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Comment by addicted44 | Hacker News Reader

Getting more stuff done with less human effort is a good thing. However, combining that with an economic system which sets your ability to feed yourself and your families based on the effort you put in is a bad thing.

Capitalism which was a great 2th century economic system, is not suited for the 21st century where there really aren't any jobs left for humans to do.

The benefits of automation only accrue to the owners of capital, while everyone else gets completely left out. Since the owners of capital are an increasingly smaller number of people (not surprising since capital accrues capital exponentially while labor only accrues it linearly) our economic systems are headed for collapse.

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Those very same APIs that create the incentive to make human labor obsolete also destroy existing business models, where old money is parked.

You vastly underestimate how hard it is to stay rich. Most families are back to square 1 after 3 generations.

The difference between today and before is that old money is rarely parked in a single business model. The sophistication in finance, and the spread of public companies means the Waltons don't only stay rich as long as Walmart is successful. In fact, I'd bet their wealth is affected far less by Walmart than it is by the tens or hundreds of hedge funds and VC firms they are invested in.

Money is rarely parked at any one place today, but rather, is largely distributed throughout the economy.

Which raises the question of whether 2nd generation rich are actually bad for overall wage growth. The industries that typically have the highest wages are the cutting-edge technologies; these are also typically industries that rely on a large pools of capital to fund high-risk investments.

Venture capitalists have played a huge role in the story of the technology industry over the past 15 years, but where do VC's get their money? From the hedge funds of rich people like the Waltons.

> Most families are back to square 1 after 3 generations.

Any sources to back this up?

It's a common cycle. The saying is "shirtsleeves to shirtsleeves in 3 generations." https://www.moneynews.com/StreetTalk/family-wealth-heir-chil... http://www.cnbc.com/id/101837456

Here's what I could find on maintaining wealth over time:

http://www.econ.ucdavis.edu/faculty/gclark/papers/Sweden%202... - A study of Swedish surnames since 1700s suggested that wealth regressed to the mean quite slowly (the statistical measure b), finding significant differences between those holding noble and common names after hundreds of years http://www.eea-esem.com/files/papers/EEA-ESEM/2013/1862/SUwp... - Another study of Swedish intergenerational wealth transfer finds similarly. http://www.econ.ucdavis.edu/faculty/gclark/papers/Clark%20Cu... - A study of rare British surnames since 1800s finds a similar rate of regression to the mean.

And taking a different tack, studying lottery winners with modest sums: http://www.econ.pitt.edu/papers/Mark_lottery.pdf - only 3 years after winning 50-150k people have regressed to the mean rate of bankruptcy http://www.nber.org/papers/w19348 - land seized from Cherokee people in 1832 was given away in a lottery. The land was valued at between 20k and 150k in modern terms, depending on how you count - inflation vs relative value of unskilled labor. Sons of lottery recipients had no better adult outcomes than the sons of eligible men who received nothing.

So, all of these do find a significant regression to the mean and not a permanent upper class, but for large wealth and social status differences it can take hundreds of years. For more moderately sized random windfalls it happens rather quickly.

I'm out of time to write this comment further, but I'd like to look next for research on what happens a generation or two after a family makes a very large move, i.e. rags-to-riches and riches-to-rags.

We still have the democratic system, as things get tighter and people poorer they'll start voting for a tax on capitol.

In the UK the the proposal of a mansion tax keeps popping up, this is really the future of owning capital, just owning it will have a cost. Which is actually a great capitalist strategy because if a 10 room mansion is being under utilised the owner is going to be compelled to use it more efficiently.

> We still have the democratic system

Not really, not anymore, we're an oligarchy now, money gets what money wants now that we have unlimited contributions.

> as things get tighter and people poorer they'll start voting for a tax on capitol.

No they won't, the rich are in control, this is an oligarchy, they aren't going to do this to themselves.

Then what would be the right way forward? We've known capitalism is broken since at least the times of Karl Marx.

There are a few ideas, such as basic income that can be tried. Personally I think that there is a need for extremely well funded organisations with a mission to acquire money now against the problem of actually creating a humane society in the future when this stuff really kicks off.

