Gyroscopic Investing

MangoMan wrote: What will the people who can't sit on their asses all day watching TV and eating unhealthy snacks do? If I have more than 3 or 4 days in a row off, I get sooo bored once I am done with the fix-it projects, caught up on my reading, and there are no new posts on this forum. Even if you like playing golf [I don't], how many days a week can you do that? And it gets really expensive after a while. A workout / bike ride / etc. only absorbs an hour or so.

Pointedstick wrote:

MangoMan wrote: What will the people who can't sit on their asses all day watching TV and eating unhealthy snacks do? If I have more than 3 or 4 days in a row off, I get sooo bored once I am done with the fix-it projects, caught up on my reading, and there are no new posts on this forum. Even if you like playing golf [I don't], how many days a week can you do that? And it gets really expensive after a while. A workout / bike ride / etc. only absorbs an hour or so.

I'm the same way. People like you and I (and other "cognitive elite"-types who hang out in places like this forum) actually enjoy "providing marginal improvements to the wondrous system we already have", as TennPaGa to beautifully put it. We're never going to be bored, and our productivity ensures that we're not going to be the kind of people that debates are had over how to allocate us purchasing power. We will allocate it to ourselves by figuring out how purchasing power is allocated and plugging into that system. The proportion of people on this forum who have or had high-paying jobs, and/or who are pursuing early retirement or have already achieved it is astonishingly high. We are the 2% referenced in the article.

MangoMan wrote: What will the people who can't sit on their asses all day watching TV and eating unhealthy snacks do? If I have more than 3 or 4 days in a row off, I get sooo bored once I am done with the fix-it projects, caught up on my reading, and there are no new posts on this forum. Even if you like playing golf [I don't], how many days a week can you do that? And it gets really expensive after a while. A workout / bike ride / etc. only absorbs an hour or so.

madbean wrote: The transition to a work-free society will not be without pitfalls.....

MangoMan wrote: What will the people who can't sit on their asses all day watching TV and eating unhealthy snacks do? If I have more than 3 or 4 days in a row off, I get sooo bored once I am done with the fix-it projects, caught up on my reading, and there are no new posts on this forum. Even if you like playing golf [I don't], how many days a week can you do that? And it gets really expensive after a while. A workout / bike ride / etc. only absorbs an hour or so.

moda0306 wrote:

madbean wrote: The transition to a work-free society will not be without pitfalls.....

Woah.  Did they test this thing for self-awareness?

Skynet 1.0

Pointedstick wrote: .... I think the trend toward ever greater welfare systems and payments is going to eventually have to morph into a citizen's dividend. The libertarians lost; welfare is the future... hopefully in a more universal, less judgmental, moralizing, poverty-trapping, perverse-incentive-causing fashion.

....

I Shrugged wrote: Are you suggesting that as utopian, or dystopian?  Sounds more like the latter to me.  And, I cannot see it working any differently than Marxism has/does.

Tortoise wrote: I think automation is slowly bringing us toward a philosophical showdown: Either we figure out what distinguishes human beings from even the most advanced robots/computers imaginable and use that distinction to restructure society, or else we potentially perish as society crumbles due to humans becoming "obsolete" or "superfluous."

Pointedstick wrote: But this will obviously require inventing a new social system that divorces human worth from personal productive capacity.

MachineGhost wrote:

Pointedstick wrote: But this will obviously require inventing a new social system that divorces human worth from personal productive capacity.

IMO, it's not that hard given how they're all piggish and obese from being food hedonists already.  WALL-E here we come!!!

Pointedstick wrote: It is always fascinating to see the disconnects between popular perceptions and reality. Here I think we're seeing that 1) we have a big underclass and 2) we can basically pacify and ignore them by simply paying them a little bit of money each month and keeping them on the path of hedonism, which is too pleasurable and distracting to make crime worth it. Nothing more than good old fashioned bread and circuses, I suppose.

But we do have other options. If it is true, as Summers seems to think, that humans prefer to do important things even when they are not forced by a labor-market cudgel, and if it is also true that financial constraint causes people to accept safe and sure work rather than take chances on activities that might be speculative but more valuable, then there might be social return in having the state absorb some of the risk of failure faced by individual humans. In effect, the state could provide venture capital to the people. If ordinary citizens had a small but reliable annuity, too modest to live comfortably but enough to prevent destitution, then at the margin, we’d expect people who currently seek or accept unfulfilling, underpaid work to opt for entrepreneurship, or education, or art, or child-rearing, or just hold out for a better gig. “VC for the people”? would combine a reduction in labor supply with a lot of new labor demand, forcing employers to increase wages and encouraging substitution of capital for the least desirable jobs. Both the wage effect and the annuity itself would increase the share of national income available to those without direct claims on capital, reducing inequality. In his talk, Summers mused (wonderfully) that he’d prefer we not evolve to an economy in which people are employed providing increasingly marginal services to the rich, working as specialized “knee masseurs”? and the like. A straightforward way to preclude that is to ensure that everyone has the means to refuse those jobs and take chances on more meaningful and ultimately more valuable work.

