
Post-Scarcity Economics - amirhhz
http://lareviewofbooks.org/article.php?id=1845&fulltext=1
======
__itall
Investment bank ex-employee here. I'm pleasantly surprised that Hacker News
front-page has finally landed an article on the history of modern
macroeconomics whose author knows what he's talking about instead of masking
their ignorance with popular voodoo buzzwords like "Ron Paul" and "Bitcoins".

Ironically but predictably, very few karma points are given. I'm happy to find
this little gold nugget and the intellectual satisfaction that comes with
reading it.

~~~
rndmize
Articles like this (semi-political stuff) tends to get flagged and thus,
disappears from the front page at speed. When I clicked the link to read the
article, it was around #6 with 20-something points after 2 hours; when I
refreshed HN ten minutes later, it had gained ten points but fallen all the
way to the second page (~30 odd places).

I'd say there's a not unreasonable chance that the article was flagged because
a reader didn't like the history it puts forth.

------
panarky
"On the one hand, technology has made us all much more productive ... on the
other, jobs have evaporated."

"Most of us are working harder, for less money and with no job security."

My econ classes taught me that increased productivity causes short-term pain
for displaced workers, but results in long-term higher standards of living for
everyone.

That relationship seems to have broken down. What if the internet destroys
more jobs than it creates?

Is it really "post-scarcity economics"? Or is it the effect of digital
networks and rising inequality?

Jaron Lanier argues in "Who Owns the Future" that digital networks make the
economy work differently. Now the benefits of higher productivity get hoovered
up the elite few, leaving most people worse off.

Lanier argues that there has always been inequality, but the internet enables
a winner-take-all economy that keeps productivity gains from trickling down to
ordinary people.

I'd love to see a mathematical model that quantifies jobs and salaries lost to
"disruptive" new entrants, and how many jobs at what compensation levels are
created in their wake.

~~~
coldtea
> _My econ classes taught me that increased productivity causes short-term
> pain for displaced workers, but results in long-term higher standards of
> living for everyone._

That's ideology, not science. Economists sell ideology instead of science all
the time (for one, it helps them tout the "free market" from cushy government
or teaching positions).

The outcome described above is not inevitable, like gravity. It depends on who
has control of the situation and what the increased productivity is used for.

If the elites owning industry etc can get by by employing far less people, why
would they care about huge parts of the population not having a job or living
in slums? As long as they get to sell their products to a market (which can
even be abroad), they are fine.

------
brownbat
"There is a long history of exaggerated concern, rightly derided by
economists, with the replacement and hence displacement of workers by
machines."

\- Judge Posner

[http://www.becker-posner-blog.com/2013/03/automation-and-
emp...](http://www.becker-posner-blog.com/2013/03/automation-and-employment-
posner.html)

To be fair, the tone is stronger than his ultimate argument. He goes on to
outline four or five examples where the short term effects could be pretty
devastating.

It's important to note that in the long run, labor markets reach an
equilibrium, adapting to any current technological capabilities.

Then again, it's also important to note that in the long run, we're all dead.

