Home > Uncategorized > Yet another New York Times column gets the story on automation and inequality completely wrong

Yet another New York Times column gets the story on automation and inequality completely wrong

from Dean Baker

I am a big fan of expanding the welfare state but I am also a big fan of reality-based analysis. For this reason, it’s hard not to be upset over yet another column telling us that the robots are taking all the jobs and that this will lead to massive inequality.

The first part is more than a little annoying just because it is so completely and unambiguously at odds with reality. Productivity growth, which is the measure of the rate at which robots and other technologies are taking jobs, has been extremely slow in recent years. It has averaged just 1.3 percent annually since 2005. That compares to an annual rate of 3.0 percent from 1995 to 2005 and in the long Golden Age from 1947 to 1973.

In addition, all the official projections from places like the Congressional Budget Office and Social Security Administration assume that productivity growth will remain slow. That could prove wrong, but the people projecting a massive pick up of productivity growth are certainly against the tide here.

But the other part of the story is even more annoying. No, technology does not generate inequality. Our policy on technology generates inequality. We have rules (patent and copyright monopolies) that allow people to own technology.

Bill Gates is incredibly rich because the government will arrest anyone who mass produces copies of Microsoft software without his permission. If anyone could freely reproduce Windows and other software, without even sending a thank you note, Bill Gates would still be working for a living.

The same applies to prescription drugs, medical equipment, and other tech sectors where some people are getting very rich. In all of these cases, these items would be cheap without patent, copyrights, or related monopolies, and no one would be getting hugely rich.

At this point, there are undoubtedly people jumping up and down yelling “without patent and copyright monopolies people would have no incentive to innovate.” This yelling is very helpful in making the point. If we have structured these incentives in ways that lead to great inequality and not very much innovation (as measured by productivity growth) then we should probably be looking to alter our structure of incentives. (Yes this is the topic of chapter of 5 of Rigged [it’s free].)

In any case, this is the point. The inequality that results from technology is the result of our policies on technology, not the technology itself. Maybe one day the New York Times will allow a columnist to state this obvious truth in its opinion section.

 

  1. Charlie Thomas
    August 14, 2019 at 2:15 am

    Right on, as usual. It is also true that raising all wages as a percentage of employee’s current wage contributes to increasing disparity.
    Clearly not as much as the rxamples given.

  2. A.J. Sutter
    August 14, 2019 at 10:03 am

    An ignorant question, since I’m not familiar with the intricacies of labor statistics: is it really possible to make a deduction about job replacement from an aggregate figure like productivity growth?

    For example, suppose automation were replacing humans in certain types of jobs, with the result that both displaced workers and a larger proportion of new entrants went into low-paying service jobs. Might that phenomenon depress productivity growth while still justifying a claim that technology is taking jobs?

    • James Beckman
      August 16, 2019 at 4:23 pm

      AJ, you have made an important observation. If I fire half of my employees, so that with the same output & automation productivity has doubled, the productivity of the fired employees should be considered. Few will immediately find work, but for those who do–say in medical care–their income could go down 50% as learners. This new, lower income could presumably measure their contribution to revenue if everyone is doing their analytic job, so that their employed but less productive hours would exactly balance the gain in the positions they formerly held. We seldom hear about this analysis, as best I am aware.

      • August 16, 2019 at 5:25 pm

        It is far worse than that. If you increase productivity by moving sales from Sears to Walmart then customers who work at Sears will have less to buy with and fewer goods may be sold, causing a loss of “productivity” that is spread out across the economy. Remember that productivity is measured as revenues / labor costs. If a pizza place has half as many customers walk in then its productivity is cut in half for that day. The crazy assertion that economists like to make about local productivity increases is not that the same magnitude gets carried into the overall economy, but rather that the same **sign** gets carried into the overall economy, and it should be understood that they are doing that without a model showing how that would happen.

  3. Ken Zimmerman
    August 14, 2019 at 11:57 am

    Technology, and not just the purely physical kind creates many problems, most unanticipated. Science fiction novels help us recognize such potential problems. May even help us solve some of them. The Circle is a dystopian novel for our time by David Eggers. It is the story of a powerful technology company that destroys privacy in the name of transparency. Two aims that are contradictory, but both have large support around the world. Eggers’ heroine joins the company–called The Circle–right out of college, and she slowly comes to see the dangers of the organization’s vision and power. The Circle is none too subtle, but it still feels frighteningly plausible in a world where most of us willingly hand over private details of our lives to services like Facebook and Twitter. The Circle was adapted into a film in 2019 starring Tom Hanks and Emma Watson.

