‘X’ Marks The Spot Where Inequality Took Root

On August 5, 2015, Stan Sorscher of the Economic Opportunity Institute writes:

In 2002, I heard an economist characterizing this figure as containing a valuable economic insight. He wasn’t sure what the insight was. I have my own answer.

The economist talked of the figure as a sort of treasure map, which would lead us to the insight. “X” marks the spot. Dig here.

The graphic below tells three stories.

First, we see two distinct historic periods since World War II. In the first period, workers shared the gains from productivity. In the later period, a generation of workers gained little, even as productivity continued to rise.

Figure 1: The X marks the spot where something happened.

Figure 1: The ‘X’ marks the spot where something happened in the mid-1970’s. (Click to embiggen)

The second message is the very abrupt transition from the post-war historic period to the current one. Something happened in the mid-70’s to de-couple wages from productivity gains.

The third message is that workers’ wages – accounting for inflation and all the lower prices from cheap imported goods – would be double what they are now, if workers still took their share of gains in productivity.

A second version of the figure is equally provocative.

Figure 2

Figure 2: Follow the money (or the lack of it).

This graphic shows the same distinct historic periods, and the same sharp break around 1975. Each colored line represents the growth in family income, relative to 1975, for different income percentiles. Pre-1975, families at all levels of income benefited proportionately. Post-1975, The top 5% did well, and we know the top 1% did very well. Gains from productivity were redistributed upward to the top income percentiles.

This de-coupling of wages from productivity has drawn a trillion dollars out of the labor share of GDP.

Economics does not explain what happened in the mid-70s.

It was not the oil shock. Not interest rates. Not the Fed, or monetary policy. Not robots, or the decline of the Soviet Union, or globalization, or the internet.

The sharp break in the mid-70’s marks a shift in our country’s values. Our moral, social, political and economic values changed in the mid-70’s.

Let’s go back before World War II to the Great Depression. Speculative unregulated policies ruined the economy. Capitalism was discredited. Powerful and wealthy elites feared the legitimate threat of Communism. The public demanded that government solve our problems.

The Depression and World War II defined that generation’s collective identity. Our national heroes were the millions of workers, soldiers, families and communities who sacrificed. We owed a national debt to those who had saved Democracy and restored prosperity. The New Deal policies reflected that national purpose, honoring a social safety net, increasing bargaining power for workers and bringing public interest into balance with corporate power.

In that period, the prevailing social contract said, “We all do better when we all do better.” My prosperity depends on your well-being. In that period of history, you were my co-worker, neighbor or customer. Opportunity and fairness drove the upward spiral (with some glaring exceptions). Work had dignity. Workers earned a share of the wealth they created. We built Detroit (for instance) by hard work and productivity.

Our popular media father-figures were Walter Cronkite, Chet Huntley, David Brinkley, and others, liberal and conservative, who were devoted to an America of opportunity and fair play.

The sudden change in the mid-70’s was not economic. First it was moral, then social, then political, ….. then economic.

In the mid-70’s, we traded in our post-World War II social contract for a new one, where “greed is good.” In the new moral narrative I can succeed at your expense. I will take a bigger piece of a smaller pie. Our new heroes are billionaires, hedge fund managers, and CEO’s.

In this narrative, they deserve more wealth so they can create more jobs, even as they lay off workers, close factories and invest new capital in low-wage countries. Their values and their interests come first in education, retirement security, and certainly in labor law.

We express these same distorted moral, social and political priorities in our trade policies. As bad as these priorities are for our domestic policies, they are worse if they define the way we manage globalization.

The key to the treasure buried in Figure 1 is power relationships. To understand what happened, ask, “Who has the power to take 93% of all new wealth and how did they get that power? The new moral and social values give legitimacy to policies that favor those at the top of our economy.

We give more bargaining power and influence to the wealthy, who already have plenty of both, while reducing bargaining power for workers. In this new narrative, workers and unions destroyed Detroit (for instance) by not lowering our living standards fast enough.

In the new moral view, anyone making “poor choices” is responsible for his or her own ruin. The unfortunate are seen as unworthy moochers and parasites. We disparage teachers, government workers, the long-term unemployed, and immigrants.

In this era, popular media figures are spiteful and divisive.

Our policies have made all workers feel contingent, at risk, and powerless. Millions of part-time workers must please their employer to get hours. Millions more in the gig economy work without benefits and have no job security at all. Recent college graduates carry so much debt that they cannot invest, take risk on a new career, or rock the boat. Millions of undocumented workers are completely powerless in the labor market, and subject to wage theft. They have negative power in the labor market!

We are creating a new American aristocracy, with less opportunity – less social mobility and weaker social cohesion than any other advanced country. We are falling behind in many measures of well-being.

The dysfunctions of our post-1970 moral, social, political and economic system make it incapable of dealing with climate change or inequality, arguably the two greatest challenges of our time. We are failing our children and the next generations.

X marks the spot. In this case, “X” is our choice of national values. We abandoned traditional American values that built a great and prosperous nation. Our power relationships are sour.

We can start rebuilding our social cohesion when we say all work has dignity. Workers earn a share of the wealth we create. We all do better, when we all do better. My prosperity depends on a prosperous community with opportunity and fairness.

‘X’ Marks the Spot Where Inequality Took Root: Dig Here

Gary Reber Comments:

Actually, in the first period since World War II, the contribution of labor was still the primary factor of production, while in the second period productivity gains were attributed to the non-human factor of production: capital (productive assets, including job-displacing physical and informational technologies, structures, land and other natural resources, patents and copyrights — or non-human “things” contributing to the production of marketable goods and services — an evolving system that puts things above most people).

Fundamentally, economic value is created through human and non-human contributions. NOTE, real physical productive capital isn’t money; it is measured in money (financial capital), but it is really producing power and earning power through ownership of the non-human factor of production.

The role of physical productive capital is to do ever more of the work, which produces wealth and thus income to those who own productive capital assets.

Full employment is not an objective of businesses nor is conducting business statically in terms of geographical location. Companies strive to achieve cost efficiencies to maximize profits for the owners, thus keeping labor input and other costs at a minimum. They strive to minimize marginal costs, the cost of producing an additional unit of a good, product or service once a business has its fixed costs in place, in order to stay competitive with other companies racing to stay competitive through technological innovation. Reducing marginal costs enables businesses to increase profits, offer goods, products and services at a lower price (which people as consumers seek), or both. Increasingly, new technologies are enabling companies to achieve near-zero cost growth without having to hire people. Thus, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role.

The result is that the price of products and services are extremely competitive as consumers will always seek the lowest cost/quality/performance alternative, and thus for-profit companies are constantly competing with each other (on a local, national and global scale) for attracting “customers with money” to purchase their products or services in order to generate profits and thus return on investment (ROI).

Over the past century there has been an ever-accelerating shift to productive capital — which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 239 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advances amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.

People invented “tools” to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive — the core function of technological invention and innovation. Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, free-market forces no longer establish the “value” of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.

Furthermore, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. If both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive, and ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the economy.

We need to provide universal access to future ownership opportunities without redistribution. That is, reform the tax and monetary system to enable every child, woman, and man to purchase capital on credit collateralized with insurance, and pay for it out of the future earnings of the capital itself.

Achieving universal capital ownership is a just, third way in which everyone controls his or her life, and safeguards liberty, by having private property in capital.

What American citizens need is a Capital Homestead Act to own shares in the unlimited frontier of growth capital, what Lincoln’s 1862 Homestead Act offered to homesteaders in America’s land frontier.

Support the Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.


Boston Dynamics CEO Believes Robotics Will Become “Bigger Than The Internet”

On November 15, 2017, Dom Galeon writes on Futurism:

A Great Disruption

In the world of ever-advancing artificial intelligence (AI), robotics continues to offer glimpses into the future intelligence machines could usher in. It also serves as a reminder (or warning) about the potential alternate side of that future, which has been played out time and time again in science fiction.

We’re not quite there yet, but according to Boston Dynamics CEO and founder Marc Raibert, robots will shake things up for humanity more so than any previous technological innovation — even the internet.

“I happen to believe that robotics will be bigger than the Internet,” Raibert said when he spoke at the Future Investment Initiative back in October, according to CNBC. “The Internet lets every person reach out and touch all the information in the world. But robotics lets you reach out and touch and manipulate all the stuff in the world — and so it is not just restricted to information, it is everything.”

It was apropos that Raibert spoke about the disruption robots have the potential to bring about at the same event where Hanson Robotics’ Sophia received the first citizenship granted to a non-human. Trained to understand and mimic human emotions, Sophia is a prime example of how robots are becoming incredibly human-like.

Capable Robots

For Raibert, that likeness is about more than appearance. “When we have robots that can do what people and animals do, they will be incredibly useful,” he said. In order to do this, he added, robots must possess three key abilities: mobility, dexterity, and autonomous perception.

Naturally, when robots become good, their usefulness increases. “I think one of the most important applications will be taking care of people,” Raibert offered. “They will help you take care of your parents so that you don’t have to spend so much time doing that.”

All three “skills” are present in the type of robots Boston Dynamics develops. Just recently, the company released a video showing the latest iteration of their robot dog called SpotMini. The video showcases how SpotMini moves in an incredibly life-like manner. It aims to exhibit dexterity and successfully navigate its environment.

SpotMini isn’t the only robot in their workshop: Boston Dynamics has also been working on perfecting their two-legged robots, ATLAS and Handle. Boston Dynamics is now under telecommunications giant SoftBank, which the company hopes will help these developments continue, and possibly, go even farther.

SoftBank’s CEO, Masayoshi Son, has a reputation for his commitment to achieving the singularity; the point (which some have argued is inevitable and imminent) when robots become smarter than humans. Son has predicted that robots with an IQ of 10,000 will exist in the next 30 years.

Right now, many robotics companies are focused on putting smaller supersmart robots out commercially. Two recent examples of these “pets” would be Sony’s robotic dog and the Wall-E look-alike Cozmo. While these bots are cute and capable, the next major development in robotics will likely be bipedal robots that move like human beings. If Sophia is any indication, robots with a similar appearance and conversation prowess may soon become very familiar to us.

Boston Dynamics CEO Believes Robotics Will Become “Bigger Than the Internet”



Americans Who Haven’t Gone To College Are Way Worse Off Today Than 40 Years Ago

FILE PHOTO: A production line employee works at the AMES Companies shovel manufacturing factory in Camp Hill, Pennsylvania, U.S. on June 29, 2017. Picture taken on June 29, 2017.   REUTERS/Tim Aeppel/File PhotoThomson Reuters

On November 11,  2017, Elena Holodny writes on Business Insider:

  • American men who have only a high school diploma have seen a reversal of fortunes over the last few decades.
  • While real wages have increased over the last several decades for those who have a higher level of education, they have held flat or fallen for those with lower levels of education.
  • There is no single catalyst for the decline in lower-skilled and middle-skilled labor, and this is a long-term problem that is weighing on the US economy.

Several decades ago, regular Americans could get by with a decent job and a decent wage with only a high school diploma.

But things are very different today.

In a note to clients, Bank of America Merrill Lynch’s Michelle Meyer and Anna Zhou shared a chart showing trends in real wages broken down by levels of educational attainment from the 1970s to today.

While real wages have increased over the last several decades for those who have a higher level of education, they have held flat or fallen for those with lower levels of education. As you can see in the chart below, those who have a college degree or higher have seen wages climb, while those who have less than a high school education, a high school diploma, or some college without a bachelor’s degree have fared worse.

