From faulty premises

I assume that Vinod Khosla is a smart man. According to the byline under his recent Forbes piece titled “The Next Technology Revolution Will Drive Abundance And Income Disparity” notes that

Vinod Khosla co-founded Sun Microsystems and is the founder of Khosla Ventures, which focuses on sustainable energy and IT investments.

but the first couple of paragraphs get things so spectacularly wrong that his following “analysis” is effectively meaningless.

As the title indicates, this is another “The machines are gonna take all y’all’s jobs” piece. Let’s dive right in:

With less need for human labor and judgment, labor will be devalued relative to capital and even more so relative to ideas and machine learning technology.

This comes up time and again in such articles and always reflects the lack of understanding that that faceless “labor” is also the “consumer” of whatever output is produced. This is followed by a laundry-list of white-collar (but non-creative) jobs to make the point that:

However, if machine learning technologies become superior in both intelligence and the knowledge relevant to a particular job, human employees may be rendered unnecessary or in the very least, they will be in far less demand and command lower pay.

Machines with unlimited and rapidly expanding human-like capabilities may mean there will no longer be as much need to leverage human capabilities. In fact, there may be little for humans to augment or amplify even as productivity per human hour of labor increases dramatically all while far fewer people are needed for most tasks. This is not to say all human functions will be replaced but rather that many, and maybe even a majority, may not be needed.

At this point, alarm bells have to ring for any capitalist (and ideally for macroeconomists as well). For if there’s little need for humans in production anymore, than this implies under the current system that few people will still get paid. Which raises the obvious question: Who will consume the output of productive processes?
Unfortunately, this relationship never enters Khosla’s mind. Instead, he boldly predicts that:

I suspect this trend will persist and the demand for goods and services will continue on an upward trajectory.

Now, this is fascinating: immediately after predicting that the vast majority of humans will not be able to earn money anymore, he predicts that those same humans will continue to increase, not only maintain, their level of demand. Khosla continues to hammer this point:

What if machines, which may soon exceed the capability of human judgment, do most jobs better than humans even if people receive additional training?
Efforts at estimating the number of jobs that are susceptible to computerization underestimate how technology may evolve and make assumptions that seem very likely to be false, similar to past “truths” (like the waning correlation between productivity and income growth for labor). Even with this underestimate, researchers concluded that of the 702 job functions studied, 47-percent are at risk of being automated.
Will new jobs be based on human intelligence or creativity? It seems likely that the top 10 to 20-percent of any profession, be they computer programmers, civil engineers, musicians, athletes or artists, will continue to do well. What happens to the bottom 20-percent or even 80-percent, if that is the delineation? Will the bottom 80-percent be able to compete effectively against computer systems that are superior to human intelligence?

But never gets around to realizing that this, and the “income inequality” he predicts (notwithstanding the fact that income inequality has gotten steadily worse over the last 30 years without the need for ML) will undermine demand, in the same way that we have seen demand being undermined by the hare-brained austerity policies of the last 5 years.
So this self-styled “unapologetic capitalist” obviously doesn’t understand capitalism at all. Maybe he should have read Marx instead of only name-dropping him (alternatively Keynes, Kalecki, or Stiglitz would have been good options).

This entry was posted in belief systems, economic policy, standards of living, techno utopianism, technology assessment, wealth distribution. Bookmark the permalink.

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