Channel: David Shapiro
Source: Watch on YouTube
- This episode is about measurements and KPI
- EAI aims to measure ownership based demand capacity in an automated economy
- Economic agency comes down to ownership, not transfers, Dave says
- The blanket UBI can paper over and perpetuate local mismatches between what communities produce
- With EAI calculated for every US county, each becomes a live sandbox
- Next up is the concept of aligned incentives. Broader ownership streams synchronize the interests of finance firms and local governments
- Wider ownership thwarts techno feudal drift by ensuring consumers keep spending power
- Next is consumer demand. Broad purchasing power sustains profitability across the economy
- Labor bargaining power is what keeps society fair, but it's fading with automation
- Manufacturing, public or lateral positions cannot outrun automation's cost curve
- Post labor economics keeps market and ownerships intact, rejecting command schemes
- Marxism, communism and socialism are all fundamentally different flavors of central planning
- As automation scales, employment metrics shed their power to gauge prosperity
Speaker A: Hello and welcome to lecture number three of my post labor economics series. This episode is about measurements and KPI. And while that might sound a little bit boring, the entire philosophy behind this is that which gets measured, gets managed. All right, so let's get right into it. The number one question whenever you're dealing with econometrics and optimizing large scale systems such as a national economy, where you've got network effects and those sorts of things, is what are you trying to optimize for? Now, of course, any kind of KPI usually hides a lot more details. GDP is a big crayon kind of number. Unemployment is a big crayon kind of number. However, at the same time, some of these can be useful KPI. So to steer a post labor economy, our metrics must spotlight demand resilience, not just raw production. For gdp. That's kind of the big, the big knob that everyone is trying to optimize right now is it originated in the 1930s and became kind of the first kind of like aggregate, okay, wealth of nations. What are we actually optimizing for? And one of the things is that you're actually measuring transactions. So it's a consumption based economy. So the theory is that the more consumption that you have, the better the economy is doing and you just kind of throw it all into one bucket. All consumption is basically considered equal. Another thing is labor KPIs. So that's what I mentioned. So unemployment wage metrics, those sorts of things, it's kind of assumed that those metrics like you know, number of jobs that you have and number of, and amount of payroll, that that's a pretty good barometer of the economy. And certainly even if it's not perfect, just tracking that number over time is better than nothing. Same thing with gdp. On an individual level. It's not necessarily that each KPI is complete, it's that tracking it over time indicates something that is underlying an underlying truth about the economy. Now, of course, with automation coming, labor and wages are going to start going down. So they're going to become a less reliable marker of what's going on out there. GDP is not going anywhere. But at the same time, we need a way to capture something that says like, okay, even if wages go away forever, we need an entirely new set of KPIs other than payroll numbers, unemployment, and those sorts of things. So what you're looking for, an ideal KPI is something that is both descriptive and prescriptives. So descriptive means that it is accurately able to diagnose a problem and Prescriptive means that it can indicate what you're supposed to do with that information. So right now the Fed, one of the primary tools that they have is changing interest rates. You can lower interest rates, you can raise interest rates, and that has plenty of downstream impacts on lending and borrowing. And of course lending and borrowing is used to do everything from finance construction to finance workers and those sorts of things. However, what we're proposing and what I've mentioned in other videos about post labor economics is, is the eai. So that is the Economic Agency Index. And this tracks household buying power and ownership, not just wages. It's actually broken down into three components. So with all that being said, let's introduce the Economic Agency Index. The EAI gauges how much household spending power is rooted in ownership returns versus wages or transfers. So there's three, three primary components that goes into the Economic Agency Index. And all this data is publicly available. And we're actually working, I'm working with a couple of people to build a dashboard about this so that we can actually just show, here's the data, let's see what it looks like over time. So number one is property share dividends, rents, interest and capital gains boost the score because ownership income scales with automation. So the idea is that the entire idea of post labor economics is that we organize aggregate demand