12 ms·

Debtmageddon vs the robot utopia

65 points by hobbyistbee 14y ago

001sky 14y ago
Priceless dilletantism. TLDR: "I'm not an Economist", followed by quoting Paul Krugman.
- mpweiher 14y ago
  I don't see him quoting Paul Krugman, though his point is similar to Joseph Stiglitz's. The "resource curse" is a well-studied phenomenon, and there is both symptomatic evidence and causal analysis that suggests it is starting to apply to developed countries. The examples I have seen were focused on the finance "industry", especially in the UK, but it definitely looks applicable to other countries and the non-distribution of the "automation-dividend".
  - 001sky 14y ago
    Try cmd+f. The attribution, however oblique, was there...so I skipped the phrase "plagiarised his argument from". This is the relevant text from PK, in case you are curious: "First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base."[1] Which of course, if it isn't obvious, is, literally+legally false and figuratively BS. [1] http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-und...
    - mpweiher 14y ago
      OK, to sum up: You don't know what the word verb "to quote" means, nor the verb "to plagiarize". The author of TFA did neither. There was no quote, and the family vs. nation metaphor is much older than Krugman's article. And of course, Krugman is right, because what he says is descriptive of things that have already happened, and those things did, in fact, happen. Now I disagree somewhat with Krugman on the importance of debt (the state having too much seems to make it defer to much to the bankers, who should be reigned in much more) , but hey, he's a Nobel-prize winning economist and I am a dude with an opinion.
      - 001sky 14y ago
        And of course, Krugman is right -- Um, no. Its false. The entire idea is false coming (literally) and going (figuratively). but hey, he's a Nobel-prize winning economist... == This is not even worth responding to.
        mpweiher 14y ago
        "And of course, Krugman is right -- Um, no. Its false." Your evidence being? Your say-so? "but hey, he's a Nobel-prize winning economist... == This is not even worth responding to." If you had actually read and comprehended what I wrote, I was comparing him to myself, not to you. But if the shoe fits...speaking of which: since you have given zero evidence for your opinion, reputation actually is the only thing we can go on...oh wait...Krugman actually did provide evidence for what he wrote, how typical of him!
        001sky 14y ago
        The US Government is required by law fulfill its lawful contractual obligations. Debt is such a form of legal contract. So, by <law> Krugman's premise is false. If that is not obvious (as it should be), then now it is spelled out for you. "First, [PQR borrower] have to pay back their debt. [XYZ borrowes] don’t — all they need to do is ensure that debt grows more slowly than their [earnings] base." Second, to the extent this is even "metaphorically" true, it is only trivially true. For any borrower XYZ and PQR alike, I can make the same claim. eg, A corporation can "roll-over" its debt indefinitely under this constrain (for example, GE has done this for 100 years) or not. But also so can a family/business (eg. even a home roll-over a mortgage w. home equity loan or ect...then kids inherit house, etc). But all borowers as a mechanic do this through....paying back the old debt....first and issuing new debt....so again Krugman's is literally a false (as well as misleading) statement.
        mpweiher 14y ago
        Suddenly "Governments" became "the US Government", odd how that happens. First, governments have done so in the past. With this alone your point is trivially false by simple observation. Secondly, the US government, like other governments, can change the law. Thirdly, if you haven't noticed, governments are sort of at the top of the food chain, so they can (and do) not bother changing, but instead simply ignore the law, which they do all the time. So you have a judgement against a government, how are you going to enforce it? Ask the same government to send its own police against itself? Good luck with that. March on Argentina? BYOA - Bring Your Own Army. Fourth, one thing that countries like the US can do that neither families nor corporations can do is inflate away their debt. This is of course one of Krugman's criticisms against the Euro: that countries there have given up this ability, and so the only way to try to get rid of the debt is so-called "austerity" measures, which aren't really working in those countries where they are being tried, as GDP drops faster than the debt and therefore the crucial debt-to-GDP ratio gets worse rather than better. Also: free entertainment in the form of riots in the street. Fifth, as Krugman keeps pointing out, the government is not really some separate entity. Most of the debt is debt we have against ourselves, within the family, to stick with the analogy, it doesn't actually make the family poorer. Unlike, say, a mortgage. Sixth, with the power to raise taxes, governments have a pretty secure way of ensuring their earnings base, unlike families or corporations.
- drewwwwww 14y ago
  do you care to respond to the argument or are you satisfied with simple ad hominem?
