The Wealth Gap, Scarcity Thinking, and the Coming Robots
President Donald Trump announced this week as Made in America week, showcasing and promoting domestic manufacturing. He played in a fire truck and ranted about the need to bring manufacturing back from foreign countries.
Much of the criticism I’ve heard of Trump’s crusade is that it is disingenuous, given the man’s affinity for Chinese structural steel and overseas sweatshop manufacturing for Trump-branded products. So much is apparent. A more thoughtful, yet nonetheless pessimistic contingent, suggests that American manufacturing is dead forever and we just need to get over it, because robots.
Who is right here? The President is clearly talking out of both sides of his mouth on this issue, so we can’t take his word for it. Can manufacturing come back? Or is it dead forever, relegated to cheap overseas labor and automation? If we can’t bring back manufacturing, or, if those jobs are lost forever to our robot overlords, what the heck are we supposed to do to ensure any semblance of a future where the poor can survive without being simply told to pull themselves up by their automated bootstraps?
I’m thinking about this particularly following reading two books in the past week, Richard Florida’s New Urban Crisis, and Manu Saadia’s Treknomics, a playful but quite thoughtful, comprehensive examination of the economics behind the society of Star Trek, both of which have as central themes the fact that poverty and wealth inequality are enormously expensive and unproductive things. Both books mention these two growing topics of universal basic income and automation (as a subset of innovation) in the context of a fact that is increasingly recognized by common discourse: Poverty and wealth inequality are ridiculously expensive for the economy and ridiculously unproductive.
Florida’s book frankly isn’t going to be an interesting read unless you have been living under a rock without access to news or internet for the past ten years. The distilled, underlying politics says, “my bad, guys, my praise for young white people flocking to the urban core resulted in more wealth inequality than in the magical, rising-tide-plus-Reagaonomic-trickle-down effect that I had predicted!” (Also, cities still subsidize massively wasteful infrastructure projects and stadia instead of small-scale entrepreneurship that might be considered even vaguely “creative.”) He inundates the reader with #data and figures on the densification of Creative Class workers, whoever they are, and how that forever changed #cities.
In one classically Floridian passage, he laments the untreated sewage in a Chinese slum, but praises the innovation of the workers, who can even produce 3D printed motorcycle parts (!). In conclusion, cities with filth and disease are better than no cities at all, because These People can 3D print their way out of poverty. Colo(u)r me unimpressed– you can learn more about cities through a critique of liberal urbanism from the man’s parody twitter account:
Personally, I would never want to live in a tiny home but poor folks don’t really have a choice if they want something affordable.
— Dick Florida (@Dick_Florida) July 17, 2017
Saadia’s book, on the other hand, is playful and to-the-point, examining, in a balance of humorous, play-by-play commentaries on Star Trek episodes, science fiction literary comparison, and surface-level economic analysis, questions of automation and innovation, using as the focal point the replicator, a wondrous machine that reorganizes matter to produce, well, whatever.
THE AUTOMATED, POST-SCARCITY ECONOMY
Saadia’s Trek universe is a post-scarcity economy that still has as much conflict as our current universe, but wherein citizens of the Federation don’t have to suffer from poverty. With no poverty or disease, one is incentivized– but not required– to engage in pursuits that better one’s self or one’s society. In other words, the Star Trek universe is one where it is still possible to suck, but not possible to suck and lack access to healthcare or food.
He describes the Trekonomy as a “reputational economy,” where, instead of questing after wealth, workers quest after achievement, reputation, and explores numerous conflicts that illustrate how the notions of classical business concepts like value creation, risk assessment, and game theory have changed in the centuries between the modern day and the hypothetical 24th century future. Star Trek has long been considered a fanciful utopian universe, but Saadia’s point is that many of the ideas it is portraying exist today– just in a horribly unequal distribution.
Florida, on the other hand, ever walking that line between liberal urbanist and straight up filthy neoliberal, doesn’t want to offend urban elitists by suggesting that we could tax the shit out of the ultra-wealthy to pay for things that might help the poor. While musing on universal basic income (UBI) and inclusionary zoning (I appreciate his frustration with market urbanists, who believe that the Gordian Knot of urban un-affordability can simply be solved by eviscerating any and all zoning regulation), he maintains an arms length, attemptedly apolitical approach to the “crisis.” This is liberal urbanism 101: Rattle off enough data from graphs and provide enough artful infographics designed by members of the Creative Class, you don’t need to embrace political solutions.
Florida has both feet firmly planted in scarcity thinking. Saadia, on the other hand, points out that such a wealthy society could easily provide for its poor if only we were prepared to levy an appropriate tax rate on the wealthy. Saadia would thereby likely dismantle Florida’s dichotomy between “optimistic urbanists” (“let’s observe things and point out good things and cities are great! Yes in my back yard! Build The Luxury Condo Tower! Now!”) and “pessimistic urbanists” (“everything is a catastrophe and terrible, urbanization has all kinds of problems and nothing is ever good”) by pointing out that, in such a wealthy society, we can have our cake and eat it, too. It just necessitates, you know, some critical examination of, well, the entire underpinnings of a capitalist society.
