Because of Machines,Computers=Job Loss:New Econmomic System Required

Your economic model is incomplete. Economic output includes both goods and services. Obviously until quite recently most economic output was indeed goods: food. Even in the middle of the 19th century about 98% of the human race were trapped in "careers" in the food production and distribution industry.

But today that ratio has been turned upside down, at least in the developed nations. Farming has become mechanized. As a result the industrial economy is able to produce more types of goods, many of which would have been considered frivolous luxuries a century ago, and many others which were simply unimaginable, such as professionally performed music available 24/7. But there has also been an explosion in the type and quantity of services available from a workforce that is no longer tied to the farm. Fast food, babysitters, athletes, artists, teachers, these are just some of the services that were only available to the aristocracy, or not at all, in my great-grandparents' era.

We have also become what Toffler calls "prosumers," people who produce things for their own use. Obviously at the dawn of the Neolithic Era (the Agricultural Revolution) just about everybody was a prosumer of their own food, although they'd trade with their village-mates. But today we do our own plumbing and remodeling with all the DIY tools that modern industry manufactures for us. These days lots of people routinely do their own photography and other similar tasks--not just dedicated hobbyists. And look at what you do with your own computer every day: finding and extracting information, organizing it, and using it for work or pleasure. How many DIY databases are on your hard drive, even if they're just spreadsheets? Can you imagine how much clerical labor would have been required to compile that much information fifty years ago--if it were even possible?

I've been saying that for years, and I see it happening all around me. Capitalism in any serious non-theoretical form arose after the Industrial Revolution, because only then was there enough surplus wealth in existence, and enough non-food-related business opportunities, to turn that surplus wealth into capital by investing it. In the past about all you could do with surplus wealth was sit on it or spend it on prodigal consumption.

But, without realizing it, what most people are angry at when they criticize capitalism is not the investment of surplus wealth in a cycle of increased productivity--which is a textbook definition of the word--but rather the dominance of the economy by corporations. The corporation is a creation of government; it only exists because governments everywhere have passed laws specifically to allow corporations to be formed. The gigantic projects of the Industrial Era--steel mills, transcontinental railroads, etc,--required enormous concentrations of capital, more than any individual possessed. In the past, there were only two ways to raise that much capital:

• Borrow it. The problem with this is that you have to put up collateral and if the project fails the bank will take away your house and your kids' college fund.
• Acquire partners who put up their share of the money. The problem with this is that you have to share the management and execution of your personal dream with a bunch of other guys who don't know as much about your business and in any case have different ideas so you dissipate a lot of your energy arguing.

At the same time, the government was having a problem of its own: As democracy replaced feudalism, the aristocracy was dying out--often violently, e.g. the French Revolution. All those earls and baronesses had served a very useful purpose: their outrageous antics inflamed the wrath of the citizens, so they were distracted from the even more outrageous antics the king was doing.

So bingo, they solved two problems at once.

• Making corporations legal allowed entrerpreneurs to sell stock. Stockholders have no claim against your personal assets if your project fails. And they have very little say in how you run your business. Sure, theoretically they vote at stockholders' meetings, but very few of them bother.
• Corporations became the new aristocracy. People get so pissed off at them that they don't see half of the really bad crap that the king (or Congress) is doing. Even today in the U.S. recession, most people are much angrier at the corporate leaders than they are at government leaders. Yet it's the government who passed all the laws that made the corporate antics even possible, much less legal.

Our problem is not capitalism. Surplus wealth has to be managed in order to become capital that is used productively. Half the world tried the other method of letting the shit-for-brains bureaucrats in the government manage their nation's capital, and they ended up producing a negative surplus so their economies collapsed. Capitalism allows the people who have the most to gain or lose, and the most familiarity with the business involved, manage capital: the people it belongs to. It's one of those things that evokes the remark, "It's the worst system in the world, except for all the others."

Our problem is corporatism.

As I have also said before on SciForums, corporatism is dying out in the Post-Industrial Era. The projects of the Information Age do not require enormous concentrations of capital. I have a friend whose son and his wife emigrated to Estonia with nothing more than their life savings and founded a software house that is now fabulously successful. The information infrastructure is not capital-intensive. China is providing telephone service to its entire population without chopping down forests and turning them into telephone poles! An increasing number of people do their jobs over the internet and with cell phones, so they don't need to drive to work. The need for highway construction will abate. The second-order effect of all this will slowly begin to cascade down through the entire economy, as people need to buy fewer industrial tools such as cars, and demand for the resources to build them will drop in synch, such as steel and petroleum.

