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The Robots Are Coming and Sweden Is Fine (nytimes.com)
58 points by prostoalex 10 months ago | hide | past | web | favorite | 73 comments

The title should be "Fine for Now".

Maintaining Sweden’s social safety net also requires that the public continue to pay tax rates approaching 60 percent for their current amount of displacement.

If automation starts to displace a huge number of people, and there is no job to transition, the social contract will break.

I'm really hoping we hit a star trek style utopia (especially in terms of energy and food) before we get close to social contract breakage. I fear we won't though, we already seeing severe signs of the social contract breaking in the United States.

> If automation starts to displace a huge number of people, and there is no job to transition, the social contract will break.

Break because of what?

If a job is stupendously productive because of automation, it can support stupendously high taxes too.

Only if the people pay, it sounded like the one of Swedish economists from the article think there is a limit to what you can tax people before the social contract breaks.

I'm assuming this applies to individuals and populations.

In a post-labour society, labour is completely divorced from productivity, so you have to tax productivity somehow to get the resources you need to take care of your population.

So somehow, sometime, we have to stop relying on income-tax, and start relying on some kind of productivity tax instead, and forge a new social contract based on that.

Otherwise we end up in the situation you describe, an ever-decreasing sliver of the population is taxed to support the masses. And even though their productivity is multiplied enormously by technology, a lot of people will still think it's unfair.

> So somehow, sometime, we have to stop relying on income-tax, and start relying on some kind of productivity tax instead, and forge a new social contract based on that.

I don't think that's actually true, absent tax evasion. Take the limiting case of the "fewer people being more productive" scenario- someday only one person in Sweden participates in economic work (who operates all the robots, or whatever.) Since all economic production is hers, her salary is essentially equivalent to Sweden's GDP. Tax her at whatever absurd rate Sweden would tax such a person, and you can definitely pay for the social safety net.

(Actually, Sweden collects much more in taxes in that scenario than in the present day, since the entire salary base is being taxed at the highest possible income bracket.)

This is perhaps counter-intuitive, and possibly irrelevant, because we're accustomed to high earners not paying taxes like ordinary folk do. In the above scenario, Sweden's sole worker would likely spend some effort trying to hide her income in the Canary Islands. Whether productivity-concentration harms social safety nets eventually comes down to the tax authorities' ability to stop that kind of behaviour.

Well, in reality the productivity gains usually go to the owners of the means of production, not labour. So if Sweden only required one person to actually perform labour, then that person would get paid a high salary, but the owners of the company doing that work would get all the profit, and you would have to tax them somehow. And they would do all they could to evade taxes.

So to reach that limit example, you would have both productivity concentration, and an enormous amount of capital concentration in the background, screwing things up, making it harder to reason about the example.

I think Blockbuster vs. Netflix is a very good illustration of what happens when productivity concentrates. With Blockbuster, you had 300k simple low-wage jobs. But they were distributed across the country, so their collective income taxes were also distributed into a lot of local economies, doing good locally.

Blockbuster went bankrupt, and Netflix took their place. So instead of 300k distributed low-wage jobs, you now have 10k high-skill high-wage jobs, but they're concentrated to LA and Silicon Valley. Those employees pay local taxes there, and nowhere else. So from a national perspective, you now need to re-distribute those taxes to the areas who lost tax revenue, somehow, without pissing off the employees, and without pissing off Netflix, and without pissing off the local government in SF and LA. Usually this is done through federal aid/job aid programmes that take money from richer states and distribute to poorer states, but that's an incredibly blunt instrument.

But if you were to tax productivity and if you were able to tax it locally where it's consumed, this change from Blockbuster to Netflix wouldn't have disrupted local economies. Because then it wouldn't matter how many employees did the actual production, or where they were located, and that's good for the places that productivity is concentrated away from.

(Unless, of course, you are of the position that fuck those guys for living in the middle of nowhere, they should move to the cities like everyone else.)

Anyway, tying it all back to the original point, productivity concentration necessitates some kind of new/stronger redistribution mechanism so the gains are spread across the entire population. Previously, and still, when we have income-tax and a high percentage of the population participating in the labour force, that distribution happens automatically.

