The Robot Economy and the Crisis of Capitalism: Why We Need Universal Basic Income … The material prosperity that capitalism has wrought is the product of technology, as well as markets (and social norms and state institutions). Markets enhance the efficiency of allocation of resources – such as human labour – between competing projects, while technological innovations enhance the productivity of our use of those resources, the ability to produce more with less. As Keynes prophesised in his famous essay, "Economic Possibilities for our Grandchildren" (1930), the seemingly relentless trend of rising productivity promises finally to end the "economic problem" – the struggle to overcome scarcity that has characterised the human condition since our beginning. Finally, we can turn as a society to considering what our enormous wealth can do for us, rather than what we must do to get it. – AustralianBroadcastingCompany
Dominant Social Theme: We will run out of work, but we shouldn't run out of money.
Free-Market Analysis: Dominant social themes are almost always economically literate. But rarely do we discover linkages that allow the presentation of two at once.
This article offers one untruth – that robots will put almost everyone out of work – and then compounds it with another untruth … that only a universal basic income will salvage social prosperity.
It is difficult to decide which meme is more pernicious.
Technology is not to be feared. It doesn't ruin economies; it enhances wealth.
Meanwhile, a universal basic income will give Leviathan the kind of power that tyrants only dreamed about in previous epochs. It will provide an invitation to an eventual genocide. "Free" money is not free.
This is not a time for complacency. Unless we intervene, the same economic system that has produced this astonishing prosperity will return us to the Dickensian world of winners and losers that characterised the beginning of capitalism, or worse.
The problem is this: how will ordinary people earn a claim on the material prosperity of the capitalist economy if that economy doesn't need our labour anymore? The original industrial revolution was basically an energy revolution which replaced puny human brawn with fossil fuel powered machines that were orders of magnitude faster and stronger.
… We are now living through a second industrial revolution that is replacing puny human brains with machine intelligence. Any kind of work that can be routinised can be translated into instructions for computers to do, generally more cheaply and reliably than human employees can. That includes increasingly sophisticated cognitive labour like driving, law, medicine and document translation.
… This time technological unemployment may become a permanent fact that we have to deal with by changing how capitalism works.
… The cult of work has persisted long after it stopped really making sense and the material prosperity prophesied by Keynes came to pass. A great many people are trapped in jobs that are wholly or mostly pointless … Artificial intelligence would undermine most of those pseudo-jobs, to the extent that they are worth doing at all, while a basic income would provide us with the freedom as a society not to set out to create a new set of pointless jobs, as flunkies to the new upper-classes, say.
Finally we would be able to stop wasting half our waking lives on activities that really don't matter whether we do them or not. Finally we would all have the right to the dignified leisure of the gentleman, not the hopeless and morally stigmatised inactivity of the unemployed. We would be able to live our lives for ourselves – though whether we would use that freedom to embark on noble projects and philosophical contemplation, or merely to watch more television and play golf is another matter.
Surely, the financial illiteracy of the Age is captured in the above excerpt. The idea that machines will replace people is the worst kind of Luddite thinking. And the idea that this replacement – which won't happen – can be ameliorated by endless government money printing is just ignorant. We commented on some of this in a previous article, "Rise of the Job Scarcity Meme." Our analysis was based on a Fiscal Times article entitled, "The Rise of Robots – and Decline of Jobs – Is Here."
Here's how the Fiscal Times began its article:
Last night, 60 Minutes aired an interesting report on the rise of robots in the workforce – a subject we've covered extensively. What they concluded was the robots we're seeing aren't necessarily the R2-D2's and Short Circuits of science fiction – the ones that become so self-aware that they challenge our authority, or in the worst-case scenarios (think Will Smith's I, Robot or 2001 A Space Odyssey), stage a coup and take over.
… They're taking our jobs. Lots of them – and it's already begun … The percentage of Americans with jobs is at a 20-year low, according to the 60 Minutes report, and the largest, most influential companies that in the old days would have hired many thousands of employees, simply don't need as many people.
In 1979, for example, General Motors employed 853,000 worldwide. Today, Apple, Amazon, Facebook and Google have something close to $1 trillion in market capitalization. But together, they employ fewer than 150,000 people– less than the number of new entrants into the American workforce every month.
… Alan Blinder, an economist at Princeton, has been talking about how productivity increases in the economy are no longer transmitted to workers in the form of wages. Nowadays when we see productivity increases, [the financial benefit] ends up at the top; it goes to the CEO, to the shareholders, but workers don't get any of it. It's hard to have more prosperity under this system because as workers start to lose jobs and see lower wages, they can't participate in the economy as consumers.
Our conclusion refuted much of this: "[It] … is the rankest kind of nonsense. For one thing … people may gain more free time … If you don't accept this argument, and it is not a mainstream Austrian one, then certainly there is the argument that increased efficiency creates increased wealth … If industry is more efficient then more developments will provide more jobs with ever higher degrees of sophistication. Even if robots will have to be created to support these new developments, there will be plenty of employment."
We also pointed out that the main job destroyer is the modern, monopoly system that saps employment via monetary inflation and subsequent busts … "Don't be fooled. The market works. Robots won't steal your job. The Industrial Revolution didn't, either."
It is always the same: The problem is the marketplace; the solution is government … in this case, the "universal basic income," a program that will make privacy invasions of the graduated income tax look puny indeed.
We wrote about the universal basic income here:
We don't anticipate that these memes will subside any time soon. The rush is on to create further internationalism and Luddism will be recycled to justify yet another government program, this one the most pernicious and invasive of all.
No … there is only one way to solve the problems of the Modern Age: Educate yourself about market economics and take human action to make yourself, your family and your community as independent as possible.
Don't be frightened by the fearmongers. Don't be misled by the sophists. These are difficult times, but we compound them with financial illiteracy.