Robert Reich. (photo: Richard Morgenstein)
n 1928, famed British economist John Maynard Keynes predicted
that technology would advance so far in a hundred years – by 2028 –
that it will replace all work, and no one will need to worry about
making money.“For the first time since his creation man will be faced with his real, his permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”
We still have thirteen years to go before we reach Keynes’ prophetic year, but we’re not exactly on the way to it. Americans are working harder than ever.
Keynes may be proven right about technological progress. We’re on the verge of 3-D printing, driverless cars, delivery drones, and robots that can serve us coffee in the morning and make our beds.
But he overlooked one big question: How to redistribute the profits from these marvelous labor-saving inventions, so we’ll have the money to buy the free time they provide?
Without such a mechanism, most of us are condemned to work ever harder in order to compensate for lost earnings due to the labor-replacing technologies.
Such technologies are even replacing knowledge workers – a big reason why college degrees no longer deliver steadily higher wages and larger shares of the economic pie.
Since 2000, the vast majority of college graduates have seen little or no income gains.
The economic model that predominated through most of the twentieth century was mass production by many, for mass consumption by many.
But the model we’re rushing toward is unlimited production by a handful, for consumption by the few able to afford it.
The ratio of employees to customers is already dropping to mind-boggling lows.
When Facebook purchased the messaging company WhatsApp for $19 billion last year, WhatsApp had fifty-five employees serving 450 million customers.
When more and more can be done by fewer and fewer people, profits go to an ever-smaller circle of executives and owner-investors. WhatsApp’s young co-founder and CEO, Jan Koum, got $6.8 billion in the deal.
This in turn will leave the rest of us with fewer well-paying jobs and less money to buy what can be produced, as we’re pushed into the low-paying personal service sector of the economy.
Which will also mean fewer profits for the handful of billionaire executives and owner-investors, because potential consumers won’t be able to afford what they’re selling.
What to do? We might try to levy a gigantic tax on the incomes of the billionaire winners and redistribute their winnings to everyone else. But even if politically feasible, the winners will be tempted to store their winnings abroad – or expatriate.
When more and more can be done by fewer and fewer people, profits go to an ever-smaller circle of executives and owner-investors. WhatsApp’s young co-founder and CEO, Jan Koum, got $6.8 billion in the deal.
This in turn will leave the rest of us with fewer well-paying jobs and less money to buy what can be produced, as we’re pushed into the low-paying personal service sector of the economy.
Which will also mean fewer profits for the handful of billionaire executives and owner-investors, because potential consumers won’t be able to afford what they’re selling.
What to do? We might try to levy a gigantic tax on the incomes of the billionaire winners and redistribute their winnings to everyone else. But even if politically feasible, the winners will be tempted to store their winnings abroad – or expatriate.
Suppose we look instead at the patents and trademarks by which government protects all these new inventions.
Such government protections determine what these inventions are worth. If patents lasted only three years instead of the current twenty, for example, What’sApp would be worth a small fraction of $19 billion – because after three years anybody could reproduce its messaging technology for free.
Instead of shortening the patent period, how about giving every citizen a share of the profits from all patents and trademarks government protects? It would be a condition for receiving such protection.
Say, for example, 20 percent of all such profits were split equally among all citizens, starting the month they turn eighteen.
In effect, this would be a basic minimum income for everyone.
The sum would be enough to ensure everyone a minimally decent standard of living – including money to buy the technologies that would free them up from the necessity of working.
Anyone wishing to supplement their basic minimum could of course choose to work – even though, as noted, most jobs will pay modestly.
This outcome would also be good for the handful of billionaire executives and owner-investors, because it would ensure they have customers with enough money to buy their labor-saving gadgets.
Such a basic minimum would allow people to pursue whatever arts or avocations provide them with meaning, thereby enabling society to enjoy the fruits of such artistry or voluntary efforts.
We would thereby create the kind of society John Maynard Keynes predicted we’d achieve by 2028 – an age of technological abundance in which no one will need to work.
Happy Labor Day.
Such government protections determine what these inventions are worth. If patents lasted only three years instead of the current twenty, for example, What’sApp would be worth a small fraction of $19 billion – because after three years anybody could reproduce its messaging technology for free.
Instead of shortening the patent period, how about giving every citizen a share of the profits from all patents and trademarks government protects? It would be a condition for receiving such protection.
Say, for example, 20 percent of all such profits were split equally among all citizens, starting the month they turn eighteen.
In effect, this would be a basic minimum income for everyone.
The sum would be enough to ensure everyone a minimally decent standard of living – including money to buy the technologies that would free them up from the necessity of working.
Anyone wishing to supplement their basic minimum could of course choose to work – even though, as noted, most jobs will pay modestly.
This outcome would also be good for the handful of billionaire executives and owner-investors, because it would ensure they have customers with enough money to buy their labor-saving gadgets.
Such a basic minimum would allow people to pursue whatever arts or avocations provide them with meaning, thereby enabling society to enjoy the fruits of such artistry or voluntary efforts.