Maybe a productivity tax to make sure the country as a whole captures part of the GDP, UBI to spread it equally across the population, and then local consumption taxes to redistribute to local governments? I don't know.

I like the idea of a productivity tax. I feel the "least" productive activity should get taxed the most. E.g. rent should be taxed higher than work income. It doesn't make sense that the highest earner in a job should be taxed at the same rate as a person sitting back and waiting for rent. Not sure about Sweden but in Singapore, rental is added to your total income from your job and taxed as a total.

I'm starting to believe that landlords just shouldn't exist. What is the benefit to society? We grant them the right to exclude others from the land, enforced by police, merely so they can benefit. The cost of the house is often less than the land! In that fashion, they are merely holding intellectual property. If tenants didn't have to pay the bank or a landlord they could often easily afford basic repairs by saving up, and we could run a public insurance program to help them do so.

Cost of resources was once the limiting factor for production, and as manual labour is automated it might be once again.

One idea is to tax natural resources higher, and labour lower, in order to incentivize more effective production. Of course with the risk that all we get is a new form of tax havens.

Precisely. The most wealthy people are also the most mobile and most able to jurisdiction shop. Wealthy Swedes may have a certain affection to Sweeden, but would probably move (to Singapore, for example) rather than pay 95% income tax.

Of course, if productivity is higher, then to pay for a certain defined minimum safety net, you can actually REDUCE the tax rate, as total income would increase.

The most wealthy from an income perspective also contribute the least — they tend to focus on staying rich.

If their take-home pay is still increasing, I'm not sure there can be all that much objection to higher taxes.

In theory, yes. In practice, it's almost a branding issue. Knowing that 60% of your money is being taken away from you is generally a bigger takeaway for people than the total amount being bigger.

Maybe they’re bright enough to see that it’s not taken and wasted, but becomes the foundation of their incredibly successful state. Not everyone in every country is blinkered by the ideology of the greediest, in the hope of joining them.

I agree and disagree. In a state with a single worker, that single worker is almost guaranteed to be a sociopath.

They likely don't care about other people. You'd have to frame it for them differently.

Perhaps the glory of an immortal title? Maybe the admiration of the populace? Something like that.

God King Emperor of Eternity?

I can see an egomaniac going for that.

The spice must flow...

> seeing severe signs of the social contract breaking in the United States.

The problem in the US is that the higher echelons don't believe that they should be part of that social contract. the social contract doesn't slip if everyone pays their fair due -- including those rich desk pigs who prefer to fatten their bonuses instead of upping their worker's salaries.

In the United States people making 250k plus, ~the one percent, pay ~54% of the income tax [1]. Poor people, approximately the bottom third, pay nothing in income tax.

I too want poor people to earn and have more money but it doesn't seem true that the rich aren't paying their fair due.

1 - https://taxfoundation.org/new-irs-data-wealthy-paid-55-perce...

Edit: To the people downvoting me, please clarify why. From my perspective I'm directly addressing a point in the conversation with a legitimate source. I don't see why this should be downvoted, so please clarify for me.

We really ought to ban the word "fair" from discussions about tax rates. Fairness is totally subjective and that just derails the conversation.

It would be more productive to focus on outcomes. How can we structure the tax system to prevent civil disorder ("let them eat cake"), keep people out of extreme poverty, and avoid burdening wealthy individuals so much that they emigrate to lower-tax countries?

Only if you define income taxes to only include a subset of income taxes and ignore social security. Further, income taxes are only a subset of the overall tax load and you need to take earnings with a grain of salt as multi generational wealth can accumulate without being considered as 'income'.

If you look at all federal taxes, as this analysis of CBO numbers does [1], then it seems that the top 1% take 18% of income and pay 28% of all federal taxes. So, you are right that the portion of all federal taxes is not as great as I made it seem in my parent comment, that comment only takes into account federal income tax. But, I believe the overarching point and conclusion still stands.

1 - https://www.factcheck.org/2008/05/top-1-what-they-make-and-p...

How do the counting is also really important. Note, links that's a decade out of date (2005) numbers and the newer numbers look a little different even using those metrics.