The key problem is what was mentioned above - capital accrues capital exponentially, labour accrues capital linearly. The only way to fix this is to give everyone significant stakes in capital (or for the Marxists, the 'means of production'). The Norwegian pension fund, which owns about 1% of global equity is exactly the kind of thing that will be required to create any kind of future. Governments aren't the only organisations that can do this kind of work though. Any organisation that is giving workers the same kind of leverage that capital gets or sees that as part of its long term mission is part of the solution.

I see this as one of the greatest challenges facing humanity over the next few decades.

Tax proceeds of capitalism & redistribute.

19th century capitalism was quite free and rampant. States acknowledged this and engaged in legislation to humanize the system, e.g. through banning child labour and other things.

I would not say capitalism is broken, but that it needs occasional strict bounds by government to make living bareable. Market is not suitable as the only economic controller - state intervention is needed as well in the form of taxes and legislation to provide basic human conditions for the majority.

Recent decades have seen the rise of free market liberalism. I hope it is fairly obvious by now that unbridled this will lead to human suffering for many.

And indeed one of Marx key predictions was that capitalism through increasing efficiency would eventually lead to an overproduction/under-employment crisis.

You don't get to keep waiting for a prediction to finally come true when it doesn't come with a deadline. It already didn't happen despite all our labor saving technology so far (we don't even weave cloth by hand anymore!). Sure it might happen in another 100 years, or another 1000. But that's almost a given for most predictions.

>We've known capitalism is broken since at least the times of Karl Marx.

By what measure is it broken when it's produced literally orders of magnitude more improvement in human living conditions than anything in the thousand years prior to the advent of capitalism?

... including Marxism. I mean, Marx's ideas are great on paper, but they have actually been tried, and they just don't work. East vs West Germany, North vs South Korea, Cuba vs Miami, the world has seen plenty of controlled experiments in this field.

IMHO the biggest mistake and "the root of all evil" of marxist and capitalistic countries was that people with:

- capitalistic mindset were not allowed to get out; (marxist countries)

- communist mindset were allowed to stay in. (capitalistic countries)

This created discontentment and abuses, undermining the system and his initial followers: "If they are taking advantage, I am stupid if I don't do the same"

[edited]

That has been tried too, in Britain in the 1960s the govt introduced punitive taxation but didn't close the borders. What happened next was the origin of the phrase "brain drain".

I'm not aware of any capitalist society that erected barriers to members wanting to go and live in a communist country. Weirdly, they didn't want to. Take the late Eric Hobsbawm for example, wouldn't stop banging on about how great the USSR was. But for himself, he preferred the life of a wealthy author in the West...

I live in South Europe. Here we want the best of both worlds: the best of Marxism and the best of Capitalism. IMHO, this is the root of our problems because this mindset is not sustainable. Just have a look on Greece. Tsipras (the Greek people) wants to follow both. This indecision will undermine them.

It's not just Capitalism that has good things, Marxism have good things also (I have lived in East Europe where you can still feel the marxist mindset presence and believe me, some things are MUCH better than in the West). But I am not even arguing which direction to take, it's just not possible to follow both.

They're not great on paper. They ignore some powerful personal human motivation that we know exists. Perhaps you should say "They're great for robots that can be programmed to think in whatever way is convenient for the academic imagining them".

Well, yes, the same could be said of Chomsky.

>The benefits of automation only accrue to the owners of capital

If that was so why would consumers purchase automated goods (or services)?

Fundamentally consumers buy a product if it is perceived to be better, cheaper or both than some existing alternative[1] or if they prefer the brand[2]. If the product is better or cheaper then the consumer benefits (and the poorest consumer benefits the most) and if the product is neither better nor cheaper, why would they buy it at all?

[1] this isn't necessarily a product or service: the alternative to driving may be walking or riding a bike, the alternative to buy some specific item of amazon may be to do without it.

[2] throwing the label "hand-made" on a product may increase its value, it is hard how to see throwing "made without human hands" on a product could increase its value, so this would be a point against automation.

>However, combining that with an economic system which sets your ability to feed yourself and your families based on the effort you put in is a bad thing.

