17 ms·

All around the world, labour is losing out to capital

207 points by rndmize 13y ago

adventured 13y ago
This is going to get drastically worse, as capital becomes able to remove most human labor from the production equation using robotics in the next few decades. I've yet to see a solution to the seemingly inevitable outcome of traditional human labor dropping to nearly zero value. And or why we'd want to prevent it from happening, given the upside to robotics. The only way to stop (slow down?) the rise of robotics, is to place arbitrary restrictions on machines to hamper their value proposition. I expect politicians all over the world to begin attempting this before another decade goes by. Will we see a dramatic increase in the formation of unions as a defensive response? Most likely.
- parasight 13y ago
  What about a tax on machines in combination with an unconditional basic income? Right now the worker is the loser in this game. Why not make him the winner? With technology he is no longer forced to do boring work. Machines can do it much better.
  - adventured 13y ago
    I would expect a tax on machines, absolutely. Many possibilities will be floated: such as taxes, limiting how many hours per day a machine can operate, limiting which hours of the day a machine can operate, projecting human costs onto the machines (cost of health insurance, sick leave, vacation time, etc). Organized labor will pull for machines being restrained to as much of an equal footing with human labor as possible. Whether that will actually happen or not, impossible to guess. I do expect various cities, jurisdictions, countries, etc. will try implementing various schemes though.
- riggins 13y ago
  Will we see a dramatic increase in the formation of unions as a defensive response? Most likely. I'm struggling to follow how a union could help this situation. What would happen? Workers would go on strike if their firms use robots? Seems like that would just push the owner to accelerate robot orders. My guess is that unions are pretty useless in the face of automation. Does anyone know any precedents? I agree in spirit though. What I think is likely is the rise of populism. I think the battle will have to be waged in the political arena.
  - adventured 13y ago
    Not suggesting it would help, but rather that it's the expected response from labor. Organized labor means far greater political influence. Robots don't vote, yet. That greater political influence will be necessary to restrict robotics / slow down the process of innovation and productivity gains (and labor job destruction).
  - zzen 13y ago
    I think we all know the precedent: http://en.wikipedia.org/wiki/Luddite http://en.wikipedia.org/wiki/Luddite And yeah, if it gets really bad, violent protest is just a more extreme continuation of unions.
- eru 13y ago
  > The only way to stop (slow down?) the rise of robotics, is to place arbitrary restrictions on machines to hamper their value proposition. I expect politicians all over the world to begin attempting this before another decade goes by. Depends a bit on how international competition between jurisdictions will play out.
- jpatokal 13y ago
  This is not about robotics, it's about cheap labour displacing expensive labour through outsourcing and companies capturing some of the vast difference in cost. Which also means it's temporary, since incomes (and thus costs) rise in the poorer countries, and any excess margin eventually will get competed away. That said, since "temporary" here may well last several generations, there's plenty of societal upheaval ahead.
- ciokan 13y ago
  It won't. Inject too much robotics and we will have no money to spend on their products. The wheel must keep spinning. If the human labor is replaced by robotics everywhere we, as humans, will have no earnings and without any income the market will freeze as demand will go down as well. All I can say, we're living interesting times.
  - gtremper 13y ago
    If robots can replace all human jobs, then why does anyone need to work? Or why does money even make sense them. All people need is food, water, and shelter. If machines can provide all that, lacking a job doesn't matter.
    - krapp 13y ago
      Robots won't replace the human need to exploit finite resources and other people for personal gain. Which is why I think complete replacement of human labor by robots isn't likely to happen, even if it becomes technically possible -- because the entire reason for displacing human labor with automation is to remove the need to pay more people to do more work, entirely a capitalist means to a capitalist end that doesn't make sense if the rich don't keep getting richer, or if there's not an economy to take advantage of all the efficiency in all the automation.
    - aianus 13y ago
      Because a large part of life is competition for a mate. This tends to manifest itself in American culture as the pursuit of material wealth and social status through employment.
    - dinkumthinkum 13y ago
      That's just kind of silly. We have so much silly thinking in HN. So in this robot magic land people are just living with basic necessities and that's? Sounds like the robot utopia worked out great ... Why does money make sense? Do your magic robots work on perpetual motion? And the robot owners are going to provide all these necessities ? Why ?
- 3pt14159 13y ago
  Geolibertarianism would solve it pretty effectively, since it would allow the human to opt-out.
- YokoZar 13y ago
  If labor costs (ie wages) get exceptionally low, it starts making sense to develop more labor-intensive technology. Consider how the industrial revolution started by replacing expensive weavers with cheap migrant workers using power looms. There could just as easily be some sort of technology or industry that takes off tomorrow because it's more able to use this abundant supply of low-skilled workers we're worrying about.
- GFischer 13y ago
  Someone will still have money, and (I guess) a desire to spend it. My own dystopian vision is of a world made almost entirely of services to those few with money - most of us will be/are selling nonessential services (entertainment, leisure, nonessential medical services & care, advertising, etc..). Most of government is probably in the "nonessential" category. Some % of the workforce will still work on R&D and essential services of course. Having all the basics covered by a small percentage of the workforce doesn't mean the rest will have to work less.. on the contrary, the battle to divest people from their money will be fiercer than ever - more and better and more exotic services, more advertising, etc. It would be interesting to live in a post-scarcity society, but we're nowhere near there yet (and I'll be a bit Malthusian and say that we should curb the population growth a bit if we want to have what I consider to be a good standard of living in the future)
l33tbro 13y ago
On the subject of robotics supplanting human toil, Ray Kurzweil recently said: "In my view, it will lead to richer lives, and longer lives, but I would put an emphasis on the richer part. And I’m not just talking about financial riches. Life is getting [better] as we enrich our lives with technology. You can see that now—a kid in Africa with a smartphone has access to more information and human knowledge than the president of the United States did 15 years ago. People were lucky if they could get a book 100 years ago. We’re going to continue that expansion. Music is going to be richer. We’re going to have virtual reality experiences we can enjoy. All different forms of human expression, art, science, are going to become expanded, by expanding our intelligence." Source: http://www2.macleans.ca/2013/10/14/how-nanobots-will-help-the-immune-system-and-why-well-be-much-smarter-thanks-to-machines-2/ http://www2.macleans.ca/2013/10/14/how-nanobots-will-help-th... He's infinitely more intelligent than me, but I fail to comprehend how a world without human labour could possibly lead to a richer experience.
- adventured 13y ago
  Robotics, technology, etc. sure haven't led to more jobs in America the last 50 years. I'd be hard pressed to name a large country (a nation with a sizable pool of labor) in which it has. The American standard of living has fallen by half during that time. And while seemingly most Americans think China is the big job stealer, manufacturing wise, the reality is huge productivity gains have killed off far more manufacturing jobs than China has taken. Kurzeil is guilty of a science fiction style utopian dream in this case, in my opinion. He's of a generation that thought the future would sparkle. The future that has come to pass - so far - has been far off course from that expectation. I think he's placing far too much hope on technology unto itself. I regard technology as a neutral player on the field; and in the right situation, it can provide a huge multiplier. Political issues are far more important than technology - if you have an environment that is hostile to innovation, science, starting businesses, manufacturing, employment, capital formation and savings, etc then no amount of technology will save you ultimately from erosion. There's a joke in Zimbabwe, that goes something like this: what did we have before candle light? Electric light. Political situations can neutralize all potential technological benefits, leading to stagnation or worse. I think that effect is at least somewhat to blame for the problems America has seen in standards of living, despite the dramatic leap in technology.
