The solution to average people becoming less relevant in the economy (which I don't dispute, btw) can of course never be to make everyone above average as that is by definition impossible.
It's a feel good message for average folk that papers over the truth, which is that average folk that used to make a decent living doing average work will become poor. All of them, eventually. How poor exactly? Well, you could do worse than to look at Chinese factory workers for an indication of where things will end.
Of course it's more complicated than that: if the average man has become as poor as a Chinese factory worker, he will no longer be able to afford expensive gadgets and value added services, so it'll be in the interest of at least some sectors of the economy (think Apple and Google) to keep the impoverishment of the middle class down to a minimum. On the other hand there are other sectors of the economy (think McDonalds and Walmart) that will do just fine even if everyone is poor, so it'll be interesting to see how this plays out.
But, like I said, this article is ridiculous. Giving everyone a PhD won't solve a thing.
"The solution to average people becoming less relevant in the economy (which I don't dispute, btw) can of course never be to make everyone above average as that is by definition impossible."
It's not as impossible as you might think. The idea here is to be above average in a specialty, not in everything.
It's even more within reach when you start thinking about how narrow a specialization can become. I remember Scott Adams's reflections on this... that you can become "elite" by being the very best at one thing (like Roger Federer at Tennis), or by by being good at an interesting blend of different things. The first is out of range for most people, but the second is a possibility for mere mortals. Scott Adams's personal reflection was that he was good but not great at drawing, telling jokes, and commenting on business, but all three together made his comic strip unique.
Even this approach will require a substantial amount of education and hard work, but it is a possibility.
The solution is none. There is no "solution" because it, in itself, is not a problem. The problem is that everybody feels entitled to a top 10% salary and many would kill for "their fair share" when nowadays even the lower 10% have their basic needs covered and some left for leisure.
The problem is that a society where everybody have similar incomes is somehow fairer, when there is no logical chain leading there and to top it off it causes ruination. Did cause it already just after industrial revolution, when this disparity in productivity first became natural, and does more and more now.
Having everyone highly educated would solve many things. Not salary disparity though, as it isn't a problem in the first place. The problem is having a significant chunk of the population hungry or homeless. This can perfectly be eradicated "even" with a higher disparity.
nowadays even the lower 10% have their basic needs covered and some left for leisure
Only really because of what's left of the welfare system, mainly Medicaid, Section 8 housing, food stamps, and the EITC; which I agree does help on the low end, but is increasingly being time-limited and rationed (e.g. Section 8 is hard to get into). The 10th-percentile household income in the U.S. is around $12,000. If that's all you had to live on, even in cheapish parts of the US it'd be quite a stretch to pay rent+food+transportation+healthcare out of that, especially for more than one person.
The problem is that a society where everybody have similar incomes is somehow fairer, when there is no logical chain leading there and to top it off it causes ruination.
Well, I've lived in both the U.S. and Denmark, which have very different levels of income inequality, and I wouldn't say Denmark has suffered ruination. There are pros and cons, of course. The logical chain isn't that complex if a society actually wants to implement it; it doesn't require some kind of communist revolution, just high and highly progressive taxes (including on capital gains), a national healthcare system, and a strong safety net.
That's what the first part of my reply is, isn't it? EITC, Section 8 housing, food stamps, Medicaid, etc., are where the extra money comes from. Which I agree is a good thing, and what makes it at all possible to claim that the 10th-percentile income is one that's possible to live on. But I don't think those programs are very secure (they've been significantly cut, many are hard to get into now if you weren't already in, and I think more cuts are likely), so the prospects aren't great.
Denmark's safety net is one thing, some whacko communist universal subsidy is another. Said safety net doesn't decrease disparity significantly, while giving some universal coverage for basic needs. As long as it's not a bigger burden to the economy than the alternative, I'd have nothing against something like this. I also believe the safety nets here in the UK are about right, in general terms. The government is still too big though.
Denmark's income inequality has increased during the last decades together with their living standard.
Notice the language there. "The situation has worsened" because the rich are now richer, even though the living standards have improved dramatically in all income ranges, somehow "the situation has worsened" because now the gap is 6 to 1, instead of 5 to 1 as it was in the 80s.
Did you really think a national healthcare system is a "whacko communist" idea? If you want to debate it's merits please do, but don't resort to petty name calling.
Nope. I actually take a National healthcare system for granted, ideally working under proper scrutiny. I'd rather have what we have here in the UK than what's in place in the US (as far as I know about it). I was talking about this other idea: http://en.wikipedia.org/wiki/Basic_income_guarantee
It's not a completely wingnut idea. I first bumped into it in Hayek, who was in favor of it and not much of a socialist.
The rationale works like this - given that some less-fortunate members of society will need assistance at some point in their life, and given that 'conservative' != 'asshole' and we don't want to just let them die in the street, we have to provide some form of limited welfare state.
Since we have to provide some form of limited welfare state, what's the best way to do it while preserving as much freedom as possible? We could set up a large government bureaucracy to do this, with rules and regulations and intrusive measurement for determining who can get what, or we could simply periodically cut everyone a small check.
Hayek thought the small check was a lot less harmful than the large bureaucracy. I'm inclined to agree.
It'd be better still if the government could get out of the welfare business altogether and leave it to our individual communities - I certainly don't mind that my synagogue dues are used to help our poorer members, and if my tax bill was lower, I'd have still more to donate. But that would require a cultural shift to make practical - it's a shame, but most people in America no longer belong to small, supportive communities.
My cynical opinion is that most voters would rather have their poor neighbors go through an intrusive welfare system than simply receive checks, even if the simpler system would be cheaper.
There’s a perverse sort of transaction going on: you receive welfare in exchange for abasing yourself in front of a bureaucrat, acknowledging that the bureaucrat has the right to decide whether or not you belong to The Deserving Poor, and admitting yourself to be Deserving.
From what I see, obtaining and then maintaining your welfare payments requires ongoing make-work... Standing in queues, applying for jobs you don't want or can't get, regular paperwork and meetings with some bureaucrat that hates their demeaning job more than you hate talking to them, doing employment courses (how to write a resume, how to do an interview, etc.) or skills training (that may cost money or debt, but often has zero chance of helping you get work), etc etc.
The system is abusive... Intentionally... it's goal is to "improve the numbers" by pushing people out of the system (onto the street, onto relatives, suicide, illegal jobs, whatever).
One of the reasons I'd ideally like (in that magic fairy land we can't get to from here) small, cohesive, homogenous communities to be the ones that take care of each other, instead of relying on some sort of centralized authority, is because it allows the community to set standards for morality and behavior - not just for the poor but for everyone. When you're dependent on a group, you're accountable to that group, and often held to a higher standard than you might hold yourself as an individual.
Wanting a bureaucrat to evaluate and judge welfare recipients worthy or unworthy is probably just that same desire for accountability - if you're drawing down the resources of a broader, nationwide group, you should somehow be held accountable to that group.
This isn't a bad instinct to have, but it's impossible to implement at the inhuman scale of federal and state governments - the welfare recipient doesn't feel particularly accountable to the abstract community of 'America as a whole', and 'America as a whole' has no shared standard to hold the individual to. So instead we get Byzantine shaming rituals that just waste everyone's time and money.
I was hoping the White House's Office of Faith-Based and Community Initiatives could lead to some interesting changes here, but unfortunately that's largely gone nowhere.
Oddly enough that's almost exactly the opposite of one of Hayek's justifications! He wanted a more individualist society where people were free to do their own thing, join/leave groups, etc., rather than feeling compelled to stay in their own tight-knit ethnic/religious/etc. groups, usually the ones they "chose" by accident of birth. And he thought one way that could happen is if the de-facto safety-net role played by those groups (e.g. the way the Mormon church has a strong safety net) was replaced by a basic state floor, freeing people to break ties with the tribalist groupings they didn't want to be in, but until now had felt compelled to stay with for safety or out of fear. Brief quote: http://www.kmjn.org/snippets/hayek79_minimumincome.html
I do think there's something to be said for cohesive groups, but moving between them is quite hard if there's no higher-level safety net from some more neutral source like the U.S. government. I know more than one person who wants to leave a church they don't like or believe in theologically, but stays because they're not sure how they'd replace its social/economic network. Especially the case with groups like the Mormons who combine a strong internal network with shunning of people who leave, making the drop-off in support you'd get by leaving seem like a daunting cliff.
"... or we could simply periodically cut everyone a small check."
And what do you do when they drink the check and once again lie dying in the street?
I really do agree with you - society can pay up to some point and no more. But at some point people must be allowed to die. For example, today I would not be opposed, in the case of cancer, to society providing payment for all necessary pain medications and hospice care to the point of death rather than paying for (surgery, chemotherapy, radiation) treatment. Lifespans would be shorter, death quicker but it is IMO a reasonable and far less expensive option.
Nobody really survives cancer although they may die trying. We need to terminate the cancer industry (but maintain cancer research). They are an industry selling pure hope with no significant probability of a cure today. They are a cancer on our economy.
And what do you do when they drink the check and once again lie dying in the street?
Not particularly much you can do in that case, no?
If we can manage it as a society in a sustainable way, people should be protected somewhat from bad fortune, whether it's from a ephemeral event or a bad roll in the genetic lottery. Protecting people from the predictable consequences of their own bad decisions is another thing entirely.
For many cancers this is simply not true. I know many people who are 5-10-15 years out from when they were declared cancer free after treatment. Should we have let them die when first diagnosed?
Maybe we should. We like to say you can't put a price on a life, yet our actions do not agree with our words. I'm sure any of us could come up with a long list of ways we indirectly place a monetary value on a life. The difference is we rarely acknowledge it out loud, and when someone does we collectively feign indignation that someone could be so callous.
It's time to end the hypocrisy and address these issues head on. Health care is so expensive because of insanely expensive treatments we use to extend the lives of chronic or terminal patients by months. It seems gravely immoral as a society to spend millions extending the life of one person while letting another die from lack of health care at all (whether or not the person is paying for it with their own money is irrelevant).
I'm not saying I know where these lines are, but we need to have this conversation.
If I learned one thing from my family of physicians (specifically pathologist parents), it is that anyone who makes broad, sweeping statements about "cancer" knows absolutely nothing about what they're talking about.
So no one survives cancer? I would say plenty of people survive B-cell chronic lymphocytic leukemia, since the average survival for a negative ZAP-70 is over 25 years and many people don't even get treatment for it because they'll die of other things long before B-CLL.
