Embracing Idleness
Jul. 17th, 2012 11:43 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
snousleI should have been a real economist - I am too readily drawn to speculation outside the range of my expertise, and cannot resist sharing it. Reading journal articles and economics blogs is educational, but also in some sense frustrating, since those with a solid background in the subject have access to models and modes of thinking that I just don't know enough about.
What I want to say to them is, what if productivity and economic growth is not the goal, but is actually the problem? I've touched on this in the past, but what it comes down to is that I'm thinking that the American economy is now so efficient that it just doesn't need people anymore. Remember the society of the future, where we would all have four hour workdays? This generally doesn't work, because two half-time employees always cost more than one full-time employee. So in an environment where everything is made by robots and there's an inescapable excess of labor, you'll always have unemployment, perhaps resulting in a death-spiral of ever-sinking demand.
I know one conservative person who openly wishes he could turn the clock back to 1970. Well, total per-capita economic output back then was less than half of what it is now. So we have a bit of a paradox - in some sense, the country was "better" at half its current productivity, yet if productivity dropped by half today it would be considered an unprecedented disaster.
Well, why not re-think this a bit. Suppose life was better at half speed. Maybe the question is not how to grow the economy, but how to shrink it gracefully. And maybe the way to do that is to embrace idleness - to make unemployment a genuinely attractive alternative to working, while at the same time making the barriers to productive work more readily surmountable.
If there are two words worth listening to from conservative economists, they are "incentives matter". No economy runs on individual goodwill or "ethical" behavior - those are mere fantasies. Unfortunately, Americans are incredibly stingy about "welfare" and get outraged when someone collects a check that they don't "need" or "deserve". The result is that the marginal incentive to work is eliminated; by demanding that workers be, say, fully disabled in order to recieve a government check, you're eliminating the possibility of disabled persons being in any way productive. So of course it's a disaster. I know all kinds of disabled people who would like to work at something, but can't, because they literally cannot afford to.
I think there's a way to embrace labor-eliminating technologies, reap their economic benefits, and overcome the death-spiral of excess productivity without the carnage and heartache we see today, but it requires thinking differently about taxation and redistribution.
Imagine a system with no revenue source other than a 50% value-added tax, half of which pays for the usual government functions like infrastructure, defense, et cetra, without any welfare component, while the other half is automatically redistributed in the form of a monthly check to everyone over the age of 16. This solves several problems at once:
- All welfare programs, including Social Security and Medicare, along with their waste, corruption, graft, and politically volatile administrative problems, would be eliminated in favor of direct cash subsidies of about $800/month. Instead of patronizing, controversial programs that try to control people's choices while stomping all over their personal values, recipients are free to choose whatever things benefit them the most. Any given person's answer might be "spend it all on booze and prostitutes", but hey, that's their choice. Instead of creating opportunities for government contractors to corrupt their political benefactors, it would use the power of the market to slash waste and inefficiency. In many parts of the country, you can live pretty darned comfortably on a subsidy of that size.
- Subsidies would not be fixed, but would be set at an immutable rate of 50% of government revenue, divided across the whole adult population. When the economy suffers, everyone shares that pain equally. (In practice, it could be arranged so you'd know what your subsidy would be a year in advance, which would help people plan for the effects of downturns while automatically putting a Keynesian damper on the business cycle.)
- Incentives are preserved. Barriers to work, which today come in the form of "means tests" that frequently result in 100% effective marginal tax rates, would be eliminated. Everyone would have an equal incentive to get off their butts and do something, however little it might pay. Employers no longer have to deal with so many complicated labor laws and can hire people on a whim. Individuals can join up to form companies with much less hassle.
- Liberals get the progressive taxation they want; combining a big subsidy with a big tax, the overall effective tax rate varies from negative, to zero, to very high indeed as you increase your earning power.
- Conservatives get the flat tax they want; the crazy tax code is reduced to a single, easily administered and uncontroversial collection mechanism affecting only businesses, not individuals. Every tax impinges on marginal incentives to productivity; under this system, that impingement is fairly and transparently distributed across rich and poor alike.
- Unemployment is no longer a disaster, but a built-in feature of the system; it is recognized that in our super-productive society, full employment is not achievable, necessary, or even desirable. The economy supports and encourages both productivity and idleness. The four-hour workweek becomes much more practical, perhaps by encouraging early retirement rather than shorter hours.
- There is no longer any such thing as "welfare fraud", or "not deserving" the subsidy, because it's not framed as welfare, it's a negative tax.
The one twist I would put on this would be that subsidy payments must never be garnished or diverted; they belong to the recipient first, and the government should not make any effort to divert it to creditors. The result of this is that it would not be possible to borrow against one's future subsidy checks, and that's a good thing. This is necessary because, frankly, too many people are willing to sell themselves into slavery for a few trinkets.
