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Tim O’Reilly: It’s Time to Rewrite the Rules of Our Economy

The economic game is enormously fun for far too few players, and an increasingly miserable experience for many others.

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By Tim O’Reilly

Future economic historians may look back wryly at this period when we worshipped the divine right of capital while looking down on our ancestors who believed in the divine right of kings.

Business leaders making decisions to outsource jobs to low-wage countries or to replace workers with machines, or politicians who insist that it is “the market” that makes them unable to require companies to pay a living wage, rely on the defense that they are only following the laws of economics. But the things economists study are not natural phenomena like the laws of motion uncovered by Kepler and Newton.

Right now we’re at an inflection point, where many rules are being profoundly rewritten. Much as happened during the industrial revolution, new technology is rendering obsolete whole classes of employment while making untold new wonders possible. It is making some people very rich, and others much poorer.

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I am confident that the invisible hand can do its work. But not without a lot of struggle. The political convulsions we’ve seen in the United Kingdom and in the United States are a testament to the difficulties we face. We are heading into a very risky time. Rising global inequality is triggering a political backlash that could lead to profound destabilization of both society and the economy. The problem is that in our free market economy, we found a way to make society as a whole far richer, but the benefits are unevenly distributed. Some people are far better off, while others are worse off.

Many discussions of our technological future assume that the fruits of productivity will be distributed fairly and to the satisfaction of all. That is clearly not the case. Right now, the economic game is enormously fun for far too few players, and an increasingly miserable experience for many others.

As the incomes of ordinary consumers stagnated, companies kicked the can down the road a few decades by encouraging them to pay for goods on credit, but that short-term strategy is crashing down. In The Marriage of Heaven and Hell, written during the most hellish days of the first industrial revolution, the poet William Blake issued what might well be a rule as certain as those issued by any economist: “The Prolific would cease to be Prolific unless the Devourer, as a sea, received the excess of his delights.”

We can wait for the push and pull of the many players in the game to work things out, or we can try out different strategies for getting to optimal outcomes more quickly. As Joseph Stiglitz so powerfully reminded us in his book of that name, we can rewrite the rules.

The barriers to fresh thinking are even higher in politics than in business. The Overton Window, a term introduced by Joseph P. Overton of the Mackinac Center for Public Policy, says that an idea’s political viability depends mainly on whether it falls within the window framing a range of policies considered politically acceptable in the current climate of public opinion. There are ideas that a politician simply cannot recommend without being considered too extreme to gain or keep public office.

Once we’ve pushed the Overton Window wide open, we can start working toward more desirable futures, in which machines don’t replace humans, but allow us to build a next economy that will elicit the WTF? of astonishment rather than the WTF? of dismay.

ASKING THE RIGHT QUESTIONS

I’m not an economist, a politician, or a financier equipped with quick answers as to why things can or can’t change. I’m a technologist and an entrepreneur who is used to noticing discrepancies between the way things are and the way they could be, and asking questions whose answers might point the way to better futures.

Why do we have lower taxes on capital when it is so abundant that much of it is sitting on the sidelines rather than being put to work in our economy? Why do we tax labor income more highly when one of the problems in our economy is lack of aggregate consumer demand because ordinary people don’t have money in their pockets? When economists like former Treasury secretary Larry Summers talk about “secular stagnation,” this is what they are referring to. “The main constraint on the industrial world’s economy today is on the demand, rather than the supply, side,” Summers wrote.

Why do we treat purely financial investments as equivalent to real business investment? “Only around 15% of the money flowing from financial institutions actually makes its way into business investment,” says Rana Foroohar. “The rest gets moved around a closed financial loop, via the buying and selling of existing assets, like real estate, stocks, and bonds.” There is some need for liquidity in the system, but 85%? As we’ll see in the next chapter, this great money river is accessible only to a small part of our population, and relentlessly directs capital away from the real economy.

