
Without right policies, automation risks shift of income from labour to capital - denzil_correa
http://blogs.lse.ac.uk/politicsandpolicy/without-the-right-policies-automation-risks-the-transfer-of-income-from-labour-to-capital/
======
dang
All: if we're to have non-boring discussion on a hot+divisive topic like this
one, please have the restraint to not post anything unless you have something
thoughtful to say. Most first reactions are reflexive, i.e. predictable, i.e.
uninteresting, i.e. off topic for Hacker News. Repetition is the enemy of
curiosity.

A good antidote is to stop and ask yourself if your comment engages at all
with anything specific and/or unpredictable in the article. If it doesn't,
consider not posting it; odds are you're moving discussion quality in the
wrong direction for this particular message board.

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

------
taurath
Popular uprising can and does occur over these power imbalances - however
historically you need a level of animosity from the monied and powerful
towards the underclass, and in this era the capital rich have been very
innovative at manufacturing consent and quelling, appeasing, or splitting
discontent.

I’m reminded of what’s been going on in Iran the past few weeks - one of the
most grasping anecdotes is that poor and middle class people are seeing the
children of the powerful absolutely flaunting their wealth, driving maseratis
and Porsche’s down the streets of Tehran, and spending more on dog food for a
month than people make in a year. Those optics (just how rich the rich
actually are compared to you) have been hidden from a lot of American society
via exclusive neighborhoods and private airports and a general amount of
discretion.

We also don’t have discussions around class because our class hierarchy
involves a lot of different verticals by virtue of not having only one
culture. The elites of the culture that one belongs to look both a lot more
attainable, or at least more inclined to interests that align with the rest of
the culture.

So instead of the conflict being up the ladders, the conflict happens between
different ladders. That’s at least how I view the current political climate.

~~~
pembrook
Except in the US you can just turn on the Kardashians. New money in the US is
not at all hidden and flaunted just as it is everywhere else.

The difference between wealth in frontier/emerging market economies like Iran
and developed market economies like the US is corruption.

If you see someone driving a Lamborghini in Tehran, it’s fairly safe to assume
acquiring that car involved a level of government corruption. If you see
someone driving a Lamborghini in any US city, it’s fairly safe to assume that
person acquired the wealth to purchase that car through lawful free market
activity.

Is there corruption in the US? Of course. But it pales in comparison to what
you find in developing economies.

~~~
ethbro
I'd argue that new money (e.g. Kardashian, <$250 million in the immediate
family) is a drop in the bucket compared to real American, old money wealth.

E.g. the kind where your son being set up to run for President in 20 years is
negotiated at a private golf club while ensuring the references are lined up
for his children to get into the right schools

------
throwawayjava
The linked IPPR report is worth reading. For this crowd, the section on
"partial automation" is probably most important. Web dev is... up there... in
terms of potential for partial automation.

There are a few important observations that the article and the IPPR report
don't stress enough.

1\. The jobs most likely to be automated, will be automated using technology
that's inaccessible to the employees whose jobs are being destroyed.

This point is often optimistically papered over using observations like "coal
miners can go to coding bootcamps!" I know a few truckers and I have no doubt
that each of them could go through a relatively short coding academy for web
development work if it became a "do or starve" situation. But I doubt that
most of them could become much more specialized autonomous vehicle software
engineers, either due to raw intellectual ability or -- more often -- due to
an inability to make a substantial half-decade investment in retraining (most
of these folks would need to (re-)learn a lot of high school algebra).

So just because we're replacing truck drivers with programmers, doesn't mean
that the folks displaced by self-driving are somehow getting jobs that were
created via the destruction of their prior employment opportunities.

2\. "Partial Automation" could mean less hours worked, but is more likely to
mean lower pay and more hours worked, and not all "partial automation" is
equal. I.e., to destroy trucking as a middle-class profession, you don't need
a self-driving truck. You just need to automate enough of the hard stuff so
that anyone can learn to drive truck in a week.

I think it's useful to separate the partial automation that de-skills work
(level 4 autonomy for trucks) from the partial automation that simply means
less equally-skilled work (web dev). The former creates more job
opportunities, but turns a middle-class job into a low-class job. The latter
just eliminates from middle-class jobs altogether.

~~~
snarf21
I agree that there won't always be new jobs for those that are lost. There is
some hope that the truck drivers can become mechanics and robot repair persons
even if they can't learn coding. There is also a hugely underfunded part of
our society that a lot of jobs will have to become in the future (imo) around
elder care. Basically, low skilled people whose job it is to help other
people, likely paid for by the government.

