Skilled Work, Without The Worker

[wonderpup]

A citizen's income isn't going to help and I strongly disagree with one on the grounds that it breaks quid pro quo. People should not have access to goods and services without supplying their own unless they are truly incapable of doing so. Exchange is the foundation of our civilization and the cornerstone of our societal bonds. Once you expand rights from the intangible to the tangible, you start handing out goods for free. This is fundamentally unjust.

The point is that the cost of living has dropped massively over the last few decades - food, clothing, white goods, travel are all now peanuts as compared to before. This leaves the PTB limited room to gouge people. So what to do. I know, let's raise the cost of living artificially through HPI. Let's do double income mortgages, IO mortgages. We could also massively speculate in the essentials of living such as food and oil. That'll work too.

What we should have is the reality envisioned in the 70s with couples able to easily live on a single income or two part time jobs. If you remove the house price burden, IMHO this would be the case. But we don't have that. Why? Because we have decided that GDP is the be all and end all of economic progress, which it clearly isn't. GDP simply measures flows. It does not measure stocks, it does not measure quality and it does not look at whether the goods and services being produced are distributed fairly. The economy is now run as an inflation targeting exercise rather than a consideration of what could raise living standards.

This idea that automation leads to mass starvation is bobbins too. People are being misled by the red herring of money. If you simplify things down, you see that the owner of the factory is producing millions of widgets. He hopes to exchange them for a big house, fast car, yacht, live in chef/butler etc etc. He needs other people to produce these items and they cannot all be automated. All that will happen is things which are automated will become cheap and people will find jobs elsewhere. The issue is that it is stated that people cannot afford things. This is bobbins. Stop thinking about the sodding money and start thinking about goods and services. People can produce goods and services others are interested in consuming. The amount of time it takes them to produce them is irrelevant and if they are automated that is good not bad, because you are producing more goods over a given timeframe. We can produce everything we need part-time if the bankers would get off our backs and stop trying to extract unnecessary surplus. People also state that there is unemployment which cannot be removed. Again this is rubbish. Do you live in a perfect world where nothing can be improved? No potholed roads? No decaying infrastructure?

We need to start using our surplus capacity. If we put the unemployed to work we remove much the problems of health, crime etc etc associated with unemployment. All benefits for the able bodied should be removed. If the private sector lacks demand for labour then the government must step in. The government should offer employment at a set wage to anyone who wants it. This will no doubt cost more than the benefits bill, but savings would be found in the lower crime rate and improved general health. Once working people will see further opportunities and also realise the benefits of work. They will have the dignity of providing the roof over their heads, the food on their table and the clothes on their back. There is plenty that needs doing in the UK, but the government sadly is actively working against the interests of the people at large through its efforts at encouraging rent seeking rather than wealth creation.

You are not taking into account the prevailing dynamic of our age- the notion that a free market will solve all problems- including- apparently- those that arise from a free market.

What makes the automation issue so slippery to deal with is that it undermines a key component of the free market system. The way things used to work is like this:

Capital invests in labour and in return labour creates profits for capital.

But increasingly it now works like this:

Capital invests in automation and in return automation creates profits for capital.

The problem being that while labour converted it's wages into demand- automation creates no demand. This breaks the system in a fundamental way.

As you point out- the solution would be to tax capital and use that money to employ people via the state. But if you try to do this capital will leave and set up it's automated production somewhere else where taxes are lower.

So what happens in reality is that states compete for capital investment on the basis they will tax it less- but since automated production pays little in terms of wages the state is left with little revenue- either from capital or local income taxes.

So we are in a trap- the more capital replaces labour with automation, the less demand there will be and the more driven capital will be to replace labour with automation- to cut it's costs in the face of declining demand.

Any state attempt to break this circle will run headlong into the globalised financial sector who have spent 30 years designing a system to frustrate precisely this kind of state intervention.

So not only is the free market now infected with a virulent form of self replicating demand failure- it has effectively immunised itself against the one antibody that might have been able to cure it- the state.

[Damik]

You are not taking into account the prevailing dynamic of our age- the notion that a free market will solve all problems- including- apparently- those that arise from a free market.

What makes the automation issue so slippery to deal with is that it undermines a key component of the free market system. The way things used to work is like this:

Capital invests in labour and in return labour creates profits for capital.

