What would be the good or service sold in order to generate the wealth to be distributed to all humans as basic wage?
And who would be the generous folks doing all the work to produce those goods and services, while being OK with sharing, with everyone, the goods (i.e. money) that they trade their goods for?
In a lot of ways, money is a measure of inefficiency. For example, if everyone had the education, experience and time to repair their own vehicles/homes etc, they wouldn't have to pay someone else to do it. We would see the costs of those services decrease, along with the income of people who would otherwise provide them.
We're seeing this all over in the economy with Amazon, eBay, Craigslist, etc. As better rapid prototyping, artificial general intelligence, and moneyless transactions like BitCoin become mainstream, there will be less and less exchange of money.
However, the overall wealth created in the economy will only increase. We're rapidly approaching a point in time (well before the singularity) where human labor can't compete with automation. We can stick with the current system of capitalism where all of the gains go to a few at the top and everyone else is in a race to the bottom to preserve their jobs. Or..
We can adopt a system that works to maximize the social good instead of production, profits, influence, things that we might think of as 20th century goals. My current favorite alternative is cooperativism, where the workers own the means of production so there is no need for unions. One example is WinCo, which simultaneously provides lower prices than Walmart and higher wages/benefits to its employees because it doesn’t spend exorbitant amounts on advertising or dividends (which tend to run 15-30% of a for-profit corporation’s overhead, sometimes more).
Ironically one of the biggest problems with cooperativism is the lack of community ownership. So a company like Valve can be regarded as the epitome of cooperativism, where the workers can potentially make billions of dollars and the community makes nothing other than taxes. In many cases even those are waived, for example in Boise where I live, Micron and hp get enormous tax waivers to attract them. Some cities even pay corporations bonuses to move there.
So the only solution that I see is to raise taxes on businesses and to abandon the idea of corporate profits so that high income individuals pay the tax rates that the US enjoyed in its highest growth decades. That would mean a readjustment of our tax brackets to match inflation since then. I would suggest few or no taxes at or below the median individual income of roughly $40,000 per year, and then use a logarithmic scale beyond that. If it was base 2, then to double one’s net income, they would need to make 4 times as much, so $160,000 per year instead of $80,000. They would pay a tax of $80,000 on that or 50%. To make 4 times median, they would have to make $640,000 per year, and pay $480,000 in taxes or 75%. If base 2 seems too high, then society would vote on which base is most fair, probably settling on something similar to what we use today below $250,000 and eliminating the loopholes above that. This is basically a flat tax in a nonlinear system.
That way we get the wage/innovation benefits of a cooperative and the social benefit of a public income stream. As cooperatives become larger, they would have a choice to pay their workers in innovation (providing free food and benefits like Google) or pay society at large through taxes if they choose cash. In other words, society gets a win-win, because non-cash innovation is the stuff of Star Trek, and even cash is still cash.
The US GDP is $16 trillion, so spread over the 160 million workers, that’s roughly $100,000 per person. The missing $60,000 reflects our wealth inequality, which means we could switch to this system today and give everyone a basic income of $40,000 and the rich would have $20,000 to spare. In other words, tax policy alone could provide for everyone right now (the way they do it in social democracies like Finland) but since the US seems averse to that, I expect cooperativism to be the path of least resistance, meaning that capitalism will eventually adopt it as the social ills of vast wealth inequality become unpalatable and we seek a peaceful reconciliation (as opposed to an uprising like the French Revolution).
To answer your original question: the endgame here is that our union (the United States was originally a union after all) becomes a conglomerate of cooperatives, and eventually a cooperative itself. So a person could join a co-op and earn $40,000 above and beyond their state-provided basic income of $40,000. But since wealth inequality already takes a larger share of income than most people earn, I think we’ll find that people migrate toward a renaissance in leisure. After all, if wages had kept up with inflation, the minimum wage would be $22/hr today, and the median income would be twice as much, or about $80,000. That’s more than most people need to live on, so we’d see a lot of 4 day work weeks, 6 hour work days, 2 months off a year, and people investing half their income and retiring at 30 anyway (essentially a private basic income as opposed to a public one). That was supposed to be the American dream, but we’ve been swindled out of it by 30 years of trickle down economics. If this seems inflammatory, well, it is, and you’ll notice that you never hear about this on the mainstream media. Please check my figures. I stand by this premise and highly recommend learning about progressivism and the history of labor since the Gilded Age, and the various ways in which the country has backpedaled with things like the Gramm–Leach–Bliley Act, which lowered regulations on wall street and led to the Dot Bomb, the Housing Bubble and the Great Recession.
