patrick.net

I think the vision of a 15-20 hour work week will still happen, it'll just take a lot longer than Keynes thought. Globalization happened in such an asymmetrical way that it'll be an extra decade or two before robots are cheaper than Chinese workers.

Kevin says

I think the vision of a 15-20 hour work week will still happen, it'll just take a lot longer than Keynes thought. Globalization happened in such an asymmetrical way that it'll be an extra decade or two before robots are cheaper than Chinese workers.

I'm not so optimistic. First, with that much excess time the population will get restless. Increased consumption may be the best outcome we could hope for. Besides, a 15 hour workweek would require a sea change in our social norms, which I wouldn't expect in any mid term time frame (low single digit decades). If I can work 15 hours and have all I need, maybe I will work 20 hours and get 1/3 more. Of course I also believe that we are somewhere in the neighborhood of maxing out our resources -- I don't believe the earth can sustain the current population, much less the rate of increase we have been experiencing. Less work coincident with widespread abundance sounds like a fairy tale to me -- or something that we have already experienced.

swebb says

First, with that much excess time the population will get restless.

The same arguments were used when the 40 hour workweek was made mandatory (by factory owners). It didn't pan out. People found things to do.

swebb says

Besides, a 15 hour workweek would require a sea change in our social norms, which I wouldn't expect in any mid term time frame (low single digit decades).

It happened within two decades when we transitioned from agriculture to industry and again when we instituted the 40-hour work week. I don't know how long it took when we went from hunter / gatherer to agrarian since our record keeping was poor.

swebb says

If I can work 15 hours and have all I need, maybe I will work 20 hours and get 1/3 more.

No, you won't, because it won't be easy to do so.

In low-paying jobs, people who WANT to work more are already finding that their employer won't give them more hours. A combination of overtime laws, balancing the requests of other employees, etc. all work in concert to make this the norm.

You can certainly, as an individual, choose to do more work outside of an employer (or multiple employers), but few do because society doesn't encourage it. Most people will gladly work less. The exceptions are the relatively few people who work in a highly creative discipline where their work is as much of a hobby as it is a source of income.

swebb says

Of course I also believe that we are somewhere in the neighborhood of maxing out our resources -- I don't believe the earth can sustain the current population, much less the rate of increase we have been experiencing

"much less" what? Population growth has been on the decline for decades. World population quadrupled over the past 100 years but it will increase by a mere 40% over the next 100.

The only resources that we're remotely at risk of exhausting are temperature (global warming) and water (but not because of population -- because of misuse). The former happens no matter how many people we have (and it can probably only be limited at this point, not stopped) and the latter can be and is being fixed.

swebb says

Less work coincident with widespread abundance sounds like a fairy tale to me -- or something that we have already experienced.

It is something that we have already experienced -- three times in human history! Every single time it was new technology, followed by social norms changing.

We figured out farming and suddenly were able to actually think about things other than our most basic of human needs.

We figured out how to harness energy and were able to allow average people to experience the concept of "leisure time" that was rare to non-existent outside of the upper class.

Now we're letting machines and software do work for us.

In the near future, small machined parts will be available for anybody to print instantly on demand, completely eliminating an entire industry, but dramatically reducing the cost of producing things.

In the near future, transportation (of people and goods) will be entirely automated, more or less eliminating the automobile industry, but dramatically reducing the cost of goods and personal transportation.

And these are just the easily predictable things that are in the late prototype stages and on the verge of mass availability. There are also breakthroughs happening every day in areas like medicine that could dramatically reduce our health care costs (but eliminate the need for many health care workers), construction that would dramatically reduce our housing costs (but eliminate the construction industry), and who knows what else.

I see lots of people working 15 hour work weeks. Sure they spend more time than that at the office, but most of it isn't working.

It has not happened because of rentier capitalists. Wherever you find jobs, there you end up spending most of your earnings on paying rent (or mortgage), insurance, etc.

Robots and automation should improve the quality of lives. Instead, people are forced to have 3 jobs, forcing both husband and wife to work, etc, just to pay the rentiers.

