Why would the janitor work for $2.40/hr? He wouldn't be in danger of catastrophic lifestyle failure, and his lifestyle and security wouldn't be improved much by $2.40/hr of pay. The amount of work required for an insignificant increase in income would be enormous.
We didn't have a 40-hour work week until recently. It used to be up to 100 hours per week--10-16 hours per day, 6 days per week. There were arguments about this, riots, even murders.
Each iteration in technology increases our wealth. People in the 90s lived simple lives with $30/month landlines, expensive PCs, a few cable TV channels, and cars with anti-lock brakes as an option. Today, I spent $87/month for Internet speeds which would have cost me $58,000/month in 1996; I just spent $160 for the entire year of cell phone service with 2GB of LTE+ data; computers are cheap; cars have more built-in goodies that should take a lot more labor (and expense) to make, but we've developed ways to do it cheaper (less labor).
The cost of food, clothing, personal care, and so forth as a proportion of income has fallen. Housing and utilities fluctuate, but generally trend down in terms of cost per square foot of living space versus income. Technical progress cut things back dramatically from 1940-1980, with food falling from around 35% to 15% of income, and clothing falling from 14% to 4%. Today it's 12% and about 3.2% for median-income households.
You can go from your quaint little 1990s lifestyle to the futuristic 2015 lifestyle (and still complain you're not getting richer, somehow, even though the median-income household has all this stuff you could never have afforded on a median income in 1990), or you can live in 1990 but work 28 hours per week.
Reduce the current public aid system to provide childcare welfare to minor dependents of low-income households. This adds no new risks compared to our current system; you can alter it later, when the UBI stuff settles.
How am I still the only one who has come up with this? It's been 4 years.
I've described a Universal Social Security system which begins paying out at age 18. For minor dependents of low-income households, a consolidated public aid system provides benefits similar to what we have today.
The cost of the childcare public aid system is ~1.4% of total taxable income in the U.S.. The total cost of today's public aid system is a dozen or so times bigger, and most of it gets rolled off to the Universal Social Security benefit.
That system also requires transitional considerations, largely about Social Security Retirement benefits. The long and short of that is the 6.2% OASDI tax on the paycheck goes away; the 6.2% on the payroll end becomes 5.3%, which goes to pay the difference between Social Security old-age pensions and the Universal Social Security. I generally specify that we grandfather anyone hitting retirement age within 15 years of the passing of a USS, and top off their benefit until the natural end of their Social Security legacy benefit.
The USS is funded by a fixed, flat-rate income tax, similar to OASDI but applied to all incomes business and personal. Because of this, any technical progress causes an increase in the purchasing power of the USS: it grows faster than inflation. The gap between the USS and old-age pensions thus shrinks, which allows the reduction of that 5.3% payroll tax.
Reducing the payroll tax as such causes a secondary effect: costs go down, and the same market economic factors which set our current prices thus drives them down in response. In this case, it's the cost of employment, meaning that an employer pays less to provide the same salary--that is: wages go down from the employer's perspective, but not from the employee's perspective. The revenue required to support those wages thus decreases, while the spending capacity of the wage recipients doesn't decrease. That, again, increases the rate at which the USS benefit grows relative to inflation.
As you can imagine, UBI systems carry lots of risks nobody thinks about.
Some people want to just hand everyone $4,000 per child, which means either a lot of people aren't receiving adequate childcare aid or most people are profiting for each child they have. It also means anyone without children pays for everyone else's children, in concept, meaning you're facing an unfair expense unless you participate by having as many children as possible. This is a disaster.
My approach simply reuses the current system, scaled down. Reducing its scope reduces the potential for fraud, along with its costs. More importantly, no new risks are introduced: nothing can go wrong as a result of that component which can't already go wrong under the current system. We always have the option to propose a change later.
Proposed UBI systems generally ignore funding risks. A lot of such systems propose funding by a cap-and-dividend, usually a carbon tax, and fail to address funding at all. How much revenue can we derive from a carbon tax? Is it enough to fund a welfare system? What happens when businesses respond by reducing their carbon emissions? One could ask the same about where we get all this money to pay out UBI for children; funding a UBI is already hard.
You're a little snide and aggressive, but you're asking important questions. That's good. A lot of people just dictate what will happen under any form of UBI and conclude that it cannot be done in any case. If you ask a critical question and people just squirm uncomfortably, you've found a risk for which nobody's figured out how to answer; that means they're doing something extremely dangerous. They should at least be able to answer for some sort of boundary or resistance against said risk, if they don't have a way to actually control it.
Salaries will drop, such that the personal incentives for work stay just as modest as they are now.
A reduction in wages without a reduction in income can only mean an increase in buying power.
Don't forget businesses take as much profit as they can. They charge the largest margins they can right now. When costs fall, so do barriers to entry; it becomes easier to compete, and so prices are controlled.
A business doesn't charge you $50 for a thing because they can; they charge you $50 for a thing because 30 or 40 other businesses are trying to sell you the same thing and are willing to triple or quadruple their profits by undercutting the next guy by $5. Turns out the ROI for cutting back prices kind of fails below $50, so that's where we all ended up.
I didn't say anything about hard work or innovation; I said your market isn't people walking through your doors if you're not Best Buy.
Here's a hint: those examples weren't made-up. Some of the largest American game studios are in retarded places like Baltimore (Firaxis), Santa Clarita (WayForward), or Austin, TX (home of Retro Studios, owned by Nintendo). The biggest broadcaster in America is in Baltimore; it was built from a one-station operation in Baltimore.
Many of these places are in population centers, and so have access to population. Population means labor, and also infrastructure; infrastructure means tech industry labor, because infrastructure includes telecomm. We've got eleven game programming studios in Baltimore and a few of them are actually big operations; Baltimore is, historically, a big industrial city, not the East Coast Silicon Valley.
Like ESPN, broadcasting corporations both license and produce content, and they distribute and sublicense for rebroadcast. Face-to-face meetings actually come here, because our local big broadcaster has its own helipad and, besides, has more negotiating power than pretty much every other party.
Comcast's HQ is Philadelphia, PA; Verizon's is in Basking Ridge, NJ; DirecTV is in El Segundo, CA; Dish Network is in Englewood, CO; Apple is in Cupertino, CA; Microsoft is in Redmond, WA; Google is in Mountain View, CA. Google and Apple are actually based in Silicon Valley; these other big nationals aren't--not even Microsoft.
It's cool that you have a snowball stand near a school bus station and make a lot of money from middle-school kids; Amazon (Seattle, WA) sells to people all over the world, and doesn't even have a warehouse in most cities. Location only matters to retail stores; if your customers aren't walking in your door to buy your stuff, they don't care where you are.
Location is important when your primary market is affected by location. Got a store? Needs to be accessible.
As a content distributor, you have viewers. Your business partners include rebroadcasters (clients) and producers (vendors). Viewers are all over the place and expect you to get content to them; clients and vendors are generally going to expect you to come to them. Your other clients--the advertisers--will mostly call you to bid for a spot, then Fedex you the film (or transfer it via FTP nowadays).
You can have a major network broadcaster in frigging Baltimore if you want. For that matter, you can have a video game studio or a security consultation firm wherever you want to stick it. It doesn't honestly matter when your interactions are primarily unconstrained by geographic region.
Because the Muslim-Illuminati Coalition signed a declaration requiring its members to demonstrate funding viability as part of every policy-influencing decision at their last meeting in their satellite evil lair under Denver Airport.
Simmons is also the kind of unmitigated retard who thinks putting a building in a location makes all the difference. Seriously, ESPN failed because it didn't have an office in SV? You don't need an office in SV; you need a business strategy.
Next, Simmons will try to become a billionaire by moving across the street from Warren Buffet.
The question is whether the number of new jobs exceeds the number of jobs lost.