~~~
throwawayjava
But truck drivers are paid _substantially_ more than the lowest educational
rung in the nursing hierarchy.

------
ryandrake
At least in the US, the “labor share”--which is the fraction of income that is
paid to workers in wages, bonuses, and other compensation--has already been
steadily declining. According to the Economic Report of the President (2013)
[1], the labor share fell from 72 percent in 1980 to 60 percent in 2005.
Increased automation can only make this problem worse.

1: [https://www.gpo.gov/fdsys/pkg/ERP-2013/content-
detail.html](https://www.gpo.gov/fdsys/pkg/ERP-2013/content-detail.html)

~~~
runeks
Automation is not a new phenomenon, it’s what has been making us wealthier for
the past century and a half.

Labor share actually went up for 1950 to 1970, and I don’t think increases in
automation were absent in that period: [http://www.macleans.ca/wp-
content/uploads/2012/09/fredgraph_...](http://www.macleans.ca/wp-
content/uploads/2012/09/fredgraph_labour_share.png)

~~~
petra
It's possible that automation worked to decrease labor share in that period,
but other factors(communism, GI bill, etc...) had a stronger influence in the
other direction.

~~~
runeks
Sure, that’s possible. But unless we can point to supporting data, it just
amounts to seeking to reinforce our preconceived notions.

~~~
shkkmo
Of course it's not possible to show cause and effect between labor share and
abstract 'automation'. Especially since not all automation is equal in this
regard. Automation in some areas may increase labor share (accessible
automation like PCs and washing machines) while others decrease it
(expensive/in-accessible automation like assembly lines and machine learning).
This means that automation could increase labor share one decade and decrease
it the next as the types of automation change.

However, the argument for a current/recent causative link between the two is
not a "preconceived notion" but rather a reasoned hypothesis arrived at based
on observation of trends and application of logic to economic theories.

It is more reasonable to suppose that:

overall, automation has had a role reducing the labor share (which has been
going down despite a couple of brief spikes in the 50s and 60s)

than to suppose:

overall, automation has been increasing the labor share, but this is
overshadowed by other causes which have been decreasing labor share.

Thus, if you want to argue for the later supposition, the burden of proof is
more heavily on your shoulders to explain the other causes which somehow
outweigh the effects of automation on the economy.

------
kelnos
I think an interesting thought experiment around this is:

Imagine we could automate literally every job. Even jobs that install,
upgrade, and maintain the automation are automated. Any "work" that anyone
wants to do is effectively unnecessary and would be considered volunteerism or
someone learning and practicing new skills to expand their horizons. There's
also artistic work; even if we had "creative AI" that could create music,
radio, television (all completely lifelike CGI, of course), etc., there'd
surely be a desire from creative people to still do this sort of work because
they enjoy it.

Regardless, in this world, no one has a job and therefore no one gets paid.
How do people live? Who gets what? Obviously you have to distribute "wealth"
(whatever that means in this kind of society) in some manner that is
independent of a person's contribution to society, since, by definition, it's
not necessary to contribute to society at all. But how do you decide who gets
how much? Do you just distribute the fruits of automation entirely equally
among every person in the world?

Obviously we're many centuries or millennia away from this scenario, if we
even ever get there without destroying ourselves in the process. But I think
there needs to be some replacement for people whose jobs get automated away.
Since our civilization still requires work in order to progress, I don't think
we should just give those people a monthly check and say "have fun not working
anymore", but at the very least we need to help these people along until they
can find a new, better job. Perhaps companies that eliminate jobs due to
automation should be required to pay out some portion of their new profits to
employees who lost their jobs for a certain period. Think of it as extended
severance pay. Some form of government assistance could also be an option
after the terms of the severance pay expire, and could be funded by corporate
taxes or simply a new branch of an expanded unemployment insurance program.

~~~
bertjk
If every job is automated, someone will invent a new job that isn't. There
will always be some people who will only be content when they have some amount
more wealth than their neighbors, and will be willing to work to make up the
difference.