  - yummyfajitas 14y ago
    Could you clarify the argument? Near as I can tell, he merely claims taxing the rich will benefit the economy, and provides no justification for this claim beyond vague allusions to the idea that it happened after WW2. I can't figure out what mechanism he is arguing. He also argues against straw-men such as this: Proponents of trickle-downism will argue that the little-taxed corporate executive will in fact share his wealth by spending it (Proponents of "trickle-downism" don't claim this.) and uses misleading definitions like this: A poor person, by contrast, needs more than he can afford. (By this definition there are virtually no poor people in America, thus his policy prescriptions are impossible. http://www.census.gov/prod/2008pubs/h150-07.pdf http://www.census.gov/prod/2008pubs/h150-07.pdf )
    - JoachimSchipper 14y ago
      He seems to be saying "take money sitting idle in the bank accounts of the rich and give it to the poor - this will get the money rolling". I don't think it's the greatest article to ever hit HN, and it's almost pure politics.
    - rdl 14y ago
      "Why was the US so successful after WW2, particularly compared to the decade before it" is a really complex question with many confounding factors in the analysis. I strongly suspect "everywhere else previously industrialized in the world had been largely destroyed" had a lot to do with it.
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- antihero 14y ago
  Well the fact that we're in worldwide recession despite being in a time of extreme productivity and technology, is perhaps a sign that the "real economists" and neo-liberals are fucking it all up. Elitism is counter-productive. So, care to actually present a counterargument or are you content to be an obnoxious blowhard?
  - potatolicious 14y ago
    No, it really isn't a sign of anything. This is like blaming all professional plumbers for your bath tub leaking. This is a cynical and knee jerk commentary that's emblematic of the sort of middle brow dismissals we've been working to limit on HN. For all of the competing thoughts on economics, I don't think it's a stretch to say it's enormously complicated. Even on the most cursory examination it doesn't break down to "more productivity = better economy". "Real economists" and "neo-liberals" may in fact be fucking it all up, but I'm quite certain they'd have done no better if they modeled the economy like you have. When your world view requires that millions of highly educated, trained, and experienced people - who have pursued a rigorous, academic field of study for decades - are all simultaneously out to lunch, possibly maliciously, the onus is perhaps on you to provide more substantiation than "they're fucking it all up". Side note: At this point I'd be very happy with HN being refocused on strictly tech/startup related posts. Every time a more general or controversial topic comes up it ends up very much like this thread. Unsubstantiated knee-jerk ad hominem. Followed by equally unsubstantiated hyperbolic cynical equip.
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    - Jare 14y ago
      > This is like blaming all professional plumbers for your bath tub leaking A large amount of bath tubs and pipes are leaking, worldwide.
  - kokey 14y ago
    Worldwide recession? The only time the recession was global was for a short while during 2009.
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Nursie 14y ago
See also 'Manna' and 'Robotic Nation' that must be over a decade old by this point.
pash 14y ago
I like to read economics articles on HN because (a) I've been trained as as an economist and (b) I like to read the opinions of other clever people, even (particularly?) those who don't have any background in economic theory. Let me make a few points: 1) Nothing the OP has written has anything to do with economics. 2) Who pays, which is the subject of the current "fiscal cliff" brinksmanship, is almost entirely a political question, not an economic one. That is, economists' insight into the present American dilemma is mostly limited to a determination of how the distribution of tax receipts under whatever bargain prevails will affect future economic growth. All other considerations are political, and economists like Krugman and Mankiw who weigh in vociferously do so as politicians, not economists. 3) Bailouts come in two distinct flavors: (a) those whose purpose is to provide essential liquidity to the capital markets at the core of our economies, while they're in distress, and (b) those that are basically handouts to the politically connected. Almost always (a) and (b) overlap. In a financial crisis, like the one we went recently went through, initially (a) dominates—"Wall Street" bailouts, necessary bailouts, lead off. Sometimes, as recently, (b) soon gain ground. The bailouts of Detroit, as with pretty much all "Main Street" bailouts, are in the latter category. These are politically motivated, not economically motivated, bailouts 3) I stand (hope!) to gain most of my future income from capital gains. I do not believe that there is any strong argument for treating capital gains differently from other other income as a matter of economic policy. There are, of course, political arguments in either direction.