Interest rates were held low because the Federal Reserve has limited tools to stoke demand (and heh, who doesn't love a good asset bubble amirite?). It therefore "pushes the string", attempting to use monetary policy when what is really necessary is Congress to act (higher taxes and government spending, or pushing wages up with legislation).
Call your representatives.
We had a really big recession in 2008-9 folks! You might have read about it? We've been recovering since mid 2010...adding 200k jobs per month or so. But these things take time.
Businesses get anchored to a certain wage cost. In the article, they mention businesses unable to fill roles at $9 or $17 per hour. Well, there may be unemployed people, but they're not willing to do those jobs at those rates. They're not the market clearing price for those roles. If you're offering a wage for months on end, and you can't fill the role, you aren't paying enough. Full stop.
Again, I want to stress that the curious macro nature of what we're seeing is because of a combination of poor statistics and business decisions. I'm sure we're not at full employment yet, and I'm sure business are not willing to pay more for labor until they absolutely have no choice, and I'm sure that time of reckoning is almost here. But not quite yet. Still more slack to pick up, as you mention.
I do think that's a big part. At local meetup groups, companies come pitch their job openings, and almost always say "we're having a hard time finding folks - and we're paying market rates!" I will sometimes counter with "if you're offering a rate and no one is taking you up on it, by definition, that's not the market rate". It might be in someone else's market, but not yours. The "market rate" for ipads was $499 for a long time, but that didn't mean HP could get $499 for their tablets.
And if you're a jealous high employer of skilled personnel, you just do the same, and legislation has just recently been passed so skilled workers can now be imported just like TFW's.
Now, there will never be full employment across most of the job spectrum so salaries will never have to rise. Add in a top 3 in the world unaffordable housing market, and this is how you eliminate a middle class.
On a similar topic it irks me that in one breath people will talk of the power of future automation and in another support large scale migration.
Automation reduces demand for labour and its price falls.
Managing future budgets is claimed to be the motivation for the immigration increase, but does not stand up to scrutiny, and the government is not open to questions on the subject as it would constitute hate speech.
Do you also have huge neighborhoods of million dollar houses and hundreds of thousands of dollars of cars in the driveway, but there's no tax base because everyone's income is below the poverty level?
Wait, how does that work? I'm obviously doing something wrong...
What happens to the mom and pop coffee shop or the grocery store that charges more than Amazon Fresh?
Enployment has a bid and offer, both sides are reluctant to cross without desperation.
Nothing. Amazon Fresh doesn't exist in most places.
Coffee shops aren't known for being places to get cheap groceries; they're places where you get fancy drinks and/or snacks and hang out and talk to your friends or use the WiFi. In other words, coffee shops are selling an experience, not a fungible good.
If a coffee shop goes out of business because of an online seller, they must have been offering a really lousy experience.
And what do they say to that? Blank stares? Acting like you're crazy? When I say stuff like that on boards like this, I usually have people arguing with me that no, there really is a "shortage" of workers.
Yep. That is essentially the crux of it and also why there's a big trade off between unemployment vs a small basic income. With unemployment you collect while having free time and then lose that income stream as soon as you take the job, making the decision to take a job significantly less obvious. With a small (survival level) basic income, having a job means you make more money...period.
It's an aspect of the equation that nobody wants to talk about. In low cost of living areas you almost have an incentive to collect unemployment for stretches because of it.
But ya, mostly slack. Another 2 years or so. Maybe a bit more. The 2020 census could put the nail in the coffin. A shit ton of people get hired for those things.
One of the issues is that it isn't just ponying up an extra $2/hr.
If a company already has, say, 10 employees at the $12/hr price point, they won't be too thrilled about a peer coming in at $14/hr. Most likely, in the short to medium term, they will have to be bumped to $14/hr, too.
So rather than being an extra $2/hr, it's actually an extra $2/hr + (10 * $2/hr) = $22/hr.
that's interesting, but has anyone asked the question of whether the business can actually remain profitable if the rate was $14 rather than $12?
I mean lots businesses become viable if you only have to pay $1/hr.
The current system sometimes seems designed to fail.
Consider externalizing costs, almost no one has a servant pump gasoline for them, I would imagine you have to be very old for "self service gas station" vs "full service gas station" to mean anything to most Americans.
