9 ms·

Without right policies, automation risks shift of income from labour to capital

63 points by denzil_correa 9y ago

ams6110 9y ago
Well that's great. Give everyone an index fund when they are born; by the time they turn 18 they will have their basic income.
- shaki-dora 9y ago
  Funny, slightly related, idea: With today's high rate of investment in the stock market, and specifically the rise of index funds, the US may have achieved something closer to socialism than any of history's self-professed "socialist" nations.
  - rm_-rf_slash 9y ago
    Much more of the stock market than you think is owned by overseas investors. Most of the stock market is owned by institutional funds and people who are already quite wealthy.
  - frgtpsswrdlame 9y ago
    First, there’s a bit of a myth that through indirect holdings, like holdings of stock in a pension fund, the stock market has become democratized, and everyone’s all in. Not so. Wolff’s data shows that while stock ownership has increased over the past few decades, in 2013 (his most recent data point), less than half — 46 percent — of households owned stocks, either directly or through their holdings in some sort of fund (e.g., a retirement account). Contrast that with the 94 percent ownership rate of the top 1 percent. But even that 46 percent ownership rate gets misunderstood, because it doesn’t differentiate how much stock is owned by different income classes. Less than a third of all households hold at least $10,000 in stocks, compared to 93 percent of those households in the top 1 percent. The figures below show that, since the late 1980s, about 80 percent of the value of the market has been held by the top 10 percent. Within that top 10 percent, the share of stock wealth held by the top 1 percent is about equal to the share held by the 90-99th percentiles; both groups’ shares are twice as large as the share that the entire bottom 90 percent holds. https://www.washingtonpost.com/posteverything/wp/2017/03/02/perspective-on-the-stock-market-rally-80-of-stock-value-held-by-top-10/?utm_term=.390a1346c38c https://www.washingtonpost.com/posteverything/wp/2017/03/02/...
    - lr4444lr 9y ago
      I find that figure exceedingly hard to believe was calculated correctly. Pension funds alone for civil servants (defined benefits, not retirement accounts,) are significantly invested in stock equities, which is a significant portion of households working and retired. Add in 401Ks, IRAs, and discount the undocumented in the workforce I would be shocked if it was not at least 75%.
- QasimK 9y ago
  Children already have different starting positions in the "race" from even before they are born from a variety of different factors but most factors are likely linked to the wealth of their parents (their education, their careers, how they value their children's education, the amount of money they spend on their children, the opportunities they have access to etc. etc. etc.). Giving every child an index fund (which should probably start being accessible when they are teenagers and become fully accessible in late 20s) would only solve some of the broader problems beyond the article. I also think it just isn't going happen because it effectively devalues the wealth of the wealthiest. It's like a wealth tax, right? Also, if everyone has 100-10000K it probably doesn't mean the same thing it means now. The general problem, as stated in the article, is the distribution of wealth - but the wealthy want to stay wealthy not be equally wealthy. Norway successfully implemented a sovereign wealth fund - currently work nearly 200k per citizen - on the back of their finite natural resources (oil), and I think that is the model that the UK (my country) should have followed. Otherwise, the sources of the funds is likely to be more direct taxation which doesn't seem likely to actually happen.
  - lr4444lr 9y ago
    Norway successfully implemented a sovereign wealth fund - currently work nearly 200k per citizen - on the back of their finite natural resources (oil), and I think that is the model that the UK (my country) should have followed Are you only interested in Norway and the U.K., or do you not see a likely fallacy of composition here?
    - QasimK 9y ago
      I selected a successful example of an attempt at a sovereign wealth fund (in fact the only example that I know), and an example of a country that chose not to implement a sovereign wealth fund despite being the same situation. I'm not entirely sure if the examples I chose constitute a fallacy. I was merely suggesting one approach that could work for some countries to establish equal funds for their citizens. Some countries may not have access to abundant raw resources though.
  - beojan 9y ago
- rsanders 9y ago
  Who are you suggesting will be giving all these babies index funds, and with what investment?
- brndnmtthws 9y ago
  That would work if people saved money, but they've been taught to spend rather than save. Most people believe that if they earn $1 they must spend that $1 as soon as possible.
  - em3rgent0rdr 9y ago
    What about teaching people to save then instead?
    - brndnmtthws 9y ago
      :) The boring simple solutions don't garner much attention. People want magic pills or cool tech.
- idoh 9y ago
  Doesn't really solve the problem because people will just sell their shares in the fund to buy whatever they want as soon as they can.
- dang 9y ago
  Please don't post unsubstantive comments here. Especially on divisive topics, it's somewhere on the flamebait-troll vector and usually leads to worse.
- meri_dian 9y ago
  But it doesn't work like that. Where are you going to get the funds you "give" to the children? There is no free lunch.
- panic 9y ago
  This sounds a lot like the idea of a social wealth fund: https://mobile.nytimes.com/2017/11/30/opinion/inequality-social-wealth-fund.html https://mobile.nytimes.com/2017/11/30/opinion/inequality-soc...
swayvil 9y ago
Will any policy keep the wolves from eating everything? I don't think so.
- adamch 9y ago
  From 1910-1945, each country's richest 1% lost a lot of their wealth, all falling to (somewhat) similar levels. But in the time since, different countries 1% have built up wealth at very different speeds. This suggests that a country's policy can actually have some effect - a lot is beyond each country's control, but it's not hopeless. This is based on reading Thomas Piketty's "Capital in the Twenty First Century" (I'm halfway through) - really good read if you are interested in this.
  - americanjetset 9y ago
    I would wager that the two World Wars impact on capital had a lot to do with the decrease of the 1%'s wealth.
    - abakker 9y ago
      Not to mention absolute destruction of capital. Not just casualties of war, but capital investments that are either lost or used up in the process of war (airplanes, boats, fuel, etc)
      - anvandare 9y ago
        Property, like matter, has an attractive quality similar to gravity: large clumps of property attract other property more than small clumps of property do. Given enough time and stability, the end state is usually one entity having (nearly) all the property (a star), or a few entities existing in (long-term) balance (like binary, trinary, quaternary, ... star systems). But stability doesn't really exist in the Universe - there's always a low degree of redistribution going on between the clumps (trade). And clumps can explode into smaller clumps (people die, and the property is inherited/distributed -- Immortal entities like corporations sort of escape this thing). Wars (and revolutions) are indeed the major disruptor, as it evens out the playing field (mostly by removing a lot of the property so everybody's equally poor). It's in the interest of the big clumps to keep the little clumps from getting too desperate, or from getting any funny ideas about redistribution of property, or from possessing the ability/organization to act on those ideas. In the absence of sudden and violent (thus unpredictable) disruptions, the big clumps can accumulate and plan sufficiently to slowly work their way into an optimum state: balancing their continuous growth (faster than the smaller clumps) with the suppression of those to stop them, without tipping the balance into revolution. The longer a system of clumps stays stable, the less likely it's going to become unstable. Until you get an outside disruption (invasion, natural disaster, plague, etc.) which is usually how long-lived and stable societies ultimately perish.
