Post Scarcity Economics

http://lareviewofbooks.org/essay/post-scarcity-economics/

by tosh • 13 years ago

91 111 13 years ago

ChuckMcM• 13 years ago

Reading the 'manna' link [1] was interesting in that it posited a way that a group might transition from a scarity economy to a post scarcity economy (Libertarian idealism aside).

One of the more interesting questions we will face is given the productivity leverage, how do we get there rather than a big apartment of rich people and a sea of slums.

[1] http://www.marshallbrain.com/manna1.htm

ar4s• 13 years ago

It's a great question, and one I'm pretty optimistic about us getting right.

Take Open Source Ecology for example. They're making the Global Village Construction set, a collection of Open Source machines that cost a fraction of what proprietary solutions do today. I think the impact of what they are enabling is hugely catalyzing towards that end (post-scarcity communism [collective ownership of capital). To the uninitiated, it it might sound like they are do-gooders just trying to make cheap machinery available for developed regions, but in reality the kind of people who will benefit immediately are other engineers. The more these engineers are liberated by the technical/economical advances of the GVCS, the more time they'll have to put back into into the project. I can already imagine the first few small semi-sustainable towns popping up, packed with engineers, ideally mushrooming into the kind of ending Manna so wonderfully illustrated.

The more collaboration we see around giving people the technologies they need to look after themselves/family/community, the less likely we'll be living in a capitalist-dystopia.

For me personally, if I was given the option between being a billionaire and being able to have everything that I want, or helping to actively build with others towards a future where we can all get what we want... I know I'd have to go with the latter.

Daniel_Newby6• 13 years ago

If the IQ-mutation load hypothesis[1] is true, the sea of slums problem will be taken care of by trivial genetic engineering. Smart people with good software are pretty good at entertaining themselves and making do with basic resources.

[1] The hypothesis is that the baseline human genome encodes a master race, but has been spoiled by a handful of mutations. Fix the mutations with "simple" proofreading and out pops a race of handsome, athletic geniuses.

samatman• 13 years ago

Hi! Genetic engineer here. Your idea of "trivial" is weird: we have no way to replace chromosomes, or even edit them. All we know how to do is add things.

The idea is fascinating: although you're getting downvoted for saying "master race", the notion that the vast majority of random mutations are "bad" while the DNA we hold in common is "good" holds a lot of water. We have no idea how to edit our own DNA, however. We simply can't do it yet.

everettForth• 13 years ago

We are already post-scarcity for pornography. Cracked Magazine said it best:

"If I gave you a budget of zero dollars and said, 'Get me as much Internet porn as you can for that amount of money,' how much porn would you come back with?

I'm thinking the answer is, 'All of the porn.'" http://www.cracked.com/article_18817_5-reasons-future-will-b...

InclinedPlane5• 13 years ago

Yet you're missing the other half of the equation. The porn business still makes a crapton of money. Maybe not as much as in its heighday (it's hard to tell), and maybe not by the same sort of folks that were doing it a few decades ago, but it's still a thriving and lucrative business.

Amadou• 13 years ago

I knew a guy who paid for porn. The way he explained it boiled down to curation.

Those youtube-for-porn sites are pretty random, and places like usenet and bittorrent are even less organized, and require a bit of, er, delayed gratification. By paying a site to exercise editorial control he got exactly what he wanted with zero hassle or delay.

D_Alex2• 13 years ago

Well... I paid money for "John dies at the end", the reasonably good book by the author of the article... ironic, right?

Edit: The Kindle version.

jayfuerstenberg3• 13 years ago

It is difficult to convince people that an abundance economy can work.

But these very people don't understand that they are currently enjoying one abundance right now: Free air.

The question is: How many things can we make as abundant as air?

OSS is there in fact. I would argue that electricity is next, then education (Khan Academy and the like), and one day fresh clean water.

We just have to keep knocking down one scarce resource at a time. The same way we don't take a single leap straight up the staircase, but instead take small steps to get to the top.

ahomescu1• 13 years ago

Is electricity really abundant, or about to be? I don't really see any options for plentiful energy in the future. Most people have a very negative attitude about nuclear plants, so those are a no-go. Solar/wind/hydro have relatively low output, in addition to taking a lot of land/resources and requiring very specific placement. Coal pollutes like crazy. In other countries, the electrical network already can't handle peak load, so they get occasional blackouts.

Qantourisc• 13 years ago

Yes electricity is abundant, well or easily made. There is more then enough sun, rain, wind etc. to make the price stupid cheap. But we cannot STORE enough energy currently, and that's the main problem.