We would thereby create the kind of society John Maynard Keynes predicted we’d achieve by 2028 – an age of technological abundance in which no one will need to work.
Happy Labor Day.
Comments
+17
#
2015-09-02 09:18
I'm actually
surprised that the Oligarchs and their lobbies haven't had Labor Day
deleted from the public holiday calendar -or replaced it under a pretty
name like "Freedom from Labor Day" in the spirit of phony naming of
nefarious institutions such as "Homeland Security (If you can afford
it)" or "Americans for Prosperity (for some)".
After all, according to the third member of the Shrubbery Die-nasty, Americans need to work more anyway, so they don't need this or any other day off.
After all, according to the third member of the Shrubbery Die-nasty, Americans need to work more anyway, so they don't need this or any other day off.
+14
#
2015-09-02 10:26
This is a very
insightful article by Robert Riech. His observations, and those of the
great John Maynard Keynes before him, put the finger on the underlying
structural problems of the economy that have evolved to our present day
and beyond.
His suggestion for dealing with this sea change is interesting, if somewhat esoteric to the non-initiated. But even though a "gigantic tax on the incomes of the billionaire winners may not be politically feasible", a substantial increase may be, and may serve to balance the way-out-of-balance we now have, thanks to Reagan, Bush II, et al.
Lets at least shoot for that - over the opposition of the oligarchs - and also increase the minimum wage which is so harmful to the lower income part of the population.
His suggestion for dealing with this sea change is interesting, if somewhat esoteric to the non-initiated. But even though a "gigantic tax on the incomes of the billionaire winners may not be politically feasible", a substantial increase may be, and may serve to balance the way-out-of-balance we now have, thanks to Reagan, Bush II, et al.
Lets at least shoot for that - over the opposition of the oligarchs - and also increase the minimum wage which is so harmful to the lower income part of the population.
+10
#
2015-09-02 11:02
This is one of Bob's
best. No doubt we are going to have to find a way to redistribute the
profits of a technology owned by a few, to the many whom it has
replaced. The alternative is to return to feudalism and serfdom.
+2
#
2015-09-02 11:36
reich's dilemma - we
are powerless to do anything about anything - in reich's words - "What
to do? We might try to levy a gigantic tax on the incomes of the
billionaire winners and redistribute their winnings to everyone else.
But even if politically feasible, the winners will be tempted to store
their winnings abroad – or expatriate."
- in sum, we are powerless to do anything about anything - unless, of course we exercise our power to tax income hidden abroad, or tax income of expatriate billionaires - i ask, why not? and don't give me that gigantic b-s-, what if they just paid the same rate everybody else pays, their fair share? these welfare billionaires?
what keeps us from exercising our power to fairly tax billionaires is, as bernie says, billionaire bribery of our beggar congress, which begs from billionaires the funds to get reelected, listens to them and does their bidding!
what bernie proposes, to fix this bribery system of government, is public funding, only, of all federal, state and local elections!
you don't have to be an economist, reich, to see how public funding, only, overthrows our 1% masters - how come you haven's figured it out yet?
the last time you wrote about the bribery system, you asked for our thoughts - i gave you mine and asked for yours - guess you haven's read our thoughts yet! - if you see any flaw in bernie's logic, someday, when you get around to it, if you think it's important enough to respond to, please let us know, thanks!
- in sum, we are powerless to do anything about anything - unless, of course we exercise our power to tax income hidden abroad, or tax income of expatriate billionaires - i ask, why not? and don't give me that gigantic b-s-, what if they just paid the same rate everybody else pays, their fair share? these welfare billionaires?
what keeps us from exercising our power to fairly tax billionaires is, as bernie says, billionaire bribery of our beggar congress, which begs from billionaires the funds to get reelected, listens to them and does their bidding!
what bernie proposes, to fix this bribery system of government, is public funding, only, of all federal, state and local elections!
you don't have to be an economist, reich, to see how public funding, only, overthrows our 1% masters - how come you haven's figured it out yet?
the last time you wrote about the bribery system, you asked for our thoughts - i gave you mine and asked for yours - guess you haven's read our thoughts yet! - if you see any flaw in bernie's logic, someday, when you get around to it, if you think it's important enough to respond to, please let us know, thanks!
+3
#
2015-09-02 11:44
I wish he had
provided an estimate of how much income the proceeds from patents would
provide per person. I really have no idea what it would be. But I think
he is right. We have to find a way to distribute income so that people
who cannot find work or enough well paying work will have a way to
maintain a decent standard of living. In my opinion it should be equal
what a "living wage", currently considered to be $15/hr but it needs a
cola, for full time work. My idea was to have a "market tax", a tax on
all companies, foreign or domestic, that sell goods or services in the
US market. If companies don't pay, they can't sell anything in the US.
+1
#
2015-09-02 11:49
Love that "everybody
in on the patent revenue" idea, Bob. Consistent with a developing
socialism. And that kid don't (sic) need his 6.8 bil. Why can't anybody
see that?
+3
#
2015-09-02 11:51
Best column yet Bob. Quaint ain't it though, that even 40 years ago, this would have been a science-fiction dystopia?