pmb 13y ago
Minimum guaranteed income can not get here soon enough.
- mikepurvis 13y ago
  Also known as Basic Income: http://en.wikipedia.org/wiki/Basic_income http://en.wikipedia.org/wiki/Basic_income Charles Eisenstein makes the case for it in chapter 14 of Sacred Economics: http://sacred-economics.com/sacred-economics-chapter-14-the-social-dividend/ http://sacred-economics.com/sacred-economics-chapter-14-the-...
  - scarmig 13y ago
    Not exactly the same. Guaranteed minimum incomes are conditional: as you make more money, they phase out. This makes them significantly cheaper than basic incomes, which you get regardless of how much money you make. The former makes more sense on the face of it, but it exposes workers to very steep marginal tax rates when they're trying to move from the underclass to the middle class. Trap enough people in the underclass, and the apparent cheapness of the guaranteed minimum income no longer looks so cheap.
- paul_f 13y ago
  For what? Living deserves an income? Can I opt out?
  - erikpukinskis 13y ago
    It's only fair. Before the State, people were born into a homeland. Just by virtue of being born, you were entitled to a share of the natural resources around you. (Of course without a state, murder and such are allowed on a who-can-get-away-with-it basis. That's the downside.) When the state stepped in and seized control of our homelands, and then said: "This person, with this piece of paper, now owns these resources", essentially creating out of thin air the concept of "wealth", they took upon themselves a moral responsibility to see to it that wealth was distributed in a way that everyone gets at least a living share. The current system, where you are either born into a dynasty with resources, or you are for all intents and purposes enslaved to people who are (albeit with some small chance of moving between groups) fails at that promise, even though the poor largely fulfill their end of the bargain by making themselves available for labor. Many go without their basic needs taken care of. A basic income would fix that. The situation is absurd, and it's an utter waste of human capital to throw talented "low" class kids into the thresher.
triplesec 13y ago
All around the world, ursine mammals defecate in forests. I suppose though that it's a good thing that the Economist is at least talking about it.
NN88 13y ago
when wasnt that true?
- eru 13y ago
  Have you read the article? The proportion of GDP paid out to labour vs capital had been stable for quite some time. So the answer to your question is: almost all the time so far.
dnqthao 13y ago
Marx predicted it long time ago. "According to Marxist analysis, class conflict within capitalism arises due to intensifying contradictions between highly-productive mechanized and socialized production performed by the proletariat, and private ownership and private appropriation of the surplus product in the form of surplus value (profit) by a small minority of private owners called the bourgeoisie." http://en.wikipedia.org/wiki/Marxism http://en.wikipedia.org/wiki/Marxism
tokenadult 13y ago
It seems silly to discuss changing shares of a whole output of a national economy devoted to labor rather than capital expenditures, without an even greater emphasis on increases in the overall national output. After all, I could just as well argue that all around the world, men are losing out to women, as more equality of rights is achieved. But what's really happening (thanks in no small part to steady economic growth all around the world) is that both men and women have more choices in lifestyle and family roles than ever before. Today's laborers are for the most part vastly better off than they were in the year of my birth, and they have every expectation of becoming still better off as the years go by, all around the world.
tjmc 13y ago
The biggest issue here is that it's the middle level jobs that are being automated, which makes it increasingly harder for low skilled workers to work their way up over time. There was a good article in The Atlantic that discussed this a while back [1]. I'm not sure what the solution is, but increasing erosion of the middle class doesn't sound like a good thing. [1] http://www.theatlantic.com/magazine/archive/2012/01/making-it-in-america/308844/ http://www.theatlantic.com/magazine/archive/2012/01/making-i...
NewCam 13y ago
I wonder if this is caused by union membership decline and the increasing power of lobbyists?
asperous 13y ago
I just want to point out that Marxism was started as a response to the Industrial Revolution. [1] If you guys think that machines are going to decrease our standard of living-- that the separation of (production value)/wages is going to cause poverty-- you have to prove to me that the same thing happened during the Industrial Revolution. [1] Karl Marx: Communist as Religious Eschatologist
- amerika_blog 13y ago
  Most revolutions replicate what they rebel against. Marxism was just an extension of French Revolution logic (1789) and not surprisingly, has followed a similar path: executions, social engineering, fanatical militarism and finally internal turmoil brings it down.
  - Volpe 13y ago
    Except the largest country (by population) in the world is a product of that line of thinking.. So where is the "internal turmoil brings it down" happening?
    - hcarvalhoalves 13y ago
      China is not communist though, it's state capitalism.
      - alexeisadeski3 13y ago
        State corporatism.
      - seanmcdirmid 13y ago
        China is also not internally very harmonious, which is why the Chinese military is focused mostly inward rather than outward.
      - Volpe 13y ago
        State capitalism... you really want to go down the rabbit hole of language semantics. So it's capitalism where all the money goes to the state, which is the government, which is the people... which is exactly what "communism" is. If you think of a "commune" as a "corporation", then it's almost identical. I'd be happy to see the arguement, that they are a pretty bad communist state, and they don't allocate their money too well, and they (like every other country) have problems with corruption. But "they are not communist" is just as valid as "the US is not a democracy" (Technically it's kind of true, but it isn't useful as a discussion point). My point is, Communism is pretty much just as popular as democracy... so saying it's died, is just being ignorant.
hudibras 13y ago
The next logical step is to increase taxes on capital, starting with an increase in the capital gains tax. Of course the Economist doesn't mention this... EDIT: Oops, maybe they did. Good for them.
- bodyfour 13y ago
  There was also a piece in the leaders section (i.e. the more "editorial" area) of this week's issue on this topic. There they specifically call for "a narrowing of the difference between tax rates on individuals' income from capital and labor"
amerika_blog 13y ago
Perhaps because "capital" is composed of the products sold because labor is willing to pay for them? These two sides aren't as cleanly drawn as people might like to think. The preferences of individuals drive the economies of the world (except in North Korea).
- Volpe 13y ago
  No, the preferences can be controlled (marketing), or even forced (addiction). No one ever thought "I need coca-cola", it was a created "want" invented purely through marketing and addiction... EDIT: typos
_Adam 13y ago
What I don't understand is why humans are so obsessed with labor. Robots are doing stuff for us, and some people are actually complaining about it. To me, this seems really sad. It's like they're saying "I'm so worthless, I can't even compete with a robot." Maybe that's true for some people. If so, then the problem isn't robots, the problem is that there are people who are less useful than robots. For a human to survive in the era of intelligent machines, he/she needs to have unique skills that are not possessed by robots. If they don't have those skills, they need to find them. For those in the tech industry, those skills are already there. It will be decades, or longer, until we can automate software/hardware engineers. Entrepreneurship is another unique skill that will be even harder to automate. I believe that once machines are capable of conceiving, starting, and operating businesses, they will no longer be called machines. What we must never forget is that humans aren't intrinsically special. We just happen to be the most capable organisms on the planet right now. The current rate of technological progression suggests that this will eventually change. When it does, we'll need to adapt or we'll go extinct. If we cannot adapt to this reality, we will simply end up serving as the spawning ground for a new species (biological or otherwise) that will make humans obsolete. If we survive, it will be as little but a historical curiosity. To adapt, we cannot look at robotics and automation as an enemy. It IS the future - we need to accept it, exploit it, and ultimately incorporate it into ourselves.