around property. So property based incomes. Now wages form another component. Earned pay still counts, but its volatility under automation earns a lower positive weight beta. So the idea is when you're measuring this, you don't want to punish wages because if people are still able to make ends meet through, through, you know, wage labor, great, like that, that is fine. And, and certainly I and others anticipate that anywhere from 20 to 50% of work that exists today will still be around, even after AI and automation. Of course, some people assume that that AI will ultimately create new jobs. Many of us don't believe so because this, this time is truly different in that there's no ne, there's not necessarily any reason for any of the new jobs to be done by humans. So if wages fall from 60 to 80% of aggregate demand to 20 to 50%, that's a fundamentally different paradigm that we're going to be entering into. At the same time, again, you don't want to punish wages when you measure it, but you really want to put the lion's share of priority into property and then transfers. So transfers are government benefits, everything from Social Security to unemployment insurance to snap you, UBI and all of those other things. Medicare, Medicaid, anything that is paid for by taxes directly is a government transfer. Anything that is paid in the form of dividends, rents, interest trusts, those sort of things is a property share. Even if the government is help managing it. If it's not paid for directly by taxes, then it's property or wage. So the formula, and by the way, this is a proposed formula, this hasn't been finalized. We actually need to get the data together and build the dashboard and do some experimentation. But property plus beta times wages minus transfers. So then this is then rescaled. So it'll be on a score of 0 to 100. Basically the more property based income you have, the higher you are going to be on the economic agency index. So that would be in terms of descriptive versus prescriptive. What this describes is the mix of asset or the mix of income sources that households have in aggregate in any given region. And this can be done at the county level. That's the lowest level of granularity. County, state and federal. So you'll have three levels where you can say okay, you know, county A, you're really struggling. Like you know, you don't have much property or entirely relying on government transfers and wages and that sort of thing versus another county where you can say, you know, like well what is this county doing differently? Particularly if they have a much larger share of income coming from property. So that will create a dashboard that we can put up as basically a heat map where you can just browse around and say hey, like which counties are doing best? And then you can also scale that over time. So describing the current state of affairs is one thing, particularly if you have historical data so you can look at how each county and each state has trended over time. And then the prescriptions are basically hey, if you're relying too much on government transfers, here's a list of options you can do. And this will be in episode four by the way, all the interventions. But so you have description and prescription and that's what EAI will hope to add.
To steer a post labor economy, our metrics must spotlight demand resilience, not just raw production. With automation coming, labor and wages are going to start going down. We need an entirely new set of KPIs other than payroll numbers, unemployment, and those sorts of things.
Speaker A: So next is the overall KPI stack. So the idea that we're working on right now is creating a dashboard. And so tldr, the economic agency index slots next to gdp, inflation confidence and labor gauges to reveal the ownership based demand capacity of those that those metrics miss because it is calculated down to every county policymakers consume from national trends to street level interventions. So gdp, this already exists and it captures the total output, but it masks whether spending power comes from wages, transfers or assets. So again, the biggest problem that people are talking about is okay, even if technology can make goods and services cheaper, so you have some deflationary power. If nobody has purchasing power, it doesn't really matter. So we need to shore up aggregate demand, which GDP just does not cover. Inflation indexes, these track price stability both but also say nothing about household's ability to keep buying as wages shrink. This is one of the biggest problems is that household income so wages have not kept pace with the real cost of things. And some people, some economists and other people will say look, real wages have grown, but under most circumstances when you look at it, real wages have actually shrunk pretty significantly since about 1971, which is when we went off the gold standard. And then it accelerated in the 80s and 90s when automation started coming in. And also when you look at the data, you see that, that productivity has gone up faster than wages has gone up, which is what