This is the most confused and ridiculous thing I could imagine from an asst. professor of finance. I thought finance people were better than economists. Until now. And does the Atlantic jsut run stuff -- i.e. no editor reads this stuff before it goes up under the masthead?
Gene On Jan 16, 2013, at 3:38 PM, Louis Proyect wrote: > http://www.theatlantic.com/business/archive/2013/01/the-end-of-labor-how-to-protect-workers-from-the-rise-of-robots/267135/ > > The End of Labor: How to Protect Workers From the Rise of Robots > By Noah Smith > > Technology used to make us better at our jobs. Now it's making many of > us obsolete, as the share of income going to workers is crashing, all > over the world. What do we do now? > > Here's a scene that will be familiar to anyone who's ever taken an > introductory economics course. The professor has just finished > explaining that in economics, "efficiency" means that there are no > possible gains from trade. Then some loudmouth kid in the back raises > his hand and asks: "Wait, so if one person has everything, and everyone > else has nothing and just dies, is that an 'efficient' outcome?" The > professor, looking a little chagrined, responds: "Well, yes, it is." And > the whole class rolls their eyes and thinks: Economists. > > For most of modern history, inequality has been a manageable problem. > The reason is that no matter how unequal things get, most people are > born with something valuable: the ability to work, to learn, and to earn > money. In economist-ese, people are born with an "endowment of human > capital." It's just not possible for one person to have everything, as > in the nightmare example in Econ 101. > > For most of modern history, two-thirds of the income of most rich > nations has gone to pay salaries and wages for people who work, while > one-third has gone to pay dividends, capital gains, interest, rent, etc. > to the people who own capital. This two-thirds/one-third division was so > stable that people began to believe it would last forever. But in the > past ten years, something has changed. Labor's share of income has > steadily declined, falling by several percentage points since 2000. It > now sits at around 60% or lower. The fall of labor income, and the rise > of capital income, has contributed to America's growing inequality. > > WHERE IS THE MONEY GOING? > > What can explain this shift? One hypothesis is: China. The recent entry > of China into the global trading system basically doubled the labor > force available to multinational companies. When labor becomes more > plentiful, the return to labor goes down. In a world flooded with cheap > Chinese labor, capital becomes relatively scarce, and its share of > income goes up. As China develops, this effect should go away, as China > builds up its own capital stock. This is probably already happening. > > But there is another, more sinister explanation for the change. In past > times, technological change always augmented the abilities of human > beings. A worker with a machine saw was much more productive than a > worker with a hand saw. The fears of "Luddites," who tried to prevent > the spread of technology out of fear of losing their jobs, proved > unfounded. But that was then, and this is now. Recent technological > advances in the area of computers and automation have begun to do some > higher cognitive tasks - think of robots building cars, stocking > groceries, doing your taxes. > > Once human cognition is replaced, what else have we got? For the > ultimate extreme example, imagine a robot that costs $5 to manufacture > and can do everything you do, only better. You would be as obsolete as a > horse. > > Now, humans will never be completely replaced, like horses were. Horses > have no property rights or reproductive rights, nor the intelligence to > enter into contracts. There will always be something for humans to do > for money. But it is quite possible that workers' share of what society > produces will continue to go down and down, as our economy becomes more > and more capital-intensive. This possibility is increasingly the subject > of discussion among economists. Erik Brynjolfsson has written a book > about it, and economists like Paul Krugman and Tyler Cowen are talking > about it more and more (for those of you who are interested, here is a > huge collection of links, courtesy of blogger Izabella Kaminska). In the > academic literature, the theory goes by the name of "capital-biased > technological change." > > The big question is: What do we do if and when our old mechanisms for > coping with inequality break down? If the "endowment of human capital" > with which people are born gets less and less valuable, we'll get closer > and closer to that Econ 101 example of a world in which the capital > owners get everything. A society with cheap robot labor would be an > incredibly prosperous one, but we will need to find some way for the > vast majority of human beings to share in that prosperity, or we risk > the kinds of dystopian outcomes that now exist only in science fiction. > > REDISTRIBUTION AGAINST THE MACHINE > > How do we fairly distribute income and wealth in the age of the robots? > > The standard answer is to do more income redistribution through the > typical government channels - Earned Income Tax Credit, welfare, etc. > That might work as a stopgap, but if things become more severe, we'll > run into a lot of political problems if we lean too heavily on those > tools. In a world where capital earns most of the income, we will have > to get more creative. > > First of all, it should be easier for the common people to own their own > capital - their own private army of robots. That will mean making "small > business owner" a much more common occupation than it is today (some > would argue that with the rise of freelancing, this is already > happening). Small businesses should be very easy to start, and > regulation should continue to favor them. It's a bit odd to think of > small businesses as a tool of wealth redistribution, but strange times > require strange measures. > > Of course, not all businesses can be small businesses. More families > would benefit from owning stock in big companies. Right now, America is > going in exactly the opposite direction, with companies going private > instead of making their stock available for public ownership. All large > firms should be given incentives to list publicly. This will definitely > mean reforming regulations like Sarbanes-Oxley that make it risky and > difficult to go public; it may also mean tax incentives. > > And then there are more extreme measures. Everyone is born with an > endowment of labor; why not also an endowment of capital? What if, when > each citizen turns 18, the government bought him or her a diversified > portfolio of equity? Of course, some people would want to sell it > immediately, cash out, and party, but this could be prevented with some > fairly light paternalism, like temporary "lock-up" provisions. This > portfolio of capital ownership would act as an insurance policy for each > human worker; if technological improvements reduced the value of that > person's labor, he or she would reap compensating benefits through > increased dividends and capital gains. This would essentially be like > the kind of socialist land reforms proposed in highly unequal Latin > American countries, only redistributing stock instead of land. > > Now of course this is an extreme measure, for an extreme hypothetical > case. It may turn out that the "rise of the robots" ends up augmenting > human labor instead of replacing it. It may be that technology never > exceeds our mental capacity. It may be that the fall in labor's income > share has really been due to the great Chinese Labor Dump, and not to > robots after all, and that labor will make a comeback as soon as China > catches up to the West. > > But if not - if the age of mass human labor is about to permanently end > - then we need to think fast. Extreme inequality may be "efficient" in > the Econ 101 sense, but in the real world it always leads to disaster. > > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