~~~
supreme_sublime
If Earth reached that kind of point, I could certainly see people attempting
to colonize other planets, to mine asteroids and all of the labor associated
with that. I really think a lot of this automation eliminating labor talk way
early. There was similar talk a century ago.

~~~
kelnos
Sure. I'm talking about an unimaginably far away future when we've colonized
all planets in the universe that we care to, and have unlocked every
imaginable and unimaginable secret before us.

Obviously this is a future that's wildly fantastic, and one we're unlikely to
ever attain, but... that's part of the thought experiment.

------
colemannugent
IMO, there will always be work that needs doing. Once a particular kind of
work becomes worthless another will replace it.

Will the rapid increase in automation cause a "correction" in the labor
market? Yup. Will it negatively effect lots of people in the short term? Sure.
Will automation destroy the labor market entirely? No.

Even if a majority of jobs were in creating automation you still have to pay
those people to automate.

I am wary of the people who feel the need to try and prevent the correction by
way of government regulation. That seems like an easy way to create artificial
markets like the housing bubble of 2008. At least at the current rate of
automation there is not going to be a sudden massive collapse.

~~~
shkkmo
Nobody is claiming the labor market will be destroyed.

> Once a particular kind of work becomes worthless another will replace it.

Yes, but the question is if the new jobs will pay, in aggregate, as much as
the jobs that disappeared:

"Aggregate wages will be reduced if workers are substituted for technology
without new jobs of equivalent worth in aggregate wages being created
elsewhere in the economy."

> I am wary of the people who feel the need to try and prevent the correction
> by way of government regulation.

I'm not sure exactly what you mean here. The only way to prevent the
correction(s) is to prevent the automation(s).

There are many ways we can make the correction(s) less painful. We can provide
funding for re-training. We can provide unemployment benefits. We can provide
basic income.

~~~
marcosdumay
> Nobody is claiming the labor market will be destroyed.

Well, let me claim it then. The labor market will eventually be destroyed.
That's the end goal of automation and it is an achievable goal. It's very
likely decades away what makes it both too far to be an emergency and too near
to ignore.

~~~
andrenth
The auto industry is heavily automated and yet more people than ever work on
it now.

~~~
kilotaras
If you're talking about US that's incorrect. There's a fall from peak 1.3m in
2000 to 940k in 2017 employees in automanufacturing[1] despite total
population rising from 280m to 325m. Percentagewise it went from .46% to .28%
of population.

[1]
[https://www.bls.gov/iag/tgs/iagauto.htm](https://www.bls.gov/iag/tgs/iagauto.htm)

~~~
andrenth
A 0.2% fluctuation is noise and doesn’t detract from the point. According to
the automation fear mongerers we should be seeing massive unemployment.

~~~
kilotaras
That's not a 0.2% fluctuation, but 1.6x decrease. Treating it as 0.2% would
treat completely wiping automanufacturing jobs as "only", 0.46% fluctuation.

~~~
andrenth
Again, where is the massive unemployment?

------
DoreenMichele
Decrying the lack of education of laborers is a bit of a red herring. The
Industrial Revolution led to both a rise in standard of living for commoners
and education reform (ie expansion of education) .

Off the top of my head, the average education level for women in Lincoln's era
was 2nd to 4th grade. They were destined to be homemakers. The world did not
think that needed an education. Lincoln's wife had a 12th grade education. She
was considered headstrong and difficult. Her own child had her committed to an
asylum, iirc. My opinion is that basically her high education caused de facto
aberrant behavior for a woman. She had crazy ideas like wanting to make
decisions for herself and her era did not tolerate this well.

Now, a woman who drops out of high school is viewed as an uneducated loser who
failed to do the minimum. Twelfth grade is considered bare minimum acceptable
for a functioning adult in the US today. That expectation apparently grows out
of the evils of automation of the Industrial Revolution "taking" jobs. Keep in
mind the US school schedule provides spring break for a week and summers off
because historically even children were expected -- aka _needed_ \-- for
planting crops in the spring and tending crops during the summer.

Yes, we need to design good policies that help effectively distribute this new
wealth across the population. That kind of goes without saying in my eyes. It
is an unprecedented level of wealth. Of course it means we are in new
territory requiring new policies.

