
Debtmageddon vs the robot utopia  - hobbyistbee
http://www.steamthing.com/2011/07/debtmageddon-vs-the-robot-utopia.html
======
DigitalJack
I see this point of view a lot in my internet wanderings. Honestly I don't
understand the line of thinking.

What do people think "the rich" do with their money? Store it under a
mattress? Keep it in an underground vault so they can go swim in it while
laughing maniacally?

Of course they don't. They invest it. They put it in Treasuries, Mutual Funds,
Individual Stocks, CDs, Money Markets, Plain Old Checking Accounts.

That money is most definitely _not_ sitting still. It is out there flowing
through the economy, financing mortgages, construction, businesses, and
probably anything else you can think of.

The only reason to tax the rich as far as economic stimulation goes, is if you
believe the Government can do better with the money than the market can. If
that is what you believe, fine, just say so and state that as your argument.

But this idea that somehow money is sequestered when owned by rich people is
absurd.

~~~
nagrom
Yes and no. They also use it to buy and store commodities, in the believe that
money will devalue and it is better to store it as gold or similar. This line
of thinking pretty much creates _no_ value - the money _does_ get kept in a
underground vault, albeit rarely in the shape of a swimming pool.

Where any investment happens also matters - I suspect that recently most of
the value of investments have gone to raising the quality of living conditions
for the middle classes in China and India, rather than in America or Western
Europe. In a sense, the planting is being done overseas, and the harvesting is
happening at home. One may argue that this is morally desirable, but it's not
clear that it is the outcome that would be chosen by enlightened American or
European self-interest.

Interest rates being as low as they are also seems to imply that there are few
solid value-creating investments to be had at home in a retail sense -
otherwise it would be trivial to invest money at a higher rate of interest and
become quickly more rich.

One final point - money is power. When money is so heavily concentrated in the
hands of very few people, you have the same very few people being very
powerful economically and picking winners and losers. This happens to be
_exactly_ the problem that a lot of people who are for market-driven economies
have with socialism/communism - power concentrated is too prone to failure and
not as great a driver for progress as power diluted.

~~~
white_devil
> They also use it to buy and store commodities, in the believe that money
> will devalue and it is better to store it as gold or similar

Yes, and it's worth noting that this pushes food prices up, which, in turn,
pushes poor people down.

------
michaelfeathers
The idea of 'Robot Utopia' is funny in a way. By most measures we are already
there in terms of technology, but the economy does keep opening new avenues
for work. The big question is what people would do if they didn't have to work
for their needs?