Liquid metal battery seems to offer some hope in this regard.

smokey42• 13 years ago

Nothing grows as fast and crazy as Photovoltaics right now. It's doubling roughly every 2 years (slightly less than 2 years). I don't know if we can scale up coal/nuclear at the same rate, but I guess that's not even possible.

So when PV prices fall to the bottom (trends indicate they will), electricity prices produced by PV will fall as well. Coal/Nuclear/etc will become unviable. What do we do then? Electricity will be basically free then.

tonylemesmer• 13 years ago

Perhaps we need to be smarter about how we use it. Currently electricity is used to extend daylight hours for leisure, to do work that humans used to do, in places for transport and many other things, but we could certainly be using it more efficiently.

mcv5• 13 years ago

Solar is low output, but it requires very little infrastructure. What we need is to make it as cheap as possible, and then cover all roofs and windows with it. Anywhere you need electricity, lay down a sheet of solar cells with a battery, and you're there.

It won't be entirely free, but with enough effort, it might get very cheap.

sliverstorm2• 13 years ago

Of course, the abundance of air might actually be hurting us. It is so cheap that companies can abuse it freely, and it actually does wind up impacting the rest of us.

Fresh clean water is much the same way. Water is so cheap, its market price doesn't reflect its value and you get companies pretty much wasting ridiculous amounts of it, which in turn causes problems.

jayfuerstenberg3• 13 years ago

This is true to an extent.

I once lived in a condo suite with free heat and hot water. My showers were longer than they would've been had I been paying for each drop.

But I still believe the merits of abundance outweigh the demerits.

rjsw• 13 years ago

There are quite a few places where water won't be cheap for much longer. Underground aquifers are being depleted very fast.

davidw• 13 years ago

OSS is there in fact.

As someone who has spent many hours hacking on open source software, I'm not sure I'd call it 'abundant' in that the production of said software is very much a costly endeavor. Once it's out there, yes, it's non-rivalrous, but that's a different thing.

jayfuerstenberg3• 13 years ago

Well I'm certain the internet as we know it today is largely a result of Linux being free.

Imagine the costs of getting a service oriented internet company up and running in a world where the only choice is Windows and IIS.

I wonder how much longer it would take sites like Youtube to scale to their current size.

jupiterjaz• 13 years ago

Well some kinds of education will. Keep in mind that tutoring or face-to-face job training is a kind of education as well. I don't think the price of that will decrease and become as abundant as air. As high paying jobs become more difficult to get, it might get so expensive that only the wealthy can afford it.

mcv5• 13 years ago

Face-to-face tutoring might become as abundant as air when highly educated people with time on their hands and a desire to help or teach become as abundant as air.

At the moment we already have plenty of people, but most of them aren't highly educated yet, and they need to spend all their time on stupid jobs that exist mostly because people need to have jobs. So more education and basic income could go a long way towards fixing this situation.

devx2• 13 years ago

Energy will be soon, too (within a few decades), once solar panels are wide-spread, much more efficient, and very cheap, and once we'll solve fusion.

Once we can make "replicators" like in Star Trek, food will probably become free, too, but that's probably going to take another 100 years until nanotechnology is mature and cheap enough.

Ilverin• 13 years ago

Fresh clean water may only happen along sources of water, not likely to happen in the desert. But along those sources of water, it should happen pretty fast. If electricity becomes free, desalination follows basically the next day.

cottonseed• 13 years ago

The Affluent Society by Galbraith is worth reading on this subject.

waps3• 13 years ago

The fundamental misunderstanding here is that a nearly steady-state economy is not a situation like the 1970's. It's a situation where 90% of the population is unemployed and unnecessary. Our expectations for a steady-state economy should be adjusted to mean the situation that existed from the fall of the Western Roman Empire to 1850 or so.

Vast majority of people on unemployment, barely subsisting. People who have viable businesses dig in and isolate themselves (if necessary declaring independence). Ever-growing consolidation of power and every institution falling to the influence of ever fewer power centers.

Fortunately, a mere 10 years of steady state economy won't get us to that point. Today we're already at the point that something like 60-70% of the world's population is useless (if you killed all of them tonight, tomorrow there would be no visible difference at all). That number is increasing fast.

The cure ? Remove the scarcity of electricity might do it. Find something to do (the way some medieval economies solved it was to employ 70% or so of the population for building cathedrals - manually. Every last thing manually cut from stone. That could work). War is another option, used in the middle east did (well, one particular group, really). As long as they keep winning, their borders expand, their economy grows, and it can last quite a while in that state.

invalidOrTaken• 13 years ago

Best comment in the thread, if one of the more depressing.

