Where Has Austerity Helped Restore an Economy to Health?

[stone]

Machine Ghost, I'm not sure wealth doesn't matter now. Infact I don't think it is true that everyone is wealthy. Lots of people are in debt. What they do gets dictated by the creditors (or that is what the creditors attempt). World wide it certainly is not true that everyone is wealthy. More people starved in 2009 than ever in human history. What is even more shocking to me is that a higher proportion of the world population starved in 2009 than at any time since the 1980s. I also think that the jobless recovery phenomenon of the 2000s is symptomatic not of automation but of financialization. When the phrase "jobless recovery" is used it needs to be interpreted as what is meant by "recovery". If it just means GDP in the form of FIRE sector activity then no wonder it is jobless. A pure asset bubble involves no goods or services at all and is a pure inflation of asset prices. Why might we even hope that that would do any good? At best it might suck some money in from third world dictators to western asset markets and so prop up western currencies.

I also think it is important to define "wealth". To me it only makes sense as a relative measure and needs to be compared to the cost of labour and the total global asset value. Of course the "cost of labour" has multiple forms. Good doctors and CEOs have got expensive whilst some other trades have become cheaper. Also the total global asset value relative to total global labour wage bill has shifted. When you said that everyone is now wealthy, did you mean that everyones savings amounted to more years of wages than used to be the case? Collectively, global assets may now be a greater ratio to total global income BUT the distribution of those assets is spectacularly uneven.

[Gumby]

When you said that everyone is now wealthy, did you mean that everyones savings amounted to more years of wages than used to be the case?

I believe MG was talking about a hypothetical post scarcity utopia or dystopia, where there is no need for money, but everyone has wealth...

http://en.wikipedia.org/wiki/Post_scarcity

For instance, there a need for money in Star Trek because your replicator would provide you with everything you could ever wish for and disease/war/famine had been eliminated. Instead of a capitalist society, planets evolved to a state where everyone pursued their own dreams and bettered mankind.

My guess is that, in reality, you would probably have a dystopia rather than a utopia:

There have also been fully dystopian science fiction societies where all people's physical needs are provided for by machines, but this causes humans to become overly docile, uncreative and incurious. Examples include E. M. Forster's 1909 short story "The Machine Stops", Kurt Vonnegut's Player Piano, Frank Herbert's Dune, and Arthur C. Clarke's 1956 novel The City and the Stars. "Riders of the Purple Wage", Philip José Farmer's dystopian 1967 science fiction novella also explores some ramifications of a future wherein technology allows everyone's desires to be met. David Weber's Honor Harrington saga has the example of the People's Republic of Haven, in which each citizen is due a Basic Living Stipend. With most of their population "on the dole", productivity and their economy collapse. In Frederik Pohl's "The Midas Plague," resources and luxuries are so common, that the poor must bear the burden of consuming and disposing of the bounty, as well as working at meaningless jobs to produce more meaningless plenty; the rich, conversely, are allowed to live simple but comfortable lifestyles. In Stanislaw Lem's Cyberiad, a central motif is unbounded progress of technology. In The Highest Possible Level of Development civilization, the inhabitants have become passive, and the visitors have to shoo away machines trying to comfort them. In H.G. Wells' The Time Machine, the Time Traveller speculates, based on the Eloi, that mankind had been "armed with a perfected science" which reduced all dangers in nature, epitomized by the quote: "Strength is the outcome of need". The 2008 Pixar film WALL-E also depicts what appears to be a post-scarcity dystopia, albeit humorously imagined.
Source: http://en.wikipedia.org/wiki/Post_scarcity#Dystopias

I think the idea that automation will eradicate the wealth gap is short-sighted. More likely, you would get one of the dystopias described in the quote above.

Stone, that "Basic Living Stipend" in Honor Harrington sounds a lot like the Citizen's Dividend you've described in the past.

[stone]

Gumby, do you agree with that dystopian view that a citizens' dividend would lead to economic collapse? In the UK we do get a minimum amount of money from the state if we have nothing and don't work. In some districts 80% of the population are on such benefits and for them, any wages they did get would get subtracted from the benefit.  To my mind a major difference with a citizens' dividend would be that everyone, as well as receiving the benefit, could work ontop of that.

[moda0306]

stone,

I think what you're observing is the difference between a true-blue citizen's dividend and one with a built-in moral hazard... something we should always avoid.

The problem I see with the true-blue type, though, is that safety nets are 75% for the recipient, and 25% so the rest of society doesn't have to deal with criminals and vagrants in public areas.

In a system that only pays out $xxx per month no matter what, you'd still have irresponsible people at the time they need it most, after spending all of their savings, in dire need.

I am just pointing that one piece out... I still like the idea of a citizen's dividend as moral-hazard-free as possible.

[Gumby]

Gumby, do you agree with that dystopian view that a citizens' dividend would lead to economic collapse? In the UK we do get a minimum amount of money from the state if we have nothing and don't work. In some districts 80% of the population are on such benefits and for them, any wages they did get would get subtracted from the benefit.  To my mind a major difference with a citizens' dividend would be that everyone, as well as receiving the benefit, could work ontop of that.

