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As tasks are getting automated and don't require much human intervention anymore we are heading to the world where 10% of population would be able to produce all the goods needed.
While that sounds like a good news at first, there's a big question lurking in the background: How is the 90% going to make their living?
They are not. If nothing changes they are going to die of hunger. And even worse, once that happens there will be only 10% of the population left, so the market shrinks to one tenth of its original size. At that point only only one tenth of the survivors — 1% of the orginal population — will be needed to produce all the goods. Thus, 9% will be left with no work to do and will also die of hunger. Now, of course, the demand plummets to 1% of what it used to be in the past and, given the improved efficiency, only 0.1% is needed to satisfy it. 0.9% is left with no work, is starved to death etc. Vicious circle perpetuates until the last human being dies of hunger.
This thinking isn't novel in any way. If I recall correctly, Keynes though about the problem in first half of XX. century and believed that in the future people will be working only few hours a day to deal with the problem.
All in all, there are three possible solutions:
- Decrease efficiency
- Work less
- Consume more
Each of the options is an intersting topic by itself, so let's check them in detail.
Decrease Efficiency
The first idea that pops to mind here is to ban efficient technologies, in other words to implement a global version on Amish horse-and-buggy-style society. It sounds ludicrous and makes us dismiss the idea of decreased efficiency straight away.
However, have a look at the world we are living in. Have you ever wondered about all the inefficiency surrounding us? Bloated governments, annoying and unnecessary paperwork, corporations with ten levels of middle management and so on? May it be that the ultimate cause of such phenomena is the need to artificially create work for people that would otherwise have no work at all? Emergent version of digging and filling holes?
It doesn't sound right, as it contradicts our basic intitions about the economy: Less efficient institutions should be, via competition in the marketplace, replaced by more efficient ones. However, if you look at individual cases, the said economic intuitions don't seem to apply. There's no marketplace for government. Thus, there's no drive for efficiency. Just the opposite: Individual bureaucrats are incentivised to invent more paperwork and more arbitrary rules to produce more work for themselves and thus secure their position in the future. They gain from employing more people because making their departments bigger gives them more authority and power. As for the corporations, they stay out of marketplace by forming cartels, creating monopolies via lobbying, rigging the legislative, patents and similar measures.
People like to fantasize about shrinking the goverment or replacing old inefficient magacorporations by lean agile startups. Before doing so though, they should think about all those people that will find themselves laid off once the efficiency measure is implemented.
If they are not offered an alternative way to make a living, they will sabotage the efficiency improvement by any means available. In short, when improving efficiency we have to provide a way out for those that are obsoleted by the improvement. Which brings us to the next points.
Work Less
Working less is the most obvious and palatable solution to the efficiency problem. It's no surpise that Keynes expected it to be adopted in the future. However, it doesn't seem to work. Shorter working hours were introduced in France, but, as I read, it doesn't work very well. People are simply working over time to compensate for shorter working hours. As for the other countries, they haven't even tried to introduce similar measures.
Let me speculate on why that may be the case, why we seem to be heading towards the society where some people work for insane hours while other are left with no work at all.
My feeling is that it has to do with the nature of work. There's work that can be easily split among multiple people: 8 people digging a hole in 1 hour shifts are more efficient than a single person working for 8 hours. However, the same principle doesn't apply to work done by a programmer, lawyer or scientist. Quite the opposite, in fact. 8 programmers working 1 hour each are likely to do less work that a single one working for 8 hours.
In the modern world, the former kind of work is being gradually automated. Consequently, more and more jobs fall into the latter category, the work that cannot be efficiently split among many people. Therefore, there's an incentive to cut the costs by employing as few people as possible working as long hours as possible.
Spend More
Of course, the easiest way to sustain improved efficiency is to simply consume more. If we can grow twice as much grain, people can simply eat twice as much bread. Some people may not want to eat that much bread, but we have the advertising industry to save the day. At some point people are going to choke on all that bread, but we can increase spending even further by producing goods which are not meant to be consumed directly and rather be used as a way of maintaining social status (a.k.a. conspicuous consumption). In theory, conspicuous consumption has no set limits and the advertising industry can very well persuade us that we should buy ever more stuff to be seen as succesful, attractive and generally better than an average person.
The process, however, is endagered by its very nature: Asserting social status can be done only if the goods used for the purpose are scarce. Yet, with improved efficiency everything manufactured is becoming less and less scarce. If food is abundant, there's no social status to be gained by being fat. If everyone owns a TV, owning a TV doesn't give you any extra status. And so on.