Educate yourself before making statements like "we need to terminate the cancer industry."
I agree with the general point that you can’t give a blank check for anything, but I think your specific point about cancer is off-base.
Some quick google-fu teaches me that in 2008, $90 billion was spent in the US on cancer treatment. During the same year, $2.4 trillion was spent on health care in general. Given that cancer is [at least as of 2007] the second leading cause of death in the US, this proportion doesn’t seem blatantly wrong; I would want society to tackle some of the other well-documented inefficiencies in our health-care system before cracking down on chemotherapy.
IIRC one of these inefficiencies is that terminally ill people who would rather get cheap palliative care than expensive, aggressive, and uncertain treatment... can’t get the cheap care covered by insurance.
My grandfather had stomach cancer in the 1960s, when he was in his 40s. He was very fortunate that it was detected quickly and removed successfully. He ended up dying of a heart attack in his 70s.
Nobody lives forever, but some people do survive cancer.
Make the 'cash' only spendable on a specific category of necessities. Such as rent, food, transportation, etc. But your creating bureaucracy to manage that, and people will find ways to get around it.
I come across this "salary disparity isn't a problem" comment every so often and need to call it out.
Salary disparity is definitely a social problem. When one person has the money of hundreds or thousands of others, they can wield significant power over them.
I have no problem with there being rich people, but I find it obscene that our society allows people to become billionaires.
> "Why should I be any happier when the AARP influences govt than Larry Page?"
For the same reason you should be happier that it's possible to win a Presidential election in the US with less of the popular vote than your opponent, as opposed to, say, a plutocracy simply choosing the winner.
Neither is great, but one is at least representative of compromise and shared values across a very large chunk of the nation where it's very unlikely they all share the same best interests.
Oh really? What is that power? The power to get govt to things on their behalf? There's your problem
No. That's one of the problems (others: cartels, influencing public opinion with your media, having people or ideas killed, using his money to buy influence with people, etc).
And you seem naive enough to think that somehow we could do with him not getting govt to do things on his behalf.
Maybe by reducing or eliminating the government? This is a sure-fire, tested way to have the rich guy and his friends have a free reign to anything with no stop gaps.
You seem to see it:
(1) government = some people with power, that they abuse or rich people can buy them.
It would help to also see it this way:
(2) government = the ONLY power that is elected and somewhat controlled by the general public and its will.
No, it's also a thing rich people and big corporations do all the time. Governments do that also on behalf of those people and their interests. Like, say, the did it for mr. Rockefeller: http://en.wikipedia.org/wiki/Ludlow_Massacre with the national guard. But rich people are also perfectly capable of doing it for themselves. In the same case, Rockefeller had an armed guard or his own killing people. Now, at least nowadays, corporations do it a little less in the US, but even US corporations have people "vanish" and be killed all the time, in Latin America, Africa and elsewhere.
You seem to think that that's a feature. It isn't - it's a huge bug. I have no interest in being "controlled by the general public and it's will".
Too bad, because it's either that, or a few guys controlling everybody else. Your country is not your playground, and nobody owes to you or anyone else anything from birthright or something. So everybody has to decide together.
If govt has power, it will act in his behalf, no matter how much you'd like otherwise.
Sure, it's a tradeoff. You give some people the power to act on your behalf in order to protect you from big bullies, and they might use it for their interests (or even for some of the bullies interests). Still, there is not other option -- except to give free reign to bullies and try to "protect yourself". Good luck with that. Their boss is a little bully, and still most people bend over backwards to accommodate him and spend their hours working overtime of fear they will get fired and end up on the street. If just your employee can do that to you, good luck with the real big bullies out there (from the health industry, to the banking industry, ..., to the mob).
The only option is that you give power to the government but you are vigilant about how it uses it (something of which we do a really bad job). There is no option b. It's not something it's up for some guy from Nowhereville to decide upon, as if he has some unique insight others lack -- it has been found to work this way since historical times and all over the world.
Govts kill millions (actually approaching 100M in the last 100 years) and you equate that with the equivalent of a weekend's worth of drunk driving. (And then there's Ted Kennedy....)
And no, it isn't "rich or govt". For all your bleating, Larry Page, Larry Ellison, and Bill Gates don't give a damn about me. Meanwhile, every pol wants a piece.
Your "only option" doesn't work, so it doesn't much matter what would happen if it did.
"Govts kill millions (actually approaching 100M in the last 100 years) and you equate that with the equivalent of a weekend's worth of drunk driving."
Governments kill millions? You seem to confuse governments with wars. Or you mean "kill millions of their own", like, say, Pol Pot? Then you confuse government with dictatorship AND civil war at the same time. Sure, dictatorship is a form of government, but we were talking about representative democracy here.
Historically, every time the governments have gone to war has been to make some rich people richer. It's not called the "military-INDUSTRIAL" complex for nothing.
And no, it isn't "rich or govt". For all your bleating, Larry Page, Larry Ellison, and Bill Gates don't give a damn about me
Exactly. But that's not in your favor. It's just that you are an ant to them, and they can crush you whenever they want if it serves their interests. From Bill Gates illegally bribing and extorting PC makers, to Larry Page using his search monopoly to pollute the results and crash the competition.
There's always an excuse when a govt kills millions.
> Historically, every time the governments have gone to war has been to make some rich people richer.
Not even close to true.
>> And no, it isn't "rich or govt". For all your bleating, Larry Page, Larry Ellison, and Bill Gates don't give a damn about me
> Exactly. But that's not in your favor.
Actually, it is. They don't bother because it doesn't "serve their interests". Govts do.
> From Bill Gates illegally bribing and extorting PC makers
to make more money and sell windows pcs for less than market rate. Wow, I was hurt.
The problem with the "buy a market" strategy is that you never actually finish. As soon as you stop buying and start trying to make "extra profit", competitors appear and undercut you.
You do know that breaking up standard oil INCREASED prices to consumers. It was basically a move by railroads to raise their rates.
> to Larry Page using his search monopoly to pollute the results and crash the competition.
You're seriously claiming that Google gets users by giving them worse search results?
I've never understood the argument of "allowing" people to become billionaires. Many of these people created things that changed the world. Should they be artificially limited even more on their income?
Billionaires don't exist without a state. Nobody toils for years in grad school and invests time and money in a new enterprise without the panoply of legal protections created by the state. Moreover, since the system of property rights enforced by the state is, like any other system of law, completely arbitrary, the specific people that get rich under a certain system owe their wealth to that arbitrary choice.
So the phrase "artificially limited" is a deep distortion of the underlying situation. It's not a matter of more versus less limitation in the legal framework. The income would not exist without all of the limitations that exist on other people in that framework. Rather, we're simply talking about points in a design space: one arbitrary set of choices versus another arbitrary set of choices.
Assuming that the laws are uniformly applied (which may not be true), they are irrelevant to the differences between people's incomes.
If Person A invents hoverboards and everyone buys them, creating billions in economic value, and Person B works at a gas station and creates a few thousand in economic value, they both reap proportional rewards.
No, Person A couldn't have succeeded without laws protecting him/her from theft and arson. But Person B also has that protection, so clearly the difference between them lies somewhere else.
If Person A has gotten billions in government aid through political connections unavailable to Person B, there's a problem. But a non-corrupt legal system is impartial, and therefore you can't attribute success or failure to it. If the system is corrupt, the solution is reform, not income redistribution.
The point is that, the particular rules of the system that reward person A with wealth is arbitrary. They essentially reward the genetic lottery and luck. Person A was able to invent hoverboards because of a million things in his lifetime lined up exactly right for him to be in the right place for his invention, most notably accident of birth and genetic lottery (genius, work ethic).
In a different time the rules would have rewarded the best hunter, still largely based on the genetic roll of the die. When you strip away the fallacy of the self-made man, you realize everything is arbitrary; who makes it big is greatly dependent on the rules of the system. Thus is makes sense for the system to have an in-built limit to how much it rewards any given individual.
> Assuming that the laws are uniformly applied (which may not be true), they are irrelevant to the differences between people's incomes.
That's not true at all. The law has huge impacts on how things are distributed. You're making an assumptions premised on how our existing system of property law works. E.g. "If Person A invents hoverboards and everyone buys them, creating billions in economic value..." Our current system is, of course, completely arbitrary.
Say Person A invents hoverboards, then Person W00001-W10000 engineer the production design, mine the raw materials, assembles them, packs them, transports them, and sells them. Say $4 billion in economic value is created as a result.
Objectively, all we can say is that the $4 billion in economic value is the product of that combined activity. If nobody transported those products to the market, there would be $0 of economic value. Apportioning "credit" for the resulting economic value, and thus income from the proceeds, is a completely subjective process. It is no less subjective just because we do it indirectly, through a system of arbitrary property rules that leads to a particular allocation.
Our system of property and contract law gives very strong protections to: 1) people who originate the last 5% of a valuable idea; 2) owners of capital. The "inventor" of the hoverboard almost certainly had 95% of the research already done for him, he just took the idea the last step forward. Assigning him 100% of the credit in the form of a patent is, of course, completely arbitrary. Moreover, in a capital-intensive business like manufacturing it won't be the inventor of the hoverboard that makes all the revenue from it, it will be the investor that supplied the production capital. Again, that's a completely arbitrary allocation.
That is not to say that there are not utilitarian reasons to prefer a set of rules that yields one allocation rather than another. Maybe giving the patent monopoly to the 5% guy yields more overall productivity than giving it jointly to the top 5 researchers who did the other 95% of the work. Or maybe we just do it that way because its the easiest system to administer. Either way, we're mired in utilitarian arguments, and whether its "fair" to "restrict" someone is wholly irrelevant to the discussion.
No doubt there is plenty of room to argue about the best system. But to say that our current system is COMPLETELY arbitrary, and that fairness is WHOLLY irrelevant to the discussion is dangerous hyperbole.
It would certainly be unfair, even cruel, to restrict everyone's income to the exact same amount, regardless of what they do. It would also lead to extremely low productivity. The fact that we don't do that isn't arbitrary.
Our current system has evolved, imperfectly, from common ideas about rights and incentives held by various thinkers throughout human history. Let's not talk as though it were the first thing vomited out of a random law generator.
That's like arguing we shouldn't oppose Internet censorship because censorship is just a kind of regulation and other regulations make the Internet possible.