No, that's not how it works. You're arguing trickle-down economics.
Jobs don't exist due to a capacity to supply; they exist due to a capacity to buy. The iteration of technology replaces a number of labor hours producing an output with a smaller number of labor hours producing and operating tools to produce that output. It does not replace 10 assembly line workers with 100 machinists; it replaces 100 assembly line workers with 10 machinists, engineers, miners, oil refiners, shippers, mechanics, and machine operators in total.
This reduction of labor-hours means a reduction in wage: a Tesla factory which expends $40,000 to make a car and garners a 24% net operational profit margin ($49,600 car) eventually has technology with which to make that car for $20,000. At a 24% net operational profit margin, that's a retail of $24,800; however, now Tesla can sell to a broad middle class of economy car purchasers. Tesla is now competing for 100,000,000 consumers instead of 100,000; and it has to go up against Ford, Chrysler, GM, Volkswagen, Mazda, Toyota, and Honda. The competitors are making a 12% net operating profit margin, making $20,000 cars equivalent to Tesla, and selling them for $22,400; while the $24,800 options are all far-superior in feature set and build quality to the Tesla offering. If Tesla wants to compete, it had best lower its prices--and likely needs to come down in operating profit margin in favor of capturing volume sales for greater total profits.
The workers who are still working are still collecting the same wage on the same hours. That means the cheaper Teslas are within their reach.
In this particular context, Tesla would load up a car model with $40,000 of features and sell it at a 24% op profit rate for $49,600 again. The new features require new labor. If those features also have cut 50% of their labor, then Tesla can pack in twice as many features and hit that price point.
In other contexts where the lowest-priced class of product comes down (food, clothing, etc.), you get a simple gap in spending power. So long as your economy is healthy (i.e. sufficiently-few workers have become unemployed in this iteration), your consumer base takes the money they're no longer spending and buys more of some products, some new products, and so forth.
Supplying those products requires labor. No, you're not going to reach a point where 100% of everything involved is done by machines--not until humans are the cultivated pets of intelligent machines and no longer intelligent ourselves. As shown above, when those products require less labor, we just buy more of them because we can.
People make all kinds of assertions about how businesses will just keep prices high and take profit, or whatever else. There are two problems with these arguments.
The first, obvious problem is that no such thing has ever happened in history. The argument stems not from the implication that businesses could, but that businesses always do simply take profit when they cut costs. Thusfar, that's demonstrably false in that it's never been sustainable business practice.
Second, businesses always try to do just that. All prices are set as high as any business thinks they can charge. Profit margins are kept as high as businesses think they can get away with. Prices and profit margins come down when businesses fail to compete at that level. Businesses always intend to charge you more, and only refrain because they believe they can't profit in that way.
That second point is important. When things become cheaper to produce, the barrier-to-entry for a market lowers. When luxury goods become cheaper, markets become larger: a lower price point puts you in the range at which more consumers will buy, and is more-attractive to current consumers willing to pay more. Profit ma
The evidence is that this work revolution has the ability to automate the very class of job that people moved into during the last work revolution.
A repeating process, again.
Last time we automated the simple jobs, we were also creating a bunch of simple jobs in the process, that warm bodies could perform.
We automated away weavers, and created a class of machine operators who tended weaving machines which wove cloth much faster than a human. Fewer human hours per yard of cloth.
We automated away that whole unpacking and packing of goods repeatedly by creating the wooden shipping pallet. Instead of humans stacking cans onto trucks, unstacking them and restacking them onto rail cars, unstacking and restacking them onto distribution trucks, unstacking and restacking them into warehouses, then unstacking and restacking those onto more distribution trucks, and finally unstacking and restacking those into the stock room at stores, we just have humans stacking cans onto pallets and then moving the pallets. A 48-hour job became a 4-hour job for the same crew.
We automated away the grunt work portion of accounting, and kept the complex skill of accounting. We need human operators of accounting programs and spreadsheet software. The software and computers are designed and built by other humans who are more-skilled.
We've automated away simple and complex jobs and replaced these with mixtures of new simple and complex jobs, mostly. Human yards of cloth? Human weaving machine operators don't know how to weave, really; human weaving machine designers and manufacturers take on more-complex tasks than human weavers. Shipping pallets? More logistics, and more idiots loading stuff on shipping trucks. Accounting software? More programmers and more accountants, as well as more support-desk technicians, computer administrators, and general IT people (support and IT admin is a pretty low-skill task, honestly).
But now we're automating away the jobs that only require warm bodies
We're not automating away all of the jobs in the chain. We're reducing the number of warm bodies in the operation of a factory, shipping operation, or taxi operation.
That, on the first order, means that factories, shipping, and taxi operations now cost less. Price competition will push more purchasing power into consumer hands as a result. This means more consumption: stuff costs less to make; the cost of shipping is 30% of your product's retail price instead of 50%; and you can ride the Uber for $5 instead of $50. The few factory workers, loading dock hands (at warehouses and other complex demarcation points where machines are unreasonably-complex, unreliable, inflexible, and expensive--we'll eliminate them at some demarcation points), and maintenance workers (mechanics, etc.) are multiplied across this.
On the second order, it means new products come about. New products which are less-automatable are still affordable, but expensive things. That's really the difference between expensive things like large-screen OLED TVs and cheap things like hard drives: more labor (and thus wages) goes in per unit produced. Honestly, why do you think SSDs cost more per GB than hard drives? Do you think someone just makes up a number and says, "Ah, this is what NAND will cost", with the arbitrary ability to make that price lower than hard drives but no real reason to do so?
New products mean new jobs. Highly-automatable products means even more new products; less-automatable products means consumers buy fewer things, and more jobs (and labor-hours) are involved in each of those units purchased. There's still the shipping, the retailing, and the whole organizational structure above all that.
We aren't entering a future in which we're mindless cattle tended by robot overlords with no human understanding of how anything around us works. Until we do, the process is repeatin
Medicare is a separate function of Social Security. We do have the ACA and 100% subsidies for people with no income, remember? (I highlight the universal social security as not counted as an income for reasons; this is one of them.)
You again ignore that you said that money is only taken out of circulation if it's taken out of the bank. You asserted that money in the bank left unspent isn't taken out of circulation, even though the only difference between spending that money and not spending that money is whether that amount of money is circulated.
You're trying pretty desperately to avoid acknowledging that you made that incorrect assertion.
You further again simplify a complex concept in a deceptive way.
There is a truck which fills in a hole to a 2-inch depth. This truck comes by every year.
Is there a difference between digging a 3-inch hole and digging a 30-inch hole?
If you dig a 3-inch hole, the truck will come by and pour in 1 inch of dirt to leave a 2-inch hole.
If you dig a 30-inch hole, the truck will come by and pour in 28 inches of dirt to leave a 2-inch hole.
How are these two things different?
After 1 year, they're not different. Within that time frame, they're different by 27 inches.
Bonus: if you dug a 30-inch hole, you're holding 30 inches of dirt. If you try to build a mound on that hole, you can build a bigger mound. If you don't decide to do that, then there's no difference in the continuing frame.
Your assertion is that these two situations are different. My assertion is that they're different for a specific short-term period and for a second short-term period which may never occur.
So, the removal of high-powered money or the monetary base from a bank account is no different than the idling of that monetary base in the term exceeding one year. Idling that money in the bank account is, further, no different in mechanism than removing that money from the banking system, but different in immediate magnitude.
Are you going to continue to ignore the parts of the system which don't function the way you fantasize?
It's measured in weeks or months, usually. Generally I measure by the numbers instead of by individual people.
Counting people individually is unethical. 5% unemployment rate. Joe loses his job; you want Joe to get a job right away, right? Do you know what that means? That mean Dave, who lost his job 2 years ago, is ineligible for a job because Joe is more-important.