Another option is political corruption, I'll donate $ to your re-election campaign if you create a property tax free zone for my business.
This is largely because the cost and labor of operating the pump has been externalized by pushing onto the car operator.
Retail business do this with cash registers. How many of these jobs will simply disappear? What else can be fully automated?
As soon as the supply of people needing jobs is low enough that businesses have to pay more to hire...they will do so barring alternative options.
And if your competition is foreign you're usually even better off -- wages in China have been rising a lot faster than wages in the States.
Just a bit though. There hasn't been some sort of sea change like a lot of people seem to think.
Right. But don't forget that it's possible for a wage to simulatenously too low and too high.
It can be too low to higher anyone, but too high to be profitable to the employer. And in that case, the job is defunct.
Also, companies do have a ceiling on how much they can pay without raising prices, and to the extent you want to pay people fairly, you would have to raise wages for all your employees.
Most of the replies are then trying to answer the second question, because the refraiming is very likely a good one.
Given the choice between toiling and not being able to make ends meet, or playing videogames and not being able to make ends meet, Americans are choosing Halo. That's not complicated.
That's not why. Japan has had full employment for 20+ years. Their wages have steadily declined for 20+ years.
The U-6 rate is at pre-recession levels though? And it's only 1% away from pre-Dot Com levels?
This makes a lot of sense. I constantly get the feeling in the US that we don't actually "do" anything anymore. And I don't just mean manufacturing. You look around at the rest of the world and infrastructure programs are at the forefront of every expanding economy. China, India, Turkey. All pouring hundreds of billions into great works at home and abroad.
Where are the massive capital expenditures we saw in the 19th and 20th centuries? America has the largest population of highly skilled, financially endowed consumers on earth yet the most that any genius Venture Capitalist can figure out to do with these billions in free money from the fed is come up with a new skin for IRC.
So is the US government! They poured $1,4 trillion into Iraq and Afghanistan.
Those expenditures are still around: they built the roads, runways and skyscrapers that we all use today.
Why do developing countries spend a lot more on development than developed countries do? That's almost a tautology.
Biggest waste of public funds in a generation. And mostly used to build further infrastructure such as roads, burdening the maintenance budget even more. Instead of helping.
A certain little jaunt through the middle east would like to have a word with you.
I don't think it's as simple as "we're developed now". Is there some arbitrary set point at which a country is completely "developed" and we should just stop doing things? Why is there such an aversion in this society to "spending money" as if it's something that we are losing rather than simply putting people to work and generating economic output. The complete gridlock which has gripped the US over the past 40 years has left vast amounts of the population sick and dying with no hope for anything.
Do you want a limitless money sinkhole with largest positive externalities and quality of life effects? Try science.
.... Kind of, and much of what we have could be upgraded. Some folks can't get clean water out of their taps (lead!), some folks have really crappy internet (dial-up or otherwise slow speeds). I'm pretty sure some areas could use an electrical grid upgrade. Railroad tracks laid long ago now block traffic and some crossings have a lot of accidents, and could be rerouted (some communities have done so, such as lafayette, Indiana). Many of our bridges are in disrepair.
On the whole though there are a lot of perfectly good roads and houses that just need a little work to keep them up. It is better to not build more than we need. I could tear down my perfectly good 2000 sq ft house and build a 4000 square ft house - but my current house is big enough for my needs so I'd rather sit back and relax.
St. Petersburg shut down a sewage treatment plant last year, and in the same year spilled 200 million gallons of sewage into the bay. For that, the city faced an $820,000 fine, which seems incredibly light. Just Wednesday this week, the city spilled 50,000 gallons of 'mostly treated' sewage into the bay. I can't image that St. Petersburg is the only city with this type of problem; though, I hope I'm wrong.
we have been at "war" for 15 years
If the market crashes then cash outperformed. There is also a lot in terms of bonds, structured products and fund products between cash and equities.
You can significantly lower variance (risk) and at the same time only slightly lower returns using diversification.
Take a look at this chart, it explains it way quicker than words could.
http://cdn.financialsamurai.com/wp-content/uploads/2016/06/T...