One answer is make-work, i.e., hobbyist jobs. The other is general hedonism.
Conservatives fear that the latter would be destructive - that it would lead
to widespread addiction and criminality. The question: "What would you do if
you didn't have to work?" can be answered in many different ways depending
upon a person's history, self-image and inclination.

~~~
ippisl
Michael , you say we're already in "robot utopia" in terms of tech but there
already new jobs. If i look at it from the position of capabilities, not
specific jobs, it doesn't seem that this is the case.

For example if you look at agriculture from the point of capabilities(physical
repetitive labor), you see machines replacing humans. You see same powers in
manufacturing.

But what about eye sight, coordination, adaptivity, ability to offer good
enough human service, retaining and sorting large knowledge bases,
intelligence and other capabilities ? Computers are improving in all those
capabilities, and contionously replace people.

The "robot utopia" will be when machines can do those things better/cheaper
than us. Then maybe the only capability that will be left is being an
authentic human, for jobs that people prefer authentic humans would do.

Whether humans have this advantage over machine replicas, how many jobs like
this would be available and what form this jobs would take(maybe being
humiliated as servants like so common in India today?) are interesting
questions.

------
panacea
Haven't read any comments here yet, but I firmly believe this analysis to be
spot fucking on. Will be interesting to find out why this critique which
aligns so closely to my own thoughts is 'wrong' or at least flawed.

------
pash
I like to read economics articles on HN because (a) I've been trained as as an
economist and (b) I like to read the opinions of other clever people, even
(particularly?) those who don't have any background in economic theory.

Let me make a few points:

1) Nothing the OP has written has anything to do with economics.

2) Who pays, which is the subject of the current "fiscal cliff" brinksmanship,
is almost entirely a political question, not an economic one. That is,
economists' insight into the present American dilemma is mostly limited to a
determination of how the distribution of tax receipts under whatever bargain
prevails will affect future economic growth. All other considerations are
political, and economists like Krugman and Mankiw who weigh in vociferously do
so as politicians, not economists.

3) Bailouts come in two distinct flavors: (a) those whose purpose is to
provide essential liquidity to the capital markets at the core of our
economies, while they're in distress, and (b) those that are basically
handouts to the politically connected. Almost always (a) and (b) overlap. In a
financial crisis, like the one we went recently went through, initially (a)
dominates—"Wall Street" bailouts, necessary bailouts, lead off. Sometimes, as
recently, (b) soon gain ground. The bailouts of Detroit, as with pretty much
all "Main Street" bailouts, are in the latter category. These are politically
motivated, not economically motivated, bailouts

3) I stand (hope!) to gain most of my future income from capital gains. I do
not believe that there is any strong argument for treating capital gains
differently from other other income as a matter of economic policy. There are,
of course, political arguments in either direction.†

4) As I've written in reply to other HN submissions, I see little reason to
believe that we are meaningfully nearer an economic singularity with respect
to robot labor than in times recently past. Capital has always eroded the
position of labor and forced workers into more productive roles that are less
directly competitive with machines. If the situation changes dramatically, it
will be clear in discussions here long before economists catch on, but we're
not there yet. Nowhere close.

† – I am very much an Internet libertarian (small "L"). I despise most taxes,
and I believe that much government spending is wasteful in the sense that the
money would be more productive, in net, in other uses. I also (b) realize that
taxation is as much about values, our values as citizens and as human beings,
as it is about economics. (I also am aware that that "the path to hell is
paved with good intentions" is close to being a theorem of public finance.)
Lastly, my motivation for studying economics has come more from an interest in
the various and common ways in which markets fail than from the ways in which
they work.

~~~
SideburnsOfDoom
> Who pays, which is the subject of the current "fiscal cliff" brinksmanship,
> is almost entirely a political question, not an economic one.

ORLY? There's a paragraph in the article which starts with "Proponents of
trickle-downism" and ends with "A dollar given to a poor man multiplies
faster, Keynes observed, than a dollar given to a rich man."

As far as I know, that paragraph is

1) Conventional wisdom, and not widely disputed.

2) Economics

3) Of direct impact on the political question of who should pay more tax,
seeing as removing a dollar of tax is the same as "a dollar given".

~~~
pdonis
_"A dollar given to a poor man multiplies faster, Keynes observed, than a
dollar given to a rich man."_

This may be conventional wisdom, but it doesn't make sense to me. It seems to
me that how much economic growth is caused by spending dollars depends on what
they're spent on, not who is spending them.

Growth caused by dollars spent on consumption is linear: the "size of the
economy" is just the total number of dollars spent. If people are buying more
stuff, the economy is larger; but that's all.

Growth caused by dollars spent on investment and innovation is exponential: it
increases the amount of stuff that can be had for a given number of dollars,
or even adds new stuff that previously could not be obtained at any price.

I think most dollars spent by both poor people and rich people are spent on
consumption, not investment. So it seems to me that finding ways to get more
dollars to be spent on investment rather than consumption is the best way to
increase economic growth.

~~~
SideburnsOfDoom
> This may be conventional wisdom, but it doesn't make sense to me. It seems
> to me that...

Uh huh. Please help me out with some links as to why Keynes was wrong on this.
He may be, but "seems" doesn't suggest that you have made much of a study of
it. I haven't gone much further in my studies, perhaps you could help me here?

