On August 24, 2013, John Evans writes on TechCruch:
Maybe I’m wrong. Maybe everything will be fine. Maybe the “widening gap between rich and poor” is temporary. Maybe the steady growth in the proportion of jobs that are part-time and/or low-paidwill soon reverse.
Or maybe the idea that all the homeless need are old laptops and a few JavaScript textbooks is not unlike the claim that new technologies automatically create new jobs for everyone. Maybe, unless something drastic changes, most people are totally screwed.
The strange present, we may conclude, is one in which the middle class is slowly being squeezed out of an economy that is gradually dividing into two camps, the few rich and the many poor. Furthermore, “rich” increasingly means “those working in technology.” Of course there are other wealthy sectors — oil, finance — but tech is the high-growth startup amid those stodgy, stagnating elephants.
Henry Blodget says: “Hate To Say It, But If Companies Don’t Start Paying People Better, We May Need Unions.” But unions only matter if labor is valuable, and with every passing year, technology renders labor more irrelevant. When the 5.7 million licensed truck drivers in America are replaced by self-driving vehicles, they can go ahead and strike all they like. Nobody will care. Hardly anybody who matters — which is to say, the rich, the powerful, the technical — will even notice.
And it’s not just truck drivers and factory workers. Better software and better robots are already beginning to replace lawyers, bartenders, burger-flippers, even surgeons, and countless other workers, including those poor souls in technology who haven’t kept up. The new law of the economic jungle is this: either write the software that eats the world, or be eaten.
Maybe that’s why app stores are filled with “the next Facetasnapchatwittergram” instead ofsomething practical, and why most app developers still target iOS first, instead of the Android masses. That’s where the (perceived) money is. As the rich get richer and the poor get poorer, faster and faster, the rich become an ever more tempting target…and the poor are more quickly forgotten.
So. The global economy seems to be bifurcating into a rich/tech track and a poor/non-tech track, not least because new technology will increasingly destroy/replace old non-tech jobs. (Yes, global. Foxconn is already replacing Chinese employees with one million robots.) So far so fairly non-controversial.
The big thorny question is this: is technology destroying jobs faster than it creates them?
These “nothing to worry about here” claims tend to advance two theses at the same time. The first is “this didn’t happen in the past, so it won’t happen now,” which — apologies to those people who will inevitably make that very claim in the comments below — is so foolish it makes me weep.
We live in an era of rapid exponential growth in technological capabilities. (Which may finally be slowing down, true, but that’s an issue for decades hence.) If you’re talking about the economic effects of technology in the 1980s, much less the 1930s or the nineteenth century, as if it has any relevance whatsoever to today’s situation, then you do not understand exponential growth. The present changes so much faster that the past is no guide at all; the difference is qualitative, not just quantitative. It’s like comparing a leisurely walk to relativistic speeds.
However. The second thesis is one which I am less ready to dismiss. As Winship puts it:
If technology reduces demand for labor by a quarter, that might translate into everyone working 25 percent less rather than unemployment rising by one-fourth.
I fully agree. Indeed, in my view, the ultimate purpose of technology is to destroy all jobs and bring on a post-scarcity economy. Let’s face it, a whole lot of today’s jobs are alreadytotal bullshit; but they persist because we live within an economic system built by, for, and around people with full-time jobs.
The trouble is, we can’t get there from here, not without wholesale changes. Machines will reduce labor, yes, great: but equally, across all of society? You must be joking. If technology cuts the demand for labor by 25%, then laborers will earn 25% less, or 25% of them will become unemployed, while all the benefits go to those who own and/or built/wrote that technology. That’s capitalism.
And again, it’s not just truckers; almost every job, probably including yours, runs the risk of being obsoleted when software eats the world…or when the next version eats it again, even faster. Meanwhile, retraining is slow, 50% of the population is below average, and even if technology does eventually create as many jobs as it destroys, there’s no guarantee that those jobs will be available to the entire population, or appear in a timely manner. The result, in a world built around the precepts that most people must have jobs and unemployment is a disaster: economic devastation for those affected.