you'd expect with an automated economy because it takes fewer people, therefore fewer wages to achieve the same or greater output. And that's only going to accelerate. So really the age of automation began in the 80s and 90s and and has only picked up over the last two decades and will only continue to accelerate with AI and robotics over the next decade or two. Consumer confidence reads sentiment but offers limited guidance when optimism diverges from real income streams. So this is one of the things that is also tracked where you're just saying like how, how confident are voters in the economy and that they'll be able to make ends meet. Unemployment rate flags labor slack but ignores rising non wage income in an automated economy. Um, yeah, so particularly like TLDR, if you expect that 50% of people are going to be unemployed. And by the way, one of the things that people ask is like when is all this going to happen? All that we need to see is unemployment at like 10 to 11% for two years before everyone's going to really take it seriously. And based on more recent data, Congress will act when it hits 14%. So we don't need to see catastrophic levels of unemployment before the nation will sit up and take notice. That's just historically true. Can also consider that, that for I think the average unemployment during the Great Depression was 14 or 15%. Yes, it peaked at 24% but it was above 10 to 12% or 14% for like 10 years. And that was considered like one of the worst economic situations in all of history in America. So the EAI then adds a county level lens and by the way, not just county, it's Just that's the lowest level of granularity. County, state and federal lands on ownership driven demand, letting leaders fine tune policy from Capitol Hill to City Hall. That is exactly the goal. And so you can imagine, you know, economists will have another gauge, another, another lever to, to observe or another dial to observe. And then that gives them another set of levers, levers to pull. Now one thing is that EAI is going to take longer. It's not just a matter of the Fed adjusting a rate, but it's decentralized, meaning that every county and every state can do their own individual things to adjust those, those income streams. And so you're looking at a lead time of 18 months to 4 to 5 to 10 years. Which is why getting started now is optimal before the unemployment gets super painful. Now one thing that I will, I will point out is that this theory would apply whether or not we had an automated economy coming. This idea just makes sense. Is to, is to, is to ensure that more consumer demand comes from property. Even without AI and robotics, we should be advocating for this.
Tldr, the economic agency index, will reveal the ownership based demand capacity of those that those metrics miss. The idea is to ensure that more consumer demand comes from property. Getting started now is optimal before the unemployment gets super painful.
Speaker A: All right, next slide. One thing that comes up is some people ask me like, you know, oh well Dave, why don't we just do ubi? And I've, I've heard everyone from the effective altruist talking about UBI only or universal basic dividends or universal basic services. So economic agency comes down to ownership. And ownership beats transfers for a number of reasons. Governance, heavy cash programs dull market signals and invite capture, whereas broad private ownerships keeps incentives sharp and decent decision making. Local number one, central authority tyranny. Social Security and Medicare show how giant federal trusts morph into political battlegrounds and magnets for rent seeking. Yeah, whenever, whenever someone says let's just go all in on ubi, it's like they haven't paid attention to history and the fact that the more money that the government owns and manages, the, the more at risk you are. So there's horror stories of people getting cut off from their Social Security checks or Medicare checks, those sorts of things. The government might say, oh well, someone filed the wrong Social Security number, so you're now officially dead. And, and it takes them years to get back on to those programs and they usually don't get back pay. So you do not want your livelihood dependent upon a government program, even if it is run with AI because the AI can still make mistakes and human bureaucracy can still make mistakes. And by the way, political party A or political party B might just want to cut your cut, cut it out from under you, just from a sense of cruelty or backwards thinking. So you certainly don't like anyone who says just UBI is the solution. I'm just going to say it. They're delusional. Like they're, they're, they're just completely delusional and do not know how states work.
Economic agency comes down to ownership. Governance, heavy cash programs dull market signals and invite capture. broad private ownerships keeps incentives sharp and decent decision making. Social Security and Medicare show how giant federal trusts morph into political battlegrounds. Anyone who says just UBI is the solution is delusional.