“Wage growth has been slow to recover [since the Great Recession] on aggregate with only 2.4% yoy nominal wage growth as of October. However, there are differences by education with relative weakness for less educated men,” Meyer and Zhou said. “This shows the demand shift away from this population, leaving them on the fringe of the labor force.”

wages degreesBAML

There’s also been a huge dip in prime-age male labor force participation. The fraction of men aged 25-65 who are working or actively seeking work has steadily dropped over the years, which you can see below. (Note that this chart goes from 1948 to 2014, going back further than the above chart.)

prime-age male labor force participationCouncil of Economic Advisers under Obama Administration

Putting those two trends together, we see an unusual situation where we have both lower wages and less labor supply. This is contrary to economics  101, which tells us that if there are fewer people available to do a job, they can theoretically command a higher salary, even in lower- and middle-skilled professions.

And, so, that brings us to demand. The Council of Economic Advisers under the Obama Administration noted in a report in 2016 that the demand for low- and middle-skilled workers has declined in recent decades, which has pushed less-educated workers out of the labor market while at the same time holding down wages:

“A number of studies have identified declining labor market opportunities for low-skilled workers and related stagnant real wage growth as the most likely explanation for the decline of prime-age male labor force participation, at least for the period in the mid-to-late 1970s and 1980s (Juhn, et. al. 1991; Juhn and Potter 2006). More recently, economists have suggested that a relative decline in labor demand for occupations that are middle-skilled or middle-paying may have begun contributing to the decline in the participation in the 1990s (Aaronson et al. 2014). As demand for these middle-skilled workers has fallen, they may have displaced lower-skilled workers from their lower-skilled jobs (Beaudry, Green, and Sand 2016), leading some lower-skilled workers to leave the labor force. Aaronson et al. (2014) find that, since 1985, participation rates for less-educated adults fell further in States with greater declines in middle-skilled employment shares.”

There is no single catalyst for the decline in lower-skilled and middle-skilled labor. There is some empirical evidence, however, suggesting that globalization and automation have at least partially contributed to this phenomenon recently. America’s high incarceration rates might also be a contributing factor.

It’s also worth mentioning that male education levels have stagnated relative to those of women in the US. This, in turn, makes women more competitive applicants for a variety of jobs — especially those in the services sector.

“These forces have, among other things, eliminated the large numbers of American manufacturing jobs over a number of decades … leaving many people — mostly men — unable to find new ones,” the report from the CEA said.

So, not only are men losing jobs amid demand shifts, but they are not getting back into the labor force.



Billionaire Ray Dalio: There Are Two Realities In This Country—For The Bottom 60 Percent It’s A ‘Miserable Economy’

Ray Dalio

Cameron Costa | CNBC

On November 7, 2017,Catherine Clifford writes  on CNBC Make It:

Billionaire entrepreneur and financier Ray Dalio says there are two very different economic realities in the United States right now. That divide is threatening the nation’s stability, the Bridgewater Associates founder says, and it’s only going to get worse as technology replaces workers.

“[T]here are two economies. We talk of ‘the economy.’ Recognize that you can’t talk about the economy … there are two economies,” says Dalio, speaking to Recode executive editor Kara Swisher on her podcast, Recode Decode, published Monday.

There’s the “top 40 percent” and “the bottom 60 percent,” says Dalio. And for those at the bottom, life is hard without a lot of hope.

“If you look at the economy of the bottom 60 percent, it is a miserable economy. Not only hasn’t it had growth and economic movement and so on, it has the highest rising death rates, it is the only place in the world where death rates are rising because of a combination of opiates, other drugs and suicides,” Dalio says. (Indeed, Princeton Professors Anne Case and Angus Deaton found that drugs, alcohol and suicide are a major reason behind rising death rates among non-Hispanic whites in the U.S. with a high school diploma or less.)

One on One with Ray Dalio

One-on-one with Ray Dalio

Meanwhile, the most privileged at the top have a radically disproportionate amount of wealth.

“The top one tenth of 1 percent of the population has a net worth that is equal to the bottom 90 percent combined,” according to Dalio, who also wrote about his calculations in a LinkedIn post.

“So, we have two existences, two parallel existences, that are taking place,” he says.

Billionaire investor Warren Buffett, the CEO of investing house Berkshire Hathaway and the hallowed Oracle of Omaha, has also laid blame at the extreme wealth inequality in the United States.

Billionaire Warren Buffett says 'the real problem' with the US economy is people like him

Billionaire Warren Buffett says ‘the real problem’ with the US economy is people like him

“The real problem, in my view, is — this has been — the prosperity has been unbelievable for the extremely rich people,” Buffett told PBS Newshour.

“If you go to 1982, when Forbes put on their first 400 list, those people had [a total of] $93 billion. They now have $2.4 trillion, [a multiple of] 25 for one,” Buffett said on PBS Newshour in June. “This has been a prosperity that’s been disproportionately rewarding to the people on top.

To improve the situation in the United States, Dalio says there needs to be honest conversation from both political parties and productive, “thoughtful disagreement.” Leaders need to be able to disagree, consider each other’s ideas and then collectively come up with the best path forward.

The notion of finding the best way forward though honest conversation and collective intelligence is at the heart of Dalio’s new book, “Principles: Life and Work.”

In the book, Dalio outlines the strategy he became famous for ruthlessly implementing in his wildly successful hedge fund, currently with $160 billion under management. At Bridgewater, Dalio says the best ideas rule, irrespective of where they came from. He calls the management philosophy an “idea-meritocracy.”

“We have to work together, to find out how you have thoughtful disagreement and then have idea-meritocratic ways of getting past that disagreement that keeps us together rather than than at each other’s throats, because I do believe that this split in the country is the greatest problem of our time, and not just economically — socially, politically,” Dalio says.

Further, Dalio suggests that the wealth gap will only become more severe.

“It is going to worsen because technology is a fantastic way of raising productivity by also reducing the need for people in a lot of different ways,” Dalio says.

“People are going to by and large, either know how to code or be increasingly unemployed because they are being replaced by the product of that. We have to deal with that issue.”

Indeed, tech billionaire and SpaceX and Tesla boss Elon Musk has indicated the acceleration in automation will leave so many out of work that the government would have to pay people a universal basic income so they can afford to live.




Three Researchers Left Elon Musk’s AI Company To Launch A Start-Up

On November 8, 2017, Chelsea Gohd writes on Futurism:

At OpenAI, researchers pushed the boundaries of artificial intelligence and robotics. Now, several researchers have left Elon Musk’s non-profit to form a start-up that’s taking machine learning to the next level.

Leaving Elon

Not content to simply transform the worlds of energytransportation, and space exploration, in 2015, Elon Musk founded OpenAI, a San Fransisco-based artificial intelligence (AI) research company. The non-profits’ goal is to further the technology in ways that will benefit humanity as a whole, and over the past two years, they’ve pushed AI into new territory. Recently, several researchers from OpenAI stepped away from the company to found Embodied Intelligence, a robotics start-up with a more singular focus: propel robotic automation to a higher level.

Understanding Machine Learning [INFOGRAPHIC]
Click to View Full Infographic

Through their previous work, the founding members of Embodied Intelligence — former OpenAI researchers Peter Abbeel, Peter Chen, and Rocky Duan and former Microsoft researcher Tianhao Zhang — explored the potential of robots to mimic complex human action.

Now, they are now confident they can use their past experience to improve the type of robots that are currently used in industry and even in the home. They’ve already received $7 million in initial funding from Amplify Partners, a Silicon Valley venture capital firm, and other investors, so clearly, others are also confident this team of four will be able to achieve its goals.

Advancing Robotics

Embodied Intelligence will specialize in finding ways to enable machines to learn how to do things on their own. That might sound like a small piece of the puzzle, but that ability is the basis for advanced AI robotics.

Breakthroughs in machine learning will allow robotics to advance from machines that we program to do specific tasks to machines capable of “learning” and behaving in human-like ways. They’ll then be able to accomplish much more complex and nuanced tasks.

“Today, every motion that an industrial robot makes is specified down to the millimeter. But most real problems can’t be solved that way,” Sunil Dhaliwal, the founder of Amplify Partners, told The New York Times. “You have to be able not just to tell the robot what to do, but to tell it how to learn.”

The company is using a method called imitation learning to do just that.

A researcher wearing a virtual reality headset and holding motion trackers repeatedly completes a task in the digital world. A robot then uses that data to learn how to complete the task in the real world. The result? “We now have teachable robots,” said Abbeel.

That bold claim is what makes the Embodied Intelligence team’s work so exciting. We can already program robots to do incredible things that humans can’t. They can clean up radioactive debris,reach unreachable spaces, and complete surgical procedures with added precision. The next step is to eliminate the need to program these actions into the robots, giving them the ability to observe, act, and learn independently.

While we can currently program a robot to follow specific instructions that tell it how to assemble car parts, a robot equipped with the right machine learning software could learn how to put together a car it had never worked with before based on past experiences — no additional programming required.

Elon Musk has a history of success, so a person must be fairly confident in their own capacity for success to leave one of the tech luminary’s companies. Abbeel and his team are such people. Beyond confidence, however, they also have the right experience to bring their robots of the future to life.

Three Researchers Left Elon Musk’s AI Company to Launch a Start-Up



How Do The Economic Elites Get The Idea That They ‘Deserve’ More?

On January 21, 2016, Yanis Varoufakis writes on Evonomics:

The ‘haves’ of the world are always convinced that they deserve their wealth. That their gargantuan income reflects their ingenuity, ‘human capital’, the risks they (or their parents) took, their work ethic, their acumen, their application, their good luck even. The economists (especially members of the so-called Chicago School. e.g. Gary Becker) aid and abet the self-serving beliefs of the powerful by arguing that arbitrary discrimination in the distribution of wealth and social roles cannot survive for long the pressures of competition (i.e. that, sooner or later, people will be rewarded in proportion to their contribution to society). Most of the rest of us suspect that this is plainly false. That the distribution of power and wealth can be, and usually is, highly arbitrary and independent of ‘marginal productivity’, ‘risk taking’ or, indeed, any personal characteristic of those who rise to the top.

In this post I present a body of experimental work that argues the latter point: Arbitrary distributions of roles and wealth are not only sustainable in competitive environments but, indeed, they are unavoidable until and unless there are political interventions to keep them in check.

The laboratory experiment central to this post took place some time ago and involved 640 volunteers. It revealed that rigid hierarchies might emerge even among people who are, to all intents and purposes, identical. Of course, discrimination cannot emerge unless there is at least some distinguishing feature (e.g. some are ‘left-hookers’ or have green eyes, some are men while others are women). So, to test the hypothesis that systematic discrimination can emerge when subjects seem identical to each other, the experimental design made it impossible for one participant to discern anything other than a wholly arbitrary feature of the ‘other’; a feature that is commonly known to be uncorrelated to the character, application, intelligence, motivation or ability of the person involved. What feature? We simply assigned, at random, the colour Blue to half our subjects and the colour Red to the other half. Could such an arbitrary colour assignment seed stable conventions that discriminated terribly between the Reds and the Blues; i.e. people that were, otherwise, indistinguishable (and who knew that the colour assignments were random and, therefore, meaningless)? The answer is, contrary to anything economic theory can explain, a resounding ‘yes’. (Click here for the academic paper, published in The Economic Journal, reporting on this experiment and here for a longer chapter on the same topic, published recently in thisbook.)

