Tuesday, September 25, 2012

Economy of Plenty

Fred Pohl over his 60 year career has written many stories with crazy insights into politics, economics, and our beliefs. His novel "Jem" may be the most cynical indictment of consumerism ever written. He's still writing. I subscribe to his blog and he still occasionally skewers the hell out of the powers that be.

So when I was a kid, probably a teenager, I read his story "The Midas Plague". Here's a synopsis (from Wikipedia):

"The Midas Plague" (originally published in Galaxy in 1954). In this new world of cheap energy, robots are overproducing the commodities enjoyed by mankind. So now the "poor" are forced to spend their lives in frantic consumption, trying to keep up with the robots' extravagant production, so that the "rich" can live lives of simplicity. This story deals with the life of a man named Morey Fry, who marries a girl from a higher class. She is unused to a life of consumption and it wears at their marriage. Morey eventually hits on the idea of having the robots help him to consume his quotas. At first he fears punishment when he is discovered, but instead the Ration Board quickly implements his idea across the world.
Somehow, this always made sense to me. Robots make everything, there's plenty of everything for everybody, right? What does an economy like this look like?

At the start of the 20th century, the occupation that consumed the most manpower was farming. That is now handled by 1-2% of the population.

The industrial revolution created new classes of jobs -- or better, new species of jobs in the ecosystem that is the economy. People left the farm, but in recent decades those jobs have been transitioning to robots -- and there was just an article floating around about the new generation of robots that will take over pretty much all manufacturing jobs. Here's another one. Here's yet another one. Eventually there will be no physical jobs that robots can't do.

And white collar jobs are not immune to automation. In fact, probably most of the 8x productivity gains that the US economy has achieved in the last 50 years have come in white collar work thanks to computers.

So what jobs can't be automated out of existence? Not doctors. Not Foxconn slave girls. Not drivers. Not soldiers.

Maybe software development? Overall, the consensus seems to be that the machines aren't making too much progress at being able to program themselves.

I have for years now had hope that software could answer the question of how to create a growth economy that doesn't eat the world. Software is like language: it is generative. You can always add another clause to any sentence; you can always add another feature to any piece of software. So maybe, like Estonia, we start teaching first graders to code. A recent article on the Flynn effect in Scientific American suggests that the 3 points/decade IQ rise is primarily from improved abstract reasoning -- just what is needed for working with computer logic. (Sorry I can't link to the article, it's behind a pay wall.)

But, back to the original question. If robots can make everything, what does everybody do for a job? And if nobody has jobs, who can buy the stuff the robots make? We are currently in an Economy of Scarcity, which assumes that no one has anything and has to earn everything. But if the robots can make everything, why aren't we in an Economy of Plenty, which assumes that everyone has automatically earned everything they need to live, just by being born? Or, at least until age 21. Children do not choose to be born, nor do they get to choose their parents.

As mentioned above, in the last 50 years, productivity in the US has increased by a factor of 8. So are workers now working 1/8th as much? Are workers getting 8x the pay? I think we can safely answer, no and no. Instead, the haves have managed to keep it pretty much all for themselves. Corporations are doing just fine. Executives are doing just fine -- with US CEOs making ~200x what the average worker does -- 10x or so more than most of the other industrial democracies in the world. It's just the rest of us that have been left behind.

80 years ago, two renowned thinkers addressed this same issue. It is very sad to read their musings and see how far off they are -- or, maybe instead, to revisit these ideas, and see if we can do something with them.

First, "Economic Possibilities for Our Grandchildren", by John Maynard Keynes, 1930. "In the United States factory output per head was 40 per cent greater in 1925 than in 1919." [Twitter digest] He thought all this increased productivity would lead to utopia for all of us! What a socialist loser! Course Ayn Rand wasn't around then, he clearly didn't understand the importance of Job Creators. Other quotes:

Let us suppose that 100 yrs hence we are all of us, on the average, 8 times better off than we are now.

Three-hour shifts or a fifteen-hour week may put off the problem for a great while.

The love of money as a possession will be recognized for what it is, a somewhat disgusting morbidity.

All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting the accumulation of capital, we shall then be free, at last, to discard.
Here is another overview of the Keynes paper by one of my favorite bloggers.

Here is another article revisiting Keynes, by an economics professor and a philosophy professor.This is adapted from the opening of their new book "How Much is Enough?: Money and the Good Life", which I will be reading before too long.

