What remains scarce after AGI? – Alex Imas and Phil Trammell

Human involvement carries intrinsic value

The 'relational sector' comprises goods and services where human participation itself constitutes value—such as healthcare, performances, or artisanal goods—potentially remaining scarce even after full automation of other sectors.

Empirical evidence reveals preference premiums

Experimental auctions demonstrate consumers pay significantly more for human-created art than AI-created equivalents, but this premium vanishes for mass-produced human goods, indicating value derives from perceived connection rather than mere scarcity.

Humans differ from horses

Unlike horses which were valued solely for outputs, humans provide intrinsic value through interaction itself, though this only sustains wages if consumers consistently pay premiums for human-in-the-loop tasks across sufficient economic sectors.

Historical stability masks potential fragility

Labor share has remained approximately 60% for centuries despite automation because network-adjusted supply chains still embed human labor and because labor and capital function as complements.

Zero labor share is theoretically possible

If network-adjusted capital share reaches 100% for automated goods while capital variety increases faster than relational goods expand, labor share could collapse to zero despite ongoing demand for human services.

Satiation creates ambiguous outcomes

Fully automating non-relational goods could drive their marginal utility toward zero faster than production rises, potentially reallocating wealth to human services—or eliminating labor income entirely if capital variety prevents satiation.

Economists have poor predictive track records

David Ricardo correctly predicted the automation of 1820s jobs but failed to anticipate new service-sector employment, illustrating the 'lump-of-labor fallacy' and the difficulty of forecasting structural economic change.

Scenario modeling outperforms point predictions

Rather than making specific forecasts, economists should map distinct scenarios—such as labor share dropping to zero versus full employment—to identify which observable data would distinguish between them.

Critical data gaps hinder analysis

Current frameworks lack measures of consumer demand elasticities for human involvement, necessitating a 'Manhattan Project for data' including conjoint analysis of willingness to pay for automated versus human-in-the-loop services.

The Mongolian economist fallacy

Analogous to a 1400 Mongolian economist predicting all wealth would flow to singers once transportation was automated, modern forecasters risk underestimating how capital variety expands demand faster than satiation sets in.

Moore's Law and value decline

The economic value of transistors has effectively halved every 18 months as supply outpaced demand, but AI may reverse this by generating infinite new uses for compute, potentially maintaining or increasing capital's share indefinitely.

Compute demand defies historical trends

Unlike declining transistor value, H100 rental prices have risen despite technological progress, indicating AI is creating sufficient new demand varieties to prevent capital satiation.