What does this all mean? What lesson can we learn, from these laboratory experiments, about our societies? Are there insights here that can be of help to political activists and civil rights organizations struggling against systematic discrimination? Below, I (YV) offer a brief summary of the empirical findings and answer questions posed by Nick Hadjigeorge (NH) concerning the political significance of these issues for civil rights activists.

INSIGHTS FROM THE LAB – in six points

  1. Experimental evidence shows that large-scale arbitrary discrimination can be sustainable on the basis of some distinguishing feature that everyone knows is independent of personal character, skill, aggression, IQ, temperament etc. If we can reproduce rigid patterns of discrimination within an hour, in a laboratory, then feminists, anti-racists  and critics of the vast inequalities between social classes have powerful evidence that it is perfectly possible for societies to distribute the good social roles (and the wealth emanating from these) independently of the personal virtues powerful white men invoke to justify their riches and power.

  2. Given their evolutionary stability, the patterns of discrimination become institutionalized in human societies because people begin to believe that they deserve what they are getting or not getting (as part of the distribution that results from the evolved discriminatory conventions). The ideology of entitlements, in others words, follows on the coattails of arbitrary distributions of social roles and income.

  3. Members of  advantaged and disadvantaged groups behave differently based on this dynamic, expect the ‘other’ group to behave differently and, importantly, allow their ‘expectations’ to become more than predictions: to become ethical expectations (e.g. the advantaged tend to believe that it is right that they should be getting more than the disadvantaged and vice versa).

  4. Advantaged people engage more in hostile behaviour toward one another, and they feel entitled to their winnings.

  5. Disadvantaged members learned to expect less and to develop a greater capacity to act collectively and cooperatively against the logic of free-riding. As a result, even though this is not necessarily what motivates them, they manage to recoup some of the losses from being disadvantaged (in their dealings with the advantaged group) by managing to cooperate with one another.

  6. The explanation of how real power evolves, and what makes it sustainable, is to be found in the mind, and the beliefs, of the majority of the disadvantaged who succumb to the  ideological belief that they are entitled to less than the advantaged.

NH: Your analysis began with empirical observations of discrimination amongst populations of birds, before you proceeded to human behaviour in the laboratory. Do you have more to say about the institutionalization process that we observe in human societies?

YV: Humans have a capacity that animals lack: the capacity to rationalise ex post and to develop moral (or normative) beliefs. Whereas in bird populations discrimination is based just on a Darwinian replicator mechanism (which ensures that conflict is minimized through the division of birds between those which are programmed to act as hawks and to those that behave dovishly), human societies are at least one order to magnitude more complex. As in the ‘Animal republic’ so too in human societies the socio-economic games we play (also known as… patriarchal, racially-charged capitalism) are quite primitive and conflictual, giving rise to social divisions between advantaged and disadvantaged groups. The difference is that humans question the conventions around them. They need reasons for accepting them. So, they devise them surreptitiously, covertly, subconsciously. They convert the observation “this is what I am getting” to the belief “this is what I am entitled to”. When predictive beliefs acquire a veneer of ethicality, they become solidified and the social order is stabilised. But, at the same time, an opposite force is at work; a subversive one that is akin to mutations in biology. These mutations are acts of rebellion (e.g. a Spartacus or a Malcolm X) that destabilize the social order and the dominant ideology. It is through this tussle between the adaptive, conservative, replicator dynamic and the subversive rebelliousness of political mutations that human history evolves. The institutions of slavery, patriarchy, racism, capitalism etc. all came about in this manner. And were all subverted in that manner too.

NH: Is it your impression that your experimental subjects behaved according to socialization, or is it the result of innate brain-wiring, as in the bird example?

YV: The only innate, hard-wired, aspect of this ‘socialization’ process has to do with our need, as humans, to rationalize; to have reasons for accepting the conventions regulating our behavior. What David Hume describes in his Treatise of Human Nature as the surreptitious conversion of an ‘is’ to an ‘ought’. It is this ‘thirst for reasons’ that is the source of the ideology that solidifies behavioural patterns of discrimination and cooperation but also of the ideology of rebellion, subversion and resistance.

NH: Advantaged members feel entitled to their winnings. What sense do the disadvantaged members feel? Is it injustice, etc?

YV: Yes and no. The disadvantaged experience a mix of emotions. Partly a sense of injustice, partly a sense of pride for not being exploiters, partly an indignation against the advantaged but also partly moral condemnation of other disadvantaged people who are ‘uppity’, who think they deserve better and who seek to subvert the advantage of the advantaged. After all, the greatest opponents of feminists have been women (who proclaimed that women should stay in the home) and the police forces that attacked anti-Apartheid protesters in the South Africa were mostly black…

NH: What is your opinion on the Civil Rights Movement? Did its members successfully utilise their power as members of the disadvantaged group?

YV: Yes. Broadly speaking, the second great difference between human societies and stratified bird populations (besides our capacity to rationalise and to develop normative beliefs) is the fact that humans, possibly courtesy of Logos (speech, language and reason), tend to correlate our mutations. If you think of mutations as individual acts of resistance against established discriminatory conventions, politics is what happens when these individuals attempt to correlate their mutations, thus giving them a great deal more power to overturn the current conventions. In the 1960s the Civil Rights Movement accomplished this with great success, especially so in view of having recruited into the coalition of subversives members of the advantaged group (e.g. whites who rode on the buses with blacks). If the Movement failed in something it was in that it had no answer to the massive loss of blue collar jobs after 1973, a loss that undermined the vast majority of disadvantaged Americans. But this is another story…

NH: Looking ahead, how do you feel about current movements of disadvantaged members exercising their collective power?

YV: It is the historic duty of victims of arbitrary discrimination to contest it tooth and nail. It is also inevitable that they will keep trying, despite the Sirens that strive to keep them on their sofas, glued to the idiot box, or to immerse them in a cloud of mindless, cheap, plastic consumerism against the background of economic insecurity. The bad news is that, since the 1970s, the economic bedrock on which the civil rights’ movement stood has become increasingly brittle. The Crisis of 2008 gave out some hope that the dispossessed would take heart and, through the Occupy Movement, reclaim part of the moral high ground in this never ending struggle. The jury is still out on this. But there is good news: As long as mindless, irrational and multiple patterns of discrimination survive, the human spirit will always produce serious challenges to it and, in so doing, will keep the flame alive.

NH: Does your game theory model/research provide any insight into how these groups should behave?

YV: No. It simply empowers them:

  • with the demonstration that the discrimination they are up against can be as idiotic as it is sustainable
  • with proof that the fact that discrimination, inequality and exploitation is rampant and everywhere is no sign that there is some worthy rationale behind discrimination, inequality and exploitation
  • with evidence that, however sustainable discriminatory norms and practices may seem, they can crumble and disappear once we expose their reliance on false beliefs that resemble a type superstition functional to the interests of a tiny minority.

How resistance and Civil Rights groups will organize against discriminatory patterns, and how they will subvert the latter’s  ideological ‘cover’, is for them to work out and for us to support.

How Do the Economic Elites Get the Idea That They ‘Deserve’ More?



A World Without Work

For centuries, experts have predicted that machines would make workers obsolete. That moment may finally be arriving. Could that be a good thing?

In the July/August 2015 issue of The Atlantic, Derek Thompson writes:

1. Youngstown, U.S.A.

The end of work is still just a futuristic concept for most of the United States, but it is something like a moment in history for Youngstown, Ohio, one its residents can cite with precision: September 19, 1977.

For much of the 20th century, Youngstown’s steel mills delivered such great prosperity that the city was a model of the American dream, boasting a median income and a homeownership rate that were among the nation’s highest. But as manufacturing shifted abroad after World War  II, Youngstown steel suffered, and on that gray September afternoon in 1977, Youngstown Sheet and Tube announced the shuttering of its Campbell Works mill. Within five years, the city lost 50,000 jobs and $1.3 billion in manufacturing wages. The effect was so severe that a term was coined to describe the fallout: regional depression.

Youngstown was transformed not only by an economic disruption but also by a psychological and cultural breakdown. Depression, spousal abuse, and suicide all became much more prevalent; the caseload of the area’s mental-health center tripled within a decade. The city built four prisons in the mid-1990s—a rare growth industry. One of the few downtown construction projects of that period was a museum dedicated to the defunct steel industry.

This winter, I traveled to Ohio to consider what would happen if technology permanently replaced a great deal of human work. I wasn’t seeking a tour of our automated future. I went because Youngstown has become a national metaphor for the decline of labor, a place where the middle class of the 20th century has become a museum exhibit.

Derek Thompson talks with editor in chief James Bennet about the state of jobs in America.

“Youngstown’s story is America’s story, because it shows that when jobs go away, the cultural cohesion of a place is destroyed,” says John Russo, a professor of labor studies at Youngstown State University. “The cultural breakdown matters even more than the economic breakdown.”

In the past few years, even as the United States has pulled itself partway out of the jobs hole created by the Great Recession, some economists and technologists have warned that the economy is near a tipping point. When they peer deeply into labor-market data, they see troubling signs, masked for now by a cyclical recovery. And when they look up from their spreadsheets, they see automation high and low—robots in the operating room and behind the fast-food counter. They imagine self-driving cars snaking through the streets and Amazon drones dotting the sky, replacing millions of drivers, warehouse stockers, and retail workers. They observe that the capabilities of machines—already formidable—continue to expand exponentially, while our own remain the same. And they wonder: Is any job truly safe?

Futurists and science-fiction writers have at times looked forward to machines’ workplace takeover with a kind of giddy excitement, imagining the banishment of drudgery and its replacement by expansive leisure and almost limitless personal freedom. And make no mistake: if the capabilities of computers continue to multiply while the price of computing continues to decline, that will mean a great many of life’s necessities and luxuries will become ever cheaper, and it will mean great wealth—at least when aggregated up to the level of the national economy.

But even leaving aside questions of how to distribute that wealth, the widespread disappearance of work would usher in a social transformation unlike any we’ve seen. If John Russo is right, then saving work is more important than saving any particular job. Industriousness has served as America’s unofficial religion since its founding. The sanctity and preeminence of work lie at the heart of the country’s politics, economics, and social interactions. What might happen if work goes away?

The u.s. labor force has been shaped by millennia of technological progress. Agricultural technology birthed the farming industry, the industrial revolution moved people into factories, and then globalization and automation moved them back out, giving rise to a nation of services. But throughout these reshufflings, the total number of jobs has always increased. What may be looming is something different: an era of technological unemployment, in which computer scientists and software engineers essentially invent us out of work, and the total number of jobs declines steadily and permanently.

