The Great Lamplighter

News that efficient fast-food robots are entering the market have sent shudders through advocates of a guaranteed minimum wage.  What's the sense of aiming for a career in flipping burgers if those jobs are poised to go the way of buggy-whip makers and slide-rule manufacturers? Technological innovation is menacing employment.  Salon warns that  "robots are coming for your job: Amazon, McDonald’s and the next wave of dangerous capitalist 'disruption'"

In the United States and other advanced economies, the major disruption will be in the service sector—which is, after all, where the vast majority of workers are now employed. This trend is already evident in areas like ATMs and self-service checkout lanes, but the next decade is likely to see an explosion of new forms of service sector automation, potentially putting millions of relatively low-wage jobs at risk.

San Francisco start-up company Momentum Machines, Inc., has set out to fully automate the production of gourmet-quality hamburgers. ... While most robotics companies take great care to spin a positive tale when it comes to the potential impact on employment, Momentum Machines co-founder Alexandros Vardakostas is very forthright about the company’s objective: “Our device isn’t meant to make employees more efficient,” he said. “It’s meant to completely obviate them.”

Change never stops and its effects work in both directions. The Left had been poised to leverage the fact that while fast-food workers entered the industry young, they aged like everyone else. " Nearly 90 percent of fast food workers are twenty or older, and the average age is thirty-five. Many of these older workers have to support families—a nearly impossible task at a median wage of just $8.69 per hour." So far, so good.  But what time giveth, it also taketh away. Now, after strikes in 50 US cities had put the minimum wage movement on the verge of triumph, "disruptive capitalism" has come along to eliminate the jobs themselves.

But automation will not stop at replacing burger flippers.  Its insidious fingers are reaching into every corner.  Robert Kuttner of the American Prospect noted that "robots have indeed eliminated a great deal of factory work and are rapidly moving on to product design, medical diagnostics, research, teaching, accounting, translating, copy editing, and a great deal more. Once-secure professions are no longer safe. From that, many economists conclude that we may just have to adjust to a high plateau of unemployment." Unlike Salon, Kuttner believes jobs will simply be displaced into tasks where humans have a competitive advantage.  Flipping burgers is a terrible waste of a mind anyway, he argues.  The "invisible hand" will guide them to a higher use of their time.

This story [of universal unemployment] is mostly malarkey. Not the automation part; technological displacement of human work is indeed accelerating.

The part that is malarkey is the assumption that high rates of human unemployment must necessarily result. They will indeed result if we trust "the invisible hand" to do the transition.

But the "invisible hand" is often less powerful than the visible one. The late Nobel Prize winning Harvard economist Wassily Leontief noted that if horses could vote the government would never have allowed the rise of the motor car industry in the early years of the 20th century. One place where horses don't vote is China, maybe because people don't vote there either.

The Chinese are embracing automation with a fervor that would put fast-food chains to shame. "The robotics industry is on the cusp of revolutionizing the way business is conducted in China; and the world. With China expected to have the most industrial robots operating in production plants worldwide by 2017," writes China Briefing.

The Chinese government is pushing forward with robotic research, and leading foreign robot manufacturers are their main focus. With demand rising, Chinese manufacturers will be looking to acquire foreign companies to speed up development through the use of imported technological knowledge and materials – something that China is currently lacking....

Currently, the automotive industry is the most prominent industry for robotics in China, claiming 40% of robots in operation. The next big industry to follow will be electronics, but the adoption of robotics is constantly increasing and has expanded into the aerospace, healthcare, railway, energy, consumer durables, apparel and jewelry industries. The automation of China’s production plants is still in the beginning stages, but is expected to double within the next three years (from 200,000 units today to more than 400,000 units) – surpassing Europe and North America. ...

Over the past five years, companies in China have adopted the use of robots to combat worker shortages, rising wages, increase efficiency and to cut production costs. The ratio of industrial robots to workers in China is still relatively low, but that is swiftly changing. China has been long known as a source of low-cost manual labor, but as the cost of automation drops and wages increase, industrial automation is looking increasingly attractive. Wages have been increasing at a rate of 10% annually over the past decade while the cost of robot production has been decreasing by 5% year on year over the same period.

While Americans are working to set minimum wages, ironically the Red Chinese are working to abolish them. In time this may reverse the current relative reliance on labor. China is choosing to become an automated economy while the West is determined to reinvent itself as legally-mandated labor intensive society. The Chinese vision is a Jetson-like future.  The Western future is one of spinning wheels, bicycles and craft beer.  Thus, one of Leontief's predictions about international trade may come true, but with the roles of the First and Third Worlds reversed. He wrote that jobs would move to where the technology was, assuming that the technology would remain in the US and Europe.

Reducing the growth of labor inputs in production is bound to affect the structure of international trade because the competitive strength of less-developed countries now depends largely on comparatively low wages. Years ago, labor-intensive industries such as simple textiles migrated from the United States, Japan, and Western Europe to India, Brazil, and other less-developed countries. Low wage rates provide advantages to Korea and Taiwan even in the production of simple electronic goods. That advantage inevitably will shrink as these industries become auto­mated and the wage bill becomes a smaller and smaller part of total cost. The expatriate industries will tend to move back to the advanced industrialized countries.

