[PassedOut]

akwoo, on 2013-April-02, 12:43, said:

I think we're just screwed here. Technology has simply made it so that there are people who due to their intelligence and education are thousands if not millions times as productive as others.

If the looming resource shortage is real, then it'll be in the interests of these people to get rid of everyone else and use the remaining resources and lots of automation to create a luxurious life for a few million, and the remaining six billion or so can just go starve themselves.

The six billion will not let that happen, and we'd better find a solution well before the situation deteriorates to that extent. Just saying...

[kenberg]

Although I do not see matters in quite such apocalyptic terms, the sort of issues Akwoo brings up deserve consideration. Something like this: Is the world becoming so complex and technologically advanced that a large share of the population will simply not be able to do anything for pay that anyone wants done? I think that, for now and for the near future, the answer is no, we are not yet at that point. Example: I just got a note from Honda saying that some feature of my audio system needs a fix and I should bring my car in. I am willing to bet the the guy/gal who does the fixing does not have a college degree. I can pretty much guarantee that no such degree is needed. There are lots of things that need doing, and everyday experience shows that some people have learned to do useful things, some haven't. We need to work on getting them paid decently.

Maybe I am being too optimistic, but it seems to me that there is and will be penty of work for normal humans for quite a while. Whether we are going at it properly is an entirely different question.

[y66]

Vampyr, on 2013-February-25, 17:38, said:

The reality is that either the upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year, or they are not. The author did not cite his source, but I think that it is reasonably safe to assume that his premise is roughly true.

The reality is also that the upper 1 percent taking in nearly a quarter of the nation's income every year either promotes or harms opportunities for life, liberty and the pursuit of happiness by the other 99 percent, for example, through disproportionate influence on decision making by the unenlightened and the self serving.

[akwoo]

PassedOut, on 2013-April-02, 17:46, said:

The six billion will not let that happen, and we'd better find a solution well before the situation deteriorates to that extent. Just saying...

I know this sounds silly, and I'm not entirely being serious here, but:

I'm not sure the six billion can beat the robot army.

kenberg, on 2013-April-02, 20:21, said:

Although I do not see matters in quite such apocalyptic terms, the sort of issues Akwoo brings up deserve consideration. Something like this: Is the world becoming so complex and technologically advanced that a large share of the population will simply not be able to do anything for pay that anyone wants done? I think that, for now and for the near future, the answer is no, we are not yet at that point. Example: I just got a note from Honda saying that some feature of my audio system needs a fix and I should bring my car in. I am willing to bet the the guy/gal who does the fixing does not have a college degree. I can pretty much guarantee that no such degree is needed. There are lots of things that need doing, and everyday experience shows that some people have learned to do useful things, some haven't. We need to work on getting them paid decently.

Maybe I am being too optimistic, but it seems to me that there is and will be penty of work for normal humans for quite a while. Whether we are going at it properly is an entirely different question.

What's different now is that the technology already exists that a team of engineers can build the machines that will fix your audio system almost as well as a human. Right now, you'd need enough engineering work and enough work to build and distribute the machines that the automated solution is not nearly cost competitive with having a technician doing it. However, the technician isn't getting any cheaper, whereas the engineering keeps getting cheaper (because a lot of engineering, particularly software and other design aspects of engineering, is getting automated too). Paying the technician decently just brings forward the day when he or she won't be cost-competitive with the automated solution.

[awm]

While the trend toward automation is definitely real, I think there are many professions where we are a long way from replacing people with machines.

For example: Any creative profession (i.e. actor, artist, writer). Any profession that involves personal care (i.e. counselor, doctor, nurse, physical trainer, teacher). Any profession in the service industry (i.e. retail, tour guide, waiter). Any profession that involves convincing people of something (i.e. advertising, lawyer, sales).

While computers can help by providing quantitative analysis or planning tools in many of these professions, I don't expect robots to be replacing humans any time soon. The fact is that these jobs involve day-to-day human interactions and people prefer to interact with people than with machines. Although conceivably this might be changed in some far-future with human-equivalent AI, we are not close to that now.