Why do productive and nonproductive investments get the same capital gains treatment? Holding a stock for a year is not the same as working for decades to create the company that it represents a share of, or investing in a new company with no certainty of return.

John Maynard Keynes recognized this problem eighty years ago during the depths of the Great Depression that followed the speculative excesses of the 1920s, writing in his General Theory of Employment, Interest, and Money: “Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

Keynes continued, “The spectacle of modern investment markets has sometimes moved me towards the conclusion that to make the purchase of an investment permanent and indissoluble like marriage, except by reason of death or other grave cause, might be a useful remedy for our contemporary evils. For this would force the investor to direct his mind to the long-term prospects and to those only.” Warren Buffett has proven that this is actually a very good strategy. Yet our policies don’t favor the kind of value investing that Buffett practices.

A financial transactions tax calibrated to eliminate all the benefits of front-running and other forms of high-speed market manipulation would be a good place to start, but we could go much further in taxing financial speculation while rewarding productive investment with lower rates. Larry Fink, the CEO of BlackRock, suggests that at a minimum, long-term capital gains treatment should begin at three years rather than one, with a declining rate for each additional year that an asset is held.

We could even institute a wealth tax such as proposed by Thomas Piketty. And if we were to tax carbon rather than labor, rather than starting by substituting a carbon tax for income taxes, it might be better to substitute a carbon tax for Social Security, Medicare, and unemployment taxes. These rule changes might be costly to some capital owners but might well benefit society overall.

These are political decisions as much as they are purely economic or business decisions. And that is appropriate. Economic policy shapes the future not just for one person or one company, but for all of us. But we should realize that it is in our self-interest to improve the rules we are now playing under. In his article about income inequality, Joseph Stiglitz explained how Alexis de Tocqueville, a Frenchman writing about American democracy in the 1840s, considered “self-interest properly understood” to be “a chief part of the peculiar genius of American society.”

“The last two words were the key,” Stiglitz wrote. “Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest ‘properly understood’ is different. It means appreciating that paying attention to everyone else’s self-interest—in other words, the common welfare—is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul—it’s good for business.”

Throughout history and across continents, economies have played the game using different rules: No one can own the land. All land belongs to kings and aristocrats. Property is entailed and cannot be sold by the owners or heirs. All property should be held in common. Property should be private. Labor belongs to kings and aristocrats and must be supplied on demand. A man’s labor is his own. Women belong to men. Women are independent economic actors. Children are a great source of cheap labor. Child labor is a violation of human rights. Humans can be the property of other humans. No human can be enslaved by another.

We look back at some of these rules as the mark of a just society and others as barbaric. But none of them was the inevitable way of the world.

Here is one of the failed rules of today’s economy: Human labor should be eliminated as a cost whenever possible. This will increase the profits of a business, and richly reward investors. These profits will trickle down to the rest of society.

The evidence is in. This rule doesn’t work. It’s time to rewrite the rules. We need to play the game of business as if people matter.

Adapted from WTF?: What’s the Future and Why It’s Up to Uswith permission from HarperBusiness 


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  • Mitchell Chanelis

    It may not be necessary to “rewrite the rules…of business” if we care to look at ‘the rules’ before they were most recently rewritten. The early 20th c. saw a sudden division of political economy into politics and economics. The shift was engineered primarily because of the threat to significant landed interests posed by the rising strength and popularity of American social reformer Henry George’s ‘Single Tax’ movement and political party.

    Henry George, with the 1879 publication of, “Progress and Poverty”, pioneered a global effort to recoup as public revenue the Feudal rentier incomes from land and natural resources which, forever, have lined the pockets of plutocrats and continue to provide the foundation of rigid social hierarchies around the world.