Speaker A: Next up is market distortions. So this one is a little bit more nuanced. The blanket UBI can paper over and perpetuate local mismatches between what communities produce and what they consume. So while you do want some ubi, you want, you want to create a floor of economic prosperity which will also prime the pump. Because guess, guess where UBI is going to come from. It's going to come from the tech giants that are selling robots and data centers and AI and those sorts of things. However, if you have a mismatch where basically everyone has guaranteed amount of money that they can spend no matter what, you're going to create what's called a market distortion. And so a market distortion is where prices don't actually match supply and demand. And the way that that shakes out is that say for instance, you have, you know, Detroit just as an example, and everyone ends up with, you know, twenty four hundred dollars a month of UBI or even more. What UBI does is that instead of that area having some level of productivity through property ownership or wages, people are just going to be spending money and it could be going into a black hole without actually creating any local returns or investment. So this is where the combination of, of market distortions from a pure UBI situation is offset by the idea of property ownership. Because instead of right now, Detroit is not particularly productive, at least not compared to where it used to be, because there aren't as many jobs around. And if there aren't as many jobs around, that's one way of looking at it. But there's also not as many valuable properties. So what you want to do is you actually want to incentivize people to get as much of their monthly income from property as possible, because then that is actually finding efficiencies. Whether it's local or national or international doesn't matter, but you're finding efficiencies and that's how you overcome market distortions. Another reason that you want to keep private property and market based solutions is information loss. Centralized payouts hide granular price cues, blinding the economy's decentralized social brain to nearby value opportunities. Basically, if your, if your financial health is completely independent from the local health of the economy around you, then you're just going to spend whatever you're going to spend. Whereas if you have options, if you have more, if you have a menu of options or other places that you can invest, guess what, if you have dividend seeking behavior, you're going to find the best places that pay the best dividends, which maintains market information. And then the principle of economic subsidiarity. Counties, banks, local companies and states can craft richer property income streams when they hold the tools and incentives themselves. Basically, we don't want a centrally managed economy, plain and simple. So I know some people are going to be skeptical of empowering the state or even counties because then you are still, you're still, you're still giving up some power if the property is all owned by counties. But we're not. Just wait till we get, wait till we get to the, to the full menu of interventions. It's not all going to be mediated by counties and states, but we do need some regulatory overhaul for some of these ideas anyways. The point is, is that by pushing out economic decisions to the lowest possible, lowest common denominator, you end up with better, more granular opportunities and you avoid the problems of central management. So the federal government should be as uninvolved as possible with post labor economics, at least in the early days. And then fiscal drag, ever growing transfers forces higher taxes or debt draining capital that would be invested in productive yield bearing assets. So the idea is that if you just rely on tax and spend, then it's not necessarily the most efficient allocation of resources for investment and reinvestment. Plain and simple.
Next up is market distortions. The blanket UBI can paper over and perpetuate local mismatches between what communities produce and what they consume. What you want to do is incentivize people to get as much of their monthly income from property as possible. We need some regulatory overhaul for some of these ideas.
Speaker A: All right, moving forward, one, one of the other questions that we get is why start small? Why start with an economic agency index at the county level? And the number the reason is 3,100 national laboratories. There are about 3,3100 counties or county equivalent polities or domains in America, which means that you have 3,000 different economic labs where you can try out some of these different things. With EAI calculated for every US county, each becomes a live sandbox where policy tweaks echo in the data within a year. This ground level clarity lets America prototype post labor ownership models locally before rolling them up to state and federal levels. Number one, granularity, county slices surface economic microclimates that state or national averages blur into noise. You know, one of the rules of thumb that we're coming up with for this is every county should use their unfair advantage. So for instance, if you have a county that is on the coast or on the river or on a lake, they have natural sources of water so that's an unfair geographic advantage that they have for tourism, fisheries, estuaries, those sorts of things. If you have a county that has a lot of meadows or desert, guess what their unfair advantage is. Sunlight. If you have one that's got a lot of trees, their unfair advantage is forests. There's all kinds of ways that you can monetize local geographic things. Now, one