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The death of wages is sin

Federico gives a 6 point plan to cure youth unemployment. It is less complicated and revolutionary than his usual fare; he suggests policies like abolishing the minimum wage and slashing labor regulations. I expect it would work exactly as well as he thinks it would.

After all, minimum wage cuts the bottom out of the labor market. Everyone who would otherwise be working in jobs worth less than $7.25/hour suddenly becomes unemployed. This seems like a bad thing. People making $6/hour seems better than people not being employed at all, right?

Back when there were communists around, some of them would fight against minimum wage laws or occupational safety regulations. Their theory was that these would dull the pain just enough to make workers hate their bosses less and prevent revolution, but not enough to matter. The medical analogy would be a patient who comes in with bone pain, receives a painkiller that pushes the pain back below the threshold of “annoying enough to make me visit a doctor”, and never bothers seeking further medical treatment on what turns out to be bone cancer.

I admire the communists for their sheer Xanatosishness, but I don’t know how kindly historical hindsight has treated their strategy. On the one hand, they were dead right that better working conditions dampened interest in communist revolution. On the other hand, it seems relevant that a communist revolution would’ve been horrible, whereas a series of progressively stronger labor regulations actually achieved far more than the communists would have reasonably expected. So this sort of gambit seems potentially very risky.

But this is how I would question whether people making $6/hour or $3/hour or whatever is obviously better than their not being employed at all.

[Before you continue, read this Mother Jones article (h/t: commenter "Nestor") to calibrate your notions of how bad jobs can be for the rest of the article.]

There are probably a lot of people whose labor just isn’t worth $7.25/hour. There are probably a lot of people whose labor just isn’t worth $3/hour.

As technology continues to advance, I expect the number of these people to increase. I have been accused of the Luddite fallacy for this and I accept the challenge that the historical data present. But there’s also this reductio ad absurdum where we can manufacture androids exactly as smart as humans in every way for $1. In this world, it seems obvious that all companies would buy androids (who work for free) and fire all their human workers, meaning an end to human employment.

So what’s the difference between the past, when technological advances have never caused long-term unemployment, and the android-world, where it does? My guess is that in the past, there have always been areas to shunt the displaced human workers to: maybe machines can manufacture cars, but they can’t drive taxis; maybe machines can sew textiles, but they can’t predict fashion trends. Technological employment will become a problem only when machines can do everything better than humans, which won’t be until after the Singularity, by which time we will have much bigger problems to worry about.

Except that’s not really true. There may come a time when machines can do most blue-collar jobs better than humans even if they haven’t mastered the white-collar ones yet. And shunting former blue-collar employees to white-collar jobs seems like a hard problem. I don’t even think the hard problem is IQ, I think it’s some sort of meta-education which is complicated enough that society hasn’t figured out how to train it yet. No doubt some blue-collar people will be able to adapt to white-collar jobs, and other people won’t. As tech level rises and we approach the android scenario, the number of people who can’t adapt gets larger and larger.

Suppose we do what Federico wants. We promote full unemployment. Well then, these growing masses of people aren’t going to be unemployed. They’re going to be underemployed at $3/hour or something like that.

The minimum wage is sometimes called “the living wage”, and there are both lots of sob stories about how it’s impossible to support yourself on the minimum wage, and lots of counter-sob-stories by people who claim it’s totally easy as long as you don’t blow it all on alcohol and expensive hookers. I don’t know enough to have a strong opinion but my guess is it could go either way depending on circumstance. But I am pretty sure $3/hour is not a living wage. $3/hour either necessitates you to work 20 hour days, or actively drains your income because having a job is expensive (commuting costs, professional clothing costs) but people refuse to give you charity if there are $3/hour jobs available and you haven’t taken them.

On the nationwide scale, which is less dystopian? One in which half the population is unemployed and living off government benefits? Or one in which half the population is working 20 hour days at $3/hour jobs like the ones in that Mother Jones article and still struggling to support themselves?

The former situation seems very likely to evolve into a Basic Income Guarantee, about which I have written before in a very similar context and which seem like a proper end state for the economy which may even be preferable to our current situation in many ways (and of course after a basic income guarantee is in place there’ll be a much stronger argument for eliminating labor regulations) But the latter situation seems like a disaster, and worse a stable disaster that no one has any incentive to make less disastrous.

This strikes me as the strongest argument for the minimum wage and other job-killing labor regulations: that they are turning otherwise-miserably-employed people into unemployed welfare recipients. “Too many people are unemployed and receiving welfare” seems more like a problem society will actually try to solve than “too many people are miserably employed”, and maybe the solution will actually do us some good.

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102 Responses to The death of wages is sin

  1. Fnord says:

    On the nationwide scale, which is less dystopian? One in which half the population is unemployed and living off government benefits? Or one in which half the population is working 20 hour days at $3/hour jobs like the ones in that Mother Jones article and still struggling to support themselves?

    Given certain trends regard welfare and eligibility, I think it’s entirely possible that we’ll end up with half the population working $3/hour jobs (albeit with somewhat less dystopian conditions than 20 hour days) despite being dependent on government benefits, because a Basic Income Guarantee won’t be available and the government benefits they live off of have eligibility requirements that mandate maintaining employment even if there’s no hope of supporting oneself with that employment.

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    • Deiseach says:

      Exactly. Family Income Supplement, where the government has to take up the slack between what people earn and what they need to live on.

      As someone who’s blue-collar herself and comes from generations of blue-collar workers, I dispute that it’s an IQ gap or even educational/training systems that means the people who used to work in the box factory aren’t transferring into white-collar jobs when the machines take over their old jobs.