Also, CBO numbers significantly understate the earnings of the top 1 percent. Mark Zuckerberg for example has a net worth of ~70 billion yet that money is vastly greater than the sum of his 'income' over his lifetime.

You mean, that there's a progressive tax system rather than a regressive one? Yeah, that is a triumph of decency and something we should not take for granted! This is something we should try to do MORE of.

I think progressive taxes are fine, my point was that the rich are paying their fair share.

No, because they are getting wealthier at a greater rate than either the middle class or poor. The U.S. didn't used to have this problem when the upper tax bracket rate was above 70%. It's plausible it doesn't need to be that high if deductions aren't as generous as they were when taxes were that high (for more than a generation by the way, so it's not like extremely high taxes at the top brackets has some civilization ending result - we already know it doesn't, in fact it acts as a strong incentive to avoid taxes by taking deductions in creative ways which ideally also have a social benefit).

The "problem" is not the doctor who struggled through med school to make 250K a year. The issue is the billionaire making tens of billions a year (and in some cases paying LESS in taxes).

Let's not kid ourselves. Everyone making that much money forms a social class that works to reengineer society to protect themselves, doctors included. However, we have engineered the system to make it look as though they deserve that much money by working students to exhaustion and saddling them with debt and poor working conditions. If we changed that, it wouldn't seem necessary to let specialists earn 250-700k+ per year. It's hard to believe that any of this is necessary or wise in a medical system.

Professional guilds like lawyers and doctors also limit the number of people in the field to protect wages. The AMA has been essentially an enemy of the people that works to milk the CPT codes. The grift is that a procedure typically is X$ and takes Y hrs to perform. They recommend that some are easier and harder and create a cheap CPT code and an expensive CPT code. This seems fair. Then everyone marks all procedures that can be remotely justified as such as the expensive CPT. There are other grifts but this is one way that health care costs inflate over time.

I don't think either of those are a problem. The problem is that we need more healthcare, more jobs, better jobs, healthier food for the poor, better education, etc. If we have to tax the hardworking doctors, or take more or even most of the billionaire's money, then I'm quite sanguine about that. So be it.

I think using taxes as a weapon against people is wrong though. So - to say that because some billionaire pays a lower tax rate, because his income comes through capital gains, that we must punish him with steeper taxes, or a wealth tax, or whatever plan you suggest, then I believe that is not only unproductive but also immoral to do so.

The basic problem is that the government is a poor steward of our money. Take education as an example. The US spends more money per student when it comes to education, and doesn't have outstanding scores in math, reading, science, or any category that I'm familiar with. There are problems with our education system, it's unequally distributed, it's not preparing kids for the careers of the future adequately, and other problems - but what's the solution? Spend more money, tax more, and so on?

On a similar subject, why should we take more money from the rich, who already pay a disproportionate share of federal taxes, so that we can buy more tanks we don't need, invade foreign countries, overthrow foreign governments, staff military bases around the world, and waste uncountable amounts of money on silly military projects.

Wealth inequality is the better measure. And by that measure, wealth inequality is getting worse in the U.S. and indefinite worsening of inequality is untenable for a civil society and functioning democracy.

Also, all earned income (wages) is subject to payroll tax from the very first dollar and that is a tax on one's income. But setting aside FICA, there is a disturbing vulgarity in saying only poor people pay nothing in income tax, because rich people also pay nothing in income tax on that exact same amount of money. That's how tax brackets work. Person A makes $15,000 a year and pays no income tax; person B makes $1.5 million but likewise pays no income tax on their "first" $15,000. So I find picking on poor people, who pay a disproportionate amount of their income on sales and property taxes than wealthy people, rather ignorant and obscene.

The mere fact that wealth inequality continues to get worse does tell me there is a deficiency in tax policy. I don't really care about an arbitrary emotive like "fairness" - what I care about is avoiding the destabilization of civility and that is guaranteed to have a breaking point at a certain level of inequality. It is not necessary to enforce a classless, egalitarian society, in order to narrow the wealth inequally gap to something more sane and then maintain that gap (for those who want to protect classism, anyway).