    The private appropriation of the ‘economic rent’ of land, more than any other factor, is the great cause of income inequality,

    The basis of the program for economic and social reform George inspired has deep roots – sustained by the writings of, among others, the French Physiocrats and Adam Smith. These classical political economists note that Land, Labor, and Capital are the sole factors of economic production. From this pre-Marxist vantage point it’s possible to recognize that, ultimately, Labor and Capital have mutual interest in the production of goods and services. The mere ownership of Land, however, serves no economically productive purpose since land exists whether or not it is ‘owned’.

    The critical element in this scenario is that although the economic rent of land is not a product of labor or capital it has enormous value because of social demand for access to land and natural resources – for economic production and for the sustenance of life itself.

    Land values increase with the advance of economic productivity and, according to David Ricardo’s ‘Law of Rent’, gets creamed off the top of economic productivity into the Wedgwood jugs of landowners. This process remains the core of societies worldwide and underpins our neo-Feudal Monopoly Capitalist system which we either love to hate or blindly apologize for.

    • Daniel Seed

      Well said, I also see the similarity to feudalism, its just less transparent and titled. We are currently regressing and it’s pretty clear.

    • Reed Schrichte

      Good point! Methinks though the attempted division of political economy into its respective parts was a result of the American experiment of 1776, where ‘one man one vote’ was proposed as a counterbalance to ‘one dollar one vote’. Since money is power and power is money and never shall the two be entirely separated, I observe that experiment to be a failure.

  • It is great to have Tim O’Reilly talking so much sense. I wonder if he knows that Clarence Ayres, the Institutional Economist who built on Thorstein Veblen and John Dewey, coined the term “Divine Right of Capital.” It was the title of a fantastic book he published in 1946. Everyone here could benefit from reading it.

  • Alan

    I’ve always respected Tim in technology. But this is a frightening turn. There is no doubt the current system of capital allocation is screwed up (regulatory capture), but the solution is to reduce taxes freeing capital (and reducing its price) for productive purposes (that is providing suff and services people want to buy), not taxing more for some bureaucrat to blow on her favorite project without consequence (i.e., losing her money) .

    Let the market do its work. Some ideas will flourish and some will die. But to presume government ever made an informed decision is simple folly.

    Forget the money, follow the incentives!

    • Reed Schrichte

      Perhaps you can explain to me then the reason, if the interest rate is the cost of capital, and as Mr. O’Reilly notes capital is and has been abundant and cheap, then why is capital given the first and biggest bite of the productive apple? Tim is right, this is social convention, not Law of Nature.

    • Reed Schrichte

      And quite honestly I am dreadfully weary of hearing ‘government’ being used as the whipping boy for every flaw in the socio-economic system, the Surrogate Satan to the angelic and innocent Free Market. This is little more than higher-order mythology. Were you watching the parade of limousines and Gulfstream jets from Wall St. to Washington in September of 2008? Let me ask you an honest question though, which I’d appreciate a thoughtful answer to: do you agree that in a financial panic, the central bank backed by the public treasury should be the lender of last resort? If so, why then should the same entity not be the employer of last resort? Is there a difference?

    • John G

      Without a guiding hand to protect life, liberty, and property, markets do not function in a sustainable way. To benefit civilization on a finite planet certain rules are required to maintain a level playing field and protect rights whose value is not reflected in markets any other way. For example, clean air, pure water, and a stable climate.

      Watch this for a repeating theme of how the free market can be twisted to provide value through exploitation, pollution, and suffering of third parties if left entirely to its own devices.

      https://youtu.be/LNPRgR-2o-A

  • Walt

    Rewriting the rules of economy? Yes, with all changes in front of us, due to information technology, sharing economy, biomedicine and genetics etc., we must do it. What was valid yesterday, will not be valid tomorrow. Probably value of capital will diminish, value of labor will diminish, value of innovation will increase, especially value of new bright ideas. I am convinced, that the free market will take care of it.
    We are playing the game. Somebody is winning and somebody is losing. Maybe tomorrow the number of losers will increase and I believe they will. I am convinced that our society will overcome such a problem. But calling the politicians and government in, and asking them to change the rules during the game, is not fair and it will not help. Progress will stop only in that region and the region will deteriorate.