- krapp 13y ago
  >Robots are doing stuff for us, and some people are actually complaining about it. To me, this seems really sad. It's like they're saying "I'm so worthless, I can't even compete with a robot." That's not what they're saying. The labor market isn't automatically going to expand to accommodate their need for employment. "Finding" new skills all too often means amassing a crippling amount of loan debt (in the US at least), to enter a job market which simply has no room, nor a desire to find room, for the population it put so much effort into letting go. Humans may not be intrinsically special, but being biased towards human survival, as a human being, should not be difficult to understand.
DannoHung 13y ago
Too bad the robots didn't eliminate the shitty jobs first.
firstOrder 13y ago
So then there is the question Marx posted a century and a half ago - what do capitalists do with the money they make? Only so much can be spent on mansions, and even that is an investment. They can bury some precious metals in the backyard if they want. But then the rest of it will all go to capital spending. What is the result of capital spending? More commodities. But who will buy the commodities? Workers. But they can't afford them, they just lost a round in the capital/labor fight. So kick the can down the road, have the workers go into debt to buy the commodities. That works for a little while, but then the problem becomes worse and a bigger collapse will happen at the next crisis. Despite just coming out of the "worst recession since the Great Depression", the Federal Reserve etc. did save the US economy for now. I'm of the belief that sooner or later the world economy is going to hit the skids and even Keynesian New Deal measures won't bring things out of it. Only time will tell of course.
- oscargrouch 13y ago
  That was also the Marx prediction, lets see if he was right.. Its not just economics, but also the human nature; we have to change the way we see and interact with the world, resources, other people.. The "Use everybody, everything, and profit whenever you see a chance" mantra is a social cancer, and will end badly for everybody.. even the ones running the show and laughing of everything
vvjia 13y ago
love and give a vote
mrmagooey 13y ago
Sometimes I wonder if any new investment that I make in my skillset is just buying me a few more months of profitable employment at some point around say 2050. The loss of employment for less skilled labour is happening now, but I see no reason why eventually all labour could be supplanted by increasingly efficient machinery/robotics (for physical tasks), and AI for information/services tasks. Capital is increasingly producing greater returns than labour, and market pressure is causing businesses to invest in capital as a result... but what does the economy do when labour cannot produce or earn, and hence cannot spend?
- cantankerous 13y ago
  but what does the economy do when labour cannot produce or earn, and hence cannot spend? The economy ceases to do anything for labour, and then people start to fight.
- bad_user 13y ago
  I see people in this thread discussing efficiency brought by technology, however people are missing an important factor for the drive to automation - employment taxes. Given our economic crisis, the IMF for example is forcing governments to raise taxes to insurmountable levels. In our country, many companies have to resort to tax evasion just for survival and now the government is trying to shove new taxes down our throats (because hey, let's not target the big tax evationists, but rather the stupid fucks that paid their taxes until now). So when the taxes you have to pay for producing goods or services exceed your other operational costs, what do you do? Well, governments aren't taxing the usage of robots yet. Bingo. I think we should be glad that automation happens. Because it's better for a factory to remain in your own country, even if fully automated, then it is to be outsourced to China. Even an automated factory generates local jobs, either directly (engineers, cleaning people) or indirectly (connected industries).
a3n 13y ago
People can only buy so many things, particularly people who aren't rich. The more robots that make our things, the less labor is needed, and the less things we can buy. As long as we're focused on individual consumers buying things for themselves, there will be fewer and fewer jobs available or needed to make those things. While it may happen elsewhere, I'm very pessimistic about anything like a basic income happening in America. But without basic income or a job, there's no effective mechanism to distribute cash. You need a job to receive cash. Yet there could be many jobs available if we shifted the focus of our consumption from individual needs, and put some of that focus into community needs. Large projects. Infrastructure improvement and operation. Solar power. Transportation. Just get it into our mindset that we're building and operating big stuff. Because providing for our individual needs will not provide jobs for most of us.
- graue 13y ago
  You're describing a cultural and economic shift towards collectivism and away from individualism, which, to me, seems no more likely than basic income. I think it may take decades for basic income in America to go from unthinkable, to radical, to controversial, to reasonable, to seemingly inevitable, to reality. But that's all the more reason to start talking about it now. Let's get the ball rolling!
- jmerton 13y ago
  Henry Ford Jr. asked Walter Reuther how he would get the robots to pay union dues. Reuther asked how Ford would get the robots to buy cars.
alexeisadeski3 13y ago
It's nice to see that the Economist is finally channeling Marx. Such trash.
Rogerh91 13y ago
The problem as I see it right now is that capital-holders are treated very well because capital can slip through borders, while labour is a bit more tricky, because it comes with the implication of having an extra person around... In an open border world, the balance would be more equalized, but that is more theoretical than practical at this point. The recent rounds of QE are a great example of this. Those were basically made to inflate asset prices for capital-holders, because economic policymakers are conditioned to placate capital. Case in point: 90% of shares in public markets are owned by 10% of Americans. The hope was that some of this benefit would trickle down, as the infamous term goes---unfortunately that hasn't happened, so far. So now we live in unequal times not seen in America since the late 20s. pre bust: http://www.nytimes.com/2007/07/15/business/15gilded.html?pagewanted=all&_r=0 http://www.nytimes.com/2007/07/15/business/15gilded.html?pag... post bust: http://finance.yahoo.com/blogs/daily-ticker/income-inequality-enemy-economic-growth-robert-reich-142150436.html http://finance.yahoo.com/blogs/daily-ticker/income-inequalit... (big ups to Shiller) There's a couple of ways to go about resolving this, from heavy handed government intervention to restrict capital, to loosening government restrictions on labour movement. There's outside the box thinking too, from how Iceland forgave those holding good homes rather than those holding bad debt to opening the pool of capital to a wider pool of people in the vein of equity crowdfunding--- this is a very pressing issue, and there are tons of solutions out there. I think the one constant is that if technology is going to play a role in solving this, people need to be given equal access to that technology, and the knowledge required to understand it. discuss and spread code!
bcoates 13y ago
> The Organisation for Economic Co-operation and Development (OECD), a club of mostly rich countries, reckons that labour captured just 62% of all income in the 2000s, down from over 66% in the early 1990s. That sort of decline is not supposed to happen. Has the fraction of people supported by capital as opposed to labor stayed constant over that time period? I know OECD countries have been aging, it wouldn't take that much of a demographic shift towards retirees and other non-laborers to account for the change.
alexeisadeski3 13y ago
