A revenue tax would be complete bullshit. It taxes the movement of money instead of production. If you produce 1 million tonnes of rice, your tax system should capture a portion of 1 million tonnes of rice; income taxes on personal income and business profits accurately do that. Taxes on revenue would tax the simple movement of money, which would tax non-productive movement of money, and would effectively double-tax money. Prices of goods would go up, production would go down, jobs would vanish, and we'd get poorer.
"Capital Input" is an abstraction. "Capital Input" is made up of goods (e.g. robots) created by labor, with the basis of their cost being... well, the wages involved. It differs from directly hiring labor only because it's in the supply chain and, thus, you're buying it from a business that has its own overhead (which may be greater than the overhead of a vertically-integrated monopoly) and a profit margin.
In other words: "Capital Input" is the same thing as corp-to-corp contracting of labor.
Taxing the robots will reduce the efficiency gain of the robots, which will prevent prices from falling in line with that efficiency gain, preventing people from finding themselves with the means to buy more, preventing the creation of new jobs to make and retail those additional things people buy.
In other word: robots will cause transitional unemployment ending in a shift of jobs over time. Taxing the robots will cause permanent unemployment.
Indeed. The core problem brought by increasing automation (which is inevitable) is that the marginal utility of labor decreases.
Increases.
Back in the day (1790), 90% of America's workforce was farmers. This was only 28% by 1900. By 1990 it was 2.8%.
In 1900, the median household spent 40% of its income on food. It was 33% in 1950, and 15% in 1990. It's 12% now. What happened?
We went from walking around with hoes, pulling plows with donkeys, and sewing seeds by hand to using massive tractors, big irrigation rigs, GMO, fertilizer, pesticides, and other intensive farming techniques. The marginal output of a single laborer's work--rather, the output of a number of labor hours--increased dramatically. The number of farmers decreased, the amount of land on which we farmed increased, the and total labor invested in the entire supply chain for a given yield of food fell dramatically.
In other words: Technology enabled the creation of more goods with less human labor.
Robots just enable production of goods with fewer human labor hours. They're more technology. A spreadsheet does a bunch of calculations for you, instead of having a bunch of accountants sit down with abacuses and tally numbers by hand--no different than a machine assembling cars from parts molded out of sheet metal that's unloaded, carried to the machine, and loaded into the roller by humans (who of course use fork lifts to do the heavy lifting).
There's this fantasy that humans won't be involved anymore. The fact is fewer humans will be involved in a given process. We keep calling people Luddites because Ludd's followers also believed things like the power loom would end all human labor, yet it takes an immense number of humans to run a factory making cloth--nowhere near what it took to make that much cloth before the robotic power loom.
So here's the other side.
All those cost decreases? The fact that you can buy more stuff today--not just that hard drives get cheaper per gigabyte or TVs fell from $4,000 for a 20-inch to $400 for a 65-inch, but that the middle-class income actually buys more--is built on the decrease of labor costs. Technical progress means 1,000 hours of human labor pumps out more crap.
So the proposal is to tax away those efficiency gains, preventing prices from falling (= rising more-slowly than wages). That sounds like a plan to keep people from getting less-poor.
Oh, okay, so let's see... you don't have actual data, just shit you made up. Got it.
When you have only a 60% labor utilization rate, it's impossible to have only a 17% U6 number, because that means that you're failing to count 23% of the population.
So a lazy stay-at-home bitch that thinks she's special and doesn't need a job because her husband makes all the money she needs and just does "housework" (lol like that's work) should be repeatedly beaten until she decides she wants a job and goes to get one to make the beatings stop? Got it.
No, seriously. There are people who, for whatever reason, are not trying to get jobs. They're not discouraged; they're not part-time workers; they haven't given up; and they're not on welfare. They simply don't need jobs, don't want jobs, and aren't trying to get jobs. Our labor force participation rate is unreasonably-high right now and a lot of people are trying to get jobs. It was relatively-flat at 58%-59% until some time around 1950, then suddenly spiked upwards.
You know, in 2002, the narrative was "big evil banks take all the money, so you need two incomes to get by because the economy is all fucked up". Today it's "labor force participation rate isn't 100%, so some people are choosing to stay home, so the economy is all fucked up".
So yeah, your position is you should beat your wife until she stops being a lazy cunt and goes out to find a job, even if you make $145k and live well-beyond comfortably, because that fat little bitch had better do something useful.
It was $2.85 in urban areas 2009, including social insurances; $1.14 in rural areas; $1.74 total compensation average in all firms. The Chinese workers engage in 2,222 working hours of labor per year (it's about 2,000 in the U.S.), at a current rate of 2,300 Yuan minimum hourly wage, equating to $1.80 of direct wage.
In 2009, the share of wages was $1.13/hr, and social insurances was $0.61. This suggests today's minimum wage compensation in china would be $2.77 of total cost, roughly 2.43 times the 2009 rural average.
If we assume (bad assumption) that rural vs urban compares the same way, then urban manufacture employee cost would be $6.925/hr, of which $4.50/hr is direct wage. The average would be $4.23, of which $2.75 is direct wage. In reality, the average Chinese manufacturer pulls roughly $3.61/hr of direct wage; the average Chinese manufacture compensation in total would be $5.56 today.
The average total compensation of an American factory worker is $78, but I've been using numbers like $21/hr + 18% + 6.4% (OASDI+HI) to project the cost of moving manufacture from China to America. I have vastly underestimated the total loss of American jobs that such a move would produce, methinks. For example: the break-even point for manufacture of Men and Boys's Cotton Trousers and Shorts in America is roughly $18/hr + 18% + 6.4%, or $22.39 total employee hourly cost; above that, you're losing jobs. At $21/hr + 18% + 6.4% ($26.12 total hourly cost), moving all MBCTS manufacture from China to the United States results in a net-loss of a little over 90,000 American jobs; at $18/hr ($22.39 total hourly cost), it's a net-loss of 0 jobs; and at $8.25/hr ($10.26 total hourly cost) you gain about 54,000 net new American jobs. Imagine what it looks like if the Americans cost $78/hr in total.
So, tariffs that make some goods more-expensive than others, trickling the cost down to the consumer and ultimately moving the bulk of the burden onto the poorest of poor?