  • Reinaldo Martinez

    For all which has been said about free market, the point is how free is the “free market”? Because with powerful advertising and telecomm corps dominating the virtual atnosphere there is no free market, but a smartly manipulated market to favour greedy interests. There is not such a thing as “free market” at all nowadays. So, we better take a fairer position for the whole of the human race tu survive.

  • Tim has correct identified that the key issue is “Asking the right questions?”

    And while he has asked some interesting questions, there are others more important and more interesting that he hasn’t yet asked.

    While I can sympathise with Alan in a sense (the sense of resisting threats to freedom), there is a far greater and deeper sense in which the existing accepted rules have become a greater threat to a greater value – that of life itself (the value upon which liberty is predicated).

    If one wants to fly, one does deny either gravity or air resistance, one understands both and uses them to create machines that allow us to fly. By acknowledging the systemic necessities of reality, one can create almost any outcome.

    The process of inquiry, of testing assumptions, of looking to the rules that seem to actually be at play, those that are necessary and those that are not, leads to a series of view changes (seemingly potentially infinite).

    Many people have confused the notion of markets with the notion of liberty – that is an error with existential level risk implications.

    In this world we find ourselves in, some things are available in universal abundance, some are not.
    For most of us, air is the single most important substance for our existence, yet the fact of its universal abundance means it has no exchange value in a market.

    The fact that markets cannot give a positive value to universal abundance incentivises the erection of barriers to universal abundance – all of our Intellectual Property (IP) laws now fall into this category. In most cases today (given the internet and digital copying of information) the only reason for IP laws is to create scarcity, and thence market value – for the benefit of the very few, and at cost to the great majority.

    The fact that our information technology is on a double exponential expansion of capacity, and is now moving from purely information more deeply into matter manipulation, means that an exponentially expanding set of goods and services are now joining the class of things that can be provided in universal abundance, and the only reason they are not is the fact of the economic (measured in dollars in markets) impact of doing so.

    Thus, clearly, economic values and human values are now directly in opposition (for the vast majority) in an exponentially expanding set of of instances.

    Thus, while it is possible to make a strong case for the historical association of freedom and security with free(ish) markets; that case cannot be sustained into the future.

    What we do about that is the great question of our age.

    I hold individual life, and individual liberty as my highest values (applied universally).

    And holding those values, in a knowledge set based in science and history (evolution, biochemistry, cosmology, quantum theory, relativity, economics, complex systems, far from equilibrium explorations of infinities, etc) demands of me responsible action in both social and ecological contexts.

    I am clear beyond any shadow of reasonable doubt that both indefinite life extension and abundance of all reasonable essentials of life and liberty can be made universally abundant, and that demands responsibility from each of us.

    Unlimited expansion of population is not a viable option. The closer we get to 1 child per couple for people on this planet, the better off we will all be, as one example. We can sustain higher breeding rates for those prepared to leave earth in space ships (large habitats capable of sustaining millions of people in abundance) for a thousand years or so, but even then there are limits that we will hit. Long term, we need to be responsible for such things.

    Right now, responsibility must express as some means of delivering a reasonable probability (something very close to unity) of life and liberty to all.

    In the short term, as we transition from scarcity to abundance, some sort of universal basic income seems to be the most viable strategy (least risk) – and it can only be a temporary transition strategy – longer term something else is required.

    The major focus of intellectual activity must be on creating fully automated production systems that are not self aware, but are under human control, capable of delivering all the essentials of life.
    Development of full Artificial General Intelligence is a very different issue – one for separate discussion and development. The current economic imperative for a headlong rush in that direction is a substantial source of existential risk (in our current social state of clearly not valuing human life or human liberty very highly at all – as any objective look at the social condition of most people clearly demonstrates).

