Sunday, June 21, 2015

Return of the Crazy Thoughts: Dealing with the Robopocalypse [Part 2]

This was originally planned to be the followup to the post I wrote in March 2015.  However, like everything it seems in my life, there has been far, far too muh to do and too little time, so things slipped.  This one slipped the most.  Or close to it.

So!  Much later!  Here we go!

The topic for the post series is the Robopocalypse and what to do with the fact so many jobs which we have long relied upon to help power our economy are simply going to go away.  Machines will take the place of workers.  This will be a greater disruption to how the economy works than even the first Industrial Revolution.  How we as humanity cope with it will determine the future.  I don't mean to sound melodramatic, but consider capital, as in dinero, will be able to replace labor in vast swathes of the economy cannot help but make you take pause when you consider the implications.

We could end up a world of the hyper-rich and the rest of us as serfs in a techno feudalist society: Blomkamp's Elysium captures the flavour, but not the details.  Or we could have a Pournellian Welfare Island Scenario.  Alternately, we end up like the residents of Wall-E's Axiom.  Or we could end up completely irrelevant.  And the future could go downhill from there.  Or we could go the extreme in the other direction, a Neo Luddite approach where those who do embrace the robopocalypse render us and our economy irrelevant: we would be the 'North Korea' of the 21st/22nd century, economically speaking.  None of those potentialities are particularly appealing. 

In the previous post, it was established that jobs for at least 26 million working force Americans are going to go away under the Robopocalypse of the next 20 years. This is through straight replacement of people with automata in the low hanging fruit of robotic tasks.  

There are also knowledge base jobs which can and will be replaced with software: think IBM's Watson, Apple's Siri and MicroSoft Cortana amped up with massive back-end databases.  These will move into the white collar jobs as well.  And that in turn will have a significant, if less clear impact on the availability of those jobs. 

Then there are those jobs which might have existed, but will be rolled back simply because the spending from the tens of millions of people now unemployable do not have the extra money to spend.  The restaurant may only need five people to cater to thousands daily, but if there is no one who can afford to go to that restaurant, then it won't exist.  

Here we seek another way.

However, what could that way be?  After all, you have potentially more people driven to unemployment than in the Great Depression.  In fact, for many, those workers may even be unemployable!  There are simply no jobs which those workers can take, not even the emergency crap jobs most of us could resort to: the emergency, crap jobs will simply not exist. 

All of those people simply cannot earn a living.  Period.

This means they will not buy the goods of the rich, so the rich will not remain rich long.  ("After all all, Mr Ford...")

It is already a case where the average person finds it exceedingly hard to vault past getting by.  Until a family (or individual) can reach the point where they can regularly risk five to ten percent of their income without any fear of what may happen, they cannot begin to accumulate wealth.  In addition, that five to ten percent must be above certain thresholds as well: it must be in the thousands of dollars on a regular basis.  If not, they cannot do the necessary bootstrapping.  This is in the economy now.

Consider the economy of the robopocalypse where a huge number of people cannot work at all based on their current skillsets and even their probable ones with training: the majority of employees from Mickey D's are not (most likely) going to become rock star programmers, engineers or scientists. Even so, there will be intense competition for what jobs there are and we could end up with a very high, European-like unemployment.
With very large numbers of unemployed, that gets dangerous.  At some point, they are going to come looking for what they feel ought to be their's.

What to do?

There is an obvious answer, but its one which when I began pondering what to do about the robopocalypse was very unpalatable: a guaranteed minimum income.  This i the concept whereby everyone is always guaranteed an income, whether they hold a job or not for the entirety of their lives.  The mechanism is everyone, regardless of their income, is cut a cheque each month for a certain amount.  The intent is to make sure everyone is at least above the poverty line and can survive.  Guaranteed.  This is the ultimate welfare state.  

I had a real problem with this when I was thinking about it.  After all, I am a Republican[1] (*gasp*shock*hiss for many of my readers!).  I believe very strongly in the 'right to fail:' that is a person has the right to succeed or fail on their own hard work.  People ought to be rewarded for their hard work and ingenuity. 

But again, there's no way for many people to get to the point where they can earn any money under the robopocalypse.  And eschewing the robopocalypse in favour of human employment won't work either.  So, again, even if the answer makes you uncomfortable, it is still the answer.  Whether or not you like it.

It turns out there is actually a some conservative support for a guaranteed minimum income.  Milton Friedman wrote about a variant in his influential book Capitalism and Freedom.  Here is a very, very respected and most definitely conservative economist who advocated a minimum income to alleviate poverty and that was in the pre Robopocalyptic economy.