Robin Hanson and Tyler Cowen have the most well reasoned visions of the future of the global economy. Hanson predicts virtually all human wages moving to near zero in the long run. http://www.overcomingbias.com/2013/05/robot-econ-primer.html http://www.overcomingbias.com/2013/05/robot-econ-primer.html http://www.overcomingbias.com/2013/07/me-on-pbs-off-book.html http://www.overcomingbias.com/2013/07/me-on-pbs-off-book.htm...
rumcajz 13y ago
If, thanks to technology, 10% of people are able to produce all the goods, 90% won't get paid. With most people not having money, only 10% of goods will be needed from that point on. And thanks to the new technology, only 1% of people will be able to produce that. Which means only 1% will have money. Thus, less goods would be needed. And so on. The cycle ends when the last human being dies of hunger. Options: 1. Ban the technology, Amish-style 2. Cut working hours 3. Introduce some new kind of re-distribution, such as basic income
- yummyfajitas 13y ago
  If the 10% believe the marginal product of the 90% is precisely 0, they will provide nothing to the 90%. They might as well wall themselves off from society and ignore them. It's as if the 10% simply don't exist and the land they live on is impassable mountain. Then nothing prevents the 90% from forming their own economy.
  - rumcajz 13y ago
    If 10% wall themselves off, they'll need only 1% to feed them. So the 1% walls themselves off the remaining 9%. But then they'll need only 0.1%...
    - yummyfajitas 13y ago
      So what prevents the 9% from forming an economy amongst themselves? This problem seems self correcting. Or your theory is wrong.
      - rumcajz 13y ago
        9% percent face the same problem. They need only 0.9% to feed them. So they leave 8.1% alone and make for themselves. But then only 0.09% is needed to produce all the stuff. Etc.
  - scarmig 13y ago
    What happened to the horse population once its marginal product became zero? They got turned into glue. Mostly, except for the lineages which could be retained for entertainment value. I'm not at all saying that we'll see that happen: I'm speaking to the fact that people's marginal utility really can drop to zero. And although we might like to console ourselves with thoughts that everyone can end up a productive person with enough education and self effort, that's just a pleasant fairy tale. I've worked in service jobs before, and the people in the underclass there, though often genuinely nice people, aren't capable of being independently productive. Why can't they just form their own economy? Well, they will. In many places you can see what happens when the bottom rung run things: think the favelas of Brazil. Some level of cohesion with the broader economy, where it provides goods that for whatever reason are suppressed by the State in governed areas, coupled with rule by brute violence.
frank_boyd 13y ago
If you think things through: 1. We were all born with the same rights. 2. Therefor, we should all have (and keep) the same rights. 3. Yet, we don't have all the same wealth (money=rights) - FAR from it. How come we accept that people who were born more lucky than others get to have more rights? When we were all born equal? How come society still accepts this basic and too obvious hypocrisy?
- RivieraKid 13y ago
  > We were all born with the same rights. The concept of "rights" is just some set of rules the society has agreed on. Nothing else. It's not something you get born with. If the society decides to completely redefine rights, they could, for example, remove the right of freedom of religion. > When we were all born equal? We obviously aren't.
- philwelch 13y ago
  Money=rights? No.
tehwalrus 13y ago
the UK's is actually the same, on a graph where the rest fall. I wonder what that means is different about us?
marvin 13y ago
Doesn't this more or less imply that you have to save and invest in order to take part in economic growth? I agree that this is a problem which should be attacked with political means, but that doesn't mean it is impossible for someone to live within their means and save. Obviously this doesn't apply to every demographic group in the world, but a large amount of people can get an account with a cheap online stockbroker and buy ETFs with the surplus of their paycheck.
jheriko 13y ago
"the rich get richer and the poor get poorer..." unsurprising common sense. :/
polarix 13y ago
Does anyone have a graph showing (per country labor share) * (per country real gdp) over time? It would appear to me that if that quantity is actually increasing, then this is an interesting curiosity and alarming in that we don't understand it, but not actually an outright disaster, as the pie would still be growing fast enough to feed labor more in real terms.
netcan 13y ago
Articles like this tend to get lost in our desire to fit the world into our favorite grand philosophyy (philosophical framework, ideology, metanarrative - take your pick.) Since these philosophies are so ambitious, they need to deal in very big concepts like imports or automation-technology. The counter points are equally abstract. Each comes with its own vocabulary like labour/capital (being used similarly here to the Marxist workers/means of production). I don't have a general problem with big abstract theories. They can be useful. They can also be blinding. Worse, they can lodge themselves as a person's political identity. Realistically, they are very imperfect and we should probably use a bunch simultaneously to try an understand a trend like this one. Here's an alternative vocabulary that IMO is relevant inasmuch as economic growth takes the form of of new technological product (smartphones, internet). Who/how many get to consume the new products. IE, airlines get invented. How many people get to use them? Personal vehicles proliferate. How many people get to own one. From that perspective, a lot of recent growth is remarkably equitable. Cellular phones penetrated right down the worldwide income ladder. In 10-20 years they outpaced earlier technologies like cars & electricity. Now most of the world gets to use them. PCs, the internet & smartphones are available to most of the lower income people in above medium income countries. I would say that overall, the common person gets more access to new consumer technology than a decade ago. Another framework I would like to see used would focus on freedom to make choices, specifically lifestyle choices. How many people choose to take a different job, change careers, work less, etc. I'm not sure how one would go about quantifying this. I'm not saying this should be the primary method of looking at the economy. I am saying is that if using different frameworks leads you to different conclusions, be suspicious of all of them.
- sentenza 13y ago
  A thought that I am somewhat scared of is this: What does the non-techie person do when their job disappears as a result of an entire industry collapsing? The collapse of an industry used to take decades but now can happen within a five-year timespan. Frank Rieger and Constanze Kurz raised this point recently when they pointed out that self-driving cars will make hundreds of thousands of drivers unemployed within Germany alone[1]. What if, at some point, these people, justifiedly feeling thrown aside by technological progress, take to the proverbial pitchfork? [1] http://translate.google.com/translate?hl=en&sl=de&tl=en&u=http%3A%2F%2Fwww.heise.de%2Fnewsticker%2Fmeldung%2FCCC-Sprecher-warnen-vor-naechster-Rationalisierungswelle-1982949.html http://translate.google.com/translate?hl=en&sl=de&tl=en&u=ht...
berntb 13y ago
Seeing this 11 hours later, it devolved into a political fight. Sad. A simple, alternative hypothesis: With the opening of India, China, etc the world has gotten a really, really large increase in work force -- but (not yet) an equal increase in capital for investment. Supply/demand -- the price for the increased resource (workers) goes down.
michaelochurch 13y ago
This is one reason why I find the consumer debt phenomenon disturbing. Until 1975 or so, there was a symbiosis between the capitalists and labor. If labor was impoverished, products weren't bought. Henry Ford learned this: by paying his workers well, he made it so they could afford his products. The middle class was built because, without it, industry would fail. Widespread consumer debt-- which went from being associated with failure (excluding mortgages and a first car, and a very small amount for college that could be paid off fully in 1-2 years) to a commonplace occurrence-- made it possible for the consumption (and, more relevantly, consumption costs) to grow while wages remained flat, putting the working classes further into debt and subordination. That's what's happening now. Even if you're fiscally responsible, you compete (on the housing market, and for higher education) with the masses who are, in general, utterly the opposite. It is somewhat of a brilliant (if malignant) divide-and-conquer strategy.

