Post Scarcity Economics

[Benko]

"the traditional model of capitalism is in the process of breaking down"

Well in our country could that be at least partially because of the person in charge is adding lots of regulations, imposing taxes on businesses with more than  (?) 49 full time employees, etc?

[dragoncar]

"the traditional model of capitalism is in the process of breaking down"

Well in our country could that be at least partially because of the person in charge is adding lots of regulations, imposing taxes on businesses with more than  (?) 49 full time employees, etc?

No

[doodle]

Unpaid interns dropping dead...the new model of capitalism.

A 21-year-old intern who worked grueling hours at Bank of America's London office died just a week before his internship was to conclude.
Moritz Erhardt, a University of Michigan student from Germany, reportedly had worked until 6 a.m. for three days straight and was found dead in his flat. Erhardt, who suffered from epilepsy, collapsed in his shower, according to reports.

http://www.cnbc.com/id/100974434

[Lone Wolf]

I was a bit surprised by the article's conclusion, since I know that median household incomes have consistently risen in real terms from the late 60s until 2007.  But upon a more careful reading, I see that the article is focusing on the median earning power of male workers rather than household.  That explains the difference.

From 2007 on, however, even median household income has fallen every single year in real terms.  This is quite depressing, I'll grant, but to me that says more about the financial crisis, globalization, and our political leadership than it does about capitalism suddenly falling to pieces.

I feel that we've already given the author's post-scarcity prescription (let lots of greedy politicians do lots of deficit spending on their favored constituents) plenty of tries.  If we ever truly reach the point where human labor is no longer needed, something like the very egalitarian citizen's dividend would work far better IMO.

Massive politician-directed spending is such a disaster that it's always quite amazing to me that some people still so enthusiastically recommend it.  The spending decisions of individual citizens will yield a much better overall result.  I think that this is an important issue, and orthogonal to the question of whether deficits are good or bad.

"the traditional model of capitalism is in the process of breaking down"

Well in our country could that be at least partially because of the person in charge is adding lots of regulations, imposing taxes on businesses with more than  (?) 49 full time employees, etc?

When I apply Occam's Razor to the choice between the narratives of "capitalism is breaking down" and "financial crisis plus Obamanomics equals miserable disaster"... well, the answer seems pretty obvious.

[Pointedstick]

I feel that we've already given the author's post-scarcity prescription (let lots of greedy politicians do lots of deficit spending on their favored constituents) plenty of tries.  If we ever truly reach the point where human labor is no longer needed, something like the very egalitarian citizen's dividend would work far better IMO.

Massive politician-directed spending is such a disaster that it's always quite amazing to me that some people still so enthusiastically recommend it.  The spending decisions of individual citizens will yield a much better overall result.  I think that this is an important issue, and orthogonal to the question of whether deficits are good or bad.

This is always my biggest objection as well. If the people who enthusiastically advocated more deficit spending would acknowledge the dismal track record of politicians directing the money in anything resembling a sane manner, it would probably do a lot to bridge some divides. The same effect can be achieved cutting taxes by the amount you want deficit-spent... 

[doodle]

The same effect can be achieved cutting taxes by the amount you want deficit-spent... 

I dont think that is correct. Maybe the wink means you are just joking?

Giving tax cuts to billionaires doesn't result in massive jobs programs, infrastructure spending etc.

Taxation in the present environment seems to serve a more redistributive stimulative function rather than a drain on inflation. It is well known that $1000 dollars in the hands of a poor person is more stimulative to economic demand than an extra $1000 dollars in the hands of billionaire where it is likely to just sit in a bank account. While, the government doesnt have to take taxes from anyone to dole out money, given how disproportionately the 1% have benefited over the last 30 years and the huge salary expansions that they have received compared to the average worker I dont think it is entirely "unfair"

[clacy]

Post-Scarcity Economics

The article gives (what I think is) an accurate summary of where we came from, where we are, and where we need to go.

That said, I am dubious as to the long-term efficacy of government stimulus (tax cuts/helicopter drops, increased spending) or improving the lot of most people.  I agree with doodle that the traditional model of capitalism is in the process of breaking down, and that a new paradigm is needed.  However, I think it will take a couple of generations to emerge, and I don't know if it will be wondrous or grotesque.