      Say thirty people used to work on the shop floor making boxes. Say there was one foreman overseeing them. Say there was one supervisor overseeing four foremen. Move that up and you can see that – until you hit a certain layer – there are fewer white-collar jobs. So the thirty box-makers can’t all get thirty office jobs because the jobs aren’t there in the first place – and with increasing automation, as you point out, the industrial alternatives to soak up that labour aren’t there.

      So the growth is in service industries which traditionally have paid badly. Think of waitresses or chambermaids in hotels. Think of all the jobs that rely on the customers tipping the staff so the staff can make a liveable wage.

      That’s why the increasing explosion in people doing degree courses – any kind of course – and incurring huge amounts of debt has arisen. To get a decent job, you need a qualification. The more qualifications, the better.

      But education is expensive. If you’re from a poor family, it doesn’t matter how smart you are if your family has no way of paying to send you to third level education and scholarships and grants only go so far, and employers will discriminate between the person who got a degree from University of Greenwood (formerly Greenwood Polytechnic) and the person who got one from Oxbridge Really Spiffy College.

      Couple all that with shipping jobs overseas (call centres and the likes) and options get tighter. There are going to be more temporary jobs, more short-term contracts, more barebones pay and no conditions. What that article describes? Not surprised. Here in Ireland, in a town not so far away from me, back in the 90s there was a pharmaceutical plant. You were permitted one day in the whole year for sick leave. Get sick more often? Tough. Either work while sick (and infect everyone else) or be fired.

      Yes, I mean “one day” and not “one week”. I didn’t believe it when I heard, either. But the attitude was – and this is much too prevalent about blue collar or lower level work – “Ah, we have to stamp out absenteeism and these people will only take advantage and call in sick on Monday with a hangover if we don’t cut off their excuses”.

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      • Deiseach says:

        For the same reasons, the American multinationals which came over here in the 80s and 90s had strict anti-union policies in place. If you wanted a job there (as an alternative to emigrating), you had to give up your right to join a union because they didn’t like unions dictating about pay and conditions.

        Sure, technically you could still join a union, but in practice (a) the company could refuse to recognise the union or permit it on the premises (b) you were marked as a troublemaker (my cousin, who was elected shop-steward of her union, warned me when applying for a job in the same company not to mention we were related if they asked “Do you have anyone related to you working here?” since the company didn’t like her being in the union and that would taint me by association (c) the government did not enforce the right to union membership because we needed foreign investment for employment (d) the companies gave out a line of waffle about “You don’t need a union, we’ll look after you!”

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      • Mary says:

        One notes that “shipping overseas” is self-limiting. There are only so many places where you can ship them. India and China are already starting to lose them because of higher wages.

        One wonders if violent regions will be pacified enough by having jobs shipped to them. At any rate, it will stop when all regions, or all regions stable enough, have gone through the industrial stage of “cheap labor”– which on one hand looks inevitable and on the other doesn’t last forever — and so there’s nowhere to go. Then again, that’s the point at which I expect automation to explode.

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  2. Paul Crowley says:

    I’m not sure I see why I should expect the blue collar jobs to be eaten up before the white collar ones. I thought that in AI, the hard stuff was easy and the easy stuff was hard?

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    • Vladimir says:

      Well, if anything, engineering will have to be eaten up last. Once engineering is eaten up, it means that the recursive self-improvement loop has been closed, and it’s game over for mankind as we know it.

      As for blue collar jobs, the problem is precisely that the last ones remaining will be the low-paid, low-status menial ones that require nothing beyond the basic “easy stuff” that almost any human can do. It’s the better paid, higher-status skilled trades and craftsmanship that are being eaten up by automation.

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    • Jed Harris says:

      I agree with Paul and this deserves more discussion. I put a longer reply below.

      Also, regarding Vladimir’s first point: totally correct as far as it goes. But only a small proportion of jobs are for engineers or anything similar, and the vast majority of those spend the vast majority of their time on routine application of known models and rules. If we never automated the jobs that generate recursive self-improvement, about 95% of the current workforce could still be unemployed.

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    • Anonymous says:

      Yes; except for programming and engineering, white-collar jobs seem to be going to the robots much faster than blue-collar jobs (in a structural unemployment sense, anyway; some blue-collar sectors are more vulnerable to cyclic unemployment).

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  3. bob sykes says:

    Actually, the indusrial revolution in Britain did cause widespread unemployment, which in fact gave rise to the Luddites. Read some Dickens and/or Marx. Eventually, the descendants mostly adapted to the new possibilities, but not until after large numbers of Britons emigrated to other countries. And not until socialism became entrenched in the UK.

    The same scenario played out across Europe: industrial revolution, mass unemployment, emigration, socialism.

    It didn’t happen here because the Us has always (until now) had labor shortages. That is probably no longer the case. Large scale immigration of unskilled and semi-skilled Hispanics, automation and women entering the labor force have lead to declining real wages among thw working class and stagnating incomes for the middle class. Socialism is coming to the US.

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    • Mary says:

      Actually, unemployment rose all over Europe at that time, regardless of the degree of industrialization. The culprit was more likely to be the potato and the subsequent population boom.

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  4. Damien says:

    People have studied the effects of minimum wage on employment and not found the predicted reduction, as if complexities of circular flow and demand are trumping simple supply and demand.

    Oh, I see Federico refers to that: “Card & Krueger are refuted by Econ 101; deduction trumps experiment.” No point in arguing with someone who believes that.

    OTOH, we have reduced the overall work week from Industrial Revolution levels: 8 hour days, 2-day weekends.

