Hours after the commencement of the Massachusetts Democratic Convention of 2015, a convention allegedly focused on income inequality, a report on WBUR announces that income inequality in Boston has widened considerably over the last dozen or so years according to a new report from The Boston Foundation. Over the past 13 years, Boston’s top 5 percent of households added 42 percent in median household income, or $122,072 in inflation-adjusted dollars, while the bottom 20 percent added 14 percent, or just $931 in income. This in a Blue City in a Blue State.
I was at the state committee meeting where it was announced that income inequality was going to be the focus of the convention. I was psyched. After all, what got me interested in the Democratic Party was a speech given by Elizabeth Warren. If you have an hour to spend, it’s well worth your time; The Coming Collapse of the Middle Class with Elizabeth Warren. Since then I’ve read one book after the other, including but not limited to Capital in the 21st Century, The Spirit Level: Why More Equal Societies Almost Always Do Better, The Price of Inequality: How Today’s Divided Society Endangers Our Future, and Winner-Take-All Politics: How Washington Made the Rich Richer—and Turned Its Back on the Middle Class. I’ve got several more books in the queue as well as some on order. Needless to say, I am obsessed with this issue and I thought the convention was going to be a Smörgåsbord of delights.
There was no smörgåsbord, just an appetizer.
Income inequality and wealth disparity was given a “shout out” by many of those who gave speeches, but few offered any solutions or bold ideas. And yes, there were breakout sessions after the speeches but only ONE of the eleven sessions dealt with wealth disparity. Fortunately I was able to make that session and it was standing room only. I also had the chance to meet the host, Senator Dan Wolf who truly “gets it” and it not afraid to speak about it.
In my time at the convention and in the days after, I kept asking my fellow Democrats what they thought the answer was to income inequality and the overwhelming reply was “education”. One of the breakout sessions was titled “Education is Key” and I assume it tried to make this case.
It’s not the case.
According to most economists, the high water mark for labor ended in 1973. Unfortunately for me, that’s the year I entered the work force. I had just graduated from high school, applied at several area companies, and accepted an ENTRY LEVEL job at Xerox. This ENTRY LEVEL job paid me (in today’s dollars) between $40-$45K, 2 Week Vacation and medical.
- In 1973, 24% of us went to college. In 2008 that number has risen to near 40%
- In 1973, the top tax rate bracket was 70%. In 2008, that number has lowered to 35%.
- In 1973, union membership was at 24%. In 2008, that number has been cut down to 12%.
In summation, education has risen, taxes and union membership have fallen, the wealth divide has widened….and the remedy from many of my fellow Democrats is more education.
This is not to disparage public education, college, and higher learning. But folks, to believe that education is going to get us out of this mess is to believe the canard that a lack of it got us into this mess. The .1% that have taken all the gains from the productivity of the labor class were not able to divert the distribution of that wealth to themselves because they took more college courses or had higher GPA’s, they were able to do so because they are organized and they act collectively and they are using their energies in Washington and Beacon Hill to legislate the tax and labor codes.
It’s time, it’s past time that we Democrats, we laborers did the same, that is, if we truly want to end this catastrophic level of income inequality.
We, and the rest of the civilized world, have always relied on labor invested as our best measure of how wealth should be distributed. That fundamental premise is now failed.
When an entrepreneur works around the clock for months to finally get a new retail outlet open on a shoestring budget, we view the new-found wealth generated by the successful business as an appropriate reward for the entrepreneur’s “hard work”. We feel, intuitively, that the entrepreneur has “earned” that wealth. We even use language like “earned income” and “unearned income” in our tax filings and regulations.
Automation, software, and communication have completely torpedoed that underlying model. No amount of education (no matter how it’s funded), no amount of work, and no unions no matter how powerful will change that.
We desperately need a new model for allocating wealth. In an economy where the two or three people who own the SOFTWARE that creates wealth — the algorithms of the robots, the user interfaces that control them, the designs they produce and the tools that create those designs — retain that wealth, those two or three people will collect ALL the wealth.
They also do very little of the work. The reason programmers like me are at least temporarily well-compensated is that the wealth generated by a piece of software I create is orders of magnitude larger than the cost of paying me to create it. If that isn’t the case, then the business case for the project is flawed and the software shouldn’t be created in the first place.
In particular, I ask you to consider the implications of software that creates and improves other software. For example, consider a software suite that measures the real-time performance of an industrial robot, and “designs” and generates optimizations that improve the performance of that robot. The result is a exponential cascade of productivity gains (up to the saturation point of the market), all from an initial investment that is a vanishingly small portion of the total wealth it generates.
Similar counter-intuitive consequences follow from robots and software tools that are self-replicating. The implications of self-replicating tools that are also self-optimizing are momentous.
Against the backdrop of these realities, relying on the hours invested by ANYBODY to distribute the resulting wealth is a colossal mistake for all but the literal handful of people who own the tools (whether or not they actually created them themselves).
A number of alternatives have been discussed over the past few decades. I hope we further explore them.
