Dow down 24. Gold still gettin’ up.
On a personal level, it’s so much fun, to point out others’ faults and give them helpful advice. Imagine you are in a restaurant. You see a fat man ordering a chocolate fondant dessert. Go over and offer to eat it for him.
Or imagine you are in church. You have heard that Mr Montaigne is fooling around with Mrs Mordant. It is practically your civic duty to say something to them both.
Or imagine that your wife has got distracted and has burned the broccoli. Surely, it will do her good to remind her to pay attention when she is cooking you dinner.
Of course, this sort of helpful comment is not always appreciated.
On a public level, it’s much easier. Remember from last week, David Brooks was concerned that people were not moving house often enough. He had a solution too – give them moving vouchers.
Tom Friedman is a great source for this kind of helpful thinking, too. In one of his editorials, he determined that people weren’t driving enough electric vehicles. Solution? Give them free parking.
In another classic, he suggested setting up a “National Commission on Doing Things Right”. We don’t recall what particular things he thought the nation was doing wrong at the time, but we are sure that had the Bush administration taken his advice more seriously, the mistakes would have been corrected years ago.
And now, in the Financial Times, Martin Wolf calls attention to the failure of working class people everywhere: they can’t compete with robots, he says.
“Enslave the robots and free the poor,” he proposes.
What’s he got against robots? He must see them as mechanical scabs. They don’t go on strike. They don’t talk back to you. They make fewer mistakes. They don’t get drunk on the job. They work holidays. And they can be programmed to be polite as well as competent.
Hey, any robot who wants our job can have it. No need to enslave the poor thing. Just let him compete for it fairly. We will gladly yield to any machine that can do it better. It would be nice if one would take Wolf’s job too.
Bill Bonner on markets, economics & the madness of crowds
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But where we see an opportunity, Wolf sees a problem. Forty-seven percent of jobs are threatened by automation, he says. Then, what will happen to the wages?
Well, you have to look no further than slavery itself to find out. Slaves, human or robotic, are a form of capital. After the cost of maintenance, the profits from their work goes to their owners.
Wolf does not mention it, but the robots should say a prayer for central bankers. By reducing interest rates, they also reduce the cost of capital. At zero rate of interest, for example, the real cost of a robot is zero.
And if that robot can replace an average, marginally-competent employee with a bad attitude, the employer makes a profit of $42,000, not counting health insurance and the parking place. The lower the cost of capital, the more robots take their place in the labour force and the more labour costs drop.
And now, instead of slaving all day in a noisy factory, the former assembly-line worker could be at the library, studying ancient Aramaic or perfecting a non-polluting air-burning motor in his basement.
But wait. There could be “a large adjustment shock as workers are laid off; the market wages of unskilled people might fall far below a socially acceptable minimum; and combined with other new technologies robots might make the distribution of income far more unequal than it is already.”
The spectre of unequal incomes is so alarming that Mr Wolf doesn’t wait for the robot invasion. He wants us to be ready for them. He gives us five things that we should do or at least think about.
First, we need to “shape” the good new robots and manage the bad ones, whatever that means.
Second, education is “not a magic wand”. Of course, we never thought it was. And in any case, you can probably teach a robot faster and cheaper than you can teach a ten-year-old.
Third, we have to “let people enjoy themselves busily”. Again, we have no idea what he is talking about. People don’t need Wolf’s permission to enjoy themselves, busily or lazily.
Fourth, uh oh, “we will need to redistribute income and wealth”. Now he’s coming to the point. He wants to control where the money goes. Maybe “the state [should] obtain an automatic share of the profits from the intellectual property it protects”, he says.
Fifth, let’s not forget the need to “ensure that demand expands in tandem with the rise in potential output”.
Remember all that stuff you learned about how an economy works, how supply and demand regulate themselves? Remember? Through prices. When supplies are short, prices rise and producers get busy. When prices fall, producers slack off. Falling prices signal over-supply.
Well, forget it. Mr Wolf thinks supply and demand should be controlled. So they both go up at the same pace. Perhaps a future column will explain how that will work.
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