Welcome friends!
I read a couple of stories in the newspapers recently that brought me back to some of the themes I raised in my recent posts about freedom. (November 1 and 28, 2013.) One was a story about some new technology that apparently functions as a sort of autopilot for cars at least over certain stretches of road and also about the impact that sort of technology might have on transportation workers. (Hint: It’s not good news.) The other story was about some sort of political initiative in Switzerland that involves a proposal to provide every citizen a guaranteed minimum income whether they are working or not. Interesting stuff. So let’s take one at a time, shall we?
As you may have detected from my less than detailed technical synopsis I’m not really that interested in the specific details of how the new automobile technology actually works. I mean, sure it sounds sort of cool, but at the moment I don’t really care. No, what I’m interested in right now is the impact on society of technological change in general; in this case, the fact that this new technology, like many previous technological innovations and no doubt many technological innovations yet to come, is likely to displace many of the workers required under the previous technology, which in the case of cars with autopilots I suppose would be truck drivers and so on.
Now the thing that struck me as funny about this situation is that it seems to me we should all be rooting for new technology. It seems so strange to me to think of someone saying, “Hey, I just found a way to reduce the labor required to do X (drive a car or whatever),” only to have someone else say, “Oh, hell! That’s bad news, that is!” I mean, it should be unequivocally better, right? As a society we should be able to do more with less thus freeing up productive resources for other purposes. Labor saving technology should allow us all some additional leisure time at any given level of needs and desires or alternatively allow us all to ratchet up our needs and desires to some new higher level in line with our new productive capacity. But it doesn’t usually work out that way under our system, does it? What usually happens is that a few people associated with the new technology, including the workers and investors to some degree, make some money and sometimes a great whopping boatload of money thus obtaining a greater degree of what we’ve been calling practical economic freedom, while the displaced workers lose their jobs and run around trying to find some new way to survive and typically suffering at least some loss of practical freedom at least in the short term and quite commonly in the long term as well. In other words, in addition to generating additional economic freedom in some net or global sense these technological developments often also represent a reallocation of economic freedom away from the typically larger number of people associated with the old relatively labor intensive technology and to the much smaller number of people associated with the new labor saving technology. So what’s the net impact? Well, much like the situation involving the particular type of utility so beloved of economists, a lot of it depends on how one defines and measures “freedom.” If you’re primarily interested in some measure of overall freedom without worrying about how particular people happen to be faring then I suppose the net impact on freedom might be favorable. On the other the other hand, if you’re more interested in actual people and you plan on doing something like counting up how many people gain or lose freedom then it’s quite possible this type of technology might lead to a net decrease in freedom.
To me as a liberal this just doesn’t make a whole lot of sense. No one should fear or resent new technology. We should be able to set up a distributional system in which everyone gains something from technological improvements and perhaps the people developing and working with the new technology gain somewhat more to provide incentives to do that sort of thing, but no one should be getting hit over the head in the process. Our current system is just, I don’t know, not in proportion in some ways. It allocates what I would call a surfeit of practical freedom to certain people for reasons I suspect go well beyond the need to provide incentives leading to an ever escalating gluttony of new needs and desires on the part of this group and it simultaneously restricts the modest amount of practical freedom allocated to other people to what I would consider in many cases completely unacceptable dimensions. Of course, I suppose you realize this has been going on a long time now, right back to the start of the industrial revolution in the early years of the nineteenth century with the Luddites and their problems with the new fangled textile technology. Anyway, this is one of the things I think is leading to the concentration of wealth and hence also freedom here in the US to an ever shrinking segment of the population. And I don’t see any mechanism by which this sort of thing is going to go away on its own including by the way the much vaunted magic of the marketplace. No, if history is any guide, the more probable situation is that without some sort of purposeful intervention it will get progressively worse until we get enough powerful egotistical self indulgent big shots and enough disgruntled powerless poor wage slaves that our democratic system begins to destabilize. If that’s what happens then we’re really up the creek because in place of reasoned and carefully considered social and economic changes we’re likely to get hasty, uncontrolled, and probably ill-conceived changes. Let’s just call it social mayhem. It’s no way to do business.
