Friday, December 27, 2013

New economic model

Jason: We have to come up with a different economic model.
Sonja: You and I?
Jason: Yes. You work. I reap the fruits. No, of course I mean we as a society.
Sonja: Let me guess: communism?
Jason: Definitely not that. I mean a model not based on constant growth.
Sonja: What's wrong with growth?
Jason: What's wrong is that it can't go on forever. Even cancer grows only until it kills its host.
Sonja: Oh, that's such a cliché. Economy is not cancer.
Jason: OK. You are right - it isn't. Yet the fact remains that it can't keep on growing and growing.
Sonja: And why not?
Jason: Because its resources are not unlimited. That includes human resources, or populations, if you wish. You do know that currently many societies in Europe have a negative population growth? That is, these societies are shrinking because of low birth rates.
Sonja: That is counterbalanced by immigration, I suppose?
Jason: Yes, but that brings its own set of problems. It's not a solution, it is a stalling tactic. The current model is based in the assumption that there always be more people, so those who are no longer productive, for example, retirees,  will be supported by the ever growing army of the employed. This is starting to fall apart for two reasons: people live longer and so the number of those who need to be supported is growing. At the other end, the number of young people who should be doing the supporting is shrinking.
Sonja: Sure, that may be true in some countries, but there is no reason to believe the sky is falling. Just look at the unemployment numbers in many of these same countries - it's not like they are having difficulty finding workers. And those unemployed have to be provided for, through welfare, or education subsidies, or healthcare, increasing the burden on the productive members of these societies.
Jason: Indeed. I don't remember where I read it, and whether I recall it correctly, but apparently close to 40 per cent of adult Americans are out of the workforce, either through unemployment, disability, or by choice. That's a staggering percentage.
Sonja: Oh, I saw that number, too. I believe Washington Post was one of the media outlets to have reported it. So you see, one could perhaps assume that if the population shrinks, the ratio of the productive to the dependent will stay roughly the same.  What's the problem, then?
Jason: The ratio may stay the same, but the supporting ability of the workforce will diminish. As we discussed before, more and more wealth is concentrated in the thin layer of the richest Americans, with the wages of the middle class stagnated or going down in real terms.  Meanwhile, life expectancy continues to climb. What if, as some people claim, may of us will start reaching the age of 12,0 or more?
Sonja: OK, so what's your solution? Tax the rich until they are rich no more? You know where this leads, don't you?
Jason: I do, and I certainly don't advocate that. I think confiscating 50 percent or more of someone's income - as it is done in certain societies - is a state-sanctioned robbery. And shortsighted.  On the other hand, we have a long way to go before we reach that threshold here; just closing some tax loopholes would probably help quite a bit.  But, as you know, I'm no great friend of taxation. Too much of our money is being wasted.
Sonja: What then?
Jason: What if we collectively decided that a certain level of affluence is enough. Let's face it, two people do not need a 5,000 square feet house. Or five cars.
Sonja: Sure. That's why we don't have that.
Jason: Oh, but many people do. Or strive to. That's the "American way" - you always want more.  All I'm saying is, let's collectively slow down, so that others can catch up with us. Wouldn't this make for a happier society? With many more people satisfied with what they have?
Sonja: Maybe. But how on earth are you going to convince people to stop being greedy? Or to stop comparing themselves to others?
Jason: I don't know. Maybe we can start pointing out that gluttony and envy are sins. This is a Christian country, after all. Shaming people who consume in excess. We could also make it more difficult to do that. We could have a progressive tax on consumption. Things like recreational boats would be taxed at a higher level than cars, for example. First cars of course - the more cars you have, the bigger the tax on each one.
Sonja: That smells too much like communism.
Jason: Only if you equate some religious principles with communism. Think of it as Kant's "categorical imperative" put into practice at a societal level: what if every person on Earth had a mansion and multiple cars? How quickly would we run out of space and resources?
Sonja: OK, but who decides what level of affluence is appropriate and what is in excess? For many people just having a shack with a tin roof is a dream to strive for. For others, a tiny apartment in a high-rise. Yet you or I would not accept that. Should we move out of our comfortable house, because our standard of living is higher than 80 or 90 per cent of people on this planet? This kind of thinking scares the daylight out of me... Isn't this what Pol Pot and the Khmer Rouge were trying to achieve? Build a better, happier society by going back to a simpler, agrarian model?
Jason: I'm not talking about equality enforced through coercion. I'm talking about having a serious re-evaluation of our goals as individuals and as a society. We have to come up with a new model before this one crumbles or is replaced through a bloody upheaval. The fate of Cambodia is exactly what I would like to avoid.