thing that people have pointed out is that those assets do not scale as much as we expect AI and robots to scale, which is perfectly fine. Data centers don't actually take up that much space and neither do humanoid robots, by the way. So you can put robots in data centers in every county, as far as I'm concerned, which will scale. Next is experimentation. Leaders can ab test land value dividends, ESOP tax credits and watch ea EAI readings. I probably need a better term, EAI readings in real time. So basically, when you, as we start to roll this out, as we start to codify some of the recommendations and everything, what we can do is first we're going to look historically at historical data because there's been plenty of counties and local regions across the nation that have implemented a lot of the things that we're going to be recommending. And we can see track over time. Did their economic agency index change over time, and if it did, if it changed in the correct direction, you know, for instance, if they created a co op or a land trust or if they closed a hospital or those sorts of things, we can, we can look at all the little interventions that counties can do that result in greater economic agency subsidiarity. We kind of already talked about that. But to put it in context here, local authorities. So that's cities and counties, local local businesses. I'm not talking about the, you know, the big Wall street firms. I'm talking about your mom and pop shops and local banks. So I'm not talking about national banks or international banks. I'm talking about your local credit union can iterate on property income streams tailored to their unique assets and culture. The more information you have about what works in your region, the better. Scaling proven county pilots can ladder up to the state, federal, and ultimately maybe even international frameworks. With evidence already in hand, this is the number one reason to start small is because yes, some of these, some of these solutions and measurements make more sense at a larger scale. But at the same time, if we can start small, lower risk, lower blast radius, with more parallel experiments, the better. And then finally, we're hedging techno feudalism, distributing ownership at the county Level thwarts techno feudal concentration population by rooting power in democratic communities. I know that techno feudalism is something that you guys are worried about, but guess what? If we start using the power of democracy at the county, at the, at the state and federal level, then you know, we have more, we can consolidate more social power.
With EAI calculated for every US county, each becomes a live sandbox where policy tweaks echo in the data within a year. This ground level clarity lets America prototype post labor ownership models locally before rolling them up to state and federal levels.
Next up is the concept of aligned incentives. Broader ownership streams synchronize the interests of finance firms and local governments
Speaker A: Next up is the concept of aligned incentives. Broader ownership streams synchronize the interests of finance firms and local governments around a single goal. Resilient demand. Again, aggregate demand is what everyone wants. And if aggregate demand is based mostly on wages, there's still some volatility there. That's not to say that property based income isn't going to have its own volatility. So for instance, if you have a rental property that's empty, your total income goes down. But if you have a diverse portfolio that's property based, that's based on data centers and solar and robots and forests and everything else, then in aggregate you're going to have a much more stable amount of aggregate demand. The EAI makes that alignment visible, converting shared benefit into coordinated action. Number one, banks stable dividend and rent flows reduce credit risk and enable new loan products underwritten on an on asset income. So the idea here basically is that once we start pivoting from a wage based income aggregate demand to a property based aggregate demand, then your local bank will be able to actually say hey, there's new products that we can offer based on this, which is part of the innovation that we want to incentivize and facilitate. Next is counties. Turning land, infrastructure or intellectual property into resident dividend grows the tax base and attracts talent without raising rates. So the idea is that the county can actually be a partner, not, not necessarily your employer, but a partner in creating more property based streams. Companies patron equity and ESOP models lock in customer loyalty while nudging local EAI scores upwards. So basically the logic here is that companies can't sell goods and services if their customers are broke. It's that simple. So it behooves everyone to have customers with money aggregate demand. Every stakeholder from households to the Fed win. When steady ownership income keeps spending power high. And then finally the win, win, win. Even absent automation pressure, wider private property stakes, smooth shocks and let national prosperity scale with gdp. That's one of the primary problems that has not been solved with neoliberalism is that household income does not scale with gdp, not, not in lockstep, not under an automated economy.
Broader ownership streams synchronize the interests of finance firms and local governments around a single goal. Turning land, infrastructure or intellectual property into resident dividend grows the tax base and attracts talent without raising rates. Every stakeholder from households to the Fed win when steady ownership income keeps spending power high.