    Written by Ernest Cline, Ready Player One is about life inside a giant simulation. Climate change and other man-made disasters have made living on the planet’s surface impossible. Most humans opt to live the bulk of their waking lives in a virtual reality–essentially a huge video game. The game’s creator has died but has left a secret in the game. A hidden feature that will give control of the game and the creator’s fortune to whoever finds it first. Cline’s young protagonist is determined to be the one to find the secret, and his quest takes him on a fantastic journey full of clever settings and winking references that video game fans will get a kick out of. The novel was adapted into a movie in 2018.

    Let’s close with a classic, Brave New World by Aldous Huxley. One of the greatest dystopian novels ever written, Huxley’s 1931 novel envisions a world where technology has taken the place of some of humanity’s most important traditions and purposes. In the book, pregnancy and childbirth are things of the past, as are romantic love, parent-child relationships, and grief. There is no poverty, war or disease. Most disturbing of all, or reassuring, based on how you look at the limits of technology, most people don’t seem to care that so much of what makes them human has disappeared. Huxley’s vision of a dystopia with willing participants has aged incredibly well and remains as vital as any dystopian novel ever written. Brave New World puts an important question to Sapiens. Are humans capable of governing themselves so the species survives? Brave New World has been adapted several times as a movie and TV series. None created a satisfactory rendering of the book. Ridley Scott has indicated he intends to adapt the book as a movie. So far, he’s made little progress. To quote Scott, “I don’t know what to do with Brave New World. It’s tough. I think Brave New World in a funny kind of way was good in nineteen thirty-eight, because it had a very interesting revolutionary idea. Don’t forget it came shortly before or after George Orwell, roughly the same time. When you re-analyze it, maybe it should stay as a book. I don’t know. We tried to get it…”

    • Robert Locke
      August 15, 2019 at 9:42 am

      I read Brave New World and the Orwell books in the 1950s, but we still believed democratic socialism would save hope from extinction. Fascism’s resurgence crushes this belief, just like its manifestation between the wars of the 20th century did. Lessons are not being learned.

      • Ken Zimmerman
        August 15, 2019 at 12:06 pm

        Robert, read all of Orwell’s books in 1955 and Aldous Huxley’s Brave New World a year later. Impressed by all of them, but much more so by Brave New World. Because it showed that even dystopian times result in sometimes contradictory events. In Brave New World control of all aspects of humans’ lives also includes no more war, poverty, or disease. I’ve wondered ever since is total control of humans the only thing that can save the species? But then I consider that the control has to come from somewhere, and that somewhere must be human. So, in the end it’s just another form of autocracy, beneficial as it may be. Also, showed me how fragile democracy is.

  4. August 16, 2019 at 6:59 am

    I disagree with a couple aspects of this.

    First of all, this analysis assumes that technology in the future generally will work like technology in the past. When the large factories were first built you saw people losing highly skilled jobs like leatherworking, silversmithing, etc. and gaining lower-skilled, but higher paid jobs in assembly lines. This broadly expanded the group of people that could create value. Even so, this required massive intervention in society. For the first time in history, jobs are being lost and the only reasonable replacements require much higher skill than the jobs that are lost. We have had luddites in every generation, fearing technology because it creates change and people don’t like having to change. For the first time in history, it is actually the people creating that change in the first place that are screaming the loudest warnings. “This time is different” fails over and over again because no matter how technology changes, human nature stays the same. For the first time in history, human nature itself is changing with technology.