I'm not prioritizing Joe or Dave. We have 5% unemployment because lower unemployment consistently leads to more people entering the job market somehow. During the 2008 recession, we saw an increase in college students going to grad school to avoid entering a job market in which they perceived no opportunity to find a job; as the unemployment rate fell and the economy recovered, we saw an increase in college students exiting college early to take jobs. People retire earlier in a recession, and later when we have lower unemployment. Birth rates are semi-relevant, but take too long to have impact; more-relevant are people who don't need but would like a job and so begin taking jobs in a strong job market, as well as the rate of immigrant labor.
Both Joe and Dave are going to be there. They're both going to need jobs, and there will be someone else working some job to occupy themselves in their free time and get a little extra spending cash they don't need--and I'm not trying to bump those people out of the way either. Joe and Dave are a product of numbers.
We don't need to establish a tribunal to decide if Joe or Dave more-deserves a job; we need a social safety net to support Joe and Dave during these trying times they're experiencing. For a strong social safety net, we need wealth. For wealth, we need a level of technical progress. Technical progress creates that transitional unemployment that makes some of the new Joes and Daves. We all benefit from technical progress, and so we further owe Joe and Dave that social safety net which our newfound wealth allows us to afford, as they have contributed their very livelihoods to our wealth.
Besides, it's more-stable that way. Stronger social safety nets reduce the severity and duration of recessions. When your economy is wealthy enough to implement a better one without draining large amounts of wealth away and funneling it toward these new services, the upgrade makes everyone wealthier.
The consistency at which people assault the poorest and most-vulnerable by focusing on an individual as a political bargaining chip never ceases to amaze me.
there were decades of unemployment and social strife during the industrial revolution before tech caught up (and wars thinned the herd) and we returned to near full employment.
Good. Someone actually sees the whole issue instead of crying that all jobs will go away/no jobs will go away.
It's flat-out ludicrous to think that old patterns won't repeat themselves unless you have some evidence about that. You have to assume something to plan ahead; that's not to say you can't control risk (that's largely what my Universal Social Security is for in a general sense), and even that requires assuming that people will continue to be greedy, self-serving, and generally prone to economize.
Whole new economic sectors have repeatedly emerged with the creation of new technology. When we invented the hot-blast furnace, we suddenly could lay a railroad system without expending the entire GDP of Europe; mass transit and overland shipping became a thing, as did the entire frigging railroad industry. Look at what computers did. Chemistry created tons of industries--plastics, pharmacology, the like. We couldn't predict those at the time, either, to any degree more than we can today predict space mining and interplanetary transport will be new industries in some future.
Dystopia isn't inevitable, but unless we figure out how to finance a safety net, it remains a possibility.
Wages come from revenue. Ultimately, money spent on goods reflects wages paid; debt lets you pay with future wages. Inflation, debt, and fractional reserve banking stabilize this system against the accumulation of money.
That means income essentially reflects productivity. Business income excludes expenses because domestic expenses are some other local productivity and import expenses are productivity outside the economy; individual income includes expenses because we're consumers, and don't consume things to produce a derivative thing to sell to someone else (you can make the argument that labor is produced from our consumption but that view, while philosophically interesting, doesn't describe an economy in any workable sense).
Technical progress reduces the labor invested to make goods. That means more wealth.
So financing a safety net means getting enough money to reflect the portion of our production which can provide the material needs of the safety net. QED.
As of 2013, it's barely doable in a stable manner without increasing taxes via a Universal Social Security. The most-stable financing mechanism is to cut Federal welfare out of Federal income taxes (merging OASDI into income taxes for this purpose), replace that with a 17% tax to fund a universal social security, and adjust the tax brackets.
The net tax rate in this model is the taxes taken (progressive general fund plus flat 17% USS fund) minus the USS benefit. To keep this smooth, the USS benefit should pay on the same schedule as withholding: each two-week withholding period is also the benefit issuance period. That means the Government takes your tax money and gives you the USS benefit at the same time.
This is important largely because the gross tax rate in the middle classes is actually higher. This will destabilize the economy because your paycheck will be smaller; thus the USS must pay its benefit out in the same frame, returning more than the additional taxes taken. When counted together, your total paycheck plus benefit in a two-week or one-month frame is higher.
Transitional concerns are pretty wide. The hottest political issue--also an economics issue--is Social Security old-age pensions. We can top up the USS to equate to retirement benefits by taking a 5.3% OASDI (replacing current 6.2% OASDI) payroll tax (not paycheck) for grandfathered retirees (my standard argument is grandfathering until death all who reach retirement age within 15 years of passing the USS). Other Federally-funded welfare is trivially covered by the USS; and the USS notably exceeds the effectiveness of HUD housing assistance for HUD-eligible households.
To avoid certain risks, minor dependents of low-income households do not receive a USS benefit; instead, the household receives public aid. The public aid system is a consolidated version of the cur
but I'm willing to bet starting in 5-10 years job destruction will far outpace job creation. You really think all the truckers in America are going to become coders or entrepreneurs?
If there's a lot of delay due to regulations and the technology matures, we'll eliminate trucker sand taxi drivers rapidly. That will cause sudden increases in unemployment, leading to a recession. No further discussion because we shouldn't have conflict on this outcome.
If we facilitate the technological change, then businesses will have a risk spread. The technology is expensive, unproven, and risky. This impacts strategic decisions based on risk tolerance and risk appetite.
Early-adopters will buy the expensive new technology in hopes of getting a leg-up. They'll be the first to nibble into the job market, cutting back a few jobs early.
More strategic companies will take into account the rate at which the technology improves--becomes cheaper. That means the prices of the trucks come down (cheaper to make), maintenance comes down (cheaper to own), and risks involved in using them come down (cheaper to operate--fewer insurance claims, lawsuits, etc.). A company may continue to expend $1,000,000/year rather than replace a fleet with a $900,000/year fleet because it believes it will be a $600,000/year fleet in 3 years--they'll break even in 4 years if they push replacement 3 years down the line, or so they think. If their fleet should last 10 years, that's a good $1.2M of cost savings in the next 10 years versus changing today.
Many companies will hedge the risk with an incremental roll-out. They'll replace part of their fleet at some point, and delay replacement to see if technology improves and to develop organizational knowledge around the new workflows. This accelerates as the old fleet becomes a larger liability.
In this mode, job replacement concerns are largely mitigated.
When replacing a worker, that worker may be old. Many workers will go into retirement a few years late or at adverse event. That means you frequently have an old man who is either planning to retire at age 65, and then gets laid off at age 62 and simply retires then.
On the other end, you have workers who are retiring. These workers voluntarily exit the work force because they actually hit age 65 or whenever they planned to stop, and then stopped working. Their employers still require their services, and so have need to replace them.
Likewise, you have new entrants to the market--college graduates, people with shiny new CDLs, the like--and you have those lain off for various reasons such as their employer losing business to the next guy who's selling cheaper because he has self-driving freight trucks. These people (less the aforementioned direct-to-retirement layoffs) have to fill the gap in employment for employers who have lost an employee for whom they still have a need.
If the job market shrinks slowly enough, the flow of entrants slows. People stop growing up to be truckers because truckers are going the way of the blacksmith; they go to college for Web design instead. If it's really slow, you can get a shortage of truckers and have to accelerate adoption of self-driving trucks to meet market demand. That's fitting, because market demand driving your need actually reduces your risk in adopting the new technology, and so accelerated adoption is more-viable.
In other words: Retraining is a red-herring. Nobody retrains. Coal miners become salt miners or some other form of miner; truckers become mechanics, take up work at a logistics-management company, or otherwise apply their skills; and so forth. Many simply retire. The influx of new entrants slows. If all of that doesn't allow your job market to smoothly transition these people, you get an unemployment spike and a recession--it may be a small recession (0.5% sudden unemployment spike, mass unemployment of truckers) or a large recession (2.5% unemployment sp
Past performance is an indicator of future results. The problem is people interpret results poorly.
