Update: Kevin Drum doesn’t buy most of my argument. I don’t think we’re as far apart on this in the long-run, but I have more detailed thoughts here. As I commented:

0. I was probably over-idealistic about the science and art, etc. But not totally. Tangentially, this would end a lot of the slave labor across the non-Western world. Hugely important both for our conscious and their dignity.

1. Robot-owning capitalists have nothing without a huge consumer base; a falling cost of production and hence expanding supply-curve suggests more producer and consumer surplus. A poor mass won’t be good for anyone. This also informs the need of a new tax system, especially on land and natural resources.

2. The Luddites during IR were saying the same thing. And you can retrospectively explain why “this time is different” (the idea that machines enhance work while robots replace work – fair enough). The Luddites, back then, would also tell you why this was different than anything before.

3. On that note, just because we don’t know what the demand for labor will be. The job market of today would have been mind-boggling to somebody even twenty years back. We shouldn’t think we can predict it, let alone its extinction.

4. Unemployment can take two forms: of people, or of hours. I think we’ll follow the latter and, in the adjustment, this will be a hugely beneficial thing.

A few days ago, I popularly argued for the return of Ricardian principles towards land taxation. In the spirit of Matt Yglesias going strong on classical economics, this post is dedicated to the brilliant John Stuart Mill.

It’s unfortunately become fashionable to question Francis Fukuyama’s now-famous essay, The End of History. But some following the debate of our technological destiny probably can’t help feel the same nostalgia Fukuyama felt as the Berlin Wall came crashing down:

The end of history will be a very sad time. The struggle for recognition, the willingness to risk one’s life for a purely abstract goal, the worldwide ideological struggle that called forth daring, courage, imagination, and idealism, will be replaced by economic calculation, the endless solving of technical problems, environmental concerns, and the satisfaction of sophisticated consumer demands. In the post-historical period there will be neither art nor philosophy, just the perpetual caretaking of the museum of human history. I can feel in myself, and see in others around me, a powerful nostalgia for the time when history existed. Such nostalgia, in fact, will continue to fuel competition and conflict even in the post-historical world for some time to come. Even though I recognize its inevitability, I have the most ambivalent feelings for the civilization that has been created in Europe since 1945, with its north Atlantic and Asian offshoots. Perhaps this very prospect of centuries of boredom at the end of history will serve to get history started once again.

Every now and then, it seems, the blogosphere plunges into deep introspection of all that we think to be holy: technology, growth, and even utopian prosperity. Kevin Drum at Mother Jones has a piece about “Robot Overlords” and the more-optimistic Matt Yglesias can’t help but go long on beachfront property. A while back, I wrote about technology at the end of history, and I think I got one thing absolutely right:

Yet, when reading Fukuyama’s gripping essay years ago, I had one big qualification, a fleeting hope for the end of history. Ideological struggle is romantic for those of us who sit in comfort and liberty. For the scholars who write in the dimmed halls of Harvard. For the man of letters in Lamont Library; or better the Bodleian. For the precocious high schoolers who fawn on every dripping word from their history teacher.

But for the many who are in the throes of historical struggle, there is nothing poetic. For the Russians who were slave to the Gulag, the romanticism of Wilson’s To the Finland Station, is but a Western concoction of reality, beautifully written for the scholar.

Just as the post-Soviet world might feel anticlimactic to the likes of Fukuyama, in its end is very much an unabashed victory of liberalism (in his own words) that has lifted millions out of silence and poverty. Who am I to say that algorithmic perfection would be sad, after all, when I have fallen on the right side of inequality.

For the small actors in history, the girls murdered by Taliban and the dissidents silenced by Communists, the real victory would be a textbook of history blank after today.

Before I get to my concerns with Drum’s ambivalent consideration of the future, let’s establish who John Stuart Mill was, and what he believed. He was a child prodigy – a master of classics and calculus in his tweens. He is commonly known as a utilitarian philosopher (you can and should learn more from Michael Sandel, here). And though a student of Ricardian ideas, his Principles of Political Economy shook the core of economic debate at that time. The 19th Century philosopher was living at the height of what we might call Utopian Socialism: a fierce rejection of what Smithian economics calls “natural”.  The Panglossian lens which turned a blind eye to the cruelty of the factory system was, finally, under fire.

