Where Has Austerity Helped Restore an Economy to Health?

[stone]

I still think that the crucial thing, whether we are in 2100 AD and have legions of robots or we are in the 1700's with sugar cane and cotton to cut by hand, is wealth equality. Any benefit will be for everyone if there is wealth equality and if it is not a benefit, then it will not be implemented. If there is a state of wealth equality then class war seems to me less of a problem because everyone would be in the same class. I also agree to some extent with Medium Tex, that human labour is very good at many things (though perhaps not at making ipods). The crucial thing IMO is that people in equal power are empowered to decide for themselves whether they want to pick strawberies or whatever.

[Gumby]

I still think that the crucial thing, whether we are in 2100 AD and have legions of robots or we are in the 1700's with sugar cane and cotton to cut by hand, is wealth equality. Any benefit will be for everyone if there is wealth equality and if it is not a benefit, then it will not be implemented. If there is a state of wealth equality then class war seems to me less of a problem because everyone would be in the same class. I also agree to some extent with Medium Tex, that human labour is very good at many things (though perhaps not at making ipods). The crucial thing IMO is that people in equal power are empowered to decide for themselves whether they want to pick strawberies or whatever.

Yes. I agree 100%

The thing is, we're not on the road to equality. Right now what we have is an all-out class warfare.

And in many ways, we have already seen many jobs disappear. The following chart shows Civilian Employment per capita:

[align=center]Civilian Employment Per Capita

[/align]

Obviously most of these jobs that disappeared went to China. But, for all practical purposes, the Chinese are basically a (foreign) robot army. Eventually the Chinese will replace themselves with robots (as Foxconn plans to do over the next three years) and then, hopefully, we can at least replace Chinese robots with American robots.

But, can we ever gain equality for everyone? I doubt it. There are entire political parties devoted to making sure everyone is not equal.

[stone]

Gumby, I totally agree that offshoring, migrant workers and automation are all factors that are being deployed in a very "class warfare" style. What I find amazing is that this can happen in a democracy. It all seems so pointless as well. Rich people really do not benefit from having a boiling mass of downtrodden, ripped off, fellow countrymen.

[Gumby]

What I find amazing is that this can happen in a democracy. It all seems so pointless as well. Rich people really do not benefit from having a boiling mass of downtrodden, ripped off, fellow countrymen.

I couldn't agree more.

[moda0306]

Who would have thought one of our deepest discussions would be regarding what the world would look like if robots could do almost everything.

Next subject... colonizing Mars.

jk... and I'm not trying to undermine the discussion, as it has a lot of solid ideas/theories running through it.

[Gumby]

Who would have thought one of our deepest discussions would be regarding what the world would look like if robots could do almost everything.

Next subject... colonizing Mars.

jk... and I'm not trying to undermine the discussion, as it has a lot of solid ideas/theories running through it.

Heh.. I know it was a crazy discussion, but when I read that Foxconn is going to replace much of its workforce with robots, it occurred to me that this is a very big deal in terms of world employment.

[moda0306]

I love how movies from the 80's and 90's depict the future... when not distopian, it seems to be WAY faster developed than what we end up with, but with the typical 80's or 90's take on what that tech will look like.

Back to the Future II is a great example... aparently in 3 years we'll be flying in hover-crafts, but we'll be bringing back some ridiculous styles we thought we had tucked into our 1980's time capsule.

[stone]

Have you seen that AliG is going to bring those hover boards to fruition:
http://www.youtube.com/watch?v=azRzqI3BJ2A

[Lone Wolf]

If there is a state of wealth equality then class war seems to me less of a problem because everyone would be in the same class....The crucial thing IMO is that people in equal power are empowered to decide for themselves whether they want to pick strawberies or whatever.

Is equality what we really want though?  Every road I know of to achieve true equality is a road with very little human freedom on it.  People are born with different talents, abilities, and desires.  Equal outcomes simply aren't going to happen so it seems to me that we need a different principle to work from.

It seems to me that overall standard of living is more important.  Why should I give a shart whether Bill Gates can build a gigantic House of the Future as his personal playground?  Would it make sense for him to be able to enjoy no more life amenities than I can afford and to have no more ability to deploy capital than I do?  I say no.

It's not really him that I care about.  It's me and mine.

Gumby, I totally agree that offshoring, migrant workers and automation are all factors that are being deployed in a very "class warfare" style. What I find amazing is that this can happen in a democracy. It all seems so pointless as well. Rich people really do not benefit from having a boiling mass of downtrodden, ripped off, fellow countrymen.