I think a citizens' dividend would make sense in a world where resources and energy are scarce. But in a post scarcity world, where energy is cheap and machines provide everything, the potential for economic collapse would be real. Click those links, from above, about Honor Harrington and the People's Republic of Haven. Although they are science fiction, they highlight a problem with post scarcity.

Ultimately a utopia is not a forgone conclusion. The potential for dystopia is just as real, if not more likely, since we are flawed as humans — preferring to live in comfort rather than work. As long as there is scarcity, people will work to attain more. Without scarcity, there is little incentive to work.

[moda0306]

Gumby,

What if the productivity gains were so great that we could supply people with a citizen's dividend of $30,000 in today's dollars?

Would that not prevent a collapse, since everyone's getting at least enough to prevent going berserk and looting businesses so they can feed their kids?

[Gumby]

Gumby,

What if the productivity gains were so great that we could supply people with a citizen's dividend of $30,000 in today's dollars?

Would that not prevent a collapse, since everyone's getting at least enough to prevent going berserk and looting businesses so they can feed their kids?

Take a look at the fictional People's Republic of Haven. The collapse isn't about people looting businesses. The collapse is about people not needing to work anymore because food, energy and goods are so easy to come by — and robots take over much of the general workforce anyway. In the story, the Basic Living Stipend needed to be raised each year to counteract inflation. There was corruption and lack of private media oversight (since I guess nobody wanted to work anymore).

[stone]

That Kingdom of Heaven fictional example seems form the wikipaedia link to have been based on an economy that got its real resources from imperial conquest. Isn't that totally different from having a system for a self sustaining economy? If a citizen's dividend was paid for with an asset tax, then the value of the citizens' dividend supported would be dependent on the value of everyone's assets which in turn would depend on what work was being done. A factory or farm is only worth anything if it is producing stuff. If no one was working, then asset prices would be low and the citizens' dividend would be low and wages would be high. To my mind that seems like a self regulating system. Work gets done as and when it needs to get done.

[Lone Wolf]

Ultimately a utopia is not a forgone conclusion. The potential for dystopia is just as real, if not more likely, since we are flawed as humans — preferring to live in comfort rather than work. As long as there is scarcity, people will work to attain more. Without scarcity, there is little incentive to work.

If there's truly no scarcity and nobody chooses to work... who cares?  What would be wrong with living in comfort, enjoying life, and pursuing whatever creative endeavor that you wish?

It's like fretting about all the unemployment in the Garden of Eden.

[Gumby]

Behold, the fictional People's Republic of Haven:

The People's Republic of Haven

Although the Haven System lies 667 light-years from Old Earth, 155 light-years further distant than Manticore, the first shuttle landed on its habitable planet (also called Haven) in 1309 pd, over a century before Manticore was settled. This was possible because of the fashion in which the introduction of the Warshawski Sail had revolutionized the logistics of colonization. Haven's day is 24.56 standard hours in length, and its year is 412.25 local days in length, divided into 13 months: 9 of 32 days each and 4 of 31 days each. The short months are the 3rd, 5th, 10th, and 12th. Every 4 years, the 3rd month is 32 days long.

Haven lay in a particularly attractive region, with an unusually high proportion of F, G, and K class stars, and the original expedition was extremely well financed as a joint venture by no fewer than eleven corporations based on member planets of the Solarian League. Moreover, the planet of Haven proved well-named, for terrestrial life forms adapted to its environment with a minimum of difficulty and its climate was very nearly idyllic. With a powerful PR organization to tout its attractiveness, it exercised a magnetic effect on the would-be colonists of the League and, with the availability of the new hypership technology, grew at incredible speed. By 1430 pd, the Republic of Haven already boasted a planetary population of almost a billion and was beginning to mount colony expeditions of its own in what became known (despite the fact that six other systems in the same region had been colonized before or almost simultaneously with Haven) as the Haven Quadrant.

By 1475, the Haven economy and government had proven themselves extremely efficient and effective. Politically, Haven was a representative democracy with a strong and politically active middle class, and its economic policy enshrined the principles of liberal capitalism with minimal government interference. Coupled with the "jump start" provided by the colony's highly favorable initial circumstances, this combination of market efficiency and flexible government created a planetary standard of living at least as high as that of most Solarian League member worlds, and it became the envy and the pattern for every other world in the quadrant.

For the next two centuries, Haven continued to fulfill its promise, rising to a system population of almost seven billion and becoming a sort of interstellar Athens. The Haven Quadrant, although composed of independent worlds and star systems, rivaled the Solarian League for economic power, and it remained a vibrant and expansive entity, unlike the essentially satisfied and content League. Although the quadrant contained no wormhole junctions, it had access to the Manticore Junction (and, later, to the Erewhon Junction) and thence to the League, and there was every reason to believe that its expansion and prosperity would continue.

It did not. Precise identification of a specific event which caused the change within the quadrant is impossible, but in general terms it might be called over-achievement. The quadrant—and, in particular, Haven—had done too well. Its wealth was incalculable, and it began to seem unfair that that wealth was not more evenly distributed. In particular, capitalism, as always, had produced stratified classes, ranging from the extremely wealthy to the marginal and even sub-marginal, and if the members of Haven's "sub-marginal" class were immeasurably better off than, say the pre-Anderman citizens of New Berlin, they were not well off compared to their own affluent fellow citizens.