† 4) As I've written in reply to other HN submissions, I see little reason to believe that we are meaningfully nearer an economic singularity with respect to robot labor than in times recently past. Capital has always eroded the position of labor and forced workers into more productive roles that are less directly competitive with machines. If the situation changes dramatically, it will be clear in discussions here long before economists catch on, but we're not there yet. Nowhere close. † – I am very much an Internet libertarian (small "L"). I despise most taxes, and I believe that much government spending is wasteful in the sense that the money would be more productive, in net, in other uses. I also (b) realize that taxation is as much about values, our values as citizens and as human beings, as it is about economics. (I also am aware that that "the path to hell is paved with good intentions" is close to being a theorem of public finance.) Lastly, my motivation for studying economics has come more from an interest in the various and common ways in which markets fail than from the ways in which they work.
DigitalJack 14y ago
I see this point of view a lot in my internet wanderings. Honestly I don't understand the line of thinking. What do people think "the rich" do with their money? Store it under a mattress? Keep it in an underground vault so they can go swim in it while laughing maniacally? Of course they don't. They invest it. They put it in Treasuries, Mutual Funds, Individual Stocks, CDs, Money Markets, Plain Old Checking Accounts. That money is most definitely not sitting still. It is out there flowing through the economy, financing mortgages, construction, businesses, and probably anything else you can think of. The only reason to tax the rich as far as economic stimulation goes, is if you believe the Government can do better with the money than the market can. If that is what you believe, fine, just say so and state that as your argument. But this idea that somehow money is sequestered when owned by rich people is absurd.
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- nagrom 14y ago
  Yes and no. They also use it to buy and store commodities, in the believe that money will devalue and it is better to store it as gold or similar. This line of thinking pretty much creates no value - the money does get kept in a underground vault, albeit rarely in the shape of a swimming pool. Where any investment happens also matters - I suspect that recently most of the value of investments have gone to raising the quality of living conditions for the middle classes in China and India, rather than in America or Western Europe. In a sense, the planting is being done overseas, and the harvesting is happening at home. One may argue that this is morally desirable, but it's not clear that it is the outcome that would be chosen by enlightened American or European self-interest. Interest rates being as low as they are also seems to imply that there are few solid value-creating investments to be had at home in a retail sense - otherwise it would be trivial to invest money at a higher rate of interest and become quickly more rich. One final point - money is power. When money is so heavily concentrated in the hands of very few people, you have the same very few people being very powerful economically and picking winners and losers. This happens to be exactly the problem that a lot of people who are for market-driven economies have with socialism/communism - power concentrated is too prone to failure and not as great a driver for progress as power diluted.
panacea 14y ago
Haven't read any comments here yet, but I firmly believe this analysis to be spot fucking on. Will be interesting to find out why this critique which aligns so closely to my own thoughts is 'wrong' or at least flawed.
vaadu 14y ago
It's odd that the word entitlements is no where in the OP. Entitlement spending is the biggest contributor to the debt. It's odd that the OP fails on basic math. If you took ALL of the money from the top 10% wealthiest people and put it towards the debt it would barley make a dent. It's odd that the OP fails to see what's happened in other countries when the tax rate is cranked up on the rich ... many leave the country. And many outside entrepreneurs considering the US as a place to start a business will take their ideas, their jobs and money elsewhere. The debt will only get fixed when jobs get created, the tax system gets modernized and entitlements get reformed.
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- subsystem 14y ago
  "It's odd that the OP fails on basic math. If you took ALL of the money from the top 10% wealthiest people and put it towards the debt it would barley make a dent." The top 1% in the US has around $12 trillion in wealth, which is about the public part of the debt ($16 trillion total). http://www.irs.gov/pub/irs-soi/12pwwinbulwealth07.pdf http://www.irs.gov/pub/irs-soi/12pwwinbulwealth07.pdf http://en.wikipedia.org/wiki/United_States_public_debt http://en.wikipedia.org/wiki/United_States_public_debt
  - moe 14y ago
    Thank you. I found it hilarious how vaadu led his comment with "OP fails on basic math" and then lands a turd like that...