llimllib 9y ago
risks? We're well down that path, aren't we?
frgtpsswrdlame 9y ago
If the interest of individual business is to automate away your workforce but the interest of general society is to increase employment we're at a bit of a crossroads aren't we? Perhaps Marx was right and it's time to move to a new phase of history.
- manicdee 9y ago
  Capitalism is pretty much defined by placing a dollar value on production and seeking to maximise returns. The inevitable outcome is increasing profits by reducing the costs of production. There is no “perhaps” about it. There are no policies that will stop a capitalist economy behaving like a capitalist economy.
  - runeks 9y ago
    There’s no rule in capitalism about who wins: the consumer decides who wins when she purchases a producer’s product, picked from the store shelf. The producers of the products we purchase are those who survive, because their income is our expenditures (and their expenditures on wages/salaries is our income). You could argue that we choose wrong when we go shopping, but ultimately we decide which businesses have an income and which don’t.
    - frgtpsswrdlame 9y ago
      I think you're missing the point a bit. It's not about our choice as consumers so much as it is the inevitable end of capitalism as a way of distributing property. https://en.wikipedia.org/wiki/Marx%27s_theory_of_history#Capitalism https://en.wikipedia.org/wiki/Marx%27s_theory_of_history#Cap...
    - manicdee 9y ago
      What choice do you have when there is only one provider?
- vkou 9y ago
  The interest of society is not to increase employment - the interest of society is to increase prosperity. Rounding up all the unemployed people, and forcing them, at gunpoint, to dig ditches and fill them will certainly increase employment, but will not do anything worthwhile for society. (I guess the ones that survive might end up in better shape.) Having them fix potholes or educate children will increase employment, as well as prosperity. (Setting aside the obvious moral problems of the means by which this took place.) Rounding them up and putting them into workhouses, where they build things for the benefit of a few well-connected individuals is how we have traditionally done this. It combines the worst of both worlds. What people forget is that jobs are the means, not the end.
ryandrake 9y ago
At least in the US, the “labor share”--which is the fraction of income that is paid to workers in wages, bonuses, and other compensation--has already been steadily declining. According to the Economic Report of the President (2013) [1], the labor share fell from 72 percent in 1980 to 60 percent in 2005. Increased automation can only make this problem worse. 1: https://www.gpo.gov/fdsys/pkg/ERP-2013/content-detail.html https://www.gpo.gov/fdsys/pkg/ERP-2013/content-detail.html
- runeks 9y ago
  Automation is not a new phenomenon, it’s what has been making us wealthier for the past century and a half. Labor share actually went up for 1950 to 1970, and I don’t think increases in automation were absent in that period: http://www.macleans.ca/wp-content/uploads/2012/09/fredgraph_labour_share.png http://www.macleans.ca/wp-content/uploads/2012/09/fredgraph_...
  - petra 9y ago
    It's possible that automation worked to decrease labor share in that period, but other factors(communism, GI bill, etc...) had a stronger influence in the other direction.
    - throwawayjava 9y ago
      Also, general economic growth due to underlying fundamentals in the demographics -- fundamentals that western societies don't enjoy today.
    - runeks 9y ago
      Sure, that’s possible. But unless we can point to supporting data, it just amounts to seeking to reinforce our preconceived notions.
      - shkkmo 9y ago
        Of course it's not possible to show cause and effect between labor share and abstract 'automation'. Especially since not all automation is equal in this regard. Automation in some areas may increase labor share (accessible automation like PCs and washing machines) while others decrease it (expensive/in-accessible automation like assembly lines and machine learning). This means that automation could increase labor share one decade and decrease it the next as the types of automation change. However, the argument for a current/recent causative link between the two is not a "preconceived notion" but rather a reasoned hypothesis arrived at based on observation of trends and application of logic to economic theories. It is more reasonable to suppose that: overall, automation has had a role reducing the labor share (which has been going down despite a couple of brief spikes in the 50s and 60s) than to suppose: overall, automation has been increasing the labor share, but this is overshadowed by other causes which have been decreasing labor share. Thus, if you want to argue for the later supposition, the burden of proof is more heavily on your shoulders to explain the other causes which somehow outweigh the effects of automation on the economy.
em3rgent0rdr 9y ago
Isn't the transfer of income from labor to capital a good thing?
- dang 9y ago
  Please don't post unsubstantive comments to HN, and especially not ideological flamebait.
- QasimK 9y ago
  Only if capital is equally distributed, otherwise you end up with large numbers of people who cannot earn an income (or significant income) which I can only imagine negatively given how willing current holders of capital are to share their wealth.
dang 9y ago
All: if we're to have non-boring discussion on a hot+divisive topic like this one, please have the restraint to not post anything unless you have something thoughtful to say. Most first reactions are reflexive, i.e. predictable, i.e. uninteresting, i.e. off topic for Hacker News. Repetition is the enemy of curiosity. A good antidote is to stop and ask yourself if your comment engages at all with anything specific and/or unpredictable in the article. If it doesn't, consider not posting it; odds are you're moving discussion quality in the wrong direction for this particular message board. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
colemannugent 9y ago
IMO, there will always be work that needs doing. Once a particular kind of work becomes worthless another will replace it. Will the rapid increase in automation cause a "correction" in the labor market? Yup. Will it negatively effect lots of people in the short term? Sure. Will automation destroy the labor market entirely? No. Even if a majority of jobs were in creating automation you still have to pay those people to automate. I am wary of the people who feel the need to try and prevent the correction by way of government regulation. That seems like an easy way to create artificial markets like the housing bubble of 2008. At least at the current rate of automation there is not going to be a sudden massive collapse.
- frgtpsswrdlame 9y ago