The manifestation of this is already visible, as corporations are turning from production to scavenging. They're buying up each other's corpses and desperately pulling a few billion dollars' profit off the carcass, before going belly-up themselves and being eaten by somebody else.

Sure a few gigantic corporations like Microsoft and FedEx will survive, because they provide the physical infrastructure of the Information Age. But most business will be smaller, which makes them more efficient and responsive to market forces. You certainly won't see corporate lobbying dominating the U.S. Congress in fifty years.

Again, you're completely overlooking the gigantic service sector of the economy. It's as if you're writing this in the sixteenth century. As people spend a smaller portion of their income on food and other physical necessities like housing and clothing, they have more to spend on services.

And there's no limit to the types of services people will provide and purchase, except their imagination. The guy across the street runs a business with several employees, driving around town and cleaning up the dog poop in people's yards--their own dog's poop! Health care has become a huge economic sector and employs millions of people who are not doctors and nurses, as everyone can afford to take better care of themselves and live longer. Physical therapy is booming as people have more time for sports. How about travel agents; how many people traveled for pleasure a hundred years ago? As education spreads and everyone expects their kids to go to college, textbook editing has become a major occupation. 500 channels of TV employs a lot of programmers, announcers, technicians and actors. Wedding planners, dog walkers, talent scouts, the list grows every day.

You're talking about one-off manufacturing, which would have been an oxymoron thirty years ago. completely automated construction of unique individual products. Industrialization without the assembly line! CAD/CAM can do this today, although it will be doing it even better, faster, cheaper and easier in ten years. Furthermore, once the tools mature the internet will allow the product to be manufactured at the user site rather than a thousand miles away. This will be another arrow in the corpse of the transporation industry, which is arguably the biggest villain in the fight against pollution and resource waste.

Government and corporations have always been in collusion. They're the ones with all the power so they serve themselves and each other first. Duh! As I noted, government created the corporation in the first place as a convenience for itself.

As the corporation wanes in the Post-Industrial Era, what we need to watch for is the government's next trick. They're not going to spend forever propping up their buddies in the corporate executive suites. As soon as they've outlived their usefulness they'll be cut loose.

What new artifact are they going to create next, to hide behind while they manipulate us?

Nothing is ever 100%. Automation will increase but it will probably never be literally 100%.

Unemployment statistics in the West are not comparable over time. In the past women were never counted in the labor pool. In good times they got jobs and hired babysitters, in bad times they stayed home and became houswives. This cycle was never reflected in the figures. Today a large percentage of American women (sorry I haven't got the figure handy) are included in the employment/unemployment figures. But they still have other ways of tweaking them. Part-time jobs generally don't count, so if someone who is "unemployed" finally gets a job working for ten hours a week that keeps him out of bankruptcy, it probably won't register. Young people who give up looking for work, move back with their parents and pursue an advanced degree, don't count as unemployed. Immigrants without legal documents don't count as either employed or unemployed, and they make up about 4% of our population.

I agree with the notion that underlies this thread: There's plenty of wealth, it's just not distributed very evenly, and in some cases it seems downright unfair. I insist that you can blame much of this on the government, at least in my country. The last time I saw the data analyzed, it worked out this way:

• If all the levels of federal, state and municipal government in the USA would take all the money they collect in taxes specifically to "devote" to their welfare programs, and simply divide it up and hand it over to the poor people, every family which is now below the poverty line (around $17K per year right now) would suddenly have an annual income of $40K!

We can bitch all day about the excesses of corporate America and the tragedy it imposes on our people. But the real culprit is the government! It creates negative wealth, by paying thirteen layers of civil "servants" to sit around all day and "administer" each other!

This is exactly where I started, if you'll recall. Government created the corporation to fill the role of the vanishing aristocracy. We're all riled up about the evil done by the corporations, so that we don't even notice the far greater evil done by the government! My example above represents the gigantic evil they perpetrated when they nationalized the charity industry in the 1930s: Government is a less efficient provider of charity than the absolute worst private charity that spends most of its money on phoning you at dinner!

This cycle has been going on since the Industrial Revolution started, but I think you're missing the key factor: Everyone works less because there is less work to do. In preindustrial society most people were farmers who typically worked 80-hour weeks, averaged over the whole year. By the middle of the 19th century, government had become a major industry, the first "knowledge workers." The work week of federal employees was 60 hours. By the end of the 19th century, when most Americans were still farmers, mechanization had reduced their work week to around 60 hours, while the growing number of people working for wages had a work week of 48 hours. In the 1920s Henry Ford realized that the coordination and concentration needed for an assembly line required alert workers, and he shortened the work week to 40 hours, which became a standard for the vast majority of Americans in the 1950s, when industrialization had turned farming into a minor occupation.