The flat-tax equivalent rate is like 29.97% circa 2013. That's how much income tax revenue the government took. That doesn't count use taxes to which the lower-incomes are more exposed.
So, they didn't (past) pay some taxes. That's a government cash flow issue in the past.
Because this money is long-term banked, it's essentially removed from the economy--same as if you put it in a big pile and burned it.
The Federal Treasury maintains a 2% inflation rate by issuing new money. Mechanically, they buy Federal Treasury bonds back from big banks at an inflated rate; this gives those banks a major profit in newly-minted money. The Fractional Reserve System allows the banks to then lend 19 times as much money--if the Federal Treasury adds $1B, the banks can now loan $19B.
This money then enters the economy from two ends. First, consumers take loans to buy things ahead of inflation--cars, mortgages, the like. Second, businesses take loans to leverage their position in the market, which pays money outward; a sizable fraction of this leveraged money trickles down in the short term, whereas in the long term the bankable fraction of profits works its way up to a narrow band of business service providers.
These immediate payouts hit consumer hands and start their way upwards. This is a fractioning process: most revenue goes to wages, either directly or by purchasing services from the next business in the supply chain; some goes into business savings, investments in securities (money that just trades on paper but doesn't actually go to buy things, thus doesn't drive the economy by paying wages), and executive pay that similarly gets banked and invested.
The fraction that goes to wages circulates, and the fraction that goes to savings and investments ages: nobody with that much cash taps their savings to $0, so only the fluctuation in savings counts as active money. The portion that just sits is removed from the economy--we're back to Apple's $250B.
Okay, so we've established that the Federal Treasury effectively offsets the money sinking into static accounts by printing new money, and replaces it while pushing 2% inflation.
From here, we can say "what's wrong with that": if AAPL brought this money back and spent it (on what?), it'd essentially cause inflation in the same way as printing a ton of money. Just floating this money into US bank accounts would cause an enormous flurry of credit availability and... were you here for 2008? Banks try to issue all the credit they can.
For completion's sake: to get 2% inflation, the Federal Treasury has to offset labor force growth (10% more working hours, 10% more dollars) and technical progress (make 10% more stuff with the same labor, goods cost 10% less, you need to drive wages up ~11% to keep prices the same). Then, it needs to pop an extra 2% on top of that. With the money being taken out of the economy, the Federal Treasury has to replace that money as well to get back to the original cash basis.
As for loans, well. Inflation and all. You take a loan for a 30-year mortgage, you pay interest that's probably more than inflation. That's going to cost you. On the other hand, that's the cost of the house. The purchase price goes directly into the hands of the seller, who can spend it now; you stop paying $1,000 in rent and instead pay $1,000 in mortgage. Thing is, in 10, 15, and 30 years, 2% inflation means that $1,000 should be $1,218, $1,385, and $1,811; and you're still paying only $1,000/month as agreed in your mortgage contract.
In other words: loaning money into existence immediately drops a pile of cash into spending somehow, adding that to circulation; and the continuing inflation steadily lowers the amount of cash removed in exchange by reducing the fraction of per-labor-hour money it represents. Your mortgage payments shrink over time.
Further, the economy is essentially labor trade. The buying power of money essentially moves based on the productivity of labor, and technical progress which decreases scarcity and increases population just spreads the money thinner (prices come down, deflation happens). Inflation works by putting in
Uh, U-6 has been as high as 17% during the height of the recent recession, and is down below 10% now. Between 1995 and 2008, it oscillated between 7% and 10%. So says the authority that provides the U-6 measurement.
Try again. Use actual facts this time instead of some horse shit you pulled out of your ass.
Maybe that's what's wrong with you: your head is full of information that's not just wrong, but hilariously wrong.
Because somebody probably envisioned identifying teens sliding toward depression and advertising things at them like study groups, social activities, or other sorts of stuff surmised to help prevent teen suicide and whatnot; and a bunch of other people probably didn't think much of it, thus opening the door to allow marketers to target teens who are likely to do certain things on an impulse.
People in vulnerable emotional states are easily-influenced. Identifying these states is good; using them to manipulate people into exchanges which typically benefit you more than them enough that they tend to avoid said exchanges is bad.
By all means: leave out health care, the relative cost of which has more than tripled since 1960, from 5% of GDP to nearly 18%
America's healthcare system has serious problems, depending on how you look at it. One of those problems is we're not allowed to just hurl barely-tested drugs at consumers and then retract them when a lot of people are injured by unpredicted side-effects; the FDA requires pharmaceutical companies to test the drugs on rats for 3 years, then to go through multiple stages of clinical trials, then to continue following patients for 3 years after approval to collect further data on side-effects in actual application. It costs roughly $315 million to get a drug FDA-approved, and fewer than 1 in 10 new drugs make it the whole way; stacking it together gets you over $3 billion to get a new drug to market.
On the other hand, technical progress has brought down the cost of medical devices and actual medical care procedures, while also improving lifetime wellness. The major driver of healthcare cost increases has been the prescription drug market, as described above.
In 1950, the median American household spent 4% of its income on healthcare; in 2000, it was 6%. The other side of this is people have been purchasing more and better healthcare, shifting their spending from mandatory costs like food and clothing (Clothing: 12% became 4%, and it's now around 3%).
Healthcare has arguably actually gotten cheaper; total healthcare spending has increased. I wonder how that happens. Clearly, the poor can't be paying all that much more for healthcare; and the middle-class is only paying roughly 50% more on-average as of 15 years ago. What do the stats look like now?
For July 2015 to June 2016, the lowest quintile (0%-20%) spent 8.4% on healthcare; 21%-40% income earners spent 9.7%; 41%-60% spent 8.8%; 61%-80% spent 8.4%; and the highest 20% income households spent 6.6%. 8.4%, 9.7%, 8.8%, 8.4%, 6.6%. 7.94% of the average spending of all consumer units. The average spending of all consumer units was $56,258, out of an average income of $72,990; the median household income in 2015 was $55,516.
By the by, the 5% number you used for 1960 includes things like preventative care, dental care, medical check-ups, hospitalization, and so forth. The 18% number you used includes things like family planning and nutrition programs. The current 8% number includes things that would be considered medical care, rather than new categories of nutrition programs. Try comparing the same things.
and housing costs have also risen sharply over the same period
That's actually not true!