Maybe I’m wrong. Maybe everything will be fine and the next generation will quickly find themselves overwhelmed with offers for jobs that don’t exist today. But there’s no conclusive evidence either way, and by the time there is, it’ll probably be too late to make meaningful changes. So we need to at least seriously consider the possibility that our current economic system is fundamentally incapable of dealing with this rising technological whirlwind, and that most people live in houses with much thinner walls than they want to believe.
If I’m right, then the under- and unemployed masses will grow ever more frustrated, angry, and resentful of the distant and decadent elite who reap all the wealth and benefits of this Great Devouring. The rich will in turn will presumably accuse the masses of trying to freeload on the immense wealth generated by their disruptive innovations. And instead of taking the first few faltering steps towards a post-scarcity society, i.e. a better world with fewer jobs, we’ll charge headlong into class warfare.
I’m a huge fan of capitalism. But I can’t shake the thought that in a decade or two we may need to move to what I call post-capitalism. Whether that means a basic income (endorsed by Milton Friedman!) or something else — and whether it has to happen the hard way, via some kind of social uprising by the have-nots — I don’t know. But I fear that if our basic economic foundation doesn’t evolve, then we’ll squander most of the enormous cornucopia of benefits that new technologies offer us. That’s not (yet) inevitable; but right now, alas, it seems to me all too likely.
John Evans’ conclusions should surprise no one who is conscious and who has even causally observed the constant shift to non-human productive inputs in the manufacturing, distribution, and sales of products, as well as the delivery of services, that has been occurring during their lifetime. The first burst of this phenomena was the Industrial Revolution. But now we are in an age of technology sophistication that is permeating every sector of industry and our day-to-day lives.
There’s nothing new about machines replacing people, but the rate of replacement is exponential and the result is that productivity gains lead to more wealth for the OWNERS of the non-human factor of production, but for others who have always been dependent on jobs as their source of income, there has been a steady decline to poverty-level labor incomes.
What must be understood (which unfortunately is not understood by conventional economists) is that there are two independent factors of production––human or labor workers and non-human or physical productive capital––productive land, structures, machines, super-automation, robotics, digital computerized operations, etc.
Fundamentally, economic value is created through human and non-human contributions.
Also what needs to be understood is that human productivity has not advanced (our human abilities are limited by physical strength and brain power––and relatively constant), but that the productiveness of the non-human factor of production––productive capital––is the reason that private sector corporations, majority owned by the “1 percent,” are utilizing the non-human factor of production increasingly to create efficiencies and save labor costs. It is the function of technology to save labor from toil and to enable us to do things that otherwise is humanly impossible without non-human input.
The critical question becomes who should own productive capital? The issue of OWNERSHIP is unbelievably overlooked by those in academia and politics, as well as by the author of the MIT Technology Review article. Yet we live in country founded upon private property rights.
Today, large streams of data, coupled with statistical analysis and sophisticated algorithms, are rapidly gaining importance in almost every field of science, politics, journalism, and much more. What does this mean for the future of work?
But what about China, the place where all the manufacturing jobs are supposedly going? True, China has added manufacturing jobs over the past 15 years. But now it is beginning its shift to super-robotic automation. Foxconn, which manufactures the iPhone and many other consumer electronics and is China’s largest private employer, has plans to install over a million manufacturing robots within three years. Thus, in reality off-shoring of manufacturing will eventually be replaced by human-intelligent super-robotic automation.
The pursuit for lower and lower cost production that relies on slave wage labor will eventually run out of places to chase. Eventually, “rich” countries, whose productive capital capability is owned by its citizens, will be forced to “re-shore” manufacturing capacity, and result in ever-cheaper robotic manufacturing.
“The era we’re in is one in which the scope of tasks that can be automated is increasing rapidly, and in areas where we used to think those were our best skills, things that require thinking,” says David Autor, a labor economist at Massachusetts Institute of Technology.
Businesses are spending more on technology now because they spent so little during the recession. Yet total capital expenditures are still barely running ahead of replacement costs. “Most of the investment we’re seeing is simply replacing worn-out stuff,” says economist Paul Ashworth of Capital Economics.