Speaker A: Now the next big problem guarding against elite capture. This is one of the biggest questions that comes up again and again. The TLDR is people say, look, if everyone is just rent seeking, then how do, how do you, how do we little guys keep the big dogs from just eating up the entire economy anyways? Which is what they're doing already. So wider ownership thwarts techno feudal drift by ensuring consumers keep spending power and communities retain real stakes in production. Market health depends on distributed agency, not a few capital holders accumulating every asset. EAI serves as a gauge for that. So again, that which gets measured gets managed. If you see that your all your people in a certain region are, are starting to have a smaller and smaller share of their income coming from property and say, who's buying up all the property? That can be a signal to intervene in a certain way. So elite capture. If wealthy actors monopolize assets, they eventually erode their own revenue streams by bankrupting customers. Again, if households don't have money, they don't spend money and the economy grinds to a halt. So that alone aligns the incentives of now. At the same time, do you think that BlackRock is going to say, oh well, you know, yes, let's just give away some of our property? No, they're not going to do it. But what this does is it gives people something to measure, to say, hey, we're going to wrest back some of that control.
Wider ownership thwarts techno feudal drift by ensuring consumers keep spending power and communities retain real stakes in production. Market health depends on distributed agency, not a few capital holders accumulating every asset. That which gets measured gets managed.
Speaker A: Next is consumer demand. Broad purchasing power sustains profitability across the economy, giving all firms an incentive to share ownership. Now again, you might argue with, well, what's the proper balance of ownership? Does that mean that every mom and pop shop is going to give away a 50% stake to the county? No, it might be 5%, it might be 10%, it might be 20%. But if 20% of every profitable company has shares that are owned in trusts or banks or whatever, that creates natural revenue cycles. And of course that's just one oversimplified way of doing it. Next is techno feudalism. Subscription everything, models, AKA you will own nothing and be happy. Centralized control. The EAI paradigm flip that flips that towards citizen equity. Now I know that some people disagree with this and they say, Dave, all you're talking about is socialism or communism or Marxism with extra steps. Literally not. I'm going to and, and I'm going to address that in a slide in just a minute, but the idea is that techno feudalism is a cyberpunk dystopia. And, and what we're aiming for is a solar punk. I'm not going to say utopia, but we're aiming for solar punk. Which is more decentralized and distributed and does not rely on corporate capture or actually fights against corporate capture. Next is exotic technologies. Crypto and blockchain can help, but democratic and policy reforms are the pure, sorry, not pure true prerequisites for diffusing ownership. So some people, and here's the logic behind it, is that Silicon Valley and effective altruists and all those other people, they see the government as fundamentally too slow and too broken to do anything. Which is why Sam Altman and worldcoin are like, we are going to single handedly save, you know, solve UBI and, and, and know your customer and all that fun stuff. And it's like, great, yes, technological innovation definitely helps these things, but at the same time they're being told no by a bunch of governments. But worldcoin has been banned in a bunch of governments. And basically it's the government is saying that's great and that's fine, and even the banks are saying that's great and that's fine, but like we actually know how to do our business. So that's Silicon Valley hubris. Now at the same time, I'm not going to deny that things like cryptocurrency and Blockchain Technologies and DAOs, they might actually be part of the solution, but they are. They are predicated upon having democratic consensus as well as policy reforms that say, yes, let's integrate these new technologies into these systems and find the best place where they can serve.
Next is consumer demand. Broad purchasing power sustains profitability across the economy, giving all firms an incentive to share ownership. Next is techno feudalism. Subscription everything, models, AKA you will own nothing and be happy. But democratic and policy reforms are the pure, sorry, not pure true prerequisites for diffusing ownership.
Speaker A: Now, there's obviously still a big tension with labor bargaining power fading. That's the primary thing that we lose, and that's actually where the entire research arc of economic agency started, was that the primary reason that society works today, or at least has up until this point, was because of collective bargaining power, meaning that we the people could withhold our labor. Well, once neoliberalism came in, it said, you know what, you're actually not allowed to withhold your labor. That's why they destroyed unions and those sorts of things. And with automation it's like, withhold your labor all you want, we're going to send your job overseas or give it to a machine. So we have been losing labor bargaining power for the better part of a century now. Now society must choose between endless transfers or genuine private property inclusion. So the ability to withhold property and collective purchasing power of property becomes the next bargaining chip that keeps society fair. That is the new tension.
We have been losing labor bargaining power for the better part of a century now. Now society must choose between endless transfers or genuine private property inclusion. The ability to withhold property and collective purchasing power of property becomes the next bargaining chip that keeps society fair.