Second, "In Praise Of Idleness" , by Bertrand Russell, 1932. Also written at the start of the Great Depression. Many of the same thoughts as the Keynes, but the arguments are somethat more pointed. Here are some quotes:

Work is of two kinds: first, altering the position of matter at or near the earth's surface relatively to other such matter; second, telling other people to do so. The first kind is unpleasant and ill paid; the second is pleasant and highly paid. The second kind is capable of indefinite extension: there are not only those who give orders, but those who give advice as to what orders should be given.

Throughout Europe, though not in America, there is a third class of men, more respected than either of the classes of workers. There are men who, through ownership of land, are able to make others pay for the privilege of being allowed to exist and to work.

The small surplus above bare necessaries was not left to those who produced it, but was appropriated by warriors and priests.

The conception of duty, speaking historically, has been a means used by the holders of power to induce others to live for the interests of their masters rather than for their own.

The war showed conclusively that, by the scientific organization of production, it is possible to keep modern populations in fair comfort on a small part of the working capacity of the modern world. If, at the end of the war, the scientific organization, which had been created in order to liberate men for fighting and munition work, had been preserved, and the hours of the week had been cut down to four, all would have been well. Instead of that the old chaos was restored, those whose work was demanded were made to work long hours, and the rest were left to starve as unemployed. Why? Because work is a duty, and a man should not receive wages in proportion to what he has produced, but in proportion to his virtue as exemplified by his industry.

This is the morality of the Slave State, applied in circumstances totally unlike those in which it arose. No wonder the result has been disastrous.

The idea that the poor should have leisure has always been shocking to the rich ... When I was a child, shortly after urban working men had acquired the vote, certain public holidays were established by law, to the great indignation of the upper classes. I remember hearing an old Duchess say: 'What do the poor want with holidays? They ought to work.'

Oddly enough, while they wish their sons to work so hard as to have no time to be civilized, they do not mind their wives and daughters having no work at all. the snobbish admiration of uselessness, which, in an aristocratic society, extends to both sexes, is, under a plutocracy, confined to women; this, however, does not make it any more in agreement with common sense.

In the past, there was a small leisure class and a larger working class. The leisure class enjoyed advantages for which there was no basis in social justice; this necessarily made it oppressive, limited its sympathies, and caused it to invent theories by which to justify its privileges.
But if we fix it?
Above all, there will be happiness and joy of life, instead of frayed nerves, weariness, and dyspepsia. The work exacted will be enough to make leisure delightful, but not enough to produce exhaustion.
Follow the link and read the whole thing. I have not read much of Russell, I think I will have to read more.

Ha ha, putting their Wikipedia links in, both were British nobles, Keynes a baron and Russell an earl. Well, their hearts were in the right place, regardless.

One thing that is mentioned in several of the papers and articles mentioned above is that the target should be something like Athenian Democracy. The existence of a slave class (which we are replacing with robots) enabled the (male) citizens of Athens to get involved in government, the arts, and all forms of creative activities. There are also multiple mentions of how our work, work, and more work has lead us to be passive consumers of culture, rather than active creators of culture.

So, what, am I a utopian? Yes, I am. We are increasingly heading towards a dystopia with income and wealth unequally distributed probably worse than in the time of kings and emperors. How do we fix it? I think We The People will have to take the bull by the horns and fix our government.

  1. Figure out how to control the power of the corporations, the ultra-rich, and the military-industrial complex and all their lobbyists. Getting rid of Citizens United is a start. Online, open government should help too.
  2. Reform the tax code such that all taxes on investments, particularly dividends and capital gains, are taxed at a minimum at the rate of wages. Why should income earned without any "sweat of your brow", for which you possibly have little or no time investment, be taxed less than labor, which costs you one minute per minute of your life?
  3. If we decide that we can't get rid of economic parasites that extract wealth while adding no value, such as high frequency or program equity traders, then they should be taxed at a minimum of 50% -- you're just hacking the system, as pointed out by Mark Cuban, the rest of us will take at least half of your ill-gotten gains. Other companies in this category: insurance companies? Other?
I believe that the primary goal of the US government and of every government in the world should be simply: to maximize the outcome of every child born. What are the arguments against that? How can we go wrong if that is our goal? As opposed to now, when we have 15 million children in the US living in poverty without enough to eat.

The other thing we need to fix when we fix this is to also get out of a growth economy, before we completely eat the earth. We have to figure out how to grow at a rate that is sustainable and environmentally neutral. Germany is taking some real leadership actions re this. Here's an article. "Growth for the sake of growth is the ideology of the cancer cell."

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