Haven't read the article fully yet, but I tend to agree with your statement.  I'm not sure there are many great answers, and governments, which are made up of humans, tend to have significant flaws that unleash many unintended consequences that often make worse, the problems they are trying to correct.

I'm not sure pure capitalism is the answer either, as we are entering a time when highly intelligent people and those that already have significant capital, can be extremely productive, yet those who in times past may have earned a living wage working with their hands or physical labor are no longer able to do so at a competitive wage.

These are quite interesting times that we live in.

[doodle]

Again, my argument is not primarily moral, but mechanical. I dont think democracy and capitalism can function when wealth distribution looks like this.

[clacy]

The same effect can be achieved cutting taxes by the amount you want deficit-spent... 

I dont think that is correct. Maybe the wink means you are just joking?

Giving tax cuts to billionaires doesn't result in massive jobs programs, infrastructure spending etc.

Taxation in the present environment seems to serve a more redistributive stimulative function rather than a drain on inflation. It is well known that $1000 dollars in the hands of a poor person is more stimulative to economic demand than an extra $1000 dollars in the hands of billionaire where it is likely to just sit in a bank account. While, the government doesnt have to take taxes from anyone to dole out money, given how disproportionately the 1% have benefited over the last 30 years and the huge salary expansions that they have received compared to the average worker I dont think it is entirely "unfair"

You could easily cut taxes for those under say $200k and get the desired effect of deficit spending.  At least then, we would be the ones to decide how to best spend our money, versus a politician giving his buddy a sweatheart deal on some stupid, worthless green energy bamboozle or no-bid lightrail project.

[Mdraf]

Capitalism is alive and well if left alone. Here in the US it has been grossly distorted by government regulations which have hindered the free flow of capital to the most productive use.  If income is going down it is because the average worker here is worth less (education, productivity, etc) than before. Also before globalization capital was not flowing around the world so your average executive could support a whole family on one salary, including a 3 martini lunch. We cheered for globalization because it expanded our markets for our consumer goods, forgetting that it is a two-way street.

[doodle]

Post-Scarcity Economics

The article gives (what I think is) an accurate summary of where we came from, where we are, and where we need to go.

That said, I am dubious as to the long-term efficacy of government stimulus (tax cuts/helicopter drops, increased spending) or improving the lot of most people.  I agree with doodle that the traditional model of capitalism is in the process of breaking down, and that a new paradigm is needed.  However, I think it will take a couple of generations to emerge, and I don't know if it will be wondrous or grotesque.

Haven't read the article fully yet, but I tend to agree with your statement.  I'm not sure there are many great answers, and governments, which are made up of humans, tend to have significant flaws that unleash many unintended consequences that often make worse, the problems they are trying to correct.

I'm not sure pure capitalism is the answer either, as we are entering a time when highly intelligent people and those that already have significant capital, can be extremely productive, yet those who in times past may have earned a living wage working with their hands or physical labor are no longer able to do so at a competitive wage.

These are quite interesting times that we live in.

What is wrong with edging towards socialism? After all, it is more in line with the way that human beings lived for hundreds of thousands of years. It tends to work well in a host of other countries....

I know there are some arguments against it, but is there another viable option?

[doodle]

Capitalism is alive and well if left alone. Here in the US it has been grossly distorted by government regulations which have hindered the free flow of capital to the most productive use.  If income is going down it is because the average worker here is worth less (education, productivity, etc) than before. Also before globalization capital was not flowing around the world so your average executive could support a whole family on one salary, including a 3 martini lunch. We cheered for globalization because it expanded our markets for our consumer goods, forgetting that it is a two-way street.

Does capitalism function when labor becomes increasingly obsolete? If so, how?

[Mdraf]

Capitalism is alive and well if left alone. Here in the US it has been grossly distorted by government regulations which have hindered the free flow of capital to the most productive use.  If income is going down it is because the average worker here is worth less (education, productivity, etc) than before. Also before globalization capital was not flowing around the world so your average executive could support a whole family on one salary, including a 3 martini lunch. We cheered for globalization because it expanded our markets for our consumer goods, forgetting that it is a two-way street.

Does capitalism function when labor becomes increasingly obsolete? If so, how?