Daniel_Newby6• 13 years ago

Ultimately you have to choose between a scarcity economy and systematic birth control. No possible technological advance can keep up with an exponential growth curve. And the birth control system has to have active eugenic measures, otherwise a genetic collapse can sweep through the population. (The AI servants do not care whether they look after 10 billion genius athletes or 10 billion brainstems in automated nursing homes.)

gizzlon• 13 years ago

The growth rate is declining:

http://en.wikipedia.org/wiki/Population_growth#Human_populat...

rwmj2• 13 years ago

Those aren't the only choices though. One is that you just accept that there will be a large number of unemployed, and account for that by having a basic income guarantee. Another would be creating make-work for many people. And there are others, it's not just "go back to 1970 or birth control".

mcv5• 13 years ago

You don't need systematic birth control. Given enough education and good pensions, people tend to have a lot less kids. Give people enough education and security, and the economy may become a lot more sustainable.

ovi256• 13 years ago

Stone is a brittle material that chips and shatters if looked at the wrong way. Stonecutters and masons were highly skilled professionals. What you're looking for are the masses of porters and carriers, unskilled workers moving construction materials.

gjm11• 13 years ago

60-70% of the world's population is useless (if you killed all of them tonight, tomorrow there would be no visible difference at all).

No difference visible to you, perhaps. I'm thinking it might be visible to their friends and families. It would certainly be visible to them, were it not for the accident that you're contemplating killing them rather than, say, just permanently disabling them.

If you view people solely as units in the economy -- devices for providing goods and services that other people will pay money for -- then it may be true that 70% of the world's population is "useless". But if you take a look you may notice that most people do other things besides providing goods and services for money. No one is paying me when I read my daughter a bedtime story, listen to a friend who's having relationship difficulties, or bake chocolate chip cookies to take to a party. Those activities may (or may not) be less valuable per hour than my highly paid day job, but if you think they are useless then I think you are looking at the world through a filter that blocks out some important things.

Sarien• 13 years ago

I think you make a very important point that I haven't seen in any of the other comments: There are lots of goods that are not traded within the economy.

The original comment is valid, many people are not relevant to the economy and indeed there are lots of articles on how we are all just wasting our time in meaningless jobs. Some studies have even found that certain jobs (like investment banking) have a net negative creation value.

Isn't the kind of activity like reading your child a story, working for free in a social group and the entire maker movement targeted at the kinds of goods that are both great and beautiful and desirable but also non-essential? Exactly the kinds of goods that people will stop paying for when they have less money to spend.

So maybe we just need to find a way to distribute the essentials and some money differently so that we can all work on beautiful but useless things instead of trying to get us all the kind of job that everybody will immediately admit they don't even want.

Just some random thoughts. ;)

waps3• 13 years ago

I think it varies. I have been walking along the 90% unemployment regions of Brussels a few years ago, and just knocking on a few random doors just "oh sorry you're not Tom" excuse for a look around, sometimes a conversation (I worked - and was bored to death - in the area, so for a month, that was my lunch hobby) (you wouldn't believe just how fertile ground conspiracy theories find here. Especially for a European country).

I hate to say it but unless I got entirely the wrong impression, you're wrong. For most of these unemployed their friends and families would take weeks or months to notice. Hell, the staff at the local supermarket will probably notice before friends will.

You see the same in the paper. They're isolated, unemployed, and there's large numbers of them. So it happens quite regularly that one of them dies - and if it's for a dumb or catchy reason, the papers go after it. Carbon monoxide poisoning is always reported. Someone who was ill - and this is a country with nearly-free healthcare before you say money - and didn't go to the hospital at all, then died, or someone who was seriously ill, but with little symptoms at first, got sent home, then died in their sleep. There's usually at least some mention of how they arrived at this conclusion and it tends to include how they were found. Depressingly often it's the smell or a loan collector, or- less often, thankfully - panicked kids who found this happened to their sole parent, then did something like running screaming outside, attack a police officer (not seriously, but enough to get them to "tell their mam"). Even if they have friends and family, that someone disappears from these neighborhoods without telling anyone is not exactly a rare event, usually related to crime they committed, so it does not raise any alarms.

So no, in most cases I don't think it would be visible at all. Some areas in large cities that nobody really goes voluntarily to would go quiet. And yes, the supermarket would notice.

rdmcfee2• 13 years ago

It seems that we need to map and better understand the relationship between innovation and demand. If our basic needs (food, housing etc) can be satisfied for a fraction of what they used to cost due to innovation, where will the excess demand come from? We're left with population growth as our only growth factor.