I don't follow.  In what way are automation and mass production "ripping people off"?  Certainly not the people for whom these products and services become affordable.

[moda0306]

LW,

If inequality is a result of differences in creativity, talent, hard work, and achievement, then I think for the most part any uneven distribution is justified.

If inequality is the result of the wealthy claiming natural resources as their own, and trading them to people who supposedly have no claim to them for their labor, and builds over generations like this, then I think that's where you start to see big problems... especially when you throw in informational assymetry and bargaining power structures that develop.

I think stone's "rip off" would be in the case where the robots (and resources) are owned by the rich and producing value for the rich, with the poor having no way to enter into this system, and possibly not even collecting any "dividend" on the wealth that the wealthy own that is NOT as a result of creative achievement, but simply abusing a system centered around private property and claiming all resources as their own.

[stone]

Lone Wolf, I do agree that it is vital that people like Bill Gates decide how capital is deployed. To my mind, an asset tax would create a headwind such that to accumulate control of capital you would have to be as astute as Bill Gates. I disagree though that wealth inequality does not matter. I agree that it matters most that everyone can afford to live well but I think that inequality leads to such absolute prosperity being less likely.

Currently many people actually are in debt. What they do gets decided to some extent by their creditors. Money ends up being power. Power (political or financial) doesn't get used wisely if only a few people are charged with deciding what everyone else does. As I see it, wealth inequality ends up meaning that a few people end up deciding what does and does not get done. The end result is that the best science graduates end up working in finance, millions of people are left unemployed etc etc. To my mind people are free to do what they want when no one has a financial hold over them.

[stone]

Lone Wolf, Bill Gates probably is largely a good egg but the principle stands that he has enormous sway over what other people do due to his wealth. I don't understand why you think it fine that such power can be vested in someone in an entirely unaccountable way by the fact that they are astute at business and yet (IMO quite rightly) you think it wrong to put too much power in the hands of elected politicians.

Bill Gates decides via the Gates foundation whether or not polio should be erradicated and that people should try and make rice have the physiology of millet. He decided to buy up and extinguish rival software producers etc etc.

[Lone Wolf]

To my mind, an asset tax would create a headwind such that to accumulate control of capital you would have to be as astute as Bill Gates. I disagree though that wealth inequality does not matter. I agree that it matters most that everyone can afford to live well but I think that inequality leads to such absolute prosperity being less likely.

Wouldn't this yield a very strong incentive to spend with reckless abandon?  In other words, if holding on to wealth becomes impossible (because the government will confiscate it if you try), what incentive is there to save for tomorrow?

Savings and capital accumulation are the only way we have of growing wealth over time.  If you undermine this via the asset tax, people will be far likelier to spend for now than they will to invest their resources or lend them to others.  (This is even setting aside the negative impacts on freedom and potential for capital flight.)

A rich man either spends his money or invests it.  If he spends it all or invests it in an inefficient way, it likely won't be his for long.    Ultimately, in order to build wealth (legally), you must serve the consumer.  Profit and loss is the mechanism by which this determination is made.  If the only metric by which you judge success is equality, you'll by definition be removing profit and loss from the equation.  Profit and loss are the reason that businesses provide the things that we actually demand.

Currently many people actually are in debt. What they do gets decided to some extent by their creditors.

I agree that owing debts makes you less free.  I'm a big fan of US-style bankruptcy "easier" law and culture where both debtor and creditor assume a good chunk of the risk inherent in lending.  In the United States, bankruptcy is generally a much easier process to get underway.  It's unpleasant to have made promises that simply cannot be kept, but the sooner everybody starts telling the truth, the better off everyone is in the long run.  (This worked better IMO before the Bankruptcy Reform Act of the mid-2000s.)

[moda0306]

LW,

Taxes in any area will affect that behavior, but only to a certain degree.  The idea that if there were a modest asset tax on wealth that people would purposely consume with "reckless abandon" seems totally unrealistic to me.

Holding wealth has value, even if that value is being depreciated and/or taxed.  It would take an amazingly horribly skewed tax system to get me to shed my wealth for consumption items.  In fact, any heavy tax on savings would probably get me to save more to make up for the annual loss to said tax (but that's me... people are in different situations based on the likelihood of future desired consumption).

Think to yourself if there was a 1% asset tax on wealth... maybe it'd change how you invest, but would you really go out and spend all your money on consumption items?