I keep repeating this: technical progress increases wealth by reducing costs. Costs are ultimately wage-labor. There's one sustainable way to reduce cost: reduce the wage-hours invested in producing a thing.
Each technical improvement first eliminates some jobs. That gives you transitional unemployment. Lower costs mean lower viable prices, which draws luxury goods down into wider markets: it costs little enough for you to target 100,000,000 middle-class consumers instead of 1,000,000 upper-class consumers, you can price it low enough to target a bigger market. That means either current producers or new competitors will try to take the market and make a bigger profit by lowering prices.
Once prices are sufficiently-low, a good is just a consumer good. Everyone has smart phones now--even poor people--so we compete on price at the bottom and on the spread of prestige across income classes. We have economy cars and luxury cars. The lower-class goods have slimmer margins to try to capture the wider market; as costs come down, we start packing more features into these goods, reducing their price, or both.
So, what happens with those lost jobs?
More features means applying more labor. If you cut costs and then increase features rather than lowering price at a certain market level, then you've invested your displaced labor into producing more stuff--each of those new feature components requires labor, and you shift it from the now-cheaper components to the previously-not-incorporated components.
If you're not boosting features, then you're competing on price to capture those low-end markets. Prices come down in terms of labor-hours--that is to say, prices increase more-slowly than wages for non-changing goods as those goods become cheaper to make. The most extreme form of this is prices decreasing.
Examples?
Cars and phones pack more features into roughly the same price or the same proportion of spending (people tend to expend the same percentage of their income on cars; phones tend to keep at the $350, $500, or $900 price points and pack features, rather than inflating). Hard drives and SSDs tend to fall in price per gigabyte; we see hard drives in particular shipping ~$100 units that keep increasing in capacity (500GB a decade and some ago, several TB today).
Food and clothing increase in dollar-price, but more-slowly than inflation (median household expends 33% of its spending on food in 1950, 12.5% today; 12% on clothing in 1950, 3% today).
New technologies outright fall. Cell phones were available for $4,000 in 1983; small hard drives used to cost hundreds of dollars; and new types of display panels come out at multi-thousand-dollar price ranges for a given size and then fall to a few hundred. SSDs also generally sell by size, and so the 32GB, 64GB, 128GB, 256GB, 512GB, and 1TB models keep falling in price, instead of simply changing the available capacities at a price point as with hard drives.
When the proportion of spending on the same goods falls, consumers have more money. They spend that money on new goods. That requires shipping, retail, and other logistics, all domestic; it also requires manufacture or service provision, which may be domestic or import. This is where new jobs are created.
Caveat: Transitional unemployment means exactly what it says. You eliminate jobs with technology, you need to wait a while for the markets to move around and create new jobs. There aren't new jobs waiting for these people; if there were, we wouldn't have 5% unemployment.
That means, yes, technology eliminates jobs; and, yes, technology creates new jobs. They're in proportion, and there's a lag between them. Both sides are arguing from one absolute, and so both sides are wrong; both sides also typically make ludicrous assertions, like the job-creation assertion that 1 human is replaced with 1 machine
This is only true if you save your money under the bed.
Savings in a bank account is idle money and is out of the economy. You argued that savings is not idle money and out of the economy unless it's under a bed. Putting savings under a bed also removes the loans generated by fractional reserve banking (which is some other money the banks have the power to issue).
As to that point exactly? It crosses over. In the short-term, it's different than putting it into the bank, because it eliminates the fractional reserve; after about a year, the Treasury issues new money to add both the mattress money and its fractional-reserve-created loan money back to the economy, making the two stable states roughly-equivalent. After that, spending bank money only puts that bank money back into circulation; whereas spending mattress money triggers fractional reserve loaning and causes faster inflation. If the money is never banked or spent, then it terminates in a no-difference state.
You can use such an argument as focusing on mattress money when bank account money is the topic to reframe the point and distort what's being presented.
The OP suggested that Zuckerberg take his $60 billion and fund a UBI himself. Do you think Zuckerberg's $60 billion is under a mattress or in a bank account?
Arguing about mattress money when Zuckerberg's idle cash is in the bank is a great way to divert the audience of a debate so they don't consider the difference between these two things, and then take the argument about mattress money to be equivalent to an argument about Zuckerberg's cash. It's one of the not-exactly-lying forms of deception that's easy enough to practice and gives opportunities to heckle your opponent for being pedantic while also remaining technically-correct by arguing over something irrelevant and staying as far away as possible from a point you can't win.
So, the point you're making has subtleties in which it can be equivalent or not in both cases; the variance between the two concepts is only one of magnitude, not mechanism; and you're either trying to win a debate by deception or just stupid.
If you look at the total picture, money put into the bank is multiplied because of the fractional reserve, it gets spent multiple times.
And when that money is spent, it stays in the bank.
Do you know how Apple's billions got into its bank accounts? It was in other bank accounts, and was transferred to Apple. The Government didn't print money and give it to Apple; the money was out there being spent. Now it's not being spent.
That's the total picture. This year, $1,200 billion is spent from bank accounts; $60 billion of that goes into bank accounts from which it goes unspent next year; and then, next year, $1,140 billion is spent because that $60 billion is laying idle in bank accounts.
What is so hard about this concept? Let me spell it out for you:
is multiplied because of the fractional reserve
All that other money that's loaned out? That's other money. That other money is being spent. That money isn't the money sitting idle in bank accounts.
The money A starts in bank accounts. Money A is multiplied by fractional reserve (loaned out). Money A is also spent--moved from one bank account to another.
Money A then stops moving between bank accounts and goes unspent. The money created by Money A's fractional reserve loans doesn't cease to exist, because the loans are paid off and new loans are made (loan money destroyed by paying off loans is recreated by making new loans); however, the spending represented by Money A ceases to be spending, because Money A has ceased to move.
You're telling me that we created 1 red car and 19 blue cars, and that the same number of cars are driven around when all 20 of these cars drive as when the 1 red car parks forever. That's ludicrous. If you stop to count the moving cars--all blue and no red now--you see there are fewer moving cars.
What is your major neurological malfunction that you can't see this? Do I have to draw an infographic to determine if you're blind as well as stupid?
The money in the bank accounts stays in bank accounts when spent. If you have $1Bn in bank accounts and you spend it, that's $1Bn spent and no less money loaned because it's still in bank accounts--just somebody else's. If you have $1Bn in bank accounts and you don't spend it, that's $1Bn that could have been but is not spent.
In both cases, there's another $19Bn that is loaned out. The first case (spend $1Bn) gives a total $20Bn of money spent; the second case (don't spend it) gives a total $19Bn of money spent.
The money stored in bank accounts unspent is idle because the amount of spending in total is less the unspent amount. Think about the whole system at once, not about the myopic view of a fractional reserve, the existence of money, and spending. You keep going back to the money loaned from money in accounts and immediately forgetting that the money in the accounts exists and is either spent or unspent, and thus moving the discussion to some other money which gets spent in both cases and forgetting about the unspent money that is the topic.
No, it's always true. You can either have $1Bn in the bank and a 19:1 fractional reserve loaning system giving $19Bn of loans being spent; or you can have $1Bn moving between bank accounts as it's spent and a 19:1 fractional reserve loaning system giving $20Bn of total money being spent. That's a difference of $1Bn of money being spent on goods and services.
Slashdot Mirror
Why would the janitor work for $2.40/hr? He wouldn't be in danger of catastrophic lifestyle failure, and his lifestyle and security wouldn't be improved much by $2.40/hr of pay. The amount of work required for an insignificant increase in income would be enormous.