If our basic needs as a society can be met by a small fraction of the working force due to innovation then we're left trying to expand the definition of what our "needs" are to create demand for the remainder of society.

As the author mentions, even the poorer echelons of society now have technology that didn't even exist a decade or two ago. It's the relationship between innovation, needs and demand that I find most intriguing.

crdoconnor3• 13 years ago

As the author mentions, even the poorer echelons of society now have technology that didn't even exist a decade or two ago.

Yet they're faced with ~2.5-4x higher costs for essentials like healthcare, education and housing.

I'd happily ditch my smartphone if I could reverse the price increases on those things.

rdmcfee2• 13 years ago

Yet they're faced with ~2.5-4x higher costs for essentials like healthcare, education and housing.

Good point. Interestingly education is one of the industries that seems to be least disrupted by technology.

The authors point somewhat still stands for healthcare, though. He uses 1939 as a benchmark. Penicillin was first manufactured in 1942. Today a generic antibiotic is just a few cents a pill. Some of the most essential healthcare that would have been just a dream in '39 is nearly free today.

Healthcare costs may be drastically increased in the US (although just $60/mo here in Canada) compared to what they used to be but the offering has changed completely as well.

InclinedPlane5• 13 years ago

Seeing gross misunderstandings of economics like this and the degree to which these ideas are popular (as witnessed in the very comments right here, including one implying that about 2/3 of the population of the world is "useless") disheartens me more than almost anything.

No, Keynesian economics is not how America recovered from the depression, nor was mobilization for wartime production (checkout the book "Keep From All Thoughtful Men" for a truly in depth analysis of the US economy during that period). No, abundance and worker productivity are not why unemployment is so high and the world economy is on shaky ground. None of these things are correct, and buying into these theories leads to erroneous decision making that will serve to exacerbate the problems rather than make them better.

Much of the problems describe are due to government action, not economic transformation. The labor laws that exist today are tightly coupled to a particular model of employment and work which is no longer dominant in the economy today, and the impedance mismatch causes a huge reduction in economic efficiency as well as misery and limitation of opportunity for many workers. Onerous regulation, as exists today in every aspect of economic activity, heavily favors the consolidation of economic activity into large corporations. And that disadvantages the individual worker in a variety of ways, as well as limiting the innovation and responsiveness of the market, down to the scale of the lone entrepreneur.

Add to that the deterioration of public education in America over the last quarter century (to such a degree where even basic literacy cannot be presumed of the holder of a high school diploma) forcing the escalation of credentialism for many entry level knowledge worker jobs toward college degrees. Meanwhile, the widespread availability of cheap, government backed student loans combined with the disruption of public funding for many public higher education institutions has led to a massive explosion in the cost of higher education. At the same time "trade school" education has become denigrated in society even though many of those jobs are high paying, well in demand, and the necessary education is often quite affordable.

Add to that the bursting of a real estate bubble of unprecedented size in the US and the follow-on worldwide financial crises. Much of it caused or exacerbated by the same reasons as above, regulation and government backing creating banking institutions that were "too big to fail", but not too big to gamble to the tune of trillions of dollars. The worldwide economy still has yet to fully recover from that disaster.

Add to that the profligate borrowing of the world's governments as if there was no tomorrow. Except tomorrow has come, and governments that have been collecting as much revenue as they possibly can and using it on social programs that everybody likes are finding that they've created a system with insufficient slack to deal with any disruption, even disruptions such as paying the debt they owe before it blows up in their faces.

It's facile to blame the economic problems of today on technology. It makes it seem as though these problems are some sort of inevitable consequence of advancement when in reality they are the product of specific choices that are now coming home to roost.

IsaacL• 13 years ago

Thanks for your post. It's refreshing to hear more realistic opinions on this situation.

I opened up the Hacker News homepage to see if anyone was discussing the US debt crisis. (I'm not American, and I find HN a fairly good source of commentary on US events). There's a non-negligible possibility that the world is about to be plunged into another round of financial crises. I guess from one point of view the current state of the world economy is just a temporary downswing in our epic quest from the caves to the stars. But I'm becoming more inclined to believe that industrial civilisation has already passed its apex, and is now growing increasingly unstable as it attempts to continue infinite growth on a finite world.