  Okay but the question isn't 'will there still be some jobs?' it's 'will there be enough jobs?' If the answer is that no and we're at some fundamental point on the technological growth curve where we're advancing fast enough that we wipe more jobs out than we create then what do we do with a society which allocates 'deserts' and 'worth' to those who have jobs on the understanding that everyone could have one if they really tried? The only way out is government involvement.
  - dragonwriter 9y ago
    > Okay but the question isn't 'will there still be some jobs?' it's 'will there be enough jobs?' No, it's will there be enough jobs with sufficient pay.
- CodeCube 9y ago
  This is a very easy position to take when you're part of the group that can easily become an "automator". I want to be entirely on the side that you describe here, but I simply can't ignore the negative quality of life that this will (and has been) imposing on a large proportion of society. This group is casually waved away; "just get a higher education", "just move to where the jobs are", "don't have to take care of your grandchildren because your children fell into opioid abuse because of the lack of opportunity even if you (currently) have a job", "take family-breaking commutes to better jobs in areas where the public transportation is poor or nonexistent". The "free market" doesn't give a crap about these folks ... just like nature doesn't care when an ecosystem is affected by the arrival of some new invasive species. If there ain't no food, you starve. That may be fine for the local rabbit population, but we have to watch out and help our fellow human ... we're not savages. edit: To be clear, as an "automator" myself, I obviously have a vested interest in this trend continuing. I'm obviously not saying that we should become the proverbial luddites and stop automation. But we do need to get better about making sure that humanity keeps marching forward one way or another.
taurath 9y ago
Popular uprising can and does occur over these power imbalances - however historically you need a level of animosity from the monied and powerful towards the underclass, and in this era the capital rich have been very innovative at manufacturing consent and quelling, appeasing, or splitting discontent. I’m reminded of what’s been going on in Iran the past few weeks - one of the most grasping anecdotes is that poor and middle class people are seeing the children of the powerful absolutely flaunting their wealth, driving maseratis and Porsche’s down the streets of Tehran, and spending more on dog food for a month than people make in a year. Those optics (just how rich the rich actually are compared to you) have been hidden from a lot of American society via exclusive neighborhoods and private airports and a general amount of discretion. We also don’t have discussions around class because our class hierarchy involves a lot of different verticals by virtue of not having only one culture. The elites of the culture that one belongs to look both a lot more attainable, or at least more inclined to interests that align with the rest of the culture. So instead of the conflict being up the ladders, the conflict happens between different ladders. That’s at least how I view the current political climate.
- pembrook 9y ago
  Except in the US you can just turn on the Kardashians. New money in the US is not at all hidden and flaunted just as it is everywhere else. The difference between wealth in frontier/emerging market economies like Iran and developed market economies like the US is corruption. If you see someone driving a Lamborghini in Tehran, it’s fairly safe to assume acquiring that car involved a level of government corruption. If you see someone driving a Lamborghini in any US city, it’s fairly safe to assume that person acquired the wealth to purchase that car through lawful free market activity. Is there corruption in the US? Of course. But it pales in comparison to what you find in developing economies.
  - ethbro 9y ago
    I'd argue that new money (e.g. Kardashian, <$250 million in the immediate family) is a drop in the bucket compared to real American, old money wealth. E.g. the kind where your son being set up to run for President in 20 years is negotiated at a private golf club while ensuring the references are lined up for his children to get into the right schools
lr4444lr 9y ago
Since the 2nd derivative of population has been negative for quite some time, maybe this is a good thing?
justin_vanw 9y ago
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- frgtpsswrdlame 9y ago
  >Is the right policy a heavy emphasis/propaganda campaign advocating birth control among people who are no longer employable in this future distopia? You think there is a genetic component to their unemployability? This is even beyond social darwinism, it's straight up eugenics. E: I just saw your edit: >Eventually this will be solved with genetic manipulation of children, of course, which will eliminate any kind of permanent underclass that develops, but will also be the beginning of trans-human civilization. The only explanation for genetic manipulation ending any kind of permanent underclass is if you believe that underclass exists only because of genetic reasons. You don't believe that do you?
  - justin_vanw 9y ago
    COMMENT REMOVED
    - frgtpsswrdlame 9y ago
      I don't think members of the American underclass are genetically less intelligent. I think the implication that if we could just manipulate the genes of the poor then the wouldn't be poor anymore ignores a million non-biological reasons why poverty perpetuates itself along family lines.
      - justin_vanw 9y ago
        COMMENT REMOVED
        frgtpsswrdlame 9y ago
        >Yes of course you are right, but intelligence is more correlated with income today than it was in 1850, and more correlated in 1850 than in 1750, and so on. Is it? I'm not sure I believe that. >At one point in history it really didn't matter much how smart you were (it helped you survive but it didn't make you upwardly mobile), it only mattered who your father was. It doesn't matter who your father is today? Of course it matters! A huge amount, I'd say your upbringing plays a more important role than your genetic lottery even today. >If the graph of education vs income is flat and then jumps as a step function at some magical 'employable' education level, then the education->income gradient that currently provides an incentive goes away for most people. I'm not sure it provides that much of an incentive to that many people. People still get liberal art degrees even though compensation in other programs would pay off better. Hell there's plenty of fields where going for a PhD vs. sticking with the BS doesn't even increase your lifetime earnings and yet people pour into those programs as well. Education has a pull in it's own right, not just as a tool to achieve a higher income. I also don't see why a step function is less incentivizing than a gradient, you could make an argument that it's even more incentivizing in that there's no reward for going half-way. Of course I think the real answer is that the distribution won't matter. And I think our society today is a lot closer to say a graph with two or three steps than it is to any sort of smooth upward climb. And then your solution to the problem of the poors dictating democracy is that we propagandize them into some voluntary but coerced eugenics program until we reach such a point where we can use genetic technology to remove whatever gene(s) it is that make them poor. It's honestly one of the stupidest things I've ever read on this board in it's ethical ideas, it's biological ideas, it's ideas about the basis of poverty, everything. This is why I decry the malignment of the liberal arts, CS programs are pumping out people like you who are desperately in need of Ethics 101.