“VC for the people”? would reduce market discipline, but it would certainly not eliminate it. People do not require the threat of destitution to cultivate ambition. It is much better to supplement ones modest annuity with a vigorous market income than to crouch inertly in a hovel. Most people (like most of you, my not-nearly-destitute readers) will still try hard to achieve economic success. It’s just that people who have options are much more likely to actually find success than people who don’t.

“VC for the people”? has a more common name. It is called a universal basic income. Properly implemented, it is not means-tested and carries no disincentive to earn. It is inflationary via increased purchasing power of ordinary people, the best kind of inflation, especially desirable in disinflationary times. Its level is a policy instrument and need not be indexed to prices. If it “works too well”?, positive interest rates can tamp down spending, and, presto, no more secular stagnation.

There is much hand wringing about jobs being replaced by robots. I actually see it as having the potential to provide enormous benefit. Everyone can see that for the owners of all of the robots, it is great. The owners get to have the benefit of all the work the robots do. I’m also most struck by the fact that there is now no physical reason why everyone couldn’t be in that position. This post is about how automation has the potential to turn “class conflict”? on its head by ensuring that no-one need be outside the “owning class”?.

I think we need to think about what is the constraint on how “rich”? everyone can be.  In previous times, much of the constraint was how much labour everyone could employ. Not everyone could be a mill owner or plantation owner.  It was labour that was limiting.  Each mill owner needed thousands of mill workers. Each plantation owner needed thousands of cotton pickers. But the owning class ALL were rich -however clever or stupid or inept they were. In the near future won’t the robots be the equivalent of the mill workers and the cotton pickers? Won’t other robots be the equivalent of the people who in the 1800s designed the machines and directed the slaves? The only role for people will be that of the owning class –free to do whatever they fancy. In many cases that freedom would probably be put to use in developing even more advanced technology.

Of course we COULD choose to have just a few in the owning class and have everyone else rioting. BUT the owning class would get no benefit at all by keeping itself select. In fact that would make each member of the owning class less rich because the market would be smaller.  Technological innovations have very high development costs relative to the unit cost of the product. A product such as a new medicine or an innovative electronic gadget becomes dramatically cheaper to produce per unit item if the development costs are spread across many more units sold. Imagine if we lived in a world with greater disparities of wealth than we do now. Imagine if the market for the latest medicine or electronic gadget was 1/10000th the current size. Those few who could still afford such items would have to pay massively more to cover the development costs. That dynamic works in the opposite direction too. Imagine if the potential market for the latest product was all seven billion people on earth. Then development costs would be spread so thinly they would hardly be noticed. Capital goods such as the robotic workers themselves also have the same economy of scale. It starts to make financial sense if many factories staffed with robots are to be built but not if just a few.

Clearly having an economy directed towards technological development is critically dependent on having lots of potential customers. When development costs are high relative to on-going production costs, then a large market is a great benefit and when they aren’t, it isn’t. The direction of the economy thus steers towards innovation when everyone can afford the latest technology and away from it when they can’t. There is no sense in having a fancy robot factory if it is just going to be idle due to lack of customers......

http://www.interfluidity.com/v2/3487.html

[1] It is interesting that even in very unequal, high productivity societies, one rarely sees the very poor reverting to low-tech, low productivity craft production of goods the wealthy can manufacture efficiently. One way or another, the poor in these societies get the basic goods they need to survive, and they mostly don’t do it by spinning their own yarn or employing one another to sew shirts. One might imagine that once people have no money or claims to offer, they’d be as cut off from manufactures as subsistence farmers in a low productivity society. But that isn’t so. Perhaps this is simply a matter of charity: rich people are human and manufactured goods are cheap and useful gifts. Perhaps it is just entropy: in a society that mass produces goods, it would take a lot of work to prevent some degree of diffusion to the poor.

However, another way to think about it is that the poor collectively sell insurance against riot and revolution, which the rich are happy to pay for with modest quantities of efficiently produced goods. “Social insurance”? is usually thought of as a safety net that protects the poor from risk. But in very polarized societies, transfer programs provide an insurance benefit to the rich, by ensuring poorer people’s dependence on production processes that only the rich know how to manage. This diminishes the probability the poor will agitate for change, via politics or other means. Inequality may be more stable in technologically advanced countries, where inexpensive goods substitute for the human capital that every third-world slum dweller acquires, the capacity and confidence to improvise and get by with next to nothing.