    Second, this ignores capital. Fundamentally the reason we can’t use an Adam Smith-style analysis involving a thatcher trading goods with a farmer and a glassblower because the model of a society built around tiny businesses fails when investment becomes more important. The value of half a corn crop is half the value of a full corn crop, whereas the value of half a semiconductor design is negative if you don’t have the capability of finishing it. One way to define capital would be “The ability to switch from value creation to rent seeking behavior based on negotiating advantages gained from cumulative investment.” This definition doesn’t really sound that different from how others would define it, and yet the problem is right there, embedded in the definition. It is true that patents may be required for some of this negotiating leverage, but it is more fundamental than that. We are talking about private property ownership and patents are simply one type of private property. If someone could hire a couple mercenaries and take a tractor onto other farmer’s fields and steal the harvest, we would have the exact same problem as you mention with patents. When a large farmer is able to use economies of scale to put lots of smaller farmers out of business, the problem is that we don’t have a tax policy that prevents him from accumulate wealth too quickly for the other farmers to adjust and that deals with supply-demand imbalances caused by the other farmers dropping demand just as fast as the large farmer can increase potential supply. The problem is not that we have government-enforced rules that keep small farmers from simply harvesting the grain that the large farmer plants.

    Third, it seems like a very neoliberal definition of productivity growth is being used here.

    “Productivity growth, which is the measure of the rate at which robots and other technologies are taking jobs, has been extremely slow in recent years.”

    Productivity growth is absolutely ***not*** the rate at which robots and other technologies are taking jobs. Productivity growth reflects (in the numerator position for productivity) the rate at which new goods are **created and bought**. The correct measurement for how much robots are damaging the ability of skilled workers to earn would involve a measurement of goods that are **create-able but not bought**. High productivity growth would in fact prove that robots are **not** taking our jobs.

    “The inequality that results from technology is the result of our policies on technology, not the technology itself.”

    I can’t read the article in question because it is behind a paywall, but I would agree with this and based on the title of the article, the opinion writer would probably agree with this as well.

    The internet is full of people asking why the general public cannot believe that global warming is real when the supposed experts on the subject, meteorologists, overwhelmingly believe in it. The same story is in the early stages of unfolding with AI researchers claiming that automation job loss is real. Should we believe them sooner?

    This is when the tech community realized that strong AI was finally here:

    https://en.wikipedia.org/wiki/AlphaGo_versus_Lee_Sedol

    • Ken Zimmerman
      August 16, 2019 at 12:20 pm

      jeff1089, wonderful post. However … Current technology is not changing people for the first time in human history. Every technology is invented by people and may if it becomes part of a human culture change humans’ ways of life. Simple technologies can have large impacts. During the Neolithic revolution about 13,000 years ago humans used fire and invented agriculture. This changed the entire shape of human history. But since humans have no basic nature these changes invented new humans, new human cultures. So, you’re wrong when you say, “human nature stays the same.” Humans invented culture (e.g., living in groups) 20,000-30,000 years ago and have reinvented it thousands of times since. Likewise, with technology, one aspect of human culture. Rather than “For the first time in history, nature is changing with technology,” I’d say for the first time in its history humans are inventing technology so powerful it can change the planet and human biology in basic ways. Even to the point of extinguishing the species and/or taking it off world.

      Second, one of the technologies invented by humans is at the center of such threats and hopes. That technology is financial capitalism. That involves all the basics of capitalism – private property protected by government, self-regulating markets protected by government, no restrictions on wealth accumulation also protected by government – but with the addition that vast parts of the property that is “traded” in markets is financial and wealth accumulation derives primarily from this financial trading. On top of this the creation and sale of products and services is subordinated to the financial markets. The problems between the small and large farmers has nothing to do with supply-demand. It’s that the large farmer can use financial instruments to hedge his crop prices and literally force the small farmer to sell at a price chosen by the large farmer. Or, to put it another way, the large farmer can hedge at a lower cost than the small farmer. One of the reasons firms continue to grow larger.

      Understanding productivity is a toughie. And economists don’t help much. When I read productivity statistics, I see statements like output per unit of input and GDP per worker. Fundamentally, productivity seems to be about how many widgets are produced relative to the labor and resources required to produce the widgets. More widgets with the same or less labor and/or resources input, productivity is improved. In this equation robots would certainly improve productivity over time. But robots would also increase societal costs since now workers would be jobless and need government aid to survive. The robots might create other environmental or societal costs (e.g., riots of the “we hate robots” groups). The feedback between the products wanted or needed, and the products created is also important here. Finally, business profits play a role. Profits can reduce the firm’s ability to craft well-organized production processes and can steal away money that might otherwise go to worker wage increases.

      • August 16, 2019 at 6:27 pm

        “I’d say for the first time in its history humans are inventing technology so powerful it can change the planet and human biology in basic ways. Even to the point of extinguishing the species and/or taking it off world.”