The cost of housing per square foot as a percentage of consumer expense had fallen continuously until around the year 2000. Then: sale prices of houses started running up in a bubble.
What's interesting is mortgage interest rate reductions drove this bubble. That is to say: the house was a $120k house with an $1,100/month mortgage at the prior rate, and then become a $380k house with an $1,100/month mortgage at the new, lowered rate. The cost did run up thanks to some market fuckery (QUICK! ACT NOW! GET INTO YOUR INVESTMENT OPPORTUNITY!) followed by pure inertia.
So in 2015, the third quintile sent 19.6% of their spending to shelter (the total "housing" figure includes shelter, utilities, and home maintenance). Owned Dwellings cost 9.5%, with 4.2% going to Mortgage Interest; while Rented Dwellings represented 9.3%.
In 2010, the third quintile sent 20.6% of their spending to shelter. Owned Dwellings represent 12% of that, with 6.1% going to Mortgage Interest; Rented Dwellings cost 7.7%.
In 2005, Shelter was 19.5% for the third quintile. Owned Dwellings were 11.7% with 6.6% going to Mortgage Interest; Rented Dwellings were 7.2%.
Going back as far as 1989, shelter was 16.5% for the third quintile. Owned Dwellin
Profit margins tend to decrease as goods become cheaper. Luxury goods have smaller markets and, thus, the barrier-to-entry is high and competition is low; once they become cheap, markets become easily-captured and competition increases.
This is why businesses specialized to high-end luxury cars have operational profit margins in the 18%-23% range, while businesses specialized to economy cars have operational profit margins in the 7%-12% range. Seriously, dude, all of 5,000 units of whatever you're selling are being bought every year in the entire world; if someone tries to undercut your prices, undercut them back. This works less-well with food because literally everyone is buying and 1% success in the market at slimmed margins is an enormous amount of profit.
Why? Blacksmith jobs have been replaced with factories. The same labor that used to make 200 tonnes of iron in 1820 now makes 86,400 tonnes of iron (that eliminates 98.8% of ironmaking jobs). 90% of the United States labor force was farmers in 1970, versus 2.6% in 1990. Before 1948, the labor force participation rate in the United States was 58%-59%; it's now around 65% and peaked around 68%, and we have 5% unemployment.
Let's look at food.
United States, 1900. Farm population: 29,400,000. Farmers make up 38% of the labor force. The median-income household spends 40% of its income on food.
United States, 1950. Farm population: 25,000,000. Farmers make up 12.2% of the labor force (68% of farm jobs eliminated since 1900). The median-income household spends 33% of its income on food.
United States, 1980. Farm population: 6,000,000. Farmers make up 3.4% of he labor force (91% of farm jobs eliminated since 1900). The median-income household spends 15% of its income on food.
United States, 2012. Farm population including laborers, supervisors, and managers: 787,000. These farm workers make up 0.55% of all US wage and salaried workers (98.6% of farm jobs eliminated since 1900). The median-income household spends 12% of its income on food; it would be under 9% if they didn't eat food out of home (arguably as low as 4%-6%).
I'm pretty sure well-more than 50% of the jobs since 1790 have been eliminated from the United States. The above scales only labor force proportion, too; it doesn't account for things like productive output, amount of land worked, or the like.
For example: in 1890, 29,400,000 farmers (43% of labor force) worked 621M acres of land; in 1900, the same number of farmers (but only 38% of the labor force) worked 844M acres of land. You would expect that to be 36% more jobs, but it wasn't--so we could say we eliminated 36% of farm jobs between 1890 and 1900 (that would be the second-most-meaningful description, right after measuring how much actual product they made).
In 1990, 3,000,000 farmers worked 988M acres of land. By the above measure, we could say the 1890-technology would project 46,800,000 farm jobs to work 988M acres of land, and we have 300,000 farm jobs. Instead of a 59% increase, we've eliminated 89.8% of the existing jobs, and produced only 6.4% of the expected jobs.
The normal automation narrative is that there will be 0 humans involved anywhere--making the robot, maintaining the robot, operating the robot, etc.--and the rich guy who own the robot will get super-rich while everyone else becomes unemployed.
I keep telling people we'll essentially pay those 3 humans instead of 30 humans, plus like 2 more humans to build/maintain/fuel the robot over its lifetime (about 0.1 human), and then be able to buy 9 times more stuff because we can employ 9 robots and ~28 humans plus 2 more fractional. They keep telling me the jobs will all go away forever. History is on my side, but most people don't have capacity to think, much less to analyze the future in terms of the past (which, oddly enough, is the basic facility which makes humans intelligent).
There are fewer jobs to make, maintain, power, and operate a robot than jobs replaced by that robot.
In total, there will be more robots and other non-robot jobs to produce more stuff because we don't have to pay the wages down through the whole structure (yeah 17 humans instead of 117? That's like, $825/hr less minimum-wages paid, and some of those 100 humans probably got paid more than minimum wage), so we have all this middle-class money to spend on other shit.
Obviously, if you unemploy 1% of your workers, the other 99% can buy into the new economy and cause job replacement; if you unemploy 30% of your workers at the same time, your economy shits itself pretty bad. Time is a major factor here.
The robots will probably cost $90k, $5k/year to maintain, and $15k/year to fuel. They'll also likely do the work of 5 $20k/year workers for that. ROI will be slightly over 1 year.
Billy Gates is posing a false dichotomy and misrepresenting facts, though: basically all businesses start with a small business loan, and $90k is nothing. I've seen people with little more than a high school diploma get near $1M out of a bank for an LLC to open up a gay-themed coffee shop (in an area with lots of gay people but, strangely, no gay-themed coffee shop; he paid the loan off in under 2 years, with a business plan that predicted break-even in 3 years and profitability in 5).
The basis of entrepreneurship isn't writing a business plan to make sure you know wtf you're doing; it's writing a business plan to convince the banks, VCs, or angel investors to give you money. Don't let people draw you into debates where you already look stupid by leading the conversation in a ludicrous direction not aligned with reality.
The bottom quintile of households already get 40% of their income from redistribution.
