Economics of the Future

the economics of the future are somewhat different -- Captain Picard

What happens when machines can produce almost everything we need? The trend is clear; there are fewer and fewer low-skill jobs that cannot be performed by a robot. Even the military is being replaced with robots and drones. So what does all of this mean?

The typical answer given by economists is that new jobs are created to maintain the machines. There is just one small problem with that answer: 100 people with shovels are replaced by a single backhoe, one backhoe operator, and a mechanic.

The other 98 ditch diggers need to find new work. Here’s the rub; any job that ditch-diggers are mentally capable of is being replaced by automation. Advancements in technology are driving the price of unskilled labor toward 0, but not everyone has the ability to do skilled labor. The level of skill required keeps rising and with it comes centralization of wealth in the hands of the mechanics. Eventually the mechanics are in danger as it becomes cheaper to let robots build a new car than to pay someone to fix an old one.

Cost of Living vs Value of Unskilled Labor

While the price of unskilled labor is falling, the cost of living is not. Libertarians believe that no one has the right to live at another expense. Everyone must add enough value to the economy to equal the amount of value they consume. So what happens when someone is unable to add enough value?

We already have this today with mentally challenged individuals. These people depend upon charity of loved ones to provide them with food, shelter, and clothing. What would happen if technology advanced to the point where someone of average intelligence finds that the value of their contribution to society is on par with today’s mentally challenged?

Why is unemployment so high? The government is certainly interfering by raising the cost of labor through minimum wage, regulations, and taxes while subsidizing the unemployed. This creates an environment where there are no jobs entrepreneurs can identify that can profitably employ the skills available. Removing restrictions would certainly create more jobs, but the jobs would be low paying jobs. Technology will eventually catch up and outcompete even these jobs.

Abundance

Advancements in technology allow us to produce more with less. All other things being equal the amount of stuff in the world per person is rising dramatically. As the population grows, the supply of unskilled labor is growing while the demand for unskilled labor is falling. Put these two things together and you have a recipe for concentration of inconceivable wealth and a multitude of people in need of handouts.

What should a Libertarian Do?

What would libertarians do if a magic wand was waived and suddenly 2/3 of the population was unfit for work? What if it costs more to feed these people than they are able to produce? What if the remaining 1/3 of the population had the means to provide the other 2/3 with a middle class standard of living?

At some point we face a real problem. As a society we like to pretend that everyone is “equal” and has “equal rights” just because they are human, but that is demonstrably not true. When half of the population depends upon handouts from the other half of the population something is wrong. Ending the government and welfare will not magically make this lower half of the population able to provide value to the economy in excess of what they consume.

Kill the Smart People

What would happen if we killed all of the smart people? All of a sudden a new market equilibrium would form. As the backhoes break down and technology slowly regresses because no one is smart enough to maintain it there would be more opportunities for lower skilled individuals to provide value to their fellow idiots. With everyone on an even playing field the middle class would grow even if they were all poorer on average. At least everyone would be supporting themselves.

What we learn from this is that the economies of scale afforded by capital concentration and intelligence cause the economic value of over half the population to fall toward 0. If people were businesses then the economy would shut them down.

We live in a world where a human life, regardless of ability, is considered priceless (unless you are a terrorist, unborn, or disagree with the government). At the very least it is politically incorrect to even suggest that one life is worth more than another. But the free market doesn’t care about politically correct answers.

Is there a Libertarian Solution?

Assuming you wanted to adhere to the non-aggression principle, the poor would only be able to survive on charity. Without meaningful work to do they would tend toward a life of inactivity and reproduction. These people would reproduce like pets that are not neutered. Their population will grow creating an increasing burden on an ever smaller percent of the population that remains competitive.

It is true that some fraction of the children would be born with the native capacity to produce enough value to care for themselves and others. This is where nature vs nurture debates comes to play. Someone who is able to provide for themselves but is raised in an environment of dependence may have no desire to provide for themselves.

Impact on Democracy and Libertarian Philosophy

The masses of people that are unable to care for themselves become an army of voters which are easily manipulated by sophisticated propaganda. These people have value for enslaving the middle and upper middle class to the elite. These masses of dependent people have the physical power to shut down the economy and extort at force what they need to survive.

Libertarian logic is either beyond their ability to understand or against their best interests. What good is libertarian theory to someone who realizes that they would die due to their inability to compete in the free market. Should they roll over and die just because it is the ‘morally right thing to do’?
I love all people and certainly do not advocate eugenics. I also love all dogs and cats but also recognize the problems we would face if we allowed them to breed without limit. So how can we design an economic system that works for everyone?

Can Steem be a Solution?

Steem creates a social currency that makes it possible for more people to be recognized for the value they bring to their peers. It enables the monetization of community contributions that have historically relied on donations and volunteer efforts. Even though there is reallocation of wealth in Steem, it is done through the non-violent means of issuing new currency by a democratic process. Perhaps the most significant difference from other democratic systems, it does not rely on centralized allocation of funds. Small groups of people have authority to issue small amounts of money without having to get approval from the whole body of voters. The larger the group, the more money they can issue to fund things valuable to them.

With any luck, Steem can enable an entirely new way for the bottom half of the population to earn an honest living without going on the dole. Steem is like discovering a new means of economically extracting gold from previously un-mineable mountains. It can help the economy extract new value from the masses of people with average intelligence.

I hope that there exists some non-violent means to organize our economy so that the vast majority of people can continue to produce enough value to support themselves. If we are unable to find a peaceful solution, then the only alternative is violence and no one wants that.