        I agree. To look at the scope of things, there are a couple possible references.

        https://waitbutwhy.com/2015/01/artificial-intelligence-revolution-1.html

        This reference is long, but I would strongly recommend people that don’t have time to read it to skim through it and look at the pictures.

        “It’s that the large farmer can use financial instruments to hedge his crop prices and literally force the small farmer to sell at a price chosen by the large farmer.”

        I see what you are saying here, but I have a different perspective. There is an effect in economics where if you need 1000 units of a scarce resource then your cost for the 1000 is likely higher than 1000 times the cost of 1. A hedge is basically paying someone 10% (or whatever the number comes out to be) of your profits to someone for them to take on your risk. A small farmer, who only has to hedge a tiny amount, also can sell at a theoretically higher price because he doesn’t have to wait for hedging deep pockets.

        The true cost problem for small farmers is, if one tractor and one employee can handle 100 acres and the small farmer has 50 acres, then he is overpaying for these by half. Add to that that a farmer 10 times as large may need only twice as much accounting and legal help, and so on. Of course the farmer, working as manager doesn’t want to work for free, so his salary is divided across the entire product. It could very easily be that the small farmer has a cost of $1 for what a large farmer can produce for 70 cents using the minimum possible self pay for the boss. It is likely that there are some farmers too small to hedge who have to bear all the risk themselves, but these farmers would not have survived to the present day based on corn and wheat sales… Of course, hedging creates some crop yield risk, so you would want to under-hedge to be safe.

        “Fundamentally, productivity seems to be about how many widgets are produced relative to the labor and resources required to produce the widgets. More widgets with the same or less labor and/or resources input, productivity is improved. In this equation robots would certainly improve productivity over time.”

        Sometimes stating things precisely can help clarify points of agreement and disagreement. I would rather say “In this equation robots would certainly improve local, microeconomic productivity over time.”

        Why is this distinction important? Let’s look at a small example economy with 3 people.

        A produces water. This is an island, where the only access to water is a well that is private property of A.

        B produces food. B owns the only arable land on the island and there is no game.

        C gathers shells and stones and makes jewelry.

        Production efficiency is total production over labor costs. You are likely be right that Productivity does not refer to production efficiency, but rather a statistic that includes resource costs as well, but the discussion of efficiency isolates the part of the discussion relevant to AI and robots, so I will stick with that.

        Neoliberal economists state that A producing water faster, B producing food faster, and C producing jewelry faster will necessarily contribute to overall faster production of all the goods and therefore lead to economic growth. But let’s look at an alternate, more detailed model.

        A has productivity 0 for 99% of the time. Then someone contracts for a bucket of water, and he jumps up to his water producing productivity level until the bucket is produced. Then his productivity drops back down to 0 again. You could argue (and neoliberals would) that he would do something else with the rest of his time, but in a world where capital is responsible for over 90% of value creation, this is sort of like suggesting that Bill Gates could increase his fortune by manning a 7-11 nights.

        B has high productivity while he is planting and watering crops and goes down to zero while waiting for them to grow. He has high leverage as well (symbolizing high capital).

        C has 0 productivity until A or B decide they want something, then he jumps up to the productivity he has while filling the order and then drops to 0 again.

        Total productivity in this case is the inner product of demand of each person for the goods of the other two with the credit he has against the other two based on value provided in the past. A and B will always trade with each other exactly to demand (well, not necessarily, but assume so for now) and so total productivity will be exactly demand of A plus demand of B plus the value A and B place on C’s jewelry. Assume that you have more than one C and you start getting a model to describe inequality. (Apologies, but I am not sure if “inner product” is a well-understood term or whether it needs clarification.)

        Note what is missing from the calculation of societal productivity – individual productivity. If A gets twice as fast and spends 99.5% of his time at 0 productivity it is a huge change in personal productivity, but 0 change in societal productivity.