    So the major issue is not how to improve market economics, but how to go beyond market economics, and into a form of management of our global (and beyond) house (Oikos – all 3 senses). UBI is a step in that direction in that it demonstrates in practice that sapient life has a value simply because it exists – rather than our existing practice of predicating the value of life on its productive capacities.

    If ethics has any meaning at all, this step cannot be avoided.

    • oldngrumpy1

      While I agree with your motivation in advocating for UBI, I believe it is premature in our society. An intermediary, or accompanying, better choice would be a federally funded and regionally managed job guarantee. Work is too deeply ingrained in our human condition to be eliminated simply because it no longer offers a profit potential. There is also a large potential demand for labor in increasing social capital that volunteerism isn’t likely to fill alone. Unless UBI is pegged at some level that allows participation in the consumer market the capitalist system will fail for lack of customers, but there is also some level of income below which volunteerism drops off drastically.

      Understanding the mechanics of a sovereign fiat currency tells one that we can afford to purchase anything that is for sale in dollars, including our labor, so the affordability issue is off the table and no elaborate tax policy is necessary to fund any program that takes us up to full employment and realization of potential. Only beyond that do we see potential inflation as a result of increasing currency in the economy. This is not to say that taxation of both capital and labor doesn’t have merit, only that it isn’t, and never has been, a revenue source for spending. The first step in advocating for anything beyond the current miserable circumstances has to be education of voters to this fact and the realization that there is no “debt” possible with our monetary system.

      • We are getting into some very complex territory.
        There are ecological limits, that we need to be responsible for, and are not yet doing a great job of. Simply increasing money supply without environmental safeguards could be a recipe for disaster.

        Coal will soon become one of our most valuable commodities, and we will regret the amount that we wasted by burning (it is the most condensed source of carbon and hydrogen, two elements rare on the moon and required to build living habitats in space). The sooner we move to solar power (either direct photovoltaic or second hand wind power) the better.

        UBI at $60/day would be a good start.
        We are not short of jobs that need doing.
        Giving people real choice about the sort of job they might want to do seems a reasonable response. Most people do want to do something meaningful.

        • oldngrumpy1

          I think we could assume that if we were to find ourselves with a government that would make UBI possible we would likely already have a green energy initiative and single payer health care. Given the political climate currently, this would most likely be in response to the inevitable depression/deep recession that will be the result of the austerity economics America is obsessed with. The only seven times we have previously been within shouting distance of a “balanced budget” has resulted in such economic conditions, so there’s little to give hope that this time will be different. As Churchill once said, “Americans can always be counted upon to do the right thing, as soon as they have exhausted all other possibilities”.

          If we realize the implementation of UBI in a conservative political climate it will be at the cost of almost all of our social safety net, including Social Security. $60 per day would be a raise for the average SS recipient and would wipe out the minimum wage and unemployment. It wouldn’t be long before inflation from leveraging private debt would wipe out any hope of living on the UBI payment and it would just become a factor in setting pay for work, much as we have allowed the safety net to become at the bottom of the wage scale now. Any effective real gains would be absorbed by employers, but there wouldn’t be a safety net to mitigate the economic damage to low income service jobs in a service economy. This is why UBI advocates are often joined by the Friedman free market crowd.

          The missing element in UBI is the labor centric dynamic that a guaranteed job, government as employer of last resort, would provide. When workers have a job available that pays a living wage with benefits just for showing up employers must begin their offering at that level to attract workers and lousy managers become an expensive choice for employers. Once employees are given such choices they can pull themselves up a rung on Maslow’s pyramid and the hard line right loses much of the appeal it now holds onto with envy politics and tax for revenue faux economics.

  • philipcopeman

    On one thing you are right Tim. You are not an economist. This revisionist article merely trumps up quotes from defunct economists (Keynes words not mine) that have over described inequality. Real economists suggest real actions, which you do not. All the people you quote are mired in the long lost world of the sovereign state. Capitalism is global and any attempts to curb it it tax will simply lead it to other pastures. You need to comeback with real solutions if we are to take you seriously. Do not underestimate the sustainability of inequality. To quote the African Politician Thomas Sankara, the rich to not give up privilege without force.

