Economists Do It With Models

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The Dystopian Nightmare Stories Continue, Robert Reich Edition…

March 20th, 2015 · 6 Comments
Income Distribution

Here, fixed that for you…

I’ve written about this supposed dystopian nightmare before– the real problem isn’t that we can create a lot of stuff without taking up a lot of people’s time (that in itself sounds lovely, right?), the problem is that we as a society don’t know how to efficiently allocate resources without the price system, and, more importantly, we can’t seem to conceive of a mechanism for getting the inputs to that price system (i.e. dollars) to people that doesn’t involve trading said dollars for worker effort (i.e. labor). I’m not entirely convinced that we’re getting to the dire point of labor obsolescence any time soon (see here for some evidence of what ATMs have done to bank tellers, for instance), but I do think that we need to start getting potential solutions out into the public consciousness well ahead of time, since social norms and attitudes don’t change overnight (looking at you, gay marriage).

It’s worth noting that my statements aren’t a criticism of Reich himself except in that he appears to have taken up the journalistic hobby of burying the lede by putting this part at the end:

Our underlying problem won’t be the number of jobs. It will be – it already is — the allocation of income and wealth.

What to do?

“Redistribution” has become a bad word.

But the economy toward which we’re hurtling — in which more and more is generated by fewer and fewer people who reap almost all the rewards, leaving the rest of us without enough purchasing power – can’t function.

It may be that a redistribution of income and wealth from the rich owners of breakthrough technologies to the rest of us becomes the only means of making the future economy work.

I get the sense that people like Reich believe that the public will pay more attention if they are presented with the dystopian nightmare view of the situation- they may be right, but I’m curious as to how a “the world will be so awesome except for this distribution problem that we need to figure out” marketing angle would play instead. In any case, we do need to start thinking about a mindset change, since otherwise we run the risk of being that society that has people do busy work so that we have an excuse to give them money. We all know how much we “love” that at our jobs nowadays, so how about we start considering some alternatives, hm?

P.S. I definitely feel that some Player Piano fan fiction is in order here. Let’s get on that, shall we?

Tags: Income Distribution

6 responses so far ↓

  • 1 Brett // Mar 20, 2015 at 3:33 pm

    I’m excited for automation. Nothing’s utopian, but it would be a lot, lot better if we could automate away most routine, boring work.

  • 2 Michael L. // Mar 20, 2015 at 8:26 pm

    If, in theory, machines did all work at no marginal cost, wouldn’t the result simply be that all people’s incomes would come from capital gains rather than labor? That system would still use the pricing system, and no go completely broke as Reich claims they will.

  • 3 econgirl // Mar 20, 2015 at 10:53 pm

    @ Michael L. Yes, absolutely- or dividends or whatever. The inequality concern is that people will be endowed with vastly different amounts of capital, and there’s not a clear way without labor income to work one’s way out of a disadvantage.

  • 4 Michael // Mar 24, 2015 at 12:53 am

    Seems like that’s a nice that a charismatic and enterprising young economist could fill, if he or she wanted.

  • 5 Jandres // Apr 5, 2015 at 11:51 pm

    I have also been through many nightmares but that is the time to show the character and be strong otherwise if we don’t stand up in difficult times then there is no way we will do anything in easy times. I am thankful to my broker OctaFX as they have been nice to me even in situation where I was in verge of giving up but due to their help and awesome service I was able to fight back and today I am successful only because of them.

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