- igravious 14y ago
  I've heard #3 time and time again and if that's among the best counter-arguments you have it practically in itself proves the article's position. Just so that we're nice and clear what you're saying is that the rich would rather leave a country rather than shoulder a fairer share of the social burden. I have three things to say to that. 1) If someone is that selfish I would be glad they left. 2) When taxes were much higher the rich and wealthy did not seem to leave the country. 3) The US of A appears to have had a culture of entrepreneurship in times of higher taxation and I just don't believe that this kind of economic calculus would figure in the mind of an immigrant all that much, there are a whole host of factors. Regarding #1. You're basically whining about helping the less well off in society. We should of course just let them rot and feel no compassion for our fellow human being. If you keep shouting this long enough it will definitely distract us from from the actual solution, the _just_ solution, which is increasing the taxation on the rich and creating a climate of fairer wealth distribution. But that's the problem, isn't it? You don't want to live in a fair society. You want to less in a manifestly unequal society where some make out like bandits, and some are ground down day after day. And #2. If the math is so basic why don't you run through the numbers for us? Sorry for the snark but I cannot stand people with your attitude.
michaelfeathers 14y ago
The idea of 'Robot Utopia' is funny in a way. By most measures we are already there in terms of technology, but the economy does keep opening new avenues for work. The big question is what people would do if they didn't have to work for their needs? One answer is make-work, i.e., hobbyist jobs. The other is general hedonism. Conservatives fear that the latter would be destructive - that it would lead to widespread addiction and criminality. The question: "What would you do if you didn't have to work?" can be answered in many different ways depending upon a person's history, self-image and inclination.
- ippisl 14y ago
  Michael , you say we're already in "robot utopia" in terms of tech but there already new jobs. If i look at it from the position of capabilities, not specific jobs, it doesn't seem that this is the case. For example if you look at agriculture from the point of capabilities(physical repetitive labor), you see machines replacing humans. You see same powers in manufacturing. But what about eye sight, coordination, adaptivity, ability to offer good enough human service, retaining and sorting large knowledge bases, intelligence and other capabilities ? Computers are improving in all those capabilities, and contionously replace people. The "robot utopia" will be when machines can do those things better/cheaper than us. Then maybe the only capability that will be left is being an authentic human, for jobs that people prefer authentic humans would do. Whether humans have this advantage over machine replicas, how many jobs like this would be available and what form this jobs would take(maybe being humiliated as servants like so common in India today?) are interesting questions.
mpweiher 14y ago
Krugman has just started a multi-part series on "Policy Implications of Capital-Biased Technology", which I think is wonkish for what TFA is about. http://krugman.blogs.nytimes.com/2012/12/28/policy-implications-of-capital-biased-technology-opening-remarks/ http://krugman.blogs.nytimes.com/2012/12/28/policy-implicati... HN story: http://news.ycombinator.com/item?id=4978136 http://news.ycombinator.com/item?id=4978136
xivSolutions 14y ago
I enjoyed the authors article. However, I think he misses the mark with some of his assumptions. Unlike some in this thread, I am NOT trained in economics. But: 1) I think the author incorrectly tries to nullify the family budget metaphor for economic prescription. While any metaphor only goes so far, he attempts to compare the micro-economic interactions within the family ("essentially communist") with the macro-economic revenue/spending/balancing act for a national budget. He misses the point that, in observing that we must "understand a family as a group of people functioning a single economic agent" we must consider the requirements of that economic unit to adhere to reasonable financial policies, such as making sure revenues are sufficient to cover debt service and expenses. 2) I think the author mis-characterizes the post WWII affluence of the American economy as a result of the wartime government spending combined with some magical wealth redistribution scheme inherent in a wartime economy. In reality, I believe the great American prosperity was more to do with the nation's near monopoly on manufacturing capacity after most of Europe was decimated (and Japan as well). 3) I agree with the author that "trickle-down": economics (actually more of a political thing than a real economic theory) is inherently flawed. I think he also misapplies the family metaphor here, as well, mixing the micro with the macro. All in all this was an enjoyable and well-written article, and I appreciate the author's ideas about the "Robot Utopia." I don;t agree, but what fun is it if we always agree, right?