This would be great. The problem is, reward has little to do with effort. Lots of effort can still leave someone broke and little effort (with a lot of capital) can make someone millions. Imagine a system where hard workers were always rewarded appropriately regardless of what they worked in, regardless of the capital they previously possessed.

The day when there are machines smart enough to do all the service jobs that humans currently do will be the day machines are smart enough not to work for free.

>an economic system which sets your ability to feed yourself and your families based on the effort you put in

As opposed to an economic system in which your ability to feed yourself is based on the effort others put in? Such a system requires some entity to prevent you from reaping the gains of your own effort and/or take the fruits of others' efforts to give to you, and historically such entities are prone to realising that the power they have allows them to just take everyone's stuff for themselves.

>The benefits of automation only accrue to the owners of capital, while everyone else gets completely left out.

This is absurd: compare someone born to a household in the bottom income quartile today to someone born in that quartile a hundred years ago, the difference in quality of life is ridiculous. All the technology that exists today is the result of automation and capital accumulation: without any, we'd all still be subsistence farmers. It doesn't matter if one doesn't own any capital, one can still buy the things produced by the world's accumulated capital.

I see a contradiction... explain the last bit mate..

How does one buy things produced if one doesn't own any capital.

Capital generally means accumulated savings/investment. One can still have cash without having capital, and this is actually pretty common (or even people having negative capital, like student debt).

In short, one buys things by doing/making things for people who do have capital, or for people who don't have capital but have themselves acquired money by doing things for people with capital.

If that was as simple as you write, then we wouldn't have unemployment and there would be no need for welfare - after all, you don't have to go hungry when you're jobless, you can always "do/make things for people with capital or" someone like you closer to them in the chain.

We have unemployment because of minimum wage laws. If the minimum wage is n, then many jobs paying less than n are eliminated, as the potential employer might decide that they'd rather go without the service than pay n. Developed countries with lower minimum wages like Singapore, Hong Kong and Taiwan have unemployment rates under 4%.

The OPs question was whether Capitalism as we understand it now, is suited for the future when we expect most kinds of labour to be done by machines.

We don't need fully self-aware machines to get to that point. For example, when self-driving cars become pervasive, they'll remove a source of livelihood for a large section of human population. Driving has a low barrier to entry and can be done by most able-bodied humans irrespective of their level of acquired intelligence. This description works for most jobs that are going to be automated away.

Typically any automation problem we solve rolls out globally at a staggering rate. It puts people out of jobs faster than they can skill up. Also, social and economic mobility is externally constrained (and changes can only happens over 2 or 3 generations), and not everyone can move up even if they try. Which means automation will give rise to an increasing number of people who cannot undertake non-automatable knowledge-work, and thus become doomed to be unemployed, and leads to a self-reinforcing cycle out of which they cannot escape. This is a problem that the civilization has to confront, and our current way of thinking about economics will not work there.

The so-called 'fruit of others labour' notion is something that made most sense in the pre-industrialized era. Applying it today in its entirety without considering how much of an inter-dependent society we have become is simplistic. This is as true in technology (open-source software that powers commercial entities) as in other fields (research that builds on top of pre-existing knowledge, industrialized economies impacting global ecosystem, ..).

If we consider that each of us is beholden to the collective past of entire humanity, the idea of ownership and 'fruits of labour' becomes just a social construct. This construct nevertheless is required today and for the foreseeable future as the only practical way to divide resources. However it is a complicated and probably intractable idea, and is not at all axiomatic as you seem to make it out to be.

What jobs that we'd like computers and robots to do require self awareness?

> The OPs question was whether Capitalism as we understand it now, is suited for the future when we expect most kinds of labour to be done by machines.

Capitalism "as we understand it now" is not pure capitalism, it's capitalism accompanied by a welfare system. Why is that not scalable to a future where most labour is not done by machines; what's qualitatively different between 70% of the population working with 30% on welfare, and 10% of the population working with 90% on welfare?

>Which means automation will give rise to an increasing number of people who cannot undertake non-automatable knowledge-work, and thus become doomed to be unemployed, and leads to a self-reinforcing cycle out of which they cannot escape. This is a problem that the civilization has to confront, and our current way of thinking about economics will not work there.

