I gave it a quick scan. It is interesting but fundamentally flawed. I say this as the one person I know of who has studied the "Luddite" myth to death. Sachs and Kotlikoff make the assumption that just about everyone makes: that machines are "labor saving". This is wrong. Machines do not * save* labor, they *displace* it.
Sachs and Kotlikoff actually do talk about one form of displacement -- from one kind of worker to another kind. In this case it is from "less skilled" workers to "more skilled" ones (although it might actually be from labor market outsiders to insiders). This is, however, only a secondary displacement. Their "solution" to the problem that arises from that secondary displacement demonstrates that they are unaware of the nature of the other and primary form of displacement, which is essentially a substitution of fuel consumption for labor. The substitution of fuel for labor is cost effective only to the extent that fuel is cheaper than labor. Currently, the relative cheapness of fuel results from the shifting of the social and environmental costs of extracting and burning the shit. Sachs and Kotilikoff discuss the machines as if they run on some mysterious unknown substance. Clue: 85% fossil fuels at present. Among the words that do not appear in their paper: energy, climate, emissions. I repeat machines DO NOT *save* labor. Nor do they *substitute* for labor. The consumption of fuel does that. The machine merely facilitates the substitution of (massive amounts of cheap) fuel for labor. And the fuel is cheap because it's full cost is not incorporated into its price. No matter how "smart" a machine is, it cannot transcend the laws of thermodynamics. Economists, however, believe that they can evade those laws by substituting "math" for the mechanical analogies that the math represents I won't go into a great deal of detail, having already mentioned the word that don't appear in the paper, but note the "model" employed by Sachs and Kotlikoff: The model is a variant of the standard two‐period overlapping generation > (OLG) model. The production function depends on three inputs: machines M, > unskilled labor L, and skilled labor S. Note that the machines in this "production function" do not require inputs of energy! They are perpetual motion machines! Who knew? It's a good thing that the machines run on mathematical notation because if they ran on electricity or gasoline and employed transmission gears and all that shit then there would be the mathematically embarrassing fact of mechanical efficiency to cope with. Mechanical efficiency? What's that? Exactly. Here's the embarrassing part: S & K's "mathematical model" is, essentially, a mechanical analogy that "abstracts from" (ignores) basic mechanical principles. A complex machine is a combination of simple machines. The mechanical efficiency of the complex machine is calculated by multiplying together the mechanical efficiency of the parts. Mechanical efficiency is * always* less than 1. Therefore, ceteris paribus, the more complex the machine the less efficient it becomes mechanically -- that is to say the more waste heat and wear it generates. The bottom line is that S & K's paper is ecologically vacant. On Sat, Jan 12, 2013 at 6:21 PM, Eugene Coyle <[email protected]> wrote: > Is this paper worth a read? And if so, is reading it worth half a sawbuck? > > > Smart Machines and Long-Term Misery > Online access to NBER Working Papers denied, you have no subscription > > Jeffrey D. Sachs, Laurence J. Kotlikoff > NBER Working Paper No. 18629 > Issued in December 2012 > NBER Program(s): PE > > Are smarter machines our children’s friends? Or can they bring about a transfer from our relatively unskilled children to ourselves that leaves our children and, indeed, all our descendants – worse off? > > This, indeed, is the dire message of the model presented here in which smart machines substitute directly for young unskilled labor, but complement older skilled labor. The depression in the wages of the young then limits their ability to save and invest in their own skill acquisition and physical capital. This, in turn, means the next generation of young, initially unskilled workers, encounter an economy with less human and physical capital, which further drives down their wages. This process stabilizes through time, but potentially entails each newborn generation being worse off than its predecessor. > > We illustrate the potential for smart machines to engender long-term misery in a highly stylized two-period model. We also show that appropriate generational policy can be used to transform win-lose into win-win for all generations. > > You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery. > > Information about Free Papers > You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy. > > If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access. > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l -- Cheers, Tom Walker (Sandwichman)
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