Robots: Economic Implications

Mike Deering, Director of Singularity Awareness, shares his thoughts about the near future of robots and their potential effects on society.

Preface
Major automakers such as Honda and Toyota and electronics manufacturers such as Sony are currently putting a great deal of effort into the development of humanoid robots. Toyota has been developing industrial robots since the 1970s, focusing on boosting manufacturing efficiency. Toyota announced that they will have an industrial humanoid robot on the market by next year to work in factories and other uses. For current news on this, google: news Toyota robots.

In this article I am discussing the economic implications of the introduction of intelligent robots into the workforce. What I will not be covering is whether it is possible to make robots intelligent or how long it will be before that happens. Based on information from Ben Goertzel, James Andrew Rogers, and Peter Voss, all artificial general intelligence (AGI) developers, I expect intelligent humanoid robots to start showing up in factories and fast food joints as early as next year.

The development of intelligent robots is going to be disruptive, economically and socially. But it's going to be great also. Yes we will all lose our jobs but the price of stuff is going to drop like a rock. In today's economy being out of work is a bummer, but being out of work when you have the personal capability to produce all the things you need or want is not so bad. Actually there may be a small market for personal human service, but it will be a competitive market with few positions.

Lets stop for a moment and talk about why things cost what they do. Everyone has heard of supply and demand, but beyond that, you obviously can't sell something for less than it cost to make it. Robots can make more robots, which can in turn make more robots in an exponential progression, so supply will rapidly exceed demand. Therefore prices should drop, but we still have that nasty "cost to produce" issue. In the "cost to produce" of a consumer product there is labor costs, raw materials costs, machinery and facilities usage cost, and intellectual property (IP) costs. With robots doing the labor, the labor cost drops to zero and the cost for usage of the robots is moved into the machinery and facilities usage cost. The raw materials cost consists of the cost of mineral rights (usually small), cost of labor (zero if using robots), and the cost of machinery and facilities usage. And the cost of machinery and facilities usage is the amortized cost of purchasing the machinery and facilities, which are themselves products. So we have a rather circular process here. With robots doing the labor, the cost to produce products is the cost to produce other products. So, what does this mean? Simple. The more manufacturing capability that is in the economy, the lower the cost of the products it produces. When robots can make more robots and manufacturing capability explodes exponentially, prices will drop to almost nothing.

What can we expect when the economy changes?