This fear is not new. The hope that machines might free us from toil has always been intertwined with the fear that they will rob us of our agency. In the midst of the Great Depression, the economist John Maynard Keynes forecast that technological progress might allow a 15-hour workweek, and abundant leisure, by 2030. But around the same time, President Herbert Hoover received a letter warning that industrial technology was a “Frankenstein monster” that threatened to upend manufacturing, “devouring our civilization.” (The letter came from the mayor of Palo Alto, of all places.) In 1962, President John F. Kennedy said, “If men have the talent to invent new machines that put men out of work, they have the talent to put those men back to work.” But two years later, a committee of scientists and social activists sent an open letter to President Lyndon B. Johnson arguing that “the cybernation revolution” would create “a separate nation of the poor, the unskilled, the jobless,” who would be unable either to find work or to afford life’s necessities.\

Adam LeveyThe job market defied doomsayers in those earlier times, and according to the most frequently reported jobs numbers, it has so far done the same in our own time. Unemployment is currently just over 5 percent, and 2014 was this century’s best year for job growth. One could be forgiven for saying that recent predictions about technological job displacement are merely forming the latest chapter in a long story called The Boys Who Cried Robot—one in which the robot, unlike the wolf, never arrives in the end.

The end-of-work argument has often been dismissed as the “Luddite fallacy,” an allusion to the 19th-century British brutes who smashed textile-making machines at the dawn of the industrial revolution, fearing the machines would put hand-weavers out of work. But some of the most sober economists are beginning to worry that the Luddites weren’t wrong, just premature. When former Treasury Secretary Lawrence Summers was an MIT undergraduate in the early 1970s, many economists disdained “the stupid people [who] thought that automation was going to make all the jobs go away,” he said at the National Bureau of Economic Research Summer Institute in July 2013. “Until a few years ago, I didn’t think this was a very complicated subject: the Luddites were wrong, and the believers in technology and technological progress were right. I’m not so completely certain now.”

2. Reasons to Cry Robot

What does the “end of work” mean, exactly? It does not mean the imminence of total unemployment, nor is the United States remotely likely to face, say, 30 or 50 percent unemployment within the next decade. Rather, technology could exert a slow but continual downward pressure on the value and availability of work—that is, on wages and on the share of prime-age workers with full-time jobs. Eventually, by degrees, that could create a new normal, where the expectation that work will be a central feature of adult life dissipates for a significant portion of society.

After 300 years of people crying wolf, there are now three broad reasons to take seriously the argument that the beast is at the door: the ongoing triumph of capital over labor, the quiet demise of the working man, and the impressive dexterity of information technology.

• Labor’s losses. One of the first things we might expect to see in a period of technological displacement is the diminishment of human labor as a driver of economic growth. In fact, signs that this is happening have been present for quite some time. The share of U.S. economic output that’s paid out in wages fell steadily in the 1980s, reversed some of its losses in the ’90s, and then continued falling after 2000, accelerating during the Great Recession. It now stands at its lowest level since the government started keeping track in the mid‑20th century.

A number of theories have been advanced to explain this phenomenon, including globalization and its accompanying loss of bargaining power for some workers. But Loukas Karabarbounis and Brent Neiman, economists at the University of Chicago, have estimated that almost half of the decline is the result of businesses’ replacing workers with computers and software. In 1964, the nation’s most valuable company, AT&T, was worth $267 billion in today’s dollars and employed 758,611 people. Today’s telecommunications giant, Google, is worth $370 billion but has only about 55,000 employees—less than a tenth the size of AT&T’s workforce in its heyday.

• The spread of nonworking men and underemployed youth. The share of prime-age Americans (25 to 54 years old) who are working has been trending down since 2000. Among men, the decline began even earlier: the share of prime-age men who are neither working nor looking for work has doubled since the late 1970s, and has increased as much throughout the recovery as it did during the Great Recession itself. All in all, about one in six prime-age men today are either unemployed or out of the workforce altogether. This is what the economist Tyler Cowen calls “the key statistic” for understanding the spreading rot in the American workforce. Conventional wisdom has long held that under normal economic conditions, men in this age group—at the peak of their abilities and less likely than women to be primary caregivers for children—should almost all be working. Yet fewer and fewer are.

Economists cannot say for certain why men are turning away from work, but one explanation is that technological change has helped eliminate the jobs for which many are best suited. Since 2000, the number of manufacturing jobs has fallen by almost 5 million, or about 30 percent.Young people just coming onto the job market are also struggling—and by many measures have been for years. Six years into the recovery, the share of recent college grads who are “underemployed” (in jobs that historically haven’t required a degree) is still higher than it was in 2007—or, for that matter, 2000. And the supply of these “non-college jobs” is shifting away from high-paying occupations, such as electrician, toward low-wage service jobs, such as waiter. More people are pursuing higher education, but the real wages of recent college graduates have fallen by 7.7 percent since 2000. In the biggest picture, the job market appears to be requiring more and more preparation for a lower and lower starting wage. The distorting effect of the Great Recession should make us cautious about overinterpreting these trends, but most began before the recession, and they do not seem to speak encouragingly about the future of work.

• The shrewdness of software. One common objection to the idea that technology will permanently displace huge numbers of workers is that new gadgets, like self-checkout kiosks at drugstores, have failed to fully displace their human counterparts, like cashiers. But employers typically take years to embrace new machines at the expense of workers. The robotics revolution began in factories in the 1960s and ’70s, but manufacturing employment kept rising until 1980, and then collapsed during the subsequent recessions. Likewise, “the personal computer existed in the ’80s,” says Henry Siu, an economist at the University of British Columbia, “but you don’t see any effect on office and administrative-support jobs until the 1990s, and then suddenly, in the last recession, it’s huge. So today you’ve got checkout screens and the promise of driverless cars, flying drones, and little warehouse robots. We know that these tasks can be done by machines rather than people. But we may not see the effect until the next recession, or the recession after that.”

Ryan Carson, the CEO of Treehouse, discusses the benefits of a 32-hour workweek.

Some observers say our humanity is a moat that machines cannot cross. They believe people’s capacity for compassion, deep understanding, and creativity are inimitable. But as Erik Brynjolfsson and Andrew McAfee have argued in their book The Second Machine Age, computers are so dexterous that predicting their application 10 years from now is almost impossible. Who could have guessed in 2005, two years before the iPhone was released, that smartphones would threaten hotel jobs within the decade, by helping homeowners rent out their apartments and houses to strangers on Airbnb? Or that the company behind the most popular search engine would design a self-driving car that could soon threaten driving, the most common job occupation among American men?

In 2013, Oxford University researchers forecast that machines might be able to perform half of all U.S. jobs in the next two decades. The projection was audacious, but in at least a few cases, it probably didn’t go far enough. For example, the authors named psychologist as one of the occupations least likely to be “computerisable.” But some research suggests that people are more honest in therapy sessions when they believe they are confessing their troubles to a computer, because a machine can’t pass moral judgment. Google and WebMD already may be answering questions once reserved for one’s therapist. This doesn’t prove that psychologists are going the way of the textile worker. Rather, it shows how easily computers can encroach on areas previously considered “for humans only.”

After 300 years of breathtaking innovation, people aren’t massively unemployed or indentured by machines. But to suggest how this could change, some economists have pointed to the defunct career of the second-most-important species in U.S. economic history: the horse.

For many centuries, people created technologies that made the horse more productive and more valuable—like plows for agriculture and swords for battle. One might have assumed that the continuing advance of complementary technologies would make the animal ever more essential to farming and fighting, historically perhaps the two most consequential human activities. Instead came inventions that made the horse obsolete—the tractor, the car, and the tank. After tractors rolled onto American farms in the early 20th century, the population of horses and mules began to decline steeply, falling nearly 50 percent by the 1930s and 90 percent by the 1950s.

Humans can do much more than trot, carry, and pull. But the skills required in most offices hardly elicit our full range of intelligence. Most jobs are still boring, repetitive, and easily learned. The most-common occupations in the United States are retail salesperson, cashier, food and beverage server, and office clerk. Together, these four jobs employ 15.4 million people—nearly 10 percent of the labor force, or more workers than there are in Texas and Massachusetts combined. Each is highly susceptible to automation, according to the Oxford study.Technology creates some jobs too, but the creative half of creative destruction is easily overstated. Nine out of 10 workers today are in occupations that existed 100 years ago, and just 5 percent of the jobs generated between 1993 and 2013 came from “high tech” sectors like computing, software, and telecommunications. Our newest industries tend to be the most labor-efficient: they just don’t require many people. It is for precisely this reason that the economic historian Robert Skidelsky, comparing the exponential growth in computing power with the less-than-exponential growth in job complexity, has said, “Sooner or later, we will run out of jobs.”

Is that certain—or certainly imminent? No. The signs so far are murky and suggestive. The most fundamental and wrenching job restructurings and contractions tend to happen during recessions: we’ll know more after the next couple of downturns. But the possibility seems significant enough—and the consequences disruptive enough—that we owe it to ourselves to start thinking about what society could look like without universal work, in an effort to begin nudging it toward the better outcomes and away from the worse ones.

To paraphrase the science-fiction novelist William Gibson, there are, perhaps, fragments of the post-work future distributed throughout the present. I see three overlapping possibilities as formal employment opportunities decline. Some people displaced from the formal workforce will devote their freedom to simple leisure; some will seek to build productive communities outside the workplace; and others will fight, passionately and in many cases fruitlessly, to reclaim their productivity by piecing together jobs in an informal economy. These are futures of consumptioncommunal creativity, and contingency. In any combination, it is almost certain that the country would have to embrace a radical new role for government.

3. Consumption: The Paradox of Leisure

Work is really three things, says Peter Frase, the author of Four Futures, a forthcoming book about how automation will change America: the means by which the economy produces goods, the means by which people earn income, and an activity that lends meaning or purpose to many people’s lives. “We tend to conflate these things,” he told me, “because today we need to pay people to keep the lights on, so to speak. But in a future of abundance, you wouldn’t, and we ought to think about ways to make it easier and better to not be employed.”

Frase belongs to a small group of writers, academics, and economists—they have been called “post-workists”—who welcome, even root for, the end of labor. American society has “an irrational belief in work for work’s sake,” says Benjamin Hunnicutt, another post-workist and a historian at the University of Iowa, even though most jobs aren’t so uplifting. A 2014 Gallup report of worker satisfaction found that as many as 70 percent of Americans don’t feel engaged by their current job. Hunnicutt told me that if a cashier’s work were a video game—grab an item, find the bar code, scan it, slide the item onward, and repeat—critics of video games might call it mindless. But when it’s a job, politicians praise its intrinsic dignity. “Purpose, meaning, identity, fulfillment, creativity, autonomy—all these things that positive psychology has shown us to be necessary for well-being are absent in the average job,” he said.

The post-workists are certainly right about some important things. Paid labor does not always map to social good. Raising children and caring for the sick is essential work, and these jobs are compensated poorly or not at all. In a post-work society, Hunnicutt said, people might spend more time caring for their families and neighbors; pride could come from our relationships rather than from our careers.The post-work proponents acknowledge that, even in the best post-work scenarios, pride and jealousy will persevere, because reputation will always be scarce, even in an economy of abundance. But with the right government provisions, they believe, the end of wage labor will allow for a golden age of well-being. Hunnicutt said he thinks colleges could reemerge as cultural centers rather than job-prep institutions. The word school, he pointed out, comes from skholē,the Greek word for “leisure.” “We used to teach people to be free,” he said. “Now we teach them to work.”

Hunnicutt’s vision rests on certain assumptions about taxation and redistribution that might not be congenial to many Americans today. But even leaving that aside for the moment, this vision is problematic: it doesn’t resemble the world as it is currently experienced by most jobless people. By and large, the jobless don’t spend their downtime socializing with friends or taking up new hobbies. Instead, they watch TV or sleep. Time-use surveys show that jobless prime-age people dedicate some of the time once spent working to cleaning and childcare. But men in particular devote most of their free time to leisure, the lion’s share of which is spent watching television, browsing the Internet, and sleeping. Retired seniors watch about 50 hours of television a week, according to Nielsen. That means they spend a majority of their lives either sleeping or sitting on the sofa looking at a flatscreen. The unemployed theoretically have the most time to socialize, and yet studies have shown that they feel the most social isolation; it is surprisingly hard to replace the camaraderie of the water cooler.