Besides it's totally possible for billionaires to exist without a state or regulations. It's just that they would look more like feudal lords than the relatively benign fellows we have today. So it is a matter of limitations in the legal framework. It's just an issue of which limitations are appropriate and which are excessive.
Feudal lords were the state. They created and enforced laws, in a form that is quite recognizable to us today: http://en.wikipedia.org/wiki/Magna_Carta (this is an 800 year old document created in feudal England). Our system of property law can be recognizably traced back to laws of feudal England more than a thousand years old.
What you're thinking of is more along the lines of a warlord in a stateless place. Such a warlord would have a lot of relative wealth, but because such a society would produce very little wealth, would not be wealthy in absolute terms.
People who have a billion dollars wealth of wealth, in absolute terms, only exist in this country because you have 300 million people working in a highly organized system of divided labor. Without a state you'd have a society of peasant farmers and hunter-gatherers that had a fraction of the population (how many hunter-gatherers can you support in a territory of a size a single warlord can reasonably defend?) and produced a minuscule fraction of the wealth. The state enables, in a very fundamental way, the social concert of action that creates the wealth that billionaires reap.
My point is, in a stateless society, the rich and power become the state. If they have good sense, they will encourage order and economic growth but they will be the wealthiest members of their respective societies and above any laws they make.
You're right however in pointing out that in current society wealthy people depend on the state and so must support it, somehow. I just find your logic confused.
I don't see how the rules of society are an "arbitrary set of choices." The process of making law is not arbitrary; it's a conscious, directed process.
Which committee decides exactly how many million dollars a man is allowed to make in his lifetime? I nominate Hugo Chavez for chairperson; he's an international expert on these affairs and surely the Venezuelan economy's current state of double-digit inflation and economic contraction in all sectors (except for oil) are completely unrelated to his confiscatory policies. ;)
The people who already do this are called the government. They do this by setting taxes. Reducing salary inequality would be a simple case of raising and setting the right taxes and closing the relevant loopholes.
We can argue over to what extent their success is earned or simply random. Taleb would argue that it has much more to do with randomness than not, and in that case I fail to see how they have earned more than the countless others who attempted the same thing but were unlucky.
Not salary disparity though, as it isn't a problem in the first place.
Salary disparity is very much a social problem. Crime is correlated much more highly to income disparity than it is to income. Even poor-on-poor crime is correlated to overall societal disparity, it's not just rich people getting mugged and secretaries embezzling funds.
If the correlation between income disparity and crime rates remains despite a net drop in crime, how is that a refutation of inequality of disparity as a component to crime?
Wouldn't a larger drop in crime in more-equal countries than less-equal countries only re-affirm that though there are clearly other factors involved, inequality is still a component?
I don't actually know the numbers but I'd think it would be pretty easy to look and see whether crime rates are dropping uniformly, or if less-equal countries are seeing a lower drop than more-equal ones.
Sure. But since income disparity has soared in the last 40 years and crime rates have plummeted, even if they have plummeted everywhere, this indicates that inequality, if it has any effect at all, is likely pretty minor.
I think this would be near impossible to test for though. So many factors affect crime rates across difference societies, and different societies experience wildly different types of income disparity. Intuitively, I imagine places with smaller net income disparity but larger real income disparity (ie a city where everyone is relatively poor but some are destitute) have much more crime than places with larger net income disparity but smaller real income disparity (ie a city where everyone is relatively wealthy, but a few are unbelievably rich).
> "since income disparity has soared in the last 40 years and crime rates have plummeted, even if they have plummeted everywhere, this indicates that inequality, if it has any effect at all, is likely pretty minor."
The big problem with a simple comparison of the plot of inequality and the plot of crime, is that inequality and crime aren't evenly spread across demographics. The young are disproportionately on the losing end of inequality and the perpetrating end of crime. (Regardless of how poor they are and how rich their neighbors, the elderly simply can't flip a car anymore.)
If you had, say, a bulge in the poor demographic around 1970 and expected crime to increase with a rise in inequality, you would expect to see the spike in crime from 1970 to 1990 and you would expect to see it subside as that bulge grew older and transitioned out of the age groups that perpetrate crime.
So, again, we cannot trivially rule out inequality as minor just because a simple plot of crime rates and a simple plot of inequality do not suggest a straightforward correlation.
It's not impossible. Levitt discusses issues like this in Freakonomics.
Just because all crime falls over a period of time doesn't discount the effect. It doesn't even mean the effect of income disparity is minor. If the rate of crime falling in countries with a lowering income disparity is vastly higher than the rate of crime falling in countries with high income disparity, then that suggests a link that can be followed up on statistically.
>The problem is that everybody feels entitled to a top 10% salary and many would kill for "their fair share" when nowadays even the lower 10% have their basic needs covered and some left for leisure.
Nonsense. Everybody doesn't feel entitled to a top 10% salary: most would be happy with the kind of jobs that were commonplace a few decades ago before globalization enabled the economicly fortunate to sell their fellow citizens out.
Excessive salary disparity is a problem for any resource that is limited in quantity - land, for example. There's also many other issues that are substantially effected by income inequality. I'd recommend a look at The Spirit Level, a decent enough book on the topic.
I don't think you analyzed the problem accurately. I think it's a pretty simple demand vs supply problem. Too much supply of unskilled (or average skilled) labor, but not enough demand. What you describe is a symptom of the root cause.
Population control seems like one potential solution. Of course given the norms of most of today's societies, telling people they can't breed is not gonna work too well.
|nowadays even the lower 10% have their basic needs covered and some left for leisure.
What dream world do you live in? The bottom 10% have enough to live and leisure?! Where the heck did you get that statistic? And how much money, exactly, do you think people need to have their "basic needs" covered with money left over for leisure?
|Not salary disparity though, as it isn't a problem in the first place
Again, this is clearly based on your own opinion rather than any facts. If you were paying attention you'd see that having less income disparity leads to less crime, increased satisfaction within the population, better health of the population (and therefore productivity), decreased violence, decreased drug abuse, etc. Watch Richard Wilkinson for specifics: http://www.ted.com/speakers/richard_wilkinson.html
Income disparity absolutely is the problem. We shouldn't have total income equality, I don't think that is realistic, but we should set up our society so we can minimise it as much as possible.
It's not ridiculous but I think it wasn't very well presented. The argument isn't that everyone should have a PhD. That wasn't even mentioned. Access to higher education was mentioned but that means college in this context (most likely even an associates degree).
The argument being made in the article isn't about making everyone above average it's about shifting what average is. Times have changed but sadly education and job training for most people has not. The person who used to stand on an assembly line and pop rivets all day is no longer a middle class wage earner. Why? Because popping rivets "at scale" isn't a problem anyone even thinks about anymore. But for people who don't have any other marketable skills or education past high school this is a big problem.
All countries that have been around for a long enough period of time go through this, the US is young enough that we're entering the phase now and we do have opportunity to try to make things as good as we can for as many people as we can. This is not to say that we'll ever stop unemployment because we won't. Our focus needs to be on education and job training in a big way. If the digital/IT age is driving the global economy and a factory can comfortably employs thousands of people the US should be building those kinds of factories. Eventually the places the US outsources to will become too expensive and jobs (some of them) will move back to the US. This is already happening. The middle classes that have been and are being built overseas will by definition grow past the point where paying them to install glass screens in cases will be good enough for them.
I could be wrong, but he's talking less about "shifting" average to include a PhD, to shifting how average people are going to have to fend for themselves - which is to fight to be above average. As another commenter pointed out, this is impossible (if everyone's special, no one is), but it's also good to mention that you get to choose whether or not you want to be average. Sure, you can rely on being a cog in a machine, but if you do that, you just jumped into a super-competitive market dominated by machines and cheap overseas labor.
So, you can either relegate yourself to that fate or choose something different.
I believe his point was that there's a shift in the past could escape with being average because it was localized and there was less overall competition for jobs because of geographic limitations.
The math is that the market for average has been commoditized over 7 billion people + machines, rather than the 300 million people we used to. That brings the level of average much, much lower for certain types of works. So, the solution isn't to try and raise your qualifications level in a pool of average people, but rather jump in a different pool altogether, where your value as a worker is not so easily commoditized (knowledge workers, developing fields & emerging tech).
Actually, everyone can be above average if you have multiple scales. Some people could be above average at singing, others at mathematics, others at running.
The unfortunate losers in this situation are the people who are uniformly below average.
Specialisation is nothing new but I think what both the article and the grandparent really mean is that you have to be above average in your field of specialisation, e.g. being an average professional singer, professional mathematician or professional athlete is not enough.
Most people are average at everything. Even if you have multiple scales, it doesn't change.
For one, people are not willing to work in all the "scale field", even if they are above average (i.e: I'm above average at preaching. Too bad I don't want to be a priest).
Second, you can be above average in a field that doesn't matter (i.e: oh, I'm an above average haiku writer. Too bad nobody pays for this).
Third, most fields are so saturated but merely being above average doesn't matter anyway. (i.e: oh, I'm above average at singing. Too bad only the top 1% or less makes any money of it).
By above average he means specialised skills in a specific talent or skill. Thus being above average in that specific talent or skill; however below average in everything else. Division of labour.
There's another way to "raise" the average and it's already beginning to happen. It is the organization of workers into unions and other democratic labor organizations. It parallels the movements that occurred in the United States in the early part of the 20th century. Except it's happening in China (and other "globalized" competitors).
Chinese workers will not put up with unsafe, low-pay factory conditions forever, despite what everyone seems to think. Most of China's population doesn't have access to reasonable healthcare, for example, and many of these factory workers live in slum-like dormitories located on the factory campus. This is to say nothing of the literal death-traps that exist in day-to-day working conditions.
The Arab-spring is evidence that, even in the 21st century, or perhaps more-so in the 21st century, collective action can provoke change. It's odd why so many see the process of globalization as a race to the bottom. In the short-term, yes, but in the long-term, no way.
Transportation, energy and other transaction costs could make it costlier to produce in China what can be produced in the United States when labor costs approach parity. At worst, the workers in China and the "average" workers in the west will meet somewhere in the middle.
The unsafe, low-pay factory jobs will probably be replaced by robots before that happens. There are already a lot of cases for which Chinese workers are more economical than robots - but robots are more economical than low-pay Americans.
There's the problem of who will buy the robot-produced goods (and fund the robot factories), when the large masses earn shit because of being replaced by robots.