It seems likely that this system of prove-your-status-by-your-eartly-possesions is going to colapse.
Some hints are visible even today: Being slim, i.e. consuming less food, is the sign of status, rather than being fat. Not owning a TV may be considered to be a way to signal that you a "better" person that can afford to care about trifles such as healthy and balanced lifestyle.
To finish the section let me introduce one more quote: "Professors Thomas J. Stanley and William D. Danko reported that Americans with a net worth of more than one million dollars are likely to avoid conspicuous consumption. In contrast, millionaires tend to practice frugality (e.g., they don't finance the purchase of new cars to avoid both the rapid depreciation of new vehicles and paying interest on loans, and instead pay cash for quality used cars)."
The fourth option
It doesn't look like any of the three options above (or any combination thereof) can be made to work in a long term.
The fourth option would thus be to not even try to provide paid work for everyone, rather to introduce some kind of re-distribution scheme. The basic income policy (much discussed in the context of upcoming Swiss referendum about the topic) is a very crude tool, but it gives you an idea. However, it's a complex topic beyond the scope of this article. Hopefully, I'll get a chance to discuss it in more detail later on.
Martin Sústrik, Dec 15th, 2013
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Let me borrow phrases from Michael O. Church.
Basic income is the way to go for now.
Since automation deprives people of power as producer, they need some other kidns of power. Basic income gives power as consumer to people. If they have basic power as consumers, people will be much more likely to refuse crappy jobs, which is terrific.
As time goes, more of easy tasks are automated, and humans are left with intellectually difficult tasks, so we will need to learn more to have jobs. This means, after decades, people will have to drop jobs from time to time, learn for months/years at home, and get another job. This process leaves most people jobless, and eventually, 0~10% of humanity will be "fully" employed.
However, there will always be infinite demand for making our lives better.
Thus, even after our basic needs(food, house, sleep, …) are automated, there'll still be economy for billions of people on this planet alone.
What's wrong with receiving basic income which enables people to refuse traditional crappy corporate jobs and work "only" on interesting things in their lives(Art, Science, etc)? Humans aren't born to work in subordinate jobs in the first place.
Another possibility is that, eventually, there will be no need to work at all, and economies will collapse. http://en.wikipedia.org/wiki/The_Culture describes this possibility.
Most corporations are "closed-allocation" shops.
In closed-allocation shops, trust in any employee can be dropped to zero by people having more credibility(managers or manager's pet worker). If an employee's credibility is low, others simply don't trust him with intellectually demanding tasks or with important tasks.
Automation is an intellectually demanding task and is more expensive than manual labor initially. Thus, if managers don't trust workers much, they don't let workers automate in the first place.
In open-allocation shops like github and valve, people get to work on any existing projects they like without managerial intervention. So, they are much more likely to automate no matter the initial cost.
The advantage of basic income is that it's easy to implement even in short term. The disadvantage is that it's a rigid and unflexible. It lacks the feature of traditional markets where the resources are automagically redirected to where they are actually needed.
My feeling is that with conspicious spending gradually losing it's ability to affect societal status, we'll evolve some way to trade (in a very broad sense) money for status that would actually help to fund non-profit (better term: non-scarcity-based) sectors of the economy.
If so, you won't get money for sitting at home, watching TV, rather for doing something that is perceived to be "useful".
Most people are inclined to work even if they don't have to(For example, linux and wikipedia). Non-scarcity economies can grow very large(Again, linux). About 10% of the populations are professional slackers, and they already don't work or work little for meager salaries.
My guess is that basic income will cover basic needs(house, clothing, food, internet, …) and people will work on interesting things to obtain expensive "material/non-material" stuff(a jet engine, ticket to the moon, social status, knowledge, quality time, etc, …). Then, basic income will basically just remove neccecity for "subordinate" jobs but encourage people to work as free agents or in small companies doing interesting things together without managerial interventions.
When I meant was not really about forcing slackers to work, rather about communicating the information about what people want to those that produce stuff.
Basic income doesn't provide that imformation flow.
However, judging on you "expensive extras" comment, I guess we are on the same line here, i.e. you have to work on something that is actually wanted to get the extras.
For example, I want to draw lots of pictures, write a lot of programs, and write songs even if those activities don't pay my bills. And those activities may actually not pay the bills after all. What about my medical care? This means the reality is a tough one now. It drives people desperate and makes them take crappy jobs which make humanity poor.