Most people want to work, and are miserable when they cannot. The ills of unemployment go well beyond the loss of income; people who lose their job are more likely to suffer from mental and physical ailments. “There is a loss of status, a general malaise and demoralization, which appears somatically or psychologically or both,” says Ralph Catalano, a public-health professor at UC Berkeley. Research has shown that it is harder to recover from a long bout of joblessness than from losing a loved one or suffering a life-altering injury. The very things that help many people recover from other emotional traumas—a routine, an absorbing distraction, a daily purpose—are not readily available to the unemployed.
Adam Levey
The transition from labor force to leisure force would likely be particularly hard on Americans, the worker bees of the rich world: Between 1950 and 2012, annual hours worked per worker fell significantly throughout Europe—by about 40 percent in Germany and the Netherlands—but by only 10 percent in the United States. Richer, college-educated Americans are working more than they did 30 years ago, particularly when you count time working and answering e-mail at home.In 1989, the psychologists Mihaly Csikszentmihalyi and Judith LeFevre conducted a famous study of Chicago workers that found people at work often wished they were somewhere else. But in questionnaires, these same workers reported feeling better and less anxious in the office or at the plant than they did elsewhere. The two psychologists called this “the paradox of work”: many people are happier complaining about jobs than they are luxuriating in too much leisure. Other researchers have used the term guilty couch potato to describe people who use media to relax but often feel worthless when they reflect on their unproductive downtime. Contentment speaks in the present tense, but something more—pride—comes only in reflection on past accomplishments.

The post-workists argue that Americans work so hard because their culture has conditioned them to feel guilty when they are not being productive, and that this guilt will fade as work ceases to be the norm. This might prove true, but it’s an untestable hypothesis. When I asked Hunnicutt what sort of modern community most resembles his ideal of a post-work society, he admitted, “I’m not sure that such a place exists.”

Less passive and more nourishing forms of mass leisure could develop. Arguably, they already are developing. The Internet, social media, and gaming offer entertainments that are as easy to slip into as is watching TV, but all are more purposeful and often less isolating. Video games, despite the derision aimed at them, are vehicles for achievement of a sort. Jeremy Bailenson, a communications professor at Stanford, says that as virtual-reality technology improves, people’s “cyber-existence” will become as rich and social as their “real” life. Games in which users climb “into another person’s skin to embody his or her experiences firsthand” don’t just let people live out vicarious fantasies, he has argued, but also “help you live as somebody else to teach you empathy and pro-social skills.”

But it’s hard to imagine that leisure could ever entirely fill the vacuum of accomplishment left by the demise of labor. Most people do need to achieve things through, yes, work to feel a lasting sense of purpose. To envision a future that offers more than minute-to-minute satisfaction, we have to imagine how millions of people might find meaningful work without formal wages. So, inspired by the predictions of one of America’s most famous labor economists, I took a detour on my way to Youngstown and stopped in Columbus, Ohio.

4. Communal Creativity: The Artisans’ Revenge

Artisans made up the original American middle class. Before industrialization swept through the U.S. economy, many people who didn’t work on farms were silversmiths, blacksmiths, or woodworkers. These artisans were ground up by the machinery of mass production in the 20th century. But Lawrence Katz, a labor economist at Harvard, sees the next wave of automation returning us to an age of craftsmanship and artistry. In particular, he looks forward to the ramifications of 3‑D printing, whereby machines construct complex objects from digital designs.

The factories that arose more than a century ago “could make Model Ts and forks and knives and mugs and glasses in a standardized, cheap way, and that drove the artisans out of business,” Katz told me. “But what if the new tech, like 3-D-printing machines, can do customized things that are almost as cheap? It’s possible that information technology and robots eliminate traditional jobs and make possible a new artisanal economy … an economy geared around self-expression, where people would do artistic things with their time.”

In other words, it would be a future not of consumption but of creativity, as technology returns the tools of the assembly line to individuals, democratizing the means of mass production.

Something like this future is already present in the small but growing number of industrial shops called “makerspaces” that have popped up in the United States and around the world. The Columbus Idea Foundry is the country’s largest such space, a cavernous converted shoe factory stocked with industrial-age machinery. Several hundred members pay a monthly fee to use its arsenal of machines to make gifts and jewelry; weld, finish, and paint; play with plasma cutters and work an angle grinder; or operate a lathe with a machinist.When I arrived there on a bitterly cold afternoon in February, a chalkboard standing on an easel by the door displayed three arrows, pointing toward bathroomspewter casting, and zombies. Near the entrance, three men with black fingertips and grease-stained shirts took turns fixing a 60-year-old metal-turning lathe. Behind them, a resident artist was tutoring an older woman on how to transfer her photographs onto a large canvas, while a couple of guys fed pizza pies into a propane-fired stone oven. Elsewhere, men in protective goggles welded a sign for a local chicken restaurant, while others punched codes into a computer-controlled laser-cutting machine. Beneath the din of drilling and wood-cutting, a Pandora rock station hummed tinnily from a Wi‑Fi-connected Edison phonograph horn. The foundry is not just a gymnasium of tools. It is a social center.

Adam Levey
Alex Bandar, who started the foundry after receiving a doctorate in materials science and engineering, has a theory about the rhythms of invention in American history. Over the past century, he told me, the economy has moved from hardware to software, from atoms to bits, and people have spent more time at work in front of screens. But as computers take over more tasks previously considered the province of humans, the pendulum will swing back from bits to atoms, at least when it comes to how people spend their days. Bandar thinks that a digitally preoccupied society will come to appreciate the pure and distinct pleasure of making things you can touch. “I’ve always wanted to usher in a new era of technology where robots do our bidding,” Bandar said. “If you have better batteries, better robotics, more dexterous manipulation, then it’s not a far stretch to say robots do most of the work. So what do we do? Play? Draw? Actually talk to each other again?”
You don’t need any particular fondness for plasma cutters to see the beauty of an economy where tens of millions of people make things they enjoy making—whether physical or digital, in buildings or in online communities—and receive feedback and appreciation for their work. The Internet and the cheap availability of artistic tools have already empowered millions of people to produce culture from their living rooms. People upload more than 400,000 hours of YouTube videos and 350 million new Facebook photos every day. The demise of the formal economy could free many would-be artists, writers, and craftspeople to dedicate their time to creative interests—to live as cultural producers. Such activities offer virtues that many organizational psychologists consider central to satisfaction at work: independence, the chance to develop mastery, and a sense of purpose.After touring the foundry, I sat at a long table with several members, sharing the pizza that had come out of the communal oven. I asked them what they thought of their organization as a model for a future where automation reached further into the formal economy. A mixed-media artist named Kate Morgan said that most people she knew at the foundry would quit their jobs and use the foundry to start their own business if they could. Others spoke about the fundamental need to witness the outcome of one’s work, which was satisfied more deeply by craftsmanship than by other jobs they’d held.

Late in the conversation, we were joined by Terry Griner, an engineer who had built miniature steam engines in his garage before Bandar invited him to join the foundry. His fingers were covered in soot, and he told me about the pride he had in his ability to fix things. “I’ve been working since I was 16. I’ve done food service, restaurant work, hospital work, and computer programming. I’ve done a lot of different jobs,” said Griner, who is now a divorced father. “But if we had a society that said, ‘We’ll cover your essentials, you can work in the shop,’ I think that would be utopia. That, to me, would be the best of all possible worlds.”

5. Contingency: “You’re on Your Own”

One mile to the east of downtown Youngstown, in a brick building surrounded by several empty lots, is Royal Oaks, an iconic blue-collar dive. At about 5:30 p.m. on a Wednesday, the place was nearly full. The bar glowed yellow and green from the lights mounted along a wall. Old beer signs, trophies, masks, and mannequins cluttered the back corner of the main room, like party leftovers stuffed in an attic. The scene was mostly middle-aged men, some in groups, talking loudly about baseball and smelling vaguely of pot; some drank alone at the bar, sitting quietly or listening to music on headphones. I spoke with several patrons there who work as musicians, artists, or handymen; many did not hold a steady job.

“It is the end of a particular kind of wage work,” said Hannah Woodroofe, a bartender there who, it turns out, is also a graduate student at the University of Chicago. (She’s writing a dissertation on Youngstown as a harbinger of the future of work.) A lot of people in the city make ends meet via “post-wage arrangements,” she said, working for tenancy or under the table, or trading services. Places like Royal Oaks are the new union halls: People go there not only to relax but also to find tradespeople for particular jobs, like auto repair. Others go to exchange fresh vegetables, grown in urban gardens they’ve created amid Youngstown’s vacant lots.

When an entire area, like Youngstown, suffers from high and prolonged unemployment, problems caused by unemployment move beyond the personal sphere; widespread joblessness shatters neighborhoods and leaches away their civic spirit. John Russo, the Youngstown State professor, who is a co-author of a history of the city, Steeltown USA, says the local identity took a savage blow when residents lost the ability to find reliable employment. “I can’t stress this enough: this isn’t just about economics; it’s psychological,” he told me.

Russo sees Youngstown as the leading edge of a larger trend toward the development of what he calls the “precariat”—a working class that swings from task to task in order to make ends meet and suffers a loss of labor rights, bargaining rights, and job security. In Youngstown, many of these workers have by now made their peace with insecurity and poverty by building an identity, and some measure of pride, around contingency. The faith they lost in institutions—the corporations that have abandoned the city, the police who have failed to keep them safe—has not returned. But Russo and Woodroofe both told me they put stock in their own independence. And so a place that once defined itself single-mindedly by the steel its residents made has gradually learned to embrace the valorization of well-rounded resourcefulness.

Karen Schubert, a 54-year-old writer with two master’s degrees, accepted a part-time job as a hostess at a café in Youngstown early this year, after spending months searching for full-time work. Schubert, who has two grown children and an infant grandson, said she’d loved teaching writing and literature at the local university. But many colleges have replaced full-time professors with part-time adjuncts in order to control costs, and she’d found that with the hours she could get, adjunct teaching didn’t pay a living wage, so she’d stopped. “I think I would feel like a personal failure if I didn’t know that so many Americans have their leg caught in the same trap,” she said.

Among Youngstown’s precariat, one can see a third possible future, where millions of people struggle for years to build a sense of purpose in the absence of formal jobs, and where entrepreneurship emerges out of necessity. But while it lacks the comforts of the consumption economy or the cultural richness of Lawrence Katz’s artisanal future, it is more complex than an outright dystopia. “There are young people working part-time in the new economy who feel independent, whose work and personal relationships are contingent, and say they like it like this—to have short hours so they have time to focus on their passions,” Russo said.