Henry Ford had a lot to say on this very matter of paying employees well in general.
when goods are produced by robots, goods will be so cheap that people with low wages will be able to purchase those goods. The higher the productivity of economy, the less people have to work.
increased productivity helps all of mankind. At infinite productivity, nobody has to work anymore...
not everyone can be above average, but a whole lot can. Just like currently a lot more than 50% earn less than average. You are confusing average with median.
But also, the context of the article seems to imply that he was thinking about international competition, so that "We will have the best-trained American people in the world." You just have to make sure the below average ones are somewhere else.
I'm sensing quite a bit of schadenfreude here, and no substance. Surely america can use its considerable resources to educate and train its populace to do work that will be in high demand in the 21st century.
Is your point that the "average person" is just too stupid to learn to do these jobs?
“Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly-line overhaul. New screens began arriving at the [Chinese] plant near midnight. A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day. ‘The speed and flexibility is breathtaking,’ the executive said. ‘There’s no American plant that can match that.’ ”
Ah yes, at midnight I'll just go walk over to my "dormitories" on my "plantation" and wake my "employees" and tell them to get to work harvesting cotton. In exchange for their 12 hour work day (and a comfy dormitory in which to live) I'll give them tea and a biscuit!
I don't understand why the "Average" American won't come work for me given these perks.
This is fascinating. I think the big (and scary) meta-trend is this:
The population is increasing and the requirement for people is decreasing.
This gap is made wider by increased birth-rates and better automation. More people are being born into a world where fewer are required. That is quite a scary thought. Computers and machines automate and replace people everywhere.
I have some anecdotal evidence of this:
At my last business we used to follow-up twice via email with all of the people who had not responded to a quote that we had sent them. We had 50-100 enquiries a day so the follow-ups soon mounted up. I tried every CRM and mail-list manager out there. I could not find one that would trigger an email from my Gmail account if a contact had not responded. I was spending 3-4 hours a day doing the follow-ups. So were my staff. It got to the point where I wanted to hire someone to do it. Eventually I learnt more about the software and read up on ruby on rails. I hired a small software house to help with the backend, built the front-end myself and a month later, a machine replaced the humans and prevented a new hire. That is just one job at a tiny 5-person company. At scale, computer-based automation creates huge efficiencies. The flip-side of that are huge deficiencies in employment.
In parts of the world where there is a lot of automation birth rates are basically either flat or declining below replacement level. Maybe this is a natural response to increasing automation or at least understanding there is a need for less people.
Do you have a citation or example of this? I've also read the opposite about Japan: that they are increasing automation in order to compensate for declining birth rates.
Not directly. Most studies look at it as automation making up for declining birth rates. There are a lot of studies that say birth rates go down with increased education, surplus goods and increased leisure time so it might be a chicken and egg thing.
> a machine replaced the humans and prevented a new hire
I think it's more the case that a machine made your small business more efficient and more likely to still be in existence a year from now. Was there really any benefit to have someone sitting at a desk performing a dull, repetitive task?
I think it's also a matter of what kind of world we want.
For example: Do you choose to use software instead of employing a person because you prefer the software, or would you prefer to hire a person but choose software because it is cheaper (which helps the company survive) and kind-of can do the same job?
If it's the first, there's a good reason to be scared. If it's the second, then market forces might eventually balance out and make hiring people an attractive choice again.
Ideally, tools such as computers will go back to being tools, "human helpers" and not "human replacements".
I do not like to think about an automated, antisocial world in which less and less humans are needed because machines have taken over. Isn't that self-defeating anyway? When did we start putting our tools above ourselves?
> Do you choose to use software instead of employing a person because you prefer the software
I think in the long run the software will do a much better job than a person. It's inevitable in my opinion. We are not even a century into computing and look what we already have achieved.
> I do not like to think about an automated, antisocial world
That is because you define your world as the action of going to work in order to receive food and shelter.
This does not necessarily have to be your world. I say we should leave this world to machines while everybody can go on to do what he is really passionate about.
Of course we need a different distribution mechanism of goods created by the machines. But that's a different question.
I think in the long run the software will do a much better job than a person
Software is good at doing a single, static, well-defined job many times. What people do much better than software is adopt to change, deal with unexpected events, and communicating with other people.
Anyway, my point is not that software isn't doing a good job, it's that there is a turnover point...
We are not even a century into computing and look what we already have achieved
Yes. No arguing that. But no trend ever keeps going in the same direction forever. It could well be that the diminishing returns for adding more software have already started.
That is because you define your world as the action of going to work in order to receive food and shelter.
No, I don't. You couldn't be more wrong about that.
This does not necessarily have to be your world. I say we should leave this world to machines
But do you believe this? Can we "leave the world to machines"? (or, to any abstraction?) Who controls these machines? They put all the worlds power in a few hands -- if we live at their whim, do they have your best interest in mind? And even if they do now, will they always have our best interests in mind? (if not, it is very unstable)
The problem reaches much deeper than just "the distribution mechanism". We already have a big problem with getting such basics as food all over the planet, and that's not because the mechanisms don't exist...
while everybody can go on to do what he is really passionate about.
I agree that would be great. We could do that already now. We could take care of the poor and un(der)employed people, step out of the consumerist mindset, and stop worrying and trying to control everyone's every actions. The problem is that it requires a shift in the mindset of people. Until we figure that out, I have very little belief in this "loving machine future".
Some people are in fact doing jobs they're passionate about.
What you should really worry about is a world in which a person can't do anything except consume entertainment and goods, because everything else is handled better by machines....
And what exactly is wrong with that? You've gotten 'consume entertainment and goods' confused with 'do absolutely anything they want'. Maybe that's making movies, or writing, or painting, or travelling, or maybe spending their time getting to know interesting people. And even if this person really prefers sitting at home watching TV (even though they haven't spent their energy at some demeaning, labour-intensive job), well, who are you to say that's a problem? Let people decide for themselves what they want to do. Increasing their free time and decreasing scarcity can only give people more options.
Some people really like producing something someone else can use. Especially if people then actually use it. There are quite a lot of people like that, actually. And such people would be absolutely screwed in the world you describe.
What's the point of making movies no one will watch? Is it worth writing if no one will read it? Painting if no one wants to see them? For some people, yes. For many, no.
If it's the second, then market forces might eventually balance out and make hiring people an attractive choice again.
It's definitely not going to balance out so that it becomes economical to hire people for today's low-skill jobs. At any given time, there will be jobs that machines are capable of, but that it is more economical to hire people for. However, the skill level required for those jobs is going to keep increasing.
> I could not find one that would trigger an email from my Gmail account if a contact had not responded.
You might want to look into a more powerful email client. Gnus (a part or emacs) could be programmed to perform such a task. Setting it up to download your gmail over IMAP and the running a process filter would probably do the trick.
It was only a few centuries ago that we paid this exclusive, elite upper class in society called scribes to write and transcribe things for us, because we weren't literate enough to do it ourselves. The parallels are pretty surprising today: we're paying an exclusive, elite class called programmers to write in the languages understood by computers. Software is eating the world, jobs are being displaced, and the demand for technical talent is as high as its ever been.
Scribes were reasonably well off, sure, but to call them an "exclusive, elite upper class" goes beyond stretching it. Scribes were decently paid clerks that worked for scheming, sword wielding thugs who only gradually became literate themselves.
I don't think we're an elite, upper class now either. We're decently paid clerks that perform an essential task for our scheming, private jet flying, yes, thuggish overlords that for now at least haven't become computer literate themselves. Yet.
But the day will come that they will have, or at least will have become computer literate enough to operate the software that has displaced us.
If that day comes after I've died, I don't mind. Otherwise it'll be a problem.
Is programming that elite though? wages seemed to have hardly changed in the U.K. in the last 10 years (accounting for inflation). Also programming pays a similar amount to other jobs requiring a degree and is certainly a lot less than jobs like accountancy, finance, law and medical doctors.
What no-one will talk about is: the economy never actually recovered from the dot-com crash. The last 10 years were a mirage built on debt. So now we need to deal with TWO aftermaths. And that is why economists say UK standards of living will revert to 2002 levels.
I don't know about the UK but in the US accounting, law, and medicine require appropriate licensing keeping supply low and wages high(er). But I dont think programming will ever reach the prestige of law/medicine since in the former you are engineering machines whereas in the latter you are engineering the human body and society, which will always be way sexier.
I'm just talking about supply and demand which should have kicked in if there is a shortage. Perhaps shouldn't have mentioned Doctors thing, which a different issue.
I saw an interesting chart, but can't find it now, that showed the average salary of programmers in the US hadn't budged in 10 years either... Hardly something you would expect if there was a true shortage.
Since I never pass up a chance for the joke: A lawyer or accountant with 30 years of experience is charging a lot of money or semi-retired... A programmer with 30 years of experience is likely unemployed.
I actually happen to know TONS of unemployed lawyers and accountants. There's quite an oversupply of lawyers. Not sure about accountants, but they are increasingly marginalized anyways.
Everybody can talk, but few people can be successful salesmen. Anyone could learn to play a musical instrument, but few people are actually doing it and even fewer people are good at it.
Related to scribes, even if mostly everyone knows how to read or write, that doesn't mean that book authors are obsolete. Writing novels and technical books is an endeavor that requires much more than simply being capable to read and write.
So I don't really get why this analogy is being made. Well, actually I do. It's for the same reason why recruiters are doing keyword matching on resumes.
The author's sudden and poorly supported conclusion doesn't really fit. Because people with bachelor's degrees have the least unemployment, it is imperative we pass a GI Bill to ensure everyone gets a bachelor's degree?!
He's getting the causality wrong. It's not because they have bachelor's degrees that they're getting jobs. They're getting jobs because they're (minimally) bright and (minimally) ambitious.
Printing 100 million bachelor's diplomas "solves" the unemployment problem in much the same way that printing 100 trillion dollars solves our financial problems: not at all.
Although your argument is perfectly valid, one should not underestimate the value of the Bachelor's degree as just a piece of paper. I'm not trying to be facetious but a lot of employers filter, and sometimes hire, applicants based on their education level. In these cases, some employers assume these people have the skills. The important point here is that skills can be acquired in post-secondary education or on your own. However if done on your own, you face a hurdle of not having the college degree.
I think he's right about many things there: manufacturing jobs are leaving and not coming back. Automation is becoming more and more advanced, particularly if you factor advances in robotics and ml since 2006 or so.