Your seeing money as a measure of inefficiency is based on flawed premises, notwithstanding your pre-emptive "in a lot of ways" self-cut slack.
Money is just another product, and in that sense it isn't special. People sell their money for goods and services when they deem it profitable to them. For instance, I could build my own house, but the time required to learn and then build it is more than the time it takes me to trade my (preferred) labor for money, then use that money to trade for a housemaker's (preferred) labor, because people are better (ie. more efficient) at what they prefer to do. The housemaker accepts to trade their labor for money because they also want things for which it is more profitable for the housemaker to build a house for money and then trade that money for what they want. The process of trading something with someone else for something you prefer results in what we call profit.
This also means when you say "moneyless transactions like BitCoin", you're mistaken; bitcoin is money. Money is any product for which there is a large enough network of people willing to accept that product as payment for labor. So the rise of BitCoin won't decrease the exchange rate of money, because BitCoin will become money by definition, since it will be used by people to arbitrage their time in a profitable way as explained in the previous paragraph.
Then you say wealth will increase because machines can make things. But the more you have of something, the more its value goes down. This is supply and demand. So you don't get automatic wealth just because machines can produce, for instance, a bunch of tires, and a bunch of cars, if there's not enough people wanting those cars with tires to self-drive them around. That means customers will assign less value to tires and cars, as the overabundance of tires and cars drive their own prices down.
I haven't heard of WinCo, but if you're saying they're more profitable than Walmart, then I should hope they drive Walmart out of business. I have no hatred for Walmart, mind you; but I do have a love for better things, and charging cheaper prices than competitors while making more money seems to me like a win-win for everyone involved. If WinCo's business model really works, and yet it hasn't displaced Walmart, and assuming what you say is true, then I'm lead to believe other forces (likely regulatory) are keeping this outcome from being brought about. I'd appreciate if you could educate me as to why WinCo stores aren't popping up everywhere and displacing Walmart (or maybe they are and I'm ignorant).
I'm still having trouble understanding how you got so quickly to the conclusion that "the solution that I see is to raise taxes". I also find it weird that you say things like "the community makes nothing other than taxes". The community is constituted of people. People can make money by selling their labor. Why do they expect Valve to work for them? I'm confused.
Also when you talk about US's high tax rates (70-90%) in its highest growth decades (1950s and 60s), you should make sure to mention that they also had more loopholes than we have today, which means in effect that companies in general were paying nowhere near the official tax rate in taxes (they were paying around 30%). See [1] for a page with links to the studies. This is one of the most common economics history fallacy floating around today.
Your analysis of spreading over GDP to the population don't take into account the change effect; that once you do that, people's behaviors change unexpectedly in a way that you can't guarantee that the GDP will remain anywhere close to what it is. Numbers look into the past, not the future. The GDP now only means how much was produced given the variables in place. If the variables were different (eg. more income distribution) then the outcome would be different (either more or less, or the same for different reasons). But because Economics fails to produce falsifiable and reproducible theories, we can never know for sure. With that in mind, number gymnastics as you do it is baseless.
You make a lot of valid points and I’m not trying to argue against them, because they do apply to today’s world. My main concern though is:
But the more you have of something, the more its value goes down. This is supply and demand.
This is the foundation of modern economics, but remarkably it isn’t true. A carrot is always worth the value of a carrot. Maybe we assign it a monetary value based on scarcity, but I’m talking about the intrinsic value of stuff. We make more and more stuff every year, but the average US citizen is not seeing his or her wealth increase. The stuff is being hoarded in the hands of a select few, which is the end result of free market capitalism if it isn’t regulated to provide a fair playing field. This bothers progressives to no end, but I think libertarians rather enjoy that outcome.
I don’t think the two ideologies will ever find common ground, so I’ve been trying to look beyond all of this and find a path to a Star Trek economy. We’re approaching full automation within 1 or 2 decades, and the singularity no later than 3 or 4 (barring a global disaster or political interference). Already today the US has perhaps 2-3 times more stuff than it needs. More empty houses than homeless, for example. The cost of food is inverted, so that resource-intensive products like meat cost less than vegetables. Automobiles have an arbitrary value, depreciating 50% as they’re driven off a lot. We basically waste more than most of the rest of the planet earns. We can analyze the reasons behind this to no end, meanwhile 6 billion people are living a subsistence lifestyle that would be like slavery to us.