65 points by hobbyistbee 14y ago

001sky 14y ago

Priceless dilletantism. TLDR: "I'm not an Economist", followed by quoting Paul Krugman.

mpweiher 14y ago
I don't see him quoting Paul Krugman, though his point is similar to Joseph Stiglitz's. The "resource curse" is a well-studied phenomenon, and there is both symptomatic evidence and causal analysis that suggests it is starting to apply to developed countries. The examples I have seen were focused on the finance "industry", especially in the UK, but it definitely looks applicable to other countries and the non-distribution of the "automation-dividend".
- 001sky 14y ago
  Try cmd+f. The attribution, however oblique, was there...so I skipped the phrase "plagiarised his argument from". This is the relevant text from PK, in case you are curious: "First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base."[1] Which of course, if it isn't obvious, is, literally+legally false and figuratively BS. [1] http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-und...
  - mpweiher 14y ago
    OK, to sum up: You don't know what the word verb "to quote" means, nor the verb "to plagiarize". The author of TFA did neither. There was no quote, and the family vs. nation metaphor is much older than Krugman's article. And of course, Krugman is right, because what he says is descriptive of things that have already happened, and those things did, in fact, happen. Now I disagree somewhat with Krugman on the importance of debt (the state having too much seems to make it defer to much to the bankers, who should be reigned in much more) , but hey, he's a Nobel-prize winning economist and I am a dude with an opinion.
    - 001sky 14y ago
      And of course, Krugman is right -- Um, no. Its false. The entire idea is false coming (literally) and going (figuratively). but hey, he's a Nobel-prize winning economist... == This is not even worth responding to.
      - mpweiher 14y ago
        "And of course, Krugman is right -- Um, no. Its false." Your evidence being? Your say-so? "but hey, he's a Nobel-prize winning economist... == This is not even worth responding to." If you had actually read and comprehended what I wrote, I was comparing him to myself, not to you. But if the shoe fits...speaking of which: since you have given zero evidence for your opinion, reputation actually is the only thing we can go on...oh wait...Krugman actually did provide evidence for what he wrote, how typical of him!
        001sky 14y ago
        The US Government is required by law fulfill its lawful contractual obligations. Debt is such a form of legal contract. So, by <law> Krugman's premise is false. If that is not obvious (as it should be), then now it is spelled out for you. "First, [PQR borrower] have to pay back their debt. [XYZ borrowes] don’t — all they need to do is ensure that debt grows more slowly than their [earnings] base." Second, to the extent this is even "metaphorically" true, it is only trivially true. For any borrower XYZ and PQR alike, I can make the same claim. eg, A corporation can "roll-over" its debt indefinitely under this constrain (for example, GE has done this for 100 years) or not. But also so can a family/business (eg. even a home roll-over a mortgage w. home equity loan or ect...then kids inherit house, etc). But all borowers as a mechanic do this through....paying back the old debt....first and issuing new debt....so again Krugman's is literally a false (as well as misleading) statement.
        mpweiher 14y ago
        Suddenly "Governments" became "the US Government", odd how that happens. First, governments have done so in the past. With this alone your point is trivially false by simple observation. Secondly, the US government, like other governments, can change the law. Thirdly, if you haven't noticed, governments are sort of at the top of the food chain, so they can (and do) not bother changing, but instead simply ignore the law, which they do all the time. So you have a judgement against a government, how are you going to enforce it? Ask the same government to send its own police against itself? Good luck with that. March on Argentina? BYOA - Bring Your Own Army. Fourth, one thing that countries like the US can do that neither families nor corporations can do is inflate away their debt. This is of course one of Krugman's criticisms against the Euro: that countries there have given up this ability, and so the only way to try to get rid of the debt is so-called "austerity" measures, which aren't really working in those countries where they are being tried, as GDP drops faster than the debt and therefore the crucial debt-to-GDP ratio gets worse rather than better. Also: free entertainment in the form of riots in the street. Fifth, as Krugman keeps pointing out, the government is not really some separate entity. Most of the debt is debt we have against ourselves, within the family, to stick with the analogy, it doesn't actually make the family poorer. Unlike, say, a mortgage. Sixth, with the power to raise taxes, governments have a pretty secure way of ensuring their earnings base, unlike families or corporations.
drewwwwww 14y ago
do you care to respond to the argument or are you satisfied with simple ad hominem?
- yummyfajitas 14y ago
  Could you clarify the argument? Near as I can tell, he merely claims taxing the rich will benefit the economy, and provides no justification for this claim beyond vague allusions to the idea that it happened after WW2. I can't figure out what mechanism he is arguing. He also argues against straw-men such as this: Proponents of trickle-downism will argue that the little-taxed corporate executive will in fact share his wealth by spending it (Proponents of "trickle-downism" don't claim this.) and uses misleading definitions like this: A poor person, by contrast, needs more than he can afford. (By this definition there are virtually no poor people in America, thus his policy prescriptions are impossible. http://www.census.gov/prod/2008pubs/h150-07.pdf http://www.census.gov/prod/2008pubs/h150-07.pdf )
  - JoachimSchipper 14y ago
    He seems to be saying "take money sitting idle in the bank accounts of the rich and give it to the poor - this will get the money rolling". I don't think it's the greatest article to ever hit HN, and it's almost pure politics.
  - rdl 14y ago
    "Why was the US so successful after WW2, particularly compared to the decade before it" is a really complex question with many confounding factors in the analysis. I strongly suspect "everywhere else previously industrialized in the world had been largely destroyed" had a lot to do with it.
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antihero 14y ago
Well the fact that we're in worldwide recession despite being in a time of extreme productivity and technology, is perhaps a sign that the "real economists" and neo-liberals are fucking it all up. Elitism is counter-productive. So, care to actually present a counterargument or are you content to be an obnoxious blowhard?
- potatolicious 14y ago
  No, it really isn't a sign of anything. This is like blaming all professional plumbers for your bath tub leaking. This is a cynical and knee jerk commentary that's emblematic of the sort of middle brow dismissals we've been working to limit on HN. For all of the competing thoughts on economics, I don't think it's a stretch to say it's enormously complicated. Even on the most cursory examination it doesn't break down to "more productivity = better economy". "Real economists" and "neo-liberals" may in fact be fucking it all up, but I'm quite certain they'd have done no better if they modeled the economy like you have. When your world view requires that millions of highly educated, trained, and experienced people - who have pursued a rigorous, academic field of study for decades - are all simultaneously out to lunch, possibly maliciously, the onus is perhaps on you to provide more substantiation than "they're fucking it all up". Side note: At this point I'd be very happy with HN being refocused on strictly tech/startup related posts. Every time a more general or controversial topic comes up it ends up very much like this thread. Unsubstantiated knee-jerk ad hominem. Followed by equally unsubstantiated hyperbolic cynical equip.
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  - Jare 14y ago
    > This is like blaming all professional plumbers for your bath tub leaking A large amount of bath tubs and pipes are leaking, worldwide.
- kokey 14y ago
  Worldwide recession? The only time the recession was global was for a short while during 2009.
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Nursie 14y ago

