Bill Gates, who has done more to propel the world into the high-tech age than almost anyone, recently called for taxing robots. That has provoked enough negative feedback to fry a motherboard, with critics decrying him for wishing to hold back progress.
And here's the FRED graph of labor's share of GDP from last week:
Gates himself said robot job killers risked provoking a Luddite backlash among their victims. But as the humans in the "Terminator" movies found out, stopping the rise of the machines is very difficult. As Lind noted, increased automation is a very strong trend that Gates has done much to feed.
What can we speculate, or infer, from these two "data points"?
Recall the 1%'s standard refuge, Pareto Optimality, which amounts to an "intellectual" defense of the status quo: you can only make A better by making B worse. Even, it can be argued, that making A better out of growth harms B if the re-distribution impacts B's previous slice of the growth pie. That's some catch, that catch 22.
As Obama/Bernanke/Yellen's trickle down monetarist approach to recovery demonstrated, a rising tide doesn't raise all boats. And, thus, income concentration continues to increase, growth stagnates, and inflation never seems to appear. Again, recall that there's three sources of inflation: wage push, cost push, and demand pull. The QE exercises never fueled inflation, outside the asset markets, because all that QE money never made it to either wages or general incomes of the middle and lower classes; it ended up on the balance sheets of corporations and the 1% who then plunged it into fiduciaries, having no cause to buy goods and services. It is curious that the beholden econ and business pundit class never seem to call out cost push when raw materiel, like oil, go shortage (real or imposed), and end user prices rise. They always call for Volker Vengeance on those evil wage slaves.
Of course, taxing robots doesn't hold back progress. As discussed in other recent missives, Kim Jong-Don fed the uneducated, unskilled, unemployed from the Empty States a line of bullshit. Which they ate up by the wheelbarrow full. I pointed out that turning an unemployed 50 year old assemblyline drone into a London Whale isn't such a good idea, even if it could be done. Turns out
Advocates for automation contend that, while some jobs are destroyed, others that pay better are created. The question is whether the number of new jobs will be sufficient to offset the ones rendered obsolete. Another concern: Can low-skilled, poorly educated employees be retrained for the new, more data-driven work arena?
As to the first and second sentences, we already know that automation, unlike the farm to factory migration of the late 19th and early 20th centuries, isn't a one-for-one (or better) bargain. As to the rest, if all one needed to be a London Whale was a GED and a bit of re-training, the tsunami of applicants for such positions would unleash a catastrophic race to the bottom for wages of such work. That ultimate catch 22: supply exceeds demand. Not to mention the psychic scars inflicted on all those Harvard MBAs who find out that all their study and bureaucratic ladder climbing was pointless. They only needed to take a three month remedial quant course at the local community college after high school graduation to earn 90210 wages.
Of more interest, of course, is the question of macro-economic effects of falling labor share and automation. It's not too far a stretch to infer that the falling share is, at least partially, the result of automation to date. We do know that income has been concentrating at an accelerating rate over the last few decades. It's also clear that income concentration yields lower to negative growth, just because at some point there's really nothing more that you want. And, more to the point, income concentration means fewer buyers for whatever the 1% wants to buy. Ferrari doesn't sell as many units as Ford.
The problem with ever more automated production, whether goods or services, is that machines can't be laid off or fired. You bought it, you'll pay for it no matter the level of demand for your widgets. And that's a significant problem for capital. Have you ever wondered why oil output never seems to drop very much? Yes, at times new sources are scarce, but producers always seem to run their equipment at 110%. Why? Because they have to pay for it no matter what. While the MBA types focus on average cost, as production becomes ever more capitalized, producers increasingly submit to marginal cost because they have to: sunk costs are irrelevant to decision making, as the econ types say. In practice that means you are forced to accept any cash flow that helps pay off your machines. You can't fire them.
In time, and it may be less than the current generation, demand collapses without a new and revolutionary method of income distribution. Whether the 1% will realize this before the implosion? Given human's penchant for time horizons that stretch to the end of his nose and no farther, more likely not. A permanent Greatest Depression, imposed by a global police state, is the most likely. Production will be geared to the wants of the global 1%, which will require what the Right has always opposed (as demonstrated by Brexit and "Make America Great Again"): a universal global currency. Such is necessary to ensure that the 1% of, say India, have equivalent buying power to, say that of the USofA. Currency manipulation by governments will be anathema to capitalists (they want those rupees to be worth as much as bucks), so they will see to it that it can't happen. Bitcoin style currency could be the vehicle; too early to be definitive.
No comments:
Post a Comment