Otherwise, how much does one need to live in a log cabin in Wyoming or Montana? Not much. However, the moment jobs are there, rentiers spring in and extract the new form of toll. That's why Institutional economists and economists before and other than neo-classicals advocated to tax rentier capitalists because they leech off productive aspects.

Oh please. Outside of illegal immigrants and miners, nobody in america works in those conditions. A greeter at wal mart who can't pay for her insulin isn't exactly The Jungle.

Vicente says

From what I've read, measurable US worker productivity has been up about 2% EVERY year since 1950.

Damn straight! And those are real gains, not nominal. At 2% a year, it only takes 36 years, one and a half generations, to double productivity. Since 1950, productivity has increased about three and a half times.

If capitalism rewarded productivity, our real wages would have risen by 3.5 times since 1950. In 1950, the median income was $5,000. Adjusted for inflation, that is roughly $46,540.59 in today's dollars, the median income of the middle class worker today. If the increases in productively were equally shared between producer and capital, then the median income would be about $160,000/yr in today's dollars.

The Middle Class is getting raped by those who control capital.

Kevin says

There are also breakthroughs happening every day in areas like medicine that could dramatically reduce our health care costs (but eliminate the need for many health care workers), construction that would dramatically reduce our housing costs (but eliminate the construction industry), and who knows what else.

That's a nice bit of blue sky, but there's a volume or two of small print on the underside of your crystal ball that you've neglected to read.

Perhaps the middle class was just a myth or an anomaly. It is always about strong hands and weak hands. The middle class never had the upper hand. It was an illusion created by the post-war boom.

I am reasonably sure that the middle class will not exist in any sufficiently large economy after 15-20 years.

Capitalism rewards strength. Productivity is a rather abstract concept.

Maybe thinking about classes will make you age faster. Who cares? Things happen so quickly nowadays pretty much anyone can become anything. We cannot tie ourselves to labels.

raindoctor says

It has not happened because of rentier capitalists. Wherever you find jobs, there you end up spending most of your earnings on paying rent (or mortgage), insurance, etc.

Ah, an interesting theory! The thinking in the time of Keynes I believe revolved around "industrial productivity". And to this day people still think in terms of making more/better widgets equals Better Life!

However, perhaps we are missing the fact that Making Things is no longer the focus of capitalists. The rising size and stature of the FIRE component is where the money goes. Why build a factory, when you can place bets with CDO-squared?

So it may boil down to FIRE found a way to consume all the gains.

Hmph.

Dan8267 says

The Middle Class is getting raped by those who control capital.

I have never been forced to have sex with a rich person. Sounds like a good time! (it never ceases to amaze me how people who have never experienced rape, slavery, or oppression compare everything that they experience to those horrible facets of human behavior).

I don't think it's as simple as dollars and cents. While we certainly didn't get a 3.5x increase in wages from that productivity, we have received the benefits of technology, the increases in food production, cheap air travel, etc.

That's actually quite good by historical standards. In the early days of the industrial revolution, it wasn't the coal miners who got access to electrical power, and it wasn't the factory workers who got to drive the automobiles.

Would you be happy living in a world where the rich had 99.999% of the wealth, but every human being had access to free housing, health care, food, transportation, etc., and had the freedom to do whatever they wanted with their time (say, Star Trek)? I certainly would be.

JodyChunder says

That's a nice bit of blue sky, but there's a volume or two of small print on the underside of your crystal ball that you've neglected to read.

I am a technology optimist, but history shows that the optimists tend to grossly underestimate actual progress. Find one of those ridiculous popular mechanics from the 50s for some amusing examples. Things are so much better than most of what they predicted, and the stuff that never appeared doesn't really matter.

Peter P says

Perhaps the middle class was just a myth or an anomaly. It is always about strong hands and weak hands. The middle class never had the upper hand. It was an illusion created by the post-war boom.

Or maybe there is no "upper hand". I've had two great conversations with two different billionaires in my life. Neither of them seemed to think of themselves as being a different type of person than anybody else, or had any agenda to keep people down. If they wanted to bring down anybody, it was their fellow billionaires. The "us vs them" mentality certainly exists, but I think it's overblown and played up by aristocratic archetypes that don't really exist in the US.