See also 'Manna' and 'Robotic Nation' that must be over a decade old by this point.

pash 14y ago

I like to read economics articles on HN because (a) I've been trained as as an economist and (b) I like to read the opinions of other clever people, even (particularly?) those who don't have any background in economic theory. Let me make a few points: 1) Nothing the OP has written has anything to do with economics. 2) Who pays, which is the subject of the current "fiscal cliff" brinksmanship, is almost entirely a political question, not an economic one. That is, economists' insight into the present American dilemma is mostly limited to a determination of how the distribution of tax receipts under whatever bargain prevails will affect future economic growth. All other considerations are political, and economists like Krugman and Mankiw who weigh in vociferously do so as politicians, not economists. 3) Bailouts come in two distinct flavors: (a) those whose purpose is to provide essential liquidity to the capital markets at the core of our economies, while they're in distress, and (b) those that are basically handouts to the politically connected. Almost always (a) and (b) overlap. In a financial crisis, like the one we went recently went through, initially (a) dominates—"Wall Street" bailouts, necessary bailouts, lead off. Sometimes, as recently, (b) soon gain ground. The bailouts of Detroit, as with pretty much all "Main Street" bailouts, are in the latter category. These are politically motivated, not economically motivated, bailouts 3) I stand (hope!) to gain most of my future income from capital gains. I do not believe that there is any strong argument for treating capital gains differently from other other income as a matter of economic policy. There are, of course, political arguments in either direction.† 4) As I've written in reply to other HN submissions, I see little reason to believe that we are meaningfully nearer an economic singularity with respect to robot labor than in times recently past. Capital has always eroded the position of labor and forced workers into more productive roles that are less directly competitive with machines. If the situation changes dramatically, it will be clear in discussions here long before economists catch on, but we're not there yet. Nowhere close. † – I am very much an Internet libertarian (small "L"). I despise most taxes, and I believe that much government spending is wasteful in the sense that the money would be more productive, in net, in other uses. I also (b) realize that taxation is as much about values, our values as citizens and as human beings, as it is about economics. (I also am aware that that "the path to hell is paved with good intentions" is close to being a theorem of public finance.) Lastly, my motivation for studying economics has come more from an interest in the various and common ways in which markets fail than from the ways in which they work.