Even if we look at the "elite" engineering and business roles, presumably very few people have the talent for these jobs but they need to come from somewhere. Companies are hard-up for good engineers (I know this firsthand); where do these people come from? If we restrict educational opportunity to the children of the successful (or take Akwoo's dystopia and kill off everyone but the children of the successful) we will face rapidly declining numbers of this elite. We need a large base of people going through the educational process at least far enough to determine their potential.

And if productivity gains continue at the current pace (and we manage to avert any looming ecological disasters), it really should be no problem to support billions of extra people even if some of them can't do "useful work." We just need to change our attitudes.

[mike777]

"While the trend toward automation is definitely real, I think there are many professions where we are a long way from replacing people with machines"


I agree however I don't see why people cannot be augmented by man made parts, machines if you prefer. This is happening today, as we speak.

[Gerben42]

Let's be fair: We had this coming big time. Since productivity is rising all the time because we are becoming more efficient, jobs that cannot become more efficient are losing out.

Example: Hairdressers. Every once in a while, I go to the hairdressers. There will be someone who is cutting my hair. What technology is used? Scissors haven't changed much in the last 100 years. Productivity increase is negligible compared to almost every other area.

Being a hairdresser is the single worst paid job in Germany. I'm sure it wasn't in 1900. It's just that literally everyone has caught up. Also the market mechanism isn't working here. Since there always be a demand, you might think the solution would be that if half of them quit, the other half would be more wanted and get better wages. This fails because those who think it's now too expensive will help themselves.

What's confusing me is the salaries of top managers. Why are they worth millions a year? Some experts are saying that if we limit their wage to, say, 20 times that of the lowest wage in the company, we will be losing all the best managers. For this to be true, there must be some big difference between the best and the 100th best manager.

Yet we see in sports that small differences really "make the difference". Tennis scoring for example is made such that the slightly better player has a huge advantage. Winning 51% of the points makes you a big match favorite. In bridge, it's not so clear. Didn't the 40th seed or so win the Vandy just now?

I for one would like to see a society where the top management incomes are coupled to the lowest incomes. After all, the top manager is only as good as his workforce.

Note that this is still no solution for our hairdresser, though... Which tells you: Inequality isn't easy to solve.

[akwoo]

awm, on 2013-April-04, 08:13, said:

While the trend toward automation is definitely real, I think there are many professions where we are a long way from replacing people with machines.

For example: Any creative profession (i.e. actor, artist, writer). Any profession that involves personal care (i.e. counselor, doctor, nurse, physical trainer, teacher). Any profession in the service industry (i.e. retail, tour guide, waiter). Any profession that involves convincing people of something (i.e. advertising, lawyer, sales).

While computers can help by providing quantitative analysis or planning tools in many of these professions, I don't expect robots to be replacing humans any time soon. The fact is that these jobs involve day-to-day human interactions and people prefer to interact with people than with machines. Although conceivably this might be changed in some far-future with human-equivalent AI, we are not close to that now.

I know I'm an exception, but I have to say that there are many cases where I prefer interacting with a machine. I also think a lot of this is cultural; people who are used to interacting with machines and expected to will like it more. Just a few years ago, many people said people would never buy goods online because they preferred to see what they were buying as well as interact with a human when buying it.

I might prefer to have a cashier ring up my purchases at the supermarket, but the preference is pretty slight. If I have to wait 1 minute for a person, I prefer the automated cashier machine.

We're not far from the day where a McDonald's in Switzerland (probably the highest wage area in the world) has onsite at any given time only a manager and a computer technician. Thirty years ago this McDonald's would need a staff of twenty; right now it's running on a staff of ten.

Quote

Even if we look at the "elite" engineering and business roles, presumably very few people have the talent for these jobs but they need to come from somewhere. Companies are hard-up for good engineers (I know this firsthand); where do these people come from? If we restrict educational opportunity to the children of the successful (or take Akwoo's dystopia and kill off everyone but the children of the successful) we will face rapidly declining numbers of this elite. We need a large base of people going through the educational process at least far enough to determine their potential.