We didn't have a 40-hour work week until recently. It used to be up to 100 hours per week--10-16 hours per day, 6 days per week. There were arguments about this, riots, even murders.
Each iteration in technology increases our wealth. People in the 90s lived simple lives with $30/month landlines, expensive PCs, a few cable TV channels, and cars with anti-lock brakes as an option. Today, I spent $87/month for Internet speeds which would have cost me $58,000/month in 1996; I just spent $160 for the entire year of cell phone service with 2GB of LTE+ data; computers are cheap; cars have more built-in goodies that should take a lot more labor (and expense) to make, but we've developed ways to do it cheaper (less labor).
The cost of food, clothing, personal care, and so forth as a proportion of income has fallen. Housing and utilities fluctuate, but generally trend down in terms of cost per square foot of living space versus income. Technical progress cut things back dramatically from 1940-1980, with food falling from around 35% to 15% of income, and clothing falling from 14% to 4%. Today it's 12% and about 3.2% for median-income households.
You can go from your quaint little 1990s lifestyle to the futuristic 2015 lifestyle (and still complain you're not getting richer, somehow, even though the median-income household has all this stuff you could never have afforded on a median income in 1990), or you can live in 1990 but work 28 hours per week.
We've bought time before.
We can create a Universal Social Security without increasing taxes on any business or individual; the taxpayer burden is $1 trillion lower in total.
Reduce the current public aid system to provide childcare welfare to minor dependents of low-income households. This adds no new risks compared to our current system; you can alter it later, when the UBI stuff settles.
How am I still the only one who has come up with this? It's been 4 years.
I've described a Universal Social Security system which begins paying out at age 18. For minor dependents of low-income households, a consolidated public aid system provides benefits similar to what we have today.
The cost of the childcare public aid system is ~1.4% of total taxable income in the U.S.. The total cost of today's public aid system is a dozen or so times bigger, and most of it gets rolled off to the Universal Social Security benefit.
That system also requires transitional considerations, largely about Social Security Retirement benefits. The long and short of that is the 6.2% OASDI tax on the paycheck goes away; the 6.2% on the payroll end becomes 5.3%, which goes to pay the difference between Social Security old-age pensions and the Universal Social Security. I generally specify that we grandfather anyone hitting retirement age within 15 years of the passing of a USS, and top off their benefit until the natural end of their Social Security legacy benefit.
The USS is funded by a fixed, flat-rate income tax, similar to OASDI but applied to all incomes business and personal. Because of this, any technical progress causes an increase in the purchasing power of the USS: it grows faster than inflation. The gap between the USS and old-age pensions thus shrinks, which allows the reduction of that 5.3% payroll tax.
Reducing the payroll tax as such causes a secondary effect: costs go down, and the same market economic factors which set our current prices thus drives them down in response. In this case, it's the cost of employment, meaning that an employer pays less to provide the same salary--that is: wages go down from the employer's perspective, but not from the employee's perspective. The revenue required to support those wages thus decreases, while the spending capacity of the wage recipients doesn't decrease. That, again, increases the rate at which the USS benefit grows relative to inflation.
As you can imagine, UBI systems carry lots of risks nobody thinks about.
Some people want to just hand everyone $4,000 per child, which means either a lot of people aren't receiving adequate childcare aid or most people are profiting for each child they have. It also means anyone without children pays for everyone else's children, in concept, meaning you're facing an unfair expense unless you participate by having as many children as possible. This is a disaster.
My approach simply reuses the current system, scaled down. Reducing its scope reduces the potential for fraud, along with its costs. More importantly, no new risks are introduced: nothing can go wrong as a result of that component which can't already go wrong under the current system. We always have the option to propose a change later.
Proposed UBI systems generally ignore funding risks. A lot of such systems propose funding by a cap-and-dividend, usually a carbon tax, and fail to address funding at all. How much revenue can we derive from a carbon tax? Is it enough to fund a welfare system? What happens when businesses respond by reducing their carbon emissions? One could ask the same about where we get all this money to pay out UBI for children; funding a UBI is already hard.
You're a little snide and aggressive, but you're asking important questions. That's good. A lot of people just dictate what will happen under any form of UBI and conclude that it cannot be done in any case. If you ask a critical question and people just squirm uncomfortably, you've found a risk for which nobody's figured out how to answer; that means they're doing something extremely dangerous. They should at least be able to answer for some sort of boundary or resistance against said risk, if they don't have a way to actually control it.
Salaries will drop, such that the personal incentives for work stay just as modest as they are now.
A reduction in wages without a reduction in income can only mean an increase in buying power.
Don't forget businesses take as much profit as they can. They charge the largest margins they can right now. When costs fall, so do barriers to entry; it becomes easier to compete, and so prices are controlled.
A business doesn't charge you $50 for a thing because they can; they charge you $50 for a thing because 30 or 40 other businesses are trying to sell you the same thing and are willing to triple or quadruple their profits by undercutting the next guy by $5. Turns out the ROI for cutting back prices kind of fails below $50, so that's where we all ended up.
See also: Wal-Mart.
I didn't say anything about hard work or innovation; I said your market isn't people walking through your doors if you're not Best Buy.
Here's a hint: those examples weren't made-up. Some of the largest American game studios are in retarded places like Baltimore (Firaxis), Santa Clarita (WayForward), or Austin, TX (home of Retro Studios, owned by Nintendo). The biggest broadcaster in America is in Baltimore; it was built from a one-station operation in Baltimore.
Many of these places are in population centers, and so have access to population. Population means labor, and also infrastructure; infrastructure means tech industry labor, because infrastructure includes telecomm. We've got eleven game programming studios in Baltimore and a few of them are actually big operations; Baltimore is, historically, a big industrial city, not the East Coast Silicon Valley.
Like ESPN, broadcasting corporations both license and produce content, and they distribute and sublicense for rebroadcast. Face-to-face meetings actually come here, because our local big broadcaster has its own helipad and, besides, has more negotiating power than pretty much every other party.
Comcast's HQ is Philadelphia, PA; Verizon's is in Basking Ridge, NJ; DirecTV is in El Segundo, CA; Dish Network is in Englewood, CO; Apple is in Cupertino, CA; Microsoft is in Redmond, WA; Google is in Mountain View, CA. Google and Apple are actually based in Silicon Valley; these other big nationals aren't--not even Microsoft.
It's cool that you have a snowball stand near a school bus station and make a lot of money from middle-school kids; Amazon (Seattle, WA) sells to people all over the world, and doesn't even have a warehouse in most cities. Location only matters to retail stores; if your customers aren't walking in your door to buy your stuff, they don't care where you are.
Location is important when your primary market is affected by location. Got a store? Needs to be accessible.
As a content distributor, you have viewers. Your business partners include rebroadcasters (clients) and producers (vendors). Viewers are all over the place and expect you to get content to them; clients and vendors are generally going to expect you to come to them. Your other clients--the advertisers--will mostly call you to bid for a spot, then Fedex you the film (or transfer it via FTP nowadays).
You can have a major network broadcaster in frigging Baltimore if you want. For that matter, you can have a video game studio or a security consultation firm wherever you want to stick it. It doesn't honestly matter when your interactions are primarily unconstrained by geographic region.
Because the Muslim-Illuminati Coalition signed a declaration requiring its members to demonstrate funding viability as part of every policy-influencing decision at their last meeting in their satellite evil lair under Denver Airport.
We'll see if Trump is in the pocket of Big Solar or Big Oil in a few hours.
Simmons is also the kind of unmitigated retard who thinks putting a building in a location makes all the difference. Seriously, ESPN failed because it didn't have an office in SV? You don't need an office in SV; you need a business strategy.