Wealth inequality today is much worse than it was 50 years ago, but is it worse than it was 100, 200, or 500 years ago? It seems to me that, on the scale of human history, there is a very strong trend towards more fairness. It seems most likely to me that it's the present disparity that is the anomaly.

Peter P says

I am reasonably sure that the middle class will not exist in any sufficiently large economy after 15-20 years.

I will take that bet. If you think the middle class will cease to exist in less than two decades, then you're essentially betting on armageddon. If that's the case, why on earth are you spending time posting about this online?

Kevin says

Neither of them seemed to think of themselves as being a different type of person than anybody else, or had any agenda to keep people down.

What do you expect them to say? :-)

Most billionaires are smart people. Smart people will always say what you want to hear.

Kevin says

I will take that bet. If you think the middle class will cease to exist in less than two decades, then you're essentially betting on armageddon.

Or most economies (except small, isolated ones) will polarized into the working class and the rich. I think that is the nature tendency of humanity.

Kevin says

It seems to me that, on the scale of human history, there is a very strong trend towards more fairness. It seems most likely to me that it's the present disparity that is the anomaly.

I think that "trend" towards "fairness" was either an illusion or an anomaly. It was rather a counter-trend correction. We cannot expect history to move in a straight line, can we?

Remember, there is no collective will in humanity.

There is the individual will to power.
Then there is the herd madness.

Those who retained their individuality will always end up with more power.

Kevin says

I am a technology optimist, but history shows that the optimists tend to grossly underestimate actual progress. Find one of those ridiculous popular mechanics from the 50s for some amusing examples. Things are so much better than most of what they predicted, and the stuff that never appeared doesn't really matter.

Maybe...this certainly is not true of futurists like Sir Arthur C. Clarke or pioneers like Marvin Minsky or Ed Fredkin, or even visionaries like Stanley Kubrick. I think if anything, the present very much pales compared to their visions from over half a century ago.

What I was referring to in my original comment was the ever-expanding stumbling blocks to technological advancement, from multinational consolidation to copyright policy and patent monopolists.

Peter P says

What do you expect them to say? :-)

Most billionaires are smart people. Smart people will always say what you want to hear.

Given that we were half drunk both times and talking about video games, I'm going to go out on a limb here and say that they weren't thinking about their image.

Peter P says

Or most economies (except small, isolated ones) will polarized into the working class and the rich. I think that is the nature tendency of humanity.

Yep, you heard it from Peter P folks. Total collapse of the middle class. The exact opposite of what has been happening globally for the past 100 years. All in 20 years time!

Peter P says

I think that "trend" towards "fairness" was either an illusion or an anomaly. It was rather a counter-trend correction. We cannot expect history to move in a straight line, can we?

No, we can't, but a 4000+ year trend beats the fuck out of a 50 year one (and never mind that, globally, even the 50 year trend is STILL towards greater equality...you just don't notice it because you're the one in the top 5% giving to the world's poor).

JodyChunder says

Maybe...this certainly is not true of futurists like Sir Arthur C. Clarke or pioneers like Marvin Minsky or Ed Fredkin, or even visionaries like Stanley Kubrick. I think if anything, the present very much pales compared to their visions from over half a century ago.

This seems like just a difference of opinion. I'd much rather the real 2001 than the lame ass version Mr Clarke and Mr Kubrick imagined.

The real innovations of the late 20th century (microprocessors, the internet, etc.) were either completely missed or only hinted at by futurists from the early 20th century. Everybody was infatuated with space travel and robots.

JodyChunder says

What I was referring to in my original comment was the ever-expanding stumbling blocks to technological advancement, from multinational consolidation to copyright policy and patent monopolists.

You say this through the lens of someone living in the present. These are legitimate concerns, but they're passing concerns. If you asked a futurist from decades past they would have had other concerns that would seem ridiculous today.

Every time I read a new publication about graphene, quantum entanglement, or stem cells, I think "the future is going to be awesome. I hope I live to see it".

Kevin says

The real innovations of the late 20th century (microprocessors, the internet, etc.) were either completely missed or only hinted at by futurists from the early 20th century.