Things move faster and average just doesn't seem to cut it when you can manufacture excellence. Hell, lawyers and doctors will be next, how about faux ai that can write simple web apps or come up with good designs? Give generative models a few more years to advance, we'll see how far fetched that is. Some people will get very rich from all that. But that wealth will go to those who control what amounts to the means of production and they'll be able to defend those means with patents. I guess workers could strike back in the day, good luck with that now, the little guy has even less negotiating power.
All this to say, I think these trends and the shift they bring are going to be the most fundamental shift in economic organization since the industrial revolution. Not sure what the answer is, but I'm concerned that those in power dont even recognize the issues (they're not "nerds", as they say.) Time will tell, but I'm not all that optimistic about the average joes out there.
PS I wish the answer was everyone will start their own business, but honestly I just don't think that will be practical.
>how about faux ai that can write simple web apps or come up with good designs?
A major class of workers that software has a tendency of replacing is programmers themselves. Bespoke solutions are replaced by what used to be called shrink-wrapped applications. In the web area, look at how services such as Squarespace replace bespoke sites by providing easy to use site design tools.
I am that guy, the average programmer. I used to wire up mobile apps to back end services. I have had no interest in my services for over a year. I think I have been replaced by iCloud, urban airship, parse, etc...
Depends what you mean by average. If you've been programming in objective-c; that most likely means you understand memory management; small-talk style oo etc. Corporate Java programmers have forgot this stuff, yet they will always be in demand.
In the case of a "everything is automated, only a small portion of people are needed to produce essentials and even advance" society, would we just be better off with a system that relied on the altruism of the few to make the lives of everyone better and everyone else could just exist?
That sort of society has a slew of issues that could be better explored in futurist science fiction (things such as psychologic issues for the non-producers, the sustainability of altruism, etc.). But it is a consideration that I have thought about.
Capitalism isn't going to be subverted that quickly, though. The system will right itself and any revolution of that caliber will be long and hard fought. The world superpower will be a capitalist system in 2050 and probably 2100.
I think you're already seeing societies like this in North Western Europe: large numbers of unproductive, uneducated and essentially useless people are kept fed, housed and clothed as that is the humane thing to do, but their lives are absolutely meaningless and empty (mostly - there are of course people who can make it work for themselves). Occasionally they revolt, like they did last summer in England, but even their revolts are absolutely meaningless and empty.
I wouldn't be surprised if that's the direction humanity takes in the end (barring significant intelligence enhancements). The door is always open to work at bettering yourself and humanity, but if you don't want to right now that's fine too because the cost to keep you alive and happy will become so minuscule and because of the various moral arguments.
I've been telling people "Even if the holodeck gets invented and its fantasy worlds are more psychologically pleasing than this one, I still want to get off this rock for real." I may be underestimating the powers of wireheading but if it's not forced on everyone I think a lot of people will keep it to a relative minimum like entertainment is already.
My take on the modern job problem is that it's about reaching the point of super cheap happy-human care which might include a possible 90%+ unemployment rate, while avoiding or making as quick as possible the messy middle-area we've entered where unemployment is rising and there aren't enough people capable/willing to support the unproductive masses.
I agree with that. However, many of the wealthy tend to be equally useless, uneducated and ultimately unproductive - that they have money or engage in some sort of commerce does not change that.
but their lives are absolutely meaningless and empty
There is nothing "the economy" can do to change that, though. Feeling meaningful and full is a state of mind. And that goes more in the realm of religion and spirituality (and psychology) than materialism. It cannot be changed by any government intervention.
Some people have confused those things to the point of extremity. To take an extreme example on the other side, buddhist monks feel fine about themselves without being "productive" and hardly having any possessions.
Also, "useless" is very cruel thing to say regarding people. Who decides who is "useful" and "useless"? Can't we just as well say "everyone is useful" to make people feel better?
In a society that values economic productivity above all else, "useless" is a very accurate term. The challenge is to convince the economically "useful" people that have to pay the taxes that support these "useless" people to keep doing that, which will get harder and harder as the "useful" people see their purchasing power dwindle.
I'm not sure what the solution to this problem would be, but I do have a suspicion that more free market economics is not it.
There is nothing inherent in that people should value economic productivity above all else. That's the gospel of the industrial revolution, and it's not really valid anymore in the (post-)information age.
If you cannot be part of "economic productivity" then it is natural to look at other ways to feel good about yourself. "useless" is a value judgment that you cannot really make about other people and causes a lot of grief.
Anyway, I was just trying to say that these concerns are orthogonal to the macro-economy. I'm with you though, that more free market economics is not a solution to anything...
The economy does a lot to give people a delusion of purpose. If u r scared that ur kids will starve, or ur wife will go without healthcare, ur focus is now on survival. If I know that "the system will take care of me and my family", I will suddenly have a lot of free time. So I now need a philosophical or religious strategy to find meaning in my life. Just consider what is already happening in the so called services economy... a lot of it is pointless paper pushing coz we have not yet simplified it to the level necessary. Just imagine if the entire banking and insurance industry was replaced by a single web scale app with a few simple rules... u'd have a huge chunk of people sitting at home. All these people "remain busy" because of the economy... I wonder whether boredom or drudgery(hand everyone spoon instead of a shovel??) is better...
I thank many of the people in power do recognize the issues, which is why transforming education has become such a hot focus lately.
Broad advances in education were essential in allowing the "average" person to find employment in an industrial society; the modern average person is far, far more educated than they were 500 years ago when most average people were illiterate and farmed for a living.
We will need a new transformation in education to allow future average people to find good work within an information-based economy. This means, for example, that the average person might be able to program computers at an average level in the future.
I think he meant "ordinary" not "average". Average has a specific meaning and as many have pointed out, you can't make everyone above average.
What we've got to figure out is how to keep the large mass of ordinaries from being made into Eloi by a combination of welfare states, machine productivity, and wealth disparity.
Or, failing that, find a way to prevent the Morlocks from eating the Eloi when it suits them.
Infinity of dimensions, sure. But we're only talking about one of them: number of dollars of economic value you can create.
Whether you're an above-average Scrabble player is irrelevant to a discussion about work and wages. Unless there's something of economic value that you can do better and more cheaply than a robot, there is no reason for anyone to pay you.
I think a better way to describe it would be to say that in order to make sure you earn an average salary, you have to be above average at something, and more so than in the previous century.
Folks are harping on the meaning of "average," but it's clear to me that in the article, "average" here is a euphemism for "unskilled."
When you've been working as an semi-skilled laborer in a textile mill for 20 years, and suddenly your job is made redundant in favor of automation- your mill training becomes worthless. You don't need to become "above average," you just need to learn a different semi-skilled trade. Like pushing around excel spreadsheets.
It's a pretty good read. It has an interesting take on a future where machines do the majority of the work. With the way things are headed, I'd say a society like the one described in Player Piano might not be to far off. I'm still undecided whether that's a good thing or not.
a) corporate profits are up
b) hiring isn't happening, or is seeing a skills mismatch
then where exactly are all these profits going? If they're going to capital goods for the company, that just moves the question on down the line. If they're going to shareholders, then what are those shareholders buying? And if it's just sitting in the bank, where is the bank lending it out?
Many of the profits were earned overseas, and are being left there. If they bring the profits home to the US, they will be taxed. Essentially, the US is levying a tax on (certain) foreign investment, specifically investment by Google Ireland in Google USA.
Additionally, most of the private sector is deleveraging and building up cash reserves to use in lieu of debt financing.
Do you have numbers or references on the deleveraging point? I know that Google, Apple and Microsoft are sitting on vast cash reserves...but is this what is happening in the economy in general? If this is the case, then this is as far as I can tell good news. Debt serves a purpose, but if it causes systemic problems like we've seen in recent years then it should be kept low.
I don't know why you got downvoted (and your reply was certainly within the guidelines), but your answer left me with some questions: would profits left overseas mean that (well duh, but more so than otherwise) foreign consumer markets will pick up noticeably (and we therefore should be paying close attention)? And is there some specific reason the private sector is deleveraging? Have CFO's just gotten more spooked than before?
...would profits left overseas mean that (well duh, but more so than otherwise) foreign consumer markets will pick up noticeably...
No guarantee, but it's likely. If the overseas profits are invested, then yes. If it sits in the bank and is not invested, then maybe not.
From what I've read and seen, it seems that overseas consumer markets are increasing. Here in Pune, it's definitely the case. There are a ridiculous number shiny new apartment complexes advertised by pretty white ladies doing yoga, Centaurs, and claims that everyone will envy your opulence.
And is there some specific reason the private sector is deleveraging? Have CFO's just gotten more spooked than before?
The credit crunch is a very recent memory. If another one occurs, then any company that uses credit for cash flow could be destroyed. So yeah, hoarding cash is basically an insurance policy.
A lot of companies are just sitting on the cash (most likely in a bank account). Interest rates are very low right now, so there's not much incentive to lend the money out.
Often in treasury bills, as banks are too risky. Which is why treasury bill rates are so low, and the money does not get relent. Since Lehman's banks are not seen as safe and there is no deposit insurance for these large amounts.
If that was the case, we would see M2 and M3 go up, and we aren't. Depending on how you want to measure it, you could even argue they are contracting slightly.
That said, I'm not entirely sure about the definition of M2 and how that's related to 'money sitting in the bank'. M2 includes 'savings and time deposits' according to Wikipedia, but it doesn't seem to differentiate whether banks in turn lend out that deposited money or it just sits there.
" Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. " - This is true in the actual times, since China (no matter how they want you to forget it) is living under very harsh communist regime, but that will change when chinese workers start demanding better working conditions, more time for family, better salaries, etc..as far as I know, it's China who's living in a bubble.
I think that should be the flip side but aside from 2009-2010 (the bulk of the recession), inflation has remained constant over the last ten years. Inflation adjusted wages have continued to decline to record numbers. The jobs that are returning in the current recovery have been primarily low paying ones (clearly IT is exempt from this).
What has been going up is corporate profits. Apple's latest figures are mind boggling. A billion dollars in profit a WEEK. Someone up higher in the comments wrote that we are at peak-capitalism and headed towards Marxism/Socialism. While I doubt that's going to happen (Wall St too strong, progressive politicians too weak) I think America needs to go that way.
As Elizabeth Warren said 'There is nobody in this country who got rich on his own'. I feel that corporations (they are people right) and "The 1%" need to pay as much or more of their income in taxes to repay society for their success. This money should be used to address the problems in this article. The US needs to make higher education and retraining free/affordable, make health care free, and provide better social safety nets. With these things in place, Americans will be able to start getting competitive again.