The Republic thus began to experiment, cautiously at first, with assistance and welfare programs to increase the opportunities of its less advantaged citizens. Unfortunately, what began as an experiment gradually became something else. Transfer payments became increasingly important for the maintenance of the industrial poor, requiring greater levies on the productive elements of society. Marginal industrial operations were shored up by protective tariffs, government loans, and outright grants to encourage full employment, which both undercut the overall efficiency and productivity of the industrial base and encouraged inflation. Inflation further worsened the condition of the poor, requiring still higher transfer payments—payments which were soon adjusted for inflation on a mandated basis—and, as the network of assistance proliferated, it came to be seen as a fundamental "right" of those receiving the aid. By 1680 pd, Haven had issued its famous "Economic Bill of Rights," declaring that all of its citizens had an "unalienable right" to a relative standard of living to be defined (and adjusted as inflation required) by statute by the legislature.

In the process, the government had initiated an unending spiral of inflation, higher transfer payments, and increasing deficit spending. Moreover, it had (quite unintentionally, at least at first) undermined the fundamental strength of its own democracy. The middle class, the traditional backbone of the Republic, was under increasing pressure both from above and below, caught in the squeeze between an increasingly less productive economy and ever larger levies against its earnings to support the welfare system. Whereas the middle class had once seen the upper class as (at worst) essentially friendly rivals or (at best) allies in their joint prosperity, they came to see the wealthy, like the poor, as enemies, fighting over a dwindling prosperity. Worse, the middle class's traditional aspiration to upward mobility had become an increasingly remote dream, and it was much easier to focus resentment on those who had more than the middle class than on those who had less—a tendency which became ever more pronounced as "enlightened" commentators and academics secured dominant positions in the media and educational system.

Perhaps worst of all, was the emergence of the "Dolist" blocs. The Dolists (so called because they were "on the dole," receiving government assistance in greater or lesser degree) were still franchised voters and, quite logically, supported the candidates who offered them the most. It was a case of self-interest, and the Dolists' self-interest interlocked with that of increasingly careerist politicians. A new class of machine politicians, the "Dolist managers," emerged, playing the role of king-makers by delivering huge blocks of votes to chosen candidates. Incumbent politicians soon realized that their continued incumbency was virtually assured with the managers' backing—and that the converse was also true. A politician targeted by the "People's Quorum" (the official term for the alliance of Dolist managers) was doomed, and as the leaders of the Quorum became aware of their power, they selected specific politicians to punish as an example to all politicos of the power the Quorum represented.

Finally, as if to complete the system-wide outbreak of mass insanity, most of those who recognized that something was wrong embraced a "conspiracy theory" which assumed that their problems must result from someone's hostile machinations—probably those of the domestic "monied classes" or foreign industries who "dumped" their cheap, shoddy products on the Haven economy. Almost worse, there was an entrenched element of "this wouldn't be happening to us if we weren't somehow at fault" in the vast majority of mid-18th century Havenite political and societal analysis and rhetoric, and this masochistic tendency only became more pronounced as the century wound to a close.

By 1750 pd, the Republic—no longer "The Republic of Haven," but now "The People's Republic of Haven"—had become the captive of a coalition of professional politicians (indeed, politicians who had never had and were not qualified for any other career) and the Quorum, aided and abetted by a morally and intellectually bankrupt academic community and a mass media philosophically at home with the Quorum's objectives and cowed (where necessary) by threats of blacklisting. That the Quorum could succeed in blacklisting journalists had been demonstrated in 1746 pd, in the case of Adele Wasserman, one of the last moderate journalists. Her moderation, which was actually a bit left of center by mid-17th century standards, was labeled "conservative" or, more frequently, "reactionary" by her 18th century contemporaries. She herself was called "an enemy of the common man," "a slave of the monied powers," and (most cutting slur then available on Haven) "a fiscal elitist," and her employer, one of the last independent news services, was pressured into terminating her contract (for "socially insensitive and inappropriate demagoguery") by means of an economic boycott, strikes, and governmental pressure. Her firing, followed by her subsequent relocation to the Kingdom of Manticore and a successful career as a leading theorist of the Centrist Party, was the writing on the wall for any who had eyes. Unless something quite extraordinary intervened, the current Havenite system was doomed.

The problem was one which had arisen as long ago as Old Earth's Roman Empire: when power depends on "bread and circuses," those in power are compelled to provide ever greater largess if they wish to remain in power. In effect, the politicos required a bottomless and ever-filled public trough to pay off the Dolists and provide the graft and corruption to support the lives to which they themselves had become accustomed, and after almost two centuries of increasingly serious self-inflicted wounds, not even the once-robust Havenite economy could support that burden. It became apparent to the political managers that the entire edifice was in trouble: tax revenues had not matched expenditures in over 143 T-years; R&D was faltering as an increasingly politicized (and hence ineffectual) educational system purveyed the pseudo-scientific mumbo-jumbo of collectivist economic theory rather than sound scientific training; and the decreasing numbers of truly capable industrial and technical managers produced by the system were increasingly lured to other star systems whose economies allowed them to use their talents and enjoy the benefits thereof. The "Technical Conservation Act" of 1778, which revoked emigration visas for all research and production engineers by nationalizing their expertise "as a resource of the Republic," was intended to put a stop to that, but it could not reverse the fatal trends.