Actually, our welfare system is so shoddy the bottom quintile in the US usually live off what they have. I've worked with people who made under $20,000, no welfare, and supported themselves and a non-working dependent (girlfriend); it's doable, albeit shitty. Note that that's a full-time, 40-hour, barely-above-minimum-wage job (at the time, minimum wage was around $7/hr); most minimum-wage workers are getting part-time, unstable hours, so living off minimum-wage is hard because you don't usually actually get minimum-wage.
Look at the welfare system, though. Look at it. Let me break it down for you.
HUD provides housing vouchers for the lower of 1/3 of your rent or 1/3 of your income, month-to-month. That means housing assistance gets you less than 1/3 of your rent until you hit the point where you're below HUD-qualifying income but above 3x your rent--i.e. you get better assistance when you're better-off. HUD also only gives benefits to 25% of qualified applicants; the rest go on a waiting list and never get off.
SNAP programs are a shining example of successful welfare. SNAP programs are also said to pay roughly 70% of what people really need. Food, clothing, and child care needs aren't adequately covered, at all. Fortunately, you should have some income, and HUD will help you with the rent if you win the Welfare Lottery.
Then you have insurances. Unemployment Insurance, Supplemental Disability Insurance, and Old-Age Pensions. These are the most-successful welfare programs in the United States because they're the most-reliable; they're also woefully-inadequate, and only serve to slow the bleeding while your savings are drained by crippling month-to-month expenses that didn't seem so bad when you had an actual income. People say Social Security old-age pensions aren't enough, although I don't see why not--because I'm constantly controlling and reducing my expenses, and could live off the retirement benefit today. Unemployment is usually capped at 1/2 or 1/4 of your income, depending on state.
everything will be so cheap that even today's level of redistribution will mean enough for everyone.
That's actually what I've been saying about welfare: technical progress reduces labor to make things; reducing labor reduces cost by removing the wage-labor cost foundation (fewer labor hours = fewer wages paid to make a thing); prices must be greater than costs; and welfare becomes possible when the price of goods involved falls low enough to represent a small-enough tax to be sustainable.
I assessed as little as 17% to be adequate in 2013 for a universal basic income. The design of a UBI is actually more-critical than the amount, in that providing e.g. 25% on a UBI plan that doesn't collect and distribute in a stable manner will cause the system to fail eventually. I designed a Universal Social Security (USS) to address that.
People generally miss the cost of risk when looking at welfare. If a landlord rents to a low-income individual, that individual likely has little in savings. Low-income individuals as a group frequently have part-time jobs and can have their hours cut (i.e. unstable income while employed), or work in services positions which regularly get rotated out (i.e. unstable employment). This has implications for the cost.
A rental property isn't just building, taxes, and maintenance, with profit on top. The costs are building, taxes, maintenance, and risk. A single eviction can cost a landlord dearly; in some low-income areas, having a unit empty for one month--incurring no special costs--can negate that unit's entire year's worth of profit. Any event which can sometimes incur these losses is factored in based on how often and at what expense it occurs; that cost is added to rent.
Those are subjective measures. The objective measure of wealth is how much stuff you can obtain for the same amount of labor. If you work 40 hours and get 3 hens and the next guy works 40 hours and gets 4 hens, the next guy is richer.
It is unsurprising that there is resistance to this idea.The implications (more on that below) are horrific.
What are the implications? The most obvious is mass unemployment/under employment. This is going to create a huge disadvantaged class in rich countries.
Technical progress displaced guildsmen like gunsmiths, seamstresses, blacksmiths, and the like ages ago. Farmers are less than 2% of the labor force in the United States and other developed countries, down from 90% in the 1790s; the U.S. farm population peaked at 29,400,000 (43% of the labor force) in 1850 on 621M acres of land, and was 2,988,000 (2.6% of labor force) in 1990 on 988M acres of land.
The result? Averaging 5% unemployment, food has fallen from 40% of the median household expense (1900, farmers 38% of labor force) to 33% of the expense (1950, farmers 12%) to around 12% of the median household spending. The poorest American households spend 16% of their income on food; middle-class households eat out of home a lot and pay servants at McDonalds and Wendy's to cook and serve their food for them.
The reality of the last 40 years is that those with jobs work harder than ever for the same or less money in real terms.
Across my life from the mid-1980s to 2017, I've gone from $50 NES games to $60 XBox games and $20 Steam games. Inflation didn't keep up.
My $30/month land-line service from the 90s is now a $17/month mobile service with 2G/month 4G LTE and unlimited voice and SMS. The 90s era $10/month dial-up Internet could have been supplanted by $35/month ISDN on a $250 modem; instead, we got $40/month 1.2Mbit/s Comcast cable Internet on an $80 modem, and today I pay $87/month for 200Mbit/s.
Cell phones became available in 1983 for $4,000. I had a $200 rectangular brick for a cell phone in the late 90s. This became $300 flip phones; the Motorola V3 Razr eventually became a $50 phone, and I have a $350 OnePlus One now. The OnePlus One has far-superior capabilities to the $600 Compaq iPaq I had in 1996--which had a 400MHz MIPS CPU and 32MB of RAM, and stored its files in RAM across reboots (no NAND).
Food has gotten cheaper--marginally, about 15% of the median household's spending in 1990, about 12% now. That's total food, meaning it includes the (increasing proportion of) food bought out of home. If we look at just food in home, it's fallen to about 9%; and most people respond by simply cooking fewer home-cooked meals and using the money to buy more fast food or carry-out.
Incomes have increased faster than prices, dude. People keep repeating that the middle-class has seen no growth in wealth, and then started claiming they've seen a decrease in wealth, while the middle- and lower-classes have enjoyed more luxuries, higher-end technology (e.g. traction control and fancy radios added to cars; cell phones, smart phones, and Internet), and food, clothing, and utility costs representing a shrinking fraction of their incomes.
What the hell do you call it when the lower and middle incomes can buy more shit?
It's a hell of a lot cheaper to run a cafeteria. Have you never cooked for a party? Did you cook individual meals for people, or giant rectangular trays of casseroles and such? Now imagine if you got paid a wage and need 6 people handling the cooking and serving for 6 hours, instead of 1 guy and a double-oven prepping and cooking for 2 hours.