That does not mean it needs to be framed as a doomsday scenario. Hopefully
folks will be proactive about this rather than reactive. Waiting until the
peasants are revolting to conclude that maybe your policies are wrong, broken
and stupid is the unnecessarily hard path forward.

Some sources:

[http://www.econlib.org/library/Enc/IndustrialRevolutionandth...](http://www.econlib.org/library/Enc/IndustrialRevolutionandtheStandardofLiving.html)

[https://www.slideshare.net/mobile/KristinaBowers/educational...](https://www.slideshare.net/mobile/KristinaBowers/educational-
reform-1790-1860)

~~~
caseymarquis
I take a bit of offense at casually pairing not finishing secondary school
with status as a "loser". I don't want to derail the disscussion, I just want
to express support for my fellow dropouts. Many of us are quite successful.
That said, if you're a dropout and reading this, go get a GED and follow it up
with an associates degree. It's definitely worth your time and effort, and
it's pretty inexpensive.

------
lr4444lr
Since the 2nd derivative of population has been negative for quite some time,
maybe this is a good thing?

------
yuhong
The current debt-based economy fundamentally depends on stocks going up every
time debt increases.

------
frgtpsswrdlame
If the interest of individual business is to automate away your workforce but
the interest of general society is to increase employment we're at a bit of a
crossroads aren't we?

Perhaps Marx was right and it's time to move to a new phase of history.

~~~
vkou
The interest of society is not to increase employment - the interest of
society is to increase prosperity.

Rounding up all the unemployed people, and forcing them, at gunpoint, to dig
ditches and fill them will certainly increase employment, but will not do
anything worthwhile for society. (I guess the ones that survive might end up
in better shape.)

Having them fix potholes or educate children will increase employment, as well
as prosperity. (Setting aside the obvious moral problems of the means by which
this took place.)

Rounding them up and putting them into workhouses, where they build things for
the benefit of a few well-connected individuals is how we have traditionally
done this. It combines the worst of both worlds.

What people forget is that jobs are the means, not the end.

~~~
colemannugent
I agree with your point on increasing employment, but I disagree as to the
"interest of society".

There is no one interest of society. Even defining prosperity is relative to
who is talking. Having the wealthy subsidize the prosperity of the poor is not
very prosperous for them.

~~~
vkou
It's true that society has no particular interest. An ascetic might take issue
with increased social prosperity, as would, for entirely different reasons, a
workhouse owner.

------
em3rgent0rdr
Isn't the transfer of income from labor to capital a _good_ thing?

~~~
QasimK
Only if capital is equally distributed, otherwise you end up with large
numbers of people who cannot earn an income (or significant income) which I
can only imagine negatively given how willing current holders of capital are
to share their wealth.

------
llimllib
risks? We're well down that path, aren't we?

------
ams6110
Well that's great. Give everyone an index fund when they are born; by the time
they turn 18 they will have their basic income.

~~~
QasimK
Children already have different starting positions in the "race" from even
before they are born from a variety of different factors but most factors are
likely linked to the wealth of their parents (their education, their careers,
how they value their children's education, the amount of money they spend on
their children, the opportunities they have access to etc. etc. etc.).

Giving every child an index fund (which should probably start being accessible
when they are teenagers and become fully accessible in late 20s) would only
solve some of the broader problems beyond the article.

I also think it just isn't going happen because it effectively devalues the
wealth of the wealthiest. It's like a wealth tax, right? Also, if everyone has
100-10000K it probably doesn't mean the same thing it means now. The general
problem, as stated in the article, is the distribution of wealth - but the
wealthy want to stay wealthy not be equally wealthy.

Norway successfully implemented a sovereign wealth fund - currently work
nearly 200k per citizen - on the back of their finite natural resources (oil),
and I think that is the model that the UK (my country) should have followed.
Otherwise, the sources of the funds is likely to be more direct taxation which
doesn't seem likely to actually happen.

~~~
lr4444lr
_Norway successfully implemented a sovereign wealth fund - currently work
nearly 200k per citizen - on the back of their finite natural resources (oil),
and I think that is the model that the UK (my country) should have followed_

Are you only interested in Norway and the U.K., or do you not see a likely
fallacy of composition here?