    OTOH again, I’ve seen claims that it’s the Industrial Revolution that was abnormal, that European serfs had a lot of free time, really. 1/3 of the year being religious holidays, and not that much to do between planting and harvest. Of course, planting and harvest were periods of really intensive work.

    Though servants and miners might have always had high work levels.

    ***

    I note that comparative advantage means that a superproductive AI and an ordinary human would still have reason to trade, if both were guaranteed existence. This breaks down when you have the option of letting humans die off and replacing them with AIs, just as international trade breaks down if you can shoot poor foreigners and replace them with your own people.

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    • Charlie says:

      I’ve usually found a good way of responding to people who stand on supposed deduction is to cite this graph, which is tricky but requires only highschool economics. Stand-on-deduction people love graphs :P

      When it comes to trading with superhuman AIs, that’s also assuming there are no non-convexities like any static time cost to do a trade, which sets a minimum possible price.

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    • Deiseach says:

      “OTOH, we have reduced the overall work week from Industrial Revolution levels: 8 hour days, 2-day weekends.”

      I wonder if that’s true all over America; over here, my brother (who has a good and well-paying job) works 12-hour shifts on a “three on, two off” basis (i.e. you work three days, two off, then work three nights, two off, back on days, etc. which really screws up your day/night cycles). The plant did try using four 8-hr shifts but went back to 3 12-hr shifts because that was more cost-efficient. Also, weekend working is mandatory – that is, you work one Sunday this week, next Sunday off but work the Saturday of that week. No 2-day weekends anymore, and Sunday working in Ireland has gone from “optional if you want to work overtime” to “mandatory part of employment”, despite the government of the day promising no-one would ever be forced to work weekends if they didn’t want to.

      Not to mention having to work extra hours or overtime when a big order is on and they have to be there to fill it; you could end up working 14 hrs straight. And that’s in a good job which does pay overtime rates if you work extra hours.

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      • Damien says:

        Not always true, and we’ve got 12 hours shifts for e.g. nursing jobs, and some service workers get back-to-back shifts But it’s still an average thing.

        Hmm, in 35 days your brother is working 252 hours, vs. 200 hours for a 40-hour week job in the same time period. Though getting 14 days off to 10.

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        • Deiseach says:

          Yeah, it’s swings and roundabouts. It’s maddening to try and keep track of when he’s working and when he’s not, though, and I do really think it can’t be good for his health with all the to-ing and fro-ing.

          But then again, be grateful for any job nowadays!

          And yes, I think the service industry jobs will be the ones where excess labour gets soaked up – though wages and conditions will be “competitive” (read: as low as can be squeezed, with contract work and sub-contracting the norm). Hospitals will go the same way – cleaning and catering sub-contracted out to outside agencies, which hire people on short-term contracts, and you cut corners in pricing, you get what you pay for, as the dirty conditions in our local regional hospital demonstrate. And I bet nursing will be the same – qualified nurses will need more and more educational qualifications, while the patient care element will be done by ‘practical nurses’ – short-trained manual labour, in other words, to do the cleaning and feeding and lifting and carrying of patients.

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  5. Doug S. says:

    I can think of one reason that people not having jobs can be a good thing: it’s a lot easier to do well in school when you’re *not* dealing with the demands of a job at the same time. My father the engineering professor has anecdotes he tells about (and to) employed students…

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    • Deiseach says:

      And what about all the students whose fathers were not professors of engineering, therefore had no family income to support them while they studied, and needed to generate income to feed, clothe and shelter themselves while paying for textbooks, materials, exam fees, and all the extras that universities slap on to cover running costs?

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      • Doug S. says:

        Well, if you NEED to be working, then you need to be working, and my father is indeed well aware of that, but most of his employed students aren’t in that situation.

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        • Deiseach says:

          Which only makes the situation worse – the necessity for better qualifications to get a reasonable job means that you need some amount of college, whether traditional third-level or post-secondary school training courses.

          But if you can only go to third-level if you can pay for it (don’t need to work while you’re there), then the very people who need the chance to get out of the blue-collar milieu where the old industrial work is fast disappearing are the ones who can’t avail of it, and the middle-classes continue to educate their children and the gap widens even more between those who can make it and those who can’t.

          And even for the middle classes, the squeeze is on, as we saw when Scott (thankfully, not now) was looking at the prospects of not getting on the starting rung of the career ladder he had spent all that time and study aiming for.

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  6. Doug S. says:

    There are costs to employing someone other than salary. I can easily imagine that the ideal market wage for some people would actually be negative; someone might be so bad at a given job that they actually do more damage than they contribute in value.

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  7. WhoWhom says:

    So what’s the difference between the past, when technological advances have never caused long-term unemployment, and the android-world, where it does?

    Gregory Clark deals with this objection in A Farewell to Alms; this actually happened to horses in England during the Industrial Revolution, and their population subsequently cratered from “everyone engaged in serious transport or farming needs a horse” to “horses are only pets now.”

    The model of unproductive people as pets fits pretty well, and has implications worth pondering.

    It’s also worth repeating Moldbug’s point that that the most miserable places in the US are the ones where much of the income is on basic income guarantees (i.e. ghettos where much of the income comes through disability / welfare payments). Work, even miserable work, might actually be better than not having to work.

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    • ThrustVectoring says:

      There’s a cause-and-effect mixup there, I think. It’s not that ghettos are terrible because the inhabitants get free money without working – it’s that money is thrown at ghettos in an attempt to not feel bad about ghettos being terrible. Also, paying them not to riot is a big part of that, and welfare is a cheaper way of doing that than prison.

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      • im says:

        Also, probably a difference between miserable ghetto-dwellers and bohemians who actually receive the same amount of resources.