------
will_asouka
Can anyone with more economic insight than myself comment on how increased
automation leading to higher unemployment (ie, self-driving car) might change
the recommendations? Are we back to the Basic Income? Seems to be an
increasingly relevant proposal.

~~~
zanny
I'm a software dude, not an economist, but as a guy on the Internet who reads
reddit and hacker news, I feel 15% qualified to answer this question!

I want to quote some passages from the article, which is kind of long, and I
think misses some of the point. All personal internet nerd opinion.

> Unemployment would drive wages down until, at some certain level, workers
> would be so cheap to hire that once again, men would be put to work and
> growth could return.

I think this is still true. The problem is that the price for human labor
right now is below the rate of a living wage. Since your productivity goes to
your bosses, but there are so many laborers looking for income, the ratio is
that all labor roles can be filled by those already subsiding on other income
sources, so the real value of labor is abysmal. How else do you have a massive
dine in restaurant industry where waiters are paid $3.50 an hour and hope for
the charity of their customers to make ends meet?

When human labor is no longer worth the cost of living, people just don't
work. So even if you make more $7.25 jobs, there is little incentive to pursue
them, especially through picking up and moving across city lines, because you
will still be in the red and still stuck in a perpetual cycle of debt and
despair.

> Only one thing makes entrepreneurs expand capacity and that has nothing to
> do with government tax policy.

Tax policy has a _huge_ impact on expanding a business. Taxes are, in the
short run, a direct percentage loss of productivity. You take a portion of
profits and that directly influences future hiring gains. The taxes might long
term provide benefits beyond the short term costs (ie, roads, power, police)
but those are not in the span at which businesses make hiring decisions.
However, reducing taxes today doesn't cause a hiring boom if there is no
demand. It is a downward cycle of a dozen factors, but tax rates _are_ a
factor on the bottom line behavior of businesses and consumers. Taking their
money by gunpoint to use it elsewhere only works if the elsewhere gets you
some significant returns on your investment, from an economics perspective. A
_lot_ of government spending doesn't do that if it is for the purpose of
playing empire or placating special interests.

> I favor government spending targeted on making the lives of citizens richer
> and more cultured. Some may say, this is elitist of me, to which I reply,
> what is wrong with elitism?

I strongly diagree with this on the principle that culture is relative. I may
not want your culture. You argue your culture matters because it contains the
_wealth and power_. Which I feel is the root cause, and back to your topic,
why basic income is relevant.

Money has concentrated itself _so heavily_ away from the masses and into the
owners of the means of production and the capital that supports it that it
causes the majority of economic slowdown because people spend incrementally
less on incrementally less immediate things the richer they are. You
eventually get to the point where the wealthiest are putting their money not
in immediate goods and services that churn money and keep the engine going but
into longer term finances like bonds or dividend investment. Investing money
doesn't have the immediate return effects spending it does, especially when
the best companies to invest in are also the ones _flooded_ with money, with
no demand to grow their business into (because the only people with the income
to realistically grow their profits by real percentages are already the
wealthy sponsors of the business) so they can just sit on troves of money and
the dividends that come out are the slow siphoning of capital out of the
abundant laborers and into the rich, because they don't recoup the absurd
amount of money they make their employers through the combined productivity of
technology and automation.

Automation isn't any different than how the green revolution worked. You take
the work of many and, with machines, are able to perform it with many fewer.
The reason for basic income is that we, economically, have collectively agreed
_we don 't need idle hands anymore_. We don't have hay to bale, we don't have
crops to pick, we don't have anything we are willing to spend a living wage on
to pay anyone for to have them exert their meat bag appendages to perform
basic tasks.

Which drops the floor out of the middle class, because as the article
describes, the entire system of the 60s / 70s worker boom was the ability to
walk into town and find a dozen windows looking for fleshy arms to move and
interact with things. Today, your machines do that.

Principally, the solution is that everyone should have equal shares in all
businesses and from there profit off the productive gains all this innovation
and automation gives society. If everyone was equally invested in automated
work that produced more than the labor is worth, and gained equally the fruits
of this process, there would be no recession, everyone would be getting checks
from the productive overhead of society. That would also drive up labor wages,
because if you don't have to slave for food, you probably won't. If you have a
choice, you will demand more for the trace menial work left, where every year
more and more of it is being sent to obsolescence.

However, we don't have that. We have an absurdly imbalanced class system where
the supermajority of people hold no assets of any form and live day to day on
whatever they can scavenge, and we have very few who control the capital,
infrastructure, and productivity, and also gain all its fruits.

I think the root problem is inheritance. Entirely. If resources were
redistributed through the masses when someones life ends, then their remnant
productivity goes back into the collective, and each person has an
opportunity, from a foundation of plenty, to collect more of that prosperity
and concentrate it for accomplishing great innovations or productive gains. If
you can be born into wealth and plenty, it perpetuates the concentration of
wealth and plenty over generations. The richest today can sometimes be traced
back to the richest of a thousand or more years ago - prosperity breeds
prosperity, and you get the cards stacked profusely in your favor when you are
raised amongst plenty in a society of scarcity.

But just eliminating inheritance today doesn't solve the problem, because the
problem is that too much is concentrated in too few. Inheritance _caused_ it
(in the way Bill Gates became the wealthiest man in the world by virtue of his
parents already being wealthy, that combined with a brilliant intellect and
probably well instructed business sense available only to the already
prosperous was able to create Microsoft - so if you are born genius with rich
parents, you have a much better shot at becoming the richest man in the world,
though I won't argue there aren't outliers).

Likewise, I'm not arguing "boo hoo, Bobby got his Dad's millions and I just
got the furniture and funeral costs". It is that by being privileged, and
being able to pass that on to your children, over _centuries_ , enables class,
and that enables the powerful elite to out-compete the rest by virtue of
status, and by having an elite, they can restrict new admission to prosperity
through their own connections and back doors. They get not just the equity,
they get the networking, which is cultural, and spans generations. If everyone
got reset, the elite culture would be the entrepreneurs and geniuses that can
move the world, not the ones who rolled a good set of birth parents and got
beyond-world-class education.

So the problem at hand is how to peacefully get that absurd concentration of
capital reversed, but market economics won't do it, because we are already
beyond a threshold where consumers had any power in the relationship.
Globalization infused the powerful with absurd amounts more markets to extract
revenue from, and the article touches on this, but I don't think reaches the
critical aspect - globalization enabled the privileged of small spaces to
extend their reach, _economically_ over the entire world, where previously
they could only extend their reach in that way _militarily_.

So the problem is getting the prosperity of society back into the hands of
everyone, because if everyone were investing, buying, and providing goods and
services, the economy would be at its peak efficiency.

It isn't just employment that contributes to economic growth, it is the
prosperity and wealth of everyone. The article documents clearly how debt
artificially grew the economy, but that is the negative of wealth, and it
stripped the middle class bare. Now we are entering another spree of
concentrated wealth and the means of production by automating the creation of
goods and services, so that whoever holds the keys to the machine makes all
the money. That is honestly unsolvable in traditional economics, and the
article also hits that - the economics of last century don't apply to the
modern global economy, and you have to question your assumptions.

PS: 1600 words. Might be my HN record. Fuck.