throwawayjava 9y ago
The linked IPPR report is worth reading. For this crowd, the section on "partial automation" is probably most important. Web dev is... up there... in terms of potential for partial automation. There are a few important observations that the article and the IPPR report don't stress enough. 1. The jobs most likely to be automated, will be automated using technology that's inaccessible to the employees whose jobs are being destroyed. This point is often optimistically papered over using observations like "coal miners can go to coding bootcamps!" I know a few truckers and I have no doubt that each of them could go through a relatively short coding academy for web development work if it became a "do or starve" situation. But I doubt that most of them could become much more specialized autonomous vehicle software engineers, either due to raw intellectual ability or -- more often -- due to an inability to make a substantial half-decade investment in retraining (most of these folks would need to (re-)learn a lot of high school algebra). So just because we're replacing truck drivers with programmers, doesn't mean that the folks displaced by self-driving are somehow getting jobs that were created via the destruction of their prior employment opportunities. 2. "Partial Automation" could mean less hours worked, but is more likely to mean lower pay and more hours worked, and not all "partial automation" is equal. I.e., to destroy trucking as a middle-class profession, you don't need a self-driving truck. You just need to automate enough of the hard stuff so that anyone can learn to drive truck in a week. I think it's useful to separate the partial automation that de-skills work (level 4 autonomy for trucks) from the partial automation that simply means less equally-skilled work (web dev). The former creates more job opportunities, but turns a middle-class job into a low-class job. The latter just eliminates from middle-class jobs altogether.
- snarf21 9y ago
  I agree that there won't always be new jobs for those that are lost. There is some hope that the truck drivers can become mechanics and robot repair persons even if they can't learn coding. There is also a hugely underfunded part of our society that a lot of jobs will have to become in the future (imo) around elder care. Basically, low skilled people whose job it is to help other people, likely paid for by the government.
  - throwawayjava 9y ago
DoreenMichele 9y ago
Decrying the lack of education of laborers is a bit of a red herring. The Industrial Revolution led to both a rise in standard of living for commoners and education reform (ie expansion of education) . Off the top of my head, the average education level for women in Lincoln's era was 2nd to 4th grade. They were destined to be homemakers. The world did not think that needed an education. Lincoln's wife had a 12th grade education. She was considered headstrong and difficult. Her own child had her committed to an asylum, iirc. My opinion is that basically her high education caused de facto aberrant behavior for a woman. She had crazy ideas like wanting to make decisions for herself and her era did not tolerate this well. Now, a woman who drops out of high school is viewed as an uneducated loser who failed to do the minimum. Twelfth grade is considered bare minimum acceptable for a functioning adult in the US today. That expectation apparently grows out of the evils of automation of the Industrial Revolution "taking" jobs. Keep in mind the US school schedule provides spring break for a week and summers off because historically even children were expected -- aka needed -- for planting crops in the spring and tending crops during the summer. Yes, we need to design good policies that help effectively distribute this new wealth across the population. That kind of goes without saying in my eyes. It is an unprecedented level of wealth. Of course it means we are in new territory requiring new policies. That does not mean it needs to be framed as a doomsday scenario. Hopefully folks will be proactive about this rather than reactive. Waiting until the peasants are revolting to conclude that maybe your policies are wrong, broken and stupid is the unnecessarily hard path forward. Some sources: http://www.econlib.org/library/Enc/IndustrialRevolutionandtheStandardofLiving.html http://www.econlib.org/library/Enc/IndustrialRevolutionandth... https://www.slideshare.net/mobile/KristinaBowers/educational-reform-1790-1860 https://www.slideshare.net/mobile/KristinaBowers/educational...
- caseymarquis 9y ago
  I take a bit of offense at casually pairing not finishing secondary school with status as a "loser". I don't want to derail the disscussion, I just want to express support for my fellow dropouts. Many of us are quite successful. That said, if you're a dropout and reading this, go get a GED and follow it up with an associates degree. It's definitely worth your time and effort, and it's pretty inexpensive.
yuhong 9y ago
The current debt-based economy fundamentally depends on stocks going up every time debt increases.
kelnos 9y ago
I think an interesting thought experiment around this is: Imagine we could automate literally every job. Even jobs that install, upgrade, and maintain the automation are automated. Any "work" that anyone wants to do is effectively unnecessary and would be considered volunteerism or someone learning and practicing new skills to expand their horizons. There's also artistic work; even if we had "creative AI" that could create music, radio, television (all completely lifelike CGI, of course), etc., there'd surely be a desire from creative people to still do this sort of work because they enjoy it. Regardless, in this world, no one has a job and therefore no one gets paid. How do people live? Who gets what? Obviously you have to distribute "wealth" (whatever that means in this kind of society) in some manner that is independent of a person's contribution to society, since, by definition, it's not necessary to contribute to society at all. But how do you decide who gets how much? Do you just distribute the fruits of automation entirely equally among every person in the world? Obviously we're many centuries or millennia away from this scenario, if we even ever get there without destroying ourselves in the process. But I think there needs to be some replacement for people whose jobs get automated away. Since our civilization still requires work in order to progress, I don't think we should just give those people a monthly check and say "have fun not working anymore", but at the very least we need to help these people along until they can find a new, better job. Perhaps companies that eliminate jobs due to automation should be required to pay out some portion of their new profits to employees who lost their jobs for a certain period. Think of it as extended severance pay. Some form of government assistance could also be an option after the terms of the severance pay expire, and could be funded by corporate taxes or simply a new branch of an expanded unemployment insurance program.
- bertjk 9y ago
  If every job is automated, someone will invent a new job that isn't. There will always be some people who will only be content when they have some amount more wealth than their neighbors, and will be willing to work to make up the difference.
  - supreme_sublime 9y ago
    If Earth reached that kind of point, I could certainly see people attempting to colonize other planets, to mine asteroids and all of the labor associated with that. I really think a lot of this automation eliminating labor talk way early. There was similar talk a century ago.