Next, Simmons will try to become a billionaire by moving across the street from Warren Buffet.
The question is whether the number of new jobs exceeds the number of jobs lost.
No, that's not how it works. You're arguing trickle-down economics.
Jobs don't exist due to a capacity to supply; they exist due to a capacity to buy. The iteration of technology replaces a number of labor hours producing an output with a smaller number of labor hours producing and operating tools to produce that output. It does not replace 10 assembly line workers with 100 machinists; it replaces 100 assembly line workers with 10 machinists, engineers, miners, oil refiners, shippers, mechanics, and machine operators in total.
This reduction of labor-hours means a reduction in wage: a Tesla factory which expends $40,000 to make a car and garners a 24% net operational profit margin ($49,600 car) eventually has technology with which to make that car for $20,000. At a 24% net operational profit margin, that's a retail of $24,800; however, now Tesla can sell to a broad middle class of economy car purchasers. Tesla is now competing for 100,000,000 consumers instead of 100,000; and it has to go up against Ford, Chrysler, GM, Volkswagen, Mazda, Toyota, and Honda. The competitors are making a 12% net operating profit margin, making $20,000 cars equivalent to Tesla, and selling them for $22,400; while the $24,800 options are all far-superior in feature set and build quality to the Tesla offering. If Tesla wants to compete, it had best lower its prices--and likely needs to come down in operating profit margin in favor of capturing volume sales for greater total profits.
The workers who are still working are still collecting the same wage on the same hours. That means the cheaper Teslas are within their reach.
In this particular context, Tesla would load up a car model with $40,000 of features and sell it at a 24% op profit rate for $49,600 again. The new features require new labor. If those features also have cut 50% of their labor, then Tesla can pack in twice as many features and hit that price point.
In other contexts where the lowest-priced class of product comes down (food, clothing, etc.), you get a simple gap in spending power. So long as your economy is healthy (i.e. sufficiently-few workers have become unemployed in this iteration), your consumer base takes the money they're no longer spending and buys more of some products, some new products, and so forth.
Supplying those products requires labor. No, you're not going to reach a point where 100% of everything involved is done by machines--not until humans are the cultivated pets of intelligent machines and no longer intelligent ourselves. As shown above, when those products require less labor, we just buy more of them because we can.
People make all kinds of assertions about how businesses will just keep prices high and take profit, or whatever else. There are two problems with these arguments.
The first, obvious problem is that no such thing has ever happened in history. The argument stems not from the implication that businesses could, but that businesses always do simply take profit when they cut costs. Thusfar, that's demonstrably false in that it's never been sustainable business practice.
Second, businesses always try to do just that. All prices are set as high as any business thinks they can charge. Profit margins are kept as high as businesses think they can get away with. Prices and profit margins come down when businesses fail to compete at that level. Businesses always intend to charge you more, and only refrain because they believe they can't profit in that way.
That second point is important. When things become cheaper to produce, the barrier-to-entry for a market lowers. When luxury goods become cheaper, markets become larger: a lower price point puts you in the range at which more consumers will buy, and is more-attractive to current consumers willing to pay more. Profit ma
The evidence is that this work revolution has the ability to automate the very class of job that people moved into during the last work revolution.
A repeating process, again.
Last time we automated the simple jobs, we were also creating a bunch of simple jobs in the process, that warm bodies could perform.
We automated away weavers, and created a class of machine operators who tended weaving machines which wove cloth much faster than a human. Fewer human hours per yard of cloth.
We automated away that whole unpacking and packing of goods repeatedly by creating the wooden shipping pallet. Instead of humans stacking cans onto trucks, unstacking them and restacking them onto rail cars, unstacking and restacking them onto distribution trucks, unstacking and restacking them into warehouses, then unstacking and restacking those onto more distribution trucks, and finally unstacking and restacking those into the stock room at stores, we just have humans stacking cans onto pallets and then moving the pallets. A 48-hour job became a 4-hour job for the same crew.
We automated away the grunt work portion of accounting, and kept the complex skill of accounting. We need human operators of accounting programs and spreadsheet software. The software and computers are designed and built by other humans who are more-skilled.
We've automated away simple and complex jobs and replaced these with mixtures of new simple and complex jobs, mostly. Human yards of cloth? Human weaving machine operators don't know how to weave, really; human weaving machine designers and manufacturers take on more-complex tasks than human weavers. Shipping pallets? More logistics, and more idiots loading stuff on shipping trucks. Accounting software? More programmers and more accountants, as well as more support-desk technicians, computer administrators, and general IT people (support and IT admin is a pretty low-skill task, honestly).
But now we're automating away the jobs that only require warm bodies
We're not automating away all of the jobs in the chain. We're reducing the number of warm bodies in the operation of a factory, shipping operation, or taxi operation.
That, on the first order, means that factories, shipping, and taxi operations now cost less. Price competition will push more purchasing power into consumer hands as a result. This means more consumption: stuff costs less to make; the cost of shipping is 30% of your product's retail price instead of 50%; and you can ride the Uber for $5 instead of $50. The few factory workers, loading dock hands (at warehouses and other complex demarcation points where machines are unreasonably-complex, unreliable, inflexible, and expensive--we'll eliminate them at some demarcation points), and maintenance workers (mechanics, etc.) are multiplied across this.
On the second order, it means new products come about. New products which are less-automatable are still affordable, but expensive things. That's really the difference between expensive things like large-screen OLED TVs and cheap things like hard drives: more labor (and thus wages) goes in per unit produced. Honestly, why do you think SSDs cost more per GB than hard drives? Do you think someone just makes up a number and says, "Ah, this is what NAND will cost", with the arbitrary ability to make that price lower than hard drives but no real reason to do so?
New products mean new jobs. Highly-automatable products means even more new products; less-automatable products means consumers buy fewer things, and more jobs (and labor-hours) are involved in each of those units purchased. There's still the shipping, the retailing, and the whole organizational structure above all that.
We aren't entering a future in which we're mindless cattle tended by robot overlords with no human understanding of how anything around us works. Until we do, the process is repeatin
Medicare is a separate function of Social Security. We do have the ACA and 100% subsidies for people with no income, remember? (I highlight the universal social security as not counted as an income for reasons; this is one of them.)
You again ignore that you said that money is only taken out of circulation if it's taken out of the bank. You asserted that money in the bank left unspent isn't taken out of circulation, even though the only difference between spending that money and not spending that money is whether that amount of money is circulated.
You're trying pretty desperately to avoid acknowledging that you made that incorrect assertion.
You further again simplify a complex concept in a deceptive way.
There is a truck which fills in a hole to a 2-inch depth. This truck comes by every year.
Is there a difference between digging a 3-inch hole and digging a 30-inch hole?
If you dig a 3-inch hole, the truck will come by and pour in 1 inch of dirt to leave a 2-inch hole.
If you dig a 30-inch hole, the truck will come by and pour in 28 inches of dirt to leave a 2-inch hole.
How are these two things different?
After 1 year, they're not different. Within that time frame, they're different by 27 inches.
Bonus: if you dug a 30-inch hole, you're holding 30 inches of dirt. If you try to build a mound on that hole, you can build a bigger mound. If you don't decide to do that, then there's no difference in the continuing frame.
Your assertion is that these two situations are different. My assertion is that they're different for a specific short-term period and for a second short-term period which may never occur.
So, the removal of high-powered money or the monetary base from a bank account is no different than the idling of that monetary base in the term exceeding one year. Idling that money in the bank account is, further, no different in mechanism than removing that money from the banking system, but different in immediate magnitude.
Are you going to continue to ignore the parts of the system which don't function the way you fantasize?
It's measured in weeks or months, usually. Generally I measure by the numbers instead of by individual people.