Note dropping from 100% equities to 70% equity and 30% bonds drops your return by about a percent while dropping your risk (variance) by just over 4%.
Taking on additional risk leads to a higher expected return, but you can see that more and more risk leads to increasingly marginal amounts of additional return in exchange for large amounts of risk.
The comment I was responding to felt distraught that he had to be exposed to the heavy risk provided by only investing in equities, when he could sleep better at night using investment diversification (ie different types of investments, not different stocks) while still maintaining a great ROI (certainly better than the negative ROI of just hoarding cash).
Savings _rates_ in the US are actually low by historical standards: https://tradingeconomics.com/united-states/personal-savings (click the 'MAX' timespan toggle). Low interest rates discourage savings and encourage borrowing. One of the fundamentals of economics is that all other things being equal, in the long term savings is needed for growth: if we consume everything we produce, then nothing remains to be invested, so productivity won't increase. If we save more, then we have more to invest, and this greater investment will increase productivity more.
The key thing to note here is that it is investment of forgone consumption that produces value (at a simple level, compare saving some wheat seeds to plant next season vs eating them all as flour). Lowering interest rates, printing money and similar things don't achieve this: they can create _money_, but not necessarily value. What they can do is increase demand, to address temporary shortfalls in demand, which under a popular form of economic reasoning will produce more growth than letting demand slump. That demand-boosting approach is however meant to be used as an immediate solution to a temporary slump, not an ongoing thing, as few economists deny a long term positive relationship between savings rates and growth.
There've actually been attempts to model what the ideal savings rate would be: https://en.wikipedia.org/wiki/Golden_Rule_savings_rate. Such models seem to have little influence on interest rate policy, however.
Basically all current investments are high-risk in the age we live in, because we are "at the brink of the chasm" on all fronts:
- general technology: ...the barriers to market are so low that a startup can spring to being at any moment and eat all your profits away
- (social) media / communication: anything can change anytime, today's Facebook can be tomorrow's Hi5
- biotech: we're getting closer to the "you can do it your garage stage" which will change everything
- world politics: India and China are big players now and their moves can no longer be predicted, also US internal politics is a cauldron of volatility, and in a decade or two we'll have the "New Africa" rising... good luck predicting anything
- ML/AI: we might be at the brink of f Singularity with superhuman-AI around the corner... but we have no idea whether it will be in 5 years or 100 years (!) ...this alone is enough to fuck up all worldwide future prediction on anything... when you're staring up from somewhere around the foot of an exponential curve everything looks like "wtf, nothing makes sense"
And also, the last economic "crisis" increased everyone's aversion to risk, kind of the opposite of what you'd need now to increase level of investment...
What needs to change is the attitude of people with money towards risk! I'd love to see people like Elon Musk succeed long-term, not because I like them or what they are doing, but because they are the only ones with an attitude that can create growth right now.
We should really re-learn thinking and working with volatility, maybe starting from what Nassim Taleb says in his Antifragile (https://www.amazon.com/Antifragile-Things-That-Disorder-Ince...) and his talks like How to Live in a World we Don't Understand (https://www.youtube.com/watch?v=iEnmjMgP_Jo - warning: he's a terrible speaker... and not a great writer either, so getting to the root of his ideas will take time). Maybe not. But current "risk reduction" attitude cannot work (hint why: even if you reduce Infinity by 20% you still have f Infinity!).
Corporate profitability continues to grow because of increased productivity (increasing the surplus), which they haven't shared with their investors, employees, or government (taxes).
Corporate savings continue to accrue because their (effective) tax rate is low.
Whatever can be said about (low) interest rates, its effect on wage stagnation is second-order, at best.
There are corner cases to it but the underlying reasoning is, if your investment is just lying around accruing wealth, it's bullshit wealth.
LOL
You specifically didn't do much. Your workers did. If they make you rich and lose their jobs in the process, you pay them back.
Did you? If the workers bought the factory, how are you involved? Didn't you enable them too?
Almost all workers are significantly more productive but wages have remained flat for a long time.
You can tell this is true because labor's share of income (vs capital's share) has remained fairly constant. It's the distribution of this share between different workers that has changed.
Labor's share of income vs capital's has not remained constant. Not even close.