The German experience suggests that 'far enough' is not very far. Some German Laender start putting their schoolchildren into different tracks as early as 4th grade, and while undoubtedly they lose some talent through 'misplacing' students, it doesn't seem to be very much, and being able to have all their talented students be taught by competent teachers seems to more than make up for it. I happen to think the German system is a terrible one for reasons of social cohesion and because it fails to educate some people enough to really be citizens in a participatory democracy (but they have different ideas on what a democracy is and how one should run), but as far as the technical and economic needs of a society are concerned, it seems to work pretty well.

Quote

And if productivity gains continue at the current pace (and we manage to avert any looming ecological disasters), it really should be no problem to support billions of extra people even if some of them can't do "useful work." We just need to change our attitudes.

All the evidence suggests that a world where a lot of people can't do 'useful work' is not a happy place, whether everyone is generously supported or not.

Re: Augmenting people by machines - unfortunately it seems that it is economically only useful to augment those who have the requisite level of intelligence and education, so this possibility doesn't reduce inequality but exacerbates it.

[Gerben42]

akwoo, on 2013-April-04, 18:46, said:

I know I'm an exception, but I have to say that there are many cases where I prefer interacting with a machine. I also think a lot of this is cultural; people who are used to interacting with machines and expected to will like it more. Just a few years ago, many people said people would never buy goods online because they preferred to see what they were buying as well as interact with a human when buying it.

I might prefer to have a cashier ring up my purchases at the supermarket, but the preference is pretty slight. If I have to wait 1 minute for a person, I prefer the automated cashier machine.

We're not far from the day where a McDonald's in Switzerland (probably the highest wage area in the world) has onsite at any given time only a manager and a computer technician. Thirty years ago this McDonald's would need a staff of twenty; right now it's running on a staff of ten.

It's funny how this effect is stronger in societies with less unequality. I am now visiting the USA, and there are people employed to pack my groceries. This job does not exist in most European countries, I have only seen it in countries with more unequalities. The automated McDonald's restaurant won't appear in the USA first, rather I'd expect it to emerge in either Switzerland or Japan.

Quote

The German experience suggests that 'far enough' is not very far. Some German Laender start putting their schoolchildren into different tracks as early as 4th grade, and while undoubtedly they lose some talent through 'misplacing' students, it doesn't seem to be very much, and being able to have all their talented students be taught by competent teachers seems to more than make up for it. I happen to think the German system is a terrible one for reasons of social cohesion and because it fails to educate some people enough to really be citizens in a participatory democracy (but they have different ideas on what a democracy is and how one should run), but as far as the technical and economic needs of a society are concerned, it seems to work pretty well.

Germany's success through the crisis is mostly because it has a economy of tangible things. A comparison between Europe's two biggest economies shows what I mean. In 2012 the balance of trade for Germany was about $3000 per capita. In France, it was -$1800. Ergo: People want German stuff but not French.

Both countries host 32 of the top 500 companies.
Germany's top 10: VW (tech), E.ON (energy), Daimler (tech), Siemens (tech), Allianz (financial), BASF (tech), BMW (tech), Metro (market) , Munich Re (financial), Telekom (utility).
France's top 10: Total (energy), Axa (financial), BNP Paribas (financial), GDF Suez (energy), Carrefour (market), Credit Agricole (financial), SocGen (financial), EDF (energy), Peugeot (tech), BPCE (financial)

Spot the difference. The first company creating real tangible things in France is in 9th spot. In Germany it's three of the top four. And if big doesn't mean anything, VW made a handsome profit (€22B) as well.

Quote

All the evidence suggests that a world where a lot of people can't do 'useful work' is not a happy place, whether everyone is generously supported or not.

Re: Augmenting people by machines - unfortunately it seems that it is economically only useful to augment those who have the requisite level of intelligence and education, so this possibility doesn't reduce inequality but exacerbates it.

There is some truth in this. We're starting to see a "digital divide" emerging. If you have never worked with computers and such and now at age 50+ you are looking for a new job... Good luck!

