1) Silicon Valley may envision a future where human labor is not needed and society adapts. But ordinary people aren't futurists. They don't envision that coming about particularly soon. Neither the technology not the social change to deal with it. All they see is the short-term effect of automation driving down wages.
2) Silicon Valley has adopted this world view that embraces futurism and automation, but that future doesn't have a well-defined place for unskilled and moderately skilled people nor have its proponents elucidated how those people will be more prosperous in that future than in the present. People in Silicon Valley talk about "bullshit jobs" but have no answers for what those secretaries or HR staffers are going to do when those jobs cease to exist.
And Silicon Valley can't hide behind the "we just make the technology, we don't give you answers to social problems" trope because there is a strong social and political component to the current Silicon Valley mindset. Uber isn't just building logistics technology. It's disrupting an outdated industry and breaking down obsolete regulations. They're not just building technologies for the world we live in, they're trying to change the social and political rules that govern that world.
It's not unique to Silicon Valley. The company behind automated elevators with buttons did not have a plan for the elevator operators, and Henry Ford did not have a plan for horse stable operators.
how so?
Ford declared: "My ambition is to employ still more men, to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and their homes. To do this we are putting the greatest share of our profits back in the business."
Now, how much of that was genuine belief and how much was him trying to win a lawsuit is anyone's guess. Nonetheless, he had a public message that offered people a path forward, a better path, even as his technology closed other paths.
Kalanick declared: "In 2015 alone, Uber will generate over 1mm jobs in cities around the world and with that millions of people may decide that they no longer need to own a car because using Uber will be cheaper than owning one. Parking could become less strained in our biggest cities, and city congestion may actually start to ease due to uberPOOL’s expansion and success."
Now, how much of that was genuine belief and how much was him trying to win public favor with regulators is anyone's guess. Nonetheless, he had a public message that offered people a path forward, a better path, even as his technology closed other paths.
;-)
I get your point though, and I don't think you're entirely wrong. I just don't think Ford was really any different from Kalanick. They're both capitalist looking to make themselves rich and powerful. They just lived in different times with different technological and social forces at work. Ford marshaled whatever rhetoric he could to combat those who were against him. Kalanick is doing the same.
Whatever problems with inequality the world faces aren't, in my opinion, due to a relatively small number of people in Silicon Valley but due to global forces trends that have been at work for decades.
Ford's process allowed him to reduce the headcount, and gain competitive advantage even with the added expense of specialized training and higher wages to retain the specialized labor. Therefore the total value of human labor should include the workers who would've been previously hired but were no longer needed under new process.
Which is not that much different from Silicon Valley's "do more with less" mentality.
I think part of the reason you see so many people blaming the greed of Silicon Valley companies is that so many "Silicon Valley" people (wealthy and upper-income people associated with Silicon Valley) seem to be ignoring the "unskilled people need to eat" problem or, worse, blaming the "unskilled people" for failing to guess which career paths would be lucrative in the future or for lacking aptitude in those careers.
When a non-negligible portion of the conversation actually turns on people who are effectively (or literally, in some extreme cases) calling for a dictatorship of tech companies, you have to expect people to wonder how much Silicon Valley cares about the rest of the world.
But, in post-ownership, only those who own capital have income. We end up with two classes: the monied capital owners (who rent out homes/cars/kitchens/software) and the poor people needing to rent from the capital owners (or work from them at an hourly, non-guaranteed rate).
The joy of that model is it's so much easier for a wealthy person with a little capital (renting 5 apartments in a city) to take that income and buy more capital (buy 5 new apartments to rent out each year), which restricts the ability for "normal" people to participate in the market by eating the fixed supply. Then, snowballing, your return-on-capital income lets you buy more units faster and faster. You get to remove even more capacity from the public market and you get to turn a scarce housing market into a private money spigot.
The age of attracting a 50,000 person factory to your town and filling it with uneducated workers is over. There aren't any future mass-employement systems for unskilled labor that aren't essentially servitude.
Very honest.
> Our society is moving towards post-ownership.
Now how a bit more honesty?
What you really mean to say is our society is moving towards an ownership by the few (shareholders, CEOs, boards) who will indenture everyone else through blah-as-a-Service. The code is owned, the capital is owned, the apartments are owned. It's a joyous model... so long as you're on the right side of the ownership line.
It's going to be a rough half century or two until we get our cornucopia machines working.
The solution is basic income. That doesn't seem realistic in the United States, though.
Yeah, basic income coming from where? Oh wait, the machines doing all the work, right. Let's talk again when we reach singularity. If ever.
The idea would be to increase taxes on companies hoarding profits due to increased automation (i.e. "tax the robots and give the money back to displaced humans"). Then you redistribute those profits back to the public by slowly (or quickly) adjusting the social security age down to birth (or age of majority) as revenue from taxing automation increases.
Not going to happen in our current political climate though.
Alaska has a variable annual payout, and while $1,900 a year is better than $0 a year, it has not led to economic/artistic/scientific revolutions described by basic income proponents.
Initially? Probably not for those in developed countries.
The median per-capita household income (per http://www.gallup.com/poll/166211/worldwide-median-household..., as of 2013) is about $3k/yr. For half the people on the planet, $100/yr would make an appreciable difference in their purchasing power (more than 1/3 their monthly income).
Is that a practical amount? $100/yr for every person on the planet is less than 5% of the GDP of the US, and less than 1% of the global GDP (GWP). If the US was going to foot the bill alone (it shouldn't), it would be about a quarter of our tax revenues. Steep, but doesn't sound financially impossible (political and infrastructural issues may well be another matter).