The inconvenient truth is that workers are hurting because we have made labor obsolete. The GOP is able to destroy unions for the same reason. The loss of union power is a symptom, not a cause, of the economic challenges faced by workers.
We need a new wealth distribution paradigm.
And a union can push for that. I see your points and I agree. That is not to say that union are obsolete anymore than stockholders are obsolete. They are two sides of the same coin, but the coin is rigged so that all flips come up “stockholder”.
which will destroy millions and millions of good jobs in this country.
Apple is so confident in their software that they’re aiming for a 2019 release. And they were late into the self-driving car game compared to others like Google.
Now, we could say that most of the jobs lost from self-driving cars will be low-education jobs (truck drivers, taxis, uberers, mechanics and auto manufacturers) and that’s mostly (though not even close to entirely) true, but before anyone thinks education alone is the answer… consider this.
-We already have sophisticated software that is as good at diagnosing patients as the average doctor, and we’ll have robots that can do surgery better than doctors not all that long from now.
-It won’t be long before we have software and AI that can handle 90% of what lawyers do.
-Given how much tech is in vogue, and how well paid software programmers can be, you’d think that would be a safe profession. Think again. Why hire a bunch of imperfect humans that have to do things like sleep, eat and blink every day when we could have AI that could write programming for us automatically, all the time, according to our needs?
If doctors and lawyers and software developers are not long from being as useful as horses, no industry is safe, and no level of education will save anyone. It may not be predictable which industries will be effected by advanced software, AI or robots next, but suffice it to say the bottom could fall out on many of these industries in years, not decades or centuries.
We need to accept this reality now and prepare for it in advance, before the bottom falls out on the next industry.
Education and retraining is part of the answer. Unions are also a huge boon and could be a major part of the answer; we should take immediate steps to make it easier for workers to organize and more difficult for employers to punish workers who are trying to organize.
But robots and software can’t be organized.
The most important thing we can do to protect people and ensure the massive divides between the rich and everyone else don’t skyrocket from the already disgusting levels they are at today to a future that could only be described as dystopian is by instituting a guaranteed basic income, one that everyone gets and that’s just enough to keep people out of poverty (and to help a poor family enter the middle class).
Strengthening unions + education/retraining + a guaranteed basic income would be a very, very powerful combination of tools to eradicate poverty and to ensure our middle class is strong and robust.
Keynes claimed that automation would lead to the 20 hour work week, endless abundance, and a refocus of mankind towards his inner growth rather than having to be a cog in the economy. Education, lifelong at that, would be a fantastic compliment to this kind of economy. Unfortunately, the power and money is still concentrated at the top, so that many, many millions of people are living in poverty or near poverty that don’t need to. And many millions more are like me, clearly employed and earning a living wage, but living paycheck to paycheck and putting things off like starting a family and home ownership.
I know your a fellow Trekker-we never really saw life on Earth in any depictions of that future, but it certainly didn’t seem to have poverty and income inequality. We know with the pace of technology how we get from the point A of the mid 20th century to the point B of the 21st. Many of us can feel we are just a few innovations away from real breakthroughs the likes of which we only dreamed of a few decades ago. But the political economy seems like it has regressed to the 19th century, and we may look closer to Metropolis than Star Trek.
but if ‘the end of work’ happens while the very wealthy have all the power and pay almost none of the taxes, that would be devastating to our entire species. That would be less Star Trek and more Star Wars, where there’s humans flying in space ships and building death stars next to subsistence moisture farmers on Tatooine and hunter-and-gatherer Ewoks.
If we had a basic minimum guaranteed income, one that grew along with the proportion of robots and AI in our economy, then I wouldn’t be so afraid of a dystopian near-future.
…how are those without work going to support themselves? Even if there is a universal basic income the funding for that can only come if enough people make enough money to pay the requisite taxes.
No. If the rich keep getting richer and everyone else keeps getting poorer, it’s not like the wealth would disappear. It would still be generated — but it would just be sitting in banks and investments, going into the hands of fewer and fewer people. Those people could make Bill Gates look middle class.
Since the wealth is still all there, though, it can be redistributed. A guaranteed minimum income would do that. In doing that, it would allow people a greater capacity to get education or retraining that they need, or greater resources/confidence to start their own business, or buy their own ‘robot’ (metaphorically or otherwise) to grow wealth for them. In other words, it would ensure that more than just the already-wealthy had a shot in life.
The rich would still be rich, but a minimum basic income ensures no one is so poor that they can’t feed their families or put a roof over their heads — and also ensures that they have tools and resources to try to find better opportunities and improve their lives.
Even my reaction is that sounds like a wholesale robbing of the very rich. At that point it seems like the talking points about punishing success and fleeing the country actually might kick in.
to the tune of 99 cents of every single new dollar earned off the backs of OUR LABOR!
This isn’t theft, it’s reclamation.
Remember, I’m not suggesting that we eradicate wealth, just that we eradicate abject poverty.
That downrate was my Rick Perry moment of the day, and I don’t even have the mobile device excuse handy for this one.
What if “intellectual property” was treated more like community property?