63 points by denzil_correa 9y ago

Well that's great. Give everyone an index fund when they are born; by the time they turn 18 they will have their basic income.

shaki-dora 9y ago
Funny, slightly related, idea: With today's high rate of investment in the stock market, and specifically the rise of index funds, the US may have achieved something closer to socialism than any of history's self-professed "socialist" nations.
- rm_-rf_slash 9y ago
  Much more of the stock market than you think is owned by overseas investors. Most of the stock market is owned by institutional funds and people who are already quite wealthy.
- frgtpsswrdlame 9y ago
  First, there’s a bit of a myth that through indirect holdings, like holdings of stock in a pension fund, the stock market has become democratized, and everyone’s all in. Not so. Wolff’s data shows that while stock ownership has increased over the past few decades, in 2013 (his most recent data point), less than half — 46 percent — of households owned stocks, either directly or through their holdings in some sort of fund (e.g., a retirement account). Contrast that with the 94 percent ownership rate of the top 1 percent. But even that 46 percent ownership rate gets misunderstood, because it doesn’t differentiate how much stock is owned by different income classes. Less than a third of all households hold at least $10,000 in stocks, compared to 93 percent of those households in the top 1 percent. The figures below show that, since the late 1980s, about 80 percent of the value of the market has been held by the top 10 percent. Within that top 10 percent, the share of stock wealth held by the top 1 percent is about equal to the share held by the 90-99th percentiles; both groups’ shares are twice as large as the share that the entire bottom 90 percent holds. https://www.washingtonpost.com/posteverything/wp/2017/03/02/perspective-on-the-stock-market-rally-80-of-stock-value-held-by-top-10/?utm_term=.390a1346c38c https://www.washingtonpost.com/posteverything/wp/2017/03/02/...
  - lr4444lr 9y ago
    I find that figure exceedingly hard to believe was calculated correctly. Pension funds alone for civil servants (defined benefits, not retirement accounts,) are significantly invested in stock equities, which is a significant portion of households working and retired. Add in 401Ks, IRAs, and discount the undocumented in the workforce I would be shocked if it was not at least 75%.
QasimK 9y ago
Children already have different starting positions in the "race" from even before they are born from a variety of different factors but most factors are likely linked to the wealth of their parents (their education, their careers, how they value their children's education, the amount of money they spend on their children, the opportunities they have access to etc. etc. etc.). Giving every child an index fund (which should probably start being accessible when they are teenagers and become fully accessible in late 20s) would only solve some of the broader problems beyond the article. I also think it just isn't going happen because it effectively devalues the wealth of the wealthiest. It's like a wealth tax, right? Also, if everyone has 100-10000K it probably doesn't mean the same thing it means now. The general problem, as stated in the article, is the distribution of wealth - but the wealthy want to stay wealthy not be equally wealthy. Norway successfully implemented a sovereign wealth fund - currently work nearly 200k per citizen - on the back of their finite natural resources (oil), and I think that is the model that the UK (my country) should have followed. Otherwise, the sources of the funds is likely to be more direct taxation which doesn't seem likely to actually happen.
- lr4444lr 9y ago
  Norway successfully implemented a sovereign wealth fund - currently work nearly 200k per citizen - on the back of their finite natural resources (oil), and I think that is the model that the UK (my country) should have followed Are you only interested in Norway and the U.K., or do you not see a likely fallacy of composition here?
  - QasimK 9y ago
    I selected a successful example of an attempt at a sovereign wealth fund (in fact the only example that I know), and an example of a country that chose not to implement a sovereign wealth fund despite being the same situation. I'm not entirely sure if the examples I chose constitute a fallacy. I was merely suggesting one approach that could work for some countries to establish equal funds for their citizens. Some countries may not have access to abundant raw resources though.
- beojan 9y ago
rsanders 9y ago
Who are you suggesting will be giving all these babies index funds, and with what investment?
brndnmtthws 9y ago
That would work if people saved money, but they've been taught to spend rather than save. Most people believe that if they earn $1 they must spend that $1 as soon as possible.
- em3rgent0rdr 9y ago
  What about teaching people to save then instead?
  - brndnmtthws 9y ago
    :) The boring simple solutions don't garner much attention. People want magic pills or cool tech.
idoh 9y ago
Doesn't really solve the problem because people will just sell their shares in the fund to buy whatever they want as soon as they can.
dang 9y ago
Please don't post unsubstantive comments here. Especially on divisive topics, it's somewhere on the flamebait-troll vector and usually leads to worse.
meri_dian 9y ago
But it doesn't work like that. Where are you going to get the funds you "give" to the children? There is no free lunch.
panic 9y ago
This sounds a lot like the idea of a social wealth fund: https://mobile.nytimes.com/2017/11/30/opinion/inequality-social-wealth-fund.html https://mobile.nytimes.com/2017/11/30/opinion/inequality-soc...

swayvil 9y ago

Will any policy keep the wolves from eating everything? I don't think so.

adamch 9y ago
From 1910-1945, each country's richest 1% lost a lot of their wealth, all falling to (somewhat) similar levels. But in the time since, different countries 1% have built up wealth at very different speeds. This suggests that a country's policy can actually have some effect - a lot is beyond each country's control, but it's not hopeless. This is based on reading Thomas Piketty's "Capital in the Twenty First Century" (I'm halfway through) - really good read if you are interested in this.
- americanjetset 9y ago
  I would wager that the two World Wars impact on capital had a lot to do with the decrease of the 1%'s wealth.
  - abakker 9y ago
    Not to mention absolute destruction of capital. Not just casualties of war, but capital investments that are either lost or used up in the process of war (airplanes, boats, fuel, etc)
    - anvandare 9y ago
      Property, like matter, has an attractive quality similar to gravity: large clumps of property attract other property more than small clumps of property do. Given enough time and stability, the end state is usually one entity having (nearly) all the property (a star), or a few entities existing in (long-term) balance (like binary, trinary, quaternary, ... star systems). But stability doesn't really exist in the Universe - there's always a low degree of redistribution going on between the clumps (trade). And clumps can explode into smaller clumps (people die, and the property is inherited/distributed -- Immortal entities like corporations sort of escape this thing). Wars (and revolutions) are indeed the major disruptor, as it evens out the playing field (mostly by removing a lot of the property so everybody's equally poor). It's in the interest of the big clumps to keep the little clumps from getting too desperate, or from getting any funny ideas about redistribution of property, or from possessing the ability/organization to act on those ideas. In the absence of sudden and violent (thus unpredictable) disruptions, the big clumps can accumulate and plan sufficiently to slowly work their way into an optimum state: balancing their continuous growth (faster than the smaller clumps) with the suppression of those to stop them, without tipping the balance into revolution. The longer a system of clumps stays stable, the less likely it's going to become unstable. Until you get an outside disruption (invasion, natural disaster, plague, etc.) which is usually how long-lived and stable societies ultimately perish.