~~~
nbouscal
> Tax policy has a _huge_ impact on expanding a business.

No, absolutely not. As someone who has run a small business, there is exactly
one thing that made me hire a new employee: too much work (aka demand). That's
it, period, absolutely nothing else. Taxes did not have a single thing to do
with it. Barring tax policies far removed from everyday reality in the U.S.,
hiring a new employee to meet demand will always be more profitable than
letting that demand go unmet (or to a competitor). On the other side,
regardless of how lenient tax policy gets, no business owner will hire an
employee if that employee is unnecessary to meet demand. This is Management
101 (I mean that almost literally, my degree is in Business Administration,
but the actual class was probably 302 or something).

~~~
zanny
The new hire puts you up a tax bracket, and you lose profit to gain
productivity.

Your immediate finances can't support adopting a new hire or division because
tax proceeds from your profit margin limit your growth potential.

If you can immediately make a return on a new hire, with instant productivity
gains and immediate bottom line improvements, yes, you absolutely make the
hire. But that doesn't always happen, and in major skill movements across the
labor market it never happens. You need financial capital to invest in
broadening or transitioning your business rather than just increasing labor to
meet more demand, principally because in this modern age it is easier to
automate increased demand (circumstantially, but frequently) than to hire more
workers to cover it. IE, if your market grows 10%, you might as well invest in
a contracted software team to automate your systems to enable your current
labor staff to be 10% more productive than to hire 10% more people.

~~~
nbouscal
That's not how tax brackets work. Tax brackets in the US are marginal, which
means that the increased rate only applies to income above the threshold. It
is impossible for an increase in income to be accompanied by a larger increase
in tax burden.

(I guess I should mention that the Business degree came with a Professional
Accounting option.)

------
keenerd
I once wrote a very ranty essay on the same topic: [http://kmkeen.com/post-
scarcity/](http://kmkeen.com/post-scarcity/)

It needs some work yet and is not terribly well written. But it goes along
well with the original post, providing things for we (as individuals) to do
that don't require massive policy changes that the article suggests.

------
33a
Good luck getting any of that done in America with the current house of
representatives. It is currently politically impossible to get anything done
at all in Washington. Our current congress can't even vote on simple stuff
like raising the debt ceiling.