Sure it has:
https://fred.stlouisfed.org/series/W270RE1A156NBEA
Every time I engage with a libertarian (always a pointless endeavor) I feel like I have to take a shower after. Just.. ugh.
System works now because some of the money goes to middle and lower classes, not all is accumulated on the top. If you accumulate all the wealth in the top without any mechanism of distributing it in lower classes then whole system will collapse and you (as someone on top) will probably end up like in other revolutions in human history, hanging up from the tree.
This is why Republican/Libertarian efforts to eliminate or reduce Government is so fucking scary. Of course there are legitimate reasons to be concerned with limiting govt. overreach. But the Govt. is a required political social entity and we've gotta keep going. Whats baffling to me is that so many wealthy people don't get this. If the Government goes away, their wealth is gonna get torched/taken.
Anyways to answer your question: I don't know what the proportion would be, but likely indicators would be... unemployment level and uninsured rates. People with no healthcare and no jobs/money === desperate people whose survival instincts will kick in.
And if it were, you wouldn't need anyone to buy anything - whatever you might want can be made by your factories.
And which physical goods production can't be automated? Probably 99% can. There are first farms that are already fully automated, so whole chain along with transportation can be automated in future. You have any examples of whole industries that can't be automated? Because I can't think of any that can't, it's only matter of getting cheap technology to do that.
> And if it were, you wouldn't need anyone to buy anything - whatever you might want can be made by your factories
This is false, you don't have infinite amount of resources and for sure you don't have enough money and space to build factories for "whatever you might want".
But in any case - A hand-made item? Which apparently adds worth..
> have any examples of whole industries that can't be automated?
depends what you mean - at what technology level?
Can modelling be automated? maybe. Can barista-ing be automated? Maybe. Can programming? To some degree..
> you don't have infinite amount of resources
luckily, most needs are finite.
> you don't have enough money and space to build factories
The premise is everything you want being automated. If space/land is not automated, that breaks the premise. So there is something you'd pay people to obtain - land rights. A short transfer of all land to the elites later, and you have enough space for anything.
This is just a marketing gimmick (in case of products that we have technology to produce also by machines) in the times we live in to make you pay more for a product.
> Why just physical goods?
Because you can automate production of almost all physical goods. A lot of services also, but to certain degree, simple tasks only, state space is just too big in case of more complex services for today technology.
> depends what you mean - at what technology level? Can modelling be automated? maybe. Can barista-ing be automated? Maybe. Can programming? To some degree..
That's why I was not writing about services but physical goods because in case of services it hugely depends, some can't be automated with our current understanding of the world around us.
> luckily, most needs are finite.
This is false.
'The world has enough for everyone's need, but not enough for everyone's greed.' - Gandhi
You need to take humans into the equation. Make everything for free because it's automated and you will see 7 billion orders for Ferrari, Lamborghini etc. You have enough factories to make those in 10 years? 20 years? 100 years? Take physics into equation and amount of factories/transportation for all the resources and parts to make those products, just those products, what about other things? This will not scale on earth.
> So there is something you'd pay people to obtain - land rights.
Most people on earth do not own any land at all.
> A short transfer of all land to the elites later, and you have enough space for anything.
Read history, this would end like it always do, elites that would try that would be eliminated and replaced with new elites from proletariat. Remember that elites are protected by police and law only because other people allow that, not because this is something written in stone. Earth was already ruled by kings, they owned most of the lands, look how it ended.
as are entire industries. Human life is ultimately meaningless, so all human pursuits are too. Restricting this argument to utilitarian good begs the question - to what aim? Aesthetic good exist at the top of any manufacturing chain.
> Because you can automate production of almost all physical goods
But, wasn't the argument a "what if" scenario in which no-one could get jobs? So physical goods are all automated - just means jobs exist in other areas now.
> - Gandhi
I don't rate the guy, but it sounds like he's talking about the worlds current resources, not future resources.
> You have enough factories to make those in 10 years?
everything is automated, remember? So the factories are made by factory-factories...
> Read history
I don't buy this kind of prediction based on historical analysis.
> elites are protected by police
police have always been human - will this be true in the future?
> Earth was already ruled by kings, they owned most of the lands, look how it ended.
How?
No, since I just stated there is none.