What's the no #2 article on HN? How our biggest problems are dealing with too much abundance!

kmdev3• 13 years ago

Yeah, who needs those pesky regulations. We should just start deregulating. Let's start with banks. Oh wait, that didn't turn out so well did it? Remember a certain massive explosion in Texas recently. I guess deregulation there just didn't come fast enough to stop it? What about energy? Surely they must have the tightest and most restrictive regulations with OSHA being such a pest. I think some people on the gulf coast would like to have a word with you.

Surely deregulation will lead to more competitive free markets! Take a look at the 19th and early 20th century economy for some excellent examples of how wonderful monopolies are (railroads, oil, etc). I'll assume you're not against government regulation of utility infrastructure since I'll assume you wouldn't like hoping a company will decide your area is profitable enough to build out or having to have new wiring and piping run to your house to switch to a competitors infrastructure.

Labor laws. Pffft. Who needs those? We have unions to ensure businesses don't mistreat workers. Oh wait. Surely an employer would never take advantage of someone to pad their bottom line. Yeah.

Are there areas where the government does some ridiculous things? Sure. Does it cost money to protect and treat workers respectfully? Sure. Are we worth the ideals we stand for if we don't? NO.

Oh gee, better quit those social programs! We sure wouldn't want accidentally melt down the economy ensuring our population is healthy or providing benefits to veterans or pensions for government employees or teacher salaries or infrastructure -- I think the everyone gets the point there.

We don't have near the tax burden in the US that we did mid century so I guess we have a ways to go before our government is "collecting as much revenue as they possibly can".

No need to reply expecting a debate, I've said my piece. :)

InclinedPlane5• 13 years ago

You are arguing against a straw man. I didn't just say "regulation", I said onerous regulation.

There should be little doubt that onerous regulation not only exists but is commonplace in the US at the moment. The sheer size of the federal register is indication enough, it's simply not possible for any one person to fully understand the law that they are subject to, period.

Effective regulation is often good. For example, I don't think the western world would have so quickly improved its air quality in the mid to late 20th century without regulation, and that has improved the lives and well-being of hundreds of millions of people. But effective regulation is difficult and sometimes requires great skill to create. In contrast, the hodge podge of laws and business rules that we have today is downright kafkaesque in its maddening mixture of arbitrariness and severity.

Most importantly, even laws and rules put in place by people operating in good faith and with the best of intentions can have ill effects. The law of unintended consequences is perhaps the most important factor in creating regulation, but it is a law that is frequently ignored by policy makers.

Consider something simple, the labor laws which force a transition in employment type around the 40 hours per week boundary, such as offering benefits and so forth. This causes many employers to use a larger number of part-time workers. Is this because those employers are evil or shirking their responsibility? Well, not necessarily, it may not be feasible to have employees for a given position provided with benefits. And even if it were and the employers were merely being "greedy bastards", would it change anything? Has the law been able to compel employers to avoid hiring part-time workers? Not at all. And the unintended consequence is that if someone has a desire to work 40 hr weeks (or longer) at an entry-level position in order to have a higher income this is just not available to them (at least without working "under the table"). Instead they need to work multiple part-time jobs, but they end up spending more time traveling to/from each job and they may have difficulties with the schedule of each job meshing with the other. In the end many people end up worse off with these labor laws, because it is more difficult and more costly to be able to work enough hours to make a decent living. And these are the workers who are the poorest, working entry-level jobs, and with the greatest desire to work. Precisely the people most in need of help, and instead they are put at a disadvantage.

As to your point about the tax burden mid 20th century, it's utterly off base. The government is collecting a much higher percentage of the total GDP of the country today than it was then. Regardless of the nominal tax rates (which are rarely reflective of effective tax burdens) the actual revenue collection has gone up. Additionally, I wasn't talking about the US in that case, I was talking about countries such as Denmark, Sweden, France, Italy, Spain, Greece, etc. Each of those countries has a tax burden higher than 1/3 of the GDP, in some cases approaching half of the GDP as in Denmark and Sweden. When you consistently take so much of the GDP for government use and you use so much of it on programs that impact the daily lives and livelihoods of so many citizens there is frequently no room for paying off debt because doing so means not just reducing outlays to the level of a balanced budget but even deeper to provide a surplus.

Patient02• 13 years ago

The last time you accused someone of misunderstanding something was when you accused Walter Bright, inventor of the D language, of a "deep misunderstanding of compiler technology": https://news.ycombinator.com/item?id=6357708.

While any "narrative" is going to be imperfect as an explanation, I thought this article was actually pretty insightful.

The vast majority of the economics profession agrees that the problem right now is a lack of demand. Consider the possibility that they are right and that it is yourself that has the misunderstanding.

