Let’s face it, capital is winning. (watch this video if you haven’t already seen it)
The statistics show that the game of growing capital has been getting easier over the years, whereas that other game of finding a good career and slowly accruing wealth through honest labor seems to be only getting harder. The millenials are the best educated generation ever, yet their prospects for career security and wealth accumulation seem to be only getting worse. The baby-boomers love to poke fun of the younger generations, but seem oblivious to the fact that the game is rigged in favor of those with healthy investment accounts and against those looking to build new ones.
Yes, it seems that now is a good time to make money if you already have money, and a bad time for making money if you don’t already have some. More importantly though, I do not see any likely shift away from this trend in the near or even medium term. In a future (present?), where the magic of automation allows wealth to be directly transmuted into productive capacity with a diminishing requirement to acquire human labor, I see no likely shift in the imbalanced advantage of capital over labor.
In the future there will be owners and there will be losers.
Even if strong new social policies such as basic income become adopted, and I am very much optimistic that these kinds of programs should and will be adopted widely in the coming decades, I am not so optimistic to believe that they will be adequate to address the accelerating wealth gap. Ironically, basic income could actually serve to impede the biggest threat to the capital class, the ability of lower classes to accrue and grow their own capital investments.
At its core, basic income is mostly envisioned as an economic mechanism to establish an absolute floor for the social safety net. Where exactly we decide to install that floor is a matter for debate, but it seems most believe that in order to maintain an incentive for work and entrepreneurship, basic income should be set close to subsistence levels. Enough should be provided for people to eat, clothe, and house themselves, but basic income is not likely to leave a great deal for savings.
Even if basic income exceeds this “basic” mandate and does provide more than enough funds for families to enjoy a comfortable life, it still provides no incentive for people to save. If people know that they can rely for the long term on a steady basic income every month, then those people may see no reason to save much money. Why would I save for retirement if I can be assured of receiving an adequate amount to meet my needs for the rest of my life?
Of course, there will always be some percentage of individuals who will have the foresight to save as much as they can, but I would simply suggest that this percentage might actually be smaller under a regime of basic income. The psychology of foresight might be the single greatest factor which differentiates the most successful individuals in life, there is no reason to think that basic income would change this in any way. Other tools such as education should be used to encourage people to have more foresight about their lives and make better long term decisions (but that is for another post).
So what is to be done about this? Ultimately, I think that the long-term emergence of powerful technologies such as strong artificial intelligence and molecular-scale manufacturing will eventually make individual wealth somewhat irrelevant. For the medium-term however, without the total collapse of the capitalist system, something that I believe would be too painful to suffer through no matter what the ends, I do not see any likely end to the acceleration of wealth inequity. For the next two decades, people who own things will do well and everyone else will get by.
Still, the message of the accelerating value of capital is not entirely doom and gloom. Yes, those who control huge sums of the world’s wealthy will benefit disproportionately from the automation revolution, but the more important disparity might actually be between those who can see the future and those who cannot. If your parents can’t understand how to use their email, how could they hope to make sound investment decisions in a world revolving around technological innovation? Similarly, those wealthy individuals who are heavily invested in the successful industries of today, may lack the maneuverability to respond to the kinds of disruptive technological innovations we are seeing with increasing frequency.
So, perhaps the most important question is not how much you have to invest, but how well you can predict the coming landscape of innovation? Being able to predict which technologies are going to be successful has been of immeasurable value since the inception of the market. Despite its ebb and flow over the years, a balanced investment in technology companies over the last 30 years would have provided unprecedented gains. I expect that the future-smart investor can realize similar gains in even shorter time over the next few years.
So however meager your savings might be, do not despair. Invest what you can, because those of us in the technology generations, who understand technology better than the rest, stand to reap enormous gains. Those who can see the future and invest in it are going to be well positioned to join the capital classes in the coming years. As the old saying goes, if you can’t beat ’em, join ’em.
The future is going to belong to those who can see it.
