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On December 19, 2018, Bob Lord writes on other words.org:
A few weeks ago, I cringed when I saw this headline at a popular progressive website: “See How Well the GOP Tax Scam Is Creating Jobs? Walmart Announces Plans for 360 Robot Janitors.”
It’s the same way I’ve cringed when conservative scolds taunt fast food workers that they’ll regret demanding a living wage, because it will cause their jobs to be mechanized out of existence.
On both the left and the right, Americans see innovation mainly as a threat to workers. The unfortunate thing is: They may not be wrong.
It didn’t used to be this way.
Replacing human labor with a machine used to mean fewer work hours per worker, with little or no loss in pay. It meant workers being freed up to do other, more rewarding work.
Until about 1980, technological advances benefited American workers and American society. Technological advances improved productivity, and workers shared in the benefits proportionately. Wages rose at the same rate as productivity.
Not only were American workers paid more, they enjoyed progressively shorter work weeks. As workers’ pay increased, they could buy more, which created more work, and more demand for workers.
Then, things changed. Technology continued its relentless march forward, but productivity increases stopped translating into higher wages. Instead, policy choices made by America’s political leaders caused the increased wealth and income from those productivity improvements to flow almost exclusively to those at the top.
Over the course of just four decades, America went from historically low levels of economic inequality to its highest level of economic inequality ever, surpassing even the inequality that reigned during the country’s gilded age. While the wealthiest American families own 60 times the wealth they owned in the early 1980s, the wealth of the median American family has decreased.
Those trends have now been at work for so long that the American view of technological advance has been turned on its head.
Today, it’s taken as a given that technology that replaces human labor will enrich only the developers of the technology — and the wealthy shareholders and executives of the corporations that employ it to eliminate jobs. We assume, not incorrectly, that the workers whose jobs are eliminated will suffer, while no other workers benefit.
It doesn’t have to be this way.
How crazy is it that we see the elimination of backbreaking labor as a bad thing? Nearly 50 years ago, science fiction writer Arthur C. Clarke proclaimed: “The goal of the future is full unemployment, so we can play. That’s why we have to destroy the present politico-economic system.”
In those words, Clarke captured the true value of technological advance: Technology should drive us ever closer to a society free of mundane human tasks. Instead, thanks to that “present politico-economic system,” it’s now employed in service of creating obscene wealth for a tiny fraction of our population.
That group, about 125,000 households in all, lives in absurd opulence. They own multiple mega-mansions. They fly in their own airplanes. Some own their own islands. Some earn more in a day than workers earn in a year. “Wealth beyond the dreams of avarice,” to quote a phrase most frequently attributed to English dramatist Edward Moore.
It doesn’t have to be this way. We may never achieve Clarke’s utopian vision, but we could be one heck of a lot closer to it. Stronger unions, a federal jobs guarantee, a universal living wage, and single-payer health insurance could all help restore the balance between labor and technology.
Those idea will have strong proponents in the next Congress. So now we can get to work destroying that “politico-economic system.”
Gary Reber Comments:
Americans continue in limit their thinking to job retention and creating, while ignoring the opportunities ahead to OWN, as individual, the future formation of non-human means of production.
There is a way for EVERY child, woman and man to have equal opportunity to become an owner of wealth-creating, income-producing productive capital assets in a future technological age when people can substitute reliance on jobs to earn an earn an income and create personal wealth with sophisticated automation, robotics and AI, etc (all non-human means) productive capital assets. It is called Capital Homesteading.
How Capital Homesteading Works
The Center for Economic and Social Justice has outlined the following process:
1. Each year (annually, bi-annually or quarterly) the government estimates how much productive capital will be added to the economy in the coming period, both in the private and public sectors. Dividing that number by the current number of U.S. citizens determines that period’s per-citizen allotment of interest-free capital credit.