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A revenue tax would be complete bullshit. It taxes the movement of money instead of production. If you produce 1 million tonnes of rice, your tax system should capture a portion of 1 million tonnes of rice; income taxes on personal income and business profits accurately do that. Taxes on revenue would tax the simple movement of money, which would tax non-productive movement of money, and would effectively double-tax money. Prices of goods would go up, production would go down, jobs would vanish, and we'd get poorer.
Substituting less labor for more labor.
"Capital Input" is an abstraction. "Capital Input" is made up of goods (e.g. robots) created by labor, with the basis of their cost being... well, the wages involved. It differs from directly hiring labor only because it's in the supply chain and, thus, you're buying it from a business that has its own overhead (which may be greater than the overhead of a vertically-integrated monopoly) and a profit margin.
In other words: "Capital Input" is the same thing as corp-to-corp contracting of labor.
Taxing the robots will reduce the efficiency gain of the robots, which will prevent prices from falling in line with that efficiency gain, preventing people from finding themselves with the means to buy more, preventing the creation of new jobs to make and retail those additional things people buy.
In other word: robots will cause transitional unemployment ending in a shift of jobs over time. Taxing the robots will cause permanent unemployment.
Indeed. The core problem brought by increasing automation (which is inevitable) is that the marginal utility of labor decreases.
Increases.
Back in the day (1790), 90% of America's workforce was farmers. This was only 28% by 1900. By 1990 it was 2.8%.
In 1900, the median household spent 40% of its income on food. It was 33% in 1950, and 15% in 1990. It's 12% now. What happened?
We went from walking around with hoes, pulling plows with donkeys, and sewing seeds by hand to using massive tractors, big irrigation rigs, GMO, fertilizer, pesticides, and other intensive farming techniques. The marginal output of a single laborer's work--rather, the output of a number of labor hours--increased dramatically. The number of farmers decreased, the amount of land on which we farmed increased, the and total labor invested in the entire supply chain for a given yield of food fell dramatically.
In other words: Technology enabled the creation of more goods with less human labor.
Robots just enable production of goods with fewer human labor hours. They're more technology. A spreadsheet does a bunch of calculations for you, instead of having a bunch of accountants sit down with abacuses and tally numbers by hand--no different than a machine assembling cars from parts molded out of sheet metal that's unloaded, carried to the machine, and loaded into the roller by humans (who of course use fork lifts to do the heavy lifting).
There's this fantasy that humans won't be involved anymore. The fact is fewer humans will be involved in a given process. We keep calling people Luddites because Ludd's followers also believed things like the power loom would end all human labor, yet it takes an immense number of humans to run a factory making cloth--nowhere near what it took to make that much cloth before the robotic power loom.
So here's the other side.
All those cost decreases? The fact that you can buy more stuff today--not just that hard drives get cheaper per gigabyte or TVs fell from $4,000 for a 20-inch to $400 for a 65-inch, but that the middle-class income actually buys more--is built on the decrease of labor costs. Technical progress means 1,000 hours of human labor pumps out more crap.
So the proposal is to tax away those efficiency gains, preventing prices from falling (= rising more-slowly than wages). That sounds like a plan to keep people from getting less-poor.
Oh, okay, so let's see... you don't have actual data, just shit you made up. Got it.
When you have only a 60% labor utilization rate, it's impossible to have only a 17% U6 number, because that means that you're failing to count 23% of the population.
So a lazy stay-at-home bitch that thinks she's special and doesn't need a job because her husband makes all the money she needs and just does "housework" (lol like that's work) should be repeatedly beaten until she decides she wants a job and goes to get one to make the beatings stop? Got it.
No, seriously. There are people who, for whatever reason, are not trying to get jobs. They're not discouraged; they're not part-time workers; they haven't given up; and they're not on welfare. They simply don't need jobs, don't want jobs, and aren't trying to get jobs. Our labor force participation rate is unreasonably-high right now and a lot of people are trying to get jobs. It was relatively-flat at 58%-59% until some time around 1950, then suddenly spiked upwards.
You know, in 2002, the narrative was "big evil banks take all the money, so you need two incomes to get by because the economy is all fucked up". Today it's "labor force participation rate isn't 100%, so some people are choosing to stay home, so the economy is all fucked up".
So yeah, your position is you should beat your wife until she stops being a lazy cunt and goes out to find a job, even if you make $145k and live well-beyond comfortably, because that fat little bitch had better do something useful.
It was $2.85 in urban areas 2009, including social insurances; $1.14 in rural areas; $1.74 total compensation average in all firms. The Chinese workers engage in 2,222 working hours of labor per year (it's about 2,000 in the U.S.), at a current rate of 2,300 Yuan minimum hourly wage, equating to $1.80 of direct wage.
In 2009, the share of wages was $1.13/hr, and social insurances was $0.61. This suggests today's minimum wage compensation in china would be $2.77 of total cost, roughly 2.43 times the 2009 rural average.
If we assume (bad assumption) that rural vs urban compares the same way, then urban manufacture employee cost would be $6.925/hr, of which $4.50/hr is direct wage. The average would be $4.23, of which $2.75 is direct wage. In reality, the average Chinese manufacturer pulls roughly $3.61/hr of direct wage; the average Chinese manufacture compensation in total would be $5.56 today.
The average total compensation of an American factory worker is $78, but I've been using numbers like $21/hr + 18% + 6.4% (OASDI+HI) to project the cost of moving manufacture from China to America. I have vastly underestimated the total loss of American jobs that such a move would produce, methinks. For example: the break-even point for manufacture of Men and Boys's Cotton Trousers and Shorts in America is roughly $18/hr + 18% + 6.4%, or $22.39 total employee hourly cost; above that, you're losing jobs. At $21/hr + 18% + 6.4% ($26.12 total hourly cost), moving all MBCTS manufacture from China to the United States results in a net-loss of a little over 90,000 American jobs; at $18/hr ($22.39 total hourly cost), it's a net-loss of 0 jobs; and at $8.25/hr ($10.26 total hourly cost) you gain about 54,000 net new American jobs. Imagine what it looks like if the Americans cost $78/hr in total.
So, tariffs that make some goods more-expensive than others, trickling the cost down to the consumer and ultimately moving the bulk of the burden onto the poorest of poor?
The flat-tax equivalent rate is like 29.97% circa 2013. That's how much income tax revenue the government took. That doesn't count use taxes to which the lower-incomes are more exposed.