207 points by rndmize 13y ago

This is going to get drastically worse, as capital becomes able to remove most human labor from the production equation using robotics in the next few decades. I've yet to see a solution to the seemingly inevitable outcome of traditional human labor dropping to nearly zero value. And or why we'd want to prevent it from happening, given the upside to robotics. The only way to stop (slow down?) the rise of robotics, is to place arbitrary restrictions on machines to hamper their value proposition. I expect politicians all over the world to begin attempting this before another decade goes by. Will we see a dramatic increase in the formation of unions as a defensive response? Most likely.

parasight 13y ago
What about a tax on machines in combination with an unconditional basic income? Right now the worker is the loser in this game. Why not make him the winner? With technology he is no longer forced to do boring work. Machines can do it much better.
- adventured 13y ago
  I would expect a tax on machines, absolutely. Many possibilities will be floated: such as taxes, limiting how many hours per day a machine can operate, limiting which hours of the day a machine can operate, projecting human costs onto the machines (cost of health insurance, sick leave, vacation time, etc). Organized labor will pull for machines being restrained to as much of an equal footing with human labor as possible. Whether that will actually happen or not, impossible to guess. I do expect various cities, jurisdictions, countries, etc. will try implementing various schemes though.
riggins 13y ago
Will we see a dramatic increase in the formation of unions as a defensive response? Most likely. I'm struggling to follow how a union could help this situation. What would happen? Workers would go on strike if their firms use robots? Seems like that would just push the owner to accelerate robot orders. My guess is that unions are pretty useless in the face of automation. Does anyone know any precedents? I agree in spirit though. What I think is likely is the rise of populism. I think the battle will have to be waged in the political arena.
- adventured 13y ago
  Not suggesting it would help, but rather that it's the expected response from labor. Organized labor means far greater political influence. Robots don't vote, yet. That greater political influence will be necessary to restrict robotics / slow down the process of innovation and productivity gains (and labor job destruction).
- zzen 13y ago
  I think we all know the precedent: http://en.wikipedia.org/wiki/Luddite http://en.wikipedia.org/wiki/Luddite And yeah, if it gets really bad, violent protest is just a more extreme continuation of unions.
eru 13y ago
> The only way to stop (slow down?) the rise of robotics, is to place arbitrary restrictions on machines to hamper their value proposition. I expect politicians all over the world to begin attempting this before another decade goes by. Depends a bit on how international competition between jurisdictions will play out.
jpatokal 13y ago
This is not about robotics, it's about cheap labour displacing expensive labour through outsourcing and companies capturing some of the vast difference in cost. Which also means it's temporary, since incomes (and thus costs) rise in the poorer countries, and any excess margin eventually will get competed away. That said, since "temporary" here may well last several generations, there's plenty of societal upheaval ahead.
ciokan 13y ago
It won't. Inject too much robotics and we will have no money to spend on their products. The wheel must keep spinning. If the human labor is replaced by robotics everywhere we, as humans, will have no earnings and without any income the market will freeze as demand will go down as well. All I can say, we're living interesting times.
- gtremper 13y ago
  If robots can replace all human jobs, then why does anyone need to work? Or why does money even make sense them. All people need is food, water, and shelter. If machines can provide all that, lacking a job doesn't matter.
  - krapp 13y ago
    Robots won't replace the human need to exploit finite resources and other people for personal gain. Which is why I think complete replacement of human labor by robots isn't likely to happen, even if it becomes technically possible -- because the entire reason for displacing human labor with automation is to remove the need to pay more people to do more work, entirely a capitalist means to a capitalist end that doesn't make sense if the rich don't keep getting richer, or if there's not an economy to take advantage of all the efficiency in all the automation.
  - aianus 13y ago
    Because a large part of life is competition for a mate. This tends to manifest itself in American culture as the pursuit of material wealth and social status through employment.
  - dinkumthinkum 13y ago
    That's just kind of silly. We have so much silly thinking in HN. So in this robot magic land people are just living with basic necessities and that's? Sounds like the robot utopia worked out great ... Why does money make sense? Do your magic robots work on perpetual motion? And the robot owners are going to provide all these necessities ? Why ?
3pt14159 13y ago
Geolibertarianism would solve it pretty effectively, since it would allow the human to opt-out.
YokoZar 13y ago
If labor costs (ie wages) get exceptionally low, it starts making sense to develop more labor-intensive technology. Consider how the industrial revolution started by replacing expensive weavers with cheap migrant workers using power looms. There could just as easily be some sort of technology or industry that takes off tomorrow because it's more able to use this abundant supply of low-skilled workers we're worrying about.
GFischer 13y ago
Someone will still have money, and (I guess) a desire to spend it. My own dystopian vision is of a world made almost entirely of services to those few with money - most of us will be/are selling nonessential services (entertainment, leisure, nonessential medical services & care, advertising, etc..). Most of government is probably in the "nonessential" category. Some % of the workforce will still work on R&D and essential services of course. Having all the basics covered by a small percentage of the workforce doesn't mean the rest will have to work less.. on the contrary, the battle to divest people from their money will be fiercer than ever - more and better and more exotic services, more advertising, etc. It would be interesting to live in a post-scarcity society, but we're nowhere near there yet (and I'll be a bit Malthusian and say that we should curb the population growth a bit if we want to have what I consider to be a good standard of living in the future)

l33tbro 13y ago

On the subject of robotics supplanting human toil, Ray Kurzweil recently said: "In my view, it will lead to richer lives, and longer lives, but I would put an emphasis on the richer part. And I’m not just talking about financial riches. Life is getting [better] as we enrich our lives with technology. You can see that now—a kid in Africa with a smartphone has access to more information and human knowledge than the president of the United States did 15 years ago. People were lucky if they could get a book 100 years ago. We’re going to continue that expansion. Music is going to be richer. We’re going to have virtual reality experiences we can enjoy. All different forms of human expression, art, science, are going to become expanded, by expanding our intelligence." Source: http://www2.macleans.ca/2013/10/14/how-nanobots-will-help-the-immune-system-and-why-well-be-much-smarter-thanks-to-machines-2/ http://www2.macleans.ca/2013/10/14/how-nanobots-will-help-th... He's infinitely more intelligent than me, but I fail to comprehend how a world without human labour could possibly lead to a richer experience.

adventured 13y ago
Robotics, technology, etc. sure haven't led to more jobs in America the last 50 years. I'd be hard pressed to name a large country (a nation with a sizable pool of labor) in which it has. The American standard of living has fallen by half during that time. And while seemingly most Americans think China is the big job stealer, manufacturing wise, the reality is huge productivity gains have killed off far more manufacturing jobs than China has taken. Kurzeil is guilty of a science fiction style utopian dream in this case, in my opinion. He's of a generation that thought the future would sparkle. The future that has come to pass - so far - has been far off course from that expectation. I think he's placing far too much hope on technology unto itself. I regard technology as a neutral player on the field; and in the right situation, it can provide a huge multiplier. Political issues are far more important than technology - if you have an environment that is hostile to innovation, science, starting businesses, manufacturing, employment, capital formation and savings, etc then no amount of technology will save you ultimately from erosion. There's a joke in Zimbabwe, that goes something like this: what did we have before candle light? Electric light. Political situations can neutralize all potential technological benefits, leading to stagnation or worse. I think that effect is at least somewhat to blame for the problems America has seen in standards of living, despite the dramatic leap in technology.