llimllib 9y ago

risks? We're well down that path, aren't we?

frgtpsswrdlame 9y ago

If the interest of individual business is to automate away your workforce but the interest of general society is to increase employment we're at a bit of a crossroads aren't we? Perhaps Marx was right and it's time to move to a new phase of history.

manicdee 9y ago
Capitalism is pretty much defined by placing a dollar value on production and seeking to maximise returns. The inevitable outcome is increasing profits by reducing the costs of production. There is no “perhaps” about it. There are no policies that will stop a capitalist economy behaving like a capitalist economy.
- runeks 9y ago
  There’s no rule in capitalism about who wins: the consumer decides who wins when she purchases a producer’s product, picked from the store shelf. The producers of the products we purchase are those who survive, because their income is our expenditures (and their expenditures on wages/salaries is our income). You could argue that we choose wrong when we go shopping, but ultimately we decide which businesses have an income and which don’t.
  - frgtpsswrdlame 9y ago
    I think you're missing the point a bit. It's not about our choice as consumers so much as it is the inevitable end of capitalism as a way of distributing property. https://en.wikipedia.org/wiki/Marx%27s_theory_of_history#Capitalism https://en.wikipedia.org/wiki/Marx%27s_theory_of_history#Cap...
  - manicdee 9y ago
    What choice do you have when there is only one provider?
vkou 9y ago
The interest of society is not to increase employment - the interest of society is to increase prosperity. Rounding up all the unemployed people, and forcing them, at gunpoint, to dig ditches and fill them will certainly increase employment, but will not do anything worthwhile for society. (I guess the ones that survive might end up in better shape.) Having them fix potholes or educate children will increase employment, as well as prosperity. (Setting aside the obvious moral problems of the means by which this took place.) Rounding them up and putting them into workhouses, where they build things for the benefit of a few well-connected individuals is how we have traditionally done this. It combines the worst of both worlds. What people forget is that jobs are the means, not the end.

ryandrake 9y ago

At least in the US, the “labor share”--which is the fraction of income that is paid to workers in wages, bonuses, and other compensation--has already been steadily declining. According to the Economic Report of the President (2013) [1], the labor share fell from 72 percent in 1980 to 60 percent in 2005. Increased automation can only make this problem worse. 1: https://www.gpo.gov/fdsys/pkg/ERP-2013/content-detail.html https://www.gpo.gov/fdsys/pkg/ERP-2013/content-detail.html

runeks 9y ago
Automation is not a new phenomenon, it’s what has been making us wealthier for the past century and a half. Labor share actually went up for 1950 to 1970, and I don’t think increases in automation were absent in that period: http://www.macleans.ca/wp-content/uploads/2012/09/fredgraph_labour_share.png http://www.macleans.ca/wp-content/uploads/2012/09/fredgraph_...
- petra 9y ago
  It's possible that automation worked to decrease labor share in that period, but other factors(communism, GI bill, etc...) had a stronger influence in the other direction.
  - throwawayjava 9y ago
    Also, general economic growth due to underlying fundamentals in the demographics -- fundamentals that western societies don't enjoy today.
  - runeks 9y ago
    Sure, that’s possible. But unless we can point to supporting data, it just amounts to seeking to reinforce our preconceived notions.
    - shkkmo 9y ago
      Of course it's not possible to show cause and effect between labor share and abstract 'automation'. Especially since not all automation is equal in this regard. Automation in some areas may increase labor share (accessible automation like PCs and washing machines) while others decrease it (expensive/in-accessible automation like assembly lines and machine learning). This means that automation could increase labor share one decade and decrease it the next as the types of automation change. However, the argument for a current/recent causative link between the two is not a "preconceived notion" but rather a reasoned hypothesis arrived at based on observation of trends and application of logic to economic theories. It is more reasonable to suppose that: overall, automation has had a role reducing the labor share (which has been going down despite a couple of brief spikes in the 50s and 60s) than to suppose: overall, automation has been increasing the labor share, but this is overshadowed by other causes which have been decreasing labor share. Thus, if you want to argue for the later supposition, the burden of proof is more heavily on your shoulders to explain the other causes which somehow outweigh the effects of automation on the economy.

em3rgent0rdr 9y ago

Isn't the transfer of income from labor to capital a good thing?

dang 9y ago
Please don't post unsubstantive comments to HN, and especially not ideological flamebait.
QasimK 9y ago
Only if capital is equally distributed, otherwise you end up with large numbers of people who cannot earn an income (or significant income) which I can only imagine negatively given how willing current holders of capital are to share their wealth.

dang 9y ago

All: if we're to have non-boring discussion on a hot+divisive topic like this one, please have the restraint to not post anything unless you have something thoughtful to say. Most first reactions are reflexive, i.e. predictable, i.e. uninteresting, i.e. off topic for Hacker News. Repetition is the enemy of curiosity. A good antidote is to stop and ask yourself if your comment engages at all with anything specific and/or unpredictable in the article. If it doesn't, consider not posting it; odds are you're moving discussion quality in the wrong direction for this particular message board. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

colemannugent 9y ago

IMO, there will always be work that needs doing. Once a particular kind of work becomes worthless another will replace it. Will the rapid increase in automation cause a "correction" in the labor market? Yup. Will it negatively effect lots of people in the short term? Sure. Will automation destroy the labor market entirely? No. Even if a majority of jobs were in creating automation you still have to pay those people to automate. I am wary of the people who feel the need to try and prevent the correction by way of government regulation. That seems like an easy way to create artificial markets like the housing bubble of 2008. At least at the current rate of automation there is not going to be a sudden massive collapse.