2001: A Space Odyssey: I think you need to sit your happy ass down and watch that film again. Maybe the shantung spacesuits and beehives haven't aged so well, but it was miles more ahead of the curve than you give it credit for being. Just one example that springs to mind is the SLM-like crystal memory that we see David removing when eviscerating Hal. Hinting at holographic data storage in an age of Ampex and IBM was pretty amazing stuff to this kid.

Kevin says

If you asked a futurist from decades past they would have had other concerns that would seem ridiculous today.

Could be. I don't deny the lens I'm looking through lost most of it's rosy tint years ago, starting with the anti-monopoly laws that Reagan helped roll back in the eighties. Obviously, I would love to look back one day and reflect on how dumbass my concerns were and witness humanity transcend all the red tape, greed and stupidity that has historically impeded so much innovation and creativity. Anything could happen. In the meantime, I'll stick to my Larry Niven paperbacks.

Vicente says

However, perhaps we are missing the fact that Making Things is no longer the focus of capitalists. The rising size and stature of the FIRE component is where the money goes. Why build a factory, when you can place bets with CDO-squared?

In old days, there was some sort of antagonism between mercantilists (like today bankers, and financial asset swappers/betters) and Industrial capitalists. Today, you hardly see Industrial capitalists. What we see is a deadly mixture of both stripes.

Look at venture capitalists: they are in the game to exit as soon as possible with huge returns. When they exit, they swap their shares with hedge funds, mutual funds, pension funds, etc.

When you look at private equity, it is the same. Today's Private Equity is a reincarnation of old junk bonds business. Buy the company, take it private, load up with debt, strip all assets, stop investing in the company, transfer that debt as bonuses for PE firms. Then exit.

If you look at asset swappers on the wall street, they don't really add any value, even though they help (serve) moving assets from one class to another class, from one owner (investor/fund) to another owner (investor/fund). A nanny or home cleaning service is more useful to many folks than these financial services industry.

Financial services industry as a whole does one thing: they jack up the asset prices. They also think that they can jack up forever; but this is not going to happen for a couple of reasons: look at recent ap ple stock price; all the funds have been trying to value it more, but are constrained by portfolio choice (don't keep more than 10% of one company), etc.

The whole sector of financial asset pricing, asset swapping (portfolio management, composition), etc, does not serve 99 percent of the population. Even a guy at McDonalds serve many joes, even if that guy does not like his job.

Again, traders and speculators provide liquidity. The add value to the financial markets by making them efficient price discovery mechanisms.

Their value is not immediate visible.

Peter P says

Again, traders and speculators provide liquidity. The add value to the financial markets by making them efficient price discovery mechanisms.

Their value is not immediate visible.

Yes, it is an indisputable fact that those whole hold financial instruments can immediately swap their instruments for dollars. It is also indisputable that a bridge to nowhere serves those who use that bridge.

These financial markets don't serve companies much, except for the top 1%, who holds their savings in those equities, etc.

The commonsense thinks that markets help companies raise funds to invest in their production: this is disputed by economists. All companies invest in their production, R & D out of their savings. How about those companies, who don't have any savings? Well, thats an interesting case: that's when they go to IPO--even here they just use 10% of IPO proceeds for investment-- if it is a new company; if its a public company with losses, they can raise capital via additional shares or debt market.

When you look at the number of publicly traded companies, you don't see that many use financial markets to raise money for future production, R &D. Michael Hudson has some interesting statistics on this, couldn't locate his paper.

Financial markets just serve those 1%, who holds 'monetary' wealth. All others use whatever paycheck they get to buy things they consume, services they can use, in non-financial markets.

Price discovery, liquidity, is for those 1 percent folks.

I'm re-reading the original essay again.

"From the earliest times of which we have record – back, say, to two thousand years before Christ – down to the beginning of the eighteenth century, there was no very great change in the standard of life of the average man living in the civilised centres of the earth......"

......

"This slow rate of progress, or lack of progress, was due to two reasons – to the remarkable absence of important technical improvements and to the failure of capital to accumulate. "

Well, that explains it eh?

http://research.stlouisfed.org/fred2/graph/?g=enR

shows housing costs (blue) have increased by a factor of ~9X since 1950 -- what rented for $200 then rents for $1800 now.