Schubert’s wages at the café are not enough to live on, and in her spare time, she sells books of her poetry at readings and organizes gatherings of the literary-arts community in Youngstown, where other writers (many of them also underemployed) share their prose. The evaporation of work has deepened the local arts and music scene, several residents told me, because people who are inclined toward the arts have so much time to spend with one another. “We’re a devastatingly poor and hemorrhaging population, but the people who live here are fearless and creative and phenomenal,” Schubert said.Whether or not one has artistic ambitions as Schubert does, it is arguably growing easier to find short-term gigs or spot employment. Paradoxically, technology is the reason. A constellation of Internet-enabled companies matches available workers with quick jobs, most prominently including Uber (for drivers), Seamless (for meal deliverers), Homejoy (for house cleaners), and TaskRabbit (for just about anyone else). And online markets like Craigslist and eBay have likewise made it easier for people to take on small independent projects, such as furniture refurbishing. Although the on-demand economy is not yet a major part of the employment picture, the number of “temporary-help services” workers has grown by 50 percent since 2010, according to the Bureau of Labor Statistics.

Some of these services, too, could be usurped, eventually, by machines. But on-demand apps also spread the work around by carving up jobs, like driving a taxi, into hundreds of little tasks, like a single drive, which allows more people to compete for smaller pieces of work. These new arrangements are already challenging the legal definitions of employer and employee, and there are many reasons to be ambivalent about them. But if the future involves a declining number of full-time jobs, as in Youngstown, then splitting some of the remaining work up among many part-time workers, instead of a few full-timers, wouldn’t necessarily be a bad development. We shouldn’t be too quick to excoriate companies that let people combine their work, art, and leisure in whatever ways they choose.

Today the norm is to think about employment and unemployment as a black-and-white binary, rather than two points at opposite ends of a wide spectrum of working arrangements. As late as the mid-19th century, though, the modern concept of “unemployment” didn’t exist in the United States. Most people lived on farms, and while paid work came and went, home industry—canning, sewing, carpentry—was a constant. Even in the worst economic panics, people typically found productive things to do. The despondency and helplessness of unemployment were discovered, to the bafflement and dismay of cultural critics, only after factory work became dominant and cities swelled.

The 21st century, if it presents fewer full-time jobs in the sectors that can be automated, could in this respect come to resemble the mid-19th century: an economy marked by episodic work across a range of activities, the loss of any one of which would not make somebody suddenly idle. Many bristle that contingent gigs offer a devil’s bargain—a bit of additional autonomy in exchange for a larger loss of security. But some might thrive in a market where versatility and hustle are rewarded—where there are, as in Youngstown, few jobs to have, yet many things to do.

6. Government: The Visible Hand

In the 1950s, Henry Ford II, the CEO of Ford, and Walter Reuther, the head of the United Auto Workers union, were touring a new engine plant in Cleveland. Ford gestured to a fleet of machines and said, “Walter, how are you going to get these robots to pay union dues?” The union boss famously replied: “Henry, how are you going to get them to buy your cars?”

As Martin Ford (no relation) writes in his new book, The Rise of the Robots, this story might be apocryphal, but its message is instructive. We’re pretty good at noticing the immediate effects of technology’s substituting for workers, such as fewer people on the factory floor. What’s harder is anticipating the second-order effects of this transformation, such as what happens to the consumer economy when you take away the consumers.Technological progress on the scale we’re imagining would usher in social and cultural changes that are almost impossible to fully envision. Consider just how fundamentally work has shaped America’s geography. Today’s coastal cities are a jumble of office buildings and residential space. Both are expensive and tightly constrained. But the decline of work would make many office buildings unnecessary. What might that mean for the vibrancy of urban areas? Would office space yield seamlessly to apartments, allowing more people to live more affordably in city centers and leaving the cities themselves just as lively? Or would we see vacant shells and spreading blight? Would big cities make sense at all if their role as highly sophisticated labor ecosystems were diminished? As the 40-hour workweek faded, the idea of a lengthy twice-daily commute would almost certainly strike future generations as an antiquated and baffling waste of time. But would those generations prefer to live on streets full of high-rises, or in smaller towns?

Today, many working parents worry that they spend too many hours at the office. As full-time work declined, rearing children could become less overwhelming. And because job opportunities historically have spurred migration in the United States, we might see less of it; the diaspora of extended families could give way to more closely knitted clans. But if men and women lost their purpose and dignity as work went away, those families would nonetheless be troubled.

The decline of the labor force would make our politics more contentious. Deciding how to tax profits and distribute income could become the most significant economic-policy debate in American history. In TheWealth of NationsAdam Smith used the term invisible hand to refer to the order and social benefits that arise, surprisingly, from individuals’ selfish actions. But to preserve the consumer economy and the social fabric, governments might have to embrace what Haruhiko Kuroda, the governor of the Bank of Japan, has called the visible hand of economic intervention. What follows is an early sketch of how it all might work.

In the near term, local governments might do well to create more and more-ambitious community centers or other public spaces where residents can meet, learn skills, bond around sports or crafts, and socialize. Two of the most common side effects of unemployment are loneliness, on the individual level, and the hollowing-out of community pride. A national policy that directed money toward centers in distressed areas might remedy the maladies of idleness, and form the beginnings of a long-term experiment on how to reengage people in their neighborhoods in the absence of full employment.

We could also make it easier for people to start their own, small-scale (and even part-time) businesses. New-business formation has declined in the past few decades in all 50 states. One way to nurture fledgling ideas would be to build out a network of business incubators. Here Youngstown offers an unexpected model: its business incubator has been recognized internationally, and its success has brought new hope to West Federal Street, the city’s main drag.

Near the beginning of any broad decline in job availability, the United States might take a lesson from Germany on job-sharing. The German government gives firms incentives to cut all their workers’ hours rather than lay off some of them during hard times. So a company with 50 workers that might otherwise lay off 10 people instead reduces everyone’s hours by 20 percent. Such a policy would help workers at established firms keep their attachment to the labor force despite the declining amount of overall labor.

Spreading work in this way has its limits. Some jobs can’t be easily shared, and in any case, sharing jobs wouldn’t stop labor’s pie from shrinking: it would only apportion the slices differently. Eventually, Washington would have to somehow spread wealth, too.

One way of doing that would be to more heavily tax the growing share of income going to the owners of capital, and use the money to cut checks to all adults. This idea—called a “universal basic income”—has received bipartisan support in the past. Many liberals currently support it, and in the 1960s, Richard Nixon and the conservative economist Milton Friedman each proposed a version of the idea. That history notwithstanding, the politics of universal income in a world without universal work would be daunting. The rich could say, with some accuracy, that their hard work was subsidizing the idleness of millions of “takers.” What’s more, although a universal income might replace lost wages, it would do little to preserve the social benefits of work.

The most direct solution to the latter problem would be for the government to pay people to do something, rather than nothing. Although this smacks of old European socialism, or Depression-era “makework,” it might do the most to preserve virtues such as responsibility, agency, and industriousness. In the 1930s, the Works Progress Administration did more than rebuild the nation’s infrastructure. It hired 40,000 artists and other cultural workers to produce music and theater, murals and paintings, state and regional travel guides, and surveys of state records. It’s not impossible to imagine something like the WPA—or an effort even more capacious—for a post-work future.

What might that look like? Several national projects might justify direct hiring, such as caring for a rising population of elderly people. But if the balance of work continues to shift toward the small-bore and episodic, the simplest way to help everybody stay busy might be government sponsorship of a national online marketplace of work (or, alternatively, a series of local ones, sponsored by local governments). Individuals could browse for large long-term projects, like cleaning up after a natural disaster, or small short-term ones: an hour of tutoring, an evening of entertainment, an art commission. The requests could come from local governments or community associations or nonprofit groups; from rich families seeking nannies or tutors; or from other individuals given some number of credits to “spend” on the site each year. To ensure a baseline level of attachment to the workforce, the government could pay adults a flat rate in return for some minimum level of activity on the site, but people could always earn more by taking on more gigs.

Although a digital WPA might strike some people as a strange anachronism, it would be similar to a federalized version of Mechanical Turk, the popular Amazon sister site where individuals and companies post projects of varying complexity, while so-called Turks on the other end browse tasks and collect money for the ones they complete. Mechanical Turk was designed to list tasks that cannot be performed by a computer. (The name is an allusion to an 18th-century Austrian hoax, in which a famous automaton that seemed to play masterful chess concealed a human player who chose the moves and moved the pieces.)

A government marketplace might likewise specialize in those tasks that required empathy, humanity, or a personal touch. By connecting millions of people in one central hub, it might even inspire what the technology writer Robin Sloan has called “a Cambrian explosion of mega-scale creative and intellectual pursuits, a generation of Wikipedia-scale projects that can ask their users for even deeper commitments.”

Adam Levey
There’s a case to be made for using the tools of government to provide other incentives as well, to help people avoid the typical traps of joblessness and build rich lives and vibrant communities. After all, the members of the Columbus Idea Foundry probably weren’t born with an innate love of lathe operation or laser-cutting. Mastering these skills requires discipline; discipline requires an education; and an education, for many people, involves the expectation that hours of often frustrating practice will eventually prove rewarding. In a post-work society, the financial rewards of education and training won’t be as obvious. This is a singular challenge of imagining a flourishing post-work society: How will people discover their talents, or the rewards that come from expertise, if they don’t see much incentive to develop either?

Modest payments to young people for attending and completing college, skills-training programs, or community-center workshops might eventually be worth considering. This seems radical, but the aim would be conservative—to preserve the status quo of an educated and engaged society. Whatever their career opportunities, young people will still grow up to be citizens, neighbors, and even, episodically, workers. Nudges toward education and training might be particularly beneficial to men, who are more likely to withdraw into their living rooms when they become unemployed.

7. Jobs and Callings

Decades from now, perhaps the 20th century will strike future historians as an aberration, with its religious devotion to overwork in a time of prosperity, its attenuations of family in service to job opportunity, its conflation of income with self-worth. The post-work society I’ve described holds a warped mirror up to today’s economy, but in many ways it reflects the forgotten norms of the mid-19th century—the artisan middle class, the primacy of local communities, and the unfamiliarity with widespread joblessness.

The three potential futures of consumption, communal creativity, and contingency are not separate paths branching out from the present. They’re likely to intertwine and even influence one another. Entertainment will surely become more immersive and exert a gravitational pull on people without much to do. But if that’s all that happens, society will have failed. The foundry in Columbus shows how the “third places” in people’s lives (communities separate from their homes and offices) could become central to growing up, learning new skills, discovering passions. And with or without such places, many people will need to embrace the resourcefulness learned over time by cities like Youngstown, which, even if they seem like museum exhibits of an old economy, might foretell the future for many more cities in the next 25 years.

On my last day in Youngstown, I met with Howard Jesko, a 60-year-old Youngstown State graduate student, at a burger joint along the main street. A few months after Black Friday in 1977, as a senior at Ohio State University, Jesko received a phone call from his father, a specialty-hose manufacturer near Youngstown. “Don’t bother coming back here for a job,” his dad said. “There aren’t going to be any left.” Years later, Jesko returned to Youngstown to work, but he recently quit his job selling products like waterproofing systems to construction companies; his customers had been devastated by the Great Recession and weren’t buying much anymore. Around the same time, a left-knee replacement due to degenerative arthritis resulted in a 10-day hospital stay, which gave him time to think about the future. Jesko decided to go back to school to become a professor. “My true calling,” he told me, “has always been to teach.”

One theory of work holds that people tend to see themselves in jobs, careers, or callings. Individuals who say their work is “just a job” emphasize that they are working for money rather than aligning themselves with any higher purpose. Those with pure careerist ambitions are focused not only on income but also on the status that comes with promotions and the growing renown of their peers. But one pursues a calling not only for pay or status, but also for the intrinsic fulfillment of the work itself.