But increasingly it now works like this:

Capital invests in automation and in return automation creates profits for capital.

The problem being that while labour converted it's wages into demand- automation creates no demand. This breaks the system in a fundamental way.

As you point out- the solution would be to tax capital and use that money to employ people via the state. But if you try to do this capital will leave and set up it's automated production somewhere else where taxes are lower.

So what happens in reality is that states compete for capital investment on the basis they will tax it less- but since automated production pays little in terms of wages the state is left with little revenue- either from capital or local income taxes.

So we are in a trap- the more capital replaces labour with automation, the less demand there will be and the more driven capital will be to replace labour with automation- to cut it's costs in the face of declining demand.

Any state attempt to break this circle will run headlong into the globalised financial sector who have spent 30 years designing a system to frustrate precisely this kind of state intervention.

So not only is the free market now infected with a virulent form of self replicating demand failure- it has effectively immunised itself against the one antibody that might have been able to cure it- the state.

automation does not break the free market. you will just end up with less profit. what we can see even now with cheaper and cheaper gadgets and SW. you also forget that the automation reduces investment costs. potentially if robotic labour does everything you will not need any capital to set up a factory. only a government/council permission and a clever idea

Edited August 25, 2012 by Damik

[Damik]

The problem is that 'the democratic system' has been displaced by a new power- globalised finance. Have you not noticed how your prime minister and his cabinet live in terror of 'the markets'?

So whatever additional wealth automation might create will not be captured in taxes by your government- if they try to do so the capital owners will simply relocate to less demanding places. And without taxes you will not get your free state services- unless the money to pay for them is borrowed- but we know how 'the markets' feel about too much state borrowing.

So the wealth concentration effect of automation will continue until the stresses it creates either blow up the economy or society or more likely both- there is neither the will or even the ability to correct this because our leaders have chosen to hand power to the money men- who being short term thinkers par excellence- have no more capacity for strategic planning than my cocker spaniel.

hmmm ....

the majority of the global economical issues have been caused by low interest rates (and induced price inflation of land). not by bankers. bankers just followed easy profit as anybody else

automation decreases costs, value of the capital and profit. it will also bring the manufacturing base back to EU, because of the transport costs

if robots can make robots and work on the farms then state/charities or private subjects can produce food with almost no costs. you do not need almost any income to get free food produced by robots. farmers can not run away with their money, because their money will not have any value. if you get free food, housing and transport you do not need the farmer's money. perhaps only for luxuries

[wonderpup]

automation does not break the free market. you will just end up with less profit. what we can see even now with cheaper and cheaper gadgets and SW. you also forget that the automation reduces investment costs. potentially if robotic labour does everything you will not need any capital to set up a factory. only a government/council permission and a clever idea

The problem with the 'cheaper prices' idea is that prices are irrelevant to someone with no income- whatever the price they are not buying.

Of course if robot labour did everything then there would be no demand at all- we could just have automated trucks take the product straight off the production line to the landfill.

This will not happen of course- at least not for a very long time. What is more likely in the short run is large scale structural unemployment as automation advances into the higher end manufacturing and distribution jobs:

Amazon has just announced that it will acquire order fulfillment company Kiva Systems for $775 million in cash. We’ve embedded the release below.

Kiva Systems’ interconnected hardware and software package is designed to streamline the process of picking, packing and shipping e-commerce products for delivery. The company uses hundreds of autonomous mobile robots and a sophisticated control software, to provide a fulfillment system for retailers.

Utilizing this system, robots scurry about the floor locating individual items before transporting them to workers who pack and ship. As founder Mick Mountz told us recently, Kiva accounts for “two-to-four times as many orders per hour as they have done the old way”. The company has been growing at over 100% a year. And the average price per system? $5 million.

The biggest employer in the UK is retail-so this is another story to watch:

J.C. Penney is waking up to this reality. The struggling retailer just last week announced that they will remove check-out counters in stores and replace them with a system that won’t require clerks. They also plan to deploy more Radio Frequency ID (RFID) technology throughout their operations to manage inventory. Although they deny that this will result in job losses it’s plainly clear that they’re doing this for that very reason. If handled correctly, this change could save the retailer. If not, it could create even more problems. I hope they do it the right way.

http://www.forbes.com/sites/quickerbettertech/2012/08/06/j-c-penney-faces-reality-are-you/2/

It's hard to see how the retail/distribution sector could be automated without serious job losses being the result- and it's not obvious what the people being replaced are going to be doing in the future.

