I just read an excellent article on XConomy by Wade Roush in which he asks the question: is technology destroying the very basis of our economy to offer employment? And assuming it is (as a thought experiment), what might we do to stop it?
First, read the article. Otherwise, my commentary won’t make much sense.
First of all, I found it fascinating that Finland and Sweden have lower taxes than the US, despite having much better social benefits. “What!?!?!?” you cry, “lower taxes? But they’re inefficient, evil socialists! It destroys the prevailing Capitalism is Best Ever narrative to say such a thing!!!”
Well, let’s take a look. My state tax is 6.25%, my Federal taxes are 33%, and my FICA taxes are 14%. Add those together and we discover that I’m paying 53% in taxes, which is about 18% MORE1 than the 45% tax rate Wade quotes for Finland and Sweden.” The big difference is that my tax dollars go mainly to private defense contractors, private insurance companies, and other private providers of services hired by the government.
What about motivation?
Wade correctly points out that such welfare states have a problem motivating people to work. But is this a problem? If the promise of industrialization is coming true—to wit, that technology will free us to pursue things that are personally meaningful rather than productive—then decreased motivation to work doesn’t seem like a huge problem.
Perhaps what we need to do is make work either voluntary, or a phase of life (say, ages 25-40), after which you can continue to work if you enjoy it and are challenged by it, otherwise you must go out and create artwork.
Warren Buffett hasn’t needed to work in any economic sense during my entire lifetime (and then some!). But he has done so, and even took on the stressful job of running Solomon Brothers. Why? Not because the money was the big incentive, but because challenge and meaning, and rescuing an institution was important to him.
This implied theory that people’s only motivation is money continues to mystify me in an age where the #1 complaint people have about their jobs is that their jobs are meaningless, paper-pushing wastes of time that are nothing more than an excuse for a paycheck.
Do any of Wade’s solutions work?
I think Wade’s option #8 is really the only viable one. Solutions like “grow our way out of it” don’t solve the underlying systemic problem. First of all, you can’t grow everything fast enough forever, so you end up in the same situation somewhere down the line. Secondly, those solutions still cling to the notion that the only legitimate way to get paid is by doing valuable work. But if the fundamental premise we’re up against is that machines are devaluing the work rapidly, then any solution that starts with the assumption that there’s enough valuable work for everyone is doomed to fail.
As for retraining, I just have to laugh. People already accumulate a lifetime’s worth of debt for their first education that will let them spend a decade to advance to a solid, mid-level, middle-class job. While I hear this meme tossed around a lot, I challenge anyone who claims it’s possible to quit their job and retrain in another unrelated job that gives them the equivalent income. (Must be unrelated because again, the premise is that the first job has been rendered economically less vaulable by technology. Thus, the replacement job must be substantially different.)
What do you think? If technology really has made a great many humans redundant for the first time in history, we’re in uncharted waters. Where do we go from here? Anywhere we want to. Where do we want to go from here?
- The math is a bit weird here. What I mean is that if I make $100 in the US, I pay 53% tax, leaving $47. Someone from Finland pays 45% tax, leaving $55. That’s 17.78% more than the Fins. Actually, to do this correctly would require looking at the different tax brackets and drawing a big graph of income ranges, etc. At the end of the day, however, it’s hard to argue that most middle class people pay much lower taxes in the U.S. If you factor in their need to pay for the services that Finland and Sweden provide nationally (e.g. health insurance, mortgage insurance, maternity leave, etc.), Americans definitely have lower take home pay to spend on non-essentials. ↩