Speaker A: Now jobs won't save us. This is another thing that comes up every now and then. Manufacturing public or basically people have asked like what about jobs guarantees? Or what about shorter workweeks and those sorts of things. Manufacturing, public or lateral positions cannot outrun automation's cost curve. Enduring demand resilience requires shifting income sources, not doubling down on vanishing payrolls. Number one, job guarantees. Back when, after the Great Recession, Obama tried to implement, implement shovel ready jobs, which didn't work. That was a callback to FDR, by the way. So shovel ready programs prove that forced placements feel like downward mobility and meet limited skills transfer. Basically people, if you lose your job as a developer or an electrician or something, you don't want to go dig ditches. It feels dehumanizing. Nobody's going to do that. Furthermore, even if you guarantee higher skill jobs, a lot of people have like are unable or unwilling to transfer laterally with an entirely different skill set. We've seen that in, everywhere from the miners and steel mills on the, in Appalachia where it's like, hey look, you know, the mine closed, but let's build a new car factory. And a lot of the miners are like, I don't want to work in a car factory, I want to work in a mine. I want to work where I'm familiar. And it sounds self defeating, but that's, that's what we have found in reality is that guaranteed jobs often don't work. Next is busy work or make work. Inventing tasks for the sake of wages diverts resources from productive investments and drags GDP per hour downward. Basically if you say well the machine could do this job, but we're just going to pay humans to do it anyways, the humans are less efficient and so that's actually economically inefficient and you don't want to do that. So residual wages, attention, economy and meaning economy persist, but its scale may never rival the service sector that it replaces. Basically, we do suspect that there's always going to be some level of wages, you know, from, from various sides of the economy. But as you know, the agricultural curve has kind of bottomed out in terms of share of wages. As the manufacturing economy has bottomed out, so too do we think that the service based economy is going to bottom out. But then the question remains is will the attention economy and the meaning economy actually grow to replace that? And right now I don't think the answer is yes. Another thing that people suggest is shorter workweek splitting. One role among five workers piles on HR tax and insurance overhead that firms simply won't absorb. And firms have never done this. What, what they do instead is they lay off half of your team and then the rest of the team picks up the slack. That's just how companies work. So shortening work weeks won't really help. We might shorten it to four days, three days or whatever. And of course, you know, studies have shown that if you shorten the work week to four days, health and happiness goes up as well as productivity goes up. But even with that data, companies don't do that because companies are very, very skeptical and very slow to change. And finally, profit imperative. Competitive pricing makes labor the first cost center to trim. So the asymptote of efficiency near zero employees. Long, long story short, in the long run, the the optimal number of employees is simply zero. That's it. That's where that's the end state that we're going towards is that every company will get to as close to zero employees as they possibly can. Now that OpenAI Codex came out, guess what? I don't ever need to hire developers. Just as an example.
Manufacturing, public or lateral positions cannot outrun automation's cost curve. Enduring demand resilience requires shifting income sources, not doubling down on vanishing payrolls. Inventing tasks for the sake of wages diverts resources from productive investments and drags GDP per hour downward.
Speaker A: Next up, post labor economics versus leftist blueprints. So this is where I'll compare PLE to all these other frameworks. Post labor economics keeps market and ownerships intact, rejecting command schemes that erase price signals. It solves post wage demand by widening property stakes, not by abolishing them. This is the primary difference between post labor economics and all these other frameworks is that some people say, oh, we have to abolish private property. If you abolish private property, guess who owns it? The state. Right. And we've already discussed why the state owning everything is not how you want it to work. And if you say ah, no, it's just going to magically be, you know, not owned by anyone. Again, enforced by whom? So next, Marxist abolition. Abolition. Marx called for scrapping money, class and the state. Only classlessness is attractive and legal equality already delivers that. So basically we're not getting rid of money. There's no reason to do that. And I know that a lot of people have asked me about the Venus project and resource based economies. That is the dumbest idea possible. Look it up. No economist has ever endorsed that idea. And in fact the only time that economists mention resource based economies is to mock and deride it. No serious economist or politician or think tank takes RBE seriously. It is a science fiction fantasy.