Health costs have risen by a factor of 28X since 1950. What cost $100 costs $2800 now.

This is because we are just bidding up the cost of stuff in limited supply, supply that cannot or at least does not meet demand and thus has scarcity rents attached.

The 2% FICA cut turned out to be a rent subsidy to landlords, as did the various Bush tax cuts of 2001.

Nobody understands this. Wish I did 10+ years ago.

If we were serious about fixing this economy we'd double the housing stock in this country. Replace a lot of crap and make it good.

The cost of the Bush wars -- $2T -- could have built 10M new homes @ $200k each. At any rate we should take $400B/yr from DOD and build housing with the money. That could build 2M new homes each year (each 500,000 city like Fresno would get 3000 new units a year) and put a helluva lot of people to work making new capital wealth for the nation, drive ground rents to zero if not negative and free up housing budgets for actual consumption and not just paying The Man for the legal right to a place to call home.

Vicente says

From what I've read, measurable US worker productivity has been up about 2% EVERY year since 1950.

Here's the FRED chart:

http://research.stlouisfed.org/fred2/graph/?g=enT

real per-worker GDP was $50,000 (2012 dollars) in 1950. Now it's over $100,000.

Chart as % YOY:

http://research.stlouisfed.org/fred2/graph/?g=enU

APOCALYPSEFUCK is Shostakovich says

any numbers on prevailing wage levels

http://research.stlouisfed.org/fred2/series/AHETPI

or, combining the two graphs:

http://research.stlouisfed.org/fred2/graph/?g=enV

blue is per-capita real per-worker GDP, indexed 1970=100, 2012 dollars.
red is wages, indexed 1970=100, also 2012 dollars.

Productivity is up 1.7X since 1970, wages are up 1.2X.

Capitalism FTW.

Kevin says

Would you be happy living in a world where the rich had 99.999% of the wealth, but every human being had access to free housing, health care, food, transportation, etc., and had the freedom to do whatever they wanted with their time (say, Star Trek)? I certainly would be.

The rich wouldn't have 99.999% of the wealth in that case, unless you're saying they own the rest of a nicely terraformed/ringworld-ed solar system and we peons get a worker's paradise of our own here on Earth free from their predations.

Wealth is that which makes us well, and that which makes us well generally has a price tag attached, or will once the rent-seekers figure out how to "monetize" it.

(thus far the air to breathe is still free, but for how long, LOL)

As it stands now, the top 1% own 50% of investment assets, while the bottom 90% owe 72.5% of the debt.

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

This is not a Star Trek economy.

Bellingham Bill says

Wealth is that which makes us well, and that which makes us well generally has a price tag attached, or will once the rent-seekers figure out how to "monetize" it.

(thus far the air to breathe is still free, but for how long, LOL)

In countries like India and China, people pay for air to breathe. Look at all those gated communities in Indian metropolitan areas. People living there have paid top dollars just to have different air quality.

Kevin says

No, you won't, because it won't be easy to do so.

In low-paying jobs, people who WANT to work more are already finding that their employer won't give them more hours. A combination of overtime laws, balancing the requests of other employees, etc. all work in concert to make this the norm.

Maybe so. I don't think that would be good for the average individual, though. If one's time and productive capacity is in such low demand, what keeps the average person relevant? Why keep them around?

Kevin says

"much less" what? Population growth has been on the decline for decades. World population quadrupled over the past 100 years but it will increase by a mere 40% over the next 100.

The first derivative is still big! You are right that the rate of growth is decreasing, but we are likely to hit 8 billion in 20 years. Adding that many people and having them join the middle class (as you suggest) will put significant pressure on resources. I agree that resource management can help, and that technology has saved our bacon in the past, but it's hard for me to believe that the world is going to experience both changes while Americans live better and work 1/3 of what they currently do. Admittedly I would have almost certainly missed previous inflection points that ended up happening. (for the record I don't think the past 50 years is an anomaly, I think it is foreshadowing)

Kevin says

Given that we were half drunk both times and talking about video games, I'm going to go out on a limb here and say that they weren't thinking about their image.