    • oldngrumpy1

      We have the solution in hand without major structural change to our economics beyond simply recognizing reality. Nixon removed us from the Bretton Woods agreement and the gold standard in ’71 but our political powers chose to ignore the most important economic change in our history and continued to govern in a tax as revenue environment. While taxes never directly funded spending in our system, the move to sovereign fiat currency meant that government could afford to purchase anything for sale in dollars, that only Congress could create and could never run out of, and could never fail to pay any obligation denominated in dollars. This effectively removed spending from any revenue constraint and left only inflation as the limiting factor restricting currency creation.

      A sovereign fiat currency allows vastly more policy room than a fixed exchange system, but the concept of no revenue restraints on spending has proven so foreign to Americans that it was quite simple to hijack their independent nature and pride with a simple “How will you pay for it?” query to any proposed progressive agenda. When the question wasn’t sufficient to garner support for austerity the massive number purposefully labeled as “debt” is trotted out to beat us about the head and shoulders with, shaming us for inflicting such a burden on future generations. It is literally impossible to borrow currency into existence or to pay off the debt with taxation, but truth and reality have never been the currency of politics.

      Without a gold reserve to balance against the currency created by Congress to provision the government and pay for programs the debt became nothing more than an accurate accounting of currency spent/created by Congress and not yet canceled by taxation. Having a self imposed mandate to fund all deficit spending with Treasury bonds it is quite natural to view taxation as revenue to fund spending but it is actually nothing more than a tool to remove currency from the private sector to protect a now non-existent gold reserve. There is no function of the Fed or Treasury that allows tax collections to be spent again. Once taxes are paid and the payer’s account is credited the number is no longer considered to be “money” and is only accounted for to determine the point where spending becomes deficits. If you pay your taxes in cash the odds are good that the cash will be accumulated for shredding as you walk out the door with a receipt in hand. The IRS, being a department of Treasury, has no provision for, or interest in, dealing with cash that is no longer money.

    • Richard..

      Dismissing people solely on having ‘the wrong title’ seems quite ignorant. It sounds like you accept neo-liberalism like an equivalent religion.
      It is indoctrinated to our brightest in business schools all over the world, those who may call themselves ‘economists’. It is more likely that non-economists who have gotten the basics will come up with solutions, because economists are all infected and affirmed by their peers.

      And yes, maybe the pitchforks will be needed to make a change. The US are doing a great job at creating a big unhappy bunch of citizens. And they have the right to pack heat. Just to be clear: I am against guns as much as I am against the corporate influence in politics (especially the levels in the US are beyond belief).

      The neoliberal hatred of taxes is also exaggerated/polarized/demonized. It depends on what society does with it’s taxes. Yes it’s “our money”, even after paying it to the govt, if we have good representation. Leeching on infrastructure and services that have been built up indecades won’t last forever. Roads and bridges will deteriorate, and you need a community effort to keep them in shape. Corporations will never fix the road in front of your house if you don’t pay them (and your neighbours too). And toll-roads are just the same as taxation, only difference is that corporations don’t have to report to any voters, just to the investors and fat cats.
      However: if the likes of Trump and Goldman Sachs etc. are ‘the government’ the people are just paying the corporations in both ways: buy their products and fill their bank account with our taxes. Solid democratic government works for and and legislation is made by the people, it’s not called ‘Corpocracy’.

      Talk about the flaws in the system, fix them by making new rules and laws and enforce them. First thing to fix is money in politics: it’s institutionalized corruption. The fact that the law says it’s okay, does not mean it’s good for the people.

      The argument that things work how they work at this point (globalism etc) is never enough reason to keep doing it. Ask the Weinsteins in this world.
      Tax evaders move elsewhere? Just keep fighting tax evasion wherever they go. Drive them all on to one island and change the rules there, too. Takes a huge effort, but change is never easy.