But suppose horses can vote in the 21st century. At least, it's clear they can become United States Senators or have a lobby in the legislature. Bernie Sanders, who has announced his candidacy for the presidency told CNBC's John Harwood that one of the reasons there is poverty in America is because its economy produces too many varieties of deodorant.

If 99 percent of all the new income goes to the top 1 percent, you could triple it, it wouldn't matter much to the average middle class person. The whole size of the economy and the GDP doesn't matter if people continue to work longer hours for low wages and you have 45 million people living in poverty. You can't just continue growth for the sake of growth in a world in which we are struggling with climate change and all kinds of environmental problems. All right? You don't necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country.

Sanders wants a world where the government gets to decide what is produced. In the past that meant shortges and rationing,  but an automated world might make that socialist ideal possible.  In that world, suppose the horses could tax the people, or in this case imagine the people could tax the machines. Once again, Leontief's questing mind arrived there first. Imagine, he said, a world where automation reduced employment to a single human worker -- let us call that person the Great Lamplighter -- whose job was simply to flip a switch to turn on the machines. "What then? The questions, Leontief said, were (1) how to allocate the fruits of all of that amazing productivity, and (2) what everyone else would do for a living."

What to do for a living? The answer surprisingly, is to be Bernie Sanders.  When value comes into the world exogenously the sole task is divvying it up. Think of an unmanned ship arriving on the shores of the world each day with a cargo of comestibles.  The kings of the world will be tribal priests who will parcel out the goods.

In an automated society we would pay the Great Lamplighter the value of entire world economy in order to create the purchasing power necessary to buy its output. In round numbers that is $100 trillion today. In an automated society it might well be 1,000 trillion, or 1 x 10^18 dollars. If we taxed the Great Lamplighterat a 99.999% rate, that would still leave him with a cool billion dollars, leaving the rest of the money available for welfare. The only people with anything left to do are politicians -- like Sanders -- who can spend their time deciding how many brands of deodorant or sneakers can be offered on the market.

Automation, assuming China doesn't conquer the world, means there's a future in being a Democratic politician.

Think Progress notes that a Koch brothers adviser warned a conference that mass welfare would recreate Nazi Germany. It's a pity he should put it that way, when David Wheeler had a far more "progressive" description of the automated future in a recent Atlantic article. "What If Everybody Didn't Have to Work to Get Paid?" Why, it would be great. In the article he proposes that the horses all go out to pasture and leave the work to the machines.

Scott Santens has been thinking a lot about fish lately. Specifically, he’s been reflecting on the aphorism, “If you give a man a fish, he eats for a day. If you teach a man to fish, he eats for life.” What Santens wants to know is this: “If you build a robot to fish, do all men starve, or do all men eat?”

Santens is 37 years old, and he’s a leader in the basic income movement—a worldwide network of thousands of advocates (26,000 on Reddit alone) who believe that governments should provide every citizen with a monthly stipend big enough to cover life’s basic necessities. The idea of a basic income has been around for decades, and it once drew support from leaders as different as Martin Luther King Jr. and Richard Nixon. But rather than waiting for governments to act, Santens has started crowdfunding his own basic income of $1,000 per month. He’s nearly halfway to his his goal.

Santens, for his part, believes that job growth is no longer keeping pace with automation, and he sees a government-provided income as a viable remedy. “It’s not just a matter of needing basic income in the future; we need it now,” says Santens, who lives in New Orleans. “People don’t see it, but we are already seeing the effects all around us, in the jobs and pay we take, the hours we accept, the extremes inequality is reaching, and in the loss of consumer spending power.”

This would mean a catastrophic change in lifestyle for those who work. Those already on welfare won't even notice the difference.  In the great public housing estates of the West the day of the Lamplighter will dawn no differently from the rest.  At least ... not at first ... then after a while most people will tire of living on a basic income. The obvious way out will be to give the Great Lamplighter a raise, which will enable us to increase the Living Wage.  But this can only happen if other people in the world economy innovate. But why should they if everyone gets an equal share of the welfare.

To introduce innovation into the system you must also reintroduce inequality.  That will be anathema, yet because a system which relies merely on a Great Lamplighter is doomed to stagnation eventually all the horses in the pasture having nothing to do but graze all day, and no incentive to do otherwise, will forget even how to perform their previous occupations. They will become completely dependent on "Someone".  Not only will stagnation become a way of life, it must become to maintain equality.

The obvious solution to the problem is to advance automation beyond the point envisioned by Leontief. Imagine a system that did not even need a Great Lamplighter. Suppose that once turned on, it would not only carry on, but innovate. Then the horses in the pasture could get a yearly increase, while Someone -- or in this case Something -- gave them more and more hay.  What could go wrong?

The sole danger to this arrangement is that so completely powerful an automaton might ask itself the question: who needs Bernie Sanders? Who needs the Democratic Party? Who needs the horses? Not that the horses would think that far. Sanders is still on the alert for attacking deodrants.


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