A “crisis of abundance” initially seems like a paradox. After all, abundance is the ultimate goal of technology and economics. But consider the early history of the electric washing machine. In the 1920s, factories churned them out in droves. (With the average output of manufacturing workers rising by a third between 1923 and 1929, making more washing machines was relatively cheap.) But as the decade ended, factories saw they were making many more than American households demanded. Companies cut back their output and laid off workers even before the stock market crashed in 1929. Indeed, some economists have said that the oversupply of consumer goods like washing machines may have been one of the causes of the Great Depression.
.. Counting both humans and machines, the world’s labor force will be able to do more work than ever before. But this abundance of workers—both those made of cells and those made of bits—could create a glut of labor.
.. Thompson: There is an ongoing debate about whether technological growth is accelerating, as economists like Erik Brynjolfsson and Andrew McAfee (the authors of The Second Machine Age) insist, or slowing down, as the national productivity numbers indicate. Where do you come down?
Avent: I come down squarely in the Brynjolfsson and McAfee camp and strongly disagree with economists like Robert Gordon, who have said that growth is basically over. I think the digital revolution is probably going to be as important and transformative as the industrial revolution. The main reason is machine intelligence, a general-purpose technology that can be used anywhere, from driving cars to customer service, and it’s getting better very, very quickly. There’s no reason to think that improvement will slow down, whether or not Moore’s Law continues.
.. I would say the best evidence comes from the wage growth numbers. I know we’ve experienced an uptick in recent months, but we’re seven years into the recovery and still well short of the level of nominal wage growth we would expect, even compared to recent disappointing recoveries.
.. Employment in Britain is at an all-time high, and wage growth there has underperformed America and most of Europe. This suggests that the main way that employers are using people in countries like the U.K. is to use them to do low-productivity work.
.. In the long run, I’m optimistic for technology to transform health care, but that’s a harder sector to disrupt.
.. The very rich will still want people, their own personal shoppers and assistants. Being able to retain human labor would be a sign that you’re wealthy. So even in a future city that had a lot of laborers replaced with technology, you might still have artisanal service sector workers.
.. A universal basic income is a totally different social contract. It says that, on a permanent basis, a large class of people will probably be subsidized by a different class. That’s a much trickier thing politically, and it raises questions about the value that they are contributing to society.
When Technology Sets Off a Populist Revolt
If you think globalization, immigration, trade and demographic change have contributed to displacement and political anger, wait until robots take away millions and millions of jobs, including those requiring the use of a well-trained brain.
.. “It seems likely that the top 10 to 20 percent of any profession — be they computer programmers, civil engineers, musicians, athletes or artists — will continue to do well,” he told me. “What happens to the bottom 20 percent or even 80 percent, if that is the delineation? Will the bottom 80 percent be able to compete effectively against computer systems that are superior to human intelligence?”
Others in Silicon Valley, most notably the venture capitalist Marc Andreessen, have dismissed this concern as Luddism, assuring people that new jobs always replace the ones that vanish.
.. And it is hardly surprising for stalwarts of an industry to claim it won’t harm anyone. What is more notable is what sometimes is called “argument against interest” — people criticizing a thing from which they stand to benefit.
.. The only answer, he believes, is massive economic redistribution via something like a guaranteed minimum income. The idea has been gaining ground.
“Does capitalism need to be reinvented for modern technology? I’m absolutely convinced it does,” he said.
.. To be plain, Mr. Khosla and others of like mind in the valley are not radicals. They are speaking of a new social contract, in which an undisrupted few assume new obligations to the disrupted many, in order to be freed to go back to their disruptive works.
The Swiss Vote on Guaranteed Income Is About Rich-People’s Problems
When Americans talk about a minimum guaranteed income, they tend to focus on one of two key themes: how to deal with poverty now, and how to deal with unemployment in the future. Libertarians have homed in on an income guarantee as a low-friction, low-bureaucracy way to take care of the poor. More recently, the idea has caught on with liberals, as cash assistance has withered away and states like Kansas have made access to what remains as onerous and unpleasant as possible. That’s the poverty angle. The unemployment angle is that well-paying jobs are disappearing, either to other countries with cheaper labor or to automation, and there just won’t be enough work for everyone.
.. “The most interesting implication of the basic income,” the Swiss actress Bettina Dieterle says in the film-essay, “is that when I die I will no longer be able to say, ‘I could not do what I wanted.’ “
.. This is Marxism Lite. If the unfulfilled promise of Marxism included “from each according to his ability,” Grundeinkommen is more “from each according to how much he or she feels like putting in today.” Like traditional Marxism, it suffers from problems of credibility, and, like other grand welfare schemes, from issues of expense.
.. As far as expense goes, the plan of paying for the basic income with a hundred-per-cent consumption tax can’t go over well in Switzerland, already one of the most expensive countries in the world.
.. When the Swiss talk about basic income, they’re talking about a utopian vision. When Americans like Reich talk about it, it’s a last bulwark against national impoverishment.
Ending Welfare as We Know It
Americans need to watch closely some promising experiments in Europe and Canada.
Instead of tinkering around the edges of the welfare state, trimming a billion dollars here, adding a work requirement there, why not simply abolish the entire thing? Get rid of welfare, food stamps, Medicaid, housing assistance, unemployment insurance, and all the rest.
.. The federal government alone, for instance, currently funds more than 100 separate anti-poverty programs, overseen by nine different cabinet departments and six independent agencies.
.. Because current welfare benefits are phased out as income increases, they in effect create high marginal tax rates that can discourage work or marriage. Studies have shown that a person on welfare who takes a job can lose as much as 95 cents out of every dollar he earns, through taxes and forgone benefits.
.. If everyone in the United States were to receive a benefit sufficient to bring him above the poverty threshold, it would cost roughly $4 trillion, more than our entire current federal budget.
.. Once we’ve established the principle of guaranteeing people money, we will still be constantly haggling over the amount.