So, they didn't (past) pay some taxes. That's a government cash flow issue in the past.
Because this money is long-term banked, it's essentially removed from the economy--same as if you put it in a big pile and burned it.
The Federal Treasury maintains a 2% inflation rate by issuing new money. Mechanically, they buy Federal Treasury bonds back from big banks at an inflated rate; this gives those banks a major profit in newly-minted money. The Fractional Reserve System allows the banks to then lend 19 times as much money--if the Federal Treasury adds $1B, the banks can now loan $19B.
This money then enters the economy from two ends. First, consumers take loans to buy things ahead of inflation--cars, mortgages, the like. Second, businesses take loans to leverage their position in the market, which pays money outward; a sizable fraction of this leveraged money trickles down in the short term, whereas in the long term the bankable fraction of profits works its way up to a narrow band of business service providers.
These immediate payouts hit consumer hands and start their way upwards. This is a fractioning process: most revenue goes to wages, either directly or by purchasing services from the next business in the supply chain; some goes into business savings, investments in securities (money that just trades on paper but doesn't actually go to buy things, thus doesn't drive the economy by paying wages), and executive pay that similarly gets banked and invested.
The fraction that goes to wages circulates, and the fraction that goes to savings and investments ages: nobody with that much cash taps their savings to $0, so only the fluctuation in savings counts as active money. The portion that just sits is removed from the economy--we're back to Apple's $250B.
Okay, so we've established that the Federal Treasury effectively offsets the money sinking into static accounts by printing new money, and replaces it while pushing 2% inflation.
From here, we can say "what's wrong with that": if AAPL brought this money back and spent it (on what?), it'd essentially cause inflation in the same way as printing a ton of money. Just floating this money into US bank accounts would cause an enormous flurry of credit availability and... were you here for 2008? Banks try to issue all the credit they can.
For completion's sake: to get 2% inflation, the Federal Treasury has to offset labor force growth (10% more working hours, 10% more dollars) and technical progress (make 10% more stuff with the same labor, goods cost 10% less, you need to drive wages up ~11% to keep prices the same). Then, it needs to pop an extra 2% on top of that. With the money being taken out of the economy, the Federal Treasury has to replace that money as well to get back to the original cash basis.
As for loans, well. Inflation and all. You take a loan for a 30-year mortgage, you pay interest that's probably more than inflation. That's going to cost you. On the other hand, that's the cost of the house. The purchase price goes directly into the hands of the seller, who can spend it now; you stop paying $1,000 in rent and instead pay $1,000 in mortgage. Thing is, in 10, 15, and 30 years, 2% inflation means that $1,000 should be $1,218, $1,385, and $1,811; and you're still paying only $1,000/month as agreed in your mortgage contract.
In other words: loaning money into existence immediately drops a pile of cash into spending somehow, adding that to circulation; and the continuing inflation steadily lowers the amount of cash removed in exchange by reducing the fraction of per-labor-hour money it represents. Your mortgage payments shrink over time.
Further, the economy is essentially labor trade. The buying power of money essentially moves based on the productivity of labor, and technical progress which decreases scarcity and increases population just spreads the money thinner (prices come down, deflation happens). Inflation works by putting in
Uh, U-6 has been as high as 17% during the height of the recent recession, and is down below 10% now. Between 1995 and 2008, it oscillated between 7% and 10%. So says the authority that provides the U-6 measurement.
Try again. Use actual facts this time instead of some horse shit you pulled out of your ass.
Maybe that's what's wrong with you: your head is full of information that's not just wrong, but hilariously wrong.
Because somebody probably envisioned identifying teens sliding toward depression and advertising things at them like study groups, social activities, or other sorts of stuff surmised to help prevent teen suicide and whatnot; and a bunch of other people probably didn't think much of it, thus opening the door to allow marketers to target teens who are likely to do certain things on an impulse.
People in vulnerable emotional states are easily-influenced. Identifying these states is good; using them to manipulate people into exchanges which typically benefit you more than them enough that they tend to avoid said exchanges is bad.
That would be millions and millions of robots. Who operates and directs the robots?
Okay, let's play.
By all means: leave out health care, the relative cost of which has more than tripled since 1960, from 5% of GDP to nearly 18%
America's healthcare system has serious problems, depending on how you look at it. One of those problems is we're not allowed to just hurl barely-tested drugs at consumers and then retract them when a lot of people are injured by unpredicted side-effects; the FDA requires pharmaceutical companies to test the drugs on rats for 3 years, then to go through multiple stages of clinical trials, then to continue following patients for 3 years after approval to collect further data on side-effects in actual application. It costs roughly $315 million to get a drug FDA-approved, and fewer than 1 in 10 new drugs make it the whole way; stacking it together gets you over $3 billion to get a new drug to market.
On the other hand, technical progress has brought down the cost of medical devices and actual medical care procedures, while also improving lifetime wellness. The major driver of healthcare cost increases has been the prescription drug market, as described above.
In 1950, the median American household spent 4% of its income on healthcare; in 2000, it was 6%. The other side of this is people have been purchasing more and better healthcare, shifting their spending from mandatory costs like food and clothing (Clothing: 12% became 4%, and it's now around 3%).
Healthcare has arguably actually gotten cheaper; total healthcare spending has increased. I wonder how that happens. Clearly, the poor can't be paying all that much more for healthcare; and the middle-class is only paying roughly 50% more on-average as of 15 years ago. What do the stats look like now?
For July 2015 to June 2016, the lowest quintile (0%-20%) spent 8.4% on healthcare; 21%-40% income earners spent 9.7%; 41%-60% spent 8.8%; 61%-80% spent 8.4%; and the highest 20% income households spent 6.6%. 8.4%, 9.7%, 8.8%, 8.4%, 6.6%. 7.94% of the average spending of all consumer units. The average spending of all consumer units was $56,258, out of an average income of $72,990; the median household income in 2015 was $55,516.
By the by, the 5% number you used for 1960 includes things like preventative care, dental care, medical check-ups, hospitalization, and so forth. The 18% number you used includes things like family planning and nutrition programs. The current 8% number includes things that would be considered medical care, rather than new categories of nutrition programs. Try comparing the same things.
and housing costs have also risen sharply over the same period
That's actually not true!