pmb 13y ago

Minimum guaranteed income can not get here soon enough.

mikepurvis 13y ago
Also known as Basic Income: http://en.wikipedia.org/wiki/Basic_income http://en.wikipedia.org/wiki/Basic_income Charles Eisenstein makes the case for it in chapter 14 of Sacred Economics: http://sacred-economics.com/sacred-economics-chapter-14-the-social-dividend/ http://sacred-economics.com/sacred-economics-chapter-14-the-...
- scarmig 13y ago
  Not exactly the same. Guaranteed minimum incomes are conditional: as you make more money, they phase out. This makes them significantly cheaper than basic incomes, which you get regardless of how much money you make. The former makes more sense on the face of it, but it exposes workers to very steep marginal tax rates when they're trying to move from the underclass to the middle class. Trap enough people in the underclass, and the apparent cheapness of the guaranteed minimum income no longer looks so cheap.
paul_f 13y ago
For what? Living deserves an income? Can I opt out?
- erikpukinskis 13y ago
  It's only fair. Before the State, people were born into a homeland. Just by virtue of being born, you were entitled to a share of the natural resources around you. (Of course without a state, murder and such are allowed on a who-can-get-away-with-it basis. That's the downside.) When the state stepped in and seized control of our homelands, and then said: "This person, with this piece of paper, now owns these resources", essentially creating out of thin air the concept of "wealth", they took upon themselves a moral responsibility to see to it that wealth was distributed in a way that everyone gets at least a living share. The current system, where you are either born into a dynasty with resources, or you are for all intents and purposes enslaved to people who are (albeit with some small chance of moving between groups) fails at that promise, even though the poor largely fulfill their end of the bargain by making themselves available for labor. Many go without their basic needs taken care of. A basic income would fix that. The situation is absurd, and it's an utter waste of human capital to throw talented "low" class kids into the thresher.

triplesec 13y ago

All around the world, ursine mammals defecate in forests. I suppose though that it's a good thing that the Economist is at least talking about it.

NN88 13y ago

when wasnt that true?

eru 13y ago
Have you read the article? The proportion of GDP paid out to labour vs capital had been stable for quite some time. So the answer to your question is: almost all the time so far.

dnqthao 13y ago

Marx predicted it long time ago. "According to Marxist analysis, class conflict within capitalism arises due to intensifying contradictions between highly-productive mechanized and socialized production performed by the proletariat, and private ownership and private appropriation of the surplus product in the form of surplus value (profit) by a small minority of private owners called the bourgeoisie." http://en.wikipedia.org/wiki/Marxism http://en.wikipedia.org/wiki/Marxism

tokenadult 13y ago

It seems silly to discuss changing shares of a whole output of a national economy devoted to labor rather than capital expenditures, without an even greater emphasis on increases in the overall national output. After all, I could just as well argue that all around the world, men are losing out to women, as more equality of rights is achieved. But what's really happening (thanks in no small part to steady economic growth all around the world) is that both men and women have more choices in lifestyle and family roles than ever before. Today's laborers are for the most part vastly better off than they were in the year of my birth, and they have every expectation of becoming still better off as the years go by, all around the world.

tjmc 13y ago

The biggest issue here is that it's the middle level jobs that are being automated, which makes it increasingly harder for low skilled workers to work their way up over time. There was a good article in The Atlantic that discussed this a while back [1]. I'm not sure what the solution is, but increasing erosion of the middle class doesn't sound like a good thing. [1] http://www.theatlantic.com/magazine/archive/2012/01/making-it-in-america/308844/ http://www.theatlantic.com/magazine/archive/2012/01/making-i...

NewCam 13y ago

I wonder if this is caused by union membership decline and the increasing power of lobbyists?

asperous 13y ago

I just want to point out that Marxism was started as a response to the Industrial Revolution. [1] If you guys think that machines are going to decrease our standard of living-- that the separation of (production value)/wages is going to cause poverty-- you have to prove to me that the same thing happened during the Industrial Revolution. [1] Karl Marx: Communist as Religious Eschatologist

amerika_blog 13y ago
Most revolutions replicate what they rebel against. Marxism was just an extension of French Revolution logic (1789) and not surprisingly, has followed a similar path: executions, social engineering, fanatical militarism and finally internal turmoil brings it down.
- Volpe 13y ago
  Except the largest country (by population) in the world is a product of that line of thinking.. So where is the "internal turmoil brings it down" happening?
  - hcarvalhoalves 13y ago
    China is not communist though, it's state capitalism.
    - alexeisadeski3 13y ago
      State corporatism.
    - seanmcdirmid 13y ago
      China is also not internally very harmonious, which is why the Chinese military is focused mostly inward rather than outward.
    - Volpe 13y ago
      State capitalism... you really want to go down the rabbit hole of language semantics. So it's capitalism where all the money goes to the state, which is the government, which is the people... which is exactly what "communism" is. If you think of a "commune" as a "corporation", then it's almost identical. I'd be happy to see the arguement, that they are a pretty bad communist state, and they don't allocate their money too well, and they (like every other country) have problems with corruption. But "they are not communist" is just as valid as "the US is not a democracy" (Technically it's kind of true, but it isn't useful as a discussion point). My point is, Communism is pretty much just as popular as democracy... so saying it's died, is just being ignorant.

hudibras 13y ago

The next logical step is to increase taxes on capital, starting with an increase in the capital gains tax. Of course the Economist doesn't mention this... EDIT: Oops, maybe they did. Good for them.

bodyfour 13y ago
There was also a piece in the leaders section (i.e. the more "editorial" area) of this week's issue on this topic. There they specifically call for "a narrowing of the difference between tax rates on individuals' income from capital and labor"

amerika_blog 13y ago

Perhaps because "capital" is composed of the products sold because labor is willing to pay for them? These two sides aren't as cleanly drawn as people might like to think. The preferences of individuals drive the economies of the world (except in North Korea).