        Just so I am not misunderstood, I am not saying that society behaves like this 3 person model. I am saying that this 3 person model distills out the problem with the neoliberal assumption in its purest form. An actual model of society would handle things like I mentioned above – the movement of Sears customers to being Amazon customers and the increase to ability to make goods combined with the decrease to society of ability to buy goods, and no guarantee whether the demand decrease decreases productivity more or whether the local productivity increase increases global productivity more. An answer to that would require determining whether production is supply-constrained or demand constrained. But once you understand the model and you understand why local productivity increases can lead to either global productivity increases or global productivity decreases, then you understand that it is not about machines increasing society costs, but rather specifically about machines lowering overall society productivity. I agree that there are other inputs into whether local productivity increases or decreases, but it is my purpose here to shine more light on the relationship between local and global productivity that is obscured commonly in discussions of the local productivity factors.

      • Ken Zimmerman
        August 17, 2019 at 12:27 pm

        jeff1089, not quite so. First, in purchasing standard insurance one pays a premium. Hedging is just a wager. Farmer wagers with someone to ensure farmer receives $100 per bushel for soybeans. The counter party will pay the farmer any difference between actual price and $100. The farmer will pay the counterparty any difference above $100. It’s a bet. As with all wagers, the big player often can afford to bet more and lose more than the smaller player. On the farming side, as has been the case for years smaller farmers often join farm cooperatives so that that equipment and other resources can be purchased and used together by all members of the cooperative.

        Adding local and microeconomic confuses me. First, are there locations where robots would not improve production? Second, in my view the word microeconomic is pointless and unneeded. It adds no new information or clarity, again in my view. It’s just economists’ jargon.

        I agree that productivity is complex. I assume this local vs. societal productivity, costs, demand, etc. is important for economists. For anthropologists society is generally understood in terms of a shared culture. There may be subcultures within a society, but these still share the fundamental concepts and ideas, morals and beliefs of the overall culture. When that changes, we see the emergence of new cultures, which may blend with, be destroyed by, or destroy the existing culture. Also, anthropologists view economics as complex in ways beyond the theories, and I suspect the understanding of economists. Observational details are required to reveal this complexity. Ad hoc theories from economists are useless for this work. Or, more accurately, obscure the complexity.

        Anthropologists focus on economic life. Something I don’t believe economists even consider. Economic life is the activities through which people produce, circulate and consume things, the ways that people and societies secure their subsistence or provision themselves. It is important to note, though, that ‘things’ is an expansive term. It includes material objects, but also includes the immaterial: labor, services, knowledge and myth, names and charms, and so on. In different times and places, different ones of these will be important resources in social life, and when they are important, they come within the purview of economic anthropologists. Most economists today identify economic life in terms of the sorts of mental calculus that people use and the decisions that they make (for example, utility maximization), which stresses the form of thought of the person being studied. Most economic anthropologists identify such life in terms of the substance of the activity. Even those who attend to the mental calculus likely do so in ways that differ from what is found in formal economics. This substance includes markets in the conventional sense, whether village markets in the Western Pacific or stock markets in the First World. However, these markets are only a sub-set of economic life, and consistent with their tendency to see the interconnections in social life, economic anthropologists tend to situate things like markets or other forms of circulation, or production or consumption, in larger social and cultural frames, in order to see how markets, for example, affect and are affected by other areas of life.

        This overview of economic anthropology allows me to ask a question I’ve had for some time about the major jargon terms in economics. Why produce? What’s the point of production? To provide more things than people can use or need? To drive climate change to dangerous levels? To make bankers and other financial entities richer? On the face of it, observations seem to point to one or more of these as the motive for production. Not securing what humans need for subsistence and provisioning human societies. Consider auto production, for example. Rather than any of the motives for production above, why can’t auto makers purse the goal of making only electric vehicles of varying sizes and prices? These not only provide reliable transportation for society but also reduce and/or mitigate the effects of climate change, smog, and other forms of atmospheric pollution. Have humans become so deluded about what’s required for transportation that they can no longer grasp what advances their welfare and what does not?

      • August 19, 2019 at 2:01 am

        “First, in purchasing standard insurance one pays a premium. Hedging is just a wager.”

        A distinction without a difference. The farmer knows he is not getting the best possible price, and the person on the other end of the wager is able to do it profitably and handle the risk. In any case this is not important for the larger discussion..

        “Adding local and microeconomic confuses me. First, are there locations where robots would not improve production?”