There is another "conservative[2]" who is quite famous who tried to get a minimum income implemented in the United States: Richard Nixon.  The monster report on this was his Commission on Income Maintenance that he followed up with trying get Congress to pass bills in support.  It failed and I am sure there might have been some nontrivial political distractions which helped preemptively derail any second attempts at getting it passed[3]. 

Finally, Alaska has its Permanent Fund.  Regular payments are made out of it in the form of dividends to every long term resident of Alaska...and Alaska is hardly noted for being a blue state. 

If the economist who came up with the conservative touch stone of school vouchers, the president who employed Pat Buchanan and one of the reddest states in the Union were & is ok with the concept with a guaranteed minimum income, then my conservative side ought to get over itself.

First Caveat: The Welfare Trap

The first problem is we are setting everyone up for the welfare trap.  This is where working at all is disincentivized.  If you work and earn above a certain level, then you lose your guaranteed income. This is part of the problem with a negative income tax.  There is little reason to work if you are not going to get more out of it by doing so.

The answer here is to guarantee everyone gets the income irregardless of how much they are making.  If you are a citizen of the United States, you get an income.  Whether you are a gazllionaire or fresh off the boat and unable to do anything other than breathe, you get an income.
Second Caveat: The Stratification Trap

Even with the implementation of a guaranteed minimum income, we still have a problem.  And sadly, its as big of a problem in its own way.  By providing everyone with the minimum to survive but no mechanism to thrive, we end up with a society of the immensely rich getting richer and the rest just to survive.  There must be a method built in for people to thrive not just survive.

The guaranteed income by itself is insufficient to make a healthy society.  You have a different case of the peasants and aristocracy.   People who survive and people who own everything.  Not good.  Even worse than things are today.

Despite having just proposed a very socialist concept here for the first half of the mechanism for dealing with the robopocalypse, the other half is going to be a very capitalist solution.  Even after the robopocalypse, there is going to be a need for businesses of various sorts.  Small, large, everything between.  The single biggest problem with starting a business is access to capital.  People have ideas, often very good ones which fill needs, but cannot get the money to get started.

The proposal here would be to create method for people to propose businesses and have them funded.  It need not be a solitary mechanism.  There may be several.  One may be the equivalent of kickstarter (properly regulated) whereby people can directly invest rather than donate to.  Another may be a form X number of loan guarantees per life time for a person from a larger, reformed SBA targeted at startup companies, allowing for larger amounts of capital to move there rather than just the standard small business loan.  It might even be a direct investment or loan by the government fund to the individual.

Third Caveat: The Structural Trap


How you set the fund up for this is really important.  Its funding source should not be raidable by Congress or the rest of the government.  Ideally, it ought to be built up in a manner similar to the Alaska Permanent Fund such that it will, over time, increase without increasing revenue streams if at all possible.  Likewise, it ought to be structured such it should be insulated from market fluctuations: a economic downturn could wipe out the fund if mismanaged.  That's dangerous and ought to be protected: people's lives are depending on this fund.

Fourth Caveat: The Funding Trap

The largest elephant in the room is funding.   Indeed, if you were to chop up the entirety of the budget of the United States and simply pay it out to every person in the country, you would end up only getting $11,000 individually.  That's too little for anyone to actually live on and would fail to provide for a defense or other government functions.

Where the income comes from for the fund is very important: it needs to be able to sustain paying for 310+ million people while not producing a crushing burden on those who are making money above and beyond.  Let's list the potential sources.  Reminder, these are meant to be suggestions, rather than absolutely required.

1.  A progressive income tax for income above the dividend paid out by the "US Permanent Income Fund."  It probably could be quite similar to what we have now, just with the equivalent of 'zero' tax being when someone does not earn anything above the guaranteed income.  The except to keeping everything the same or very similar would be to get rid of most of the deductions: the rich won't end up paying like Mitt Romney (15%), but what they really ought to (somewhere around 35%).  An exception might be for mortgages; however, but with a limit on the total amount of interest which can be claimed. 

2.  Social insurance taxes - since this would be largely replacing the social security - bring in another almost $1.1 trillion.  Raise the limit for social security taxes: currently this is only paid up to around $120k.  Everything you earn above that is social insurance tax free.  This could easily raise the amount of revenue significantly and could potentially pay even more than the regular income tax.

3.  Corporate taxes.  Guess what?  Corporations in the United States paid less than one fourth what individuals did in taxes in 2015.  That could easily be rectified.  After all, Google, Apple and others have a combined in excess of $100 billion in cash.