DigitalJack 14y ago

I see this point of view a lot in my internet wanderings. Honestly I don't understand the line of thinking. What do people think "the rich" do with their money? Store it under a mattress? Keep it in an underground vault so they can go swim in it while laughing maniacally? Of course they don't. They invest it. They put it in Treasuries, Mutual Funds, Individual Stocks, CDs, Money Markets, Plain Old Checking Accounts. That money is most definitely not sitting still. It is out there flowing through the economy, financing mortgages, construction, businesses, and probably anything else you can think of. The only reason to tax the rich as far as economic stimulation goes, is if you believe the Government can do better with the money than the market can. If that is what you believe, fine, just say so and state that as your argument. But this idea that somehow money is sequestered when owned by rich people is absurd.

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nagrom 14y ago
Yes and no. They also use it to buy and store commodities, in the believe that money will devalue and it is better to store it as gold or similar. This line of thinking pretty much creates no value - the money does get kept in a underground vault, albeit rarely in the shape of a swimming pool. Where any investment happens also matters - I suspect that recently most of the value of investments have gone to raising the quality of living conditions for the middle classes in China and India, rather than in America or Western Europe. In a sense, the planting is being done overseas, and the harvesting is happening at home. One may argue that this is morally desirable, but it's not clear that it is the outcome that would be chosen by enlightened American or European self-interest. Interest rates being as low as they are also seems to imply that there are few solid value-creating investments to be had at home in a retail sense - otherwise it would be trivial to invest money at a higher rate of interest and become quickly more rich. One final point - money is power. When money is so heavily concentrated in the hands of very few people, you have the same very few people being very powerful economically and picking winners and losers. This happens to be exactly the problem that a lot of people who are for market-driven economies have with socialism/communism - power concentrated is too prone to failure and not as great a driver for progress as power diluted.

panacea 14y ago

Haven't read any comments here yet, but I firmly believe this analysis to be spot fucking on. Will be interesting to find out why this critique which aligns so closely to my own thoughts is 'wrong' or at least flawed.

vaadu 14y ago

It's odd that the word entitlements is no where in the OP. Entitlement spending is the biggest contributor to the debt. It's odd that the OP fails on basic math. If you took ALL of the money from the top 10% wealthiest people and put it towards the debt it would barley make a dent. It's odd that the OP fails to see what's happened in other countries when the tax rate is cranked up on the rich ... many leave the country. And many outside entrepreneurs considering the US as a place to start a business will take their ideas, their jobs and money elsewhere. The debt will only get fixed when jobs get created, the tax system gets modernized and entitlements get reformed.