I think that should be the flip side but aside from 2009-2010 (the bulk of the recession), inflation has remained constant over the last ten years.
While this may be true, technology has definitely become cheaper and more accessible. Eg. in my country, which is a Western economy, few people could afford computers in the 80ies, except maybe for the very low end (C64, MSX). Now many families have multiple laptops, smartphones, and maybe even a tablet.
Also, fixed Internet connections used to be expensive, pay per minute. Nowadays, for 20 Euros per month you get an internet connection without data limits and plenty of bandwidth.
Technology did become more accessible for the average family. And the impact is real: snail mail is almost killed, records stores have mostly disappeared, and next up are book stores. The price of e-mail is near-zero, iTunes music purchases are often cheaper than new physical albums (especially if you have to pay S&H fees), and Kindle ebooks are often cheaper than paper equivalents.
The working poor, created by organizations such as the iPod factory quoted in the article, still can't afford anything, because the living costs are rising faster than their income.
We need to stop subsidizing companies that offload the costs of their labor onto the rest of us.
"We" are not "building" the economy in the sense that factory workers build a car. It is more like evolution. You start with some little molecules floating the ocean, you let the simulation run, and eventually you get a complex equilibrium that includes ants, giraffes, and those parasites that mind-control mice into getting eaten by cats.
You start with self-sufficient peasant farmers that don't want barbarians to take their stuff, you let the simulation run, you eventually get towns, feudalism, enough surplus food to feed a few scientists, the industrial revolution, world wars, the military-industrial complex, the internet, high frequency trading. There is not someone designing this progression. It is a system of particles that in each time step apply an update rule.
If we want to stop it, we need to figure out what force we can apply to the system to make it settle into a different equilibrium. That's not even the hard part, since the system is not very stable, and can collapse into new equilibria very quickly, just like natural ecosystems can when you introduce new species. What's hard is understanding the dynamics of the system well enough that you can steer it into a state that you want, and make it stay there. Otherwise it is like introducing kudzu for erosion control. Well, it sure controlled erosion!
I am not a fatalist or a nihilist. I don't believe that there is some universal predetermined order (I think giraffes are arbitrary) and I think that when we can understand a small corner of the system, targeted intervention can work. But it is not a question of finding the right "evil person" to beat up, or finding the right political dogma. It is a question of studying the system with the same intellectual modesty as an ecologist, and finding a few levers that we can responsibly use - and, yes, gathering enough force in one place that we can protect the levers from people that would rather they be set in different positions.
We're building an economy that the average person doesn't have the skills to -contribute to-. Much different.
The economy is still 'for' the average person, because its point is to -produce- things, not to employ people. If the requirements for human life become easier to produce, that can only be a good thing for those humans (i.e. everybody).
Average is looking less attractive than it did 10 years ago
There will always be a place for average. However, I don't think it's going to be as attractive of a place to be as it has been. It's going to be much more costly to try and coast through life.
It's also worth noting that it's never been as affordable or easy to escape "average" as it has been today - interestingly enough, thanks to technology.
What is this "average"? Obviously, it is a statistical measure. But what does it mean in terms of people?
In those terms, "the average" is just a narrative of what the average person would be like. Which seems to be breaking down.
Sure - you can make a list of specific things that every person needs or desires, as there is a lot of commonality between people. Aside from that commonality, we do different things, which are specific to persons or groups. You cannot really speak of a mathematical average there, as those are qualitative differences not quantitative differences (and the groups also overlap...).
How do you "escape the average"? How is it to be "average"? How will you and other people escaping, affect that average? Will the average catch up with you?
I think the term is losing meaning, more than anything else, due to the specialization inherent in our technological society, and due to non-geographical clustering of people made possible by faster means of communication.
I can't believe those Presto touchscreens at restaurants are $100 per month. I love gadgets and technology, but much prefer dealing with a server and think most people do. My kids like the games and nag incessantly to play the "pay" ones, but I hardly think this is the end of waitresses and waiters. (I hope)
Agreed, I think replacing waitresses with touchscreens removes an important part of the whole dining out experience.
A touchscreen waiter seems very cold and utilitarian. It reminds me of the cheap LCD displays that have replaced gas station attendants. Almost all of the gas stations that I've used recently have them, and they all have very poorly worded prompts that show no regard for the time that I spend interacting with it.
I can't help but feel that we're headed the same route with eating food:
WELCOME. PLEASE SWIPE CARD.
SELECT FOOD.
THANK YOU. DISPENSING FOOD. PRESS ENTER DESERT?
COME AGAIN. SPC. 2 MEAL LOBSTER FRIDAY.
That's not the experience I'm looking for when I want to go out on a friday night. I want a real person to show up at the table and all of the imperfections that comes bundled along with it.
Is that just because it's what I'm used to? Will our kids grow up in a world without waiters and not even care?
My desire to interact with a waiter varies depending on the nature of the restaurant. Clearly this system isn't going to be installed at a 4 star restaurant any time soon, but if I go to a restaurant just to eat it would be useful. It would also be useful in a crowded pub where the service is generally slow and terrible and the social aspect is more about hanging out with your buddies than being waited on with a date/wife/kids. People could enter their food and drink orders and they would at least know they are in process.
In San Francisco there is a sandwich shop called Specialty's that has installed iPad kiosks patrons can order from, which allows them to handle the lunch time rush with essentially no line and two cashiers. You are also assured that your order is correct because you can see all the ingredients on the sandwiches and make additions and subtractions. It's really quite great, although I have thought it is the sort of thing that is much more likely to be successful in a technology hub than in most cities.
If people really wanted gas station attendants, they would go to gas stations that had them instead of LCD displays, and you would see more of them. In reality, you can hardly find a gas station that has an attendant outside of states that don't let you pump your own gas, because the demand isn't there.
I've noticed that just about any place with decent food and counter service seems to do brisk business. Look at the crowd at Chipotle or Panera at lunchtime. Maybe some people want a server some of the time, but in an era when fewer and fewer people cook, at least as many people want decent food at a decent price. Eliminating a 20% tip plus the cost of the server's benefits and wages baked into the bill helps with the price bit.
When a conservative starts talking about how taxes should be lower, hang on to your credit card. Cause he's not going to cut spending, he's just going to run up debt.
Some people don't have problems lifting up those who never had the advantages that they had. It's a collective action problem that takes a whole society to fix.
I'm always curious about this -- to what extent do you think you can compel Maggie, me, and others who don't share your values to solve a collective action problem we don't particularly think is a problem? And what side effects do you think that will have on society?
Edit: yeah, yeah, downvote because I don't share your values, fine by me -- but my questions weren't rhetorical. I'm really interested in your answer.
(preface: I'm an American speaking from an American POV, not sure where you're located so this may not be 100% relevant if you're aussie or swedish or canadian or something)
I think that everyone in a society as wealthy as our own deserves the chance at a life free from fear. Freedom from the fear of hunger, from the fear of a parent losing their job and being plunged into destitution. Freedom from the fear of medical bankruptcy and dying of curable disease or injury. Freedom from the fear of walking down your own street or going to your public school.
I don't think anyone is brazen enough to believe that these are not real problems in America. The solutions from the right are not solutions at all, they're just the status quo. More tax cuts, more deregulation, more gutting of municipal funding for libraries, police, public transit, and schools.
I am of the belief that wealth is not created by individuals in a vacuum. Every entrepreneur and employee stands on the shoulders of giants. They had a business environment and consumer base already here, ready made. Additionally, would Gates have dropped out of Harvard if his father wasn't a partner at a major law firm(Preston Gates)? Would Romney have formed his own company if his father wasn't the CEO of American Motors? If you come from wealth you can afford to take more risks, as you always have an out if things go poorly. 99% of america doesn't have that out.
This is why I am of the belief that assets accrued by the wealthy are not just theirs alone to hoard. Not only is it better for the economy if more people have a fall-back and can take risks without the fear of financial ruin, it is better for society.
I guess the bottom line is that I would prefer that a majority of Americans agree with me in the sense that we can do better for those that haven't really benefited from the vast improvements in technology we've seen in the past few decades. I want to move beyond the 'culture war' rhetoric of the previous generations and I believe we can find practical solutions to these real problems that can benefit the vast majority of Americans.
I don't really know what to say to someone who doesn't think we have problems, I guess we have to agree to disagree.
Thanks. I'm in America too, although I'm not American.
We agree completely on the need for some sort of minimal welfare state. No one wants to let others die on the street. I've said as much elsewhere in this thread.
We don't agree if you, like Friedman, think we need "a G.I. Bill for the 21st century that ensures that every American has access to post-high school education." I don't believe our current levels of spending are sustainable.
I suspect that the burden of making our current benefits sustainable, and adding new benefits to the list, will fall predominantly on me - I'm not rich by any means, but my household falls comfortably into the group that regularly gets singled out for tax increases. And I have plans for that money that involve my own family, my own business, and own community.
Like you, I would prefer a majority of Americans agree with me. But as it is, about 40% of Americans agree with each of us and the rest bounce back and forth.
I think it'd be relatively easy to negotiate an acceptable, sustainable amount of social spending if people of my ilk thought that'd be the end of it - if it were clear that this was a compromise between different worldviews, and that the concessions made wouldn't just get reopened in the next election.
But I rarely hear an advocate for additional social spending say 'no, a tax rate of over X% would be definitely unfair, whatever you make - we won't require you to pay that.' I've also rarely heard advocates for additional social spending say 'a welfare state above X would be excessive.'
If I'm willing to concede a minimum level of welfare state spending - most conservatives are - surely the other half of America should be willing to set a maximum level. How much compulsion (since it is compulsion, I'd much rather spend my money on my family) do you think is too much?
Why don't you believe our spending is sustainable? The USA is nowhere near default. Rates on US Treasury bills are extremely low, as they're actually seen as an incredibly safe investment compared to both other countries and stocks in general.
I sort of disagree with Friedman. I think we need to reform high school educations to make them useful. Career and Technical education needs to be seen as a viable track for students who don't go to college. High schools should let people take 2 years of programming, welding, metalwork, plumbing, carpentry, CNC machining, HVAC or other useful skills if the student doesn't plan on college. There is no reason why a HS grad should be flipping burgers. Quite frankly I think even people on the college track should learn a bit of trade work.