      • philipcopeman

        Thanks for engaging – I am certainly not dismissing you. Dismissing is to not even reply to your article. I liked the article – thats why I replied. We’ve got the problem – if you need to read a description of the problem, read 800 pages of Piketti. He does it a lot better than you or I. He then spends about 10 pages on a dreamy utopian solution. Tim tell us EXACTLY HOW you are going to FIX THE PROBLEM – the problem that we all know exists. I say its not that easy. We are in a META STABLE equilibrium.

  • Peter van den Engel

    Taxes and speculation ARE both human inventions. That is… testosteron, offen found in human genes, which grows extremely well on money. Like a garden full of weeds.

  • Peter van den Engel

    Stock is a paper written mirroring the value of a company/ but is not the real value. It is a clone. A double.
    People can buy the paper with real money, but it cannot be used for money transactions. It can be bought or sold on its own.
    It is a clever trick from banks, to provide companies with new money they don’t have to lend/ and never have to pay back.

  • pwlsax

    I would like to remind Mr. O’Reilly that today’s definition of “self-interest” pretty much rules out its being “properly understood.” Capitalism today is becoming a cult.

  • Sabbie

    There’s no “free market” with Central Banks manipulating the rate of interest and adding trillions to their balance sheets. This is a planned economy based on ever expanding debt. It is a scheme run by banks, for banks. And like all systems, there is a natural limit to how extreme it can get.

  • John G

    Thanks Tim, for some interesting ideas to ponder.

    Citizens Climate Lobby is working to address a big one of society’s big challenges, climate change from fossil fuels. You may be very interested in the solution approach Carbon Fee and Dividend, because it would provide something of a test case for some of the theoretical benefits a UBI would yield.

    https://citizensclimatelobby.org/basics-carbon-fee-dividend/

    Regarding a pure UBI, I do worry about the basic human nature trait of laziness. I think providing some motivation, like income for learning (free online courses that could be taken to earn enough credits each month or year to qualify for UBI) could be a necessary piece to help keep civilization progressing (and preventing the ignorance of a group of manipulated citizens from taking us down the wrong path).

  • While the author has a number of interesting ideas, human labor is going to be eliminated as a cost, whenever possible. The alternative is make-work, a demeaning situation in which people are paid, in effect, to move papers from Pile A to Pile B, and then back again.

    Far better than attempting to prop up pay for human services would be to institute a UBI that actually works. As documented here (http://bit.ly/2iIjrAy), conventional approaches to implementing UBI have far greater hurdles than most acknowledge. Fortunately, an ally of our Celebration Society proposal has conceived an approach that addresses all of those hurdles. A paper about it should be published in early 2018.

    • Moslerfan

      Couldn’t disagree more that the alternative to eliminating human labor is make-work. There is no end to useful things that people can do for each other and for the planet. Our current economic system is not capable of recognizing and compensating those things. That’s why our current economic system must be changed.

      • Thanks for catching that. I’ve edited my answer.

        Much of my work, and that of our allies, is about proposing and developing such a new economic paradigm.

  • Macrocompassion

    The rules of society can be made to appear complex and needing lots of attention, but when one examines the Big Picture from sufficiently great a distance, there is only one aspect that if changed would solve the need for changing all of the others. What we need is equality of opportunity, not wealth, in order to be able to earn a decent wage, live in a stable region and educate our children to a satisfactory degree. Equality of opportunity is greatly affected by the right of access to natural resources, particularly the land. But today land is monopolized and its value is continuously being speculated in. Useful development site are being held unused for speculative purposes and this drives up the prices of land that is being sold for use.

    It results in uneven earnings and capitalistic speculations over a wide range of the macro-economy because once one has begun a monopoly there is a tendency to expand on it rather than to cease supplying the owners of it with greater lines of making profit.