Anyway, I don’t see WinCo ever toppling Walmart. It has more to do with regulatory capture and monopoly than quality of service though. WinCo has a rather narrow niche and isn’t willing to do the strong-arming to have a presence in every city. They aren’t trying to maximize profits either. But I do think employee ownership is the next big thing. The costs to form a business are lower than ever, and the great failure of banks to provide seed capital has caused attention to turn to pulling ourselves up by our bootstraps. We just don’t need bosses anymore, or venture capital for that matter, which means we don’t need investors or the burden of paying dividends.
But it worries me that all of this emphasis on self-actualization is promoting selfishness. The “I’ve got mine” mentality is reminiscent of the Michael Douglas Wall Street days and I find it distasteful. I don’t trust the majority of people who’ve made it to do the right thing and give something back to the community that got them there. So I prefer to leave it in the hands of the people and just vote for increased pay by raising taxes. We could double taxes tomorrow and pass a moratorium on government spending and raise everyone’s income by $10,000 ($3 trillion divided by 300 million citizens) as a basic income. In other words, most people would see an increase in income if taxes were raised. This is counterintuitive, but what happened from roughly 1940 to 1980. Unfortunately a basic income was not in the picture, so most of the wealth created was in the form of public works. Now those roads, bridges, dams etc are crumbling because we’ve slashed government spending to unsustainable levels.
I’ve heard all of the arguments about how if we give everyone more money, inflation goes up. That turns out to be one of the great fallacies of all time and an easy way to get people to vote against their own self-interest. I worked at a business that charged $99/hr and paid the employees $15/hr. Doubling everyone’s pay is more likely to mean taking $15 per employee out of the boss’s pocket than doubling prices. This appears to be true across the board in most industries today (wages as a percentage of business overhead are lower than ever), and is an impetus behind the Occupy Wall Street movement.
Well, this has become completely political now and I’m probably just spinning my wheels here. Paul Krugman is probably as divisive as, say, Milton Friedman, so I would recommend to anyone reading this far to look at the writings of someone like Noam Chomsky as a litmus test. If we’re talking about the future, then it’s going to be more productive to think at a meta-level. There are very basic measures of unfairness and prosperity that even a child can understand, and I think he does a good job of exploring policy ramifications through reductionism. I don’t think either liberalism or conservatism are compatible with a post-scarcity future.
Comments
What would be the good or service sold in order to generate the wealth to be distributed to all humans as basic wage?
And who would be the generous folks doing all the work to produce those goods and services, while being OK with sharing, with everyone, the goods (i.e. money) that they trade their goods for?
I'm just trying to understand your suggestion.
In a lot of ways, money is a measure of inefficiency. For example, if everyone had the education, experience and time to repair their own vehicles/homes etc, they wouldn't have to pay someone else to do it. We would see the costs of those services decrease, along with the income of people who would otherwise provide them.
We're seeing this all over in the economy with Amazon, eBay, Craigslist, etc. As better rapid prototyping, artificial general intelligence, and moneyless transactions like BitCoin become mainstream, there will be less and less exchange of money.
However, the overall wealth created in the economy will only increase. We're rapidly approaching a point in time (well before the singularity) where human labor can't compete with automation. We can stick with the current system of capitalism where all of the gains go to a few at the top and everyone else is in a race to the bottom to preserve their jobs. Or..
We can adopt a system that works to maximize the social good instead of production, profits, influence, things that we might think of as 20th century goals. My current favorite alternative is cooperativism, where the workers own the means of production so there is no need for unions. One example is WinCo, which simultaneously provides lower prices than Walmart and higher wages/benefits to its employees because it doesn’t spend exorbitant amounts on advertising or dividends (which tend to run 15-30% of a for-profit corporation’s overhead, sometimes more).
Ironically one of the biggest problems with cooperativism is the lack of community ownership. So a company like Valve can be regarded as the epitome of cooperativism, where the workers can potentially make billions of dollars and the community makes nothing other than taxes. In many cases even those are waived, for example in Boise where I live, Micron and hp get enormous tax waivers to attract them. Some cities even pay corporations bonuses to move there.
So the only solution that I see is to raise taxes on businesses and to abandon the idea of corporate profits so that high income individuals pay the tax rates that the US enjoyed in its highest growth decades. That would mean a readjustment of our tax brackets to match inflation since then. I would suggest few or no taxes at or below the median individual income of roughly $40,000 per year, and then use a logarithmic scale beyond that. If it was base 2, then to double one’s net income, they would need to make 4 times as much, so $160,000 per year instead of $80,000. They would pay a tax of $80,000 on that or 50%. To make 4 times median, they would have to make $640,000 per year, and pay $480,000 in taxes or 75%. If base 2 seems too high, then society would vote on which base is most fair, probably settling on something similar to what we use today below $250,000 and eliminating the loopholes above that. This is basically a flat tax in a nonlinear system.
