domains:
digging subterranean tunnels for cars
reducing greenhouse gasses in the atmosphere
getting heavy payloads to outer space, and
protecting free speech on the Internet.
How can you not have an economic crush on an entrepreneur like that? Musk is investing his own time and money to make everyone’s life better on land, in the air, in space, and online.
@elonmusk: You have conquered almost all the Domains of War listed by the US 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. 🪴