One (absurd) solution would be to say, no income taxes beyond $127,000 (same as social security) and to pay for it, we'll just not have a military. The homeless person down the street wouldn't really notice. The homeowner would get very nervous. The international oil corporation would essentially self destruct. So in this case, The more you have the more you stand to lose.

Another (absurd) option, we could cut all discretionary spending in half. So, 1/2 size military, 1/2 size departments of state, health, homeland security, veterans affairs, education and the rest. This might be kinda workable, but we'd probably lose military control in the middle east, which is essentially access to all that oil. i think it'd be tough to enforce copyright without heavy state department involvement, which would risk a bunch of wealth.

I think the 1% get outsized returns from the stability of the government. If you can pick a set of departments to simply eliminate i'd love to see the set, and why it wouldn't risk current wealth. There are a few i'd be sad to see go, but you could probably eliminate education, energy (no more nukes though), nasa, interior, hud, and agriculture. that gets you fairly close to 200 billion, with about 400 billion more to go. those are risky, but probably survivable.

i dunno. I fundamentally disagree, the more you have the more you benefit from the status quo.

I agree that rich benefit more from the status quo than the poor. That's part of why I'm not bothered by the fact that the rich pay a disproportionate (mathematically speaking only) share of the taxes. Plus, a rich person can give up a third of their income whereas a poor person couldn't.

What I'm saying is that it doesn't seem true to say the rich aren't paying their fair due. If you think that, then please answer what percentage of federal taxes do you think the 1% should pay and why would that be more fair than what they currently pay?

if i could wave a magic wand, taxes would be strictly progressive. I understand the difference between income and capital gains, but i find Buffet's comments about 'lower rate than my secretary' frustrating.

I would support Paul Ryan's original promise that 'you can file your taxes on a postcard'. With the caveat, every other person and corporation also files their taxes on a postcard.

This, of course, strips a fantastic amount of subtlety and control. Subsidize what you want and tax what you don't is standard tax policy.

On the other hand, i prefer scheme to c++. so simple as to be completely transparent is better than fabulous complexity. But, it turns out that's not a particularly popular world view.

Buffet's comments are just nonsense though. He doesn't pay a lower rate on capital gains tax than his secretary does. Buffet is comparing federal income tax rate to capital gains tax, that's comparing two different things, like if I said I paid more in sales tax than the coupon rate on your savings bonds - maybe that's true, but so what?

The reason why capital gains are taxes less includes things like you were already taxed on the money when you earned it before investing it so the capital gains tax is the second time you're getting taxed on that money, and that capital gains tax affect the risk to return ratio of investments. In other words, if you are taxed on capital gains more that diminishes the potential gains of your investments, while leaving your potential losses alone. If the balance of risk to reward shifts too much towards "risk" then investments will fall and the whole economy will suffer.

I agree with you that our taxes should be simpler.

> the more you have the more you benefit from the status quo.

Also, as a general rule, the more land you own, the more you benefit from public expenditure. This is because the value of land rises as taxes are spent improving the surrounding environment (roads, schools, parks, etc). The 'return' on this investment is captured in property values and so is essentially a tax rebate for land owners.

> star trek style utopia

Utopia and dystopia may be a fine line, but I like the theory that Star Trek is a dystopic, culturally desolate future. [0]

[0]: https://www.youtube.com/watch?v=r1Kju_-1sYM

I am in a ds9/voy binge watching and I agree the federeation isn't the utopia as it's often mentionned but the arguments in the video are pretty weak (and uninformed).

Sweden is a sovereign nation with its own currency and a free floating exchange rate.

Therefore when the Swedish state spends money, people earn more from the production that induces. The machines are run for longer and more is made. Taxes then automatically recover that.

Extra Spending causes extra taxation.

The analogy is straightforward. If you have an advanced electrical economy you have to supply more power into the grid than is consumed to handle the phase shift of advanced inductive power plant. That extra power is then taxed back by the electrical grid 50 times a second.

You have to generate that extra power, and have wires big enough to take it, even though it is never actually used. If you don't supply it, then the motors just don't create as much real power.

To get the correct amount of real power out of a modern mechanised economy, the currency issuer has to spend more into that economy as reactive power and that then returns to the source as taxes and additional savings in the currency every cycle.