    The answer is to stop this monopolization of our natural resources so that everybody can share in the bounty that the ownership and use that a site of land can confer. For those who don’t own land they should be able to benefit as much as those who do and this can be achieved by the use of a single tax on land values or LVT. The following list shows all the effects that such a tax regime change would bring. Nobody gets hurt except for the monopolists whose activities are immoral.

    17 Aspects of LVT Affecting Government, Land Owners, Communities and
    Ethics

    Four Aspects for Government:

    1. LVT, adds to the national
    income as do other taxation systems, but it replaces them.

    2. The cost of collecting the LVT is less than for all of the production-related
    taxes–tax avoidance becomes impossible because the sites are visible to all.

    3. Consumers pay less for their
    purchases due to lower production costs (see below). This creates greater
    satisfaction with the management of national affairs.

    4. The national economy
    stabilizes—it no longer experiences the 18 year business boom/bust cycle, due
    to periodic speculation in land values (see below).

    Six Aspects Affecting Land Owners:

    5. LVT is progressive–owners of
    the most potentially productive sites pay the most tax.

    6. The land owner pays his LVT regardless of how his site is used. A large
    proportion of the ground-rent from tenants becomes the LVT, with the result
    that land has less sales-value but a significant “rental”-value (even
    when it is not used).

    7. LVT stops speculation in land prices and
    the withholding of land from proper use is not worthwhile.

    8. The introduction of LVT initially reduces the sales price of sites, even
    though their rental value can still grow over a longer term. As more sites
    become available, the competition for them is less fierce.

    9. With LVT, land owners are unable to pass the tax on to their tenants as rent
    hikes, due to the reduced competition for access to the additional sites that
    come into use.

    10. With LVT, land prices will
    initially drop. Speculators in land values will want to foreclose on their
    mortgages and withdraw their money for reinvestment. Therefore LVT should be
    introduced gradually, to allow these speculators sufficient time to transfer
    their money to company-shares etc., and simultaneously to meet the increased
    demand for produce (see below).

    Three Aspects Regarding Communities:

    11. With LVT, there is an
    incentive to use land for production or residence, rather than it being unused.

    12. With LVT, greater working opportunities exist due to cheaper land and a
    greater number of available sites. Consumer goods become cheaper too, because
    entrepreneurs have less difficulty in starting-up their businesses and because
    they pay less ground-rent–demand grows, unemployment decreases.

    13. Investment money is withdrawn from land and placed in durable capital
    goods. This means more advances in technology and cheaper goods too.

    Four Aspects About Ethics:

    14. The collection of taxes from
    productive effort and commerce is socially unjust. LVT replaces this extortion
    by gathering the surplus rental income, which comes without any exertion from
    the land owner or by the banks–LVT is a natural system of national income-gathering.

    15. Bribery and corruption on information
    about land cease. Before, this was due
    to the leaking of news of municipal plans for housing and industrial
    development, causing shock-waves in local land prices (and municipal workers’ and
    lawyers’ bank balances).

    16. The improved use of the more
    central land reduces the environmental damage due to a) unused sites
    being dumping-grounds, and b) the smaller amount of fossil-fuel use, when
    traveling between home and workplace.

    17. Because the LVT eliminates
    the advantage that landlords currently hold over our society, LVT provides a
    greater equality of opportunity to earn a living. Entrepreneurs can operate in
    a natural way– to provide more jobs. Then earnings will correspond to the
    value that the labor puts into the product or service. Consequently, after LVT
    has been properly introduced it will eliminate poverty and improve business
    ethics.

  • Mural Baltabay

    How could a scholar in the age of modern technology which landed human on moon still stands so stubbornly on point that ” But the things economists study are not natural phenomena like the laws of motion uncovered by Kepler and Newton.” ? ! Everything is natural phenomena, including economy. It has its natural law. We just need to see in a more macro perspective, from Rethinking the Problem of Scarcity.