I am an advocate for increased social spending, but I do think it should be sustainable. I don't think we need to worry about that just yet, and I think the consequences of NOT spending on society now in the midst of a great recession are pretty dire.
Historical patterns in financial crises, mostly. Over the past couple centuries, once sovereign debt rises over a certain percentage of GDP, countries have invariably defaulted, with the shock coming very suddenly and with a lot of pain and austerity for all involved.
The book is extremely boring, but 'This Time Is Different' has a lot of data on past financial crises, which as far as I can tell is legit and untampered with. Yes, this time could be different, but I don't see any compelling reason why we'll be an exception to the pattern. I'd argue that US sovereign debt is perceived as safe right now only because other countries are further down the same path and because the market's collectively whistling past the graveyard.
Projected spending on Social Security and Medicare is the other reason - these aren't 'unfunded liabilities', as they're frequently described by conservatives, because Congress is under no obligation to maintain Social Security and Medicare at current benefit levels. But if we were to maintain current benefit levels, it's quite a bit of money we've got no solid plans for generating.
I could be wrong, but I suspect something has to give.
Complete agreement on the need for more vocational training.
Do people seriously consider this guy a liberal? He spent most of the 2000s talking about how awesome globalization is and how the free market was gonna fix everything.
"Liberal" is a relative term. If you like Noam Chomsky, Friedman probably looks pretty conservative, but if you like Ludwig von Mises, yeah, he's a liberal.
Great article. This illustrates a fundamental mistake that many believe which is that just because they have a college degree they deserve a certain job, income or lifestyle.
Yeah I completely agree with this. There is an attitude just like this in England at the moment. There aren't enough graduates using their initiative and being creative in either finding jobs or making work for themselves to fight the declining level of jobs. The assumption is, leave school, go to University, get a job. Unfortunately for them that route is failing now.
In the past, when less people were attending university, this would be true as in getting a degree you were putting yourself into a fairly exclusive group. Now though, when so many are getting degrees, you need to go above and beyond them to put yourself in a group as exclusive as the degree would give you a generation ago.
Yeah i think you're spot on, it's that ability to shine out from the crowd that is required. Although i guess the exclusivity of being a graduate could easily return with recent hike up in fees within the last couple of years.
You certainly have better chance at getting job by going to university; unemployment rate is higher for non-grads. Also running your own business is not as easy as it seems; especially without the connections to get the contracts. Expecting the graduates to work for themselves straight out of university is unrealistic.
I tend to agree with that solution, though I think there are more and less sustainable vs. conflict-inducing ways of structuring it. The simplest way is just to pay out cash collected from taxes, but that's always subject to conflict around "my tax money going to support lazy bums" type stuff, and easy to cut (or fiddle with in various ways to meet other budgetary goals).
More sustainable basic incomes tend to be structured as royalties imo, like Alaska's oil fund. One possibility would be to look at what might happen in a future where agriculture is mainly mechanized, so in effect food is being grown by robots. Initially what that'll mean is whoever got in place first will profit from them; whoever had the land and the capital to invest in the robots will then own the results of their production, even in a hypothetical future where they run 100% on autopilot henceforth. So it's a sort of strong-dependence-on-initial-conditions type situation, where who gets the results of the robots' labor depends basically on who was on top in the last pre-robot generation (granted, it may not be a purely black-and-white pre-robot/robot transition). I think in that case we'd have to eventually (somehow) transition towards a bunch of arable land + robots being held in trust for the population as a whole, splitting up the proceeds, or at least a portion of them, like the Alaska oil fund.
Lots of details and questions around exactly how the numbers work out, but at a high level I like a solution of not intruding much into the "normal" part of the economy, like humans doing things for other humans, but operating some basic minerals/land/agriculture in some sort of trust arrangement, with proceeds distributed to everyone, as their share of the proceeds of the earth+robots (as opposed to the proceeds of other humans' labor).
My issue with that is that it would drive us to extract the maximum value from the land, which could worsen the environment even more. I would like to hear more about what people think about this.
It's something that should be considered since it seems like currently there's nothing really keeping the value of human labor from going down, leaving most people destitute. However, even if it could be financed successfully, it would be a very dramatic change for our economy and society, and I don't really see any way to there from here. Our present culture is ultimately rooted on consumerism -- most people earn as much money as they're able to working a job and then spend all of it on things they need. We permit a small elite who can earn enough money to not need to work for a living to do as they see fit, but the vast majority is kept doing what society requires of them by the need to work at a job and earn a wage.
In a world where people are free to do what they want, there needs to be something to encourage them to do something which is beneficial to society, to prevent stagnation. The whole system begins to sound a lot like a refinement of what communist countries hoped to achieve in the 20th century, and it feels like we're back to many of the basic arguments for and against socialism.
If it isn't already clear from what I wrote, I have no real knowledge of this topic and I'm just rambling. The article I linked is a bit long but it and the FAQ it links to try to address some of these issues.
More bachelor's degrees won't increase the number of exceptional people, it will just mean more average people with bachelor's degrees. A side effect of this will be that the number of jobs for average people with bachelor's degrees will increase. Some of the most stable and best paying jobs are in education, law enforcement, state and local government, school and health care administration and so forth. Basically anything that is full or partially funded by tax dollars.
In many places there is already an attitude of why would you be so dumb to subject yourself to the logan's run of working in private enterprise when you can get an easy job with a pension by simply working directly or indirectly for the state.
Not everyone is cut out for college, actually, most people aren't.
That is me. Once upon a time, I applied to take CS at a number of institutions. I was rejected from them all. Not that it really stopped me, I just had to learn it all by myself. Now I get to play "lead engineer" on some pretty significant projects and have CS grads coming to me for help.
But the meme I see often on HN and elsewhere is that you need to go to college. What they fail to account for is that college is a protected class where most people do not have the choice of going, even if they wanted to. I certainly didn't have the opportunity – though in hindsight, it was probably a blessing.
The question is, will a robot that is autonomous enough and sophisticated enough to build a house be cheaper to operate than a human worker? As complexity of machines increases, the number of ways they can break down increases exponentially. Humans bodies are self-repairing for the most part except in cases of severe traumatic injury and disease.
The complexity of a robot is mostly in the software. Input (cameras and microphones) and output (robotic arms, etc) have been around for decades, but robots have not been able to interpret a picture of the world effectively. That's a software problem.
The thing about software is that you write it once and then it's free to copy. The first general-purpose robot workers will probably run expensive proprietary software, but 10 years later there will be usable open source versions. The physical robot itself will become cheaper, if anything, due to economies of scale.
I always wondered, is it actually possible for us to ever assume that we can achieve better unemployment rates or is there a practical minimum which we can never get below again.
If you think about it, in a world without technology, the money we spend has to go to someone in the economy. However, since we know have artificial workforce in play, we effectively pay less, which means that we in consequence pay out less than we receive. So eitheir we all get paid less (yay communism), or some people just naturally have to be unemployed (yay income inequality).
Most people are paid with how much labor they provide. $X amount of hours worked equals $Y amount of money. Call these people Group A. Some are paid using a different scale in line with the value of their creations. E.g. inventing a better battery, opening a well positioned McDonalds, etc. Call these people Group B.
Technology is reducing the amount of hours of labor from Group A the world actually can use. Similarly most of Group A won't be able to create something that actually adds value to the economy and transition into Group B.
So what are we going to do with all these people from Group A that are not adding "value" to the economy? The only reasonable solution is to subsidize these people in a way we deem socially acceptable.
Social Darwinism isn't acceptable, so the trick is finding a way to do this without causing side effects and hopefully that adds benefit to society. Note these people won't generate benefit to the economy in any meaningful way.
One point of the article that rankled me was his concept of a G.I. Bill so that everyone had access to higher education. That seems very misguided in my opinion. Instead of focusing on "higher education" should we not attempt to remake our primary education system such that we provide people with more relevant knowledge and skills?
I think the numbers from Harvard B-school grads isn't really that shocking or terrifying. Of course the US is losing ground to the BRIC countries. They were bound to make progress eventually. Also, the 21% that felt America is "falling behind" probably didn't mean to suggest that the country is finished. They're reacting to events of the past year, such as the demotion of our credit rating, which, as that particular snippet states, reflect a negative trend worthy of greater public attention. Nice article overall though, especially the point about the country successfully deleveraging.
Siri has changed the discussion about voice recognition and semantic search. Hard to imagine what will happen to all the call-centers in India if the use of this technology becomes more widespread. How many years are we away from this?
Speech recognition has been displacing Indian call centers for 10+ years. Tellme Networks and Nuance have been leading this space... Siri has done nothing in the call center sector.
The majority of comments seem to praise the programming/IT community or question the state of our government/economic system but I have a different question.
What future skill set should people be retooling to have? What can our economy use more of?
Taking care of children/elders/family/friends/neighbors.
With everything else automated, people will still be in need for social interaction with real humans.
Currently the issue is that there's no simple economic value to put on these tasks. Given their importance, I'd claim the bug lies in the economic model, not in social interactions.
This all assumes that automation is put to its full potential: What will society look like when harvesting energy, food generation and processing, transportation and home building ("basic needs") were fully automated and available for more-or-less free?
(home building is the odd one out in this list, as the others are for nearly instant consumtion, while most people live under the same roof for a while)
His arguments, and many here, are moot because of the political ramifications of disenfranching such a huge number of voters. The average worker, by definition, commands by far the biggest voting block.
When their minds are concentrated on this one problem, irrespective of their normal voting choice, they will vote for whoever offers them a way out.
It will end in tears as almost all wall-papering does, but not for a decade or two.
FWIW, I think this is the beginning of the China-induced global economic realignment. But we won't begin to see the real ramifications for a couple of decades because of the above.
Go listen to Davidson's interview with a factory worker over the increasing amount of automation and required technical knowledge that will eventually shove her out of a job if she doesn't acquire the skills to keep up:
I think that we're taking the concept of "average" too literally. Picture two lines: average worker competency and need/requirement for the company to be competitive. The author states that historically those two lines have been so close as to be equivalent in management's eyes. Now the second line has moved up.
So according to this definition, the average line is no longer acceptable. As a result we need to move it up to realign with the need line.
Under this definition the author is not as problematic as before.
Interesting. In addition to post-high school education access, it's important that we also re-think our education system by creating environments that inculcates learning around our individual passion/talent. Above average performers are known to love their craft, and in a hyper-competitive economy that requires one to learn, unlearn and relearn, passion would matter a whole lot.