Real economic growth had stopped—indeed, the economy was contracting—but ever higher Basic Living Stipend payments were politically inescapable, and the stagflation which had resulted was becoming a self-sustaining reaction. In 1771 pd, a highly classified economic report to the House of Legislators predicted that by the year 1870 the entire economy would collapse in a disaster which would make Old Earth's Great Depression and the Economic Winter of 252 pd look like mild recessions. The Chiefs of Staff, apprised of the degree of collapse to be anticipated, warned that it would precipitate pitched warfare in the streets as Haven's citizens fought for food for their families, for Haven had long since attained a population which could not feed itself without imports, and imports could not be paid for with a negative balance of trade.

The government saw only two ways out: to bite the bullet, end deficit spending, abolish the BLS, and hope to weather the resultant catastrophic reorganization, or to find some other source of income to shore up the budget. The possibility of admitting they could no longer pay the interest on Haven's mortgaged future was too much for them to stomach, which meant only the second solution was a real possibility, but there was no more money to be squeezed out of the economy. A panicked group of legislators suggested draconian "soak the rich" schemes, but the majority recognized that any such panacea would be purely cosmetic. Aside from their own hidden assets, the wealthy represented less than 0.5% of the total population, and the totally confiscatory taxes proposed would provide only a temporary reprieve . . . and eliminate both future private investment and the highest tax brackets (already taxed at 92% on personal income and 75% on investment income) as a long-term revenue source. A self-sustaining tax base could be produced only by a strong middle class, and the middle class had been systematically destroyed; what remained of it was far too small to sustain the government's current rate of expenditure and had been for almost a century.

That left only one possible way to find the needed revenue, and the government, with the cooperation of the Quorum, prepared to seize it under the so-called "DuQuesne Plan."

The first step was a "Constitutional Convention" which radically rewrote the Havenite Constitution. While maintaining a facade of democracy, the new constitution, by redefining eligibility requirements and office qualifications and giving the House of Legislators the right to refuse to seat even a legally elected representative if the House found him or her "personally unfit for public office," created a legislative dictatorship with hereditary membership. (It was not a strictly parent-to-child inheritance but rather a codification of the "adoption" process which had become the normal career route for Havenite politicians over the past century; true dynasties came later.) The second step was not to limit deficit spending but to increase it, this time with the enthusiastic support of the military, which underwent the greatest peacetime expansion in Havenite history. And the third step, launched in 1846 pd, was to acquire additional revenue from a totally new source: military conquest.

The initial attacks were almost totally unopposed. The quadrant was so accustomed to the idea that Haven represented the ideal to which all humanity aspired that its steady collapse had been sadly underestimated. Haven's problems were known, but their severity was misjudged, and the consensus was that all of them could be solved if Haven would only put its house in order. Indeed, the majority of Haven's neighbors felt that Haven was on the right track but had simply gotten temporarily out of control, and many of them were in the early stages of the same process in a sort of lemming-like emulation of disaster. The sudden expansion of the Havenite military caused some concern, but those who suggested that long-friendly Haven contemplated hostile action were viewed as hysterical alarmists. Besides, the quadrant's other systems found their own economies were becoming increasingly strapped, and warships and troops cost money which was required for their own welfare programs.

The result was a turkey shoot for the Peoples' Navy. Between 1846 and 1900 pd, a period of barely more than fifty years, the People's Republic of Haven had conquered every star system within a hundred light-years of it, incorporating them by force into a new, interstellar PRH ruled by the now openly hereditary "legislature" of the Haven System.

Unfortunately for the Legislaturalists, they soon discovered that conquest was not the solution they had hoped. True, they could loot the economies of conquered worlds, but unless they wanted servile insurrection, there was a limit to how badly they could wreck their subject economies. Worse, the military machine required to conquer and then police their new empire cost even more than they had anticipated, particularly as their alarmed and (so far) unconquered neighbors began to arm in reply. Despite all efforts, their budgets remained stubbornly in the deficit column; they simply could not pay for both their military and the support of their subsidized population out of available resources. There was an appearance of prosperity on the home front, but those in informed positions knew that it was only an appearance. In short, the "Republic" had only two options: continue to expand, or collapse.

And so, in 1900 pd, the People's Republic had no choice but to look for fresh fields to conquer . . . and found, directly in its path, between it and the additional worlds it had to have, a small but wealthy star system known as the Star Kingdom of Manticore.

Dystopia happens. On paper, a citizens dividend sounds flawless. I agree, it really is a great idea. But, in reality, politicians always become corrupted by the urge to retain power. And people find ways to exploit that from both ends of the spectrum (rich vs. poor). In the end, the utopia we draw up on paper can rarely ever happen because our nature, as humans, is to overexploit a good thing.

[stone]

Medium Tex, I guess the thing is that the system we have is collectively every ones' choice and doing. Is it best to leave other people to boss us about as they see fit and for us not to pass comment? I totally agree that the best system is the system that is best in practice with real people doing what real people do. I just get the feeling that our system is rapidly evolving into something rather ugly and much of the reason is simply that people are being bamboozled into thinking that there is no alternative due to falaciatious arguments about "economic imperatives" and "there is no more money" or whatever.