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      • Mary says:

        No, the ghettos were in fact much nicer places before they started getting paid to act stupidly. Furthermore, it was a lot easier to rise out of them, then, too.

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        • Damien says:

          They were a lot nicer before old neighborhoods got torn down for housing projects which got dosed with neurotoxin, and jobs moved out into the suburbs. Difficulty of rising was also increased by the projects being only for low-income people, so anyone who did rise had to leave, leaving a concentration of poverty behind. Contra Moldbug this is because they were *not* getting basic income guarantee, they were getting minimum income, much of it in-kind, conditional on being poor.

          There’s a lot to be said against the old social programs but it’s more about the details than the basic idea of preventing miserable starvation, and many of those details are there to satisfy conservative ideas about not giving money to the undeserving.

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        • Mary says:

          Whatever our current social programs are aiming for it, it is not preventing “miserable starvation” and the claim that it is just shows that the actual aims are — less presentable.

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      • Mary says:

        Indeed, there are places where the money is much worse and the lives much less miserable in the Third World. This is how the slums of the Third World and those of the welfare state look relative to each other, in the doctors form the Third World.

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    • Fnord says:

      It’s also worth repeating Moldbug’s point that that the most miserable places in the US are the ones where much of the income is on basic income guarantees (i.e. ghettos where much of the income comes through disability / welfare payments). Work, even miserable work, might actually be better than not having to work.

      Perhaps this is addressed, but…

      This seems like a minefield for correlation-causation issues. The poorest communities are the ones where the most welfare dollars go? You don’t say.

      Plus, as I alluded to above, basic income guarantees don’t actually exist (or, rather, are uncommon and not typical of welfare; the Alaska Permanent fund is sort-of one, though I wouldn’t want to try living on it).

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  8. Army1987 says:

    Gotta love how in your old post drinking martinis on the beach is considered good and drinking beer at home is considered bad! :-)

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  9. ThrustVectoring says:

    I’ve been making the exact same point off and on. Unemployment isn’t necessarily a problem. As a society, it’s worth buying people out of miserable employment. It’s fairly affordable on a societal level, too – $1000/month for everyone in the US is only a quarter of the US GDP, and relative costs and incomes are only going to make this figure better in the future.

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  10. Deiseach says:

    I also love how the employers and others who advocate doing away with the minimum wage and letting the market determine what is a competitive rate don’t abide by that logic themselves; all the remuneration committees for board members which say “We have to pay this rate plus perks, otherwise we won’t attract the best people for the job!” while saying “We’re cutting the rates and dumping the health plan for the shop floor workers, and if they don’t like it, too bad!”.

    Is Federico willing to work for $3 per hour if a putative employer thinks that’s a competitive rate?

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    • Multiheaded says:

      Is Federico willing to work for $3 per hour if a putative employer thinks that’s a competitive rate?

      You really don’t grok the right-wing authoritarian mindset. The question is meaningless to today’s reactionaries, and would’ve been meaningless to their intellectual predecessors like Nietzsche or Carlyle.
      They simply view themselves as a breed apart from the hoi polloi – not just quantatively but qualitatively different in genes, talent, virtue, etc; empathizing with the “barbarians” is, to them, difficult, unnecessary and uncalled for in judging policies.
      This is also why alt-right folks can like the internet for its libertarian mores, free voluntary exchange and lack of coercion, yet fail to extend these revealed preferences with what they advocate for society (authoritarianism, patriarchy, rigid hierarchies, etc).
      “Liberty for the few; slavery – in every form – for the masses!

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      • Jed Harris says:

        Excellent essay you linked to. Very brief summary (by me):

        Reduce state control so that white men can exercise more control over their women, slaves, children and other natural subordinates.

        Of course the minimal state must enforce continued subordination of those natural subordinates. But that is like preventing theft etc. — obviously appropriate.

        This description works really well as a generic template for a lot of the (pseudo)libertarian arguments we see.

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      • Vladimir says:

        That’s by no means specific to right-wingers, except that they tend to be more forthright about it.

        After all, have the elites in Western countries become more or less detached and secluded from the general population in the last century or two, as the Western world has become far more leftist and liberal in every respect? Consider that a 19th century U.S. president would ride around town in an open coach and tip his hat to the passers-by, and you could go and knock on the White House door and ask to talk to him. Or observe the late 19th and early 20th century assassinations, both attempted and successful, from around the world: Abraham Lincoln, Alexander II, Franz Ferdinand… Monarchs and presidents would just show up in public spaces and move around ordinary citizenry and passers-by, with a lack of precautions that is simply unimaginable nowadays.

        Now compare that with today’s political elites, whose behavior is more akin to some Dominate-era Roman emperor, sitting in a throne room separated from the common world by a multitude of guarded gates and antechambers, each successive gate opened only to a still narrower privileged group. (Or showing up in public only in meticulously staged and planned events, with a wide radius put under the most stringent security regime.) Do you think that this trend, and the general social change in the liberal-left direction, are correlated only by accident?

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        • Aris Katsaris says:

          “Or observe the late 19th and early 20th century assassinations, both attempted and successful, from around the world ”

          Kennedy was in the 1960s, Olof Palme was in the 1980s, Zoran Đinđić was in 2003

          “Do you think that this trend, and the general social change in the liberal-left direction, are correlated only by accident?”

          I’m not yet sure you’ve even established a correlation yet. If e.g. the Saudi Arab monarch is to the right of Abraham Lincoln, is your argument that he’s more approachable than Abraham Lincoln was? Is Putin more approachable than Merkel? Can I approach the Pope in the Vatican more easily than the Prime Minister of Andorra?