[stone]

Lone Wolf, I think the various meanings of saving and investment actually have very different economic consequences and a lot of confusion comes from that. To my mind the type of "investment" that increases wealth is use of labour and materials to develop a technology, or make machines or whatever. If you have $5M and you keep it under the mattress, then you would suffer attrition by the asset tax. If you spend it on financing a technology start up company then, whilst that company is in the process of getting on its feet, it will be worth zero and so you will have no asset tax liability.
As an example, my better half works somewhere that started up with venture capital and it took nine years for them to turn an invention into a useful product. That would be nine years free of the asset tax. Those venture capitalists might instead have just bought a building with that money. To my mind it is no problem that buying a building would leave one exposed to asset tax as in that case the "investment" creates nothing and just bids up the price of a pre-existing asset.

I don't imagine that an asset tax would lead to wasteful consumption. Most people consume as much as they want anyway unless they are poor. If someone decided to consume all that they had, then they wouldn't be rich for long and so wouldn't squander that much. From what I can see, examples of gross squandering of resources often come from the proceeds of asset bubbles. An asset tax would stop such bubbles. Assets would be priced and managed based around what those assets earned not where their price was headed.

[Gumby]

Is equality what we really want though?  Every road I know of to achieve true equality is a road with very little human freedom on it.  People are born with different talents, abilities, and desires.  Equal outcomes simply aren't going to happen so it seems to me that we need a different principle to work from.

In what way are automation and mass production "ripping people off"?  Certainly not the people for whom these products and services become affordable.

LW, as a society enters a post scarcity era, anyone who has enough money to buy their way into a life of automation and comfort would be as rich as the richest person. In other words, money would start to become unimportant past a certain dollar threshold in a post scarcity society.

Let's say that threshold is a net worth of $1,000,000. In other words, my home, my food, my ability to travel and my ability to live a long and healthy life would be as awesome as Bill Gates' because of the wonders of automation making my life better and cheaper. Gates would have far more money than me, but it wouldn't matter because I wouldn't be resource constrained in any way (just like Gates).

The problem lies in the fact that as money in one's bank account becomes unimportant after the first $1 million dollars, how does the money from the wealthy actually "trickle down" to the robot-replaced jobless? They would literally be moneyless and you would still be worrying about how large your own bank account was.

The people who couldn't reach that initial threshold would be left in the dust for eternity because the money would stop flowing from the rich.

This all sounds like science fiction, but the truth is the wealthiest 1% have no reason to part with their billions right now. They can lead a life of leisure and never have to spend more than a fraction of their money into the economy. So, we are already seeing this disenfranchisement taking place. That's why Occupy Wall Street exists — not because of robots (yet), but because there is no opportunity for those whose jobs will never return. Zero income for the poor and jobless.

How would you deal with that?

[stone]

Gumby I think that what we see in the abandonment of swathes of the population of the developed world is actually just a continuation of the abandonment of most of the world's population that has been happening for much longer. With money (and so power) in the hands of the 1%, I see it as inevitable that 99% will be left standing at the sidelines.

[Gumby]

Gumby I think that what we see in the abandonment of swathes of the population of the developed world is actually just a continuation of the abandonment of most of the world's population that has been happening for much longer. With money (and so power) in the hands of the 1%, I see it as inevitable that 99% will be left standing at the sidelines.

Exactly. That's why I see a dystopian future. The top 1% sucks most of the money out the system and then has no need to ever spend it. Even if the top 1% invests that money, it still wouldn't reach the jobless/moneyless who have zero income.

[moda0306]

Gumby I think that what we see in the abandonment of swathes of the population of the developed world is actually just a continuation of the abandonment of most of the world's population that has been happening for much longer. With money (and so power) in the hands of the 1%, I see it as inevitable that 99% will be left standing at the sidelines.

Exactly. That's why I see a dystopian future. The top 1% sucks most of the money out the system and then has no need to ever spend it. Even if the top 1% invests that money, it still wouldn't reach the jobless/moneyless who have zero income.

Then what, outside a citizen's dividend, do you see as a solution?  I see nothing short of fixed value being provided to every citizen accomplishing much to avoid said distopian future.

If the bottom 80% are mieserable in our democracy, I think that will put great force on our elected officials to do something about it.

[Gumby]

Gumby I think that what we see in the abandonment of swathes of the population of the developed world is actually just a continuation of the abandonment of most of the world's population that has been happening for much longer. With money (and so power) in the hands of the 1%, I see it as inevitable that 99% will be left standing at the sidelines.