I'm going to go out on a limb here and say that we aren't talking about your typical billionaires, here.

I also don't think the upper tiers are as focused on keeping the lower classes down as they are on protecting and building their own wealth...that it may happen at the expense of others is secondary.

Kevin says

Every time I read a new publication about graphene, quantum entanglement, or stem cells, I think "the future is going to be awesome. I hope I live to see it".

I wish I still shared your enthusiasm for the future and what technology will bring to it.

Kevin says

Would you be happy living in a world where the rich had 99.999% of the wealth, but every human being had access to free housing, health care, food, transportation, etc., and had the freedom to do whatever they wanted with their time (say, Star Trek)? I certainly would be.

Interesting question. My "reluctant wet blanket" reaction is to say that this is so far outside my understanding of human nature that it's impossible. The small group holding essentially all of the wealth (power), and having no need for the others....why would they keep them around? You have an awful lot of trust for that group...So, no...I don't think I would be happy with that arrangement, at least not without some meaningful assurances. I would rather trade it for nearly equal distribution of wealth and people working, say, 40 hours a week.

I have a general bias against technology, though. Maybe it's more of a fear. While I acknowledge that humans are tremendously adaptable creatures (and can accommodate the changes that technology bring) I also know that we evolve biologically much more slowly than we evolve culturally and technologically, and that (to my mind) creates a problem for the species. I'm probably overthinking that, though, and besides it's at odds with my career! (How soon before the 15 hour work week is here?)

In spite of my position on these things, I sure hope your optimism turns out to be right!

Bellingham Bill says

or, combining the two graphs:

http://research.stlouisfed.org/fred2/graph/?g=enV

blue is per-capita real per-worker GDP, indexed 1970=100, 2012 dollars.

red is wages, indexed 1970=100, also 2012 dollars.

Productivity is up 1.7X since 1970, wages are up 1.2X.

Capitalism FTW.

The big WTF part about that graph for me is what happened to wages between 1975 and 1995. Indexing at 1995 levels makes it look a lot better.

swebb says

The big WTF part

See that gap between the lines ca. 1995?

That's how Romney made his billion(s).

Bellingham Bill says

The rich wouldn't have 99.999% of the wealth in that case, unless you're saying they own the rest of a nicely terraformed/ringworld-ed solar system and we peons get a worker's paradise of our own here on Earth free from their predations.

I'm saying that they essentially own everything, and we're just "renting" from them (for the low price of zero, as mandated by government. Think of a benevolent monarch).

Bellingham Bill says

As it stands now, the top 1% own 50% of investment assets, while the bottom 90% owe 72.5% of the debt.

Yep, we aren't living in the future yet.

Kevin says

and we're just "renting" from them (for the low price of zero, as mandated by government

yes, this is the model the UK operates under, Elizabeth Windsor legally still "owns" everybody's land but everybody pays property tax to the state or any rents to some entitled land owner, not her (the explicitly titled royal lands also yield their net rental income to the state in return for the "Civil List" royalty payments).

http://en.wikipedia.org/wiki/Civil_list

So in the UK case it's arguable whether the royal tenancy really exists (outside the explicit royal holdings) or has just become a fiction bound in tradition.

Some legal fiction that "the 1%" somehow owns 99.999% of the US (that would be all but 4 square miles) wouldn't be any skin off my nose, but does not really describe the present understanding of ownership, or at least what the bundle of rights traditional fee simple land tenure gives people, among which are the rights to say who gets to even be on the land and how much rent the lessees have to pay for this leasehold tenure.

In Europe, economic power went from city to city and lasted ~ 50 year in each place. Athens, Rome, Seville, Antwerp, Berlin, all had eras.

Each city had a cycle of hard work, trade, increased standards. Then entitlement behavior set in, slackness and lack of industriousness caused a decline.

We would have 15 hour work weeks if we had 40% scientists, manufacturers, doctors (people that do things).

But the US has mostly admins, accountants, econs, and other oversight jobs now. Recall just one generation ago the US led in Electronics, Mechanics, Physics, Chemistry.

My how times have changed.