[wonderpup]

hmmm ....

the majority of the global economical issues have been caused by low interest rates (and induced price inflation of land). not by bankers. bankers just followed easy profit as anybody else

automation decreases costs, value of the capital and profit. it will also bring the manufacturing base back to EU, because of the transport costs

if robots can make robots and work on the farms then state/charities or private subjects can produce food with almost no costs. you do not need almost any income to get free food produced by robots. farmers can not run away with their money, because their money will not have any value. if you get free food, housing and transport you do not need the farmer's money. perhaps only for luxuries

You are glossing over the reality that it's now very difficult for the state to tax capital because the deregulation of finance has made capital so agile- if you try to tax it- it relocates to another domain who are offering lower tax rates for that very reason.

And if the state cannot tax capital- and capital no longer pays a lot of wages- who is the state going to tax to maintain the unemployed population?

automation simply amplifies the wealth concentration effect of globalisation- each feeding the other.

[Saberu]

A citizen's income isn't going to help and I strongly disagree with one on the grounds that it breaks quid pro quo. People should not have access to goods and services without supplying their own unless they are truly incapable of doing so. Exchange is the foundation of our civilization and the cornerstone of our societal bonds. Once you expand rights from the intangible to the tangible, you start handing out goods for free. This is fundamentally unjust.

Sorry I should make my point clearer as I've not written my 'full stance' in that post. As I've written my other opinions in so many posts I just assume people remember. My stance is mass house building to make rental prices down to Chinese levels then we could have a very low citizens income like 200 pounds/ month, less than what people get now. And abolish housing benefits altogether, keeping a little left over e.g. 50% HB for those with children but rent would be cheap enough for that to be negligible.

Under my proposed system, the benefits bill would be cut by two thirds as a result of my changes, a flat tax rate of 20% over 5k which is harder for high earners to avoid and yet lower than existing rates. NHS would no longer be completely free, people would be required to pay a token 10% fee an all operations but could have it as a loan which is is payable based on means testing to see how much or little they can afford, the loan would also have a very loan interest rate like 1%. This adds social responsibility to people who eat and smoke to death whilst being too little money to be considered immoral.

Minimum wage would be abolished but very strict border controls would be put into place, employers will be required to give unskilled job offers to British people before Europeans. The new market set minimum wage would end up being around 300-400 pounds/ month but in combination with a citizens income it would be a comfortable salary. People only receiving the citizens income would be no worse off than current JSA in terms of affording living costs but would definitely need to economize on food.

But they would very easily be able to find a job unlike current conditions so there would be no moral issues. No more expensive license requirements for opening a bank or laws against using alternative currencies like Bitcoin. Licenses could be made very cheap so to prevent the current monopolisation of the banking industry.

Saberu solution losers: BTL investors, home owners who want to 'cash out' on the equity of their home, children who want to cash out by inheriting property from parents (I think this includes fafa)

Unless my solution is applied in terms of the housebuilding reforms and subsequent removal of minimum wage then Britain is going down the road of a banana republic or USSR style depression. High land prices only help land and property owners while doing extensive economic damage to non-owners, it's essentially pricing them out of the world labour market and without them we wouldn't need a minimum wage. The minimum wage is higher in London, why? Because land costs more, thus rent and everything else does aswell.

[Saberu]

This is actually a very bad example. The news in the airwaves or internet maybe free, but that does not mean that you are able to get the truth from those headlines.

Vodafone paid a lot of taxes (VAT, PAYE, CT) (unless you consider billions 'very little') it is just not as corporation tax as some people like.

Have you tried to order a HLR, MSC or a radio base station? Ring up Huawei and ask them what your £20k - 30k can buy. You estimate for cost to cover London is probably out by about 10000x. Then you have to pay the rent for the towers, get planning permission to put them in, to setup the backhaul etc.

Don't believe me? Ring up Huawei in China and ask them.