Mill’s brilliant, if two hundred years too early, insight was that the economic question was not distribution at all, but production:

Mankind, individually or collectively, can do with them as they please. They can place them at the disposal of whomsoever […] and on whatever terms. What a person has produced by his individual toil, unaided by anyone, he cannot keep, unless by the permission of society. Not only can society take it from him, but individuals could and would take it from him, if society did not employ and pay people for the purpose of preventing him from being disturbed in his possession. The distribution of wealth, therefore, depends on the laws and customs of society. The rules by which it is determined are what the opinions and feelings of the ruling portion of the community make them, and are very different in ages and countries, and might still be more different, if mankind so chose.

Mill’s obvious (and maybe even foolish) oversight is the disjointed treatment of distribution and production, which are intimately linked. The Laffer Curve is a full embodiment of this principle. But it’s an important point to make that incentive and entrepreneurial risk are not Adam Smith’s primary defenses of a free market economy. The role of risk and such was far more explicitly considered later by Joseph Schumpeter. Mill was wrong for his time. Punitive redistribution would have disincentivized the capitalist from creating the tractor, car, airplane, and assembly line. Indeed, as Harvard Business School innovation-man Josh Lerner argues here, business friendly practices in America allowed a lot of British basic research to be commercialized in the United States.

Let’s now fast-forward to Kevin Drum’s utopian dream. Natural resource constraints are solved by ultra-efficient technologies. Your hot shiny masseuse is a robot. Everyone has chauffeurs, maids, butlers, and secretaries. But we’re living in a post-employment world of deep inequality. Enter Mill.

To the extent Drum is right, the problem of production is solved in its entirety. Governments are free to subsidize lavish basic incomes and fancy roads because incentives are no longer tethered to production, which is on robotic autopilot. In fact, counterintuitively, inequality will no longer meaningfully exist in the post-scarcity world.

And what Drum ignores is, the Great Redistribution has already started. Our tax code was designed for a bygone era and, therefore, obscures the immense change technology has created in the past ten years. Redistribution in the form of pure consumer surplus. The web application system allows us, for the first time, to quench or materialistic desires for free.

3D printing is the logical extension of virtual surplus. Soon, we’ll have toys, books, furniture, televisions, and even education for free. Many who are on the computer all day, would pay thousands for Google. And many more thousands for Gmail. (By the way, this is why Robert Solow is wrong about the productivity statistics and, contra Drum, we’re not just “barely starting to see it”, but deeply benefitted for over a decade).

As productivity increases, before unemployment rates fall, the average hours worked will fall. Redistribution will occur in the form of more time with the family, easier weeks, more vacations, and more sleep.

And then the formerly-working masses will turn themselves to questions of higher importance: science, pure mathematics, abstract philosophy, art, and politics. Surely, as matters which by definition require high intelligence, many will fail. But the concerted and diligent effort, larger than ever before, to understand the human condition will surely create the most prolific intellectual work the world will ever have seen.

The government – finally! – can redistribute without worrying about incentivizing effort. Because the robots plowing our fields and flying our planes don’t care. They will work hard no matter what. And then our kids can each be educated as if at Phillips Exeter and Harvard. We will all dine as if in a Michelin star restaurant.

This is all in Kevin Drum’s thesis, that is. I’m not that optimistic. I do believe this is the future we asymptotically approach. But to the extent that production is still of material importance, the gloomier parts of Drum’s vision can never become true. This is the heart of my contention:

But it’s not enough. When the robot revolution finally starts to happen, it’s going to happen fast, and it’s going to turn our world upside down. It’s easy to joke about our future robot overlords—R2-D2 or the Terminator?—but the challenge that machine intelligence presents really isn’t science fiction anymore. Like Lake Michigan with an inch of water in it, it’s happening around us right now even if it’s hard to see. A robotic paradise of leisure and contemplation eventually awaits us, but we have a long and dimly lit tunnel to navigate before we get there.