I disagree this goes beyond the topic - If you want to disregard things as "meaningless", anything can ultimately be disregarded. Even basics (food shelter etc) serve no purpose that to preserve life - and what is the meaning in that? All human pursuit is meaningless, as such, all things are for their own sake. So, what are your assumptions about what does, and does not have worth?
> Amount of ignorance in this comment is staggering
ok. I don't care what he meant, because the fact he said it is meaningless. Why not argue for yourself than appealing to authority? If I "don't get it", it's because you decided to communicate with a vague quote.
> Where I wrote "no-one"? I didn't
"no one to buy this things from you when everyone will automate everything, then most people would have no job" -- https://news.ycombinator.com/item?id=14769844
Which is what I originally responded to - that no one will have jobs/money.
Don't respond to threads if you lack the context.
> scalability problems on our planet
and technology improves, so what limits still apply in the future? You don't know.
> How many kings with real power you see now
I still see power, so who cares what they are called? Modern elites are far more powerful.
> you should read some history books
since I said I didn't care for historical analysis, I don't agree.
> This only proves your ignorance.
Nothing is proven but your arrogance. You claim I'm ignorant, then provide nothing more.
Read the last paragraph of section 7 here: https://plato.stanford.edu/entries/popper/#ScieKnowHistPred
Historicism has is generally not seen as valuable or valid anymore; if you disagree the burden is on you to demonstrate otherwise.
Ah, and another "who cares". You will always see in some form power because this is how world model looks like and how society works, the difference is type of power and it's influence on society, but to know that you would need to know history.
> "no one to buy this things from you when everyone will automate everything, then most people would have no job" --
Do you see difference between what you wrote in last comment which is "no-one could get jobs" and what I wrote which is "MOST PEOPLE would have no job" ?
Do you see the difference? "no-one" vs "most" - you see it? Or you "don't care" and it's "meaningless" ? Or there is no difference because it would mean you are wrong?
I need to waste my time to show things like that?
> since I said I didn't care for historical analysis
And another "I didn't care"..
> Historicism has is generally not seen as valuable or valid anymore; if you disagree the burden is on you to demonstrate otherwise. > You claim I'm ignorant, then provide nothing more.
I don't need to really look far. Read this article from yesterday, it's historical analysis that proves your ignorance:
https://www.theguardian.com/world/2017/jul/14/globalisation-...
Based on this analysis you could predict exact effects of globalism that we see now in economy. But maybe it's also "meaningless" ? Because I am "appealing to another authority" ? Or you "don't care" ? Or because this would prove you are an ignorant.
"arrogance" ? Call it whatever you want, I call things how I see them, you can't stand raw critic about yourself? Then you have problems.
I don't waste my time to argue with ignorants that write things like "I don't care what he meant, because the fact he said it is meaningless" when they do not understand what someone else is writing to them or they don't have any anti-arguments. Your attitude to authority only shows how big your ego is. I know how this discussion will end, with more "I don't care" and "meaningless" instead of real arguments. I've seen it many times. So why I should waste my time on it? I have really better things to do than arguing with ignorants that claim history is irrelevant because they don't know it, at the same time they ate all the brains and write not to "appeal to authority".
You need to know past to understand present and plan for future.
You know why WWII happened? You know why World Trade Organization exist? You know why law is written the way it is? You need to know history to know that. But you probably know better and it's all "meaningless".
"Those who do not remember the past are condemned to repeat it." - that's why historical analysis is so important and that's why you are ignorant.
You will probably understand that I've just finished writing/reading in this thread for good and this was my last message to you. I've explained why.
I already stated historical analysis is bunk.
> Do you see difference
Your posts would be a lot shorter if you stated what you thought, instead of speculating of what I think.
> And another "I didn't care"..
So? What's your point? I'm repeating myself because you don't seem to get it. "I don't care for historical analysis" means I don't value it. I won't start to value it, just because you keep claiming it has value.
> it's historical analysis that proves your ignorance
How? What do you mean by "proves"? Can you show me the parts proving the Stanford paragraph wrong?
> But maybe it's also "meaningless"
again, why not spend more time describing it's meaning, than speculating on what I think.
> Because I am "appealing to another authority" ?