[mike777]

What's confusing me is the salaries of top managers. Why are they worth millions a year? Some experts are saying that if we limit their wage to, say, 20 times that of the lowest wage in the company, we will be losing all the best managers. For this to be true, there must be some big difference between the best and the 100th best manager.

--



They may not be worth it but these are private companies. Let the owners change them or if the company does poorly a new owner will come in. See Carl Icahn. People forget companies fail all the time and disappear. Icahn bought a company and basically fired the entire 150 person headquarters staff since he could not figure out what the heck they did all day.

I understand what you want and that is fine...buy the company and make the change.
If the govt buys the company great the govt can set the rules.
Please respect private property and those risk takers that own them.

btw Germany's success has come from risk takers...you missed that point.

[helene_t]

It is not always so easy to "let the owners change them".

I have some shares in a number of investment funds. At the annual meetings, one thing I would really like to propose is that we save some money by getting rid of all the managers and replace them with the famous blind-folded dart-throwing chimp which has been proven to perform just as well. But the managers always send out forms prior to the meetings, on which one has three options:
- I am going to participate
- I am staying at home and giving letter of attorney to the board of directors
- I am staying at home and not giving l.o.a.

Now for some reason there are enough folks who give l.o.a. that the managers can just decide their own wages. To avoid too much outcry, they take a modest wage plus a few % of the profits. I am sure that most folks think that this is reasonable (it is only a few % and it does give them an incensitive to perform, right?). Those who have read hrothgar's remarks about high-variance strategies in the bridge discussions will know why it is not reasonable but unfortunately most folks are too stupid.

[mike777]

helene_t, on 2013-April-05, 02:11, said:

It is not always so easy to "let the owners change them".

I have some shares in a number of investment funds. At the annual meetings, one thing I would really like to propose is that we save some money by getting rid of all the managers and replace them with the famous blind-folded dart-throwing chimp which has been proven to perform just as well. But the managers always send out forms prior to the meetings, on which one has three options:
- I am going to participate
- I am staying at home and giving letter of attorney to the board of directors
- I am staying at home and not giving l.o.a.

Now for some reason there are enough folks who give l.o.a. that the managers can just decide their own wages. To avoid too much outcry, they take a modest wage plus a few % of the profits. I am sure that most folks think that this is reasonable (it is only a few % and it does give them an incensitive to perform, right?). Those who have read hrothgar's remarks about high-variance strategies in the bridge discussions will know why it is not reasonable but unfortunately most folks are too stupid.

you have the most important option which many people forget....SELL

One of the most important issues is the one of governance. If you don't feel that management is responsive to your ownership you may want to sell.

This is another area where govt may help by demanding more transparency by managers and giving risk takers more power rather than less power.

[kenberg]

Hairdressers: I see Lenny, since my wife says he does a good job. I can't tell.
I think Lenny makes a decent living. The bill is around twenty bucks and I give him another three or four with instructions to give one of them to the gal who washed my hair first. I have an easy head, I imagine he can do two or maybe three of me in an hour.
Lenny's educational level:
When I first started seeing Lenny he asked, as they all do, what I did for a living. When I told him I was a mathematician he replied that he really liked math. Not the usual comment. He went on for a bit on the subject, saying that of course he didn't much like the hard stuff like algebra but he really liked, now he thought for a bit, addition. He liked addition a lot.
He explained that he was highly regarded for his ability to cut and shape hair, and that his fellow workers call him the sculpture.
My wife says he does a good job, so even after our move I get to him when it is convenient.

He is a good guy, we get along, he has a wife and owns a house. I think they have dogs, I'm not sure about kids.

[y66]

According to these numbers, income inequality in Germany is not a problem compared to most other countries.

I will guess that hairdressers in Germany don't have to worry as much about food and health care for themselves and their families as hairdressers in the United States, that their children have better access to decent schools and their politicians are less unduly influenced by super PACS and lobbyists. These are areas where growing income inequality is a big problem imo.

[Winstonm]

y66, on 2013-April-05, 07:22, said:

According to these numbers, income inequality in Germany is not a problem compared to most other countries.