Mechanisation reduces the power factor of an advanced economy - requiring more reactive power, government spending, to be supplied to maintain the optimum level of real output.

Seems this is an experiment in the direction of UBI.

I don't ever remember signing a social contract. How about we just get rid of it, or at least call it something different.

Calling something a "contract" implies that other people agree to it. But in reality, the "social contract" that we follow now was created by people who are hundreds years dead, and never asked anyone else if they wanted to join it or not.

Maybe it is good that this "contract" is ending.

Difference between Northern Europe and the US: we minimised low wage work long ago with automation. As a business you want to AVOID employing people at all costs. The drive for efficiency and productivity is relentless.

As for manufacturing: yeah most of that already left for China/Asia in the 70s and 80s. And what remains is already computerised and done by robots.

If by "we" you mean the US, you're very wrong. Sweden has one of the lowest rates of "simple jobs" in the OECD, the demands for education and training to enter the Swedish work force are the highest in the EU.

Again, if you mean the US. If you meant Sweden, yep, what you said is very true, Swedish industry has a very long history of automation.


Bruh...he was obviously speaking about Sweden

Does "automation" mean immigrants?

It depends. Some work is more amenable to automation, and there are a number of large hi-tech factories (e.g. pharma) that are powered with a dozen of people. Same applies to huge ships with tiny crews, etc.

Some work is less amenable to automation, mundane care for the elderly, fixing plumbing, or even sweeping streets. This work either becomes very expensive, or is done by semi-legals who are willing to accept a much lower standard of living.

> "Does "automation" mean immigrants?"

> "we minimised low wage work long ago with automation. As a business you want to AVOID employing people at all costs."

Yeah, I read that. It's a nice theory, I am asking about the practice.

Given the abundance of low-skilled workforce, I have my doubts.

If that's the case, then your question as phrased is a little bit disingenuous or flamebaity. Asking for measurements or evidence of how this was implemented is legitimate, and something I, too, would be interested in learning; insinuating that your parent was being euphemistic or misleading is another. Please ask questions in good faith.

You could say that, or you could say that bragging about being better without a solid proof is disingenuous or flamebaity. Not unreasonable, is it?

In this particular case, I've seen scores of advanced economies where the eloi are clueless about the stinky and dirty morlocks breaking their backs to power the paradise, and I believe a tiny bit of blindingly obvious sarcasm is not an overreaction.


"Robots, or automation, are not the problem. Too little worker power is."

Ironically, the article doesn't really discuss any legitimate reason as to why Sweden is – or indeed will be – fine despite automation. It's all about what Swedes expect and how much they trust their present society to hold. Also, labor union propaganda, but that's tangential. So, the takeaway is that Americans believe business to be cutthroat and competition to be effective at weeding out the least optimized actors, whereas Swedes feel that employers will take care of employees because this is a nice Sweden thing to do, or something. Beliefs, expectations, feelings, self-affirmations. «Everything is fine, we can provide everyone with jobs, we can even support a large and growing number of uneducated refugees and help them get jobs, we just need to innovate faster than anyone to be sure that our market share won't ever diminish, it'll all work out in the end". Well. Guess it's pleasant to be so positive. But how is any of this even relevant to the issue? The issue being, mind you, automation-induced joblessness, not people's anxiety about it.

If people aren't scared of automation there won't be any political pressure to restrict automation. This will probably increase the adoptation rate so I'd say it matters a lot in the discussion.

There will be problems because of automation and I think most Swedes realize this. The safety nets that are in place provide a buffer, and possible solutions, if you should loose your job because of it. I'd say that's where the optimistic attitude in this article comes from.

Sustaining those safety nets is indeed going to be hard if unemployment increases. There probably won't be any "silver bullet" solution to the problem either.

[edit] spelling

Did some HMI before or troubleshooting offshore oil rigs in the North Sea, I can confirm that it is also possible to remotly have fully drilling operations from the shore.

This example is perfect for what a working symbiosis man / machine, not tehnology is the problem but value of human labour costs and machine investments. In Scandinavia this is not only fine but normal.