What if the wealth that flows from intellectual property came FIRST to the government, and was shared in a way that benefited those who created the IP, and did so in a limited way?
What if the prevailing national standard was that the GINI coefficient of the US economy was capped at some level comparable to other first world nations (about 30 — that of the EU)? Today, BTW, the US GINI coefficient of 45 puts us in the neighborhood of Nigeria, Uganda, Iran, Uraguay, Singapore, etc. — not nations known for their commitment to American values.
What if the astonishing COMBINED wealth of the US (currently held by by a very select few — less than 0.1%!) were distributed so that the average American resident (not “worker”) was actually wealthier (and felt that way) from his or her counterparts in the rest of the world?
I think the political strategy is the disabuse of the LIE of “someday”, and replace it with here-and-now reality. FDR did this to end the Great Depression, and we can do it today.
I think it is a matter of political will, rather than possibility.
It is among Congress’s enumerated powers to issue patents and copyrights so as to encourage innovation and the useful arts and sciences.
Just because Congress is allowed to doesn’t mean it must.
The world of patents and copyrights is among the most heavily-regulate areas of commerce. Those regulations can change.
Just as a small for-instance, much of the wealth that is associated with IP results from transfers and assignments, usually to corporations. That can be changed. Also, quite frankly, if the constitutional provisions no longer work in today’s society, they can be changed.
The Constitution once specified that only white male land-owners could vote. As it became clear that that provision was inconsistent with American values, it was changed.
I want to start with a vision of the society we seek, then work to make that vision concrete.
but I’m not sure I’d want to go entirely the other direction on the merits. I do think there is something to be said for allowing creators the rights to their work. I would favor more reasonable limitations possibly just to the lifetime of the creator so we don’t get situations like “Happy Birthday To You”, the copyright for which was just ruled invalid.
Just look at the Walmart heirs. A family of 5 people owns as much wealth as the poorest 140 million people in America.
That’s nearly half the population.
Just 5 people.
What if they were only as rich as, say, the poorest 10 million people? Or even 50 million? That would make them pretty damn rich, wouldn’t it? Rich enough to own private jets, have private islands and have their own money bin, Scrooge McDuck style, so they can swim in all their cash.
But the difference between them being as rich as 140 million people and “only” being as rich as the poorest 10-50 million would be enough to wipe out poverty for all of Walmart’s workers… and bring them into the middle class. These are workers who we, the American taxpayers, now have to subsidize because the Walmart heirs (who did nothing to earn their fortunes other than be born into the right family – like aristocrats of old) aren’t paying their fair share. If we didn’t have to subsidize those tens of thousands of people, that’s hundreds of millions or billions that could be spent elsewhere, on other struggling families or on our terrible roads.
I think a healthy society should have wealthy people, and the more the merrier. But we must make sure the wealthy pay their fair share and that enough of that fair share is dedicated toward ensuring abject poverty doesn’t exist in this country.
of tax policy. It’s not robbing them to take back money our political system–a system they are rapidly coming to own–gave them.
I’d use the phrase “economic policy” rather than “tax policy”. Our current tax policy is just part of it.
To quote Phillip Blond: Socialism dispossesses the ordinary worker for the sake of the general good while capitalism dispossesses the ordinary worker for the sake of the monopolizing capitalist. So in effect, these are two economic models of dispossession.
I think it’s important to note that each half of this premise presumes that labor is needed to create wealth. Similarly, Karl Marx assumed that labor (provided by workers) was needed to create wealth and that capitalists (who owned the tools and machinery) exploited those workers by selling their product for more than its gross manufacturing cost (including the cost labor).
All of these models share the assumption that labor — people doing work by the hour, day, or month — is needed to create goods or services that in turn can be sold to create wealth.
In today’s world, that fundamental assumption is invalid. Like a divide-by-zero mistake in a mathematical proof, that failed assumption makes each competing classical theory meaningless.
Today’s economy is dominated by business models where wealth is generated in ENORMOUS quantity by mostly automated processes that are owned by a handful of people. NO premise that hinges on work and workers — whether how long or short, hard or easy, energetic or lazy, illiterate or highly-educated — is going to change today’s dynamic.
That, in turn, is why those at the apex of today’s wealth pyramid enthusiastically support (and are quite willing to spend modest — for them — sums of money to perpetuate) the rest of us passionately arguing about “Democrat” or “Republican”, “union” or “non-union”, “smart” or “dumb”, “capitalist” or “socialist” and all the other utterly meaningless labor-based dichotomies that we argue about.
That is also why wealth distribution is so much more important than income distribution. “Income” (as we mean it in these discussions) is something that LABOR needs. Once somebody is sitting at that apex, increasing wealth simply happens. All they have to do is breathe in and out, and their portfolio expands. Minions, workers, and other wage slaves do whatever actual WORK is required.
We really ARE in a new world where almost none of our classical assumptions work or are even relevant.
more like William Gibson than Star Trek. I have hope, but if work disappears, wealth will be an even more important source of income and erstwhile workers will have little or no access to wealth.