Yet, while the problem is one that no one can no longer ignore, the solution also is one starring them in the face but they just can’t see the simplicity of it.
The fundamental challenge to be solved is how do we reinvent and redesign our economic institutions to keep pace with job destroying and devaluing technological innovation and invention so not all of the benefits of owning FUTURE productive capacity accrues to today’s wealthy 1 percent ownership class, and ownership is broadened so that EVERY American earns income through stock ownership dividends so they can afford to purchase the products and services produced by the economy.
None of this is new from a macro-economic viewpoint as productive capital is increasingly the source of the world’s economic growth. The role of physical productive capital is to do ever more of the work of producing more products and services, which produces income to its owners. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 235 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advance amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.
People invented tools to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive––the core function of technological invention. Binary economist Louis Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in Kelso’s terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, Kelso asserted that, “free-market forces no longer establish the ‘value’ of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.”
Furthermore, according to Kelso, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. Kelso postulated that if both labor and capital are interdependent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive.
The 400 wealthiest Americans and the other 1 to 10 percent richest Americans are rich because they own wealth-creating, income-generating productive capital assets. The disenfranchised poor and working and middle class are propertyless in terms of owning productive capital assets.
Because productive capital is increasingly the source of the world’s economic growth, shouldn’t we be asking the question why is not productive capital the source of added property ownership incomes for all? Why are we not addressing how the system facilitates greed capitalism and envy while concentrating productive capital ownership among the 1 to 10 percent of the population?
The change that is necessary is to reform the system to provide equal opportunity for EVERY American to acquire wealth-creating, income-generating productive capital assets on the basis that the investments will pay for themselves––and on the same terms that the wealthy ownership class now utilizes. They are able to use the investment’s earnings to pay off the capital credit loans used to finance their investments, without having to use their own money or deny themselves consumption.
A National Right To Capital Ownership Bill that restores the American dream should be advocated by the progressive movement, which addresses the reality of Americans facing job opportunity deterioration and devaluation due to tectonic shifts in the technologies of production.
There is a solution, which will result in double-digit economic growth and simultaneously broaden private, individual ownership so that EVERY American’s income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.
The solution is obvious but our leaders, academia, conventional economist and the media are oblivious to the necessity to broaden ownership in the new capital formation of the future simultaneously with the growth of the economy, which then becomes self-propelled as increasingly more Americans accumulate ownership shares and earn a new source of dividend income derived from their capital ownership in the “machines” that are replacing them or devaluing their labor value.
The solution will require the reform of the Federal Reserve Bank to create new owners of future productive capital investment in businesses simultaneously with the growth of the economy. The solution to broadening private, individual ownership of America’s future capital wealth requires that the Federal Reserve stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Policies need to insert American citizens into the low or no-interest investment money loop to enable non- and undercapitalized Americans, including the working class and poor, to build wealth and become “customers with money.” The proposed Capital Homestead Act would produce this result.
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
See the article “The Absent Conversation: Who Should Own America?” published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/who-should-own-america_b_2040592.html and by OpEd News at http://www.opednews.com/articles/THE-Absent-Conversation–by-Gary-Reber-130429-498.html
Also see “The Path To Eradicating Poverty In America” at http://www.huffingtonpost.com/gary-reber/the-path-to-eradicating-p_b_3017072.html and “The Path To Sustainable Economic Growth” at http://www.huffingtonpost.com/gary-reber/sustainable-economic-growth_b_3141721.html. And also “Second Income Plan” at http://www.huffingtonpost.com/gary-reber/second-income-plan_b_3625319.html
Also see the article entitled “The Solution To America’s Economic Decline” at http://www.nationofchange.org/solution-america-s-economic-decline-1367588690 and “Education Is Critical To Our Future Societal Development” at http://www.nationofchange.org/education-critical-our-future-societal-development-1373556479. And also “Achieving The Green Economy” at http://www.nationofchange.org/achieving-green-economy-1373980790. Also see it complete with the footnotes at http://foreconomicjustice.org/?p=9082.
Also see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.
http://techcrunch.com/2013/08/24/jobs-robots-capitalism-inequality-and-you/