The cost of housing per square foot as a percentage of consumer expense had fallen continuously until around the year 2000. Then: sale prices of houses started running up in a bubble.
What's interesting is mortgage interest rate reductions drove this bubble. That is to say: the house was a $120k house with an $1,100/month mortgage at the prior rate, and then become a $380k house with an $1,100/month mortgage at the new, lowered rate. The cost did run up thanks to some market fuckery (QUICK! ACT NOW! GET INTO YOUR INVESTMENT OPPORTUNITY!) followed by pure inertia.
So in 2015, the third quintile sent 19.6% of their spending to shelter (the total "housing" figure includes shelter, utilities, and home maintenance). Owned Dwellings cost 9.5%, with 4.2% going to Mortgage Interest; while Rented Dwellings represented 9.3%.
In 2010, the third quintile sent 20.6% of their spending to shelter. Owned Dwellings represent 12% of that, with 6.1% going to Mortgage Interest; Rented Dwellings cost 7.7%.
In 2005, Shelter was 19.5% for the third quintile. Owned Dwellings were 11.7% with 6.6% going to Mortgage Interest; Rented Dwellings were 7.2%.
Going back as far as 1989, shelter was 16.5% for the third quintile. Owned Dwellin
We can eliminate absolute poverty, but not relative poverty.
Profit margins tend to decrease as goods become cheaper. Luxury goods have smaller markets and, thus, the barrier-to-entry is high and competition is low; once they become cheap, markets become easily-captured and competition increases.
This is why businesses specialized to high-end luxury cars have operational profit margins in the 18%-23% range, while businesses specialized to economy cars have operational profit margins in the 7%-12% range. Seriously, dude, all of 5,000 units of whatever you're selling are being bought every year in the entire world; if someone tries to undercut your prices, undercut them back. This works less-well with food because literally everyone is buying and 1% success in the market at slimmed margins is an enormous amount of profit.
Why? Blacksmith jobs have been replaced with factories. The same labor that used to make 200 tonnes of iron in 1820 now makes 86,400 tonnes of iron (that eliminates 98.8% of ironmaking jobs). 90% of the United States labor force was farmers in 1970, versus 2.6% in 1990. Before 1948, the labor force participation rate in the United States was 58%-59%; it's now around 65% and peaked around 68%, and we have 5% unemployment.
Let's look at food.
United States, 1900. Farm population: 29,400,000. Farmers make up 38% of the labor force. The median-income household spends 40% of its income on food.
United States, 1950. Farm population: 25,000,000. Farmers make up 12.2% of the labor force (68% of farm jobs eliminated since 1900). The median-income household spends 33% of its income on food.
United States, 1980. Farm population: 6,000,000. Farmers make up 3.4% of he labor force (91% of farm jobs eliminated since 1900). The median-income household spends 15% of its income on food.
United States, 2012. Farm population including laborers, supervisors, and managers: 787,000. These farm workers make up 0.55% of all US wage and salaried workers (98.6% of farm jobs eliminated since 1900). The median-income household spends 12% of its income on food; it would be under 9% if they didn't eat food out of home (arguably as low as 4%-6%).
I'm pretty sure well-more than 50% of the jobs since 1790 have been eliminated from the United States. The above scales only labor force proportion, too; it doesn't account for things like productive output, amount of land worked, or the like.
For example: in 1890, 29,400,000 farmers (43% of labor force) worked 621M acres of land; in 1900, the same number of farmers (but only 38% of the labor force) worked 844M acres of land. You would expect that to be 36% more jobs, but it wasn't--so we could say we eliminated 36% of farm jobs between 1890 and 1900 (that would be the second-most-meaningful description, right after measuring how much actual product they made).
In 1990, 3,000,000 farmers worked 988M acres of land. By the above measure, we could say the 1890-technology would project 46,800,000 farm jobs to work 988M acres of land, and we have 300,000 farm jobs. Instead of a 59% increase, we've eliminated 89.8% of the existing jobs, and produced only 6.4% of the expected jobs.
Do you see 90% unemployment in America?
The normal automation narrative is that there will be 0 humans involved anywhere--making the robot, maintaining the robot, operating the robot, etc.--and the rich guy who own the robot will get super-rich while everyone else becomes unemployed.
I keep telling people we'll essentially pay those 3 humans instead of 30 humans, plus like 2 more humans to build/maintain/fuel the robot over its lifetime (about 0.1 human), and then be able to buy 9 times more stuff because we can employ 9 robots and ~28 humans plus 2 more fractional. They keep telling me the jobs will all go away forever. History is on my side, but most people don't have capacity to think, much less to analyze the future in terms of the past (which, oddly enough, is the basic facility which makes humans intelligent).
There are fewer jobs to make, maintain, power, and operate a robot than jobs replaced by that robot.
In total, there will be more robots and other non-robot jobs to produce more stuff because we don't have to pay the wages down through the whole structure (yeah 17 humans instead of 117? That's like, $825/hr less minimum-wages paid, and some of those 100 humans probably got paid more than minimum wage), so we have all this middle-class money to spend on other shit.
Obviously, if you unemploy 1% of your workers, the other 99% can buy into the new economy and cause job replacement; if you unemploy 30% of your workers at the same time, your economy shits itself pretty bad. Time is a major factor here.
First, the rich could just kill all poor humans
They wouldn't have the labor force to provide all the things their rich-people money buys.
The robots will probably cost $90k, $5k/year to maintain, and $15k/year to fuel. They'll also likely do the work of 5 $20k/year workers for that. ROI will be slightly over 1 year.
Billy Gates is posing a false dichotomy and misrepresenting facts, though: basically all businesses start with a small business loan, and $90k is nothing. I've seen people with little more than a high school diploma get near $1M out of a bank for an LLC to open up a gay-themed coffee shop (in an area with lots of gay people but, strangely, no gay-themed coffee shop; he paid the loan off in under 2 years, with a business plan that predicted break-even in 3 years and profitability in 5).
The basis of entrepreneurship isn't writing a business plan to make sure you know wtf you're doing; it's writing a business plan to convince the banks, VCs, or angel investors to give you money. Don't let people draw you into debates where you already look stupid by leading the conversation in a ludicrous direction not aligned with reality.
The bottom quintile of households already get 40% of their income from redistribution.