Thursday, December 26, 2013

Will there be a revolution?

Jason: Do you think there will be a revolution?

Sonja: Where?

Jason: In the United States.

Sonja: What?? Why would there be a revolution?

Jason: Well, the growing inequality for one thing.

Sonja: Oh, "the poor are getting poorer, while the rich are getting richer" - is that it?

Jason: Kind of. Not only that, but yes, that's part of the problem.

Sonja: OK. What's the other part?

Jason: The fact that it's not only about inequality, as this has been with us for a very long time...

Sonja: ...and it's been quite useful...

Jason: Yes, it's been quite useful. But in the past it was more about the overall increase in wealth lifting all boats, albeit unequally. Today more and more boats are permanently stranded on a sandbar. When tycoons like Ford and Vanderbilt made their fortunes, they also created a lot of relatively well-paying jobs, lifting many people out of abject poverty. The new billionaires of today often create very few jobs. Some well know brand names of the Internet Era operate with the staff  of dozens, yet are capable of making their owners incredibly rich.

Sonja: I think I know whom you have in mind... But there are examples of Internet companies that have huge operations, with the staff of thousands. Besides, is it this proof of the democratization of wealth creation? Unlike those tycoons of yesteryear, you no longer need enormous capital to build the infrastructure of your industry. All you need is a laptop and Internet access - anybody can have that.

Jason: If only that were all you needed... You also need creativity, talent, ability to take and afford risk, good education, etc. These intangibles are much less common than computers and Internet access. You may succeed without some of them, but not all of them.

Sonja: OK, so people are born with different capabilities - I'm not going to deny that. All I'm saying is that in the past you needed all that, plus a fortune.

Jason: That's not quite true. Many of the "giants of industry" started from very humble beginnings. But that's not my point. My point is that, while it may be easier for a handful of people to become richer quicker, it only helps them, and very few others. Those who did not have the mental resources to become rich, could still find decent jobs in the factories built by the shrewd, risk-taking entrepreneurs. That's no longer the case. In fact, those who are being displaced by new ways of doing things have no way of benefiting from new jobs being created - simply because those jobs aren't being created. And if they are, they require more intellectual "capital" and often more education than those misplaced workers can afford.

Sonja: One thing you need to keep in mind that the bar had been raised. It was much easier for Henry Ford to lift people out of poverty by paying them $5 a day, because that compared very favorably to the meager wages of many other workers.  Not to mention that it beat the back-breaking labor at a farm. People today are not starting that low. Their starting expectations go beyond mere survival - thus it is much more difficult to create jobs that would satisfy those expectations. Many of the low-skill, high-paying jobs had been replaced by machines or more efficient processes...

Jason: ... or shipped abroad. Many of those jobs did not disappear. They are just being done by someone else in the world. Cheaper.

Sonja: True, but the steadily growing expectations of these workers abroad are going to force their industries to start shedding human labor there, too.

Jason: The outcome will be more dissatisfied people with nowhere to turn to. How is that not a recipe for revolution?

Sonja: The lacking ingredient is despair. People may lose their jobs, but that does not mean starvation for them and their families. You said it yourself: people would revolt demanding "bread and circuses". At least in the advanced economies those two are fairly abundant. As long as people can have one hand in the bag of potato chips, and another one on the TV remote, or a media tablet, they will be pacified.

Jason: Is this supposed to fill me with optimism? A handful of obscenely rich people in the sea of lobotomized couch potatoes?

Sonja: You did not ask for an optimistic scenario. You asked whether we'll have a revolution. Here is your answer.

On computers and the Internet

Sonja: You have yet to set up the new laptop I bought you for Christmas...

Jason: I'm sorry... I started doing it, but then felt such a sense of dread, that I abandoned it. For now.

Sonja: That's quite strange coming from you. In the past you just could not wait to get your hands on a new computer...

Jason: I know. And I know it is strange, but computers seem to have lost their appeal for me. I fear them now...

Sonja: Fear?? What's there to fear? It's just a machine. A tool. Or a toy.

Jason: It's not the machine itself, but what it represents.

Sonja: What does it represent? For you?

Jason: Disappointment. Disillusionment. Sense of betrayal. Misplaced love.

Sonja: Wow. That's a handful. Again, it's just a machine. How could it possibly betray you?

Jason: I used to have such high hopes for this technology. Finally, a tool that would set us free, change the world, allow us to be creators, not mere consumers.