Counting people individually is unethical. 5% unemployment rate. Joe loses his job; you want Joe to get a job right away, right? Do you know what that means? That mean Dave, who lost his job 2 years ago, is ineligible for a job because Joe is more-important.
I'm not prioritizing Joe or Dave. We have 5% unemployment because lower unemployment consistently leads to more people entering the job market somehow. During the 2008 recession, we saw an increase in college students going to grad school to avoid entering a job market in which they perceived no opportunity to find a job; as the unemployment rate fell and the economy recovered, we saw an increase in college students exiting college early to take jobs. People retire earlier in a recession, and later when we have lower unemployment. Birth rates are semi-relevant, but take too long to have impact; more-relevant are people who don't need but would like a job and so begin taking jobs in a strong job market, as well as the rate of immigrant labor.
Both Joe and Dave are going to be there. They're both going to need jobs, and there will be someone else working some job to occupy themselves in their free time and get a little extra spending cash they don't need--and I'm not trying to bump those people out of the way either. Joe and Dave are a product of numbers.
We don't need to establish a tribunal to decide if Joe or Dave more-deserves a job; we need a social safety net to support Joe and Dave during these trying times they're experiencing. For a strong social safety net, we need wealth. For wealth, we need a level of technical progress. Technical progress creates that transitional unemployment that makes some of the new Joes and Daves. We all benefit from technical progress, and so we further owe Joe and Dave that social safety net which our newfound wealth allows us to afford, as they have contributed their very livelihoods to our wealth.
Besides, it's more-stable that way. Stronger social safety nets reduce the severity and duration of recessions. When your economy is wealthy enough to implement a better one without draining large amounts of wealth away and funneling it toward these new services, the upgrade makes everyone wealthier.
The consistency at which people assault the poorest and most-vulnerable by focusing on an individual as a political bargaining chip never ceases to amaze me.
We're not replacing 100% of all human operations in any productive pipeline with non-human operations, so that is still the case.
there were decades of unemployment and social strife during the industrial revolution before tech caught up (and wars thinned the herd) and we returned to near full employment.
Good. Someone actually sees the whole issue instead of crying that all jobs will go away/no jobs will go away.
It's flat-out ludicrous to think that old patterns won't repeat themselves unless you have some evidence about that. You have to assume something to plan ahead; that's not to say you can't control risk (that's largely what my Universal Social Security is for in a general sense), and even that requires assuming that people will continue to be greedy, self-serving, and generally prone to economize.
Whole new economic sectors have repeatedly emerged with the creation of new technology. When we invented the hot-blast furnace, we suddenly could lay a railroad system without expending the entire GDP of Europe; mass transit and overland shipping became a thing, as did the entire frigging railroad industry. Look at what computers did. Chemistry created tons of industries--plastics, pharmacology, the like. We couldn't predict those at the time, either, to any degree more than we can today predict space mining and interplanetary transport will be new industries in some future.
Dystopia isn't inevitable, but unless we figure out how to finance a safety net, it remains a possibility.
Wages come from revenue. Ultimately, money spent on goods reflects wages paid; debt lets you pay with future wages. Inflation, debt, and fractional reserve banking stabilize this system against the accumulation of money.
That means income essentially reflects productivity. Business income excludes expenses because domestic expenses are some other local productivity and import expenses are productivity outside the economy; individual income includes expenses because we're consumers, and don't consume things to produce a derivative thing to sell to someone else (you can make the argument that labor is produced from our consumption but that view, while philosophically interesting, doesn't describe an economy in any workable sense).
Technical progress reduces the labor invested to make goods. That means more wealth.
So financing a safety net means getting enough money to reflect the portion of our production which can provide the material needs of the safety net. QED.
As of 2013, it's barely doable in a stable manner without increasing taxes via a Universal Social Security. The most-stable financing mechanism is to cut Federal welfare out of Federal income taxes (merging OASDI into income taxes for this purpose), replace that with a 17% tax to fund a universal social security, and adjust the tax brackets.
The net tax rate in this model is the taxes taken (progressive general fund plus flat 17% USS fund) minus the USS benefit. To keep this smooth, the USS benefit should pay on the same schedule as withholding: each two-week withholding period is also the benefit issuance period. That means the Government takes your tax money and gives you the USS benefit at the same time.
This is important largely because the gross tax rate in the middle classes is actually higher. This will destabilize the economy because your paycheck will be smaller; thus the USS must pay its benefit out in the same frame, returning more than the additional taxes taken. When counted together, your total paycheck plus benefit in a two-week or one-month frame is higher.
Transitional concerns are pretty wide. The hottest political issue--also an economics issue--is Social Security old-age pensions. We can top up the USS to equate to retirement benefits by taking a 5.3% OASDI (replacing current 6.2% OASDI) payroll tax (not paycheck) for grandfathered retirees (my standard argument is grandfathering until death all who reach retirement age within 15 years of passing the USS). Other Federally-funded welfare is trivially covered by the USS; and the USS notably exceeds the effectiveness of HUD housing assistance for HUD-eligible households.
To avoid certain risks, minor dependents of low-income households do not receive a USS benefit; instead, the household receives public aid. The public aid system is a consolidated version of the cur
but I'm willing to bet starting in 5-10 years job destruction will far outpace job creation. You really think all the truckers in America are going to become coders or entrepreneurs?
If there's a lot of delay due to regulations and the technology matures, we'll eliminate trucker sand taxi drivers rapidly. That will cause sudden increases in unemployment, leading to a recession. No further discussion because we shouldn't have conflict on this outcome.
If we facilitate the technological change, then businesses will have a risk spread. The technology is expensive, unproven, and risky. This impacts strategic decisions based on risk tolerance and risk appetite.
Early-adopters will buy the expensive new technology in hopes of getting a leg-up. They'll be the first to nibble into the job market, cutting back a few jobs early.
More strategic companies will take into account the rate at which the technology improves--becomes cheaper. That means the prices of the trucks come down (cheaper to make), maintenance comes down (cheaper to own), and risks involved in using them come down (cheaper to operate--fewer insurance claims, lawsuits, etc.). A company may continue to expend $1,000,000/year rather than replace a fleet with a $900,000/year fleet because it believes it will be a $600,000/year fleet in 3 years--they'll break even in 4 years if they push replacement 3 years down the line, or so they think. If their fleet should last 10 years, that's a good $1.2M of cost savings in the next 10 years versus changing today.
Many companies will hedge the risk with an incremental roll-out. They'll replace part of their fleet at some point, and delay replacement to see if technology improves and to develop organizational knowledge around the new workflows. This accelerates as the old fleet becomes a larger liability.
In this mode, job replacement concerns are largely mitigated.
When replacing a worker, that worker may be old. Many workers will go into retirement a few years late or at adverse event. That means you frequently have an old man who is either planning to retire at age 65, and then gets laid off at age 62 and simply retires then.
On the other end, you have workers who are retiring. These workers voluntarily exit the work force because they actually hit age 65 or whenever they planned to stop, and then stopped working. Their employers still require their services, and so have need to replace them.
Likewise, you have new entrants to the market--college graduates, people with shiny new CDLs, the like--and you have those lain off for various reasons such as their employer losing business to the next guy who's selling cheaper because he has self-driving freight trucks. These people (less the aforementioned direct-to-retirement layoffs) have to fill the gap in employment for employers who have lost an employee for whom they still have a need.
If the job market shrinks slowly enough, the flow of entrants slows. People stop growing up to be truckers because truckers are going the way of the blacksmith; they go to college for Web design instead. If it's really slow, you can get a shortage of truckers and have to accelerate adoption of self-driving trucks to meet market demand. That's fitting, because market demand driving your need actually reduces your risk in adopting the new technology, and so accelerated adoption is more-viable.