        Yes! Re-read my example of the island and A, B, and C again. A can double microeconomic production efficiency and there will be zero impact on macroeconomic efficiency. Also, in the Sears Walmart example, you see workers at Walmart or Sears who are no longer able to eat at the local restaurant and instead put a potato in the microwave and call that dinner. You have simultaneously increased the efficiency of the Walmart and decreased the efficiency of the local restaurant with the same action of reducing wages paid for results given. Neoliberals pull a sneaky trick of counting the increase in Walmart efficiency while ignoring the decrease in local restaurant efficiency and the result is garbage ideas about Macroeconomic efficiency.

        “Second, in my view the word microeconomic is pointless and unneeded. It adds no new information or clarity, again in my view. It’s just economists’ jargon.”

        On the contrary. It adds a great deal of new information. Look at a poker game. In one perspective, you have an individual poker player and how well he does. The correct prescriptive advice might be to learn psychology, betting behavior, card math, and so on. In another perspective you stop talking about an individual player and instead start talking about the average player. If you talk about one player winning a hundred bucks, you also have to talk about a player losing, so the net result around the table is that the average player breaks even for any given hand. Note that I am not saying that economics is zero sum in that sense, but there are other constraints you see only when you look at the full picture. For example, total goods sold in a closed economic system = total goods bought. If you have an economic theory that increases global revenues while decreasing global costs you have a problem. This concern is irrelevant to microeconomic behavior.

        “Why produce? What’s the point of production?”

        I think we are getting pretty far afield of the topic of why microeconomic efficiency is not good enough to really understand macroeconomic efficiency, but I will point out that this is an easy area of economics to oversimplify. For example, if the average consumer thinks that the new generation of cell phone is worth $800 and the old generation of cell phone is worth $400 (but was $800 on release), under some systems, production has doubled if people have moved from the old cell phones to the new phones and paid the same amount. More production doesn’t have to mean more pollution and environmental damage. If we set up our economic rules and regulations properly, we can move in the opposite direction.

      • A.J. Sutter
        August 19, 2019 at 3:29 am

        “More production doesn’t have to mean more pollution and environmental damage. If we set up our economic rules and regulations properly, we can move in the opposite direction.” — Several observations about these remarks, and the scenario in the sentence preceding them:

        (1) This defines production in terms of aggregate exchange value, which is a cardinal number.

        (2) One of the inconsistencies between the macroeconomic approach of, say GDP (which is an aggregate of exchange values) and the microeconomic approach is that the latter is based on the premise that cardinal prices don’t matter, and that only *orderings* of prices matter. If you’re aggregating cardinal exchange values to compute “production,” that’s an inherently macro approach.

        (3) As your example illustrates, “production” can be (“under some systems,” as you note) a subjective number. When prices are psychological and arbitrary, they aren’t necessarily tied to physical throughputs. Your argument seems therefore to be that production can grow as we make new stuff that people find more valuable, and that if we regulate things properly, there won’t be any pollution or environmental damage.

        Economic rules and regulations won’t change the laws of physics, chemistry and biology. Even if in theory we could all hypnotize ourselves into thinking that product Y is worth twice product X, we still have to deal with the questions of the materials and energy to make and transport product Y, and disposal/recycling of the materials of product X (and the energy necessary to effect that disposal/recycling). And this leaves aside the question of services (the majority component of GDP in developed countries), which have consequences in the material world each time a service is rendered.

        At best, “production” in your psychological sense can grow at a disproportionally faster rate than the material and energetic throughputs needed to support that growth — but it cannot avoid those material and energetic throughputs altogether.

        (4) So in order to avoid pollution and other environmental impacts, as you claim possible, you seem to assume implicitly that appropriate environmental regulation can eliminate all problems of environmental damage.

        This is thermodynamically impossible, though the laws of thermodynamics aren’t sufficient alone to tell quantify the economic significance of the theoretically inevitable loss. Nonetheless, the recovery of more and more dispersed material, up to some theoretical limit, requires the expenditure of more and more and energy, resulting in more waste heat. So there is a physical trade-off, at least — even if we leave aside the question of whether *practical* efforts at recycling can ever approach their theoretical limits anytime soon.

        The laws of thermodynamics also don’t say anything about the biological impacts of the energy we waste and amounts of material we fail to recover despite these recycling efforts: for all we know, these could be significant even in small quantities.

