 This is Mises weekends with your host Jeff Deist Ladies and gentlemen welcome back once again. It's Mises weekends. We're joined by someone I'm sure many of you know our friend dr. Pear Bieland. He teaches at Oklahoma State University He specializes in obviously as a professor of economics, but also specializes in entrepreneurship In is a protege of sorts of our own Peter Klein He has written a couple of articles for mises.org of late about both AI and big data And with Mark Zuckerberg in Washington this week talking or testifying before Congress on on Data collection among other things. We thought it'd be a great time to bring him in so Pear. It's good to see you. How are you? Doing great. Thanks for having me on again. Well, it was a little disingenuous this week Don't you think to see members of Congress grilling? Mark Zuckerberg about data collection and privacy when these guys are supposedly in charge of oversight of things like NSA Mm-hmm. Yeah, the great irony that apparently the NSA is okay But if a private company wallet collects information that we give them then it's a big problem They don't want competition I guess right, but I noticed one thing you point out is that in the wake of some of these revelations about Perhaps Facebook's lenient leniency with your data Their share price has suffered as a result. There's a market mechanism a market correction at work Yeah, I mean there's there's nothing that punishes us harshly as the market the market is merciless if you make a mistake Then you you can be completely wiped out and that doesn't affect the government of course, but it affects all businesses well, there's a lot of discussion about Big data generally and whether supercomputers and algorithms and the emergence of AI can somehow change What what Hayek would call the knowledge problem in economics and allow us to plan things in a centralized fashion better Then we could before in in effect overcome Hayek's objection. So give us your thoughts about this Well, I mean that what I put in my means is the org article before was this being has this prediction engine for sports results Where they tried to predict the result of all these football games and ice hockey games and so forth and They run all the statistics available Everything they can they run it through very very powerful computers and they do machine learning and all this stuff and they get it right about maybe two-thirds of the time and And of course with all that data you should do better than just a coin toss And they do but they don't actually get closer than two-thirds And that makes sense because The past does not decide the future and doesn't matter how much statistics you have you still cannot tell exactly What's going to happen in the future? We're talking about people here. We're not talking about dead mass. I Just wonder if if the data revolution the digital age is going to intensify This kind of thought though among some of our friends in economics in other words You have this this great quote here you say there are no constants in human action I'm not sure that Keynesians believe that I'm not so sure that they don't think on some level that this stuff can't be modeled To the nth degree Yeah, I'm not sure about Keynes is I'm not sure what they believe actually but I mean for us It's pretty obvious that everything starts with Value and valuation and that is something that we experience directly through consumption and anyone who misses that Tiny little points which is still the sort of very fundamental if they miss that then they're gonna go wrong And they're they're doing that over and over and over again It seems like the the cult of the modern age is economic illiteracy Well, so you mentioned the the Bing experiment like predicting football NFL results If they're getting two-thirds don't the sports books in Las Vegas do that well or better I mean they have skin in the game in the sense that they're handicapping against their with their own money Yeah, they probably do a better job, but I mean what they're doing is not just run the data I mean the data the data are important, of course I mean you can't just neglect all the data and I mean a team that is better on paper Seems more likely to win over a team that is a lot worse But then there is there are a lot of other things involved as well I mean the weather do the do the psychology of the players Maybe one of the star players have had Personally shoes lately and stuff like that so they don't really play out there. They're at their best things like that But and those things are involved as well when when these bookies put the odds on games and stuff like that But that's not part of the Bing engine and the machine can't understand that But it's this human element That Mises stressed Going on almost a hundred years ago now and it seems like it's missing in Amongst futurists, they think that they're going to engineer some better future Using using models using algorithms using data Yeah, absolutely, and I mean what they do when they talk about AI and robots building robots It's very fashionable right now to talk about how that suddenly means that we don't have to work Which is I think it's a glorious thing. It's not it's not actually a problem But somehow they get from robots making robots to There's no scarcity And we don't need to prioritize anymore for some reason but machines they can produce stuff But they also need to know what we want and what we value because otherwise they're gonna produce the wrong stuff We're gonna end up with a lot of resources in the wrong places that that could be a disaster rather than What they what they predict that it's gonna be marvelous When Austrians of course talk a lot more than other Schools about the structure of production about the temporal element in all of this So we generally tend to think in terms of time, but then capital and labor and land From your perspective is AI Different is it a different from existing capital only in degree or is it actually some sort of qualitative? Different thing that that's going to need a new category and economics Well, it's not a new economic category. That's just ridiculous It's capital like any other capital. I mean might be Intelligent capital, but I mean our machines today compared to machines before are more intelligent in a sense as well I mean unless they become human sort of and they have a consciousness and they understand subjective value and things like that There's still