InclinedPlane5• 13 years ago

That series of posts was mostly about miscommunication, we were talking about two different things (compiling the same code using different compilers and compiling the same code using the same compiler), neither of us picked up on the other person's point at the time.

Besides which, are accusing me of being fallible? That's not a difficult task, all humans are so. As to what "the vast majority of the economics profession" believes, I would point out that the track record of that profession in predicting the economic outcome of different decisions is poor at best.

kokey• 13 years ago

I keep wondering if he's missing the point of why deficit spending and putting money in the hands of the workers is also bad thing. When the consumers have limited money, they will spend that limited amount of money more wisely, and it will put the companies that rely on them buying things they don't need out of business. It will drive wages up in the right industries and down in the wrong industries. With deficit spending you will distort that information which could lead to even bigger problems. That said, deficit spending will always be more popular under democracies, because it provides a benefit to the individual voter first, so it's the easier thing to argue for and taken up by young people as they become political.

kmdev3• 13 years ago

Unfortunately, your assumption that less money to consumers translates to wiser financial decisions is incorrect. It's well studied that quite the opposite behavior occurs and for good reason; more stress and less access to time saving goods and services. On top of the huge disadvantage that levies on a person, the things that person DOES need start costing more. In the vast majority of the states, having a car is a necessity to work. Loans cost more if you can even get one so you end up spending what little is there on a clunker and all the time and energy that goes in to that heap. Uh oh, now you can get to your job, but if you're working anywhere near minimum wage and have a family (that doesn't just include kids and spouses, but also elderly parents (whose social security and medicare aren't enough), you won't have the cashflow to keep everything going. So you end up with a payday loan and so on. I think everyone has the picture by now.

You mention that the 'right' industries will shrink and the 'wrong' will expand. Let's make that leap and follow it through, ignoring the pedantry of arguing what's a 'right' and 'wrong' industry. I get the point you're trying to make with that. There are two obvious paths. First, that as it stands now, increased corporate profits has not translated to increasing wages or employment. Regardless of whether the 'right' or 'wrong' industries expand, that still translates to less money in the hands of those that have the most need to spend it. The article does a much better job communicating the consequences of that. On the second path, I'll ignore the previous and just look at the overall growth consequences. If we assume that indeed only the industries producing things consumers need expand that eliminates a ton of research, development and source of unexpected discoveries (and jobs and wages and... I digress). How many 'useless' web apps and services are out there that also contribute to open source? Did consumers really need Google? Not at all, but damn if we don't all enjoy many of the things Google has contributed to our sector.

The following isn't in reply to you, Kokey, but I want to get it out there.

Of course government spending on things that don't contribute to real growth are a terrible idea. Government spending on infrastructure, education and healthcare, however, contribute more than the sum total of their costs. Most like to use the NASA example to illustrate that point, but how about finally investing in upgrading our power grid? A nationwide upgrade would put hundreds of thousands to work including a huge number of engineers and other knowledge jobs. Not to mention, we'd also be increasing our knowledge, expertise and intellectual property as a nation in a sector vital to every country on the globe during the process. What about using the next few billion we were going to subsidize telcoms with to upgrade our internet infrastructure (I don't know anyone who has been informed of the billions given to telcoms to upgrade infrastructure that wasn't used for that at all, that wasn't furious about it)? But what about healthcare? Surely that's just a money pit, right? A healthy population is more productive. Simple as that.

I doubt anyone reading this can't see that these kinds of large government spending projects and programs pay for themselves many times over in all sorts of varying ways.

kennethh• 13 years ago

This article basicly says that money printing is good and we should do more of it. If one increase the amount of money with 10% then your money and your wage has decreased by 10%. Those who get access to the new money first would be able to buy things for the old price before everyone is aware of the increase in money supply. In practice this is the big banks and their best customers (hedge funds). I would rather say there is no problem with demand, it is just the prices who are to high. Espesially with housing, gas and other fixed costs. Lower the prices and the demand will increase.

kmdev3• 13 years ago

Not at all. While the author does end with a curve ball on the arts (which he then admits in the commments), the point is valid. Spending on infrastructure, education, reasearch, healthcare, exploration and the like contribute much more than the sum total of their costs. NASA is a well known example of this. DARPA as well.

What you're describing contributes to a vicious cycle. Lowering prices means less revenue which translates to lay-offs, scaling back and cutting corners. That means worse quality and less demand, which means lower prices again - so on and so forth. Unfortunately, a simple supply and demand curve doesn't come close to describing a functioning modern economy.

cmccabe• 13 years ago

Some of this is questionable. For example, he claims that "by the 1980s... saving became passe" but that doesn't make sense. If anything, saving was useless in the 1970s and earlier, when inflation was out of control at more than 15%. It's kind of weird to be in favor of soft money and deficit spending, as he clearly is, and then get upset about mounting debt.