For example, the total annual U.S. capital formation increment for 2018, which according to the Federal Reserve Bank of St. Louis amounts to $3.955 trillion. When that number is divided by the total 2018 U.S. population of 328.9 million citizens, the result is an annual per-citizen capital credit allocation of $12,023. (For purposes of this illustration, however, we’ll use an annual capital credit allotment of $7,000, calculated for a slow growth economy.)
2. An enterprise that needs to finance new capital assets, such as plant, equipment, structures, patents, information technology systems, etc., decides to finance that new productive capital by selling newly issued Capital Homesteading shares to citizens, at their current market price. The enterprise can escape paying corporate income taxes on all full-dividend payout, voting shares. Future dividends not used to repay a Capital Homestead loan would be taxable at the personal level.
In this example a family of four goes to their local bank to set up four individual, tax-sheltered Capital Homestead Accounts (CHAs). With the parents making decisions on behalf of their minor children, they will get investment advice from the bank and use their annual capital credit allotments to purchase qualified shares of the enterprise. (A portion of their capital credit allotment will be used to cover the one-time cost of capital loan insurance and bank service charges.)
3. Under the Capital Homestead law, the enterprise must pay annually to each citizen’s Capital Homestead account all the profits earned on the shares to be purchased.
The initial stream of corporate profits will be used to pay off the scheduled CHA loans. When the citizens receive dividend incomes above their periodic principal payments on their CHA loans, they will be subject to personal income taxes on any additional dividends. Capital Homestead shares are tax-exempt as long as they remain in the tax-sheltered Capital Homestead account.
4. The family’s adults present “bills of exchange” for the bank’s approval and acceptance, in order to obtain their chosen shares for each CHA loan for that period. (Before the loan is made, the lender, risk insurance company and other entities will first determine the “feasibility” of each particular loan. (“Feasibility” means that the enterprise’s new capital is expected to generate enough profits to pay for itself.) Such a feasibility analysis will judge the soundness of the enterprise that needs to purchase the new capital assets, including the quality of its management and workforce, its current and future markets, etc.)
The bank in turn issues a promissory note for each Capital Homestead loan and sets up a checking account for each member of the family. (In a process called “discounting” the bank will deduct from the total loan principal a one-time premium for capital credit risk insurance and service fees for the bank and other advisors.)
5. The bank guarantees to a Capital Credit Insurer to add a risk premium to the principal needed to purchase the shares. (This premium and the bank service charges will be paid out of the CHA loan discount.)
6. The Capital Credit Insurer insures each of the CHA loans.
7. The local bank bundles (or transfers to a Capital Credit Syndicator) all insured CHA loans.
8. Either directly or through the Capital Credit Syndicator, the bank takes to the discount window of its regional Federal Reserve Bank the bundled CHA loans for “rediscounting.” (This is where the Federal Reserve deducts from the total loan an amount to cover its own actual servicing costs for issuing new money.)
9. The regional Federal Reserve issues to the local bank a promissory note and creates new asset-backed money or “demand deposits” (a checking account) for the local bank.
10. The local bank then transfers to the citizen’s Capital Homestead Account the new money to be used to purchase the newly issued shares of the enterprise.
11. The Capital Homesteader writes out a check from his or her Capital Homestead Account to purchase the new growth shares.
12. The enterprise uses the cash to purchase new capital assets and working capital.
13. The enterprise acquires and puts into operation the new capital (technology, structures, land, etc.) to increase its production of marketable goods and services.
14. The enterprise, as it generates profits, makes scheduled payments of dividends to the citizen’s Capital Homestead Account. These dividends are tax-deductible to the enterprise.
15. The Capital Homestead Account makes periodic installment payments of principal on the citizen’s CHA loan. Once principal payments on that loan are made, all additional future dividends become a new source of consumption income for the citizen.
16. The Capital Homestead money creation cycle ends with the original money being cancelled, in order to avoid the inflationary effects of money remaining in the economy not backed by capital assets or marketable goods and services.
