Yet another travel day, can't remember the last weekend I was home (no complaints though), so one more from Brad DeLong and that's it for awhile:
Physiocracy and Robots, by Brad DeLong: The physiocrats saw France as having four kinds of jobs:
- Skilled artisans
- Landowning aristocrats
Farmers, they thought, produced the net value in the economy--the net product. Their labor combined with water, soil, and sun grew the food they and others ate. Artisans, the physiocrats thought, were best seen not as creators but as transformers of wealth--transformers of wealth in the form of food into wealth in the form of manufactures. Aristocrats collected this net product--agricultural production in excess of farmers' subsistence needs--and spent it buying manufactured goods and, when they got sated with manufactured goods, employing flunkies.
In this framework, the key economic variables are:
- the fraction f who are farmers.
- the net product per farmer n.
- the fraction who can be set to work making manufactured goods that aristocrats can consume before becoming sated m.
The key equilibrium quantity in this system is:
(nf-m)/(1-f-m) = W
This gives the standard of living of the typical flunky--say, a runner for His Grace the Cardinal. The numerator is the amount of resources on which flunkies can subsist. The denominator is the number of flunkies. If this quantity W is low, the country is poor: flunkies are ill-paid, begging and thievery are rampant, and the reserve army of potential unemployed puts downward pressure on artisan and farmer living standards as well. If this quantity is high, the country is prosperous.
The physiocrats saw a France undergoing a secular decline in the farmer share f, and they worried. A fall in f produced a sharper decline in W. Therefore they called for:
- Scientific farming to boost n and so boost the net product nf.
- A reallocation of the tax burden to make it less onerous to be a farmer--and so boost the farmer share f and so boost the net product nf.
With the unquestioned assumption that there were limits on how high the net product per farmer n could be pushed, the physiocrats would have forecast that France of today, with only 5% of the population farmers, would be a hellhole: huge numbers of ill-paid flunkies sucking up to the aristocratic landlords.
Well, the physiocrats were wrong about the decline of the agricultural share of the labor force. And let us hope that the techno-pessimists are similarly wrong about the rise of the robots.