How is it a problem? If they're less productive than robots in every way, why not just put them on welfare? Current economics handles this perfectly.

>If we consider that each of us is beholden to the collective past of entire humanity, the idea of ownership and 'fruits of labour' becomes just a social construct. This construct nevertheless is required today and for the foreseeable future as the only practical way to divide resources. However it is a complicated and probably intractable idea, and is not at all axiomatic as you seem to make it out to be.

'Fruits of labour' is axiomatic in the sense that rejecting it necessarily entails violence. Eg, if Joe picks an apple, but is not allowed to keep the fruits of his labour, this necessarily entails violence or the threat thereof to take the apple away from Joe. If Aaron sings a song and Camelia offers him a pumpkin in exchange for this, but they're not allowed to trade freely, this necessarily implies some violence or threat thereof against them to prevent them from making the exchange. If Martha builds a car for Fred and Fred offers Martha a house in exchange, but then it's decided Fred shouldn't be allowed to keep the car, violence or the threat thereof is necessarily required to take the car from Fred. Unless Fred wanted to give it away freely, for instance charity, but he's perfectly capable of doing this anyway under a 'fruits of one's labour' system.

>How is it a problem? If they're less productive than robots in every way, why not just put them on welfare? Current economics handles this perfectly.

Does it really handle it perfectly? I assume perfectly handling it will mean those who do live on this welfare system have their basic needs met, is that the case in the current economy?

>I assume perfectly handling it will mean those who do live on this welfare system have their basic needs met, is that the case in the current economy?

In most Western Countries it is. America seems to be an exception in terms of having relatively lower welfare payment rates.

>what's qualitatively different between 70% of the population working with 30% on welfare, and 10% of the population working with 90% on welfare?

The government receives less tax revenues because 20% of the population is no longer working (and paying taxes). At some point if enough of the population is no longer contributing, unless there are massive changes in how we manage the economy, the country will become insolvent and won't be able to afford the welfare payments as tax revenue decreases.

>The government receives less tax revenues because 20% of the population is no longer working (and paying taxes).

The assumption is that machines exist that are more productive than all these people no longer working. If these machines didn't exist, then these people would still be productively employed.

Ahh yes, then we shall tax the machines!

The machines don't make money, the owners make the money. So we will end up taxing the owners - which will already happen under the current system.

Except if consumers don't have jobs they won't be able to purchase the products made by machines, therefore the owners will NOT make the money, and the economy will enter into a "death spiral".

If you'd ever been on welfare for an extended amount of time, you'd realise that it's actually seriously scary. You worry that at any moment, the Government might take away some of your benefits, when you're literally at $0 at the end of every month.

If the problem is benefits being taken away, doesn't that mean the problem is not with welfare but with the lack of it?

Well, the problem is mostly that some significant number of voters hate the idea that their money is being spent on keeping someone else alive and well, so the Government is constantly changing who gets it and how much.

The problem is that when you're living off someone else's goodwill - even if that someone is the Government - you're entirely dependent on them, and they can put you through whatever hardship they please.

> The day when there are machines smart enough to do all the service jobs that humans currently do will be the day machines are smart enough not to work for free.

The self-checkout at my supermarket is smart enough to demand pay? Wow, I didn't know that.

Actually, you could quite easily automate an entire store with robotics that haven't been state-of-the-art in years. The main issue is up-front capital, not scaring people, and having one person in the shop to deal with complaints/loss prevention.

It'd be even easier for McDonald's - picking things out of crates, going through pre-set steps to cook them, and packaging them, isn't exactly very hard. You could have one human for quality control if you really wanted.

So, retail as a sector will, at the same time as growing, employ fewer and fewer people. I'm sure you can pick out examples of existing technology that's not very hard to apply to most sectors, aside from capital concerns.

Well, then you have Amazon's automated warehouses, where humans are already reduced to the role of flexible actuator. The only thing they do is take things marked by a laser pointer, put in a proper container and press "DONE" button. Even the actual product search handles itself, a worker doesn't have to move around at all.

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