Is this really so hard? This could be implemented today, in a revenue-neutral fashion, and I bet it would work like a charm.
What I want to say to them is, what if productivity and economic growth is not the goal, but is actually the problem? I've touched on this in the past, but what it comes down to is that I'm thinking that the American economy is now so efficient that it just doesn't need people anymore. Remember the society of the future, where we would all have four hour workdays? This generally doesn't work, because two half-time employees always cost more than one full-time employee. So in an environment where everything is made by robots and there's an inescapable excess of labor, you'll always have unemployment, perhaps resulting in a death-spiral of ever-sinking demand.
I know one conservative person who openly wishes he could turn the clock back to 1970. Well, total per-capita economic output back then was less than half of what it is now. So we have a bit of a paradox - in some sense, the country was "better" at half its current productivity, yet if productivity dropped by half today it would be considered an unprecedented disaster.
Well, why not re-think this a bit. Suppose life was better at half speed. Maybe the question is not how to grow the economy, but how to shrink it gracefully. And maybe the way to do that is to embrace idleness - to make unemployment a genuinely attractive alternative to working, while at the same time making the barriers to productive work more readily surmountable.
If there are two words worth listening to from conservative economists, they are "incentives matter". No economy runs on individual goodwill or "ethical" behavior - those are mere fantasies. Unfortunately, Americans are incredibly stingy about "welfare" and get outraged when someone collects a check that they don't "need" or "deserve". The result is that the marginal incentive to work is eliminated; by demanding that workers be, say, fully disabled in order to recieve a government check, you're eliminating the possibility of disabled persons being in any way productive. So of course it's a disaster. I know all kinds of disabled people who would like to work at something, but can't, because they literally cannot afford to.
I think there's a way to embrace labor-eliminating technologies, reap their economic benefits, and overcome the death-spiral of excess productivity without the carnage and heartache we see today, but it requires thinking differently about taxation and redistribution.
Imagine a system with no revenue source other than a 50% value-added tax, half of which pays for the usual government functions like infrastructure, defense, et cetra, without any welfare component, while the other half is automatically redistributed in the form of a monthly check to everyone over the age of 16. This solves several problems at once:
- All welfare programs, including Social Security and Medicare, along with their waste, corruption, graft, and politically volatile administrative problems, would be eliminated in favor of direct cash subsidies of about $800/month. Instead of patronizing, controversial programs that try to control people's choices while stomping all over their personal values, recipients are free to choose whatever things benefit them the most. Any given person's answer might be "spend it all on booze and prostitutes", but hey, that's their choice. Instead of creating opportunities for government contractors to corrupt their political benefactors, it would use the power of the market to slash waste and inefficiency. In many parts of the country, you can live pretty darned comfortably on a subsidy of that size.
- Subsidies would not be fixed, but would be set at an immutable rate of 50% of government revenue, divided across the whole adult population. When the economy suffers, everyone shares that pain equally. (In practice, it could be arranged so you'd know what your subsidy would be a year in advance, which would help people plan for the effects of downturns while automatically putting a Keynesian damper on the business cycle.)
- Incentives are preserved. Barriers to work, which today come in the form of "means tests" that frequently result in 100% effective marginal tax rates, would be eliminated. Everyone would have an equal incentive to get off their butts and do something, however little it might pay. Employers no longer have to deal with so many complicated labor laws and can hire people on a whim. Individuals can join up to form companies with much less hassle.
- Liberals get the progressive taxation they want; combining a big subsidy with a big tax, the overall effective tax rate varies from negative, to zero, to very high indeed as you increase your earning power.
- Conservatives get the flat tax they want; the crazy tax code is reduced to a single, easily administered and uncontroversial collection mechanism affecting only businesses, not individuals. Every tax impinges on marginal incentives to productivity; under this system, that impingement is fairly and transparently distributed across rich and poor alike.
- Unemployment is no longer a disaster, but a built-in feature of the system; it is recognized that in our super-productive society, full employment is not achievable, necessary, or even desirable. The economy supports and encourages both productivity and idleness. The four-hour workweek becomes much more practical, perhaps by encouraging early retirement rather than shorter hours.
- There is no longer any such thing as "welfare fraud", or "not deserving" the subsidy, because it's not framed as welfare, it's a negative tax.
The one twist I would put on this would be that subsidy payments must never be garnished or diverted; they belong to the recipient first, and the government should not make any effort to divert it to creditors. The result of this is that it would not be possible to borrow against one's future subsidy checks, and that's a good thing. This is necessary because, frankly, too many people are willing to sell themselves into slavery for a few trinkets.
Is this really so hard? This could be implemented today, in a revenue-neutral fashion, and I bet it would work like a charm.