Don’t be distracted by the more superficial aspects of “Basic Income,” “Citizen’s Income” or “Unconditional Income” or whatever other “product name” these things have. The underlying concept addresses _exactly_ what you’re worried about.
We’ll get to that, but let’s start with the “basic” of “basic income” and “savings.” This point is urgent.
What are “savings”? “Savings” means you’re playing a game of quantified reputation accumulation in a defensive manner; you’re afraid of losing your stack of poker chips, so you don’t transfer these chips without giving it a lot of thought. You _could_ use the little money you have to start a Hackerspace that might or might not work, or, you could use your time to volunteer at the local school in a risky project that you’re passionate about instead of working a pointless job to earn a bit more of money, but … meh, you’re “responsible,” a “good citizen,” not like these “irresponsible poor people” that e.g. give and spend on concrete good, so let’s “save” instead.
The whole point of having a guaranteed monthly or weekly or whatever income for life (much better than alternatives that want you to pay a lump sum when you reach 18, for example) is to help eliminate the notion that you have to “defend” against your society and that you have to spend 50%+ of your brain power worrying about the poker chip game that is the monetary system. Nanorobotics and other such futuristic crap is just optimization; the basis of a human society will always be optimizing human thought towards understanding and living reality, not towards manipulating whatever faulty oversimplified abstract representation systems we have of reality (i.e. “money” tokens and other such crap).
Put simply, having to “save” to live is as retarded as you get as a societal design. We truly are in economic Dark Ages when people walk around with this completely broken notion of “fiscal responsibility” and this twisted morality where hoarders of stuff are somehow glorified. If you belong to a society, your main source of savings IS your society. As the primitive tribesman says, “I store meat in the belly of my neighbor.”
Example of our Dark Age: Let’s assume you have “saved” and hence you can survive an “economic crisis” but your next door neighbour has not saved and he starves to death because, well, he screwed up the abstract token game even though he did ten times more concrete social good than you did (gave all he had to poor people, tried to open an NGO, etc. ) What the fuck? A society where some live on a basic standard and some don’t based solely on whether they can do the Wolf of Wall Street thing or not is a non-society: it’s a market, which is the lowliest form of relationship two people can engage in, the lowest common denominator, insensible, dehumanized, objectified, almost an emergency form of organization. People in there are together not in human fraternity but put on their “business” faces — we’re as businesses, merely cogs in a machine of competition, so if one “fails” (i.e. shrivels and dies without food or heat or) then too bad, “it’s the market.” Ah, how good it is to be free of such concerns for others’ “financial irresponsibility,” huh? Dark Age thinking…
We don’t need technology. Well, we need that too. A lot actually. But what we do need urgently, right now, primarily is to wake the fuck up. That’s what Occupy was: it showed what the needed fraternity is. That’s it. The “Revolution is Love” in that sense: wake the fuck up and see that the impedance mismatch here between the ideology and physical reality is that businesses don’t suffer but people do suffer, and that’s the fundamental difference; you can’t apply business logic to a society of people, it has to be adapted to people first. People starve and die, people need affection, need connection, need a stable environment and a lot of other things.
Ok, with that out of the way, let’s see how the various “Xxxxx Income” ideas can be implemented and how they can directly and definitively address your concert of “owners versus people who don’t know how to play the economic poker.”
There are two main mechanisms to implement the “X Income” initiatives: the first mechanism is through “funding,” and the other is through “seignorage.” The “funding” mechanism is retarded: it means your “congress” or whatever you have in your country can cut the “funding” and you end up with a Basic Income or whatever that can run out of funds. You’ll see endless discussions of what “programs to cut” to “fund” Basic Income. You’ll see the “country debt going up” and that you can no longer “afford” Basic Income, etc. It will be a mess. It doesn’t work, so let’s skip that.