+7
#
2015-09-02 12:26
Rosa Luxembourg said
it best so long ago: "Under capitalism we have to make a choice between
socialism or barbarism." I think ill-gained wealth should be
expropriated from the parasitic ruling class and redistributed. It's a
nice old fashioned concept.
+1
#
2015-09-02 18:19
Quoting Agricanto:
Ha. Good one, but for the evidence provided from history that whatever the system there is always a "ruling class".
Those damnable "7 deadly sins" afflicting human beings seem to transcend and trump ideologies.
Those dear souls on the wait for the second coming will wait no longer than our Utopian egalitarian dreamers.
Rosa Luxembourg said it best so long ago: "Under capitalism we have to make a choice between socialism or barbarism." I think ill-gained wealth should be expropriated from the parasitic ruling class and redistributed. It's a nice old fashioned concept.
Ha. Good one, but for the evidence provided from history that whatever the system there is always a "ruling class".
Those damnable "7 deadly sins" afflicting human beings seem to transcend and trump ideologies.
Those dear souls on the wait for the second coming will wait no longer than our Utopian egalitarian dreamers.
+4
#
2015-09-02 15:40
Reich is a treasure font of economic info. What he points out is that technologically ,
we have advanced to the point of everyone being able to provide for
themselves and live healthy, meaningful lives, without war and
inequality. He adds that those who desire more can put in the time and
effort to have it.
What he doesn't acknowledge is that our world is controlled by sociopathic, adolescent Monopoly competitors who control the board and won't let anyone else compete. To do this, they must have everyone else divided and struggling to get by. This will keep them busy till they die, thus assuring their continued control through their offspring - Waltons, Kochs, Mars, Dupont. Ford. Trump etc.
What he doesn't acknowledge is that our world is controlled by sociopathic, adolescent Monopoly competitors who control the board and won't let anyone else compete. To do this, they must have everyone else divided and struggling to get by. This will keep them busy till they die, thus assuring their continued control through their offspring - Waltons, Kochs, Mars, Dupont. Ford. Trump etc.
+3
#
2015-09-02 18:46
Quoting Doc Mary:
Great idea! Most people would agree with you. But most people can't afford the loss of income. And if you think corporations will increase hourly wages to prevent loss of income (due to cutting back hours), guess again. As an example of corporate benevolence, look at how they are supporting proposals to increase the minimum wage to a measly $15 an hour.
I think it's time for the 30-hour work week.
Great idea! Most people would agree with you. But most people can't afford the loss of income. And if you think corporations will increase hourly wages to prevent loss of income (due to cutting back hours), guess again. As an example of corporate benevolence, look at how they are supporting proposals to increase the minimum wage to a measly $15 an hour.
0
#
2015-09-03 10:17
Quoting Doc Mary:
Like Kellogg had for decades? (See http://www.alternet.org/labor/when-america-came-close-establishing-30-hour-workweek) I met some of those workers who's productivity more than made up for the shift from 3 long shifts to 4 shorter ones a day. I was very impressed.
The principle of taxing actual profits from patents appeals to me, though I'm sure the slick financial players would shift the accounting to make it all seem more "non-profit," or very low profit. Seems many more industries have learned how to pay much more in services that can skim much more privatized revenue/income away from areas formerly taxed much less, if at all.
I still think it is worth consideration, and might help upset the steady ratcheting of advantages to those who would otherwise keep tending to increase the differential accumulation of wealth and power.
Fewer and fewer people can afford the ever more concentrated profits, I think which reduce the Velocity of Money (already lower than the worst encountered at the beginning of the Great Depression, when they started measuring it).
The Velocity of Money (how much it circulates) seems a critical, but now ignored measure). To me, that relates as a documentary on the Greenwood section of Tulsa mentioned, the "Negro Wall Street" had each dollar circulated 29 times before it left the community. Shouldn't we examine how such circulation helps an economy?
I think it's time for the 30-hour work week.
Like Kellogg had for decades? (See http://www.alternet.org/labor/when-america-came-close-establishing-30-hour-workweek) I met some of those workers who's productivity more than made up for the shift from 3 long shifts to 4 shorter ones a day. I was very impressed.
The principle of taxing actual profits from patents appeals to me, though I'm sure the slick financial players would shift the accounting to make it all seem more "non-profit," or very low profit. Seems many more industries have learned how to pay much more in services that can skim much more privatized revenue/income away from areas formerly taxed much less, if at all.
I still think it is worth consideration, and might help upset the steady ratcheting of advantages to those who would otherwise keep tending to increase the differential accumulation of wealth and power.
Fewer and fewer people can afford the ever more concentrated profits, I think which reduce the Velocity of Money (already lower than the worst encountered at the beginning of the Great Depression, when they started measuring it).
The Velocity of Money (how much it circulates) seems a critical, but now ignored measure). To me, that relates as a documentary on the Greenwood section of Tulsa mentioned, the "Negro Wall Street" had each dollar circulated 29 times before it left the community. Shouldn't we examine how such circulation helps an economy?
