We know there is a problem with today's economy. We know how to produce
things but we don't know how to distribute the gains from that production.
Sandwichman has proposed some approaches, all of them reasonable in my
opinion. What is needed is political will, political leadership. We are
trying to run the new economy with the old rules. And the old politics.
Some years ago I proposed the bit tax as another alternative. It too was
met with incredulity. So here is the bit tax summary for those who want to
know. Again I think that we can come up with many ways to work through the
success of the economy by making changes to ensure the sustainability of the
economy. By thinking that we have failed, that we are poorer than we
actually are, we will lead to that outcome that we most fear.
Arthur.
THE NEW WEALTH OF NATIONS: DISTRIBUTING PROSPERITY
A paradox has caught the attention of developed nations. It has to do
with the dramatic growth of the globalized, information- based New Economy.
While highly productive, the rewards are not widely distributed. Rewarding
few, it downsizes many. Oozing wealth at the high end, the New Economy
seems unable to distribute prosperity to those in the middle or at the low
end.
With downsizing and outsourcing of jobs, there are fewer workers paying
taxes and more on the unemployment rolls. The tax base shrinks and income
support claims rise.
In nations with falling tax dollars, the physical, educational and
social infrastructure declines. Universality in health, education,
libraries--even access to clean water--is questioned as government tax
revenues decline, as the budget deficit takes centre stage.
Over two hundred years ago, Adam Smith wrote his famous book:
The Wealth of Nations. For Smith, wealth was based on the division of
labour and the extent of the market. Today we can add to society's
production function: knowledge, information and communications.
The new wealth of nations is found in the trillions of digital bits of
information pulsing through global networks. These are the
physical/electronic manifestations of the many transactions, conversations,
voice and video messages and programs that, taken together record the
process of production, distribution and consumption in the new economy.
What happens to the productivity gains created by global digital
networks? Some show up in profits, some in lowered prices, some go to
domestic labour and some to domestic or off-shore capital.
While part of the increased productivity shows up in earnings to firms
adopting the technology, to banks, to telecom firms or other network
operators, it appears that some of the productivity gains just disappear.
It is either a non-monetary item (eg., time saved in using ATMs for banking)
or the productivity is diffused over so many domestic and foreign players
that it is not appropriated effectively, if at all. If all productivity
gains were accurately reflected in our national accounts, some economists
conclude that growth rates would be as much as a full percentage point
higher.
The challenge is to fully access the new productivity. One approach is
to "follow the money." Go to where the new wealth is being created.
While there are few kudos for proposing a new tax, the move to a new
economy should be matched by consideration of a new tax base.
A tax base that is growing, can be easily identified and where collection is
in few hands. A tax that is difficult to avoid.
How do we it? Imagine a turnover tax on digital traffic. It is
similar to a gasoline tax, paying a toll on a bridge or highway or paying
vehicle license fees. These excise and indirect taxes are by weight of
vehicle, or amount of gas used, not on the value of the commodity carried.
So why not tax the digital traffic on the Information Highway? Whether the
digital bit is part of a foreign exchange transaction, or a business
teleconference, check clearance information, or an ATM transaction, each bit
is a physical manifestation of the new economy at work.
So let's imagine a 'bit tax.' Automatically metered, it will cause
fewer collection problems than most other direct or indirect taxes.
Collected by the telecom carriers, satellite networks and cable systems,
revenues would flow directly to the revenue service of the respective
country.
Research has to be done on the burden or incidence of this new tax. Is
it progressive or regressive? Will it be absorbed by the carriers or passed
on to consumers? Should lower rates apply to some heavy traffic items such
as digital movies downloaded to the home? Can one nation bring in a bit tax
or does it require international collaboration?
The point is to begin a discussion on the sort of new taxes appropriate
for a new economy.
A bit tax can lead to the monetization of all productivity.
One result: economic growth numbers will more accurately reflect the
productivity advances brought by information technologies. And this new
growth is likely to be non-inflationary since so much productivity has been
unaccounted for.
With monetization will come higher gross domestic product and higher
revenues to be used in a variety of ways.
New revenues can be used for schools, parks, health care, to re-train
some for new jobs and, for those who cannot be retrained to provide a
continuing flow of income that allows displaced workers to maintain their
dignity--and purchasing power--in the new
economy. This last point is important since purchasing power is
needed to maintain effective demand in our economies if we are to avoid
chronic economic recessions or worse.
The bit tax may be one way to more fully distribute the benefits of the
New Economy. One way for the productive power of information technology to
bring with it a New Wealth of Nations.
===========================
-----Original Message-----
From: [email protected]
[mailto:[email protected]] On Behalf Of Sandwichman
Sent: Tuesday, July 27, 2010 9:41 PM
To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION
Subject: [Futurework] Shouldn't High Unemployment = Less Work To Do?
July 27, 2010
Shouldn't High Unemployment = Less Work To Do?
-- by Dave Johnson
This post originally appeared at Campaign for America's Future (CAF)
at their Blog for OurFuture. I am a Fellow with CAF.