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        • Multiheaded says:

          Oh, enough with the rose-tinted glasses! This could very easily be due to the general character of social stratification under pre-1968 capitalism, so that, in essense, when an official would “ride about town”, he’d only risk encountering the “decent” public – the middle classes, the bourgeoisie, his fellow aristocrats… Do you think that, during the labour struggles of the 19th and early 20th century, a worker or an unemployed person would characterize a politician as “approachable” or willing to associate with the common folk?
          Nah, the elites have always had their comfortable bubble – in the past this bubble just controlled the flow of information as well as resources much more completely, so that we remember much less about the lives of the majority of people who were outside it.

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        • Mary says:

          A more likely explanation is the immensely greater ease of killing at a good distance nowadays.

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        • Deiseach says:

          “Can I approach the Pope in the Vatican more easily than the Prime Minister of Andorra?”

          You would seem to have a better chance with this pope, who is not going to live in the Vatican Apartments but continue to stay in the Domus St. Martha.

          As for the Prime Minister of Andorra, I’m afraid I would first need him to walk around with a placard saying “I am the Prime Minister of Andorra” before I could identify was this the person I wished to approach?

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      • Deiseach says:

        Well, I’m conservative myself (but very much not, I suspect, in the American vein of conservatism) and I do get a sense of anthropological investigations from all this talk about ghetto-dwellers.

        To quote Chesterton from the Fr. Brown story “The Secret of Father Brown”:

        “No man’s really any good till he knows how bad he is, or might be; till he’s realized exactly how much right he has to all this snobbery, and sneering, and talking about ‘criminals,’ as if they were apes in a forest ten thousand miles away; till he’s got rid of all the dirty self-deception of talking about low types and deficient skulls; till he’s squeezed out of his soul the last drop of the oil of the Pharisees; till his only hope is somehow or other to have captured one criminal, and kept him safe and sane under his own hat.”

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    • Mary says:

      The reason why they will drop the shop floor workers’ rates is that they can get quite adequate workers at the new rate. Or else they won’t drop the rates.

      According to your thesis, why is anyone except the board members paid more than minimum? The obvious answer, that they will seek employment elsewhere and get it, is precluded by your thesis.

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      • Deiseach says:

        But why is it considered that the carrot- better pay and conditions – will get better workers at the higher end but the stick – ‘welfare to work’, state pensions not enough to live on, piece-rates, abolish the minimum wage – will motivate workers at the lower end?

        There have been enough CEOs and board of director members who did not do a good job but whose contract of employment meant that they were locked in to the perks. Shop floor workers don’t get “gardening leave”; why reward an incompetent manager when an incompetent packing-line worker would be kicked out with not even statutory redundancy?

        Why not think about outsourcing management to the same countries that the manufacturing jobs are being outsourced to? Why not approach it on “I can get an equally or better qualified person for less money” when it comes to the person who is Executive Vice President of Growing Strategic Processes?

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    • anon says:

      That’s not hypocrisy, just market forces.

      Shop floor people have no options – it’s work or starve, except for government interventions that luckily prevent actual starvation. The nature of the labor is such that the 99th percentile and the 50th percentile only differ by a small amount in terms of how much value they can generate..

      Board members do have options, and so you really *won’t* get the best person for the job unless you pay well. The nature of the labor is such that 80th percentile vs. 95th percentile board members can mean the difference between profit and complete failure.

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  11. Vladimir says:

    There are many problems with such a scheme, but two of them stand out in particular.

    First, people living off handouts will develop all sorts of social pathology, and descend into degradation and savegery. The basic reasons are. simple. Once the status competition through productive endeavors is eliminated, what remains is status competition through unproductive, violent, and predatory means. And the lack of structured everyday discipline and incentives for long-term prudence will lead many towards the most self-destructive kinds of immediate gratification.

    Second, such plans are based on the false premise that as the society becomes wealthier, all sorts of wealth increase in proportion, so it’s a simple matter of dividing a much larger pie, where nobody needs to be made worse off. This is true for stuff that can be mass-produced with huge economies of scale, like food, clothing, or electronic toys. However, some essential goods are zero-sum or very nearly so — and people who keep competing in the productive economy will quickly bid up the price of these beyond the guaranteed basic income. So these goods will still need to be actively re-distributed to the welfare-dependent population. The most obvious example of this sort is habitable land (and by implication, housing).

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    • im says:

      That’s important. However, I would add that norms and non-economic social structures can shape that in a lot of ways, including into very positive forms.

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    • CaptainBooshi says:

      Where’s your evidence for your first point? It doesn’t seem obvious to me that is automatically true.

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    • Doug S. says:

      Once the status competition through productive endeavors is eliminated, what remains is status competition through unproductive, violent, and predatory means. And the lack of structured everyday discipline and incentives for long-term prudence will lead many towards the most self-destructive kinds of immediate gratification.

      Would this apply to, say, retired people?

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      • Jed Harris says:

        Or perhaps to the idle rich? Sometimes that doesn’t seem so far fetched…

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      • Athrelon says:

        Uh, retired people (and the idle rich, as mentioned below) appear to be different than most people in a number of highly relevant ways.

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        • Jed Harris says:

          Can you elaborate by listing a few of the most relevant? I’m not sure why you are moved to make that assertion but not moved to illustrate or otherwise support it.

          In the absence of specifics I’m skeptical that distinctive attributes of the retired and idle rich — other than their secure incomes — explain their lack of resort to “unproductive, violent, and predatory means”. A parsimonious explanation of the observed facts is that sometimes people who have no secure income, very little power and resources, very low social status, and very poor prospects don’t see any better option.

