The Craft Economy

Automation will bring massive change, what kind of change is up to us.

Human-level AI, robotics and cheap solar power are a self-reinforcing trinity that will collapse the cost of everything. I go into this in detail in my Abundance Essays. This may take a few decades but it is inevitable, and it is wise to prepare.

We all want this miracle of productivity to result in abundance for everyone, but how we manage and structure our economy during this transition will determine how prosperity is distributed.

The worst outcome

The movie Elysium is a cinematic portrayal of the worst outcome. In this future, the wealthy take their industrial capacity and automation and create a private paradise, while the rest of humanity is left to struggle, starve and suffer.

This outcome is more likely if terrible people are in power and are able to centralize the means of production in fewer and fewer hands. Hoarding the wealth generated by automation for themselves.

The Universal Basic Income (UBI) scenario

The UBI scenario is that countries decide to tax automation and/or wealth and redistribute that to folks as a regular income so that everyone has a base level of income that they can survive on.

This may come about sneakily by governments extending unemployment benefits indefinitely, or it could be an explicit new social program, but the results will be the same: A vast majority of people will be entirely dependent on a central entity for their survival. A vast majority of people will lose their autonomy.

People will advocate core it knowing there are trade offs, but in the face of widespread unemployment people will think it's our only decent option (it's not).

UBI as people's primary source of income will lead to tyranny. It may take 5 years or 200 years but human nature is human nature.Power will always be abused when power rests in very few hands; and there is no greater power than controlling the livelihoods of every one of your fellow citizens.

This future must not come to pass.

Problem is, people don't have an imagination for anything better. We'd need a system that preserves people's autonomy. A system that maintains the economic incentives that continue to push prices down as automation spreads. A system that makes space for people to have meaningful work and a chance at greatness. A system that leads to people being able to work as little or as much as they want depending on their desired lifestyle.

The Craft Economy

AIs and Robots will eventually be capable of all labor a human can do. Humanity may choose to retain the human touch in certain domains (childcare, education, healthcare, political leadership, etc) but a vast majority of goods and services will be cheaper and higher quality if they come from our digital and mechanical partners.

That said, the transition from today's economy to one almost entirely executed by automatons won't be instant. Certain parts of the economy will be automated before others. And the extremely cheap $2 kitchen chair and the $10,000 house will all be the IKEA versions of themselves. A mass produced, boring, utilitarian product.

People will always crave to express their individuality, and people have distinct and changing taste. This creates an ever-present demand for something that's not the IKEA version of things.

Humans can fill that niche.

People already make good incomes from selling hand-made ceramics, or custom quilts, or being writers, artists, podcast hosts, and Twitch streamers. The Craft Economy is "just" the transition of all human labor towards developing and selling their craft(s) of choice.

As automation drops the price of necessities closer and closer to zero, people who still have jobs in the old economy will have more disposable income to spend in the Craft Economy. The total income available for creators in the Craft Economy will increase dramatically; even as more people are dropping out of the old economy due to automation.

The combination of price collapse for necessities and more money going into the Craft Economy will mean the Craft Economy can support more people earning an entire liveable income from their craft.

There's no theoretical limit to how many humans can make a living this way.

Won't robots eventually replace even that labor?

Yes. Eventually. But it won't matter.

Computers have been better at chess than humans for a long time, yet more people play chess today than ever. There's more people making an income from chess than ever because of the content creators and celebrities of the chess community. People make income from teaching people chess and creating content about the chess community.

Even though computers are the best at chess, the arena for chess competition remains humans-only. It's obvious why, but the implications are important. People just like to play chess and they want to improve at chess and they want to compete against other humans. That's never going to change.

Eventually we'll get to a place that even restoring vintage motorcycles, making custom mugs, or making niche educational content will be better done by AI and robots. But the human desire for interaction with other humans will never go away. The desire to be good at something and be known for being good at something will never go away. The drive to own something rare (like the one-of-a-kind art piece painted by a particular person) will never go away.

The foundation of a Craft Economy is eternal so long as humans remain free to learn, create, and exchange goods and services.

The age of universal human flourishing

Imagine growing up 100 years from now in a world that has always known this level of abundance. A world where people only need to work 40 hours a year seling their craft to survive. But everyone works more than that because eventually you get bored just watching movies. Everyone has multiple hobbies and is generating income from at least a few of them.

People choose to work on what brings them joy. Some people choose hobbies that are more widely demanded (e.g. making entertaining videos) because they want to have a higher ceiling on their income. Some people still chose to be entrepreneurs because they want to continue to push the frontiers of. Other people choose to settle new worlds and spread abundance to every corner of the galaxy.

People will have choice, people will have meaningful work, people will flourish.

How do we make it happen?

The age of automation is underway but it is still very early. It will take decades to play out fully.

During that time we must help people understand what is coming, we need to help newly unemployed people discover their sale-able craft, and we need to create fair platforms and marketplaces for billions of people to earn income in the Craft Economy.

There will be labor shocks as new technologies and products start to take big bites of out the labor market.

This will manifest in two ways:

1. Big supply shocks as certain jobs are rapidly replaced with AI. This will look like a massive reduction in employees so that the remaining employee base can take advantage of the new AI-driven tool.
2. There will suddenly be very few job openings for certain roles as companies get more output from their existing employee base augmented by new tools.

The critical moments in our path to abundance and liberty will be when folks lose their jobs and/or struggle to find work for long stretches of time. In these moments we have to help people transition to the Craft Economy. This is a tall order because it's cold comfort to tell a 56 year old truck driver to start making mugs on Etsy.

That's why it's best to start helping people prepare for this future now. Help your friends and family by warning them what the future may bring. Ask them about their hobbies. Introduce them to platforms like Etsy or Twitch. Show people how to build a small presence on social media so they'll have someone to sell to.

Encourage people to sell just one thing every few months or so, it will make the whole enterprise seem less intimidating. That way, when we're laid off, they'll have more confidence in choosing to transition to the Craft Economy because they already have evidence it can work.

Push back on UBI

Those of us with the foresight to see what's coming have a responsibility to help others see the dangers of UBI and to paint a positive vision for how the world can be both abundant and free.

Flood the replies of existing content creators telling them about the Craft Economy, so that we change the imagination of the people that are currently talking about this. It won't come about unless we help people decide it's the right path.

Let's build a future we're exciting about.