There are a lot of reasons why a London home that was 300,00k in the 1970s is now worth three times that. More people are living in London now than then, and due to London's "green belt" policies and height and zoning restrictions, there just hasn't been a great supply of new houses.

Tom doesn't even mention things like the oil shock, the impact of technology and automation, or demographics. It's kind of hard to get a reasonable picture of the economy without considering these things!

I agree with the basic point that we should have more Keynesian spending, but the history felt like a distraction. Calling the 70s a "golden age" is just... what is this, I don't even. Yeah, with the Vietnam war, OPEC, Silent Spring, and the threat of nuclear war, it was a real picnic...

sliverstorm2• 13 years ago

It's kind of weird to be in favor of soft money and deficit spending, as he clearly is, and then get upset about mounting debt

You seem to think that one must incur debt when deficit spending. Patently ridiculous. ;)

mcv5• 13 years ago

I think he calls the 70s the end of the golden age, which was the 50s and 60s.

ido2• 13 years ago

    Houses on my block in the United Kingdom that cost £3000
    in 1970 are now going for over £1.5 million.

was this a typo? Because that's a 500-fold increase, and I can't imagine inflation in the UK was that bad since the 70s?

jaggederest• 13 years ago

I think a basic income is a reasonable way of handling this sort of issue. Getting people to accept it is another matter altogether.

vbuterin2• 13 years ago

IMO, the best political solution there is to maximally decouple it from "government". Obviously this would be hard to do given the current organization of society and technology since tax revenue is the only sufficient source of money, and anything that relies on taxes is necessarily influenced by politics, but there are examples; Georgist systems like Alaska's oil dividend combined with endowment funds would be best, although we would need to actually create these institutions somehow. In the medium term, technological advances to make food, housing and medicine cheaper are probably the best bet.

D_Alex2• 13 years ago

According to the article, massive spending on something, even war, will be beneficial to the economy.

Okay, Lets fund science.

devx2• 13 years ago

Wired's Chris Anderson wrote a great book called "Free: The Future of a Radical Price" and is relevant to this "post-scarcity" future.

He has a speech here and the book is on Amazon:

http://www.youtube.com/watch?v=p8l64NpaCnE

guard-of-terra• 13 years ago

Nitpick:

Send us back to ancient Greece... and startled peasants would worship at our feet.

Ancient Greece was not so much about peasants as about citizens. People with some capital and some position in their world. They aren't going to worship you, they would try to figure you out.

eschnou• 13 years ago

This article, and some of the comments, seems to suggest that stimulating demand is the solution. It fails however to address if continuously increasing demand is realistic in a finite world.

Increasing demand and thus supply, requires increasing use of energy, land, raw material, etc. Which is at some point limited by the physical realities of our world.

There is a limit to growth. Have we reached it?

sillysaurus2• 13 years ago

There is a limit to growth. Have we reached it?

Depends. Growth of what?

There are aspects of life I see as having unlimited growth. Evolution has a way of crashing through barriers and trampling anything that stands in its way. If humans somehow exhaust a resource, we'll evolve a new one, as we always have. Perhaps painfully, but it'll happen.

anovikov2• 13 years ago

My pet theory of today's economic problems (by 'todays' i mean approximately: since mid-1970s) is different. I think the problem is that approximately by that point, the pace of technological and therefore, economic and social changes exceeded the limits of average people's adaptibility. In part that was because of limits imposed by 'slow' institutions (like education), but mostly, simply mental.

Therefore, GDP growth have slowed (because most people are underperforming or doing wrong jobs as their view of the worls is lagging behind). Therefore, there is a redistribution of income to the top 1% because to all previously existing factors of success, a new a huge one added being the ability to adapt to change quickly.

Bad thing about this is that it is a permanent condition and is only likely to get worse. And, we don't want that to stop because there is little growth factors except technology left out (all free and good soil is taken 100 years ago, cheap labor is also gone, capital is abundant and cheap, too - we can't make it any better). Even change in how we grow children is unlikely and undesirable (imagine telling your child 'you don't need to be loyal or do a good job, just look where the money goes and follow'). So, this is here to stay.

svantana• 13 years ago

Really? What kind of jobs do you think people are not adapting into? Twitter hashtag analysts?