frgtpsswrdlame 9y ago
Okay but the question isn't 'will there still be some jobs?' it's 'will there be enough jobs?' If the answer is that no and we're at some fundamental point on the technological growth curve where we're advancing fast enough that we wipe more jobs out than we create then what do we do with a society which allocates 'deserts' and 'worth' to those who have jobs on the understanding that everyone could have one if they really tried? The only way out is government involvement.
- dragonwriter 9y ago
  > Okay but the question isn't 'will there still be some jobs?' it's 'will there be enough jobs?' No, it's will there be enough jobs with sufficient pay.
CodeCube 9y ago
This is a very easy position to take when you're part of the group that can easily become an "automator". I want to be entirely on the side that you describe here, but I simply can't ignore the negative quality of life that this will (and has been) imposing on a large proportion of society. This group is casually waved away; "just get a higher education", "just move to where the jobs are", "don't have to take care of your grandchildren because your children fell into opioid abuse because of the lack of opportunity even if you (currently) have a job", "take family-breaking commutes to better jobs in areas where the public transportation is poor or nonexistent". The "free market" doesn't give a crap about these folks ... just like nature doesn't care when an ecosystem is affected by the arrival of some new invasive species. If there ain't no food, you starve. That may be fine for the local rabbit population, but we have to watch out and help our fellow human ... we're not savages. edit: To be clear, as an "automator" myself, I obviously have a vested interest in this trend continuing. I'm obviously not saying that we should become the proverbial luddites and stop automation. But we do need to get better about making sure that humanity keeps marching forward one way or another.

taurath 9y ago

Popular uprising can and does occur over these power imbalances - however historically you need a level of animosity from the monied and powerful towards the underclass, and in this era the capital rich have been very innovative at manufacturing consent and quelling, appeasing, or splitting discontent. I’m reminded of what’s been going on in Iran the past few weeks - one of the most grasping anecdotes is that poor and middle class people are seeing the children of the powerful absolutely flaunting their wealth, driving maseratis and Porsche’s down the streets of Tehran, and spending more on dog food for a month than people make in a year. Those optics (just how rich the rich actually are compared to you) have been hidden from a lot of American society via exclusive neighborhoods and private airports and a general amount of discretion. We also don’t have discussions around class because our class hierarchy involves a lot of different verticals by virtue of not having only one culture. The elites of the culture that one belongs to look both a lot more attainable, or at least more inclined to interests that align with the rest of the culture. So instead of the conflict being up the ladders, the conflict happens between different ladders. That’s at least how I view the current political climate.

pembrook 9y ago
Except in the US you can just turn on the Kardashians. New money in the US is not at all hidden and flaunted just as it is everywhere else. The difference between wealth in frontier/emerging market economies like Iran and developed market economies like the US is corruption. If you see someone driving a Lamborghini in Tehran, it’s fairly safe to assume acquiring that car involved a level of government corruption. If you see someone driving a Lamborghini in any US city, it’s fairly safe to assume that person acquired the wealth to purchase that car through lawful free market activity. Is there corruption in the US? Of course. But it pales in comparison to what you find in developing economies.
- ethbro 9y ago
  I'd argue that new money (e.g. Kardashian, <$250 million in the immediate family) is a drop in the bucket compared to real American, old money wealth. E.g. the kind where your son being set up to run for President in 20 years is negotiated at a private golf club while ensuring the references are lined up for his children to get into the right schools

lr4444lr 9y ago

Since the 2nd derivative of population has been negative for quite some time, maybe this is a good thing?

justin_vanw 9y ago

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frgtpsswrdlame 9y ago
>Is the right policy a heavy emphasis/propaganda campaign advocating birth control among people who are no longer employable in this future distopia? You think there is a genetic component to their unemployability? This is even beyond social darwinism, it's straight up eugenics. E: I just saw your edit: >Eventually this will be solved with genetic manipulation of children, of course, which will eliminate any kind of permanent underclass that develops, but will also be the beginning of trans-human civilization. The only explanation for genetic manipulation ending any kind of permanent underclass is if you believe that underclass exists only because of genetic reasons. You don't believe that do you?
- justin_vanw 9y ago
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  - frgtpsswrdlame 9y ago
    I don't think members of the American underclass are genetically less intelligent. I think the implication that if we could just manipulate the genes of the poor then the wouldn't be poor anymore ignores a million non-biological reasons why poverty perpetuates itself along family lines.
    - justin_vanw 9y ago
      COMMENT REMOVED
      - frgtpsswrdlame 9y ago
        >Yes of course you are right, but intelligence is more correlated with income today than it was in 1850, and more correlated in 1850 than in 1750, and so on. Is it? I'm not sure I believe that. >At one point in history it really didn't matter much how smart you were (it helped you survive but it didn't make you upwardly mobile), it only mattered who your father was. It doesn't matter who your father is today? Of course it matters! A huge amount, I'd say your upbringing plays a more important role than your genetic lottery even today. >If the graph of education vs income is flat and then jumps as a step function at some magical 'employable' education level, then the education->income gradient that currently provides an incentive goes away for most people. I'm not sure it provides that much of an incentive to that many people. People still get liberal art degrees even though compensation in other programs would pay off better. Hell there's plenty of fields where going for a PhD vs. sticking with the BS doesn't even increase your lifetime earnings and yet people pour into those programs as well. Education has a pull in it's own right, not just as a tool to achieve a higher income. I also don't see why a step function is less incentivizing than a gradient, you could make an argument that it's even more incentivizing in that there's no reward for going half-way. Of course I think the real answer is that the distribution won't matter. And I think our society today is a lot closer to say a graph with two or three steps than it is to any sort of smooth upward climb. And then your solution to the problem of the poors dictating democracy is that we propagandize them into some voluntary but coerced eugenics program until we reach such a point where we can use genetic technology to remove whatever gene(s) it is that make them poor. It's honestly one of the stupidest things I've ever read on this board in it's ethical ideas, it's biological ideas, it's ideas about the basis of poverty, everything. This is why I decry the malignment of the liberal arts, CS programs are pumping out people like you who are desperately in need of Ethics 101.