[Gumby]

Medium Tex, I guess the thing is that the system we have is collectively every ones' choice and doing. Is it best to leave other people to boss us about as they see fit and for us not to pass comment? I totally agree that the best system is the system that is best in practice with real people doing what real people do. I just get the feeling that our system is rapidly evolving into something rather ugly and much of the reason is simply that people are being bamboozled into thinking that there is no alternative due to falaciatious arguments about "economic imperatives" and "there is no more money" or whatever.

Ultimately the problem is that unless you find a way to eliminate all poverty, disease, war and famine (as in Star Trek's own utopia) — an extremely tall order, mind you — then politics will always revert back to class warfare. And when political parties take sides in class warfare, it makes the progress to eliminate all poverty, disease, war and famine nearly impossible — further widening the wealth gap.

[Gumby]

Ultimately a utopia is not a forgone conclusion. The potential for dystopia is just as real, if not more likely, since we are flawed as humans — preferring to live in comfort rather than work. As long as there is scarcity, people will work to attain more. Without scarcity, there is little incentive to work.

If there's truly no scarcity and nobody chooses to work... who cares?  What would be wrong with living in comfort, enjoying life, and pursuing whatever creative endeavor that you wish?

It's like fretting about all the unemployment in the Garden of Eden.

LW, you're describing a utopia where everyone is equal — where poverty doesn't exist and money doesn't circulate. Sounds great. Sign me up.

But, if poverty does exist, and money stops circulating due to the fact that those with money don't need to work or spend much, what then? Based on how automation has already started to reduce the need for low-skilled labor, my sense is that only those who could own automation would reap most of the benefits in a post-scarcity world.... and then the rich would stop circulating their money. This would create a class of those without any money. The citizens dividend would be an idea to solve this, but my guess is that this would just create more class warfare. This is kind of story is outlined in the Republic of Haven story above.

All of these post-scarcity science fiction stories deal with this inequality somehow. I highly doubt post-scarcity is always perfect. More likely class warfare intensifies.

[MediumTex]

Wouldn't a post-scarcity environment just be a temporary state until population increases tipped things out of balance again? 

Every population in nature responds to abundance with increased reproduction, right?

Our economic system is premised upon continued economic growth, which is itself the product, in part, of population growth, right?

Doesn't every population that sees a spike in growth following a temporary abundance (as, for example, fossil fuels may have provided humans) later see a crash when the temporary abundance disappears?

Maybe we are all just living in a system that is based upon some pretty silly assumptions.

[Gumby]

Every population in nature responds to abundance with increased reproduction, right?

Nope. Fertility rates always decline as societies become more wealthy.

http://www.ted.com/talks/hans_rosling_s ... _seen.html

http://en.wikipedia.org/wiki/Total_fertility_rate

(Fertility Rate = average number of births per woman)

[MediumTex]

Every population in nature responds to abundance with increased reproduction, right?

Nope. Fertility rates always decline as societies become more wealthy.

http://www.ted.com/talks/hans_rosling_s ... _seen.html

http://en.wikipedia.org/wiki/Total_fertility_rate

(Fertility Rate = average number of births per woman)

Think about it more broadly, though.  What happens when a society becomes more wealthy?  It tends to outsource a lot of its functions to either foreign production centers, or to foreign populations imported just to do the dirty work.  The places that this work normally falls to are countries that are seeing high population growth.

This same process happens with pollution.  A society may think it is improving its pollution levels when what it is actually doing is moving its pollution to another country by outsourcing dirtier parts of its economy.

If you look at a country like Japan as an example of prosperity and zero population growth, I think you also have to look at all of the areas of mainland Asia that are needed for Japan to continue its desired standard of living.

If we entered a period of zero world population growth with stable or increasing standards of living, that  would impress me.

Also, declining population growth rates are not enough to reverse the dynamic I am describing above.  Any sustained positive growth rate turns into dramatic exponential growth when given enough time.  Thus, the whole universe would be overrun by humans even at a compounded 1% population growth rate, and it would happen in just a blip in terms of geological time.  Populations typically encounter "least abundant necessity"-related issues long before they overrun the universe (normally the bottleneck is food, but occasionally it can be running out of a place to store waste).

[Gumby]

Every population in nature responds to abundance with increased reproduction, right?

Nope. Fertility rates always decline as societies become more wealthy.

http://www.ted.com/talks/hans_rosling_s ... _seen.html

http://en.wikipedia.org/wiki/Total_fertility_rate

(Fertility Rate = average number of births per woman)

Think about it more broadly, though.  What happens when a society becomes more wealthy?  It tends to outsource a lot of its functions to either foreign production centers, or to foreign populations imported just to do the dirty work.  The places that this work normally falls to are countries that are seeing high population growth.

Except the science-fictional worlds of post scarcity usually outsource production to robots and machines. So, perhaps robots would see a population growth. Any developing countries would certainly see population growth — though, American-born robots would likely stifle the growth potential of developing countries. In any case, there's no real data that shows us that a post-industrial wealthy society would see anything but a steady decline in fertility rates.

