Facing The Robot Tsunami (Demo)

Robots make the perfect employee. They don’t complain, they don’t get sick, and, as of this writing, they don’t have babies. When robots can do the job in today’s economy, they get the job.

When they can’t, a human must suffice. You still need a human to make the perfect latte, ask security questions at the airport and, for the time being, drive a taxi.

That hasn’t stopped many employers from trying to robotize the people they can’t do without. Many have built business models in which they can, in effect, dust off a human when its labor is required and ignore all its other needs.

This is the famous gig economy. It’s app-based cab services insisting that their drivers are private contractors not entitled to the traditional benefits of employment. It’s national chain stores calling employees to duty at a moment’s notice, the heck with any schedule.

Some good people are challenging such employment policies, but there’s a more long-term approach: Give up defending a traditional model of employment that’s dying and come up with a new one. Any realistic solution would require a lot more government intervention and sharing of the national wealth.

I can already hear my conservative friends blowing their tops, but they should hear out the arguments.

A paper out of Brookings Institution — “What happens if robots take the jobs?” — describes the stakes and offers responses. (I’ve taken the liberty of shortening the title.)

“We need a way to provide health care, disability and pension benefits outside of employment,” author Darrell West writes.

How?

For starters, provide a guaranteed income for all. Think of it as an expansion of the earned income tax credit now supporting many low-wage workers and their families.

Isn’t there something socially debilitating about living on government “handouts”? Well, that’s a good question.

An answer, West told me, could be to attach some kind of work requirement to the checks.

(Many states already do that with welfare benefits.) The work could be an existing job or government programs that pay people to do something useful.

It’s been done before. The Works Progress Administration was created during the Great Depression to employ armies of out-of-work Americans. The fruits can be seen today in some of the country’s most gorgeous courthouses, zoos and libraries — and great works of art, theater and music.

Some propose paying for volunteer activities having humanitarian value. Examples could include working for the Red Cross, a hospital or a school.

Our Social Security system allocates benefits on the basis of work credits. We could extend credits for certain volunteerism, as is already done in Britain.

Those conservative friends are moaning that the expense would be borne by the most productive Americans. It would “kill” the jobs they create. Well, some of those entrepreneurs did create jobs, but taxes were a lot lower then.

And contrary to ideology, many of our most successful business minds have become unimaginably rich finding ways to get rid of workers, certainly the Americans ones. They’ve cut pay and benefits and are no longer sharing the profits generated by rising productivity.

Small-government conservatives must ask whether they have a better way to pull America’s working class to safety, out of the path of the oncoming tsunami of robotic competition.

They should be mindful that machines don’t have the vote yet. Also, a big crowd of jobless humans hanging out on street corners leads to crime and social unrest. “If you have a large number of unemployed people,” West said, “the United States starts looking like Egypt.”

We Americans have a lot to talk about — things that really matter.

The role of physical productive capital is to do ever more of the work, which produces wealth and thus income to those who own productive capital assets. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. They strive to minimize marginal costs, the cost of producing an additional unit of a good, product or service once a business has its fixed costs in place, in order to stay competitive with other companies racing to stay competitive through technological innovation. Reducing marginal costs enables businesses to increase profits, offer goods, products and services at a lower price (which people as consumers seek), or both. Increasingly, new technologies and productive capital assets (productive land, structures, tools, machines, robotics, super-automation and mechanization, computerization, etc.) are enabling companies to achieve near-zero cost growth without having to hire people. Thus, 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.

The result is that the price of products and services are extremely competitive as consumers will always seek the lowest cost/quality/performance alternative, and thus, for-profit companies are constantly competing with each other (on a local, national and global scale) for attracting “customers with money” to purchase their products or services.

Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment – thus the political focus on job creation and redistribution of wealth rather than on equal opportunity to produce, full production and broader capital ownership accumulation. This is manifested in the myth that labor work is the ONLY way to participate in production and earn income, and that individual talent and effort are what distinguish the wealthy from the non-wealthy. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Physical capital provides not less than 90 to 95 percent of the input. Full employment as the means to distribute income is not achievable. When the “tools” of capital owners replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another.

We have institutionalized greed (creating concentrated capital ownership, monopolies, and special privileges). The present rigged system is about the ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the wealth through monopolized productive capital ownership. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to earn the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption made possible by “customers with money.” It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.

Without this necessary balance hopeless poverty, social alienation, and economic breakdown will persist, even though the American economy is ripe with the physical, technical, managerial, and engineering prerequisites for improving the lives of the 99 percent majority. Why? Because there is a crippling organizational malfunction that prevents making full use of the technological prowess that we have developed. The system does not fully facilitate connecting the majority of citizens, who have unsatisfied needs and wants, to the productive capital assets enabling productive efficiency and economic growth.

Without a policy shift to broaden productive capital ownership simultaneously with economic growth, further development of technology and globalization will undermine the American middle class and make it impossible for more than a minority of citizens to achieve middle-class status. This will result even with a minimum guaranteed annual income, as the current system requires past savings to invest, which the vast majority of Americans will never achieve, leaving the future ownership of America’s growth wealth-creating, income-producing capital assets to be further concentrated among those who are already wealthy.

As long as working people are limited by earning income solely through their labor worker wages or by income welfare, they will be left behind by the continued gravitation of economic bounty toward the top 1 percent of the people that the system is rigged to benefit. Working people and the middle class will continue to stagnate, resulting in a stagnated consumer economy. More troubling is that this continued stagnation will further dim the economic hopes of America’s youth, no matter what their education level. The result will have profound long-term consequences for the nation’s economic health and further limit equal earning opportunity and spread income inequality. As the need for labor decreases and the power and leverage of productive capital increases, the gap between labor workers and capital owners will increase, which will result in turmoil and upheaval, if not revolution.

Only by freeing economic growth from the slavery of past savings will be able to finance future growth and simultaneously create new capital owners using insured, interest-free capital credit, repayable out of the future earnings of the investments.

Economic democracy has yet to be tried. We are absent a national discussion of where consumers earn the money to buy products and services and the nature of capital ownership, and instead argue about policies to redistribute income or not to redistribute income. If Americans do not demand that the contenders for the office of the presidency of the United States, the Senate, and the Congress address these issues, we will have wasted the opportunity to steer the American economy in a direction that will broaden affluence. We have adequate resources, adequate knowhow, and adequate manpower to produce general affluence, but we need as a society to properly and efficiently manage these resources while protecting and enhancing the environment so that our productive capital capability is sustainable and renewable. Such issues are the proper concern of government because of the human damage inflicted on our social fabric as well as to economic growth in which every citizen is fairly included in the American dream.

For policy solutions see the agenda for the Just Third Way Movement at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/, http://www.cesj.org/wp-content/uploads/2014/02/jtw-graphicoverview-2013.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.

Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice

Support the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/. See http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.