What I get out of articles like this is that economic policy can easily fix the loss of jobs due to automation, but we will likely never see such policy in the US. In other words, job loss due to automation is a problem caused almost exclusively by the political system in which automation happens, not with the automation itself. Societies that make the right political decisions to accommodate for automation, like Sweden, have an advantage over societies that don't, like the US. Outside of jobs, this is obvious from comparing the different societies' approaches to education, parenting, and other social necessities, IMO.

This really depends on what you consider to be an advantage. The US already has a massive advantage when it comes to industrial power and economic output. For those in power, does anything else really matter to them?

"For those in power, does anything else really matter to them?"

Probably not, but I'm concerned about society as a whole, not a few hundred or thousand rich people. They'd be fine anywhere in the world. I'm talking about advantages for regular people who want to make something of their lives and don't have millions or billions in the bank. For these regular people, industrial power and economic output doesn't mean shit when they can't get health insurance, education, or jobs. Industrial power and economic output are irrelevant when you're bankrupt because of medical bills which you can't pay because you don't have a decent job since a bachelor's degree costs more than a lot of houses and education below high school level is almost nonexistent.

Sweden is 'fine' and yet has to raise the retirement age to cover all the drain on their societal services?



With life expectation rising this seems a reasonable thing to do. How else do you want to deal with this?

That's fine for people who work desk jobs. But manual laborers tend to accumulate a variety of chronic injuries as they age. So increasing the retirement age means more of them will be forced to go out on disability pay instead of being able to retire with dignity.

Disability doesn't have to violate your dignity. That's a US problem. You can also give early retirement to people who can't work anymore. But in general something has to be adjusted for people getting older. It's simple math.

This is wrong. It's not needed because people are getting older, it's needed because the increase in productivity is not enough to cover expenses for long-lived retirees and other groups. If Sweden was 20% more productive, perhaps they could afford to just have longer and happier retirements. And if it was, say, 50% more productive, they could cut work week to 15 hours or decrease retirement age. Alternatively, they could cut other expenses (for example, stop bringing in more refugees) and still afford fixed retirement age. This "simple math" is not inherently linked to longevity of the Swedish elderly, it's the budget constraints that matter.

Edit: given that bringing up refugees invites downvoting, I want to clarify that this may not be among the major causes of Sweden's decision to raise retirement age (and is not the core idea of my message), but it's not negligible either: according to this guy http://voxeu.org/article/fiscal-cost-refugees-europe , current immigration policy costs Sweden 1,35% of annual GDP.

It's also important to distinguish between refugees versus other types of immigrants. Many of the people who have entered Sweden recently from Africa and the Middle East are just seeking a better life, and I sympathize with their situation, but legally speaking they aren't refugees.

Don't forget that the benefits from most productivity increases have been going to a few capitalists over the last decades and any further increase will probably be absorbed by them too. If this had gone to workers or retirement funds they probably could keep the retirement age steady.


Ok. Now go ahead and implement it. Sounds like a brilliant idea nobody has thought of.

Here is a related cartoon:


Stop allowing a flood on migrants for no reason other than a feel good policy. Social safety nets exist for the populace that contributes over time, not for new fully grown males to suddenly appear with or without families expecting benefits they and their predecessors never contributed to. Down votes show HNs continued ignorance to actual world situations.

Can you provide some numbers showing that the increase is due to those migrants?

But at the same time, the average life expectancy has also increased at a similar rate.

Edit: Adding to this the retirement age has not yet been raised, but is only proposed to be raised.

Retirement is a drain on social services.

Retirement isn't a drain, it is a social service. Unless you are wealthy, you cannot retire without corporate or government social insurance plans like pensions, social security, paid off mortgages, medicare, etc. Without these plans, we go back to the Dickensian past where the poor and old slept on the streets or in workhouses until they died.

Some might even say retirement is the goal of life, defined however the individual wants to define it.

Social services themselves are a drain on social services -- that is the sense in which I meant retirement is one.

Sorry, I realized that after I posted, but I disagree with the framing (based on my interpretation of the word "drain") that using them is inherently a bad thing or that they should be rationed in some way.

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