I will guess that hairdressers in Germany don't have to worry as much about food and health care for themselves and their families as hairdressers in the United States, that their children have better access to decent schools and their politicians are less unduly influenced by super PACS and lobbyists. These are areas where growing income inequality is a big problem imo.

The enigma to me in the US is the survival of the apparent paradox of a religious majority who hold religious moral values, and whose religious tenets teach common-good, share-the-wealth, look-out-for-one-another economic thought, yet this group at the same time has an economic viewpoint that is based on winner-take-all, survival-of-the-fittest, am I my brother's keeper? thinking than it is on moralistic thinking.

Curious to me that many liberal atheists hold what seems to be the very tenets taught by the religious texts.

[barmar]

mike777, on 2013-April-05, 04:55, said:

you have the most important option which many people forget....SELL

That's cutting off your nose to spite your face. Most funds work the same way, so what are you going to do with the money instead? Put it in the bank and get a measly 1% return? That'll show those greedy fund managers.

[kenberg]

Winstonm, on 2013-April-05, 09:12, said:

The enigma to me in the US is the survival of the apparent paradox of a religious majority who hold religious moral values, and whose religious tenets teach common-good, share-the-wealth, look-out-for-one-another economic thought, yet this group at the same time has an economic viewpoint that is based on winner-take-all, survival-of-the-fittest, am I my brother's keeper? thinking than it is on moralistic thinking.

Curious to me that many liberal atheists hold what seems to be the very tenets taught by the religious texts.

To use mathematical phrasing, religious belief is neither a necessary nor a sufficient condition for concern for others. More commonly put, a jerk is a jerk regardless of where his butt is on Sunday mornings. My guess is that religious folks would readily agree with this, they have seen it close up.

[barmar]

People are very good at compartmentalizing. That's why it's so easy to be a hypocrite -- business decisions are not viewed as being in the same sphere as the moral issues raised in religious discussions.

[kenberg]

It would be very good to understand, and I confess that I do not at all understand, what happened in the U.S. between 1910 and 1950 (dates approximate). We went from sweatshops and child labor to something of a golden age for the blue collar worker. With two major wars and a depression stuck in the middle, either as motivation or catalyst or something. I grew up with the gospel that labor unions were the backbone of this. Winston grew up with religious gospel and he has forsworn it. My religious training was lighter and easier to shrug off, but I still feel the unions played a very strong role in the development of the American middle class. No proof, it's a faith.

It matters, I think. How do we advance the cause of those holding the lesser parts of the pie? A good part if the strength of labor came from the rank and file membership. The president? The Pope? Yeah, maybe. But what does John L Lewis say? You don't see this today.

[Gerben42]

y66, on 2013-April-05, 07:22, said:

According to these numbers, income inequality in Germany is not a problem compared to most other countries.

I will guess that hairdressers in Germany don't have to worry as much about food and health care for themselves and their families as hairdressers in the United States, that their children have better access to decent schools and their politicians are less unduly influenced by super PACS and lobbyists. These are areas where growing income inequality is a big problem imo.

That's certainly true, but it is SEEN as a big problem here. In fact it will be one of the major topics in the coming election this fall. Coming from the Netherlands, I always thought Germany was less socialist. The point is that Germany is using the USA as a warning how they never want to be in terms of inequality (which is fine) but the amount of panic made because of it is a bit overdoing it. Many want to be like Sweden, which is overdoing it in the other direction.

To illustrate, most parties want to increase social welfare levels, whereas the real problem is not the benefits for the jobless (I know what I am talking about I was in this situation for half a year, it's quite possible to make ends meet on jobless benefits, and there is even room to go to the bridge club every week), but that those in bad-paying jobs earn just a bit more than the welfare level.

Just today I read that there is a shortage in people to take care for the elderly, and that it's hard to even find applicants from other EU countries (with much lower standard of living): They prefer to go somewhere else, given the chance.

Therefore my suggestion would be: No income tax on a larger sum than currently is the case (It was raised a bit I think from 8000 € to 8500 € I think, but it should really be at least € 15000), and a higher income tax on everything that is more than three times the average. And very high income tax on everything that is more than ten times the average (but still less than Francois Hollande's 75% - that is overdoing it).