Labor is not obsolete. It is simply shifting focus. Most labor 200 years ago was in farming. Then labor shifted to industrialization and farming became more efficient and productive without all that labor.  Now we are undergoing another shift towards an electronic world where factories that make things don't need so many hands.  We don't know where this will lead just as an 1860 farmer had no idea his grandchildren would be making cars.

[doodle]

Capitalism is alive and well if left alone. Here in the US it has been grossly distorted by government regulations which have hindered the free flow of capital to the most productive use.  If income is going down it is because the average worker here is worth less (education, productivity, etc) than before. Also before globalization capital was not flowing around the world so your average executive could support a whole family on one salary, including a 3 martini lunch. We cheered for globalization because it expanded our markets for our consumer goods, forgetting that it is a two-way street.

Does capitalism function when labor becomes increasingly obsolete? If so, how?

Labor is not obsolete. It is simply shifting focus. Most labor 200 years ago was in farming. Then labor shifted to industrialization and farming became more efficient and productive without all that labor.  Now we are undergoing another shift towards an electronic world where factories that make things don't need so many hands.  We don't know where this will lead just as an 1860 farmer had no idea his grandchildren would be making cars.

OK, but in the meantime how does capitalism function when our capacity to produce is enormous, but people have an increasingly difficult time earning money through labor?

This time is fundamentally different than the past. For the first time we are seeing a decoupling of productivity and employment and income.

http://www.aei-ideas.org/2012/12/the-gr ... 1953-2011/

[Mdraf]

Does capitalism function when labor becomes increasingly obsolete? If so, how?

Labor is not obsolete. It is simply shifting focus. Most labor 200 years ago was in farming. Then labor shifted to industrialization and farming became more efficient and productive without all that labor.  Now we are undergoing another shift towards an electronic world where factories that make things don't need so many hands.  We don't know where this will lead just as an 1860 farmer had no idea his grandchildren would be making cars.

OK, but in the meantime how does capitalism function when our capacity to produce is enormous, but people have an increasingly difficult time earning money through labor?

This time is fundamentally different than the past. For the first time we are seeing a decoupling of productivity and employment and income.

http://www.aei-ideas.org/2012/12/the-gr ... 1953-2011/

Capitalism is amoral.  It is not a means to provide for people.  I think you mean our current "socio-economic system" when you call it capitalism. In that sense I agree that it sucks and unfortunately I don't have the answer .  I do think that it has something to do with our high expectations of what The System should do for us, as well as our own motivations.  Considering my own case (I am self employed) I don't have too great an incentive to work harder because half of it gets taken away. In socialist countries 98% gets taken away after you reach the threshold considered "fair" by someone else.  Diminishing returns.

[Pointedstick]

That said, what doodle has written is amoral as well.  And you haven't addressed the point: Historically, capitalism has worked because people have received  money for their labor, enabling them to buy what has been produced.  But today (i) the owner class has decided to quit paying people and (ii) labor is either cheap or unnecessary.  How does the system continue?  Besides the Soylent Green scenario?

Well, the simple cop-out answer is that people whose labor is valued by capitalists to have no exchange value might nonetheless retain a use value. The only problem with not being able to get paid is if your lifestyle requires cashflow. I don't think it's at all impossible that people who can't generate cashflow might start living lifestyles that don't require it. People with "valueless" manual labor power can easily build a relatively good quality mortgage-free house using earth and scavenged wood. In rainy climates, farming and raising animals doesn't have to require much if any money with a strong enough social circle.

This is all talking out of my ass, but I wonder if a more old-school society might not emerge within the fast-paced capitalistic society as more and more people are priced out of it. Probably the biggest impediment to this is that without some kind of cashflow, there would be no internet, no TV, no smartphones. Those bread and circuses are mighty tempting. But are they worth remaining in a society that says you're useless?

[Mdraf]

OK, but in the meantime how does capitalism function when our capacity to produce is enormous, but people have an increasingly difficult time earning money through labor?

This time is fundamentally different than the past. For the first time we are seeing a decoupling of productivity and employment and income.

http://www.aei-ideas.org/2012/12/the-gr ... 1953-2011/

Capitalism is amoral. 

I disagree.  In an abstract sense, I suppose this is true.  But seeing as how the participants in capitalism are people, I view this statement as a cop out.