If basic income is low enough but still enough for basic needs, it wouldn't hinder market information flow much. Plus, the current tough reality drives people to join established companies, which strengthens centralization, oligopoly, and eventually monopoly. Oligopoly and monopoly shield market information very well.
Basic income incentivizes people to become free agents and join startups, and this encourages formation of free market and thus free market information flow.
Low-enough basic income would be a nice compromise.
Or I might be wrong, and basic income would just block market signals, making everyone poorer.
In the end, either basic income or other mechanisms should come in to rescue us from life enervating forces(Those boring and mediocre 9-5 brick and mortar office jobs, sacrifice of hobby lives, having to endure subordinate conditions, etc)
NPE(non profit entity) jobs that you mentioned may turn out worse than our traditional jobs, and a global market state of free agents(as opposed to a global welfare state of high class elites, which is closer to hobby economy e.g., linux and clojure) sounds better in my mind.
What do you think will rescue us?
What if people are mad for your pictures, but don't give a shit about your music? What's the mechanism to let you know that you should focus on the former and let the latter be?
In traditional economy you are guided by prices.
In economy based on basic income there's no such mechanism.
Maybe producers should actively search for feedback as a way to improve their credit (you get more credit for nice pictures than for sucky music). Would that be strong enough incentive to drive the effort in the right direction? Or should it be enforced by voluntary redistribution (donations)? In the latter case, wouldn't it mean that those working in scarcity-based sectors of the economy would have more say than others?
In fact, we don't know. We don't even have a way to reason about such things. What's missing IMO is a generalised economical theory that would take non-monetary aspect into consideration rather than conveniently waving if off as "externalities".
Actually it's easy to know if your pictures are good and your music is bad. Just look at the people faces, the people number when doing a recital or art show, etc.
I must have been misleading about how I want to make money and enjoy hobby. With or without basic income, I plan to make money mostly by writing programs and to enjoy drawing pictures and composing songs as hobbies. So I start with hobbies.
When people draw pictures and write songs for fun, people generally don't care much about how badly others want their talents in hobbies. It's because hobbies are more about consumption of time/material than about production.
In other words, most people generally pay money to enjoy hobbies. However, if other people praise them for their drawing talent, they will be gratified and do more drawing than writing songs, and vice versa. If they get good enough to be paid for one of their hobbies, they might think about making money from it.
There exist non-monetary wealths. Monetary currencies are preferred forms of wealth because they are easily convertible and fungible. Although non-monetary wealths are also valuable, they are generally not easily convertible to other forms of wealth.
According to pieter hintjen's recent book, "Culture and Empire", the US government spent millions of dollars to make people click "like" in facebook. Social currency exists. Hobbyist artists are gratified and release more artworks if others click "like" or praise them(social currency). That process also generates reputation(social currency) which can be converted into other personal properties later. Amazon book reviews are a form of social currency, too. So, social currency can incentivize people to do more of something. However, it takes time and careful planning to convert social currency into other forms of wealth(food, house, etc). Thus, if people put above-board efforts into earning social currency for a long time(half a year?), they'll get burned out. Basic income changes this dynamics, which will be described below.
For example, I and you have skills as programmers. Skills are non-monetary wealth that can be converted to monetary wealth easily if other people want those skills.
Health is a form of wealth. Japanese have the longest expected lifespan, and japanese people are considred to be wealthy not just because of their per-capita GDP but also due to their life expectancy. In Congo-Kinshasa, the life expectancy is about 50 years. Beautiful people monetize their beauty in markets.
According to "Culture and Empire", when money didn't exist, there wasn't a barter economy. If I give you milk when you starve, you owe me. You repay the debt by giving me eggs when I starve later. Ledgers of human coins are maintained in human minds, so human coin economy doesn't scale. Monetary currencies solve scaling problem and remove human coins.
I guess you have one of two possibilities below in mind, and I have arguments for them.
Brazil adopted basic income years ago, and they are not heavily taxed so far. Switzerland is voting for unconditional basic income of 2800$/month for every adult employed or unemployed. I don't know about switzerland yet. Even, south korea, my country, can implement BI if the government cuts out wasteful programs(S.Korea has many) and consolidates lots of welfare programs into BI.
I guess it's possible to configure BI to incentivize people to ignore market signals. However, I think it generally makes people more sensitive to market signals. I'm going to explain my rationale below step by step.