4.  A carbon tax.  Originally I was going to state a fossil fuel tax, but its largely the same.  Natural gas is cheaper in the US than anywhere in the world.  Add a moderate tax.  Coal is environmentally destructive and adds to our carbon emissions hand over fist. If a tax for the equivalent of 10 cents per gallon for carbon emissions were added at a flat rate across the board for all carbon sources, the US would collect over $500 billion.  If an associated carbon tariff is also employed, then the intake would at least be comparable to the income tax intake.

Up to this point, all we've done is balanced the US budget, neglecting other sources of income for the government.  And the carbon tax, we hope, will slowly decrease in revenue.  This

5.  A robot tax.  This would be a direct, specific tax on the bot which is replacing Assuming a bot costs the same as one year's salary for the employee the robot is replacing, even a significant tax at the time of purchase would hardly be arduous since the bot will be far, far cheaper over the long term.  A 100% tax would be possible (though perhaps not advisable) if the bot was replaced every 5 years, the business owner still comes out way ahead.  Even with the price drop of the goods as there is a race to the bottom for pricing, the revenue from the 'robot tax' would be quite significant; doubly so since the cost of services and goods would decrease and allow for more production and bots and the associated tax.  In fact, there would be enormous amounts of growth if costs really dropped that much.  A tariff of a similar kind would probably be necessary as well.  How that would work with free trade deals, I have no idea, to be honest.

Recap:

The idea here is everyone gets a guaranteed minimum income.  This is intended only to make sure people have comfortable, but not luxurious life.  Additionally, the cost of this would be born by those who can afford it, the corporations which make far more than individuals do and pay far less taxes, the bots which are replacing people and a carbon tax (really a lot like the petroleum based funds if you think about it).

However, a mega welfare state is not the sole change.  The second change would also be to greatly increase the access to capital by the average person through a major expansion of the SBA (with the understanding most of the businesses would fail and not ding the person) and other potential methods as well.  This would also allow for people to start their own businesses and with the aid of the robopocalypse potentially bootstrap themselves.

The fundamental idea here is people are taken care of at comfortable, but not luxurious level.  Then it is up to them to bootstrap themselves - and they have the tools to do so now - past that point.  However, that takes their own hard work to do so.

There are questions which need to be answered - besides verifying we can afford this plan - and those will be addressed in the next post.  Which might take a while.





1.  I'm a fiscal conservative, social liberal, foreign policy conservative and technological liberal.

2.  He'd be comfortably within the left wing of the Democratic Party these days...how bizarre.

3.  While I do not like Nixon much at all, I'm none too fond of LBJ and he, while seemingly a loathesome man, succeeded in doing some pretty impressive legislation.  Nixon might have produced some good socially if not for his paranoid stupidity that led him his criminal acts.

9 comments:

  1. I think the trend to should move towards.

    1) Basic shelter = free.
    2) Basic food (ie. not fancy food) = free.
    3) Health care = free.
    4) Basic Phone & Internet = free.
    5) Public transportation = free (unfortunately, we have cities so spread out).
    6) Education (unfortunately, most congressmen send their kids to private school).
    7) Government should own things that don't make profit:
    -a) Trash
    -b) Electric
    -c) Water
    -d) Gas
    -e) Health Insurance (not counting cosmetic surgery)

    Robot tax is a good idea.

    But the hard part is the transition to this.
    Especially if the rest of the world is not doing the same.
    And then there's the problem of companies that can outsource everything (ie. workers, database to the cloud, even just having the building built in another country).

    So, it's not as easy, but still can be done.
    And yes, this is very simplistic form of the idea.

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  2. Hi John,

    A pleasure to meet you.

    I understand your POV, but I have to say, I think it would be better for all involved if there were transactions involved. When people purchase something they tend to treat it better than if they are given something from a faceless entity like the government. If they rent or buy their place (and there are plenty of spots where they could do the latter if not in, say, San Francisco or New York), they will treat it better than if they get it for free.

    Additionally, by making everything free to folks, then you are setting them up for the exact same trap (if with a different coloring) that I warn about above with the stratified society. You get, in many ways, the Pournellean Welfare Island scenario: citizen vs taxpayer. No thanx.

    Finally, you're taking away choice with the above. If citizens of a country - the US since I am an American - are given an income, then they can make decisions on how to spend it. If they are simply given shelter and life's amenities for free, then they cannot make those same decisions. It will be whatever is available. And if the past is any guide whatsoever for the future, then the housing which will be provided will not be that good. Whereas someone can make a buck off it...then that seems to motivate people quite well.