That said, what doodle has written is amoral as well.  And you haven't addressed the point: Historically, capitalism has worked because people have received  money for their labor, enabling them to buy what has been produced.  But today (i) the owner class has decided to quit paying people and (ii) labor is either cheap or unnecessary.  How does the system continue?  Besides the Soylent Green scenario?

It is not a means to provide for people. 

Some of you austrian/libertarian types crack me up.

I think you are getting amoral and immoral mixed up.

[Mdraf]

Chart from doodle's American Enterprise Institute link.

Proving my point.  Output is increasing while employment (hence income) is not. That's what I said happened to farming. If the output was not being absorbed (ie. consumed) then it would not be increasing.
This shows capital is being properly allocated to some extent otherwise productivity would not be increasing.

I'm assuming you have a PP since you are on  this forum. If so, this shows that you have chosen to allocate your capital in a manner you deem is most productive for you.  Instead you could have chosen to give your money to Joe Blow for him to have a job. But you didn't.

[Pointedstick]

Proving my point.  Output is increasing while employment (hence income) is not. That's what I said happened to farming. If the output was not being absorbed (ie. consumed) then it would not be increasing.

Actually, not quite. The chart shows that labor productivity and GDP are increasing. GDP includes government spending, and labor productivity could simply be offsetting diminished employment (for example, 10 people each producing 15 units of output vs 15 people each producing 10 units of output). It could very well be that output is flat or falling, and the only reason GDP hasn't followed suit is because of the way it's calculated to include government spending.

[Benko]

GDP ...it's calculated to include government spending.

Is there a financial number/parrameter that is GDP without gov't spending that one could track?

[Mdraf]

Proving my point.  Output is increasing while employment (hence income) is not. That's what I said happened to farming. If the output was not being absorbed (ie. consumed) then it would not be increasing.

Actually, not quite. The chart shows that labor productivity and GDP are increasing. GDP includes government spending, and labor productivity could simply be offsetting diminished employment (for example, 10 people each producing 15 units of output vs 15 people each producing 10 units of output). It would very well be that output is flat or falling, and the only reason GDP hasn't followed suit is because of the way it's calculated to include government spending.

Huh? I don't understand you. 10 people producing 15 units is obviously more productive than 15 people producing 10 units.

[Pointedstick]

Huh? I don't understand you. 10 people producing 15 units is obviously more productive than 15 people producing 10 units.

Even though the total output is 150 units in both cases? Or are you defining "productivity" as the per-worker output rather than the total output? If that's the case, you need to go back and look at the chart again, because while it does indeed show per-worker output increasing, it says nothing about total output, which may be rising, falling, flat... the chart doesn't tell us.

[Mdraf]

Huh? I don't understand you. 10 people producing 15 units is obviously more productive than 15 people producing 10 units.

Even though the total output is 150 units in both cases? Or are you defining "productivity" as the per-worker output rather than the total output? If that's the case, you need to go back and look at the chart again, because while it does indeed show per-worker output increasing, it says nothing about total output, which may be rising, falling, flat... the chart doesn't tell us.

Come on...are you pulling my leg or is this more of your Cult Of Cullen stuff? You guys are scaring me.

Definition of productivity is the output of an industrial concern in relation to the materials, labour, etc, it employs.

[Pointedstick]

I'm just trying to make sure we're on the same page since you were using "productivity" and "output" interchangeably for a few posts.

The point I was making didn't actually concern productivity. It's clear that it's increasing. What I was saying is that output may be flat. If you have fewer people working each of whom produces more (which is what the chart shows), it's not clear that this means that total output is actually rising.

This is in relation to your assertion that output must be being absorbed because it is increasing; what if it's not actually increasing?

[Mdraf]

I'm just trying to make sure we're on the same page since you were using "productivity" and "output" interchangeably for a few posts.

The point I was making didn't actually concern productivity. It's clear that it's increasing. What I was saying is that output may be flat. If you have fewer people working each of whom produces more (which is what the chart shows), it's not clear that this means that total output is actually rising.

This is in relation to your assertion that output must be being absorbed because it is increasing; what if it's not actually increasing?

Ok you are right it's semantics. Output = Production (not productivity). My bad.  I see what you are saying now.  That it's possible that much fewer people are making fewer things with less materials and the total output might not be up at all.  Agreed. That's possible.