The “seignorage” mechanism is about taking the right to generate money from the banks — money enters the economy when someone needs a loan — and give it back to the citizens: money enters the economy at the end of the month, with X new “dollars” or whatever you have in your country, minted brand new per citizen. And you need that mechanism in your country’s constitution. Nothing less will do, so the mechanism itself is protected. The actual amount can be regulated by law, and it can be set even to zero in an emergency. There will be a drain for the money so it doesn’t inflate indefinitely; I’m sure the economists will have tons of solutions for that (e.g. tax people and destroy cash received though some or all taxes).
Seignorage is the only actual way to implement any “X Income” menchanism if you want it to work for more than a couple years until the “1%” make a lobby and wipe out the mechanism itself from the books.
And finally: if you get it right and to it through Seignorage, you have much more than a mechanism to allow people to survive. You have an ownership equalizer; the greater the amount, the more it works towards that end.
Remember that today even with a Basic Income of ZERO, people are able to “save” and survive and, in some cases, even thrive. What Basic Income does is lift all boats, rich and poor alike: every dollar given to every citizen every month is a dollar that will either allow you to live if you’re playing the economic poker game badly, in which case you will become a better person and use your brain to help the world instead of using it to make bad ultra-short-term decisions (poverty is expensive and pollutes the world), or, you can already live and the extra dollars you can save to purchase things like, say, stock, land, equipment, or pay salaries to other people, i.e. you can start businesses. You can own more of the means of production.
In short, the middle class will own much more things and, unlike the 1%, which always will be inhabited by pathological antisocial hoarders, the middle class will put what they own to good use, because that’s all they will have and they have their whole lives to express through the little means of production they have. In a world shifting from large-scale industrialism to localized non-industries, that’s exactly what you want to happen. The 1% will still exist, but they will focus on building spaceships and mining operations and other large-scale crap. Big Agra, Big Edu and a lot of Big XXX will die as soon as the middle-class is free to overrun cities with gardens, Hackerspaces, free university-like environments, businesses of all kinds and the like.
And all that by saving their citizen’s income. Have you seen what a business needs as seed capital on Kickstarter? It’s chump change. Give me $1,000 a month to have a “basic living” but since I already have that, I’ll take that and squeeze purely in business awesomeness. And I’ll hire “poor people” whose lives are already taken care of by the same $1,000, so I’ll probably have “poor people” even _volunteering_ for my business, as I take my $1,000 and spend it to pay a mortgage from the previous 1%er owner…
I could go on.
>As the primitive tribesman says, “I store meat in the belly of my neighbor.”
I really like that metaphor. I totally agree that the primary and most important savings we can have is the society around us. I would add that left untended, it can also be the biggest debt we have. That primitive tribesman might worry about his neighbor taking the meat out of his belly if he does not share appropriately.
As for the impact of basic income on savings rates, I share your optimism that a basic income would stimulate huge small business growth (the likes of which we have never seen). But I still feel that this change would probably pale in comparison to the big money that will control access to AI and robotics that make up the majority of production in the future.
These small businesses would be great on the ground level, but I have to reiterate that the issue of accelerating capital growth is not directly addressed by basic income. As you said the “1% will still exist, but they will focus on building spaceships and mining operations and other large-scale crap”, which means that ultimately they will also maintain a lot of power over the direction of society.
To counter this, I think that we on the ground level are going to need to play their game, which means investing and growing corporations which are truly interested in and driven to support the common good.
>Seignorage is the only actual way to implement any “X Income” menchanism if you want it to work for more than a couple years until the “1%” make a lobby and wipe out the mechanism itself from the books.
I agree that a system to fund a basic income which avoids the complication of taxation would likely be the only way to mak it successful in the long term. I would actually like to see something like the seignorage system that you describe, but how to get the power out of the hands of the banks? This is the $1000 question.
Perhaps a blended system wherein 100% comes from taxation in the beginning, and we slowly phase over to 100% coming from seignorage over say 10 years. Maybe this could also be combined with a system wherein eventually an equal amount of wealth has to be created by BI and by banks. This compromise could maybe make everybody happy, and if well managed could avoid potential for massive inflation.