The twilight of the corporate era has driven American business leaders crazy in their futile attempt to keep their way of life viable, and they have stretched the average non-union worker's week back to 50 hours, but in Europe 40 is still the standard and in many places the week has been shortened even further.

There is less work to do, so the most sensible thing to do is to divide it evenly among the workers, who will continue to have shorter work weeks than their ancestors. Since in aggregate the economy produces ever more goods and services, the actual surplus wealth generated by all this work is not shrinking and in fact is rising, so the weekly wage of a worker in my scenario would rise, or at least not fall, even if he works fewer hours than his parents did.

There will surely come a day when the average work week is ten hours, and the people who work will be just as prosperous as we are, and almost certainly more. Everyone will have more time to be prosumers of their own goods and services, or simply to enjoy as leisure, in ways that we can't imagine.

What we have to make sure is that the total wealth is distributed... well let's say humanely, if not perhaps totally equitably. Inequality is inevitable, but let's try not to have people literally starving while others have private islands. Unfortunately it's government who gets to shape the future, and humaneness is not one of government's guaranteed principles.

We are. The circulation of printed newspapers is dropping so fast that the medium will disappear within my lifetime. I now buy books and magazines on my Kindle. Advertising continues to be an execrable waste of paper, but as the U.S. Postal Service fades into oblivion, Madison Avenue is going to have to get with the program and concentrate on electronic media.

The only place that I see paper not disappearing is in the halls of government. Unfortunately as an editor and writer in a bad economy I do most of my work on government projects, and I am astounded by the volume of paper the average government employee uses every day: something like 20 pages compared to six for the average citizen. Considering that government was one of the early adopters of automated information technology, it's a shame that they're stalled in the 1960s, still using their computers as really fast typewriters!

 

If the people in charge of this new type of entity had the power to manage that enormous collection of surplus wealth, without the liability of losing their own personal wealth if the enterprise failed, from the standpoint of this discussion I don't think it would be very much different from a corporation. Power without responsibility: isn't that a textbook definition of "despotism?"

Obviously once the project succeeded and the business was in a steady state of profitability, that credit rating would ensue. But who would lend it money under those conditions when it was just a gleam in the entrepreneur's eye?

It's not logically much different from buying stock, but stockholders are won over with the ploy, "You are part owner of this business! You get to participate in the decision-making! You have control over the fate of your own money!" Even today, with corporatism institutionalized and Americans putting up with it blithely the same way they put up with a government that uses the Constitution for toilet paper, it's very difficult to attract venture capital to the dream of a risky new project. There's a whole class of "venture capitalists" who exist only because a century and a half of corporatism has created them. I don't have the figures but I'm sure many of them are "artificial persons," the government's clever legal term for "corporations." They're playing the game with somebody else's money.

The real problem with taxation, at least from my point of view as a libertarian leftist, is not inequity--well okay that is a problem but not the biggest one. The problem centers on where the tax money goes: into a bottomless pit called "government."

The reason I'm a libertarian leftist, unlike most Rand/Hayek libertarians who came from the right, is that I spent most of my life working for governments so I sympathize with their mission to right society's wrongs, but I also understand that a government (at least on the U.S. scale) is a large organism and like all large organisms it is slow-moving, insensitive to external stimuli, and focuses most of its resources on managing its own internal metabolism.

The U.S. government, the governments of all but the tiniest states, and the larger municipal governments (Los Angeles County, where I worked for most of my career, is the world's largest "local" government with 80,000 employees and a $13 billion budget--bigger than many federal departments, a couple of states, a lot of corporations and a few countries) deploy their resources so inefficiently that the waste is simply astounding. I spent many years managing teams who accomplished literally nothing, and some years when we actually DID literally nothing, drawing salaries and becoming crossword-puzzle experts while waiting for the next assignment that never came.

Since the post-9/11 economy forced me to work in Washington where all the money goes, I have worked on software "projects" that were some bureaucrat's personal toy, but whose target end-user community had no intention of ever adopting--what we call "shelfware," each package beautifully documented by yours truly and bearing a seven or eight-figure price tag, paid for by--well you can figure that out. And throughout the life I wasted in civil "service" I spent many years in the specific domains of welfare and health care, where we were theoretically helping the citizens and other residents, yet the inefficiency was still horrifying.