When I think about the role that work plays in people’s self-esteem—particularly in America—the prospect of a no-work future seems hopeless. There is no universal basic income that can prevent the civic ruin of a country built on a handful of workers permanently subsidizing the idleness of tens of millions of people. But a future of less work still holds a glint of hope, because the necessity of salaried jobs now prevents so many from seeking immersive activities that they enjoy.

After my conversation with Jesko, I walked back to my car to drive out of Youngstown. I thought about Jesko’s life as it might have been had Youngstown’s steel mills never given way to a steel museum—had the city continued to provide stable, predictable careers to its residents. If Jesko had taken a job in the steel industry, he might be preparing for retirement today. Instead, that industry collapsed and then, years later, another recession struck. The outcome of this cumulative grief is that Howard Jesko is not retiring at 60. He’s getting his master’s degree to become a teacher. It took the loss of so many jobs to force him to pursue the work he always wanted to do.




The Benefits Of Economic Expansions Are Increasingly Going To The Richest Americans

On September 26, 2014, Neil Irwin writes in The New York Times:

Economic expansions are supposed to be the good times, the periods in which incomes and living standards improve. And that’s still true, at least for some of us.

But who benefits from rising incomes in an expansion has changed drastically over the last 60 years. Pavlina R. Tcherneva, an economist at Bard College, created a chart that vividly shows how. (The chart appears in print in the Fall 2014 edition of the Journal of Post Keynesian Economics, in her article “Reorienting fiscal policy: A bottom-up approach.”)

Back in the 1940s, ’50s and ’60s, most of the income gains experienced during expansions — the periods from the trough of one recession until the onset of another — accrued to most of the people. That is to say, the bottom 90 percent of earners captured at least a majority of the rise in income.

With each expansion in sequence, however, the bottom 90 percent captured a smaller share of income gains and the top 10 percent captured more.

Fast-forward to the 1990s and early 2000s expansions, and a new pattern emerged, with the huge majority of income gains going to the top 10 percent, leaving pocket change for everybody else. From 2001 to 2007, 98 percent of income gains accrued to the top 10 percent of earners, Ms. Tcherneva found, basing her analysis on data from Thomas Piketty and Emmanuel Saez, the academics who have made a speciality in documenting the rise of income inequality around the world. (As a point of reference, an American needed a 2011 adjusted gross income of $120,136 to be in the top 10 percent of earners that year, according to I.R.S. data.)

Inequality Has Increased With Each Expansion in the Postwar Era

Percent share of income growth received by the top 10 percent and bottom 90 percent of earners during expansions
’49 to ’53
’54 to ’57
’59 to ’60
’61 to ’69
’70 to ’73
’75 to ’79
’82 to ’90
’91 to ’00
’01 to ’07
’09 to ’12
Top 10%
Bottom 90%

Which brings us to the current expansion. Ms. Tcherneva’s data goes only through 2012, so perhaps in the two years since then things have gotten a bit better for most workers. But in the first three years of the current expansion, incomes actually fell for the bottom 90 percent of earners, even as they rose nicely for the top 10 percent. The result: The top 10 percent captured an impossible-seeming 116 percent of income gains during that span.

But one consistent finding of research into inequality is that merely cutting things off at the top 5 or 10 percent of earners doesn’t capture all of what is changing in patterns of wealth and earnings. So Ms. Tcherneva also compiled the same data for those in the top 1 percent. (The cutoff there, according to the I.R.S., is $388,905 in 2011 adjusted gross income).

This pattern is, in its way, all the more striking. One percent of the population, in the first three years of the current expansion, took home 95 percent of the income gains.

Most Income Gains in Recent Expansions Went to Top 1 Percent

Percentage share of income gains during economic expansions accruing the top 1 percent and bottom 99 percent of earners
1949 to 1953
’54 to 57
’58 to ’60
’61 to ’69
’70 to ’73
’75 to ’79
’82 to ’90
’91 to ’00
’01 to ’07
’09 to ’12
Bottom 99%
Top 1%

In the paper containing the chart, published this month in the Journal of Post-Keynesian Economics, Ms. Tcherneva argues that this shift indicates a failure of the approach that governments take to stabilizing the economy. The postwar consensus has been that central bank action to cut interest rates should be the key tool to fight economic slumps, and to the degree fiscal policy ought be used at all, it should be tax and spending policies that boost the economy in the aggregate, such as cutting taxes temporarily.

She argues that this approach isn’t flowing through to broad-based wage gains because it is so untargeted. “Conventional fiscal fine-tuning measures ensure that when government increases its total demand for goods and services, it first improves the conditions of the skilled, employable, highly educated, and relatively highly-paid wage and salary workers,” she wrote. “It is hoped that after those workers increase their own demand for products and services, the fiscal stimulus would trickle down to the less skilled and low-wage workers.”

But, she added, “this trickle-down mechanism never quite trickles down far enough to create job opportunities for all individuals willing and able to work.”

She would prefer forms of fiscal stimulus that focus more directly on employing workers, especially at the lower end of the economic ladder. “The manpower of the poor and the unemployed can be mobilized for the public purpose irrespective of their skill level, which in turn will be upgraded by the very work experience and educational programs that the program would offer,” she writes.


Enormous yachts at a boat show in Fort Lauderdale, Fla., are one visible manifestation of large income gains at the top. CreditLynne Sladky/The Associated Press

Not everyone would agree with that prescription. But this much is clear: Recessions are bad enough; everyone understands that they will tend to be times of stagnant or falling incomes. What is remarkable about the patterns of the last half-century is the steady march toward expansions that also do less and less to build up the incomes of most Americans.

Amazon Robber Baron Jeff Bezos’ Abusive Labor Practices

On October 31, 2017, Nick Stender writes on Liberation:

Amazon, the multi-billion dollar tech company founded by Jeff Bezos, has a long history of abuse of its employees. Guided by the plutocratic hand of their chief, Amazon executives routinely quash worker-led efforts to improve conditions in the workplace and achieve a living wage.

Under our current economic system, capitalism, workers that sell their labor power on the market are treated as a disposable means to create further profit for the owners. Just like machinery and raw materials, the bosses see us as interchangeable producers of value. Amazon takes this capitalist logic to its extreme with its dehumanization of workers in a way that is remarkable for an already brutally exploitative system.

Amazon also maintains a highly segregated workforce continuing and deepening the U.S. legacy of white profit from Black labor as the company’s demographics makes clear. Amazon’s 2016 Employer Information Report for the Equal Employment Opportunity Commission reveals a stark difference in employment numbers between the highly-paid white collar employees and the poorly-compensated blue collar workers.

Of 105 executives, 78 are white males and 20 are white women — i.e., 93 percent of Amazon executives are white. Next comes Amazon’s first or middle managers. In this group, 51 percent are white males. Below the managers on the pecking order lies the professional bracket made up of 38 percent white males and 29 percent Asian males. Women make up only 21 percent of managers and 26 percent of professionals, reflecting generalized trends across the technology sector, which has long been censured for its lack of diversity.

The numbers become even more telling when we look at how Black and Latino workers are represented. We see that 19,411 of the 22,794 Latino workers at Amazon do manual labor in Amazon’s warehouses; that is 85 percent of the total number of Latino workers at Amazon. The percentages are similar for Black workers. Of Amazon’s 37,463 Black workers, 33,379 work in the warehouses. This represents 89 percent of total Black workers. The class lines in the United States often mirror those of race. Amazon is no different with a whitewashed corporate headquarters and racially diverse underpaid warehouse workforce.

Jobs in the warehouses are notorious for their draconian discipline measures, unsafe conditions and poor pay and hours. Jeff Bezos has gone on record as claiming that unions, which protect workers from abuse by their employers, are unnecessary while stressing that in a company like Amazon an open door is needed between management and employees. In his words, flexibility is key to keeping Amazon running. “Flexibility” in this case means firing workers with little warning and hiring many precarious positions during peak shipping season.

Part and parcel of working at Amazon is intense scrutiny of every aspect of the workday. Marxists have long known that the amount of surplus value extracted from labor power can be increased in a number of different ways. One: the workday can be lengthened leading to an increase in what’s called absolute surplus value produced. Two: the capitalist can invest in a new technology making each hour of labor that the worker performs more productive. Three: the capitalist, through cajoling and threatening, can increase the intensity of the work being performed.

It is this final tactic that is the preferred method of the capitalist behind Amazon, Jeff Bezos. By carefully watching every second of the workday, from the time a worker clocks in to when they clock out, Bezos and Amazon are able to amass an enormous amount of data regarding how hard each individual works. This “big data” is eventually used against labor as management culls those who don’t work as hard as their neighbor during weekly progress reports. This frenetic pace of work is directed for the benefit of Bezos and other executives.

Amazon also engages in attempts to divide workers by pitting them against one another, a longstanding tactic of the bosses who foster fierce competition between fulltime Amazon workers and contract workers who receive lower wages and fewer benefits. Lured by the prospect of a fulltime job, contractors like Integrity Staffing Solutions bring on more workers during peak shipping seasons like Christmas only to let the vast majority go when they are no longer needed. These workers are given no severance and have little to show for their time at Amazon. In fact, most do not deal directly with Amazon, but with Integrity, who does much of the dirty work of firing so that Amazon can keep its hands clean.

Even with that said, the attrition rate among fulltime Amazon employees is high as well. Amazon’s warehouses are often poorly heated or overheated, with many workers complaining of fainting from heat exhaustion and overwork. It is not uncommon for warehouse employees to tell of sorely crawling into bed after getting off the job, just hoping that they will have the strength to pull their broken bodies to work in the morning. They state that taking a sick day is tantamount to a death sentence at Amazon.

Bezos’ opinions on unionization are commensurate with his actions and opinions on the nature of business in general. A self-described “libertarian,” Jeff Bezos cultivates a culture of vindictiveness not only in the warehouse, but even in the white-collar work environment of the Amazon offices. It is there that workers are encouraged to rip apart each other’s ideas, clandestinely report on their coworkers to their bosses, and work from home on the weekends, all the while enduring round-the-clock surveillance of their work practices and the attendant weekly performance exams that constitute life in the warehouses.

Bezos takes personal pride in cultivating this atmosphere of terror and dysfunction. Speaking at a Business Insider conference, Bezos explained, “My main job today: I work hard at helping to maintain the culture.” If that is the kind of culture Bezos wants to maintain, then we do not want it coming to our cities.

Bezos has already been well-compensated for his efforts to keep down the working class. His net worth is currently estimated at $93.9 billion making him the richest person in the world. It would take an Amazon warehouse worker, making the average wage of $13/hr, more than 3,600 years to earn that much money. There can be no justification for a single CEO to own as much wealth as generations of working families. This is why, Bezos has shown himself to be an enemy of the working class, who parasitically profits off the immiseration of thousands of working people.

No to the Amazon HQ! No to the dictatorship of capital! No to inhumane working conditions!