throwawayjava 9y ago

The linked IPPR report is worth reading. For this crowd, the section on "partial automation" is probably most important. Web dev is... up there... in terms of potential for partial automation. There are a few important observations that the article and the IPPR report don't stress enough. 1. The jobs most likely to be automated, will be automated using technology that's inaccessible to the employees whose jobs are being destroyed. This point is often optimistically papered over using observations like "coal miners can go to coding bootcamps!" I know a few truckers and I have no doubt that each of them could go through a relatively short coding academy for web development work if it became a "do or starve" situation. But I doubt that most of them could become much more specialized autonomous vehicle software engineers, either due to raw intellectual ability or -- more often -- due to an inability to make a substantial half-decade investment in retraining (most of these folks would need to (re-)learn a lot of high school algebra). So just because we're replacing truck drivers with programmers, doesn't mean that the folks displaced by self-driving are somehow getting jobs that were created via the destruction of their prior employment opportunities. 2. "Partial Automation" could mean less hours worked, but is more likely to mean lower pay and more hours worked, and not all "partial automation" is equal. I.e., to destroy trucking as a middle-class profession, you don't need a self-driving truck. You just need to automate enough of the hard stuff so that anyone can learn to drive truck in a week. I think it's useful to separate the partial automation that de-skills work (level 4 autonomy for trucks) from the partial automation that simply means less equally-skilled work (web dev). The former creates more job opportunities, but turns a middle-class job into a low-class job. The latter just eliminates from middle-class jobs altogether.

snarf21 9y ago
I agree that there won't always be new jobs for those that are lost. There is some hope that the truck drivers can become mechanics and robot repair persons even if they can't learn coding. There is also a hugely underfunded part of our society that a lot of jobs will have to become in the future (imo) around elder care. Basically, low skilled people whose job it is to help other people, likely paid for by the government.
- throwawayjava 9y ago

DoreenMichele 9y ago

Decrying the lack of education of laborers is a bit of a red herring. The Industrial Revolution led to both a rise in standard of living for commoners and education reform (ie expansion of education) . Off the top of my head, the average education level for women in Lincoln's era was 2nd to 4th grade. They were destined to be homemakers. The world did not think that needed an education. Lincoln's wife had a 12th grade education. She was considered headstrong and difficult. Her own child had her committed to an asylum, iirc. My opinion is that basically her high education caused de facto aberrant behavior for a woman. She had crazy ideas like wanting to make decisions for herself and her era did not tolerate this well. Now, a woman who drops out of high school is viewed as an uneducated loser who failed to do the minimum. Twelfth grade is considered bare minimum acceptable for a functioning adult in the US today. That expectation apparently grows out of the evils of automation of the Industrial Revolution "taking" jobs. Keep in mind the US school schedule provides spring break for a week and summers off because historically even children were expected -- aka needed -- for planting crops in the spring and tending crops during the summer. Yes, we need to design good policies that help effectively distribute this new wealth across the population. That kind of goes without saying in my eyes. It is an unprecedented level of wealth. Of course it means we are in new territory requiring new policies. That does not mean it needs to be framed as a doomsday scenario. Hopefully folks will be proactive about this rather than reactive. Waiting until the peasants are revolting to conclude that maybe your policies are wrong, broken and stupid is the unnecessarily hard path forward. Some sources: http://www.econlib.org/library/Enc/IndustrialRevolutionandtheStandardofLiving.html http://www.econlib.org/library/Enc/IndustrialRevolutionandth... https://www.slideshare.net/mobile/KristinaBowers/educational-reform-1790-1860 https://www.slideshare.net/mobile/KristinaBowers/educational...

caseymarquis 9y ago
I take a bit of offense at casually pairing not finishing secondary school with status as a "loser". I don't want to derail the disscussion, I just want to express support for my fellow dropouts. Many of us are quite successful. That said, if you're a dropout and reading this, go get a GED and follow it up with an associates degree. It's definitely worth your time and effort, and it's pretty inexpensive.

yuhong 9y ago

The current debt-based economy fundamentally depends on stocks going up every time debt increases.

kelnos 9y ago

I think an interesting thought experiment around this is: Imagine we could automate literally every job. Even jobs that install, upgrade, and maintain the automation are automated. Any "work" that anyone wants to do is effectively unnecessary and would be considered volunteerism or someone learning and practicing new skills to expand their horizons. There's also artistic work; even if we had "creative AI" that could create music, radio, television (all completely lifelike CGI, of course), etc., there'd surely be a desire from creative people to still do this sort of work because they enjoy it. Regardless, in this world, no one has a job and therefore no one gets paid. How do people live? Who gets what? Obviously you have to distribute "wealth" (whatever that means in this kind of society) in some manner that is independent of a person's contribution to society, since, by definition, it's not necessary to contribute to society at all. But how do you decide who gets how much? Do you just distribute the fruits of automation entirely equally among every person in the world? Obviously we're many centuries or millennia away from this scenario, if we even ever get there without destroying ourselves in the process. But I think there needs to be some replacement for people whose jobs get automated away. Since our civilization still requires work in order to progress, I don't think we should just give those people a monthly check and say "have fun not working anymore", but at the very least we need to help these people along until they can find a new, better job. Perhaps companies that eliminate jobs due to automation should be required to pay out some portion of their new profits to employees who lost their jobs for a certain period. Think of it as extended severance pay. Some form of government assistance could also be an option after the terms of the severance pay expire, and could be funded by corporate taxes or simply a new branch of an expanded unemployment insurance program.

bertjk 9y ago
If every job is automated, someone will invent a new job that isn't. There will always be some people who will only be content when they have some amount more wealth than their neighbors, and will be willing to work to make up the difference.
- supreme_sublime 9y ago
  If Earth reached that kind of point, I could certainly see people attempting to colonize other planets, to mine asteroids and all of the labor associated with that. I really think a lot of this automation eliminating labor talk way early. There was similar talk a century ago.