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Culture War Roundup for the week of March 20, 2023

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Hypothetical scenario: the San Francisco Homeless Union approaches the Motte with a unique offer. We have the opportunity to trade with the homeless of SF; moreover, we've gotten a special dispensation from the government to allow us to trade with them without any regulations around wages etc. They've also been cut off from any direct government services. Although the homeless are far less effective than us at creating both widgets and symbols, this is our chance to use the principle of comparative advantage to benefit all the involved parties. We appoint you CEO: what do you do and how do we make a profit?

Answer: you run and we don't. Economic organization works by embedding information into the structure of the organization so that humans don't need to worry about it, but that requires abstraction. The leakier the abstraction, the less effective the organization, to the point where it becomes unprofitable as the costs to manage the leakiness outrun any possible economic value created. Actual existing homeless people can't provide a reliable enough labor abstraction to create any economic value.

Comparative advantage might always exist mathematically, but whether it results in trade depends on the costs of the trade. In my homeless example, there are management costs; the reason I don't hire a maid living in Manila to do my housework is (mostly) travel costs; and a hypothetical GAI wouldn't want to trade with humans if including us in its economic organization created more costs than economic value. (Granted, it would be better at designing systems to minimize those costs than humans currently are.)

This isn't a counterexample to comparative advantage. It's true that the opportunity cost of using resources to employ the homeless people can exceed the expected benefits, but that's still ranking according to opportunity cost: the opportunity cost of their employment relative to other uses of those resources.

I actually mentioned an example of such non-trades in the post you replied to:

Another possibility is that the expected marginal profit from hiring more humans falls below the minimum wage and the latter is not reduced, the marginal profit is not increased by subsidies etc.

Notice that this can happen for all sorts of reasons other than GAI, and the huge absolute advantage of the GAI does not create the non-trades.

To repeat, the law of comparative advantage doesn't mean that everyone gets employed. It means that rational people use their resources on the basis of an opportunity cost ranking, rather than an absolute advantage basis.