Alright 20-30k might be an underestimate, but it's significantly less than people think it is. You don't need some big ass tower, you just put a big communications rod on a building somewhere for cheap rent. Then you have a series of small signal bouncers places all over the place in places like trees, you don't need to pay to just put a very small peice of equipment in a tree- people don't even know it's there. It's probably smaller than an mp3 player.

Let's say it was a million pounds, that still means calls and texts should be significantly cheaper than they are currently.

Vodafone paid a billion in taxes a short while ago but it was part of a deal with HMRC when both parties knew they really owed a lot more. They are making SO much money, that they decided to hide how much they are making from the government because the amount of tax they would have to pay is probably insane. People pay so much on mobile bills these days that I wouldn't be surprised if they are making 10 bil a year revenue. Then they only pay the odd billion every few years in 'tax deals', it's a joke.

You must be the same guy that thinks the 150k you pay for a house is because it's expensive to actually build and buy the materials, but the reality is materials are the cheapest part, labour is probably more expensive then land is 2/3 the price. Then the labour is only expensive due to artificially high salaries on the back of artificially expensive land/ minimum wage pushing all wages up. Without all the BS and manipulation you could probably buy a small apartment for 30k.

And why should an operating license cost so much money? Same question for banking. There's no reason we can't have 'cheap' operating licenses like 5 or 10k, it's an artificial barrier to entry that prevents healthy competition.

Edited August 25, 2012 by Saberu

[winkie]

[wonderpup]

High land prices only help land and property owners while doing extensive economic damage to non-owners, it's essentially pricing them out of the world labour market and without them we wouldn't need a minimum wage. The minimum wage is higher in London, why? Because land costs more, thus rent and everything else does aswell.

This is a really good point that makes a nonsense of the current stance of both the government and the various VI groups calling for more labour market 'flexibility'.

As long as the basic costs of housing remain high no amount of labour flexibility will enable us to compete with cheap foreign labour-but I have yet to hear David Cameron make this point- on the contrary he seems to be doing his best to ensure that house prices remain high- so their whole position is a flat contradiction.

[aa3]

Sorry I should make my point clearer as I've not written my 'full stance' in that post. As I've written my other opinions in so many posts I just assume people remember. My stance is mass house building to make rental prices down to Chinese levels then we could have a very low citizens income like 200 pounds/ month, less than what people get now. And abolish housing benefits altogether, keeping a little left over e.g. 50% HB for those with children but rent would be cheap enough for that to be negligible.

Under my proposed system, the benefits bill would be cut by two thirds as a result of my changes, a flat tax rate of 20% over 5k which is harder for high earners to avoid and yet lower than existing rates. NHS would no longer be completely free, people would be required to pay a token 10% fee an all operations but could have it as a loan which is is payable based on means testing to see how much or little they can afford, the loan would also have a very loan interest rate like 1%. This adds social responsibility to people who eat and smoke to death whilst being too little money to be considered immoral.

Minimum wage would be abolished but very strict border controls would be put into place, employers will be required to give unskilled job offers to British people before Europeans. The new market set minimum wage would end up being around 300-400 pounds/ month but in combination with a citizens income it would be a comfortable salary. People only receiving the citizens income would be no worse off than current JSA in terms of affording living costs but would definitely need to economize on food.

But they would very easily be able to find a job unlike current conditions so there would be no moral issues. No more expensive license requirements for opening a bank or laws against using alternative currencies like Bitcoin. Licenses could be made very cheap so to prevent the current monopolisation of the banking industry.

Saberu solution losers: BTL investors, home owners who want to 'cash out' on the equity of their home, children who want to cash out by inheriting property from parents (I think this includes fafa)

Unless my solution is applied in terms of the housebuilding reforms and subsequent removal of minimum wage then Britain is going down the road of a banana republic or USSR style depression. High land prices only help land and property owners while doing extensive economic damage to non-owners, it's essentially pricing them out of the world labour market and without them we wouldn't need a minimum wage. The minimum wage is higher in London, why? Because land costs more, thus rent and everything else does aswell.

A very good plan I support wholeheartedly.

-The way to bring down house prices is exactly what you said, mass building of homes. That is why even in prosperous and populus Texas, homes are dirt cheap.

-With the neccessities of life covered, a minimum wage law isn't neccessary. Someone might work for £2 an hour as they learn a trade. A little bit of extra spending money each day for them. The renumeration is between them and the employer.