~~~
QasimK
I selected a successful example of an attempt at a sovereign wealth fund (in
fact the only example that I know), and an example of a country that chose not
to implement a sovereign wealth fund despite being the same situation. I'm not
entirely sure if the examples I chose constitute a fallacy. I was merely
suggesting one approach that could work for some countries to establish equal
funds for their citizens. Some countries may not have access to abundant raw
resources though.

------
swayvil
Will any policy keep the wolves from eating everything? I don't think so.

~~~
adamch
From 1910-1945, each country's richest 1% lost a lot of their wealth, all
falling to (somewhat) similar levels. But in the time since, different
countries 1% have built up wealth at very different speeds.

This suggests that a country's policy can actually have some effect - a lot is
beyond each country's control, but it's not hopeless.

This is based on reading Thomas Piketty's "Capital in the Twenty First
Century" (I'm halfway through) - really good read if you are interested in
this.

~~~
americanjetset
I would wager that the two World Wars impact on capital had a lot to do with
the decrease of the 1%'s wealth.

~~~
abakker
Not to mention absolute destruction of capital. Not just casualties of war,
but capital investments that are either lost or used up in the process of war
(airplanes, boats, fuel, etc)

~~~
americanjetset
This is basically what I was referring to, along with the redistribution and
redirection of capital towards the "war effort."

------
justin_vanw
COMMENT REMOVED

~~~
frgtpsswrdlame
>Is the right policy a heavy emphasis/propaganda campaign advocating birth
control among people who are no longer employable in this future distopia?

You think there is a genetic component to their unemployability? This is even
beyond social darwinism, it's straight up eugenics.

E: I just saw your edit:

>Eventually this will be solved with genetic manipulation of children, of
course, which will eliminate any kind of permanent underclass that develops,
but will also be the beginning of trans-human civilization.

The only explanation for genetic manipulation ending any kind of permanent
underclass is if you believe that underclass exists only because of genetic
reasons. You don't believe that do you?

~~~
justin_vanw
COMMENT REMOVED

~~~
throwawayjava
_> However, people tend to move towards communities of their same 'status'_

This makes no sense. A smart but poor kid does not have the option to move to
a rich suburb with excellent schools.

 _> so if you have a really smart kid you aren't nearly as likely to find that
kid still in the trailer park when they are 30 as one of their more average
peers._

1\. But, you're just as likely to encounter that extra bright kid smoking pot
in a trailer home in 20 years. Poverty is a hell of a burden and barrier.
Intelligence can help you _stay out_ of poverty, but it's far less powerful
when you want to _get out of_ poverty. And can even function as a
disadvantage.

2\. Furthermore, lots of dumb but rich kids will go on to six figure incomes
for the rest of their lives.

Intelligence isn't as strong a determinant as you claim, in either direction.

~~~
justin_vanw
> Intelligence isn't as strong a determinant as you claim, in either
> direction.

Your claim is incorrect.

[http://www.emilkirkegaard.dk/en/wp-
content/uploads/Intellige...](http://www.emilkirkegaard.dk/en/wp-
content/uploads/Intelligence-and-socioeconomic-success-A-meta-analytic-review-
of-longitudinal-research.pdf)

EDIT: over the course of one generation, higher intelligence leads to a
dramatically higher income. In the long run, if this effect continues, this
will be compounded as higher intelligence parents are also higher income
parents (by hypothesis).

~~~
throwawayjava
From the abstract:

"The results demonstrate that intelligence is a powerful predictor of success
but, on the whole, not an overwhelmingly better predictor than parental SES"

I.e., intelligence is about as likely to explain success (or lack thereof) as
parental income. This is exactly what I was saying -- if you want to guess
whether a 5 year old is going to succeed, take a look at their parents.

In short, I don't think this paper is the home-run for your case that you
think it is. If what you're claiming is true, we'd expect intelligence to be
radically better as a predictor than SES. But it isn't.

The paper also notes some important criticisms that cut that right to the core
of your use of this paper in the context of the "nature vs nurture" debate.

Edit: the second component of your edit (" In the long run...") is absolutely
_NOT_ justified by the paper you cite, and is wild conjecture at best.

~~~
justin_vanw
I didn't advocate neutering the poor, and I strongly disagree with your
suggestion that we murder rich people and take their stuff.

~~~
throwawayjava
Fair enough. I've stricken that sentence.