Good commentary. Thanks!
Right. A mixed system (X% seignorage + Y% funding, where X and Y are both anything between 0% and 100%) would probably be better (I’m no economist, not at all), but I think it is fundamental that the money issuance monopoly that has been taken by private banks out of the states has to be broken. You have probably already watched the “Money as Debt” hit series on Youtube. If you haven’t already done so, do it now, it is worth it. That’s the primary problem, and the fact that we can end that monopoly while also automatically and transparently “funding” Basic Income… well, that’s something massively convenient.
You are probably right that Basic Income won’t make much of a scratch in the concentration of means of production, the ownership of the robots and the technology patents and the huge masses of land with all the resources and all that stuff. I see the “Basic/Unconditional/Citizen’s Income” ideas it as a thing that’s simply missing from all economies, a thing that’s so obvious that it hurts just to think that it doesn’t exist yet. You are correct that for ownership itself, of all things, to be more evenly distributed, is a bigger problem, and yes, the idea that you can be someone’s economic serf and own “nothing,” just live off of rent… yes, that died. Job stability, etc. all that 50’s stuff is gone for good. And thankfully, but thankfully IF AND ONLY IF we adopt the much more elegant version of having a just society: give people a check at the end of the month (economists: figure out what’s the nonzero number on it) and call _that_ their “stable employment”: take this money and go do whatever it is that you think the world needs, not what Donald Trump or Bill Gates thinks is needed — unless they are offering a job which is exactly what you think needs to be done, in which case yeah, take it, for a while, until you inevitably get sick of it — as the people taking the jobs you create with your citizen’s capital income will also do. With Basic Income we can do away with worrying whether “the guhvernment” is “creating jobs” or whether Walmart is paying more than $0.01 per hour for workers. Without Basic Income, no: you need unions, you need strikes, you need to keep watching the news to see if the government is “creating jobs,” you’ll become a xenophobe perhaps worrying about “immigrants stealing jobs” and all that huge mass of nonsense.
So with Basic Income half of us create and operate companies/corporations of varying sizes, and the others work on these concepts created by others, and when we get fed up with either role we switch. What’s the system today? A third of us get boring jobs with ever decreasing pay, a third of us deteriorates at dungeons like Walmarts and such, and a third is simply prevented from legal/economic disarray from doing anything productive, and <1% of people decide what are the "jobs" that exist, and almost all of them suck. Not good for humanity as a whole.
But yes, the macro controls over society remain with the 1%. But I'm not too worried about that if we can convince "the 100%" of people that we have to start somewhere, and that start is a bold Basic Income initiative that cuts through all the red tape with amazing force — a society getting together in demonstrations of yet unseen scale, 5%, 10%, 15% of the entire population of a country getting on the streets to get Basic Income constitutional support, and whatever else it needs to become a bedrock institution of a society. To me it is the key issue that everyone should be talking about, and we can't wait for "the media" or "the intellectuals," be them mainstream or fringe, to decide to talk about it. This has to become a family and friends discussion topic everywhere in the world, right now!
Thanks for your posts. They surely got my juices flowing today 🙂
I would think that a basic income would make it much easier for a working-class person to save and invest money then it is for them now.
And I think that a significant fraction of people, at least, will do that. A person who’s used to living on $30,000 a year and suddenly has $40,000 a year, but doesn’t have a lot of confidence in keeping their job over the long haul, is very likely to want to save money for a rainy day. This is especially true if we’re seeing a backdrop of automation and jobs being eliminated.
On the other hand, basic income itself at least makes it possible to save a little money, in a way that welfare or food stamps totally prevent.
I also don’t think Basic Income will fix all of our economic issues but do think it can help us in doing so. In my opinion crypto-currency and basic income are both like medicine for a disease since the medicine won’t do all of the work for us even though it can help.