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  3. Oh and I'll say I am onboard for the health care. We just need to make sure that does not cost more than providing an income to people.

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  4. Anonymous11:57 AM

    I like your ideas and general analysis, though the funding will definitely be one of the biggest contentions so far that I can see.

    However, supposing a bill following your good thoughts to a T is proposed, how would you prevent it from becoming corrupted subsequently in the future? It's not the "today" legislature we must worry about, but where it can be taken to "tomorrow". It seems pretty easy for such a system to spiral into that welfare trap and ultimately cause societal debt to outpace GDP and eventually collapse the economy (ala Greece); at which point, since society was to some degree dependent on a now unaffordable minimum income, societal revolution is unavoidable. If the government could be trusted to manage the system like Alaska has done... but there's no guarantee a priori that it will be well managed or remain well managed, and the larger the scale the more difficult both those aspects become.

    And then there's the problem of corruption, which we have seen corporations perpetuating en mass on both sides of the aisle in Washington as of late. How in the world can this idea be protected from corporate lobbying? Particularly when corporations have become so multinational, so their interests may have absolutely nothing to do with Our interests, yet they wield all the money based influence (bribery is "free speech" these days, blech). If everyone has a minimal income they depend on, and then some corporation is able to lobby forward twisting that in a way, like saying you can only use your minimal income "stamps" in certain brand chains or stores that "support accepting them" that end up all simply subsidiaries of one megacorp, then what will that mean for the economy and the ability to get capital for ones own potentially competitive-to-the-establishment ideas? It could end up leaving the country controlled by one corporation through many branches, since they've got the population captive by the hook of minimal income--a serious point of leverage to use against folks.

    It's hard for unwieldy government to have that much control of daily lives--let alone over the survivability of an entire segment of society. And what about the possibility of "Strings" being attached to the minimal income? Vote a certain way, spout certain beliefs the government doesn't sanction (e.g. political correctness), try to stop the government from compromising your privacy, and boom, you're cut. Again, that's not a problem of the "today's" legislation idea, but tag-ons or loopholes or legal challenges or subsequent ideas being imposed in new bills (forwarded by new forces of influence) later down the line.

    Somehow, this idea and hypothetical bill would have to be designed from the ground up to hard counter All those routes of challenge and corruption, and future funding challenges. Not an enviable task to figure out.

    Finally, it is, unfortunately, an extremely intrusive idea, particularly when dealing with a country founded on the principles of individualistic freedom and minimal governance. But that still leaves the roboapocolyse an unavoidable problem that so far you've put forward the best idea I've seen to date with how to address. It's just an idea that depends on extraordinary optimism in government character and uncorruptability, but simply leaving forces to be and hoping for a good outcome requires even More optimism than this idea.

    I feel like, given all these quagmires, what may end up actually happening is legislation goes in to limit robotic use--some sort of "Worker Protection Act" or something. Forcing companies to hire labor, simply because no better compromise could be forged on Capital Hill and it's an oh so easy sounding solution. I guess we'll have to see, and a lot will depend on the strength of the characters running the show when the time comes.

    But yeah, great idea overall, and a wonderful, thought provoking read!

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  5. I completely agree that funding will be hard. It will require some nontrivial reworking of the tax code and the acceptance of the robot tax and probably something like the carbon tax (or fossil fuel extraction tax or some such).

    Navigating the legal creation of the of the fund would be a task. I do not think it will be perfect. OTOH, the Alaska Permanent Fund (as well as other permanent funds in Texas! and elsewhere in the US!) have been done.

    Government can be done well. I suspect part of our problem now with government being inefficient is partly because we believe it will be so and we over regulate even the government. The US Army was just stating to get a new helicopter design done it needed to have sign off by 68 different offices within the Pentagon. WTF! OTOH, I've worked with govies most of my career and I've seen groups and people work well and very, very efficiently. The key is the ability to remove stupidity or incompetence.

    Even so, the way I envision this is through a fund which is owned by the government, but run separately from the government. Again, the Alaska Permanent Fund.

    Likewise, it is on the citizens of the country to police the country. Likewise, it ought to be noted that no system lasts forever. It needs to be cleaned up and replaced periodically. Our government has been remarkably stable. We need to go in and clean out parts of it though. This system I am proposing will probably only last 100 years tops. Then something else ought to take its place. Considering the change which would come in that time period, it will HAVE to be replaced.