So what’s the problem? Why can’t we apply our ingenuity to resolve this little issue? Well, the problem in my opinion is that we seem to be unable or unwilling to talk seriously about distributional issues. Mention the word distribution here in the US and the next thing you know some fat conservative windbag will be calling you a socialist and trying to get a mob together to go set your house on fire. (Well, maybe that last part was a bit of exaggeration, but you know what I mean: they get all crazy.) It’s like we’re under the spell of academic economists who feel, rightly in my opinion, that they are not intellectually equipped to deal with distributional issues but who manage to twist that fact into the idea that no one else is intellectually equipped to deal with distributional issues either and that therefore we shouldn’t discuss them or think about them in any way. It’s just ridiculous. Look, at some point we’re going to have get serious and start talking about what’s happening to actual people and give up this simple minded idea that whatever happens in a free market system is by definition socially optimal. Our system isn’t some sort of delicate and mysterious clockwork mechanism that fell from the heavens one day and that no one dare attempt to adjust or manipulate in any way. Nor should we put our horse before the cart and base our distributional goals on whatever happens rather than trying to get what happens to reflect our distributional goals. I mean, if you know a new technology is going to generate some unfortunate distributional changes and economic hardship for some people then just get in there and do something about it. At least provide the displaced workers with some help to get into something else. I know we do some of that right now but not nearly enough. We give people a few months of unemployment benefits and then basically send them off with hearty slap on the back. And if they’re not able to locate suitable employment they end up living under a bridge and everyone throws up their hands like it’s some sort of unfortunate mystery of nature. For me it’s just not good enough. Hey, it’s not difficult to figure out. People need money to survive. People need jobs or they need money sans job. If that means you need to reallocate some money that would otherwise go to people with jobs then I guess that’s what we need to do. I’m sorry to get all socialistic on you but if you don’t give a damn what happens to your fellow citizens then brother you don’t really have much of a society, do you?
Which brings me to that story about Switzerland. Crafty people, the Swiss. They know how to make a buck, that’s for sure. But apparently they’ve got some other interesting stuff going on as well, such as a couple of nationwide referendums that have resulted in strict limits on executive bonuses and so-called golden handshakes. What prompted this socialistic assault on the free market in generally conservative Switzerland, you ask? Well, one likely reason reported in the BBC article I was reading is that some of the biggest Swiss banks, such as USB, continued to pay their top executives huge bonuses even while the banks they were supposedly managing reported huge losses. Ein bisschen komisch, nict wahr? (Hint: When you get to executive pay you’re in a world that is apparently largely divorced from normal market forces so what these people get paid has precious little to do with what they actually do on the job. I wrote a little about that phenomenon before, see my post from July 5, 2012, for example.) But that’s not even the most interesting thing they’ve been up to recently for our purposes. No, the most interesting thing is they’re now planning to vote on something that seems to me to be even more remarkable: a guaranteed minimum income for all citizens whether they’re working or not. Talk about taking the bull by the alpenhorns. Granted the income they’re talking about is apparently barely enough to survive in pricey Switzerland (about $2,800 per month), but that still represents a big difference from someplace like the US where our official policy is that we don’t really care if you survive or not. (But I suppose that’s part of the problem, isn’t it? What exactly does someone need to survive? You mean survive like a caveman? Or do you mean survive given the norms of an advanced society? Are you surviving if you can’t afford rent? How about a car? Internet? TV? Phone? Who’s deciding that anyway? Or are we going down a blind alley here? Would it be more relevant to just think about this issue in relative terms like some percentage of the average or something like that? So many questions; so little discussion.) Even more to the point for me is the rationale for the new bill expressed by a key supporter, Enno Schmidt, who opined “a society in which people work only because they have to have money is ‘no better than slavery.’” Which is pretty much what I was discussing the other day. But can a market economy really function without at least some wage slavery? What will happen to the jobs that just aren’t the nicest jobs in the world? Will they go undone? Will wages for those jobs rise enough to encourage people to take them up for reasons other than that they have no real choice because the rent is due? Will it make no difference at all as people ratchet up their perceived needs and desires by the amount of the minimum income so that internally they still feel forced by their economic situation to take those jobs? And how about the overall economy anyway? Will this blatant “distortion” of the “natural” distribution of resources (I thought I’d be funny and talk like a conservative economist just then) lead to all manner of unfortunate unintended consequences? Or will making sure everyone has at least some money to spend give a little demand side boost to the economy and enable otherwise unproductive people the luxury of actually being able to train to do something useful and to relocate and to just in general become more productive members of society? If that vote passes it will certainly be something interesting to watch in the years to come, won’t it?
Well, looks like that’s about it for this year. See you in the new one with ... well ... I suppose with pretty much more of the same. Never seems to end, does it? Well, never mind. We’ll get through it together. As for now, please allow me once again to wish you all a happy holiday and a great and fantastic new year!
References
Swiss to vote on incomes for all — working or not. Imogen Foulkes. BBC. December 17, 2013. http://www.bbc.co.uk/news/business-25415501.