My father arranged a private basic income system for me via some financial vehicles, so I know what BI does to mind. Almost nobody is satisfied with basic income that only covers the most basic needs(house rent, food, clothing, internet), and they need to trade in markets to get what they want. BI just guarantees that people still have comfortable low class life if they lose a job. This private BI urges me to drop my job, endure months/years-long unpaid learning, build reputation, and make living as a free agent like you do, and I'm actually going to do it. In other words, BI makes it bearable for people to quit crappy jobs and live on ramen noodles for years in rent houses until they get a decent job, become a well-paid freelancer, or one of their tablet games raises them to a middle class/upper middle class life.
People will be inclined to refuse crappy jobs, and this leads to some economic effects.
If basic income taxes people too much, it'll distort markets. If it doesn't tax much, private sectors will always have abundance of money to trade with or without basic income. And I think many governments can implement BI while increasing tax only a little by cutting out useless programs and consolidating lots of "conditional" welfare programs into "unconditional" BI. Also, unconditional BI is simpler to maintain and think about than lots of "conditional" welfare programs.
Central authorities hire managers, and managers hide market signals. Workers actually feel warmth in the shielded core and are happy without market signals. Since workers don't know how market actually values their labor, they don't know if they are compensated fairly or unfairly. Those workers without market signals don't know what societies need in the long term. However, managers don't know what societies need or want in the long term, either. So centralized corporations tend to make irrelevent products.
Since people with BI are more inclined to refuse crappy jobs than without BI, it encourages people to leave established companies. Many more people will endure months/years-long unpaid learning and become freelancers or join small startups. Some people will opt to build other non-monetary wealths for months/years, and they may or may not convert non-monetary wealths into other personal properties(house, car, food, etc) later. It means basic income favors decentralization. If workers are inclined to become freelancers, join startups, or join open-allocation shops(github, valve, …), they'll become much more sensitive to market signals. Even if they choose to build non-monetary wealths mainly, they are not shielded from market signals as long as they communicate with other people. Managers would do a much better job at shielding market signals.
Another argument to consider is that BI can be funded without the distortion of taxation. In fact we might be able to have both BI and eliminate taxes entirely.
What you do (according to Georgists) is that you tax land value and basically remove all other forms of taxation.
Besides not distorting ordinary transactions it also has the benefit of predetermining the total wealth available for BI which I believe should install a natural balancing force into the market. If too many people does the wrong thing the total wealth sinks and so should land rents, at some point the BI will simply be to low to be acceptable again.
You could also argue that BI from land value is just the morally correct thing to do if land is seen as fundamentally a commons, but with arrangements of private ownership layered on top for efficiency. See Geolibertarianism. In this view it can be argued that land value taxation isn't a tax at all, just a proper rent contract between the land owner and the commons.
In my mind there is also the potential to solve the climate crisis this way. What is Ecotaxing if not compensating the commons?
Well, there is another way to cope with the problem, and just this way is now used by 'The Golden Billion' countries: since the Great Depression the capitalists know that if too many people lose their buying power, the sellers very soon lose their buying power too, and in no time the wave goes up to the richest ones.
So they decided to part with some of their revenues and pass it to the Government for re-distribution to as many poor people as possible, as a welfare. The poor people keep the ability to buy (cheap and little in quantities, but there are many of them), so those who sell to them gather their income and keep their ability to buy more costly things… and so on.
The new problem is, that the size of the population grows, and the part of it that produces things shrinks. To keep the pace the capitalists have to have more revenues, and pass to the Government more.
What will be in the end? 1% of the population working, creating very big revenues to their bosses, and the bosses paying enormous taxes to support 99% of the population having nothing at all to do…
Yes, the welfare system is an imperfect implementation of basic income.
As for me, I believe we'll have to resort to basic income sooner or later. At least, I haven't heard anyone proposing an alternative solution — well, unless you consider bullshit jobs (http://250bpm.com/blog:44) to be a solution.
As for 99% doing nothing, it's unlikely IMO. When you look at actual people, you'll find out that it's pretty hard to make them do nothing. You have to lock them up in a jail or something. And event there they will be doing something, I guess. Doing nothing contradicts our psychological (or, to put the emphasis on the inborn component of it, etological) wiring.
So, I think, we'll just have to think of a way of steering this surplus activity in desirable direction by non-monetary means.
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