That way we get the wage/innovation benefits of a cooperative and the social benefit of a public income stream. As cooperatives become larger, they would have a choice to pay their workers in innovation (providing free food and benefits like Google) or pay society at large through taxes if they choose cash. In other words, society gets a win-win, because non-cash innovation is the stuff of Star Trek, and even cash is still cash.
The US GDP is $16 trillion, so spread over the 160 million workers, that’s roughly $100,000 per person. The missing $60,000 reflects our wealth inequality, which means we could switch to this system today and give everyone a basic income of $40,000 and the rich would have $20,000 to spare. In other words, tax policy alone could provide for everyone right now (the way they do it in social democracies like Finland) but since the US seems averse to that, I expect cooperativism to be the path of least resistance, meaning that capitalism will eventually adopt it as the social ills of vast wealth inequality become unpalatable and we seek a peaceful reconciliation (as opposed to an uprising like the French Revolution).
To answer your original question: the endgame here is that our union (the United States was originally a union after all) becomes a conglomerate of cooperatives, and eventually a cooperative itself. So a person could join a co-op and earn $40,000 above and beyond their state-provided basic income of $40,000. But since wealth inequality already takes a larger share of income than most people earn, I think we’ll find that people migrate toward a renaissance in leisure. After all, if wages had kept up with inflation, the minimum wage would be $22/hr today, and the median income would be twice as much, or about $80,000. That’s more than most people need to live on, so we’d see a lot of 4 day work weeks, 6 hour work days, 2 months off a year, and people investing half their income and retiring at 30 anyway (essentially a private basic income as opposed to a public one). That was supposed to be the American dream, but we’ve been swindled out of it by 30 years of trickle down economics. If this seems inflammatory, well, it is, and you’ll notice that you never hear about this on the mainstream media. Please check my figures. I stand by this premise and highly recommend learning about progressivism and the history of labor since the Gilded Age, and the various ways in which the country has backpedaled with things like the Gramm–Leach–Bliley Act, which lowered regulations on wall street and led to the Dot Bomb, the Housing Bubble and the Great Recession.
Your seeing money as a measure of inefficiency is based on flawed premises, notwithstanding your pre-emptive "in a lot of ways" self-cut slack.
Money is just another product, and in that sense it isn't special. People sell their money for goods and services when they deem it profitable to them. For instance, I could build my own house, but the time required to learn and then build it is more than the time it takes me to trade my (preferred) labor for money, then use that money to trade for a housemaker's (preferred) labor, because people are better (ie. more efficient) at what they prefer to do. The housemaker accepts to trade their labor for money because they also want things for which it is more profitable for the housemaker to build a house for money and then trade that money for what they want. The process of trading something with someone else for something you prefer results in what we call profit.
This also means when you say "moneyless transactions like BitCoin", you're mistaken; bitcoin is money. Money is any product for which there is a large enough network of people willing to accept that product as payment for labor. So the rise of BitCoin won't decrease the exchange rate of money, because BitCoin will become money by definition, since it will be used by people to arbitrage their time in a profitable way as explained in the previous paragraph.
Then you say wealth will increase because machines can make things. But the more you have of something, the more its value goes down. This is supply and demand. So you don't get automatic wealth just because machines can produce, for instance, a bunch of tires, and a bunch of cars, if there's not enough people wanting those cars with tires to self-drive them around. That means customers will assign less value to tires and cars, as the overabundance of tires and cars drive their own prices down.
I haven't heard of WinCo, but if you're saying they're more profitable than Walmart, then I should hope they drive Walmart out of business. I have no hatred for Walmart, mind you; but I do have a love for better things, and charging cheaper prices than competitors while making more money seems to me like a win-win for everyone involved. If WinCo's business model really works, and yet it hasn't displaced Walmart, and assuming what you say is true, then I'm lead to believe other forces (likely regulatory) are keeping this outcome from being brought about. I'd appreciate if you could educate me as to why WinCo stores aren't popping up everywhere and displacing Walmart (or maybe they are and I'm ignorant).
I'm still having trouble understanding how you got so quickly to the conclusion that "the solution that I see is to raise taxes". I also find it weird that you say things like "the community makes nothing other than taxes". The community is constituted of people. People can make money by selling their labor. Why do they expect Valve to work for them? I'm confused.