Simple question: have we reached a point where machines and computers
leave us with less work to do? If so it can mean a lot of people are
left without jobs and incomes, losing their homes and health, while
the rest have our wages dragged ever downward. Or we can make some
changes in who gets what for what, and every one of us ends up better
off.
Cake or death? Which will it be? (*explained below)
Somewhere around one in five of us is un- or under-employed while at
the same time so many of the rest of us, still employed are stressed,
tired, doing the work of those laid off. With too few employed many
stores, restaurants, hotels and many other businesses are falling
behind. As Bob Herbert puts it today, "Simply stated, more and more
families are facing utter economic devastation: completely out of
money, with their jobs, savings and retirement funds gone, and nowhere
to turn for the next dollar." The government has stepped in with
stimulus to pick up some of the slack in demand but that can't go on
forever and we need to find long-term solutions.
Is it structural?
There are signs that the jobs crisis may now be structural, or built
into the system. This means that the usual solutions are not going to
"restart the engine" and trigger a return to an economy that had where
almost everyone can find a job, (even if it is a menial, boring
time-suck).
Our unemployment emergency may really be about less work to do. Hale
"Bonddad" Stewart writing at 538.com, Labor Force Realignment and
Jobless Recoveries concludes, (click through for gazillions of charts
and full explanation)
The "jobless recovery" is in fact a realignment of the US labor
force. Fewer and fewer employees are needed to produce durable goods.
As this situation has progressed, the durable goods workforce has
decreased as well. This does not mean the US manufacturing base is in
decline. If this were the case, we would see a drop in both
manufacturing output and productivity. Instead both of those metrics
have increased smartly over the last two decades, indicating that
instead of being in decline, US manufacturing is simply doing more
with less.
So it may be that machines and computers are doing more of the work
that people used to have to do.
Robert Reich sees signs of structural unemployment as well, writing in
The Great Decoupling of Corporate Profits From Jobs,
... big U.S. businesses are investing their cash in labor-saving
technologies. This boosts their productivity, but not their payrolls.
[. . .] The reality is this: Big American companies may never rehire
large numbers of workers. And they won't even begin to think about
hiring until they know American consumers will buy their products. The
problem is, American consumers won't start buying against until they
know they have reliable paychecks.
So what do we do?
Maybe we need some changes in who gets what for what. Right now we
have an economy that is structured to send most of its benefits to a
few at the top, while the rest of us -- the help -- sink ever downward
into less and less security. People with power and wealth benefit when
they figure out how to cause other people to receive lower pay -- or
just lose their jobs. Eliminating jobs brings bonuses to the
eliminators -- a perverse incentive if ever there was one. If someone
can figure out how to cut your pay and benefits or just get rid of you
("eliminate your position") they get to pocket what you were making,
and you get nothing (and conservatives say you're lazy). If you don't
own the company you're out of luck.
In the past this perverse incentive was mitigated by people banding
together in governments and/or unions and forcing the wealthy and
powerful to share. But modern marketing science has been successful at
making people believe that government and unions are bad for them.
This was also mitigated by the ongoing need to find people to do the
jobs that needed to get done. But with continual improvements in
technology this need is reduced. We're living the result.
Also, this perverse incentive structure assumes an infinite pool of
customers to sell to, ignoring that the transaction of benefiting from
eliminating a job also eliminates a customer. But modern business has
become so efficient at job elimination that this comes into play. Who
will be able to buy theTVs that the employee-eliminating factory
makes, if all the employees are eliminated and have no income?
These are structural problems that we can change. Let me just
brainstorm a few possibilities for structural changes into the mix
here:
# Today when they replace a worker with a machine, the few at the top
get another chunk of income, the worker gets nothing. But suppose a
worker got to keep some of the economic benefit from getting laid off!
Suppose that if your company replaces you with with a machine you get,
say, 15% of the cost-savings as ongoing income. Heck, getting laid off
would be a good thing, like winning a prize. After you get laid off a
few times you only have to work part time. Get laid off enough times,
you can retire.
# Suppose we just shorten the workweek? What if we change from a
40-hour workweek to a 30-hour workweek? Economist Dean Baker has been
offering ideas for workweek reductions for some time:
The other obvious way to provide a quick boost to the economy is
by giving employers tax incentives for shortening their standard
workweek or work year. This can take different forms. An employer who
currently provides no paid vacation can offer all her workers three
weeks a year of paid vacation, approximately a 6% reduction in work
time.
# Suppose the corporations and wealthy were taxed at the rate they
were taxed before all the deficits and income inequality started, and
the government just sent everyone a check, which served as a base
income? Then everyone's wages would be higher because desperate people
wouldn't be fighting over the few jobs. So then the better those at
the top do, the better all of us do.
These are just a few ideas for restructuring the economy in ways the
help all of us instead of just a few at the top. Please add your ideas
in the comments.
We have a choice. We can continue with the system we have, and most of
us -- the help -- will just get poorer and poorer while a few at the
top take home more and more. Or we can change who gets what for what,
and everyone comes out ahead.
*So which will it be, cake or death?
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allowScriptAccess="always" width="640" height="385"></embed></object>
--
Sandwichman
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