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      • peterdjones says:

        Productive endeabourndoesnt have to be paid. .People can compete to create amateur,music, writing, etc.

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    • Nestor says:

      I live in a country with 3 million estimated empty dwellings. Tell me again how there is a housing shortage.

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      • Jed Harris says:

        Furthermore the only essential good Vladimir mentions that is really zero-sum or nearly so is land. Anyone who flies from San Diego to Vancouver can easily observe that open land (unfarmed, unbuilt) within 100 miles of the coast is not a scarce resource. If the robots will put in utilities and build houses on it, no serious redistribution will be necessary.

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    • Scott Alexander says:

      Haven’t the two of us discussed housing shortage on Less Wrong before? There’s a housing/land shortage relative to places where you can get lots of jobs, but there’s more than enough land in Kansas for anyone who wants.

      The Berkeley community I’m in seems to be full of unemployed or underemployed people, including myself. Most of them seem to be using their free time to study, plan pie-in-the-sky startups, blog, or hang out with friends. Although I admit savagery is a possible failure mode of lack of work, it doesn’t seem inevitable. A lot of people who are savage without jobs seem to be pretty savage with jobs too, and a lot of savagery seems indirectly related to the challenge of making money without jobs, eg drug dealing.

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      • Jed Harris says:

        A bunch of these responses (including yours and mine) seem pretty convergent. Oversimplifying, two positions have been laid out:
        – “Savagery” is primarily a response to circumstances.
        – “Savagery” is primarily due to a lack of socialization or perhaps some deeper problem with temperament / character.

        I currently plump for the first position but I wonder if there is good evidence for either position. Good evidence is hard to come by because of the extremely complex causal field, ethical problems of conducting most experiments, plus the intrinsic cost of serious experiments. However there must be a lot of natural experiments.

        Plus there are other options — for example the recent claims, which seem credible, that lead burden in early childhood explains a lot of “savagery”. This evidence is of course from a large number of natural experiments.

        But all of this would be “epidemiological” and so very weak evidence as you have noted in other contexts.

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  12. Jed Harris says:

    As Paul Crowley says, you should not align “likely to be automated” with “blue collar”. A friend of mine just had a cataract operation, the surgeon commented that he’d soon be replaced by a robot and the surgery would be done in shopping malls. In my own experience most visits to primary care physicians could be handled well by an expert system — and probably would be done better by Watson. Huge numbers of while collar paper pushing jobs have already been vaporized.

    Psychiatry that requires some depth of conversation with the patient should be safe for a while, though.

    Not clear to me what the policy implications of this are, but we can’t rely on the disaffected being just the lower end of the socio-economic spectrum.

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  13. CaptainBooshi says:

    I think it’s worth pointing out as well that we have already had an era that had no labor regulations or minimum wages over a century ago, and Americans fought hard and shed a fair amount of blood to move away from that. I think anybody arguing we should move back in that direction should explain why it’s a good idea to move back to what’s already a known failure state. It is possible to argue that we have gone too far in modern days and should dial it back (I don’t agree with it, but it is possible to argue that), but that’s not the argument I see being made here.

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    • Multiheaded says:

      I think anybody arguing we should move back in that direction should explain why it’s a good idea to move back to what’s already a known failure state.

      Their reasoning must be along the lines of “no popular socialist movements” + “different equilibrium in military technology, less favourable for the demos” + “we don’t depend on the working class economically” = “we’ll easily crush all uprisings”. Plus the sheer sadomasochistic fixation of most reactionaries with “hard work” and “knowing one’s place” and other still-fashionable cruelties.

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    • ESRogs says:

      No labor regulations or minimum wage in a regime with a basic income guarantee is a pretty different state from just no labor regulations or minimum wage. No?

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  14. Romeo Stevens says:

    Auction the unemployed, the best treatment of the NIT I’ve seen.
    http://www.morganwarstler.com/post/44789487956/guaranteed-income-auction-the-unemployed

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    • Zaxser says:

      Saw this while checking out Molebug. Sounds jest crazy enough to work if the perverse incentives can be rung out. The only objection I have is that by subsidizing wages for the smaller companies, you may be encouraging technological stagnation.

      I remember reading, back when I was doing research on immigration, how, when a local government went after a tomato farm that was hiring illegals to pick their fruit. The company actually went and hired a bio tech company to engineer the tomatoes so that they could be easily harvested by machine.

      On, the other hand, it could also allow certain companies and individuals to take more risks. If I could hire people for a dollar an hour, I’m sure if I sent them out to beg on the street, they’d have 41 dollars. In this vein, I could do a lot. Hire people to do apprenticeships while considering them for “real” employment. Test out untried labor on my idea for a new video game. Test out employees for very brief periods of time (even one day) ti see if they might work out. In the mean time. people are getting experience and adding value to themselves and the economy. It’s just crazy enough that it might work.

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  15. Mary says:

    Most people earning minimum wages are not their own sole support.

    Furthermore, working at minimum wage may be crucial to ever earning more, by learning the essential skills or giving a reference to someone who has no other credentials.

    A wage that would actually support them would mean that we would have to support them in a poverty they have more difficulty climbing out of.

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    • Jed Harris says:

      People who don’t need to be paid can work as interns, volunteer in non-profits, etc. If they want to they can learn whatever “essential skills” they want to learn and are capable of. If they do a good job, they can get good references — maybe more impressive than from a fast food restaurant.

      Furthermore because they don’t need to be paid they can work in situations chosen to maximize their rate and quality of learning, rather than the situations that can turn a profit from them — which I see no reason to believe are especially good for learning.