Yes,feel like it, that you are appealing to the Guardian. You point to an entire article as proof. I pointed to a specific paragraph, instead of quoting the whole thing which I believe characterises my opinion well. If you disagree, please state what you disagree with.
> I call things how I see them
You don't have to say anything that pops into you mind, if there are no reasons for them that you can think of. If you have reasons, provide those instead.
> can't stand raw critic about yourself? Then you have problems
It's called personal attack/ad-hom, and it's generally considered bad form. No one like nonconstructive criticism, especially that motivated by spite.
> when they do not understand what someone else is writing to them
I don't care because the burden to provide an argument is on you. The burden is not on me to read the works of Gandi to find one, when you brought it up.
> Your attitude to authority only shows how big your ego is
What does this mean? Is Gandi an "authority"?
> I know how this discussion will end, with more "I don't care" and "meaningless" instead of real arguments.
The argument is it doesn't matter what Gandi says, if the meaning isn't communicated. This is a nuanced argument. Some of the things you've written here suggest to me that English isn't your first language, so maybe you are not fully understanding what I write?
> ignorants that claim history is irrelevant because they don't know it
I never claimed that "history is irrelevant because [I] don't know it".
> You know why law is written the way it is? You need to know history to know that.
Laws are written by individuals, often motivated by specific events. Specific events can be correlated with events preceding them. But these kind of stories are less useful in predicting the future, which is what Historicism is.
> "Those who do not remember the past are condemned to repeat it." - that's why historical analysis is so important and that's why you are ignorant.
Are quotes proof too? You know quotes aren't even consistent?
As a very simple example, imagine that you were able to fully automate, such that you required zero workers. Imagine further that all other businesses did the same.
If you had robots making everything you could possibly want, why would you bother selling any of it to people who don't have any land, natural resources, or rare skills? They wouldn't have anything you want.
The idea that you could do something like that is even more outlandish than having robots that could automate everything a human could.
But I didn't say this.
Certain materials can be substituted for another, but for high energy costs in making them.
Well, that assumption is pretty general and doesn't account for natural resources/raw materials, energy inputs required for production, or other factors. It would also vary per sector, such that the statement is far from universally true.
>The poorest member of that society would live like a king from our present day world
But, regardless, there would be some cost for goods. How do you propose the now 100% unemployed population pay for anything, let alone "live like kings"?
The answer is that you would need to devise a method of wealth distribution that is orthogonal to capitalism. Say, for instance, a tax that subsidizes everyone else. That, of course, would not be capitalism.
The point is that wage labor is fundamental to capitalism. Somewhere between our present state and 100% automation, a capitalist system requires so much intervention that it breaks down.
You forget things such as: meaningful work, respect from society, crime, cultural differences between the poor and the rich, interclass upward mobility (see any sociology textbook), intellectual stimulation.
Actually, I like the idea of work. But, at some point, we will have to "artificially" employ people or, of course, implement a UBI. But, even with the latter, we'll have to re-imagine our relationship to work and its role as a source of self-worth.
There's this idea that without work, we'd all just instantly self-actualize and write poetry or paint masterpieces. Not sure why we imagine this vs. the more likely reality that we'd instead sit around sharing cat memes, making heinous YouTube comments, and generally getting dumber.
I'm not sure if society is really ready for a post-work world.
Of course, that's not ideal either. My main point was that a UBI (or not having to work) wouldn't be the instant panacea that some suggest, leading to a sudden heightening of the human race as we are collectively released to pursue our higher purposes.
Of course not all of them will be unemployed, so you only have to pay for 100 + (unemployment rate) × 400 people.
If the cost of your efficiency increase is not too high, you get to pocket the difference.
Unless your automation is as expensive as hundreds of workers, this will likely still be a large sum.
Then who pays the tax?
What if I invent a whole new product category that obsoletes a whole industry? Not a lot of people manufacturing typewriters anymore.
What if I invent a cheaper way to ship goods from China making it easier to shift manufacturing there? Who pays the tax then?
What if I'm an employee at the factory and I figure out a better way of doing things so that I can take on additional responsibility so when Bob (the guy next to me) retires we don't have to hire a replacement? Then do I pay?
And how long does this tax last? Forever? Are people still paying taxes for all the farmers we don't have to have anymore?