Gary Reber Comments:

What we are experiencing is the ever-greater substitution of machines for human labor and at the same time greater world-wide competition to produce goods, products and services at the lowest cost. This makes for a poor position for those (the vast majority) who can only depend on their labor to earn income. That being the reality, what really makes wage slaves is being without capital ownership in any significant degree. Capital is the non-human factor of production. Fundamentally, economic value is created through human and non-human contributions. In simple terms, there are two independent factors of production: humans (labor workers who contribute manual, intellectual, creative and entrepreneurial work) and non-human capital (land; structures; infrastructure; tools; machines; robotics; computer processing; certain intangibles that have the characteristics of property, such as patents and trade or firm names; and the like which are owned by people individually or in association with others). With capital carrying out most production these days, and the market rate of wages declining in value relative to the cost of capital, what locks people into the wage system in which most people get the bulk of their income from wages is lack of access to capital credit, not the wages, per se.

Yet a just wage is mandatory in any system. Non-owning labor must be compensated fairly, but it is time for the abolition of the wage system, not the abolition of wages. And while ideally a just wage should be defined as the rate determined by the free market, this can only be achieved with equality of bargaining position, with the employer (owner) and the employee entering into free agreements.

What about the exceptions, however? What happens when the free market rate is insufficient for the worker to meet ordinary expenses, or something interferes with the free market in labor, e.g., when the propertyless laborer is forced to take less than justice demands simply because he is in a bad bargaining position?

The difference must be made up of employer charity to ensure that the worker is able to meet ordinary expenses adequately, so that justice is completed and fulfilled by charity.

But, of course, this is not reality. Employers are always seeking to produce at the lowest possible cost, while maintaining the level of quality demanded by the market. From the employer-owner’s perspective, the problem with paying workers more than the free market rate of wages is it increases costs to the consumer (who is usually the worker under another hat). After all, full employment or paying wages higher than the market rate are not objectives of businesses nor is conducting business statically in terms of geographical location (outsourcing). Companies strive to achieve cost efficiencies to maximize profits for the owners (the reason the owners are in business), thus keeping labor input and other costs at a minimum. They strive to minimize marginal costs, the cost of producing an additional unit of a good, product or service once a business has its fixed costs in place, in order to stay competitive with other companies racing to stay competitive through technological innovation. Reducing marginal costs enables businesses to increase profits, offer goods, products and services at a lower price (which people as consumers seek), or both. Increasingly, new technologies are enabling companies to achieve near-zero cost growth without having to hire people. Thus, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role.

The result is that the price of products and services are extremely competitive as consumers will always seek the lowest cost/quality/performance alternative, and thus for-profit companies are constantly competing with each other (on a local, national and global scale) for attracting “customers with money” to purchase their products or services in order to generate profits and thus return on investment (ROI).

Over the past century there has been an ever-accelerating shift to productive capital — which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 239 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advances amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.

People invented “tools” to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive — the core function of technological invention and innovation. Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, according to binary economist Louis Kelso, “free-market forces no longer establish the ‘value’ of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.”

Furthermore, according to Kelso, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. Kelso postulated that if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive, and ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the economy.

We need to shift to a democratic growth economy. Such a future economy,  based on Kelso’s binary economics (human and non-human productive inputs), the ownership of productive capital assets would be spread more broadly as the economy grows, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate capital asset wealth. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, benefiting EVERY citizen (children, women and men), including the traditionally disenfranchised poor and working and middle class. Thus, productive capital income, from full earnings dividend payouts, would be distributed more broadly and the demand for goods, products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote economic growth and more profitable enterprise. That also means that society can profitably employ unused productive capacity and invest in more productive capacity to service the demands of an environmentally responsible growth economy. As a result, our business corporations would be enabled to operate more efficiency and competitively, while broadening wealth-creating, income-producing ownership participation, creating new capitalists and jobs and “customers with money” to support the  goods, products and services being produced.

And how to bring about this state of affairs? Capital Homesteading suggests one way.

Support the Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

Republicans Release Tax Plan, Cutting Corporate And Middle-Class Taxes

Representative Kevin Brady, who chairs the House Ways and Means Committee, spoke about the new Republican tax plan today. Mr. Brady said the bill is estimated to cost $1.51 trillion over a decade.

On November 2, 2017, Jim Tankersley, Thomas Kaplan and Alan Rapport write in The New York Times:

Republican lawmakers unveiled the most sweeping rewrite of the tax code in decades on Thursday, outlining a $1.51 trillion plan to cut taxes for corporations, reduce them for some middle-class families and tilt the United States closer, but not entirely, toward the kind of tax system long championed by businesses.

The House plan, released after weeks of internal debate, conflict and delay, is far from final and will ignite a legislative and lobbying fight as Democrats, business groups and other special interests tear into the text ahead of a Republican sprint to get the legislation passed and to President Trump’s desk by Christmas.

“With this plan, we are making pro growth reforms, so that yes, American can compete with the rest of the world,” said House Speaker Paul D. Ryan of Wisconsin.

Representative Kevin Brady, chairman of the House Ways and Means Committee, said that the plan had the “full support” of President Trump and predicted that it would be on his desk this year.

The bill is estimated to cost $1.51 trillion over a decade. Lawmakers must keep the cost of the bill to $1.5 trillion if they want to pass it along party lines and avoid a fillibuster by Democrats. Lawmakers have been scrambling for days to find a way to make cuts that are expected to cost trillions of dollars into a $1.5 trillion hole. That has prompted a host of changes on the corporate and individual side, including a new twist that would limit the mortgage interest deduction by capping it at $500,000.

Anticipating the coming resistance from industry groups, Mr. Brady said: “We’re going to prove them wrong once and for all.”

“This isn’t the last product,” said Representative Carlos Curbelo, Republican of Florida and a member of the House Ways and Means Committee. “This is just the kickoff to this tax reform exercise.”

Individual tax rates will change

The plan establishes three tax brackets, 12, 25 and 35 percent, and also keeps a top rate of 39.6 percent for the highest-earners, collapsing the total number of brackets from seven. The brackets, as described by Representative Kevin Brady, chairman of the Ways and Means Committee and Republican of Texas, fall along the following lines:

Single filers making up to $24,000 will pay no income tax; up to $90,000 will be in the 12 percent bracket, up to $260,000 in the 25 percent bracket and up to $1 million in the 35 percent bracket. Those making above $1 million will be in the 39.6 percent bracket, which is currently the top rate for millionaires.

Changes for the middle class

The proposal roughly doubles the standard deduction for middle-class families, expanding it to $24,000 for married couples, from $12,700, and setting it at $12,000 for individuals, from $6,530 today. Republicans also plan to expand the child tax credit to $1,600 from $1,000 and add a $300 credit for each parent and nonchild dependent, such as older family members.

Some tax credits are eliminated

The bill includes a host of changes that will impact taxpayers in different ways. For instance, it repeals certain tax credits, including a 15 percent credit for individuals age 65 or older or who are retired on disability. Right now, those individuals can claim up to $7,500 for a joint return, $5,000 for a single individual, or $3,750 for a married individual filing a joint return.

The House bill would entirely repeal that tax credit. It would also repeal the adoption tax credit, no longer allow deductions for tax preparation and repeal credits for alimony payments. And deductions for moving expenses would no longer be allowed.

No changes to 401(k) retirement plans

After much nail-biting debate, the House will not make any changes to the pretax treatment of 401(k) plans. “Americans will be able to continuing making both traditional, pretax contributions and ‘Roth’ contributions in the way that works best for them,” the talking points say.

Changing the mortgage interest deduction

One of the biggest flash points will be proposed changes to the popular mortgage interest deduction. Under the Republican plan, existing homeowners can keep the deduction, but future purchases will be capped at $500,000.

The National Association of Realtors came out swinging against the bill, suggesting a huge fight awaits over how real estate is treated.

“Eliminating or nullifying the tax incentives for homeownership puts home values and middle-class homeowners at risk, and from a cursory examination this legislation appears to do just that,” said William E. Brown, president of the National Association of Realtors. “We will have additional details upon a more thorough reading of the bill.”

Jerry Howard, chief executive of the National Association of Homebuilders, said he was very disappointed in the Republican tax plan and warned that it could create a recession in the housing market.

“It puts such severe limitations on home buyers ability to use the mortgage interest deduction that home values will fall,” Mr. Howard said in an interview. “If a home seller takes a loss, that’s money they were counting on for retirement.”

Mr. Howard said the bill amounts to a broken promise.

“Contrary to their assertions, the Republicans are picking winners and losers,” he said. “They are picking rich Americans and corporations over small businesses and the middle class.”

Eliminating the medical expense deduction

A big change may be in store for those who deduct medical expenses. The talking points outlined by Republicans say the deduction will go away but that families will be made whole by the overall lowering of tax rates and doubling the standard deduction. But those who make heavy use of the medical expense deduction — including many middle-class families — may be opposed to that change.

Repealing the estate tax — eventually

The proposal will double the estate tax exemption to roughly $11 million, from $5.49 million, meaning families can avoid paying taxes on large inheritance. And it eventually repeals the estate tax altogether, phasing it out entirely in six years.

Adding limits to the state and local tax deduction

One of the biggest flash points will be how the bill treats the state and local tax deduction, which lawmakers are proposing to limit to property taxes and cap at $10,000. That will not be enough for Republicans in some high-tax states, where middle-class families make heavy use of the deduction, which currently applies to state and local income taxes and general sales taxes as well as property taxes.

House Republicans had intended to roll out the tax proposal on Wednesday, but ended up delaying its release by a day, providing a signal of the steep challenge they face in making the math work while also assembling the votes they need to get a bill through the chamber.

Representative Dan Donovan, a Republican from New York, said he remained concerned about the impact of the state and local tax deduction as he left a briefing on the bill but said he would assess the proposed changes on their entirety.

“I’m looking for a benefit for the people I represent,” he said. “The people of New York City deserve a tax break.”

Multinational corporations face big changes

For the first time, the United States is proposing to have a global minimum tax of 10 percent, which would apply to income that American companies earn anywhere in the world. The effort is aimed at preventing companies from shifting profits abroad and grabbing back some of the tax revenue on income earned overseas. Those profits are currently not taxed until they are returned to the United States, giving companies an incentive to keep that money offshore since they are taxed at the current corporate tax rate of 35 percent.

A new tax rate for pass-through businesses, with guardrails

Republicans stuck to their promise of lowering the tax rate for “pass through” businesses to 25 percent. But to prevent the rate from becoming a loophole for all sorts of individuals, tax-writers have created a formula they say will ensure that business owners will pay a higher individual tax rate on income that they receive as wages. The formula would be applied based on the circumstances of the business.

Republican leaders are encouraged

Walking into the men’s restroom, Representative Kevin McCarthy, Republican of California, said of his colleagues, “It looks very positive, these people are excited.” He added: “this is why they came to Congress.”


Hidden gem in the R tax fongula, via Andy Slavitt (ran Medicare, Medicaid, and ACA for Obama).

College savings accounts for CHILD IN UTERO! Redefines life. Grrr.

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Nick Batzdorf

Nick Batzdorf Another nice one: eliminates deduction for small businesses to provide access to handicapped people.

These are just hidden turds, not the big picture (which is a blatant turd).

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Michael Bindner is with Howard Gleckman and 3 others.

18 hrs · 

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Some of these features are the 1986 reform in reverse, where tax simplificaiton on the personal side funds tax cuts on the corporate side. Some of the personal cuts are what you would do to approach establishing a VAT without doing so. The repatriation features should be matched by dividend tax increases. This is truly a give away to the rich without making it look like one.

The size of the cuts would have a bigger economic impact with a defense boom, but if Trump is planing

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