This same process happens with pollution.  A society may think it is improving its pollution levels when what it is actually doing is moving its pollution to another country by outsourcing dirtier parts of its economy.

It's hardly the same thing. Again, a post scarcity society would outsource its work to robots and automation.

If you look at a country like Japan as an example of prosperity and zero population growth, I think you also have to look at all of the areas of mainland Asia that are needed for Japan to continue its desired standard of living.

True. But, Again, I was talking about a post scarcity society where robots pick up the work. Note that Japan is currently the leader in robotic technology. The Japanese would prefer it if the robots took care of their aging population.

Reuters: Japan eyes robots to support aging population

If we entered a period of zero world population growth with stable or increasing standards of living, that  would impress me.

Also, declining population growth rates are not enough to reverse the dynamic I am describing above.  Any sustained positive growth rate turns into dramatic exponential growth when given enough time.  Thus, the whole universe would be overrun by humans even at a compounded 1% population growth rate, and it would happen in just a blip in terms of geological time.  Populations typically encounter "least abundant necessity"-related issues long before they overrun the universe (normally the bottleneck is food, but occasionally it can be running out of a place to store waste).

True. But, the replacement level of fertility is roughly 2.1 (the .1 accounts for early deaths). In the next few years, half of humanity is expected to drop below this threshold.

The Economist: Go forth and multiply a lot less

Population will still increase, but it's theoretically possible for a post scarcity world — where everyone has wealth — to have a population replaced by machine due to declining of fertility rates. This is all hypothetical, but still interesting.

[MediumTex]

Gumby,

What do you think would happen to an economic system premised upon perpetual economic growth (which is especially needed to pay off debts with interest) if growth rates became static in harmony with static population growth?

Are you thinking that the robots will make up for what would otherwise be a stagnation of economic growth as a result of slowing population growth?

Wouldn't a rise of a robot class create even more surplus economic capacity than we have now?  Where would the demand come for all of the robot output?

It always seemed to me that part of what made capitalism work was that the people who worked in the factories were consuming the stuff that was being made in all of the other factories.  When you replace the factory workers with robots, though, it seems to me that from a macroeconomic perpsective you now have the same amount of supply, but less demand since there are fewer people with money to spend on the overall output of all of the factories.

Ultimately, I think the question is whether the robots of the future are going to be prosthetic devices for humans (figuratively speaking for the most part), allowing humans to do more work than ever with the help of their robot assistants, OR are the robots going to completely replace humans, which seems farfetched to me.  One thing to keep in mind when thinking about these things is that over its lifecycle a robot is actually a very energy intensive device.  In a low energy environment, however (which has been the case for 99% of history), human muscle power alone can actually do quite a lot of work at a relatively low caloric input compared to other sources of energy.  Even compared to larger animals such as horses and oxen, humans provide a favorable work output relative to caloric input.  Humans over time have preferred animals to human labor because animals can deliver greater bursts of energy than human muscle power alone, not because animal power was more efficient on a caloric intake to output basis than human muscle power alone.

If we assume that human muscle power is more efficient from a caloric intake perspective than any iteration of machinery or robots (I don't think it's any accident that human slavery only disappeared on a large scale when cheap and easily obtained supplies of fossil fuel began being used to power industrial processes), we see that machinery and robots are mostly just useful for bringing large bursts of energy to a task and require the ready availability of large supplies of very dense energy (typically fossil fuels).  For example, you could never build a moon rocket using human muscle power alone (though you could build a bunch of large pyramids, which might be even more impressive).  In other words, human muscle power may actually provide a more efficient and a more resilient source of energy for us to provide for our needs, even though it suggests that the long term prospects of the current super-high energy configuration of society (along with the robots) may be transitory.

When it comes to the creation of a robot compared to the creation of a human being, I also think that it is much easier to make a new human (all you need is the right mood and good timing) than it is to make a new robot (robots require vast infrastructure that is vulnerable to all sort of disruptions).  If human muscle power is more efficient, more resilient and easier to replicate, it seems to me that the robots should fear us, not the other way around.

Any time I hear the story of John Henry and the steam drill, I always wish that the calorie count of John Henry's breakfast could be compared to the calories necessary to run the steam drill for the first half of the day.  If this information had been included, it might have made the "winner" less clear.  If I were John Henry, I would have stipulated that I would only compete with the steam drill on the condition that we each be entitled to use the same amount of caloric intake to perform our work, and then I would have just laughed as the steam drill went home crying to its robot mama because its inefficiency had been exposed.

[Gumby]

Gumby,

What do you think would happen to an economic system premised upon perpetual economic growth (which is especially needed to pay off debts with interest) if growth rates became static in harmony with static population growth?

Are you thinking that the robots will make up for what would otherwise be a stagnation of economic growth as a result of slowing population growth?

No. We've already discussed this. I was talking about post scarcity. It's very different from post industrial (which you are talking about).

Read this: http://en.wikipedia.org/wiki/Post_scarcity

Money and possessions would take on a different meaning in a post scarcity era.

Wouldn't a rise of a robot class create even more surplus economic capacity than we have now?  Where would the demand come for all of the robot output?

