If this is the wave of the future, it makes nonsense of just about all the conventional wisdom on reducing inequality. Better education won’t do much to reduce inequality if the big rewards simply go to those with the most assets....I think our eyes have been averted from the capital/labor dimension of inequality, for several reasons...But I think we’d better start paying attention to those implications.So does Kevin Drum:
Here's what I mean. It's quite possible that, say, 50 years from now the production of nearly all goods and services will be automated. And this might usher in a golden age...But what happens while we're busy getting there? Answer: the owners of capital will automate more and more, putting more and more people out of work...The rest of us will have no jobs, and even with all this lovely automation, our government-supplied welfare checks will be meager enough that our lives will be miserable.And 60 minutes. And so does the Financial Time’s Izabella Kaminska, who’s been writing a series of posts on the influential FT Alphaville blog for more than nine months on the influence of robots on the economy and whether or not an economy can handle no scarcity. FT Alphaville requires registration, but fortunately Kaminska has collected links from across the world of economics and journalism as people attempt to hammer out this problem.
“One of the criticisms I face all the time, meanwhile, is that all this tech innovation has been going on for centuries. Why should there be a crisis of capital now? What makes this time any different? And what makes my sudden focus on tech relevant?Some think the revolution is already in progress. Forbes thinks China may be one of the first victims.
For starters, what I feel is new is the idea that the financial crisis was born out of the tech crash. If not for the dotcom bubble, we would not have had the conditions to create the subprime crisis. The China outsourcing phenomenon and imbalance situation may also have been born out of a need to replace mechanised labour — which compromised capital — with human labour, which still ensured profit and the preservation of capital. It was in a sense, an artificial scarcity response… designed to spread spending power to secure return on capital, rather than extinguish it.
[If] West not outsourced labour as extensively back in the 1990s…. the West may have been Japan-ified much earlier on.
But what really makes this time different, I would argue, is that a lot of the competition is now coming from a) the voluntary and crowd sourcing/open source arena and b) it’s only artificial scarcities (patents, monopoly interests) which are preventing complete democratisation of technologically-fueled abundance across the world. It is thus because monopoly power is slipping, challenged as it is by free alternatives rather than cheaper ones… that the crisis is beginning to manifest.”
This is not a race against the machines. If we race against them, we lose. This is a race with the machines. You’ll be paid in the future based on how well you work with robots. Ninety percent of your coworkers will be unseen machines. Most of what you do will not be possible without them. And there will be a blurry line between what you do and what they do. You might no longer think of it as a job, at least at first, because anything that seems like drudgery will be done by robots.
You’ll be paid in the future based on how well you work with robots. Ninety percent of your coworkers will be unseen machines.That doesn't make any sense at all. Who "Works well with robots"? Only a slim percentage of the population is skilled enough to program and design robots, and even then - you only have to do that work once.
Over the past decade, though, incomes and living conditions have improved throughout Asia and Africa. So perhaps robots only exist in Europe and North America?mean incomes have gone up in north America, just not median incomes, as most of the wealth has accumulated at the top.
Just create any effective corporate tax. Don't penalize automation.
As the Liberty lads o'er the seaWho will be the new King Ludd, I wonder...
Bought their freedom, and cheaply, with blood,
So we, boys, we
Will die fighting, or live free,
And down with all kings but King Ludd!
In other words, is it fair for a corporate that depends entirely on voluntary input for its capital returns, to suck up those profits entirely for itself? Or should that wealth somehow be shared amongst the collaborative community? Are these corporates becoming rentiers as some argue, or as others might counter social utilities, which need to make money to cover costs of operation and infrastructure.Her thought experiment was specific to the observation that capital flows are stemming away from industries of job creation and innovation and instead are chasing investments that depend largely on social contribution (see: some of the largest IPOs in the past few years). On top of which are investors who want to protect their wealth by investing in safe assets, which implicitly or explicitly, end up being purchases of government securities. So instead of creative destruction, you end up with net-net job loss. The government might as well step in in a more creative manner than simple welfare.
There is one potential solution. You could call it the “common agricultural policy” response. A model in which people are compensated by the government for staying out of the “financially compensated” workforce if their occupational field is oversupplied and suffering the effects of overproduction and capacity, and thus become free to deploy leisure time as they see fit with no need for compensation.
You’ll be paid in the future based on how well you work with robots. Ninety percent of your coworkers will be unseen machines.That doesn't make any sense at all. Who "Works well with robots"? Only a slim percentage of the population is skilled enough to program and design robots, and even then - you only have to do that work once.
So the way we're gonna try to solve the "who buys all of the stuff the robots make when no one can find a job and the only money is inherited money" is to produce just staggering amounts of crap for the overclass, to really just shower them with goods out of respect for their position, even if everyone else is starving.
What about robber barons? We don’t talk much about monopoly power these days; antitrust enforcement largely collapsed during the Reagan years and has never really recovered. Yet Barry Lynn and Phillip Longman of the New America Foundation argue, persuasively in my view, that increasing business concentration could be an important factor in stagnating demand for labor, as corporations use their growing monopoly power to raise prices without passing the gains on to their employees.What about them... The problem isn't that too much money is being invested in robots, it's that too little is. All of that capital that should have been invested in technology (and associated activities such as education) has instead been used to speculate on financial products, to decrease productivity by outsourcing, to consolidate industries to create monpolies whihc earn profits by rent or to create enormous pleasure palaces and purchase other non-commodities.
So the story has totally shifted; if you want to understand what’s happening to income distribution in the 21st century economy, you need to stop talking so much about skills, and start talking much more about profits and who owns the capital. Mea culpa: I myself didn’t grasp this until recently. But it’s really crucial.The robot issue is a tangent and this post totally misses the point...