    I am also very against the idea of just giving stamps or what have you. This ought to be cash. That allows for the maximum personal choice for what they do.

    The Worker Protection Act is a bad idea. It's a neoluddite approach. And, honestly, Congress will not act fast enough to stop the Robopocalypse. The self driving cars and trucks alone are going to be ridiculously disruptive. Nevermind the Burgertron. or if you combine them, the Robo Taco Truck. Life is 2030 is going to be RADICALLY different. The future will have finally arrived.

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  6. A few more bits:

    Congress should NOT try to stop the Robopocalypse either.

    1. if we do, we end up trailing massively behind our competitors who do embrace the Robopocalypse.

    2. The Robopocalypse has the chance to provide as much of an increase in wealth from now as the industrial revolution was over the previous agrarian economy before it. We just have to manage it better than the IR was by its contemporaries.

    However, something needs to be said about governments.

    They and the military are NOT businesses. While they can benefit from some business practices, it has been a great mistake to think they ought to be run as businesses. In many cases business practices can greatly increase government costs.

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  7. Anonymous8:02 AM

    You are completely right that Congress definitely should not try to stop progress, particularly the promise of robotic. I'm just afraid that'll be the "simplest" solution at the time given all the other complexities, unless we have some strong visionaries take charge. It'd also be nice if we had a "once every 10 years we must review and clean up laws and practices" sort of system to help trim this ever growing and more cumbersome amount of bureaucracy going on.

    Keeping the fund managed by, but separate from the government is a great protective barrier. I am certain there are ways to beat or stave off all my worst case scenarios if this "Universal Minimum Wage" bill is crafted well enough. Designing protections on the fund itself and then guaranteed rights of the citizens to access it, sort of like a trust fund I guess, would go a long way.

    Where I am a little disillusioned is in believing the citizenry is coherent enough anymore to effectively police the government, and we get a "fox guarding the hen house" conundrum like Citizens United (or other things that piggy back as bill "pork") that we (the people) just let happen as we can't mount any unified rejection with our votes. There's so many other issues and complexities of governance that come with each candidate. And like some children, if the citizens don't react to misbehavior, bad politicians will naturally push the boundaries simply because they can. That's a problem that's a little harder to do something about... And if the government has such personal leverage over folks via guaranteed minimal wage, it opens a new dimensional door to bad behavior by politicians and apathy by the public.

    I guess in the end it is simply the risk problem we have to live with, as it's an inherent feature of a representative democracy: it's only as strong as its people want it to be.

    So yeah, with a bit of well crafted design, like that "managed by yet separate from"
    form for the fund, this plan is completely workable and probably completely necessary. If it's a matter of when, then who can we trust to champion the legislation on the Hill? Doesn't seem like anyone currently is favorable to the idea, as far as I have seen, but could easily have missed someone whom could be written to.

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  8. The problem with the assumption that Government is corrupt.
    Well, business are corrupt as well.

    And the number one goal of any business is, "Make Profit".
    Hence, a business that doesn't make profit is silly to be a business.

    As for government corruption.
    https://en.wikipedia.org/wiki/California_electricity_crisis
    Example where Enron made rolling blackouts in California saying it needed to increase the price cause the electricity was so high in demand.
    But in actuality, the electric plants were shutting down turbine for this supposed "Routine Maintenance".

    There are 4 ways of an organization.
    1) Government control
    2) Business control (private / public)
    3) Non-profit group
    4) Individual / Group ownership.
    All can get corrupted.

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  9. I concur everything can be corrupt, John, with a twist. The corruption of the political process and the corruption of the corporation while similar are not the same. The idea here would be to try to find a hybrid of the political and nonprofit which would eschew the normal political problems and the nominal issues with nonprofits.

    The political cycle can be too short term for managing something of this magnitude: look at problems we've had with social security.

    OTOH, handing something this large over to a purely nonprofit entity with no accountability to the public is just as bad if not worse.

    Anything thinking this ought to be handed over to business ought to be shot in the head (proverbially). Though the idea of a publicly head corporation where everyone who is a citizen owns stock as part of gaining citizenship, the dividends are paid out to the shareholders and the shareholders vote annually on the corporation's direction, etc. has an appeal...but wait, it sounds largely like the US government already. ;)

    As for whether or not the current voting public is better or worse than in the past, I think we keep idolizing the past due to our frustrations with the present. We neglect to think about the problems and stupidities which the electorate of the past has perpetuated. McCarthyism as a more recent, but still safely historical, example.

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