Yes. I already referenced that dystopian outcome. See: "The Midas Plague"

It always seemed to me that part of what made capitalism work was that the people who worked in the factories were consuming the stuff that was being made in all of the other factories.

Yep.

When you replace the factory workers with robots, though, it seems to me that from a macroeconomic perpsective you now have the same amount of supply, but less demand since there are fewer people with money to spend on the overall output of all of the factories.

Yes. I believe I was trying to explain that on page 5 of this discussion. Though, you were much more concise than I was

Ultimately, I think the question is whether the robots of the future are going to be prosthetic devices for humans (figuratively speaking for the most part), allowing humans to do more work than ever with the help of their robot assistants, OR are the robots going to completely replace humans, which seems farfetched to me.

I don't understand why is this far-fetched? A robot 50 years from now may very likely be a much better worker than a human. Maybe not a better lawyer, but...

See: Forbes: FoxConn to Replace Workers With Robots; Aim For One Million Robots In Three Years

As I said before, Foxconn currently has about 1,000,000 (sweatshop) workers and 10,000 robots. Next year they'll have 300,000 robots. In three years they will have 1,000,000 robots and most of those workers will be sent back home to the family farm with no pay and no future. That will have a big impact on those one million Chinese workers. The team that manages the robots will be significantly smaller and higher educated than the soon to be former sweatshop workers. Those former workers will have no money to spend, and it will cause economic consequences.

One thing to keep in mind when thinking about these things is that over its lifecycle a robot is actually a very energy intensive device.

Yes, this is true. But, in order to have a post scarcity world, energy must be cheap. Otherwise its not a post scarcity world.

You often say that you have little faith that a new, cheap, alternative energy will be discovered — using past performance as your guide. While that may be true, theoretically cheap energy is very possible. Einstein taught us that the atoms found in a single paper clip has the potential energy yield of 18 kilotons of TNT. Will those 18 kilotons of TNT ever be harnessed in our lifetime? Probably not. But, hey, you never know.

But, I digress... As long as energy is scarce, we cannot move into a post scarcity era. Most of this discussion is hypothetical.

When it comes to the creation of a robot compared to the creation of a human being, I also think that it is much easier to make a new human (all you need is the right mood and good timing) than it is to make a new robot (robots require vast infrastructure that is vulnerable to all sort of disruptions).  If human muscle power is more efficient, more resilient and easier to replicate, it seems to me that the robots should fear us, not the other way around.

If that were true, Foxconn wouldn't be replacing most of their workers with 1,000,000 robots over the next three years. And auto plants would be full of people instead of robots...

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I think it's pretty short sighted to assume that robots won't be more prevalent over the next decade — particularly if major companies have already started making plans to replace low-skilled labor with robots. It doesn't matter if people eat their Wheaties or not. If 10,000,000 robots get "employed" in the US over the next decade, there's no way that won't have negative impact on the low-skilled job market.

Wired: Brainy Robots To Lead To Longer Unemployment Lines?

[MediumTex]

Is a post-scarcity world a sort of secular heaven-on-earth concept?

It seems to have some supernatural assumptions built into it.  Sort of like an industrial capitalistic mythology.

Doesn't any "limitless" energy scheme have a bit of a supernatural overtone to it?

It is, however, exciting to contemplate such a world.

[MediumTex]

Gumby,

In what way does your robot thesis differ from the "dummy takes over for the ventriloquist" narrative?

[Gumby]

Is a post-scarcity world a sort of secular heaven-on-earth concept?

On paper, yes. It's supposed to be the ultimate utopia we are all working towards (no war/no famine/no disease/cheap energy). But, my personal feeling is that human nature would steer us towards a dystopia.

It seems to have some supernatural assumptions built into it.  Sort of like an industrial capitalistic mythology.

Yes, it's all science fiction. However, people are always striving (often unsuccessfully) to eradicate war, famine, disease and discover cheap alternative energy. It is the ultimate goal of society.

Doesn't any "limitless" energy scheme have a bit of a supernatural overtone to it?

How so? If Einstein tells us that there are 18 kilotons of energy locked up inside of a paper clip, shouldn't we be spending a few million dollars to see how we can unlock a tiny fraction of that energy?

[Gumby]

Gumby,

In what way does your robot thesis differ from the "dummy takes over for the ventriloquist" narrative?

I'm not suggesting that robots are going to take revenge on us and destroy all our lives. I'm merely suggesting that on the road to post scarcity there will be unintended negative consequences to replacing millions of low-skilled laborers with robots. I believe it will create a class of unemployable citizens. That's pretty much the premise of almost every post scarcity dystopian novel/movie.

When Foxconn replaces most of their workforce with robots over the next three years, a lot of low-skilled Chinese won't have jobs. But won't that mean that someone could just as easily create a cheap Foxconn-like robot manufacturing company on American soil? Absolutely. And that will be great for American robot engineers and the American economy (and probably bad for the Chinese). But will low-skilled workers be able to find work? I don't know. Maybe. Maybe not.

If low-skilled workers can't find jobs, that will only serve to widen the gap between rich and poor.

