2 Answers sorted by
Jan 06, 2024
140I continue to think that, in worlds where we robustly survive, money is largely going to be obsolete. The thing that maximizes the terminal values of the kind of (handshake of) utility functions we can expect probably aren't maximized by maintaining current allocations of wealth and institutions-that-care-about-that-wealth. The use for money/investment/resources is making sure we get utopia in the first place, by slowing capabilities and solving alignment (and thus also plausibly purchasing shares of the LDT utility function handshake), not being rich in utopia. (maybe see also 1, 2)
1Jan 04, 2024
94Some people say to invest in land because land prices keep going up. But I can't help but wonder if there's a pyramid scheme element to this. In the end, we'd expect land to increase in value because people who need land get more productive and can therefore afford to bid it higher, but if the value of human labor drops, shouldn't we expect the value of land to drop too?
In the macroeconomic division of an economy into 'labor', 'capital', and 'land', 'land' is a rather misleading sort of term (similar to 'non-shared environment' in behavioral genetics). It's basically 'all fixed facts about the world which are not a human doing work or an improvement/change'. To quote WP:
In economics, land comprises all naturally occurring resources as well as geographic land. Examples include particular geographical locations, mineral deposits, forests, fish stocks, atmospheric quality, geostationary orbits, and portions of the electromagnetic spectrum. Supply of these resources is fixed.[1]
So when someone says 'maybe you should invest in land if AGI', what you're thinking is something vaguely like 'I should buy suburban houses or random patches of desert in Arizona because someone will buy them from me???'. It is indeed confusing.
But what you should actually be thinking is something like 'the price of a cubic meter of space in central Manhattan next to the stock exchange which minimizes latency for AI traders due to the fixed speed of light', or 'an acre of land in the Appalachians where the only ultra-pure quartz in the world can be mined and which is a critical irreplaceable rate-limiting input to the TSMC chip fabs churning out the most advanced GPUs which run the AIs', or possibly, 'an apartment building in Cerebral Valley where the handful of AI researchers still capable of meaningfully improving DL architectures will reside next to their office building and willingly pay rents of hundreds of thousands of dollars, because, with their annual incomes of hundreds of millions of dollars, they don't want to waste even an extra precious minute commuting to the office in the final days left'.
Essentially, in the slow takeoff, as there is a tsunami of 'labor' and 'capital' pent up behind a few bottlenecks, whoever owns those bottlenecks may be able to extract enormous profits. By definition those bottlenecks are now 'land' (because that's all that's left if you assume abundant 'labor' and 'capital'), and so something in it must become extremely valuable. Concretely, if the world goes into hypergrowth where all deployment and economic activity becomes gated by getting more GPUs, then if you control some unique resource for GPU manufacturing, you may be able to exact a toll of billions or trillions, like the quartz mines. You still produce the same quartz, but now it's worth vastly more because it limits growth, rather than 'labor' or 'capital' components. (Imagine in this scenario that each ton of quartz you sell is worth a thousand immortal von Neumanns - no quartz, no von Neumanns - you could probably charge a lot for it, right? Millions, at least.)
Hopefully put that way, it's more obvious both why 'land' might become super-valuable and also why you, as an individual, may have serious trouble investing in the right 'land'. (There is no 'land' ETF on Vanguard.)
In the end, we'd expect land to increase in value because people who need land get more productive and can therefore afford to bid it higher, but if the value of human labor drops, shouldn't we expect the value of land to drop too?
Will the value of human labour drop? The immense scale of economic disruptions in a future where there is widespread AGI makes the question itself hard to interpret. There are many theories of value that are relatively similar in modern economies but come apart in very different ones such as these hypothetical futures.
Regardless of that, I think that returns on any relevant capital investments would skyrocket for a while, followed by pretty major rises in rates of return on investment in whatever the new limiting factors turn out to be - very likely some forms of economic rents.
In the end, you presumably don't much care about returns directly in monetary terms, but in what it gets you in the new civilization. Goods, services, influence, security - whatever. I think land as a general rule is pretty unlikely to get less of these than it does now, and in some cases likely gets very much more - though as with any investment there will be risks.
This is basically an all-in bet on land, which I guess could be a great bet if land increases in value, but extremely bad if land decreases in value.
The value of land (other than farmland) depends wildly on its location: cities are far more expensive. Cities are currently popular for two reasons:
- High population densities and short distances make delivering a wide range of goods and services more efficient by shortening the lengths of pipes, wires, roads, and transmission networks.
- Having a lot of people working in the same industry in the same place produces social network effects and makes it easy for people to change employers without having to move.
Of these effects, 2. would go away, but 1. would remain (since of a lot of it is basic physics). So while cities would still be favored, they might become less favored. Thus the value of land might change. So I'd recommend against investing in land in cities where effect 2. is currently strong (like the SF Bay Area, Seattle, Los Angeles, New York) and instead investing in land either outside a city (but perhaps near one) or where 2. doesn't currently apply (such a currently-blighted city in the rust belt, say Detroit). Also allow for climate change and sea-level rise.
The text below is a confused ramble to illustrate where my mindset is at.
Suppose we condition on developing some kind of AGI that is reasonably controllable. In that case, the future is going to look a lot different from the present, as I assume the value of a lot of human cognitive labor is going to drop a lot. It seems like it would be wise to invest so one is in a reasonably good position for life, even in that case.
One investment option would be stock in AI companies, under the assumption that this stock would go up with AI. This seems superficially plausible, but I can't help but worry that it's dangerous to put too much money into this, as there's the whole "moat" problem; couldn't other organizations just make their own AIs, thereby driving down the price of the AI itself to ~0?
I'm not sure what else would be worth investing in. Maybe complementary goods or resources (I've seen chip firms mentioned sometimes), but are there any that can be known to predictably increase in value?
Some people say to invest in land because land prices keep going up. But I can't help but wonder if there's a pyramid scheme element to this. In the end, we'd expect land to increase in value because people who need land get more productive and can therefore afford to bid it higher, but if the value of human labor drops, shouldn't we expect the value of land to drop too? Do we think governments could somehow put in some policies to prevent this? If they could, presumably this would lead to economic distortions, but which distortions would be most plausible to occur?
I guess ultimately if the value of human labor drops to ~0, we'd need something like Universal Basic Income to survive. This would have to be funded by taxing whoever owns whatever is generating economic value, and the taxes need to be enforced with capacity for violence, which in turn requires some solid source of economic value.
If we speculate that AI companies are the ones that generate economic value, then this would look something like the state taxing AI companies and then using those taxes partly for UBI and partly for hiring them to make AI systems that enforce the taxes. But if the AI companies are all American, then it would be harder for EU countries to tax them.
I guess the standard take would be that due to uncertainty, it's best to have a diverse set of investments. Which I guess is logical enough, but I keep getting stuck on the issue of land here. Most people seem to first buy place to live in, and if I did that it would eat up all of my wealth and require me to get a loan. This is basically an all-in bet on land, which I guess could be a great bet if land increases in value, but extremely bad if land decreases in value. Since so many other people are making this bet, one could argue that the government will make sure it pays out; but if the government will be reliant on wealth taxes from AI companies in the future, then even that logic can only work out in countries that have their own AI companies.