Coming from taxing capital income like other income, rather than giving it preferential tax treatment that favors the already rich.
Scott Sumner explaining how all capital income taxes are additive w.r.t labor income tax: http://www.themoneyillusion.com/?p=28842
Also just do the arithmetic; 1-(1-corporate income tax)(1-cap gains tax) >income tax for pretty much any bracket.
Yes, it does.
> The combined taxes on income + corporate tax + capital gains greatly exceed the tax rate on labor income.
It makes no sense to combine those things, especially since not all capital holdings which recieve the benefit of favorable capital taxation are investment in entities that are even theoretically subject to corporate income taxes.
> Scott Sumner explaining how all capital income taxes are additive w.r.t labor income tax
He certainly asserts that income tax "doubles [sic] taxes the money saved, once as wages, and again as capital income." But this is a ludicrous assertion, since the part taxed as labor income is not taxed as capital income.
> Also just do the arithmetic; 1-(1-corporate income tax)(1-cap gains tax) >income tax for pretty much any bracket.
Even for the things where that might be relevant, that's probably only true if you look at the nominal corporate income tax rate rather than the effective corporate income tax rate.
Could you do some arithmetic? I'm not really sure what you are talking about.
But this is a ludicrous assertion, since the part taxed as labor income is not taxed as capital income.
This is simple arithmetic. Suppose I'm paid $100, taxed $20 on labor income. Then I invest the remaining $80, cash out at $90 and pay $2.50 in cap gains. I've then paid another 2.8% (adjusted for NPV).
Taxes on capital income always come after labor income, except for certain special tax deferred investment vehicles which treat capital income as equal to labor income.
Its not a matter of arithmetic. Its a matter of understanding that the kind of arithmetic you suggest doesn't make sense, because an asset doesn't have to be subject to corporate income tax on the process by which it increases in value for the proceeds derived from it to be subject to favorable capital gains taxes rather than normal income taxes. E.g., among other things, real estate investments.
> This is simple arithmetic.
The issue isn't with arithmetic, its about the justification for ascribing menaing to the arithmetic you are choosing to do.
> Suppose I'm paid $100, taxed $20 on labor income. Then I invest the remaining $80, cash out at $90 and pay $2.50 in cap gains. I've then paid another 2.8% (adjusted for NPV).
And, so? You paid taxes at the rate applicable to labor on the $100 of labor income, and taxes at the rate applicable to capital on the $10 of capital income. This isn't "double taxation" -- the portion of the income on which you pay taxes at the rate applicable to labor income isn't taxed as capital income, and vice versa.
> Taxes on capital income always come after labor income
First, so what? "After" is irrelevant to the discussion, its still separate taxes on separate buckets of income. Chronological sequence isn't relevant to the discussion of Summers claims that there is a double taxation that comes from a combination of labor income taxes and capital income taxes.
Second, in any case, as well as being irrelevant, that's untrue in the general case. While capital assets may be purchased with after-tax labor income so that there is a sense in which the capital-income-generating event and associated taxes follow after a labor-income-generating event and associated taxes, capital assets may be created or generated by events other than purchases from the proceeds of labor income, in which case the capital income, and associated taxes, are not after some kind of even loosely-connected labor income and associated taxes.
And so if I consume immediately, I get $80 worth of consumption for every $100 I earn, whereas if I invest I consume only $77.2 of consumption for every $100 I earn. That's the core of Sumner's argument.
Do you have any argument beyond playing with definitions and arbitrary divisions of wealth as to why a person who invests should consume only $77.2 while a person who consumes immediately should consume $80.0?
With the numbers you gave, the first number was correct ($80 of consumption on $100 in pre-tax labor income), but with investment the actual number is $88.75 on $110 of pre-tax labor and capital income, or $80.68 per $100 of income.
consuming immediately gives you 80% of income
assuming you invested all of it, 80$ and made back 10$ which was then taxed at 25%, you're left with 87.5$ out of 110$ in total income.
consuming after a year gives you 87.5/110 = 79.5% of income, 1 year in the future. After discounting at 2.8%, you're left with only 77.38% of income.
In that case, you'd rather splurge than invest.
Comparing dollar values of money in the future to dollar values of money in the present is simply incorrect.
After that the market reprices accordingly.
Addressing the "need to eat" problem though, the government would have a much better leverage withholding the money to buy up food in bulk than let individual buyers with no leverage negotiate their own prices.
Is that really true? My limited experience with AirBnB seemed to be that providers were in it full time. That wasn't an apartment they used themselves, they are literally acting as alternatives to hotels.
To this article's point, shouldn't parent companies be optimized out as well if we're innovating on marketplaces?
Uber and Homejoy, while also having aspects of efficiency increases, also are tightly coupled with labor, which has always acted as a counterbalance to unfettered capitalism due to the human element involved and the need for people to make a living. However, the authors of this article miss the bigger picture here. The dynamic playing out with these companies is act one of a larger play, where the final act is the complete removal of human labor from the process. The logistics infrastructure being built here is the end being sought, not the profit margin on the labor being sold nor the network of "entrepreneurs." With the logistics in place and the data needed to properly run these services at scale, switching out humans for robots as is cost effective will be a natural transition.
All the more reason we as a society need to come up with a better solution to "unskilled people need to eat" beyond blaming the greed of silicon valley companies.