> economic growth is caused by spending dollars depends on what they're spent
> on, not who is spending

Half correct. The argument is that an extra dollar in the hands of a poor
person is much more likely to be spent _sooner_ on some basic good like food,
and to another relatively poor person who will do likewise. i.e. with higher
_velocity of money_. <http://en.wikipedia.org/wiki/Velocity_of_money> The
article mentions this. You know about velocity of money, right?

> I think most dollars spent by both poor people and rich people are spent on
> consumption, not investment

ORLY? Most arguments that I have read on it claim that most dollars spent by
_rich people_ are spent on investment. i.e. Rich people can save and invest,
poor people can't. Saving and investment is slow velocity money storage.

In short, since money given to poor people will probably be spent a few times
over before it ends up in some corporation's coffers, why would "helicopter
money"
[http://www.guardian.co.uk/commentisfree/2012/jan/26/economy-...](http://www.guardian.co.uk/commentisfree/2012/jan/26/economy-
uk-high-street) be worse than the current policy of printing money and giving
it to banks who don't want to lend it out to any investment?

> Growth caused by dollars spent on investment and innovation is exponential.
> So it seems to me that finding ways to get more dollars to be spent on
> investment rather than consumption is the best way to increase economic
> growth.

please supply a link to an article about how "exponential innovation" is more
important than monetary velocity. It may be, but not because it "seems" to
someone. Right now, that's just gibberish to me.

~~~
pdonis
_You know about velocity of money, right?_

Yes, and the most common definition of "the size of the economy" is GDP, which
is, as I understand it, linearly related to the velocity of money. That's
another way of saying what I was saying, that economic growth due to spending
on consumption is linear.

 _Most arguments that I have read on it claim that most dollars spent by rich
people are spent on investment_

I'm not sure that's quite what they claim. They certainly claim that rich
people spend _more_ on investment than poor people, and as you point out, that
makes sense because they can afford to and poor people can't. But that's not
the same as saying that _most_ of what rich people spend is spent on
investment.

Spending on expensive houses, cars, private jets, yachts, traveling around the
world, personal assistants, etc., etc., is all consumption, not investment. As
far as I can tell, that's what most of rich people's spending is. The ones
that make the news, like Bill Gates or Warren Buffett, seem to me to be the
exceptions. But I would love to see hard data if there is any.

 _why would "helicopter money" be worse than the current policy of printing
money and giving it to banks who don't want to lend it out to any investment?_

I agree that "helicopter money" wouldn't be any worse than giving money to
banks that don't lend it out; in fact, economically speaking, "helicopter
money" might actually be better, since the money would actually get spent.
However, both of them are short-term solutions, like giving a nitroglycerine
pill to someone having a heart attack. Neither of them fix any underlying
chronic problems.

 _please supply a link to an article about how "exponential" innovation is
more important than monetary velocity_

I haven't seen my statement about growth due to spending on investment being
exponential phrased in exactly that way, but investment being equivalent to
compound interest, which grows exponentially, is a commonplace among
economists.

As for "velocity of money", try this article by Henry Hazlitt:

<http://mises.org/daily/2916>

Two key points, from the summary at the end of the article:

"Velocity of circulation is a result, not a cause. It is commonly a passive
resultant of changes in people's relative valuations of money and goods."

"V is never an independent factor on the side of money, because the transfer
of goods must speed up, other things being equal, to an equal amount. It is
just as valid to think of the velocity of circulation of money being caused by
what happens on the side of goods as by what happens on the side of money."

In other words, trying to "help the economy" by trying to speed up the
velocity of money is getting things backwards.

------
xivSolutions
I enjoyed the authors article. However, I think he misses the mark with some
of his assumptions. Unlike some in this thread, I am NOT trained in economics.
But:

1) I think the author incorrectly tries to nullify the family budget metaphor
for economic prescription. While any metaphor only goes so far, he attempts to
compare the micro-economic interactions within the family ("essentially
communist") with the macro-economic revenue/spending/balancing act for a
national budget. He misses the point that, in observing that we must
"understand a family as a group of people functioning a single economic agent"
we must consider the requirements of that economic unit to adhere to
reasonable financial policies, such as making sure revenues are sufficient to
cover debt service and expenses.

2) I think the author mis-characterizes the post WWII affluence of the
American economy as a result of the wartime government spending combined with
some magical wealth redistribution scheme inherent in a wartime economy. In
reality, I believe the great American prosperity was more to do with the
nation's near monopoly on manufacturing capacity after most of Europe was
decimated (and Japan as well).

3) I agree with the author that "trickle-down": economics (actually more of a
political thing than a real economic theory) is inherently flawed. I think he
also misapplies the family metaphor here, as well, mixing the micro with the
macro.

All in all this was an enjoyable and well-written article, and I appreciate
the author's ideas about the "Robot Utopia." I don;t agree, but what fun is it
if we always agree, right?

------
Nursie
See also 'Manna' and 'Robotic Nation' that must be over a decade old by this
point.

------
mpweiher
Krugman has just started a multi-part series on "Policy Implications of
Capital-Biased Technology", which I think is wonkish for what TFA is about.

[http://krugman.blogs.nytimes.com/2012/12/28/policy-
implicati...](http://krugman.blogs.nytimes.com/2012/12/28/policy-implications-
of-capital-biased-technology-opening-remarks/)

HN story: <http://news.ycombinator.com/item?id=4978136>

------
vaadu
It's odd that the word entitlements is no where in the OP. Entitlement
spending is the biggest contributor to the debt.

It's odd that the OP fails on basic math. If you took ALL of the money from
the top 10% wealthiest people and put it towards the debt it would barley make
a dent.

It's odd that the OP fails to see what's happened in other countries when the
tax rate is cranked up on the rich ... many leave the country. And many
outside entrepreneurs considering the US as a place to start a business will
take their ideas, their jobs and money elsewhere.

The debt will only get fixed when jobs get created, the tax system gets
modernized and entitlements get reformed.