How confident are you that you can really write tax rules that make sense for the infinite number of scenarios via which productivity is enhanced in a modern economy?
> And how long does this tax last? Forever? Are people still paying taxes for all the farmers we don't have to have anymore?
Assume for a moment that being a farmer were hereditary and they couldn't do anything else anyone would find of value. Then when you replace all of them by machines, you make huge profit, but also leave hundreds of people without income. In such a case, I think it only fair that the farmers and their descendants be provided for indefinitely.
That this tips the scale against automation is not exactly bad: if the farmers have to be provided for anyway, additionally maintaining machines to do work they could do just as well is a further cost that should be weighted against the benefits.
However, in reality most people can learn to do other work, so automation can still end up a net positive, even when the needs of the displaced workers are taken into account.
I guess the problem will solve itself when workers will either employ themselves as revolutionaries and looters, or the beneficiaries of automation pay the equivalent of this tax to prevent this from happening.
But our economic system is literally grinding to a halt, which means it's not exactly perfect. I for one welcome suggestions, even if they're only slightly less imperfect.
Of course you could only fund the re-education of certain job fields, centrally controlled economy style, but that never worked well for the Soviets and you'd likely end up with political goals like flooding the programming market with really bad programmers who none the less work for $7.25/hr (or less) because of the "shortage". It might be possible to actually destroy economic sectors by flooding them with unqualified people. Would you go to the hospital if you knew the doctors were intentionally uneducated?
The problem with re education is it isn't likely to be any more successful in the long run than non-re education. Its the same people with the same brainpower operating off the same observed signals. If a quarter of the population was improperly educated the last time they went to school, the result of re-education is virtually certain to be a quarter of the population being differently improperly educated. Its sort of like handing out money to rebuild housing in flood plains, you know you're just going to be handing out more money to the same people in a couple years.
My neighbor bakes nice cookies. I have programmer money. You can guess whats supposed to happen here, but legally can't happen. Some education might help a little with WRT food safety, but it doesn't matter because the purpose of the government is to prevent her from going into the cookie baking business and compete with existing processed food factories.
The ultimate micro-brew isn't some multinational corporation spending lots of money on branding, but its the guy down the block. That of course is incredibly illegal, because the multinational corporation decides whats legal or illegal.
My wife's favorite hairdresser became unemployed due to the cost of health insurance; for awhile she cut hair at home on the side, but the .gov comes down heavy on that for obvious financial reasons.
Some sort of ideal world for lower IQ / lower functioning people would require better government. Rather than the government existing solely to protect Nabisco Inc sales, you'd have to refocus it entirely on safety and small business support services so my neighbor can sell cookies.
If my neighbor did all the homemade baked goods for my entire subdivision, I'm not entirely sure she's be poor, either. If she ran a 50% profit margin and everyone in my subdivision dropped $2/day for baked goods service (like she'd hand deliver you a hot loaf of bread every day?) that would be 6012500*0.50=$180K profit per year, not bad for an area where the median household income is a hair under $60K. Of course the purpose of the government it to annihilate small businesses in favor of large businesses.
I for one would rather pay 0.5% of my book value than the vastly larger amount in income taxes I pay. And it's a small enough value I think even extremely thin margin businesses could probably afford it.
Everyone on HN says "People would just flee" but in the end almost all the value in the US is real assets i.e. you can't move a physical building overseas.
This is even more true when you consider the incentives people have for hiding assets and cheating the system, and their ability to do it over many years or even cooperatively.
That's one major benefit of the income tax option, that measurement is actually easier, even when you consider all of those non-wage incomes.
I don't have any answers for those things, but it's an interesting thought experiment - what would such a thing look like for relatively easily valued assets vs very difficult to value assets, etc
Perhaps you could simply structure it as a transactional cost, but of course, that causes overhead on every transaction. Backdating would be ruinous and cause people a strong incentive to transact often which is probably perverse.
I think the larger question is the implication that (assuming we moved to a purely wealth tax), there's a minimum rate of return on wealth - this is already functionally true, but it sets an interesting floor to the return on investment for an asset.
