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A PMC Revolt Will Hold Us Back From The Glorious Automated Future
I've heard a few variants on this. When Tyler Cowen was on Dwarkesh, he said that people will be the bottleneck to automation. His prediction seemed part mechanistic, but part hearkening to the Luddites, that automatable members of the PMC will band together to do whatever it takes to save their weak, deplorable skins. Pass destructive policies, regulations, restrictions, maybe even try to physically break the machines. A minor variant on the Woke Capitalist Wrecker, if you will; the PMC wrecker.
Some might be concerned that these sorts of predictions are a bit vague. What will they actually do? What will it look like? How could we watch events unfold and categorize what is happening? Of course, as the old joke says, fascism comes with smiley faces and McDonald's, so it's unlikely that their activities will be immediately apparent on just a surface glance. Thus, I will turn to the impetus for this post and submit that one need look no further than current events.
This morning at the gym, I listened to Phil Magness, an economic historian who specializes in tariffs, on Reason's Just Asking Questions Podcast. Then, when I got home, I read Alex Tabarrok's latest on Marginal Revolution. They both pointed out something that I had not realized. America still manufactures a lot of value. More value than ever before in history. In real terms. So why all the hullabaloo about manufacturing? Jobs. And why are jobs somehow impacted? It can't be that China has stolen all of the manufacturing value add from us; we've already established, from the data, that we're doing more of that than ever before.1 Nah... it's automation. We're manufacturing gobs more value with fewer human laborers.2
This is the backlash to automation. This is the "wrecker class" implementing destructive policies in response to being automated away. This is just what it looks like. It doesn't say it on the tin. The talk is always about jobs, but the blame is misplaced for why they're going away. It's automation. It can cause people to reach for whatever tool can possibly cause shortages and contract the economy, just hoping that doing so somehow reverses the impacts of automation. Nevermind that the intermediate steps are "cause shortages" and "contract the economy".
If you're worried about how the PMC will eventually sabotage the progress of automation or just want to find a way to model how humans might be a bottleneck on the way to a glorious automated future, one might need look no further than current events.
1 - Perhaps one wants to just compare total manufacturing value add. China does have approximately double of that than the US does. China also has approximately four times the population of the US.
2 - It also does not seem to be purely a population growth phenomenon.
The manufacturing "real value added" number is simply a terrible statistic that no one who cites it actually understands. For instance, U.S. has lost its competitive advantage in microprocessors to Taiwan, and basically doesn't manufacture motherboards, memory, LCD panels, etc, but because overall computer quality has made such incredible leaps and bounds a "quality adjustment" is applied to overall nominal dollar value added of whatever US manufacturing remains and that quality adjustment is basically responsible for the entire increase in manufacturing. Worse, they don't even apply the same quality adjustment to the inputs (value added is output minus inputs) so the entire number is just FUBAR. And the same thing applies to other categories -- automobiles, clothes. The number is just a train wreck.
I would like to subscribe to your newsletter. I'm not even kidding. I'm very sympathetic to the concern that quality adjustments are inherently difficult (Russ Roberts talks about this a lot), but if you have any further explanation/data to show that this is specifically a problem in microprocessors as an intermediate good and is of sufficient magnitude to significantly change the reasoning, I'd love to know more.
Here is a paper on the problem but it is very academic and too understated: http://inforumweb.inforumecon.com/papers/conferences/2006/RealValueAdded.pdf
It does deserve a more publicly accessible write-up. Here is a more accessible article writing a somewhat different critique: https://americancompass.org/no-us-manufacturing-is-not-at-an-all-time-high/
Meade's paper seems reasonable, in terms of an academic squabble. What I struggle more with is turning it into a coherent critique at the current moment, especially trying to reconcile it with your other statements and your other link. For example, you focused on quality adjustments, which as I mentioned, I understand there are some difficulties there... but Meade basically didn't talk about those at all. American Compass seemed to embrace something like real value added with their first two "grounding factors", while their third seems to me to be irrelevant. It also sort of randomly shifted to focusing solely on output, but included some bollocks claims like, "...BEA significantly overstates the growth of the computer sector (NIACS 334) because it assumes that when a computer doubles in speed due to Moore’s law that actual production doubled..." when their citations for this claim do absolutely no such thing. I'm just really struggling to scrap together a specific, coherent complaint that I can just go look at and see, "Yes, right here is where the actually-claimed numbers actually go bollocks, and now I can see that I should be interpreting this entirely differently."
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