Actually, our welfare system is so shoddy the bottom quintile in the US usually live off what they have. I've worked with people who made under $20,000, no welfare, and supported themselves and a non-working dependent (girlfriend); it's doable, albeit shitty. Note that that's a full-time, 40-hour, barely-above-minimum-wage job (at the time, minimum wage was around $7/hr); most minimum-wage workers are getting part-time, unstable hours, so living off minimum-wage is hard because you don't usually actually get minimum-wage.
Look at the welfare system, though. Look at it. Let me break it down for you.
HUD provides housing vouchers for the lower of 1/3 of your rent or 1/3 of your income, month-to-month. That means housing assistance gets you less than 1/3 of your rent until you hit the point where you're below HUD-qualifying income but above 3x your rent--i.e. you get better assistance when you're better-off. HUD also only gives benefits to 25% of qualified applicants; the rest go on a waiting list and never get off.
SNAP programs are a shining example of successful welfare. SNAP programs are also said to pay roughly 70% of what people really need. Food, clothing, and child care needs aren't adequately covered, at all. Fortunately, you should have some income, and HUD will help you with the rent if you win the Welfare Lottery.
Then you have insurances. Unemployment Insurance, Supplemental Disability Insurance, and Old-Age Pensions. These are the most-successful welfare programs in the United States because they're the most-reliable; they're also woefully-inadequate, and only serve to slow the bleeding while your savings are drained by crippling month-to-month expenses that didn't seem so bad when you had an actual income. People say Social Security old-age pensions aren't enough, although I don't see why not--because I'm constantly controlling and reducing my expenses, and could live off the retirement benefit today. Unemployment is usually capped at 1/2 or 1/4 of your income, depending on state.
everything will be so cheap that even today's level of redistribution will mean enough for everyone.
That's actually what I've been saying about welfare: technical progress reduces labor to make things; reducing labor reduces cost by removing the wage-labor cost foundation (fewer labor hours = fewer wages paid to make a thing); prices must be greater than costs; and welfare becomes possible when the price of goods involved falls low enough to represent a small-enough tax to be sustainable.
I assessed as little as 17% to be adequate in 2013 for a universal basic income. The design of a UBI is actually more-critical than the amount, in that providing e.g. 25% on a UBI plan that doesn't collect and distribute in a stable manner will cause the system to fail eventually. I designed a Universal Social Security (USS) to address that.
People generally miss the cost of risk when looking at welfare. If a landlord rents to a low-income individual, that individual likely has little in savings. Low-income individuals as a group frequently have part-time jobs and can have their hours cut (i.e. unstable income while employed), or work in services positions which regularly get rotated out (i.e. unstable employment). This has implications for the cost.
A rental property isn't just building, taxes, and maintenance, with profit on top. The costs are building, taxes, maintenance, and risk. A single eviction can cost a landlord dearly; in some low-income areas, having a unit empty for one month--incurring no special costs--can negate that unit's entire year's worth of profit. Any event which can sometimes incur these losses is factored in based on how often and at what expense it occurs; that cost is added to rent.
A
Those are subjective measures. The objective measure of wealth is how much stuff you can obtain for the same amount of labor. If you work 40 hours and get 3 hens and the next guy works 40 hours and gets 4 hens, the next guy is richer.
It is unsurprising that there is resistance to this idea.The implications (more on that below) are horrific.
What are the implications? The most obvious is mass unemployment/under employment. This is going to create a huge disadvantaged class in rich countries.
Technical progress displaced guildsmen like gunsmiths, seamstresses, blacksmiths, and the like ages ago. Farmers are less than 2% of the labor force in the United States and other developed countries, down from 90% in the 1790s; the U.S. farm population peaked at 29,400,000 (43% of the labor force) in 1850 on 621M acres of land, and was 2,988,000 (2.6% of labor force) in 1990 on 988M acres of land.
The result? Averaging 5% unemployment, food has fallen from 40% of the median household expense (1900, farmers 38% of labor force) to 33% of the expense (1950, farmers 12%) to around 12% of the median household spending. The poorest American households spend 16% of their income on food; middle-class households eat out of home a lot and pay servants at McDonalds and Wendy's to cook and serve their food for them.
The reality of the last 40 years is that those with jobs work harder than ever for the same or less money in real terms.
Across my life from the mid-1980s to 2017, I've gone from $50 NES games to $60 XBox games and $20 Steam games. Inflation didn't keep up.
My $30/month land-line service from the 90s is now a $17/month mobile service with 2G/month 4G LTE and unlimited voice and SMS. The 90s era $10/month dial-up Internet could have been supplanted by $35/month ISDN on a $250 modem; instead, we got $40/month 1.2Mbit/s Comcast cable Internet on an $80 modem, and today I pay $87/month for 200Mbit/s.
Cell phones became available in 1983 for $4,000. I had a $200 rectangular brick for a cell phone in the late 90s. This became $300 flip phones; the Motorola V3 Razr eventually became a $50 phone, and I have a $350 OnePlus One now. The OnePlus One has far-superior capabilities to the $600 Compaq iPaq I had in 1996--which had a 400MHz MIPS CPU and 32MB of RAM, and stored its files in RAM across reboots (no NAND).
Food has gotten cheaper--marginally, about 15% of the median household's spending in 1990, about 12% now. That's total food, meaning it includes the (increasing proportion of) food bought out of home. If we look at just food in home, it's fallen to about 9%; and most people respond by simply cooking fewer home-cooked meals and using the money to buy more fast food or carry-out.
Incomes have increased faster than prices, dude. People keep repeating that the middle-class has seen no growth in wealth, and then started claiming they've seen a decrease in wealth, while the middle- and lower-classes have enjoyed more luxuries, higher-end technology (e.g. traction control and fancy radios added to cars; cell phones, smart phones, and Internet), and food, clothing, and utility costs representing a shrinking fraction of their incomes.
What the hell do you call it when the lower and middle incomes can buy more shit?
It's a hell of a lot cheaper to run a cafeteria. Have you never cooked for a party? Did you cook individual meals for people, or giant rectangular trays of casseroles and such? Now imagine if you got paid a wage and need 6 people handling the cooking and serving for 6 hours, instead of 1 guy and a double-oven prepping and cooking for 2 hours.
It said "fairly", not "in contract." It's whinery.