~~~
subsystem
"It's odd that the OP fails on basic math. If you took ALL of the money from
the top 10% wealthiest people and put it towards the debt it would barley make
a dent."

The top 1% in the US has around $12 trillion in wealth, which is about the
public part of the debt ($16 trillion total).

<http://www.irs.gov/pub/irs-soi/12pwwinbulwealth07.pdf>

<http://en.wikipedia.org/wiki/United_States_public_debt>

~~~
moe
Thank you.

I found it hilarious how vaadu led his comment with "OP fails on basic math"
and then lands a turd like that...

------
001sky
Priceless dilletantism.

TLDR: "I'm not an Economist", followed by quoting Paul Krugman.

~~~
antihero
Well the fact that we're in worldwide recession despite being in a time of
extreme productivity and technology, is perhaps a sign that the "real
economists" and neo-liberals are fucking it all up. Elitism is counter-
productive.

So, care to actually present a counterargument or are you content to be an
obnoxious blowhard?

~~~
potatolicious
No, it really isn't a sign of anything. This is like blaming all professional
plumbers for your bath tub leaking.

This is a cynical and knee jerk commentary that's emblematic of the sort of
middle brow dismissals we've been working to limit on HN.

For all of the competing thoughts on economics, I don't think it's a stretch
to say it's enormously complicated. Even on the most cursory examination it
doesn't break down to "more productivity = better economy". "Real economists"
and "neo-liberals" may in fact be fucking it all up, but I'm quite certain
they'd have done no better if they modeled the economy like you have.

When your world view requires that millions of highly educated, trained, and
experienced people - who have pursued a rigorous, academic field of study for
decades - are _all simultaneously out to lunch_ , possibly maliciously, the
onus is perhaps on you to provide more substantiation than "they're fucking it
all up".

Side note: At this point I'd be very happy with HN being refocused on strictly
tech/startup related posts. Every time a more general or controversial topic
comes up it ends up very much like this thread. Unsubstantiated knee-jerk ad
hominem. Followed by equally unsubstantiated hyperbolic cynical equip.

~~~
Jare
> This is like blaming all professional plumbers for your bath tub leaking

A large amount of bath tubs and pipes are leaking, worldwide.

