Eric Brynjolfsson and Andrew McAffee have a new Kindle instant book out, Race Against the Machine, that very nicely describes the issues related to technological unemployment. It’s well-written, content-packed, cogently argued, usefully hyperlinked, and well worth the $3.99 they’re asking.
But I think there’s one crucial topic they don’t address, highlighted by the following.
They deliver a quotation from Gregory Clark’s 2007 Farewell to Alms, speaking of the decline in employment of horses in England in the 19th and 20th centuries. The quotation concludes:
There was always a wage at which all of those horses could have remained employed. But that wage was so low that it did not pay for their feed.
The question that B&M fail to ask or answer: Why couldn’t those horses continue working for a living wage?
Answer: because they couldn’t upgrade their skills (to drive trains and tractors, or whatever). They were biologically incapable of “improving” themselves in such a way that they and the new machines were “complements.” So the machines replaced them instead of complementing them.
Imagine that those horses had been free to mate and have offspring at will (as opposed to the PRC-style, top-down population control imposed by breeders). They couldn’t work (nobody would hire them because their marginal productivity relative to machines was so low), so they couldn’t make any economic claim to a share of the (massively increasing) pie of production and prosperity.
They would have faced an unequivocally Malthusian situation: large numbers of horses would have starved.
Now suppose that the population-control option was … not an option. And that laissez faire – letting them just live (and die) with their subsistence or sub-subsistence incomes — was also not an option. The only solution would be to subsidize their lives, transferring money from those who own and profit from the machines to those who can’t benefit economically from using those machines.
You know where I’m going. (I’ve taken you there before.) Human capacity has limits. By definition, 50% of people have an IQ below 100. The prescription we so often hear — that those folks should train to operate computer-driven lathes, and to perform in the sophisticated, information-driven organizational structures associated with that kind of equipment — is … less than realistic.
Rapidly accelerating machine capabilities can result an economy in which those people’s marginal productivity drops to near zero, or even negative — so no matter how hard they work or train, their contributions aren’t great enough for them to “deserve” a decent share of the pie. (Define “decent” as you will; for me in our wildly prosperous society it extends to a good chunk of leisure/recreation time with friends and family, taking family vacations now and then, such like that. Let’s hear it for “family values.”)
If you’re reading this, then like me you probably can’t even imagine what it would be like to have really low intelligence (or other below-average capacities) — how desperately hard it would be to make a go of things, to raise a family and give them a good life, in the country we live in today. Imagine just trying to get through high school.
Some people may get unsavory feelings from this thinking, so (to quote BHO), let me be perfectly clear: I’m not saying that less-capable people are horses. Quite the contrary. They’re people. So yes, I’ll say it: at least if they’re willing to work (or are unable to do so), they deserve a decent share of the pie. They shouldn’t be driven to the bottom while the machine owners wallow in luxury, just because the technological economy they happen to have been born into doesn’t value them any more.
In wonk-speak: income and purchasing power must be decoupled from human participation in production. Not completely, of course — requiring participation in the work force is necessary to solve the free-rider problem. But in an economy that’s bursting with surplus, we can be better off overall if individual incomes (at least at the low end) are not rigidly associated with individual capabilities.
Which brings me back, yet again (getting practical here), to a greatly expanded Earned Income Tax Credit — encouraging both work and hiring — with benefit levels indexed to some measure of unemployment. This would require, of course, that we implement a tax system that actually is progressive, to pay for the increased EITC.
Imagine a post-scarcity future (or … present?) in which high productivity (think: Star-Trek-style replicators) means there’s plenty for all, with little work required. My utopian image is of something like an Athenian Agora — people of all types gathering in public spaces, meeting their friends, and exchanging their wares and their news — instead of constantly scrambling to make a buck and collapsing in their homes when they’re done.
In fact, it looks a whole lot like the zillions of public squares you find throughout Europe — surrounded by residences, and cafés and such where people mingle and spend time with their friends — the kind of environment that pretty much doesn’t exist in America.
And I haven’t even touched here on the idea that this redistribution may be economically efficient, even necessary, to maintain aggregate demand and support productive enterprises, keeping the log that is our economy, rolling.