I'm by no means a financial wizard, I'm sure there are huge flaws in the idea I can't see after an hour's thought, I was just playing with the idea, but it seems like it solves a lot of the problems inherent in income taxation - different entities (people, corporations, foreign investors, etc) being taxed at different rates, the relative spending ratios of various income brackets, etc.
It follows essentially a similar line of thought as the land value taxes, except of course applying to all assets.
Unfortunately dollars for employees doesn't necessarily translate to return as well as, say, hiring a process manager or automation engineer to try to eliminate the effects of a bad employee.
Like I said, there are corner cases. But most businesses would rather fire an unproductive employee than keep them around just for tax breaks.
Also, queue massive new industry that specializes in creative job accounting/number fixing in 3, 2, 1...
Here's the thing. There is still more money to be made by hiring fewer employees (because employee payroll cost > tax break).
Will it slow some things down? Sure. But it will also disincentivize the current slaughtering of humans.
>> Also, queue massive new industry that specializes in creative job accounting/number fixing in 3, 2, 1...
What do you think the current set of laws do? >>
Not sure how much it keeps the money moving, but I'm sure it encourages investment and growth.
1. Hire more people and get a tax break
2. Innovate and hire less people and have smaller payrolls
Both are win-win for companies and customers and employees.
Today, it is just point 2.
That would introduce a ton of perverse incentives.
That will also solve the unemployment problem and incentivize people to start small businesses. The family members will also have a choice between working minimum wage for their own business or seek a higher paying job, pushing wages higher and higher.
Sounds good to me.
The French have seen their wages grow at 1/4 to 1/2 the typical rate of American wage growth for the last decade. They do not lack for collective bargaining.
The American median wage is higher than the German median wage. The Germans do not lack for collective bargaining.
The American economy and median wage has outperformed: France, Germany, Spain, Italy, Finland, Britain, among many other developed nations.
The American median wage is also higher than: Sweden, Finland, Netherlands, Germany, France.
The American median wage is so high, nations such as Britain barely qualify as matching up with our poorest states.
So much for your theory.
There is a strong union presence here - both for normal employees and management. There are also actual laws to protect workers. This includes things like paid vacation, paid time off if you are sick (more if you have children), paid leave after having children (some of which can be split between the parents). Everyone is entitled to a job contract - even for temp jobs or fast food workers. Not all of the costs for the benefits is paid for by the employers: Healthcare is a tax, vacation pay is withheld from the employee's wages and paid the next year, and the government (taxes) pay for sick or parental leave.
Nope, it isn't perfect, but it surely isn't representative of the picture you paint because the one you paint leaves out the quality of life stuff.
The American Salary is higher that Germans, but Germans also work less hours on average (with higher productivity mind you, but that's not important at the moment). It actually comes out to Germans having a better median wage.
https://www.quora.com/Are-Germans-content-to-earn-19-less-th... (I wish I had a better source, but I can't find the original data that I made this conclusion before with).
I'll leave the rest as an exercise to the reader.
To meaningfully compare countries you need to either compare the gross wage costs per employee that a company actually faces or compare the net income of employees after all taxes. And correct for purchasing power of course.
You can't make incomparable values comparable by reducing them to a ratio, except in special cases.
https://en.wikipedia.org/wiki/Monetarism
then he doesn't have a point at all.
'This is the wheel of capitalism literally coming to a halt because the oligarchs are staring each other down waiting for someone to go first.'
If low interest rates boosted wages, the japanese worker would be the highest paid worker in the world. Instead, the japanese wage has declined for 20+ years.
"This state of things has left analysts stumped. For nearly a decade, the Federal Reserve has kept interest rates at extraordinarily low levels in order to initiate growth and rising demand, inflation, and ultimately higher wages. But the higher wages have been stubbornly slow to materialize."
Interest rates have been dropped into the ground, and it hasn't increased investment(growth). We have the highest savings in the history of capitalism and the lowest level of investment.
This is the wheel of capitalism literally coming to a halt because the oligarchs are staring each other down waiting for someone to go first.
And I think there is a lot to be said about Wall Street leaching most of the investors' money because it promises better returns than actual investment into actual things with utility.
Wall Street is 'supposed' to be the mechanism for recycling profits into investments so that this wheel keeps spinning. Does anyone honestly still believe it's functional?