UNIVERSAL BASIC INCOME AND AUTOMATION
Let’s return to the topic of manufacturing by way of automation. Automation, the experts tell us, could replace maybe two fifths of all jobs in the next 15 years. Maybe more like half in the next couple of decades. Robots, they say, will manufacture pretty much all things that humans now manufacture. This is especially notable in the heavily cyclical automotive industry, which still dominates the Southeast Michigan economy, demonstrates a historically horrible relationship between management and workers, and remains substantially less automated in the United States than it is in, say, Japan.
Saadia frames the concept of “automation as job destroyer” in terms of two kinds of value– the first is the value that is created by automation, something toward the very bottom of Maslow’s hierarchy. He talks about how agricultural efficiency increased a bazillion percent over a half century and allowed for unforeseen population growth combined with unforeseen growth in innovation and science, and how manufacturing is essentially going to go the same way, hopefully allowing for the same. The economy, Saadia argued, retooled from agrarian to manufacturing and knowledge-based in a matter of generations, and it weren’t no thang, so we’ll do it again.
The second type of value is somewhat more abstract, higher up Maslow’s pyramid, and it involves betterment of society and self– increasing the depth of collective human knowledge and understanding. He provides examples from the Star Trek universe about Federation citizens who engage in a nominally obsolete practices like viticulture or cooking– and are nonetheless highly respected for their original contribution to society.
If Florida’s approach to the agrarian-manufacturing transformation involves the promise and perils of urbanization, Saadia is proposing that the agrarian-manufacturing shift was a shift, not an elimination of jobs– but now many of those jobs are going to be outright eliminated through manufacturing, and people will have to do something else with their time. Florida suggests that bolstering service sector wages would ameliorate poverty in that sector, but that’s a “would-be-nice” strategy until he gets into discussion of UBI.
However, while automation will put many people out of work, it will also create a lot of wealth that can be redistributed. In other words, the fruits of the robot’s labor can be redistributed to the rest of society rather than allowed to accumulate in the hands of the ultra-wealthy. This isn’t a new idea, proposed by the likes of Lady Juliet Rhys-Williams in the 1940’s or Milton Friedman as a negative income tax, but it’s gaining a lot of traction as we discuss the loss of jobs to automation.
In 2016, Switzerland voted against UBI in a crushing landslide vote. In North America, the flailing, Liberal provincial government in Ontario, beleaguered by budget deficits, economic woes, and its mismanagement of the provincial utility, is deploying a UBI pilot project in Hamilton, so, we’ll see how that goes. Kenya piloted a UBI program, which was successful and, to the lack of surprise of experts, did not create a disincentive toward work for recipients. The $55 billion Alaska Permanent Fund, which distributes a modest but nonetheless considerable dividend to every state resident from oil revenues, has been likened to a UBI, and has been proven to have had broad economic benefits.
CONFLICT VERSUS CATASTROPHE
The impending catastrophe of automation is bandied about in the same way that the impending catastrophe of whatever else is bandied about. You cannot bring up the news on any day without reading about how there won’t be any fish in the seas by 2020, or how the US Senate is going to actually murder all poor people and make it illegal to be a woman, or whatever, or how the carbon dioxide concentration in the atmosphere is so bad that we might as well just kill ourselves now.
It isn’t a catastrophe– it’s a conflict, or a problem that must be solved. If we want to ameliorate problems of job loss and resultant poverty, we might want to consider some of these ideas that basically every credible scholar seems to think might be a good idea.
Saadia warns against this kind of doomsday thinking. He traces this back to 1798 when Thomas Robert Malthus warned that we’re all fucked, basically, because population growth will outpace growth of food production. Saadia points out that in the 20th century, as population increased, competition for scarce resources promoted innovation that in turn promoted tremendous value creation. He concludes that, if we were able to appropriately distribute the gains from that value, we would already be living in the Trekonomy, and just need to start promoting that kind of thinking.
Donald Trump’s tie manufacturing enterprise isn’t going to be replaced by tie-making sewbots in the next couple of years– the garment industry has been fiercely resistant to automation for a variety of reasons- but I also don’t see it coming back to the United States for the same reasons that the rest of the jobs he promised his red state voters won’t come back.
The raw figures agree with Saadia’s point that we can still, and will likely always, have a craft economy, as defined by the massive influx of private equity dollars into highly profitable American manufacturing economy, which I explored in my now vintage piece on Shinola. People still value handmade products over robot-made products or imported sweatshop goods.
I am always wary of things like automation as the trendiest new thing. The robots aren’t going to start blogging any time soon, nor are they going to start renovating houses in Detroit (hell, I will pledge my first-born to the inventor of a robot who can manage tradesmen on some broke-ass inner city housing rehabs), but we need to start having conversations about things like UBI or negative income tax in order to establish a baseline for what we want a pluralistic, profitable, and productive future to look like. In the mean time, transitioning toward the kind of post-scarcity thinking Saadia argues in favor of would help us think more effectively about the kind of wealth distribution required to build a functional society that is still competitive and oriented toward growth.
