Alex Imas and Phil Trammell – What remains scarce after AGI?
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Today, I'm chatting with Alex Imas, who is director of AGI economics at Google DeepMind and professor of economics at University of Chicago, and Phil Trammell, who is head of economics at EPOC and research scholar at Stanford. In general, in this interview, what I want to understand is what economics tells us about what we can expect in a world with more and more automation, more and more advanced AI, what that tells us about what will happen to wages, to labor share, what the best way to tax and redistribute the wealth that we generated as a result of AGI will be, and what kinds of things wil
Something like the relational sector, which is what I defined as, you know, basically services and goods where the fact that the human was in the loop was actually part of the value of that product. So because humans are naturally scarce, if we have automation where a lot of other things stop being scarce, we will still have scarcity in things that humans are kind of involved in and in the loop for.
I'm curious to understand whether humans doing services for other humans can never be a big part of the economy. And here's maybe one intuition pump. So in a world where AI can physically do anything humans can do, you know, there's this whole machine economy where they're like building factories and doing research and coming up with new ideas and humans may or may not be involved in the physical production of those things, but probably not given that in the ultimate limit, if robotics is solved, if you don't care about humans being involved in that process, why would humans be involved in tha
I would like to pitch kind of a rephrasing of that question. Sure. So I think my view is that kind of forecast that economists like us would make are not necessarily as individual forecasts like me and me and Phil are talking right now are not necessarily very useful. Useful. The reason I think that so there was this blog post by Andre, Fredkin, Brian Dobarian, and Andrew Coe that came out yesterday, actually, that looked at, like, kind of people's forecasts, economists' forecasts about the labor market. And what they found is that there's a ton of disagreement, like, every single direction. S
It's probably worth defining labor share and capital share real quick. So the whole economy, like the total sum of goods and services sold is either paid out to people in wages. Yeah. Or it's paid out to capital, which is to say that there's like rents on buildings and then there's shareholders of companies that we get paid out. And for many hundreds of years in the economy, 60 something percent of the economy, all the things that are sold in a given year basically gets paid out to humans and wages. And the other 40% gets paid out to people who own machines and land and claims on companies and
better? And it's like it really this was a call to our fact. Like right? So it's incredibly we should stress this. It's incredibly surprising. Right. That it's over 60% after the industrial revolution, after all of the automation we've ever seen. The fact that it it's almost like some people are worried it's an accounting error or something like that, that it's kept being been so constant. And, the fact that it's, like, been over 60%. And, you know, there's there's even a controversy right now. So some might say, like, you know, labor share has been falling in the last twenty, thirty years. Bu
Right.
In the last thirty, forty years. So for example, Andy Atkinson has this paper showing that actually, if you keep the accounting constant over the years, labor share hasn't even fallen ever.
But
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