Post labor economics keeps market and ownerships intact. It solves post wage demand by widening property stakes, not by abolishing them. Marx called for scrapping money, class and the state. Only classlessness is attractive and legal equality already delivers that.
Speaker A: So moving on. Communism in reality, in practice, benevolent central planners become authoritarian, turning the economy into an efficient command grid. Now, before someone says but real communism has never been tried. That is exactly the point. Real communism is not possible. It's not going to happen. Next is the limits of socialism. Socialism is closer to PLE but still kills private property, the very tool PLE uses to fund broad dividends. Private property is the primary anchor. Ownership is the core differentiator. PLE expands it. The others eliminate or curtail it. Next up is market signals. PLE preserves prices and decentralized decision making. Central planning suffocates both. All of these. Marxism, communism and socialism are all fundamentally different flavors of central planning.
- Communism in reality, in practice, benevolent central planners become authoritarian. PLE preserves prices and decentralized decision making. Socialism is closer to PLE but still kills private property. Marxism, communism and socialism are all fundamentally different flavors of central planning.*
Speaker A: Next, the job creation myth. So this basically when whenever someone says technology always creates new jobs, Technology has never created new jobs. Let me explain. Technology lowers costs and frees capital for fresh demand. But nothing in economics guarantees those new needs rely on human labor. As automation scales, employment metrics shed their power to gauge prosperity. Number one, deflationary tech. Every innovation drives down the cost of goods and services, shrinking the revenue pool that once paid workers. Now this has always been true, except historically speaking, those the capital that has been liberated then goes to fund new goods and services. So the deflationary tech this is talking about from here moving forward, capital liberation, savings flow to new opportunities. Yet machines, not people, now satisfy much of that redirected demand. This is one of the reasons that globalism has been so unpopular, is because it's like, yes, we have made things, We've made goods and services cheaper by offshoring our manufacturing to China. But now all those jobs are in China. And so with labor arbitrage, you guys still don't have that much more money. And then with automation on the rise, guess what? We have the machines generating as much of the wealth as possible. So again, you workers are kind of up the creek without a paddle. So what I call this is the anthropocentric fallacy. No natural law says that emerging markets must be staffed by humans. Economic physics is agnostic to species. Basically, there's no reason that new new jobs, jobs or new work must be done by humans. It's always like, it can always be done by machines. Now some people will say, ah, yes, but you know, but what about this? And I say, imagine your ideal life. Like what percentage of the things that you want and need in life actually require a human? Like first principles, laws of physics, how much of what you want, needs, like, fundamentally requires a human to participate. Like take this house for instance. I love living in this house. There is no physical law, There is no economic law that says this house must be built by humans. It's entirely possible to build it entirely with robots and AI. So under, under what is hypothetically possible with automation, eventually all those construction workers completely out of a job. Just as an as an example labor substitution. Even when fresh roles appear, AI and robotics rush in, displacing labor before headcount rebounds. So this is actually seems to be where the consensus out in my audiences is that we're probably going to see a camel's hump of jobs where the until. Until the point where AI and robotics are good enough to replace everything, they probably will create a few more jobs in some respects. But that's basically just going to be the people deploying the AI and robots. But then as soon as the AI and robots get good enough, those jobs are going to go back away very quickly and this dislocates the need or the the efficacy of legacy KPIs. So employment and neat rates lose relevance in an automated era, underscoring the need for ownership centered centered gate, the ownership centered gauges like AI. Basically everyone's going to end up being a neat or maybe not everyone, but many people. So with all that being said, thanks for watching to the end. Episode four will be interventions and solutions. So this will be on Monday morning. You show up and you say, all right, we're bought into post labor economics. What do we do first? I'll see you there. Cheers.
Technology lowers costs and frees capital for fresh demand. But nothing in economics guarantees those new needs rely on human labor. As automation scales, employment metrics shed their power to gauge prosperity. Episode four will be interventions and solutions.
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