      There’s a potential double standard here. Some kids can afford to work as unpaid interns, perhaps supported by their parents, and are credited with the desire and ability to learn from that — even without prior experience in mall retail. Kids whose families can’t afford to help them work as interns need to “learn … essential skills.”

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      • Multiheaded says:

        But obviously the children from Decent Families with a Good Background learn much differently from, and require less Discipline than the spawn of Plebs and Savages! It’s silly to even compare their paths in life! If you weren’t born on top, you’d better claw your way up; this is Meritocracy!

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      • Mary says:

        So what you are saying is that people who can’t earn minimum wages are worthless as workers — not worth a red cent. That makes the lower minimum wages look positively generous.

        Leaving that aside, the notion that workers who need to learn to arrive on time are foresightful enough to see that they need to learn it is positively silly. It is exactly in the lower classes where they need to learn such things, and providing a wage will inspire those who can learn to do so.

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    • Damien says:

      “Most people earning minimum wages are not their own sole support.”

      Source?

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      • Mary says:

        Yours for claiming that they do support themselves?

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        • Zaxser says:

          People certainly try. I was working an apprenticeship and living off a stipend of ~500 bucks from my dad, plus my mom paying for my phone and was quite comfortable. With out food stamps or government assistance. If you aren’t paying your soul in gas (and are lucky enough to have no major medical issues as I had no insurance) it’s not all that hard, but I walked two miles to work.

          I knew several people working and earning less or only nominally more after you put in car costs. They all used food stamps. Some had occasional help from their parents. Some were quite old or were middle aged with medical issues and they were getting at least some government assistance, though it’s amazing and sad how poor you can be and not make it on medicare, or how messed up your body can be and not be on disability.

          I do think I could live on minimum wage and live pretty damn well, if my job wasn’t hurting my health, but only given either being close to work or having cheap public transit and actually getting full time, which almost no one on minimum wage gets. In addition to the obvious like making birth control a priority and not getting screwed over by your health insurance.

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        • Damien says:

          I never made such a claim. You made a specific claim, it’s your responsibility to back it up, or admit ignorance.

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    • Deiseach says:

      “Most people earning minimum wages are not their own sole support.”

      Which is part of the problem – there’s a lot of talk about subsiding the idle poor, but what about subsidising businesses which is what happens when they can pay for the same work at a lower rate of pay? Either that person is depending on another person in a better job, or on income supplement from the government.

      For heaven’s sake, we are not talking about 17 year olds straight out of school getting their first job and any experience is better than none. We’re talking about people in their thirties, forties or fifties who may have been in fairly reasonable jobs until the plant closed down because the company was taken over and corporate headquarters decided it wasn’t cost efficient to have two bottle-making plants when automation and increased productivity in one would take up the extra customers from the takeover. Or people who have always worked seasonal or short-term labour because they didn’t have the chance to get the education to get out of that kind of work. Or people who couldn’t get an apprenticeship because those are being phased out.

      Not necessarily criminals, idlers and the unemployable, but people who could make some kind of a living. And now they’re being lectured as parasites upon the hard-working taxpayers or told “Just change career to something like computer programming or accountancy or one of the high-value jobs!” and if they don’t or can’t, then it’s their own fault for being lazy and/or stupid.

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  16. Leonard says:

    it seems obvious that all companies would buy androids (who work for free) and fire all their human workers, meaning an end to human employment.

    No. It is obvious only that many kinds of work would be androidized. I think it likely that most kinds would be, although I do not regard that as obvious. Specifically, the work that would be automated is any kind of work in which the identity of the worker is immaterial to the customer. However, particularly when the customer is an individual human (i.e. the “consumer”), it is often the case that we do care about who works for us.

    Humans love service, and part of that is based in our will to dominate. Humans love sex. Humans love friends and friendly connection; and they love their celebrities who provide friend-simulacra. And some humans like helping other humans, and if that means buying “fair trade” coffee, they pay extra. Unless your androids are fully human in the sense that we cannot tell who is human, then I expect to see people employing other people to do the sort of jobs implied above. I.e.: humans being butlers, waiters, whores, paid friends (i.e. psychiatrists, alternative medicine, personal trainers, yoga instructors, etc.), and celebrities. Not to mention some amount of work as “fair trade” artisans.

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    • Scott Alexander says:

      I was positing that they could do even very human tasks like massage and psychiatry indistinguishably from the average human.

      There would probably be people who would pay extra for the sheer signaling value of knowing a real human was doing stuff for them, but I don’t think it ruins my point that this would raise unemployment.

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    • Deiseach says:

      Re: humans want to interact with other humans, so those jobs won’t be automated.

      Online banking which is being pushed, so that people won’t come into the physical branches and take up time being served by the tellers at the counters, meaning fewer jobs at the starting-level in banks are being created or advertised. How about all the times you’ve rung a helpline and gotten the “For account queries, press 1. For new customers, press 2. For billing queries, press 3. If you want to talk to one of our agents, please hold. We value your custom and will get back to you as soon as one of our agents is free to take your call!” all done by automated voice?

      Options for the ‘lower classes’? Sex work and going into service. In the 21st century. Ah, brave new world that has such creatures in it!

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      • Multiheaded says:

        Options for the ‘lower classes’? Sex work and going into service. In the 21st century. Ah, brave new world that has such creatures in it!

        I was going to tell Leonard the same – perhaps inquiring as to whether he himself would enjoy having to earn a living as a “butler, waiter, whore or paid friend”, metaphorically or literally sucking up to the few “natural aristocrats” – but I’m very glad to hear this from a self-identified conservative; proof that not only neo-Jacobinist crazies like me would balk at this retreat from Modernity into serfdom.