In other words: Retraining is a red-herring. Nobody retrains. Coal miners become salt miners or some other form of miner; truckers become mechanics, take up work at a logistics-management company, or otherwise apply their skills; and so forth. Many simply retire. The influx of new entrants slows. If all of that doesn't allow your job market to smoothly transition these people, you get an unemployment spike and a recession--it may be a small recession (0.5% sudden unemployment spike, mass unemployment of truckers) or a large recession (2.5% unemployment sp
Past performance is an indicator of future results. The problem is people interpret results poorly.
I keep repeating this: technical progress increases wealth by reducing costs. Costs are ultimately wage-labor. There's one sustainable way to reduce cost: reduce the wage-hours invested in producing a thing.
Each technical improvement first eliminates some jobs. That gives you transitional unemployment. Lower costs mean lower viable prices, which draws luxury goods down into wider markets: it costs little enough for you to target 100,000,000 middle-class consumers instead of 1,000,000 upper-class consumers, you can price it low enough to target a bigger market. That means either current producers or new competitors will try to take the market and make a bigger profit by lowering prices.
Once prices are sufficiently-low, a good is just a consumer good. Everyone has smart phones now--even poor people--so we compete on price at the bottom and on the spread of prestige across income classes. We have economy cars and luxury cars. The lower-class goods have slimmer margins to try to capture the wider market; as costs come down, we start packing more features into these goods, reducing their price, or both.
So, what happens with those lost jobs?
More features means applying more labor. If you cut costs and then increase features rather than lowering price at a certain market level, then you've invested your displaced labor into producing more stuff--each of those new feature components requires labor, and you shift it from the now-cheaper components to the previously-not-incorporated components.
If you're not boosting features, then you're competing on price to capture those low-end markets. Prices come down in terms of labor-hours--that is to say, prices increase more-slowly than wages for non-changing goods as those goods become cheaper to make. The most extreme form of this is prices decreasing.
Examples?
Cars and phones pack more features into roughly the same price or the same proportion of spending (people tend to expend the same percentage of their income on cars; phones tend to keep at the $350, $500, or $900 price points and pack features, rather than inflating). Hard drives and SSDs tend to fall in price per gigabyte; we see hard drives in particular shipping ~$100 units that keep increasing in capacity (500GB a decade and some ago, several TB today).
Food and clothing increase in dollar-price, but more-slowly than inflation (median household expends 33% of its spending on food in 1950, 12.5% today; 12% on clothing in 1950, 3% today).
New technologies outright fall. Cell phones were available for $4,000 in 1983; small hard drives used to cost hundreds of dollars; and new types of display panels come out at multi-thousand-dollar price ranges for a given size and then fall to a few hundred. SSDs also generally sell by size, and so the 32GB, 64GB, 128GB, 256GB, 512GB, and 1TB models keep falling in price, instead of simply changing the available capacities at a price point as with hard drives.
When the proportion of spending on the same goods falls, consumers have more money. They spend that money on new goods. That requires shipping, retail, and other logistics, all domestic; it also requires manufacture or service provision, which may be domestic or import. This is where new jobs are created.
Caveat: Transitional unemployment means exactly what it says. You eliminate jobs with technology, you need to wait a while for the markets to move around and create new jobs. There aren't new jobs waiting for these people; if there were, we wouldn't have 5% unemployment.
That means, yes, technology eliminates jobs; and, yes, technology creates new jobs. They're in proportion, and there's a lag between them. Both sides are arguing from one absolute, and so both sides are wrong; both sides also typically make ludicrous assertions, like the job-creation assertion that 1 human is replaced with 1 machine
Actually, you originally weren't:
This is only true if you save your money under the bed.
Savings in a bank account is idle money and is out of the economy. You argued that savings is not idle money and out of the economy unless it's under a bed. Putting savings under a bed also removes the loans generated by fractional reserve banking (which is some other money the banks have the power to issue).
As to that point exactly? It crosses over. In the short-term, it's different than putting it into the bank, because it eliminates the fractional reserve; after about a year, the Treasury issues new money to add both the mattress money and its fractional-reserve-created loan money back to the economy, making the two stable states roughly-equivalent. After that, spending bank money only puts that bank money back into circulation; whereas spending mattress money triggers fractional reserve loaning and causes faster inflation. If the money is never banked or spent, then it terminates in a no-difference state.
You can use such an argument as focusing on mattress money when bank account money is the topic to reframe the point and distort what's being presented.
The OP suggested that Zuckerberg take his $60 billion and fund a UBI himself. Do you think Zuckerberg's $60 billion is under a mattress or in a bank account?
Arguing about mattress money when Zuckerberg's idle cash is in the bank is a great way to divert the audience of a debate so they don't consider the difference between these two things, and then take the argument about mattress money to be equivalent to an argument about Zuckerberg's cash. It's one of the not-exactly-lying forms of deception that's easy enough to practice and gives opportunities to heckle your opponent for being pedantic while also remaining technically-correct by arguing over something irrelevant and staying as far away as possible from a point you can't win.
So, the point you're making has subtleties in which it can be equivalent or not in both cases; the variance between the two concepts is only one of magnitude, not mechanism; and you're either trying to win a debate by deception or just stupid.
If you look at the total picture, money put into the bank is multiplied because of the fractional reserve, it gets spent multiple times.
And when that money is spent, it stays in the bank.
Do you know how Apple's billions got into its bank accounts? It was in other bank accounts, and was transferred to Apple. The Government didn't print money and give it to Apple; the money was out there being spent. Now it's not being spent.
That's the total picture. This year, $1,200 billion is spent from bank accounts; $60 billion of that goes into bank accounts from which it goes unspent next year; and then, next year, $1,140 billion is spent because that $60 billion is laying idle in bank accounts.
What is so hard about this concept? Let me spell it out for you:
is multiplied because of the fractional reserve
All that other money that's loaned out? That's other money. That other money is being spent. That money isn't the money sitting idle in bank accounts.
The money A starts in bank accounts. Money A is multiplied by fractional reserve (loaned out). Money A is also spent--moved from one bank account to another.
Money A then stops moving between bank accounts and goes unspent. The money created by Money A's fractional reserve loans doesn't cease to exist, because the loans are paid off and new loans are made (loan money destroyed by paying off loans is recreated by making new loans); however, the spending represented by Money A ceases to be spending, because Money A has ceased to move.
You're telling me that we created 1 red car and 19 blue cars, and that the same number of cars are driven around when all 20 of these cars drive as when the 1 red car parks forever. That's ludicrous. If you stop to count the moving cars--all blue and no red now--you see there are fewer moving cars.
What is your major neurological malfunction that you can't see this? Do I have to draw an infographic to determine if you're blind as well as stupid?
The money in the bank accounts stays in bank accounts when spent. If you have $1Bn in bank accounts and you spend it, that's $1Bn spent and no less money loaned because it's still in bank accounts--just somebody else's. If you have $1Bn in bank accounts and you don't spend it, that's $1Bn that could have been but is not spent.
In both cases, there's another $19Bn that is loaned out. The first case (spend $1Bn) gives a total $20Bn of money spent; the second case (don't spend it) gives a total $19Bn of money spent.
The money stored in bank accounts unspent is idle because the amount of spending in total is less the unspent amount. Think about the whole system at once, not about the myopic view of a fractional reserve, the existence of money, and spending. You keep going back to the money loaned from money in accounts and immediately forgetting that the money in the accounts exists and is either spent or unspent, and thus moving the discussion to some other money which gets spent in both cases and forgetting about the unspent money that is the topic.
No, it's always true. You can either have $1Bn in the bank and a 19:1 fractional reserve loaning system giving $19Bn of loans being spent; or you can have $1Bn moving between bank accounts as it's spent and a 19:1 fractional reserve loaning system giving $20Bn of total money being spent. That's a difference of $1Bn of money being spent on goods and services.