Also when you talk about US's high tax rates (70-90%) in its highest growth decades (1950s and 60s), you should make sure to mention that they also had more loopholes than we have today, which means in effect that companies in general were paying nowhere near the official tax rate in taxes (they were paying around 30%). See [1] for a page with links to the studies. This is one of the most common economics history fallacy floating around today.
Your analysis of spreading over GDP to the population don't take into account the change effect; that once you do that, people's behaviors change unexpectedly in a way that you can't guarantee that the GDP will remain anywhere close to what it is. Numbers look into the past, not the future. The GDP now only means how much was produced given the variables in place. If the variables were different (eg. more income distribution) then the outcome would be different (either more or less, or the same for different reasons). But because Economics fails to produce falsifiable and reproducible theories, we can never know for sure. With that in mind, number gymnastics as you do it is baseless.
[1] - http://dailycaller.com/2012/11/21/krugmans-twinkie-defense/
You make a lot of valid points and I’m not trying to argue against them, because they do apply to today’s world. My main concern though is:
But the more you have of something, the more its value goes down. This is supply and demand.
This is the foundation of modern economics, but remarkably it isn’t true. A carrot is always worth the value of a carrot. Maybe we assign it a monetary value based on scarcity, but I’m talking about the intrinsic value of stuff. We make more and more stuff every year, but the average US citizen is not seeing his or her wealth increase. The stuff is being hoarded in the hands of a select few, which is the end result of free market capitalism if it isn’t regulated to provide a fair playing field. This bothers progressives to no end, but I think libertarians rather enjoy that outcome.
I don’t think the two ideologies will ever find common ground, so I’ve been trying to look beyond all of this and find a path to a Star Trek economy. We’re approaching full automation within 1 or 2 decades, and the singularity no later than 3 or 4 (barring a global disaster or political interference). Already today the US has perhaps 2-3 times more stuff than it needs. More empty houses than homeless, for example. The cost of food is inverted, so that resource-intensive products like meat cost less than vegetables. Automobiles have an arbitrary value, depreciating 50% as they’re driven off a lot. We basically waste more than most of the rest of the planet earns. We can analyze the reasons behind this to no end, meanwhile 6 billion people are living a subsistence lifestyle that would be like slavery to us.
Anyway, I don’t see WinCo ever toppling Walmart. It has more to do with regulatory capture and monopoly than quality of service though. WinCo has a rather narrow niche and isn’t willing to do the strong-arming to have a presence in every city. They aren’t trying to maximize profits either. But I do think employee ownership is the next big thing. The costs to form a business are lower than ever, and the great failure of banks to provide seed capital has caused attention to turn to pulling ourselves up by our bootstraps. We just don’t need bosses anymore, or venture capital for that matter, which means we don’t need investors or the burden of paying dividends.
But it worries me that all of this emphasis on self-actualization is promoting selfishness. The “I’ve got mine” mentality is reminiscent of the Michael Douglas Wall Street days and I find it distasteful. I don’t trust the majority of people who’ve made it to do the right thing and give something back to the community that got them there. So I prefer to leave it in the hands of the people and just vote for increased pay by raising taxes. We could double taxes tomorrow and pass a moratorium on government spending and raise everyone’s income by $10,000 ($3 trillion divided by 300 million citizens) as a basic income. In other words, most people would see an increase in income if taxes were raised. This is counterintuitive, but what happened from roughly 1940 to 1980. Unfortunately a basic income was not in the picture, so most of the wealth created was in the form of public works. Now those roads, bridges, dams etc are crumbling because we’ve slashed government spending to unsustainable levels.
I’ve heard all of the arguments about how if we give everyone more money, inflation goes up. That turns out to be one of the great fallacies of all time and an easy way to get people to vote against their own self-interest. I worked at a business that charged $99/hr and paid the employees $15/hr. Doubling everyone’s pay is more likely to mean taking $15 per employee out of the boss’s pocket than doubling prices. This appears to be true across the board in most industries today (wages as a percentage of business overhead are lower than ever), and is an impetus behind the Occupy Wall Street movement.
Well, this has become completely political now and I’m probably just spinning my wheels here. Paul Krugman is probably as divisive as, say, Milton Friedman, so I would recommend to anyone reading this far to look at the writings of someone like Noam Chomsky as a litmus test. If we’re talking about the future, then it’s going to be more productive to think at a meta-level. There are very basic measures of unfairness and prosperity that even a child can understand, and I think he does a good job of exploring policy ramifications through reductionism. I don’t think either liberalism or conservatism are compatible with a post-scarcity future.