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        • Multiheaded says:

          Hmm, googling “neo-Jacobinist” reveals that it’s only ever used by American paleocons, as an insult against neoconservatives and some others. Eh, I meant it simply in the sense of “Liberté, Égalité, Fraternité, ou la Mort”.

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        • Leonard says:

          Actually I think I’d make a pretty good butler. But as to your question, no, I would not want to be a butler or a waiter or whore, etc. But this is not about my wants, nor yours. It’s about earning a living. Right now there are billions of people earning a living at jobs they do not enjoy. You know, the kind of work which is work. Do you think this is wrong somehow? Do you believe waiting tables is beneath you? Will you indict the entire history of the world, and practically all the work that has ever been done from time immemorial, as serf-labor in a dystopia?

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      • Leonard says:

        Undoubtedly current companies in the West, hamstrung by high minimum wages and workplace regulation that makes the employment of low-wage labor difficult and costly, want to robotize what they can. Part of this is customer-driven: for example, I prefer using a cash machine to a teller, because the cash machine is faster and will not screw up the transaction. But yes, we see the drive to substitute capital for labor. This is what economics predicts when labor costs are high.

        Nonetheless, bank tellers and phone-answerers are not exactly the sort of jobs I was talking about. When I go to a bank it is because I want some cash, and the human qualities of the teller are incidental to the transaction. By contrast, the human qualities of a whore are not incidental to her trade.

        And yes, I do think it is important to have work for the lower classes. You may sneer at such work, but your disdain does nothing to put food on their tables.

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        • Adam L says:

          Yes, but the proposed alternative is welfare / guaranteed minimum income, not just letting anyone starve.

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        • Anonymous says:

          The problem with guaranteed minimum income is
          here.

          for those who don’t want to read the article, the short version is:
          Life on welfare/guaranteed minimum income makes life in the Third World slums look appetizing by contrast.

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        • Zaxser says:

          @Anonymous

          It seems to me a mix up in causation here with free education and welfare, the people who remain in the lower classes will be people whose problems and lack of social mobility will be those whose problems aren’t easily solved by welfare. Most of those who have such problems will have moved up and out of that strata.

          If your social system doesn’t solve addiction, one of those problems will be addiction. If your social system doesn’t solve a lack of agency and responsibility, then that’ll be a problem the remaining poor.

          There have always been people like this. If you do read anything from the victorian era or listen to your great grandparents talk about how they lived (incidentally pre welfare state) they might talk about surviving while working hard and being poor, but they might also talk about drunken layabouts and scummy impoverished con men and low class wife beaters I hear a few of those stories in my own family. These aren’t new problems.

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  17. Jed Harris says:

    Here’s an interesting discussion (with facts and anecdotes!) about the sort of patchwork post-employment system we’ve got now.

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  18. Kaleberg says:

    1) Lowering the minimum wage doesn’t increase the demand for labor. It decreases it. This has been shown again and again. If you can hire someone to do something for $3 instead of $9, that’s just $6 removed from the economy. If you have to pay $15, that adds $6 to the economy. Unless you are arguing for decreasing employment efficiency, it makes more sense to raise the minimum wage.

    2) We have had long term periods of unemployment when wages were too low. There were those late 19th century recessions, the Great Depression and our current depression. When productivity outstrips wage growth, lack of demand leads to unemployment.

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    • Mary says:

      Broken Window Fallacy. If the person has nine dollars and only spends three on wages, then he has six to spend elsewhere. It does not vanish.

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      • Charlie says:

        If it goes to the CEO, who then puts it under his mattress, that’s pretty close to vanishing (Molly Ivins quote – “the rich are the only class who can afford to not spend their money”). If the CEO does not in fact keep money under his mattress, but instead in a bank, and this bank loans out the money to someone who buys a house (statistically reasonable), this is much better than vanishing, but still not as good as going to buy milk from the local grocery store. Relevant to Kaleberg’s claim, it certainly employs more people to sell a hundred thousand bottles of milk than to sell a house for the same money.

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        • Mary says:

          And what color is the sky on your planet? What CEO in the world puts his money under his mattress?

          As for your silly claim that investing is not a good as buying milk — good heavens, do you think that construction workers don’t buy milk?

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        • Randy M says:

          Molly Ivins quote – “the rich are the only class who can afford to not spend their money”

          She’s either defining rich all the way down to my 50k income (for 5, in CA), or assuming everyone has Molly Ivin’s tastes.

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        • Doug S. says:

          And what color is the sky on your planet? What CEO in the world puts his money under his mattress?

          It’s not CEOs that are keeping cash under the proverbial mattress right now. It’s corporations. Apple, for example, has over $100 billion in cash – more than the market capitalization of McDonalds.

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    • ESRogs says:

      The proposal is to lower minimum wage only after putting in place guaranteed basic income though. Employers will certainly chase after the low cost workers (see: outsourcing), and if there’s an aggregate demand problem, fix that by raising the basic income, or other monetary policy.

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  19. Grognor says:

    $3 an hour is less than you can make on Amazon Mechanical Turk, my only source of income. Which is probably going to get a lot more popular for workers as unemployment increases, and lot less popular for “employers” as AI gets better at everything.
    I guess this just supports your point.

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  20. Pingback: Thank you for doing something ambiguously between smoking and not smoking | Slate Star Codex

  21. Scott Alexander says:

    HostGator.

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  22. ESRogs says:

    I think this is spam.

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  23. Anonymous says:

    It’s intelligently-written spam. A reasonable question that can be blind-posted to a ton of blogs!

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