machines and people will still need to direct them You need to produce this but not that because this is what we value without that I mean that they're just gonna guess and using big data and big data is Can get sort of close, but it's still it's not gonna be get as close as entrepreneurs with skins in the game skin in the game Well, we but we still have this fetish about unemployment Jobs rather than productivity of the economy. We've had periods of automation and mechanization in history Certainly in agriculture very few Americans today work in egg We've had this in factories assembly lines all of these shifts in the past haven't rendered us all Completely without work and and watching Oprah on the couch all day So do you think again? Do you think these these fears about AI and robots are overblown? Amongst among economists Yeah, definitely. I mean it's I don't see it as a big problem in transition is always a problem Because people are used to certain things and they have certain expertise and before they get are able to take on new types of jobs They can hurt On the other hand, I mean we're gonna end up with in the world with so such high standard of living because of this development That we don't have to work as much at all when people now are talking about it. Oh my goodness in the future We don't need people to drive Drive trucks across the country for 40 hours every week. Well Okay, but why would they first of all drive 40 hours a week? Why do they need full time in the sort of sense from the 1940s because that's what we're talking about, right? It's not even Necessary to work 40 hours a day. That's that's necessary because it's it's in in legal statutes that that's full time But nothing else. I mean imagine if if in the future We would become so much more productive and that's what we're really talking about here That because capital only makes labor more productive and with AI and robots making robots and so forth All we need to do as work is really to direct them to the right places We don't need to work more than maybe 30 minutes or an hour a week And that's not a lot but but we can still support a great Luxurious lifestyle working that little and I don't see that as a problem at all the the problem is the transition but somehow Keynesian thinking and the whole in the long term We're all dead sort of thing that we shouldn't what we shouldn't look further than the short term Means they're completely missing the point that after the transition. That's the real result and that's glorious. I Mean imagine how much more physical labor our great great great grandparents did in Agricultural societies back breaking physical work preparing meals cooking cleaning all day long Yeah, we surely we work far less than they did Yeah, no kidding. And I mean children as well children in coal mines were working 80 90 hours a week To help sustain the family Today what did what did children do? I mean they're they're out there with their iPhones trying to find these These Whatever they're called these Pokemon goes Yes, exactly those things and try to throw balls at them or or whatever in this virtual world That's what they're doing and they're going to school and being fed knowledge I don't I don't see that as a big problem really that that they don't have to go to the coal mines And what we're gonna see is the same sort of development into the future. It's just gonna go a little faster Well, we talk about the structure production. We talk about higher and and lower orders of goods Do you think AI or machine learning will will compress? The temporal structure of all this and in certain industries will it expand it How should we look at it in terms of where it fits? Also, that's a very good question. I'm not sure. I mean the introducing it to begin with is extending it pretty obviously Then I mean how to actually talk about different stages of production that sort of depends on what AI will take over and It might become very problematic if if we start to integrate production processes from the very start to the very end Which I'm guessing that these these people would prefer having an AI basically be be a In charge of Smashing rock to producing cars the same AI and then then sort of maximize that process Then we're gonna have a big problem because then we're not gonna use resources in the in the economic way at all We're gonna be economizing on the resources Well, there's this endless Debate in economics labor versus capital we might be capital is accumulated labor But nonetheless there are there are a lot of a lot of economists obsess about labor and what it's doing and the value It's creating and and this is actually of course one of the big criticisms of capitalism is that it supposedly Steals this surplus labor value. Do you think? AI is going to change the labor versus capital Debate do you think it's gonna play a role in it other than where there are you know always is concerned about jobs Yeah, I I don't know how it's gonna affect the debate because the bait is so confused so It might be confused in a different way. I suppose I mean people seem to believe sort of intuitively that Capital provides you with power and power over labor and power over Everything basically because you can buy the government and whatnot And I mean that's completely wrong So unless people start thinking about it the right way that capital is not power It is just a way of making labor more productive and producing value I mean if you own meger told us this already in 1871, I mean if you have a machine that can only produce Tobacco and people stop smoking that machine is worthless and it's the same with any capital So if you own a lot of capital the only reason That will will make you wealthy is that it benefits consumers So there's really no conflict here There's no conflict at all between between capital and labor capital really liberates labor That's what it does because it makes labor more productive Well, that said Dr. Beeland has a couple of articles on mises.org of late dealing with these very topics We will link to those and I think the takeaway pair is Maybe that there really is nothing new under the Sun and a lot of the things that manger and bombard virk and mises Explains still apply. There's no such thing as new economics over that pair. Thank you so much for your time ladies and gentlemen Have a great weekend Subscribe to mises weekends via iTunes you stitcher and SoundCloud or listen on mises.org and YouTube