It's not fucking robots.Ever since I first saw Blade Runner thirty years ago, that's exactly the kind of robots I've been waiting for.
notyou: If only there were some way to democratize ownership of the means of production....without the power ending up even more disproportionately in the hands of the ruthless elite.
Initially, the Mincome program was conceived as a labour market experiment. The government wanted to know what would happen if everybody in town received a guaranteed income, and specifically, they wanted to know whether people would still work.It continues from there, going into detail on how none of happyroach's predictions about himself or about people in general came true for the people of Dauphin, Manitoba. I don't think it's because the people of Dauphin are more virtuous than other people elsewhere. I think it's because people aren't worthless.
It turns out they did.
Only two segments of Dauphin's labour force worked less as a result of Mincome—new mothers and teenagers. Mothers with newborns stopped working because they wanted to stay at home longer with their babies. And teenagers worked less because they weren't under as much pressure to support their families.
Most likely though, in this socialist utopia, the arcology bureaucracy will decide I'm not contributing according to my ability and put me to farming tomatoes on the local low-impact organic community farm. My creativity in hoe wielding will justify my existence.Yeah, this started out as a thread about how people might be having trouble finding work is because automation is making broad categories of human labor unnecessary. This is... problematic... when the dominant economic and ethical systems demand that most people justify their existence to others through laboring for others under the threat of starvation if they fail to do so.
Firms' autonomy to choose their products and production methods means they can communicate directly with customers and tailor their output to their needs — and with free entry customers can choose between the output of different producers: no agency needs to spell out what needs to be produced. To illustrate the relative informational efficiency of this kind of system, Stiglitz cited a Defense Department contract for the production of plain white t-shirts: in the tender for bidding, the physical description of the t-shirt desired ran to thirty small-print pages. In other words, a centralized agency could never learn and then specify every desired characteristic of every product.viz. When governments become banks (via)
Meanwhile, East European economists realized that an essential precondition for firms to be truly autonomous was the existence of a capital market – and this helped explain the failure of Hungary's market-oriented reforms. In seeking an explanation for the persistence of shortages under the new market system, the Hungarian economist János Kornai had identified a phenomenon that he called the "soft budget constraint" — a situation where the state continually transfers resources to loss-making firms to prevent them from failing. This phenomenon, he argued, was what lay behind the shortage problem in Hungary: expecting that they would always be prevented from going bankrupt, firms operated in practice without a budget constraint, and thus exerted limitless demand for materials and capital goods, causing chronic production bottlenecks.
But why did the state keep bailing out the troubled firms? It's not as if the Hungarian authorities were opposed to firm failures on principle. In fact, when bankruptcies did happen, the Communist leadership treated them as public relations events, to demonstrate their commitment to a rational economic system.
The ultimate answer was the absence of a capital market. In a market economy, a troubled firm can sell part or all of its operations to another firm. Or it can seek capital from lenders or investors, if it can convince them it has the potential to improve its performance. But in the absence of a capital market, the only practical options are bankruptcy or bailouts. Constant bailouts were the price the Hungarian leadership was forced to pay to avoid extremely high and wasteful rates of firm failures. In other words, capital markets provide a rational way to deal with the turbulence caused by the hard budget constraints of market systems: when a firm needs to spend more than its income, it can turn to lenders and investors. Without a capital market, that option is foreclosed.
As resistance against Communism rose, those in Eastern Europe who wished to avoid a turn to capitalism drew the appropriate lessons. In 1989, the dissident Polish reform economists Włodzimierz Brus and Kazimierz Łaski — both convinced socialists and disciples of the distinguished Marxist-Keynesian Michał Kalecki — published a book examining the prospects for East European reform. Both had been influential proponents of democratic reforms and socialist market mechanisms since the 1950s.
Their conclusion now was that in order to have a rational market socialism, publicly-owned firms would have to be made autonomous — and this would require a socialized capital market. The authors made it clear that this would entail a fundamental reordering of the political economy of East European systems – and indeed of traditional notions of socialism. Writing on the eve of the upheavals that would bring down Communism, they set out their vision: "the role of the owner-state should be separated from the state as an authority in charge of administration... [E]nterprises... have to become separated not only from the state in its wider role but also from each other."
The vision Brus and Łaski sketched was novel: a constellation of autonomous firms, financed by a multiplicity of autonomous banks or investment funds, all competing and interacting in a market — yet all nevertheless socially owned.
On the one hand, government must produce unlimited amounts of debt to meet the financial system's demand for safe assets, and allow the central bank to exchange this debt freely for new money. But on the other hand, they must maintain strict control of inflation and government spending so that the safe assets they are producing remain safe... In the financial world, the purpose of government debt is not to fund government spending. It is to provide safe assets...also btw...
In the BIS model, each currency-issuing nation has a public savings bank - government - and a public fractional reserve lending bank - the central bank. The fractional reserve lending bank acts as lender of last resort for the savings bank - hence debt monetization. And it is itself backed by government, because as a last resort government would use tax income to recapitalise the central bank. There are two massive assumptions underlying this: firstly, that central bank insolvency is never an issue because it can always meet its liabilities by creating money, and secondly, that populations can always be taxed sufficiently to meet all government liabilities including (if necessary) central bank recapitalisation.
Or perhaps, more accurately, welcome to the World Central Government. For if governments are banks, and are backstopped by banks, and exist primarily to serve banks and investors, then who is it who really runs this show?
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As for a race with the machines -- well, that's only for the people who own the machines. The rest of us just lose more ground.
posted by jb at 3:50 PM on January 14 [4 favorites]