        (5) And this is to say nothing of the political trade-offs and obstacles necessary to promulgate such regulations. In essence, the regulatory scheme you conjecture has the same ontological status as a “free market”: it’s easy to make utopian claims about something that has never existed, and that is impossible to effect.

      • Ken Zimmerman
        August 19, 2019 at 11:31 am

        Jeff1089, of course it’s important. Wager vs. purchase is the difference between capitalism and a casino. Unfortunately, my point being capitalism has already forgotten that distinction. Capitalism is today just a casino.

        I see your point about Walmart, their employees, and the local restaurant. Do smart people who make US policy believe this crap? And from my perspective none of the events represents efficiency. Reducing pay, laying off employees, reducing the cash flow of a local restaurant are not efficient. In my mind, efficiency refers to making conditions better for everyone.

        A poker game can exist because the players have enough in common to understand the game, it purposes, the general perspectives of the other players, understand money and how to use it, and focus on the game to win or for enjoyment. In other words, they share a good many cultural concepts, tools, and morals. Some may be cheats and/or thieves out to steal the money. But this is not outside the shared culture of the players. All the actions you list could occur in the game. But they are not separate events since they cannot be understood outside the context of the game and the other players. For example, when you discuss the “average player,” you must consider that knowledge in terms of the game and the other players. That knowledge can range from zero to up on the latest relevant statistics. That is, relevant to the game at hand. If the game involves 6 Russians, full statistics on the average player in the US is less useful than full statistics on the average player in Russia. In other words, microeconomics is often irrelevant BS.

        Let’s answer the basic question on cell phones. Do people need them at all? We all seemed to communicate well and fully with digital land lines. Some persons, such as law enforcement, military, emergency responders, etc. may need them to improve their work. But observations show that people outside these categories mostly use their cell phones to post on facebook, etc., read the latest celebrity news, gossip, or run their business while sitting by the pool. Convenient and fun, but hardly worth the chunk of money cell phones take from peoples’ pay checks. Of course, AT&T, etc. love them. They represent great profit increases. And, of course China loves them since it gathers a lot of money from building them

      • August 19, 2019 at 4:50 am

        “When prices are psychological and arbitrary, they aren’t necessarily tied to physical throughputs. … “Even if in theory we could all hypnotize ourselves into thinking that product Y is worth twice product X, we still have to deal with the questions of the materials and energy to make and transport product Y, and disposal/recycling of the materials of product X”

        You are overcomplicating this. There is an idea that 3% GDP growth means we fill 3% more landfills, so we need to stop growth to have a sustainable environment. GPD growth is measured in dollars, and to compare dollars from different years you need something like a “basket of goods” approach to create an inflation multiplier that you can multiply the before number to get a more accurate estimate of growth that includes better iPhones that are not necessarily bigger iPhones.

        But even that is overcomplicating things. The central point is that if we were to set up our system so there was a profit motive to avoid the things that hurt society and the environment, we can still make tech progress and improve lives.

        And again, this is a distraction from the central point that local efficiency increases do not have to translate to global efficiency increases because the more efficient Walmart can be associated with workers that are paid less and the businesses that those customers shop at becoming less efficient.

      • A.J. Sutter
        August 19, 2019 at 11:00 am

        @jeff0189 August 19 04:50: On your final paragraph, we agree. Your other arguments, though, are oversimplified. Throwing money at a problem, in the form of a profit incentive, is not going to overcome the limitations of the laws of physics, etc.

        Real economic growth isn’t just inflation of prices: it comes either from an increase in productivity, or an increase in consumption due to population increase. If one is committed to growth in total GDP, rather than GDP per capita (which could accompany decline in total GDP if the population also declines), then there will be an increase in material and energetic requirements for economic activity. I agree that this won’t necessarily be at 3% more landfills for 3% more GDP, but at some positive rate. It’s physically impossible to increase total physical production (including of services) without some thermal and material waste, and as a practical matter those are going to be above the theoretical minimums.

        Might the GDP intensity of waste be less than it is now? Yes — and usually this is what’s meant by sustainability. But even if you make plastic bags with 1/10 the material you do today, or cut emissions on airline miles by 90%, as long as you want to sell an infinite number of plastic bags or airplane miles, your success means you’ll use more and more material and energy in total. (A point made years ago by Bernard Christophe in « L’entreprise et la décroissance soutenable » (L’Harmattan 2007).)

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