[MachineGhost]

The "Malthusian Complex" is going to turn out to be laughable based on how wrong historical authors and futurists been about our future (although, I guess GM gets kudos for the driverless cars concept presented in the early 1900s...).  Simply because there won't be any need to work and the impetus of human beings is curiosity and sensation-seeking, rather than boring, physical, menial labor.  The "Imagination Era" will not mirror any of the dystopian books or films to date because they're all old-school concepts based on resource-constrained realities of the time.  Heck, its a myth we're resource-restrained in the first place as Buckminster Fuller discussed; its merely an issue of government incompetence.  It is just common sense that negative-orientied futuristic outlooks just do not come to pass; chicken and egg as to whether it motivates people to resolve the problem or the problem solves itself through technological innovation.

Nanotechnology, autofabrication, life extension, etc.. its all unstoppable and manipulating reality is one thing humans completely excel at, both literally and virtually.  My reference to WALL-E wasn't to refer to the resource-constraints, but the fat lazy inhabitants immersed in virtual reality.

If one wants to be paranoid about future concepts that have a history of occuring in the past and is currently ongoing, then there is a risk of winding up with the dystopias of "1984" or "This Perfect Day" if the technological "arms race" between government and its free citizens gets out of equilibrium and is no longer "mutually assured destruction".  To wit:

It sounds like something out of Hollywood, but as of today, mass interception systems, built by Western intelligence contractors, including for ’political opponents’ are a reality. Today WikiLeaks began releasing a database of hundreds of documents from as many as 160 intelligence contractors in the mass surveillance industry. Working with Bugged Planet and Privacy International, as well as media organizations form six countries – ARD in Germany, The Bureau of Investigative Journalism in the UK, The Hindu in India, L’Espresso in Italy, OWNI in France and the Washington Post in the U.S. Wikileaks is shining a light on this secret industry that has boomed since September 11, 2001 and is worth billions of dollars per year. WikiLeaks has released 287 documents today, but the Spy Files project is ongoing and further information will be released this week and into next year.

Source: http://wikileaks.org/the-spyfiles.html

MG

When you said that everyone is now wealthy, did you mean that everyones savings amounted to more years of wages than used to be the case?

I believe MG was talking about a hypothetical post scarcity utopia or dystopia, where there is no need for money, but everyone has wealth...

http://en.wikipedia.org/wiki/Post_scarcity

For instance, there a need for money in Star Trek because your replicator would provide you with everything you could ever wish for and disease/war/famine had been eliminated. Instead of a capitalist society, planets evolved to a state where everyone pursued their own dreams and bettered mankind.

My guess is that, in reality, you would probably have a dystopia rather than a utopia:

There have also been fully dystopian science fiction societies where all people's physical needs are provided for by machines, but this causes humans to become overly docile, uncreative and incurious. Examples include E. M. Forster's 1909 short story "The Machine Stops", Kurt Vonnegut's Player Piano, Frank Herbert's Dune, and Arthur C. Clarke's 1956 novel The City and the Stars. "Riders of the Purple Wage", Philip José Farmer's dystopian 1967 science fiction novella also explores some ramifications of a future wherein technology allows everyone's desires to be met. David Weber's Honor Harrington saga has the example of the People's Republic of Haven, in which each citizen is due a Basic Living Stipend. With most of their population "on the dole", productivity and their economy collapse. In Frederik Pohl's "The Midas Plague," resources and luxuries are so common, that the poor must bear the burden of consuming and disposing of the bounty, as well as working at meaningless jobs to produce more meaningless plenty; the rich, conversely, are allowed to live simple but comfortable lifestyles. In Stanislaw Lem's Cyberiad, a central motif is unbounded progress of technology. In The Highest Possible Level of Development civilization, the inhabitants have become passive, and the visitors have to shoo away machines trying to comfort them. In H.G. Wells' The Time Machine, the Time Traveller speculates, based on the Eloi, that mankind had been "armed with a perfected science" which reduced all dangers in nature, epitomized by the quote: "Strength is the outcome of need". The 2008 Pixar film WALL-E also depicts what appears to be a post-scarcity dystopia, albeit humorously imagined.
Source: http://en.wikipedia.org/wiki/Post_scarcity#Dystopias

I think the idea that automation will eradicate the wealth gap is short-sighted. More likely, you would get one of the dystopias described in the quote above.

Stone, that "Basic Living Stipend" in Honor Harrington sounds a lot like the Citizen's Dividend you've described in the past.

[Gumby]

The "Imagination Era" will not mirror any of the dystopian books or films to date because they're all old-school concepts based on resource-constrained realities of the time.  Heck, its a myth we're resource-restrained in the first place as Buckminster Fuller discussed; its merely an issue of government incompetence.  It is just common sense that negative-orientied futuristic outlooks just do not come to pass; chicken and egg as to whether it motivates people to resolve the problem or the problem solves itself through technological innovation.

I'm not sure it makes any sense to criticize the post scarcity dystopian films and novels I referenced (above) for being based on resource constraints. That's contradictory. If they had resource constraints, by definition they wouldn't be 'post scarcity dystopias'.

Are you suggesting that governments will stop being incompetent in a post scarcity era? Governments will likely always be incompetent when it comes to managing unlimited wealth, resources and ideas. That's the entire post scarcity dystopian premise.