Sonja: That's still valid, isn't it? Computers have changed the world and are continuing to do so. They gave voice to people who otherwise would not have a voice. Look at all the blogs, tweets, social media explosion.

Jason: But that's exactly part of the problem. We're drowning in the cacophony of trivial, useless, narcissistic crap that contributes nothing while taking away precious, non-renewable resource - our time.

Sonja: You can ignore it.

Jason: Of course! But that is getting more and more difficult. Often you have to wade through tons of garbage in order to get to a voice that has something interesting or profound to say.

Sonja: That's why you have search engines. Filters. Use them.

Jason: I do, but that's another trap - a perfidious one. As you know, the companies behind search engines make their money by selling targeted ads. They collect info about your interests, so that someone can sell you stuff.

Sonja: Ignore that, too. You have not signed off your power to choose.

Jason: Oh, I do. I do my best to ignore them. But the fact remains that the whole focus has shifted: we're being molded into ultimate consumers and expected to behave as such. Some people can resist that. Many more can't. This is getting too clever for most. Often, it is also the price of entry. Did you notice, for example, that the companies behind the computer hardware and operating systems are no longer satisfied with building hardware and OS, but are trying to trap them inside their proprietary ecosystems? I guess it started with Apple, tying people to iThis, iThat... Now everybody is doing it. This new laptop - it has tons of hooks left there by Microsoft with bait for you to swallow... Want to use Skype? Sign in with your Microsoft online account and synchronize it with your Skype account. Every step of the way there are barriers built in to build up your dependence on the other Microsoft products - their ecosystem. Google is not any better - just try setting up a new Android tablet. There are still choices and workarounds but they are often hidden and require extra effort or knowledge. Most people just give up and accept what is presented to them. They just swallow the bait, the hook, and sinker.

Sonja: I guess you have a point here. But the fact that people abdicate their power of choice - it's not exactly computer's fault, is it?

Jason: I think it is, because computers make it easy and entice us to do so. They are like the sirens from sailors' myths - the sailors can tie themselves to a mast and avoid being sucked in by the siren song, but those who don't and drown - are they really the ones to blame? Especially if they had no warning? This is a new territory here. We're just learning how to exist in this constantly changing world.

Sonja: It this any different from television? Many people spend hours and hours entertaining themselves into a stupor, but there is always the remote. Or the power button on the TV set.

Jason: That's part of my peeve. In may respects computers have become like television: yet another medium for pumping mindless entertainment to keep the public docile and stupid. Crowds in ancient Rome would start revolts by demanding "panem et circenses" (bread and circuses). Advanced economies don't need to worry too much about providing their citizens with bread. Thanks to computers and the Internet, the masses are never short of entertainment. The trap has closed.

Sonja: Maybe I'm too optimistic, but I still believe we're not slaves. We can walk away. We just choose not to - maybe because, in the end, the benefits outweigh the costs. You know, we get connected to other people we wouldn't have a chance to connect to otherwise. We get to know different points of view...

Jason: Do we? I think the opposite is true: we're building our own echo chambers, seeking those who think like us and tuning out other voices. It's easier than before. Here's where your filters come in so handy.

Sonja: I don't think you can insulate yourself so easily. The Internet is too big a place and the barriers are low. Even private discussion groups get infiltrated by outsiders and people with different views. I also did not finish my list of benefits before you interrupted. What about all the convenience and time savings this technology introduced into our lives? You no longer have to waste time going to different stores to buy the things you need - you can do it quickly from home, while often saving money by comparing prices. What about not having to stand in line at the bank? Finding a restaurant with the best reviews from actual customers?

Jason: It's true, but what about the inconvenience - to say the least - of having your identity stolen? Or your online bank account  broken into? Or you computer infected with nasty viruses? The Internet has become this huge and highly profitable playground for criminals of all stripes. Robbing a bank used to come with considerable risk and thus required some  guts. Now you can do it from the convenience of your home, breaking in through someone else's compromised computer. The losses are staggering and we all ultimately pay their cost. Yes, you can buy a new refrigerator online, but you can also buy child porn as easily. Is this a worthy trade off? I doubt it.

Sonja: All these negatives can be overcome with technology and laws. When it comes to the Internet, we're still in its Wild West period. It will get civilized, eventually.  Just like people in Arizona are no longer wary of roaming gangs of outlaws. In any case, we will have to pick up this discussion some other time - I need to run some errands.

Jason: Talk to you later.