Volpe 13y ago
No, the preferences can be controlled (marketing), or even forced (addiction). No one ever thought "I need coca-cola", it was a created "want" invented purely through marketing and addiction... EDIT: typos

_Adam 13y ago

What I don't understand is why humans are so obsessed with labor. Robots are doing stuff for us, and some people are actually complaining about it. To me, this seems really sad. It's like they're saying "I'm so worthless, I can't even compete with a robot." Maybe that's true for some people. If so, then the problem isn't robots, the problem is that there are people who are less useful than robots. For a human to survive in the era of intelligent machines, he/she needs to have unique skills that are not possessed by robots. If they don't have those skills, they need to find them. For those in the tech industry, those skills are already there. It will be decades, or longer, until we can automate software/hardware engineers. Entrepreneurship is another unique skill that will be even harder to automate. I believe that once machines are capable of conceiving, starting, and operating businesses, they will no longer be called machines. What we must never forget is that humans aren't intrinsically special. We just happen to be the most capable organisms on the planet right now. The current rate of technological progression suggests that this will eventually change. When it does, we'll need to adapt or we'll go extinct. If we cannot adapt to this reality, we will simply end up serving as the spawning ground for a new species (biological or otherwise) that will make humans obsolete. If we survive, it will be as little but a historical curiosity. To adapt, we cannot look at robotics and automation as an enemy. It IS the future - we need to accept it, exploit it, and ultimately incorporate it into ourselves.

krapp 13y ago
>Robots are doing stuff for us, and some people are actually complaining about it. To me, this seems really sad. It's like they're saying "I'm so worthless, I can't even compete with a robot." That's not what they're saying. The labor market isn't automatically going to expand to accommodate their need for employment. "Finding" new skills all too often means amassing a crippling amount of loan debt (in the US at least), to enter a job market which simply has no room, nor a desire to find room, for the population it put so much effort into letting go. Humans may not be intrinsically special, but being biased towards human survival, as a human being, should not be difficult to understand.

DannoHung 13y ago

Too bad the robots didn't eliminate the shitty jobs first.

firstOrder 13y ago

So then there is the question Marx posted a century and a half ago - what do capitalists do with the money they make? Only so much can be spent on mansions, and even that is an investment. They can bury some precious metals in the backyard if they want. But then the rest of it will all go to capital spending. What is the result of capital spending? More commodities. But who will buy the commodities? Workers. But they can't afford them, they just lost a round in the capital/labor fight. So kick the can down the road, have the workers go into debt to buy the commodities. That works for a little while, but then the problem becomes worse and a bigger collapse will happen at the next crisis. Despite just coming out of the "worst recession since the Great Depression", the Federal Reserve etc. did save the US economy for now. I'm of the belief that sooner or later the world economy is going to hit the skids and even Keynesian New Deal measures won't bring things out of it. Only time will tell of course.

oscargrouch 13y ago
That was also the Marx prediction, lets see if he was right.. Its not just economics, but also the human nature; we have to change the way we see and interact with the world, resources, other people.. The "Use everybody, everything, and profit whenever you see a chance" mantra is a social cancer, and will end badly for everybody.. even the ones running the show and laughing of everything

vvjia 13y ago

love and give a vote

mrmagooey 13y ago

Sometimes I wonder if any new investment that I make in my skillset is just buying me a few more months of profitable employment at some point around say 2050. The loss of employment for less skilled labour is happening now, but I see no reason why eventually all labour could be supplanted by increasingly efficient machinery/robotics (for physical tasks), and AI for information/services tasks. Capital is increasingly producing greater returns than labour, and market pressure is causing businesses to invest in capital as a result... but what does the economy do when labour cannot produce or earn, and hence cannot spend?

cantankerous 13y ago
but what does the economy do when labour cannot produce or earn, and hence cannot spend? The economy ceases to do anything for labour, and then people start to fight.
bad_user 13y ago
I see people in this thread discussing efficiency brought by technology, however people are missing an important factor for the drive to automation - employment taxes. Given our economic crisis, the IMF for example is forcing governments to raise taxes to insurmountable levels. In our country, many companies have to resort to tax evasion just for survival and now the government is trying to shove new taxes down our throats (because hey, let's not target the big tax evationists, but rather the stupid fucks that paid their taxes until now). So when the taxes you have to pay for producing goods or services exceed your other operational costs, what do you do? Well, governments aren't taxing the usage of robots yet. Bingo. I think we should be glad that automation happens. Because it's better for a factory to remain in your own country, even if fully automated, then it is to be outsourced to China. Even an automated factory generates local jobs, either directly (engineers, cleaning people) or indirectly (connected industries).

a3n 13y ago

People can only buy so many things, particularly people who aren't rich. The more robots that make our things, the less labor is needed, and the less things we can buy. As long as we're focused on individual consumers buying things for themselves, there will be fewer and fewer jobs available or needed to make those things. While it may happen elsewhere, I'm very pessimistic about anything like a basic income happening in America. But without basic income or a job, there's no effective mechanism to distribute cash. You need a job to receive cash. Yet there could be many jobs available if we shifted the focus of our consumption from individual needs, and put some of that focus into community needs. Large projects. Infrastructure improvement and operation. Solar power. Transportation. Just get it into our mindset that we're building and operating big stuff. Because providing for our individual needs will not provide jobs for most of us.

graue 13y ago
You're describing a cultural and economic shift towards collectivism and away from individualism, which, to me, seems no more likely than basic income. I think it may take decades for basic income in America to go from unthinkable, to radical, to controversial, to reasonable, to seemingly inevitable, to reality. But that's all the more reason to start talking about it now. Let's get the ball rolling!
jmerton 13y ago
Henry Ford Jr. asked Walter Reuther how he would get the robots to pay union dues. Reuther asked how Ford would get the robots to buy cars.

alexeisadeski3 13y ago

It's nice to see that the Economist is finally channeling Marx. Such trash.

Rogerh91 13y ago

The problem as I see it right now is that capital-holders are treated very well because capital can slip through borders, while labour is a bit more tricky, because it comes with the implication of having an extra person around... In an open border world, the balance would be more equalized, but that is more theoretical than practical at this point. The recent rounds of QE are a great example of this. Those were basically made to inflate asset prices for capital-holders, because economic policymakers are conditioned to placate capital. Case in point: 90% of shares in public markets are owned by 10% of Americans. The hope was that some of this benefit would trickle down, as the infamous term goes---unfortunately that hasn't happened, so far. So now we live in unequal times not seen in America since the late 20s. pre bust: http://www.nytimes.com/2007/07/15/business/15gilded.html?pagewanted=all&_r=0 http://www.nytimes.com/2007/07/15/business/15gilded.html?pag... post bust: http://finance.yahoo.com/blogs/daily-ticker/income-inequality-enemy-economic-growth-robert-reich-142150436.html http://finance.yahoo.com/blogs/daily-ticker/income-inequalit... (big ups to Shiller) There's a couple of ways to go about resolving this, from heavy handed government intervention to restrict capital, to loosening government restrictions on labour movement. There's outside the box thinking too, from how Iceland forgave those holding good homes rather than those holding bad debt to opening the pool of capital to a wider pool of people in the vein of equity crowdfunding--- this is a very pressing issue, and there are tons of solutions out there. I think the one constant is that if technology is going to play a role in solving this, people need to be given equal access to that technology, and the knowledge required to understand it. discuss and spread code!

bcoates 13y ago

> The Organisation for Economic Co-operation and Development (OECD), a club of mostly rich countries, reckons that labour captured just 62% of all income in the 2000s, down from over 66% in the early 1990s. That sort of decline is not supposed to happen. Has the fraction of people supported by capital as opposed to labor stayed constant over that time period? I know OECD countries have been aging, it wouldn't take that much of a demographic shift towards retirees and other non-laborers to account for the change.

alexeisadeski3 13y ago

Robin Hanson and Tyler Cowen have the most well reasoned visions of the future of the global economy. Hanson predicts virtually all human wages moving to near zero in the long run. http://www.overcomingbias.com/2013/05/robot-econ-primer.html http://www.overcomingbias.com/2013/05/robot-econ-primer.html http://www.overcomingbias.com/2013/07/me-on-pbs-off-book.html http://www.overcomingbias.com/2013/07/me-on-pbs-off-book.htm...