I would that argue that since the 70's, technology has mostly improved the stuff at the top of Maslow's pyramid - entertainment, communication, computation - while the stuff at the bottom (housing, food, clothing, energy) has been fairly stagnant.

icebraining• 13 years ago

(...) Over the last several decades groceries have been one of the real bargains in America, and the average rate of inflation on dozens of food items tracked by the U.S. Bureau of Labor Statistics has consistently been less than increases in the purchasing power of the average American family. As a result, the percentage of income that families devote to their food purchases has fallen sharply since the food inflation of the 1970s (...). Recent price spikes have done little to reverse years of moderation in the cost of food.

The good news started for most consumers in the 1980s and has continued since then. In the decade before, food prices rose at average annual clip of 8.4 percent, which was more than a full point above the overall inflation rate. But in the 1980s, the rate of inflation on food items declined to 4.6 percent annually, nearly a point below general inflation. That downward momentum continued in the 1990s, when food prices rose by a mere 2.8 percent annually, a trend that has pretty much continued in the new century until the last few months.

http://www.manhattan-institute.org/html/miarticle.htm?id=301... (2008)

vorg• 13 years ago

From 1938 to 1945, war created that demand. From 1946 to 1981, prosperity, rising wages, and advertising created that demand. From 1982 to 2007, debt fuelled consumption financed by ever rising asset prices created that demand.

The next phase of US prosperity will be fueled by Asian immigration. They want to spend their money on college fees and houses, cars and city apartments, legal fees and taxes. They kept Australia, NZ, and Canada afloat for the last 20 yrs, but they prefer America. By 2050, half of all Americans might be ethnic Asians.

tanzam753• 13 years ago

Australia was not kept afloat by Asian immigration, but by digging up their land and selling pieces of it to China. 30% of Australian exports are to China. More than half of that is coal.

As for immigration, it is much easier to immigrate to the Commonwealth countries than to the United States. They all have point systems for skilled immigration.

It's possible to immigrate into the United States by making a $500,000 investment. But that policy really only captures the upper middle class looking for a backup plan.

ido2• 13 years ago

I don't know what your definition of "upper middle class" is, but I am pretty sure even in the top 10% of the economy in any given western/industrialized country almost nobody has half a million $ laying around for investment (i.e. that isn't tied up in the homes).

cliveowen2• 13 years ago

I don't know why the author keep talking about world economy while the only examples he presents are U.S. only: mortgage crisis, debt fuelled spending, etc. In Europe there wasn't nothing like that and yet Europeans have been hit hardest by the recession.

rythie• 13 years ago

We've got all that in the U.K.

cliveowen2• 13 years ago

Fine, U.S. and U.K., my point still sticks.

tanzam753• 13 years ago

I don't know why the author keep talking about world economy while the only examples he presents are U.S. only: mortgage crisis, debt fuelled spending, etc. In Europe there wasn't nothing like that and yet Europeans have been hit hardest by the recession.

Look at the countries that got hit hardest in Europe. Spain had a larger housing bubble than even the US. Ireland also had a housing bubble. Greece went on a massive debt-fueled spending binge.

contingencies• 13 years ago

Capitalism's problem is this: it's totally goddamn imaginary. There is no worker, no consumer, no manager, no government. When you get down to reality, we're all in this shit together - and that includes the non-human parts of the ecosystem and non-renewable resources that we're systematically screwing over. The profit motive has its place, but we've clearly demonstrated that it's not a viable, holistic modus operandi for the world at large.

So where to next? IMHO what we need is less people looking backwards to theories but rather looking forward to systemic change that is more closely based on reality. A system in which tropical fruit in December is either produced locally, taxed in some way or otherwise socially frowned upon. A system in which a dildo that's imported half way around the world for a frigid, antisocial society of sterile worker-drones living in a fantasty of fear and loathing becomes unnecessary.

How do we get there? I think significant change in financial systems is the most realistic path. I think the way to achieve that is by systems that allow the exchange of new asset types that can represent social or environmental value, and also by allowing innovation in financial services (currently next to impossible), and by governments eventually wising up to grant tax or other types of incentives to parts of their community contributing to more educated, peaceful, sustainable, locally-grounded, holistic ways of life.

Put it this way: big capital which controls much of politics says no. Environment says your days are numbered. IMHO there's really no option but to engineer a more holistic/realistic modification of the existing system operating closer to reality - in which big capital can profit from environmental and social concern. Pure capitalism - selling fresh air - is not an option that will preserve biodiversity.

captainmuon• 13 years ago

"I said it before, and I'll say it again, Capitalism just doesn't work!"

Post Scarcity Economics

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