After these experiences I say with no irony that government agencies for the most part are staffed by skilled, motivated, well-educated people who believe in what they're doing, but the organism itself fights back to thwart them. They're working within structures that were created so long ago that the people who built them are DEAD! Procedures that were developed when mainframe computers had one megabyte of memory and stored their data on magnetic tapes. Procedures that incorporate the organism's own self-serving safety measures: they cannot be changed quickly or easily, maybe three rules per year out of ten thousand.

This is why the government is the worst possible choice for administering the nation's charity programs. This is why, out of every dollar they confiscate from us and claim to spend on social services, only ten or fifteen cents actually finds its way into the hands of our poor people, while the rest goes into the pockets of people like me who spend our days shaking our tiny fists at an organism that doesn't even hear us because it has no sensory organs.

The government creates negative wealth. Even the most notoriously bad private charities, like the police and firemen's benevolent societies that sell them crappy insurance but send you a decal to ward off traffic tickets, give that much of their income to their stated recipients. Truly honorable charities like the Salvation Army, the Red Cross and World Vision International are paragons of efficiency, and it is they who should be left responsible for taking care of America's poor. Which they could do if we had more of our income left over for discretionary spending!

Uh, you're talking to an IT professional here! Software is designed by humans and humans make errors. There's no such thing as "zero defects," even in avionics software. It just means that the probability of an error is ten to the minus ninth. Sorry, but I don't want software of that quality running my civilization! It would be the government all over again, making errors that are hidden from the view of most of the citizens, and in any case are agonizingly difficult to correct. As I have said many times, if the world's plumbing infrastructure were built to the standards of its information infrastructure, you would never use a toilet without leaving the door open and carrying a plunger.

But it will not be human intelligence. We will turn ourselves into dogs, trusting our cybernetic caretakers to run civilization with our best interests at heart. I don't think you'll find very many people in IT who would sit still and watch this transition take place. Many of us would become active saboteurs. And of course where will these Heinleinian AI's be headquartered: The halls of government! Is that enough to keep you from sleeping?

Please Register or Log in to view the hidden image!

What makes you say that? Humans will build the software, including all the fantastic learning and self-correction algorithms. Every successive generation of self-replicating software will be built upon that foundation, and the generations will issue forth with blinding speed, exacerbating the original errors. I worry when laymen express such ill-founded faith in information technology. Trust me, it just ain't like that! I was a computer security specialist for many years, and the biggest threat to the accuracy, confidentiality, currency and availability of data and processes comes from human error. The first generation of globe-governing AIs will be built by those same humans, and humans will continue to provide much of the input on which they base their decisions.

Well you're correct there and it doesn't require the self-created global AI of The Moon Is a Harsh Mistress to make it happen. It's been happening with plain old non-information technology for eleven thousand years. The paradigm-shifting technology of agriculture lowered the labor cost of food production so dramatically that for the first time in history a food surplus was created. Every subsequent paradigm shift--civilization, transportation, metallurgy, writing, industry--has reduced the production costs of most goods and services to the point that it became possible to produce entire new categories of unimaginable goods and services. It's also reduced the total amount of human labor required to satisfy our needs and desires for goods and services, so we have more time to utilize them. Ignoring the parts of the world still effectively in the Neolithic Era, the average number of hours worked in a week is half of what it was in the Neolithic, and we all have much more to show for our labor than a week's supply of food with a little left over to get through the next famine.

"Future Shock" was not an entirely optimistic label. It was about the turmoil caused by the reorganization of civilization. One of the lines I remember verbatim from the book, because I was watching it happen from the inside, is, "Once-efficient bureaucracies sputter and fail." That applies to General Motors and Bank of America as much as it does to America's three-tiered system of government.

I think the point that futurists like Toffler and Naisbitt are trying to alert us to is that every Paradigm Shift is a singularity. No one in the 18th century could have imagined with the vaguest accuracy what life would be like after the Industrial Revolution: freeing people from farming, education for the masses, leisure time, worldwide travel and communication, the breakdown of the nuclear family, etc. Ditto for the 2nd millennium BCE and iron metallurgy: barbarian tribes becoming well-armed kingdoms. Ditto for the 4th millennium and bronze metallurgy: the first "weapons of mass destruction" and war as we know it. Ditto for the 8th millennium and civilization: people learning to live in harmony and cooperation with complete strangers, participating in transactions so complex and time-displaced that recordkeeping became necessary. Ditto for agriculture: people giving up their nomadic lifestyle, living in permanent villages with other tribes who used to be their enemies because of competition for scarce resources.

I don't think we sophisticated denizens of the Industrial Era are any better at forecasting what life will be like after the Information Revolution, except that it will obviously occur much faster than all previous Paradigm Shifts and will therefore surely be more wrenching.