On the contrary, I feel average is the new skill. There are many a time where you need just average skilled workers. High skilled workers may find such tasks mundane while for average skilled workers the same mundane tasks may be challenging. IMHO, I would love to have a good mix of high skilled and average skilled workers.
Post high school education is overrated. In fact the American school system won't really prepare you to face the reality.
Yes it seems like the need for these "average" jobs are decreasing but in the end it will all balance itself out and there will be new areas that would need to be filled.
It absolutely isn't overrated for many fields. Software is something of an exception, but I also think even coders usually benefit from formal training, which they're not really going to get in high school.
What's overrated is the "pick a degree, any degree, you get to call yourself 'educated' in four years!" mantra. The difference between the US and (what I hear of (so probably stereotypical)) Germany is that in the US you're told from a very young age to go to college to "get an education". In Germany you're told to go to college to "become a competent engineer".
I really disagree with you that it will balance out, that everything will be alright, and that the 40-hour work week will keep on going. I'll defer to the other comments on this page for reasons why.
I believe new opportunities will open up. Change will come. There are plenty of needs that will surface somewhere and it's up to the "average" to adapt to fill those needs.
Those that don't adapt or resist the change will be the ones that suffer the most. This is a pattern with many things in life.
In the future, people will need more than a degree. They will need a few. That's what our children will have to deal with. There's nothing ridiculous about this. More and more and people are getting access to education.
I have been thinking about solutions to this, to get a feeling for how things will work out in the future by itself. Technology allows us to replace manual labour with machines, but it also can create jobs for other things we have been struggling to automate since it's naturally resistant to being industrialised. These are human things, which tends to be the service economy.
To work on real examples: There are tasks around the house that I don't enjoy doing or don't do reliably. Things like laundry, taking the rubbish out, cleaning, paying the bills, going shopping for food or new underwear. I wouldn't mind laundry people coming into my house once a week to pick the laundry up, doing it somewhere else, and bringing it back. I also wouldn't mind if someone would fold and pack my laundry for me nicely. Also, if my underwear or socks get old, drop me an e-mail allowing me to replace it with a provider of my choice. A cleaner is also very handy. It would be nice if someone would note when my handwash soap or toilet paper is running low, and order it for me. It would be nice if the delivery and placing of those things in the correct place was done for me.
Now all of these things I mention can already be done right now by employing serving staff, but this has a few issues. The main is cost, second to that is trust and personal space, and third to that it's perceived as a demeaning job.
Technology allows us to solve a lot of these things. From making sure that the right people can enter the property at the right time, e.g. when you are out, and that they do only what they are supposed to do (e.g. track their time, and movement around the house). It can also give anyone easy instructions on what to do when they enter the house (e.g. a mobile device with a checklist to check on things that need replacement, and even to guide them around the house to where these things are, and knowing what stuff has been delivered and needs unpacking) Other things can be -done better off site with modern industrial methods, e.g. your laundry. Also when replacement shopping has been ordered, it can be brought into your home along with the laundry, instead of you having to wait for a delivery. I can see this stuff potentially becoming a lot cheaper while creating a lot of low skilled jobs, perhaps jobs people can do while studying other things. In the long run a lot of these things will probably also be automated, making these jobs go away again. That in itself is a good thing, since all of us want these jobs to go away. Then humans will just be left to making choices about what they want to consume, or be creative if they want to be creative. We won't be happy but that's a different issue.
I believe that the solutions will be found in a change in our value system. Things that we really appreciate, things that are uniquely human, will be valued more. See thisismadebyhand.com
Obviously solving big problems and being "not average" will be important, but I believe that many people will be able to find niches doing things that add value to life in ways that a machine can't.
As for this particular pundit, he lost me at "invade Iraq". After claiming the earth is flat, you'd think people would have learned to ignore this asshat.
Welcome to Peak Capitalism. This is the peak of our current socio-economic system, and I'm fairly certain that everyone in the White House is now well-aware and convinced of what's likely going to happen over the course of the next 10 years. I hope they're preparing for it right now.
I believe the coming collapse of the capitalistic-democractic system is imminent, and America needs to very seriously start planning for a conversion to Socialism/Marxism because the current system is not going to work for very long.
Because that worked out so well for Russia and China. Command economies have never efficiently allocated resources, and they never will. Economies are just too complicated for a single central authority to control successfully. They can never have enough accurate information, and can't be flexible enough to rapidly changing circumstances.
Just look at the hopeless response to the financial crisis from European leaders. You really want to put politicians in charge of all business activity as well?
If the alternative does turn out to be unemployment on a massive scale due to automation, the Soviet Union doesn't look so bad in comparison. It's probably not optimal, but at least we know that it works (badly, no doubt, but life went on under the Soviets). I seriously doubt Friedman's idea of sending everyone to college would work at all.
That's a grossly exaggerated figure, and if you skip the Lenin/Stalin era and go straight to Khruschev it's not nearly as bad. And if, by hypothesis, the "average" person become redundant and unemployable, they would simply starve to death in lieu of government intervention, which would lead to a death toll that would make the Dekulakization look like a traffic ticket.
Actually, it's working great for China (in the short-term at least). Though they probably wouldn't call their system "communist" anymore, in preference for the new description: "state capitalism."
I still haven't seen any convincing argument that socialism is going to result in anything besides "trickle up poverty." How that's supposed to be better than what we have now remains a mystery to me.
I'm also unconvinced that the basic premise of this entire discussion (that technology is going to completely obviate the need for human labor) is sound. Alarmists have been crying this out since at least the Luddites[1] and it hasn't come true yet. But since economies tend to be cyclic, and since we are in the midst of a pronounced (and unfortunately long) downturn right now, it's hard to say if the current malaise is just a "local minimum" of sorts, or an actual sign of some long-term trend. My feeling is that it's more the former than the latter.
Alarmists have been crying this out since at least the Luddites[1] and it hasn't come true yet
It hasn't come true yet. That doesn't prove or disprove anything. Either they were far ahead of their time, or it will never happen. That's not sure yet, and that depends on what people do today.
Either they were far ahead of their time, or it will never happen. That's not sure yet, and that depends on what people do today.
The more I think about this, the more I'm thinking that the Luddites and other alarmists might have been right AND that things might not come to the worst imaginable "post human labor" dystopia. Like you said, "it depends on what people do today." And that's been true all along.
I don't believe the future is set in stone... so the question is, what do we need to do now, that is both more and just and respects individual freedom, while also trying to guide us away from a future where most humans can't find gainful employment, and wind up living some sub-human lifestyle, disconnected from the rest of world.
One thing that history has demonstrated, is that technological innovation tends to create new jobs to replace the jobs it destroys. This process is part of what Schumpeter[1], referred to as "Creative Destruction"[2]. One open question, then, is whether or not this process will continue indefinitely, or if there's a "top" where no new jobs are created to replace the old ones.
I don't claim to have the answer to this (I doubt anybody does, actually) but it's definitely an area worth spending some time and thought on. Being a technologist and entrepreneur, I find the idea that innovation and technological progress might ultimately prove to be a Bad Thing a bit discomforting.
Yes they are relevant, because fundamentals don't change. Human nature hasn't changed.
Supply-and-demand is still in effect. A thing is still only worth what another gives for it. And when you try to mess with these two rules, they don't go away, they just adapt to what's imposed.
"Functional poverty" is, for most practical purposes, illegal in this country. Employers can't pay what a job is worth if that worth less than a given wage; ergo, economic fundamentals dictate commerce find an alternate solution which does match the supply-and-demand rule, which unsurprisingly often is manifest as either international outsourcing or robotics (loosely speaking). The "average" gets skewed because the lower end of the bell curve gets chopped off, and those chopped find themselves unemployed because it's illegal for them to earn what their skills warrant. Yeah "average" doesn't cut it any more, because someone tried to impose a new economic model and large segment of society is finding out the hard way it doesn't work. The demand is still there, but since it's illegal to supply that demand with human labor, the supply gets filled in other ways - ways which create more demand for high-end skills leaving the low end further behind.
You can't violate these basic models without causing (or relocating) the very problems you're trying to solve.
At the very least an update is probably in order. To really over-simplify (somewhat unfairly), my read of the "socialist alternative's" theorizing is that it's gone in waves roughly like this: 1) extensive analysis of 19th-century economic systems, especially factory production (Marx et al) and agriculture (Kropotkin, the kibbutz movement, etc.); followed by a period of 2) focus on culture/ideology/hegemony as the place the "real battle" is fought (Gramsci, neo-Gramscians, post-structuralist Marxism); but not really followed by 3) extensive analysis of 21st-century economic and technological systems.
I think even for people who disagree with them, it'd be healthier for there to be a Left that paid close, scientific/analytical attention to present-day material conditions, rather than focusing mainly on culture/ideology like the neo-Gramscians, or tying themselves too strongly to 19th-century analyses of 19th-century conditions. Or, for that matter, just taking an amorphous "against the greedy bankers" line like the populist left does, which is probably good politics, but not a deep analysis.
In a way, they are. People haven't changed that much since then.
However, economic models need spring into existence from the ground up. They are emergent. The world is too complex for them to be designed by theorists. This is why base capitalism (not the complex beast it has become) works, as even without any pressure people start trading. USSR communism collapsed because it needs to be enforced from the top, and you can only keep up a lie for so long.
The same is true for our current zombie-capitalism. We do need to give new systems some room to form and grow, though... and not label it as EVIL communism/capitalism/someotherism too soon, as that will cause typical path lock-in.
The solution to average people becoming less relevant in the economy (which I don't dispute, btw) can of course never be to make everyone above average as that is by definition impossible.
It's a feel good message for average folk that papers over the truth, which is that average folk that used to make a decent living doing average work will become poor. All of them, eventually. How poor exactly? Well, you could do worse than to look at Chinese factory workers for an indication of where things will end.
Of course it's more complicated than that: if the average man has become as poor as a Chinese factory worker, he will no longer be able to afford expensive gadgets and value added services, so it'll be in the interest of at least some sectors of the economy (think Apple and Google) to keep the impoverishment of the middle class down to a minimum. On the other hand there are other sectors of the economy (think McDonalds and Walmart) that will do just fine even if everyone is poor, so it'll be interesting to see how this plays out.
But, like I said, this article is ridiculous. Giving everyone a PhD won't solve a thing.