Exactly. That's why I see a dystopian future. The top 1% sucks most of the money out the system and then has no need to ever spend it. Even if the top 1% invests that money, it still wouldn't reach the jobless/moneyless who have zero income.

Then what, outside a citizen's dividend, do you see as a solution?  I see nothing short of fixed value being provided to every citizen accomplishing much to avoid said distopian future.

If the bottom 80% are mieserable in our democracy, I think that will put great force on our elected officials to do something about it.

Let me be clear. I think a citizen's dividend is a great idea. I really do. And if I were in charge, that's probably what I'd attempt to implement for a transition into a post scarcity society.

But, I think it would fail. Why? Because as humans we are flawed and our governments are incompetent.

If you quickly read the following short story...

http://www.e-reading.org.ua/chapter.php ... Honor.html

...it describes a fictional post scarcity society whose politicians become corrupted after attempting to placate the lower-class with a citizens dividend. The key sentence being...

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.

So, while a citizens dividend makes complete sense, I think class warfare would still arise. The poor would demand more and the rich would only try to restrain and suppress the demands of the lower class. In many ways, that fictional world isn't too different from our own.

[MachineGhost]

I meant the authors and futurists took the then resource-constraint memes of their current reality and projected it into a future as a fantasy where there were no resource-constraints.  They were limiting themselves to the issues at hand as far as forecasting the future.  Ever notice how just about every SciFi film is about resource-constraints and power struggles over it?  But past experience of forecasters have shown that the future will be stranger than fiction and won't merely fit into neat black and white dichotomies based on present concerns (like resource scarcity, of which class warfare is a derivation).

I would argue that government as we know it will cease to be meaningful in a post-scarcity era since there would be no scarce resources needed to be dominated, controlled, protected, subsidized and/or divided up and redistributed ineffeciently by political insiders and unelected bureaucrats.  This would presuppose the continuing power of technology not just to decentralize (cheapen) access to resources, but increase individual security as well.

MG

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.

[MachineGhost]

Indeed, its not wealth inequality that is the real problem, it is legal inequality.  One of the fundamental reasons the US has been so economically successful was that the rule of law uniformly applied to everyone, including the common man and the working poor.  Without access to legal equality, there is no de facto protection of private property.  In other countreis that have been dysfunctional compared to the U.S., they have a poorly developed rules of law and no real protection of private property unless you are first wealthy enough to buy your access to it.

So equal law, not equal outcomes.  That doesn't mean that inequal outcomes are fair though.  Is it fair that an adult with Down's Syndrome, etc. will never have equal opportunity?  Should he be compensated for this fact to make him "whole"?

MG

I think stone's "rip off" would be in the case where the robots (and resources) are owned by the rich and producing value for the rich, with the poor having no way to enter into this system, and possibly not even collecting any "dividend" on the wealth that the wealthy own that is NOT as a result of creative achievement, but simply abusing a system centered around private property and claiming all resources as their own.

[MachineGhost]

Don't discount the value of mass uprisings and revolutions.  People do not just sit idly by while insiders game and rape the system.  The Sovet Union only lasted 70 years.

MG

Gumby I think that what we see in the abandonment of swathes of the population of the developed world is actually just a continuation of the abandonment of most of the world's population that has been happening for much longer. With money (and so power) in the hands of the 1%, I see it as inevitable that 99% will be left standing at the sidelines.

Exactly. That's why I see a dystopian future. The top 1% sucks most of the money out the system and then has no need to ever spend it. Even if the top 1% invests that money, it still wouldn't reach the jobless/moneyless who have zero income.

[edsanville]

So, while a citizens dividend makes complete sense, I think class warfare would still arise. The poor would demand more and the rich would only try to restrain and suppress the demands of the lower class. In many ways, that fictional world isn't too different from our own.

This reminds me of Milton Friedman's idea of a "negative income tax."  For those who don't know:  that's where you just have a flat income tax, and combine it with a constant rebate that goes to every citizen.  In other words, you could charge a 20% income tax with a $10,000 universal "tax rebate."  It would replace all forms of welfare and simplify the tax code immensely while keeping the general idea of a progressive system intact.  It has the huge advantage in that there is NEVER an incentive "not to work," like in most welfare states around the world.  Well, beyond the cost of childcare and transportation, etc.

It's actually similar to the FairTax proposal, as far as I understand.

[stone]

edsanville, I agree that Milton Friedman's "negative income tax" is the same as a "citizens' dividend". I think the term "citizens' dividend" predates him though.
They actually have a modest one in Alaska:-
http://en.wikipedia.org/wiki/Citizen's_dividend