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subsystem 14y ago
"It's odd that the OP fails on basic math. If you took ALL of the money from the top 10% wealthiest people and put it towards the debt it would barley make a dent." The top 1% in the US has around $12 trillion in wealth, which is about the public part of the debt ($16 trillion total). http://www.irs.gov/pub/irs-soi/12pwwinbulwealth07.pdf http://www.irs.gov/pub/irs-soi/12pwwinbulwealth07.pdf http://en.wikipedia.org/wiki/United_States_public_debt http://en.wikipedia.org/wiki/United_States_public_debt
- moe 14y ago
  Thank you. I found it hilarious how vaadu led his comment with "OP fails on basic math" and then lands a turd like that...
igravious 14y ago
I've heard #3 time and time again and if that's among the best counter-arguments you have it practically in itself proves the article's position. Just so that we're nice and clear what you're saying is that the rich would rather leave a country rather than shoulder a fairer share of the social burden. I have three things to say to that. 1) If someone is that selfish I would be glad they left. 2) When taxes were much higher the rich and wealthy did not seem to leave the country. 3) The US of A appears to have had a culture of entrepreneurship in times of higher taxation and I just don't believe that this kind of economic calculus would figure in the mind of an immigrant all that much, there are a whole host of factors. Regarding #1. You're basically whining about helping the less well off in society. We should of course just let them rot and feel no compassion for our fellow human being. If you keep shouting this long enough it will definitely distract us from from the actual solution, the _just_ solution, which is increasing the taxation on the rich and creating a climate of fairer wealth distribution. But that's the problem, isn't it? You don't want to live in a fair society. You want to less in a manifestly unequal society where some make out like bandits, and some are ground down day after day. And #2. If the math is so basic why don't you run through the numbers for us? Sorry for the snark but I cannot stand people with your attitude.

michaelfeathers 14y ago

The idea of 'Robot Utopia' is funny in a way. By most measures we are already there in terms of technology, but the economy does keep opening new avenues for work. The big question is what people would do if they didn't have to work for their needs? One answer is make-work, i.e., hobbyist jobs. The other is general hedonism. Conservatives fear that the latter would be destructive - that it would lead to widespread addiction and criminality. The question: "What would you do if you didn't have to work?" can be answered in many different ways depending upon a person's history, self-image and inclination.

ippisl 14y ago
Michael , you say we're already in "robot utopia" in terms of tech but there already new jobs. If i look at it from the position of capabilities, not specific jobs, it doesn't seem that this is the case. For example if you look at agriculture from the point of capabilities(physical repetitive labor), you see machines replacing humans. You see same powers in manufacturing. But what about eye sight, coordination, adaptivity, ability to offer good enough human service, retaining and sorting large knowledge bases, intelligence and other capabilities ? Computers are improving in all those capabilities, and contionously replace people. The "robot utopia" will be when machines can do those things better/cheaper than us. Then maybe the only capability that will be left is being an authentic human, for jobs that people prefer authentic humans would do. Whether humans have this advantage over machine replicas, how many jobs like this would be available and what form this jobs would take(maybe being humiliated as servants like so common in India today?) are interesting questions.

mpweiher 14y ago

Krugman has just started a multi-part series on "Policy Implications of Capital-Biased Technology", which I think is wonkish for what TFA is about. http://krugman.blogs.nytimes.com/2012/12/28/policy-implications-of-capital-biased-technology-opening-remarks/ http://krugman.blogs.nytimes.com/2012/12/28/policy-implicati... HN story: http://news.ycombinator.com/item?id=4978136 http://news.ycombinator.com/item?id=4978136

xivSolutions 14y ago

I enjoyed the authors article. However, I think he misses the mark with some of his assumptions. Unlike some in this thread, I am NOT trained in economics. But: 1) I think the author incorrectly tries to nullify the family budget metaphor for economic prescription. While any metaphor only goes so far, he attempts to compare the micro-economic interactions within the family ("essentially communist") with the macro-economic revenue/spending/balancing act for a national budget. He misses the point that, in observing that we must "understand a family as a group of people functioning a single economic agent" we must consider the requirements of that economic unit to adhere to reasonable financial policies, such as making sure revenues are sufficient to cover debt service and expenses. 2) I think the author mis-characterizes the post WWII affluence of the American economy as a result of the wartime government spending combined with some magical wealth redistribution scheme inherent in a wartime economy. In reality, I believe the great American prosperity was more to do with the nation's near monopoly on manufacturing capacity after most of Europe was decimated (and Japan as well). 3) I agree with the author that "trickle-down": economics (actually more of a political thing than a real economic theory) is inherently flawed. I think he also misapplies the family metaphor here, as well, mixing the micro with the macro. All in all this was an enjoyable and well-written article, and I appreciate the author's ideas about the "Robot Utopia." I don;t agree, but what fun is it if we always agree, right?