rumcajz 13y ago

If, thanks to technology, 10% of people are able to produce all the goods, 90% won't get paid. With most people not having money, only 10% of goods will be needed from that point on. And thanks to the new technology, only 1% of people will be able to produce that. Which means only 1% will have money. Thus, less goods would be needed. And so on. The cycle ends when the last human being dies of hunger. Options: 1. Ban the technology, Amish-style 2. Cut working hours 3. Introduce some new kind of re-distribution, such as basic income

yummyfajitas 13y ago
If the 10% believe the marginal product of the 90% is precisely 0, they will provide nothing to the 90%. They might as well wall themselves off from society and ignore them. It's as if the 10% simply don't exist and the land they live on is impassable mountain. Then nothing prevents the 90% from forming their own economy.
- rumcajz 13y ago
  If 10% wall themselves off, they'll need only 1% to feed them. So the 1% walls themselves off the remaining 9%. But then they'll need only 0.1%...
  - yummyfajitas 13y ago
    So what prevents the 9% from forming an economy amongst themselves? This problem seems self correcting. Or your theory is wrong.
    - rumcajz 13y ago
      9% percent face the same problem. They need only 0.9% to feed them. So they leave 8.1% alone and make for themselves. But then only 0.09% is needed to produce all the stuff. Etc.
- scarmig 13y ago
  What happened to the horse population once its marginal product became zero? They got turned into glue. Mostly, except for the lineages which could be retained for entertainment value. I'm not at all saying that we'll see that happen: I'm speaking to the fact that people's marginal utility really can drop to zero. And although we might like to console ourselves with thoughts that everyone can end up a productive person with enough education and self effort, that's just a pleasant fairy tale. I've worked in service jobs before, and the people in the underclass there, though often genuinely nice people, aren't capable of being independently productive. Why can't they just form their own economy? Well, they will. In many places you can see what happens when the bottom rung run things: think the favelas of Brazil. Some level of cohesion with the broader economy, where it provides goods that for whatever reason are suppressed by the State in governed areas, coupled with rule by brute violence.

frank_boyd 13y ago

If you think things through: 1. We were all born with the same rights. 2. Therefor, we should all have (and keep) the same rights. 3. Yet, we don't have all the same wealth (money=rights) - FAR from it. How come we accept that people who were born more lucky than others get to have more rights? When we were all born equal? How come society still accepts this basic and too obvious hypocrisy?

RivieraKid 13y ago
> We were all born with the same rights. The concept of "rights" is just some set of rules the society has agreed on. Nothing else. It's not something you get born with. If the society decides to completely redefine rights, they could, for example, remove the right of freedom of religion. > When we were all born equal? We obviously aren't.
philwelch 13y ago
Money=rights? No.

tehwalrus 13y ago

the UK's is actually the same, on a graph where the rest fall. I wonder what that means is different about us?

marvin 13y ago

Doesn't this more or less imply that you have to save and invest in order to take part in economic growth? I agree that this is a problem which should be attacked with political means, but that doesn't mean it is impossible for someone to live within their means and save. Obviously this doesn't apply to every demographic group in the world, but a large amount of people can get an account with a cheap online stockbroker and buy ETFs with the surplus of their paycheck.

jheriko 13y ago

"the rich get richer and the poor get poorer..." unsurprising common sense. :/

polarix 13y ago

Does anyone have a graph showing (per country labor share) * (per country real gdp) over time? It would appear to me that if that quantity is actually increasing, then this is an interesting curiosity and alarming in that we don't understand it, but not actually an outright disaster, as the pie would still be growing fast enough to feed labor more in real terms.

netcan 13y ago

Articles like this tend to get lost in our desire to fit the world into our favorite grand philosophyy (philosophical framework, ideology, metanarrative - take your pick.) Since these philosophies are so ambitious, they need to deal in very big concepts like imports or automation-technology. The counter points are equally abstract. Each comes with its own vocabulary like labour/capital (being used similarly here to the Marxist workers/means of production). I don't have a general problem with big abstract theories. They can be useful. They can also be blinding. Worse, they can lodge themselves as a person's political identity. Realistically, they are very imperfect and we should probably use a bunch simultaneously to try an understand a trend like this one. Here's an alternative vocabulary that IMO is relevant inasmuch as economic growth takes the form of of new technological product (smartphones, internet). Who/how many get to consume the new products. IE, airlines get invented. How many people get to use them? Personal vehicles proliferate. How many people get to own one. From that perspective, a lot of recent growth is remarkably equitable. Cellular phones penetrated right down the worldwide income ladder. In 10-20 years they outpaced earlier technologies like cars & electricity. Now most of the world gets to use them. PCs, the internet & smartphones are available to most of the lower income people in above medium income countries. I would say that overall, the common person gets more access to new consumer technology than a decade ago. Another framework I would like to see used would focus on freedom to make choices, specifically lifestyle choices. How many people choose to take a different job, change careers, work less, etc. I'm not sure how one would go about quantifying this. I'm not saying this should be the primary method of looking at the economy. I am saying is that if using different frameworks leads you to different conclusions, be suspicious of all of them.

sentenza 13y ago
A thought that I am somewhat scared of is this: What does the non-techie person do when their job disappears as a result of an entire industry collapsing? The collapse of an industry used to take decades but now can happen within a five-year timespan. Frank Rieger and Constanze Kurz raised this point recently when they pointed out that self-driving cars will make hundreds of thousands of drivers unemployed within Germany alone[1]. What if, at some point, these people, justifiedly feeling thrown aside by technological progress, take to the proverbial pitchfork? [1] http://translate.google.com/translate?hl=en&sl=de&tl=en&u=http%3A%2F%2Fwww.heise.de%2Fnewsticker%2Fmeldung%2FCCC-Sprecher-warnen-vor-naechster-Rationalisierungswelle-1982949.html http://translate.google.com/translate?hl=en&sl=de&tl=en&u=ht...

berntb 13y ago

Seeing this 11 hours later, it devolved into a political fight. Sad. A simple, alternative hypothesis: With the opening of India, China, etc the world has gotten a really, really large increase in work force -- but (not yet) an equal increase in capital for investment. Supply/demand -- the price for the increased resource (workers) goes down.

michaelochurch 13y ago

This is one reason why I find the consumer debt phenomenon disturbing. Until 1975 or so, there was a symbiosis between the capitalists and labor. If labor was impoverished, products weren't bought. Henry Ford learned this: by paying his workers well, he made it so they could afford his products. The middle class was built because, without it, industry would fail. Widespread consumer debt-- which went from being associated with failure (excluding mortgages and a first car, and a very small amount for college that could be paid off fully in 1-2 years) to a commonplace occurrence-- made it possible for the consumption (and, more relevantly, consumption costs) to grow while wages remained flat, putting the working classes further into debt and subordination. That's what's happening now. Even if you're fiscally responsible, you compete (on the housing market, and for higher education) with the masses who are, in general, utterly the opposite. It is somewhat of a brilliant (if malignant) divide-and-conquer strategy.