Accelerating Technology and the Economy of the Future 4 doc

... Taxes 140 The “Workerless” Payroll Tax 142 “Progressive” Wage Deductions 144 Defeating the Lobbyists 146 A More Conventional View of the Future 149 The Risk of Inaction 152 Chapter 4: Transition ... AmazonCopyright©2009byMartinR.FordAllRightsReserved,including the right of reproductioninwholeorinpartinanyform.Publishedin the UnitedStatesbyAcculant™Publishing.Library of CongressCataloging-in-PublicationDataFord,MartinR. The Lightsin the Tunnel:Automation, Accelerating Technology and the Economy of the Future /MartinFordp.cm.IncludesbibliographicalreferencesISBN-101 -44 86-5981-7ISBN-13978-1 -44 86-5981 -4 1.Economics Future Trends2.Economics—Impact of Advanced Technology on3.ArtificialIntelligence and Robotics 4. Computer Technology and Civilization5.TechnologicalUnemploymentI.TitleThis ... haveasweanticipaterecovery from the current cri-sis and in the years and decades ahead? What will the economy of the future looklike?Among people who work in the field of computer technology, itisfairlyroutinetospeculateabout the like-lihoodthatcomputerswillsomedayapproach,orpossiblyevenexceed,humanbeingsingeneralcapability and intel-ligence....

... aregrowingdark.Nowweseethatmany of the verybrightestlightsin the tunnelfinallyfeel the impact and alsobegintolosetheirlight. The owners of the businessesin the tunnelareseeingmuch of theirwealthgraduallydrainaway. The ... mayhaveactuallyin-creasedforatime,astheywereabletolowertheirprices.Asaresult,theirprofits, and therefore the wealth of theirtopemployees and shareholdersincreased.Thesewere the brighterlightsin the tunnelthatinitiallybecamestronger.However,asnearlyallbusinessesin the tunnelcontinuedtoautomatejobs,atsomepoint the decreasein the num-ber of potentialcustomersbeganto ... quitesurethatcomputerswereimportantenoughtomerittheirownengineeringfield. The University of Michiganhadone of the mostad-vanced computing centers in the country. The computerthen in use was a state -of -the- art...

... morepopular.Whatwillwedoifsomedayasubstantialpercen-tage of the three and ahalfmillioncashiersin the U.S.nolongerhavejobs?Whatadditionaleducation and trainingcanweoffertheseworkers? And whatjobswoulditpre-parethemfor? And what is the impact of thatpotential unemploy-mentonmarketdemandforgoods and services?Cashiersaregenerallynothighlypaid,buttheynonethelessexistaslightsinourmassmarkettunnel.Cashiers,justlikeotherworkers,drivecars,buyclothes and consumerelectronics,rent ... the glassesisopen and the other closed. And, of course, the glassescouldberotatedinanydirection. And perhapstheyare touching or somehow entangled with other objects.Building and programminga ... formanythousands of lawyerswhorarely,ifever,gointoacourtroom.Theseattorneysareemployedin the areas of legalresearch and contracts.Theyworkatlawfirms and spendmuch of theirtimein the libraryoraccessinglegaldatabasesthroughtheircom-puters....

... food—all of these and countlessthousands of otherstructures and chemicalsthatcompriseourbodies and make usfunctionareproteins. And theyareallconstructedthroughnanotechnology.Itislikelythat the coming“nanotech”revolutionwillbegin ... collating and faxing in-formation. The intellectualportion of the job—eitherap-provingordenying the loan—isprobablyalreadyessential-lyhandledbyacomputer.Throughout the economy, there*Formoreonrobotics and itspotentialimpactonemployment and on ... of the geometrically increasing technology line. Prior to the point where the impact be-comesobvious,thereisreallynowaypastdatacanshowthem the steepverticalpart of the linethatliesahead.The...

... access to capital, small plots withpoor economy of scale,tradebarriers, and oftenoutrightexploitationat the hands of governments and corrupt officials. Manufacturing in China is ... Amazontakeaper-capitaincomethatissomewhatcomparabletothat of developed nations and then multiply it by somehugefraction of the Chinesepopulation.In otherwords,theyassume that a very significant percentage of the 1.3billion ... AmazonInthisbook,wewon’tagainstrayintothismorespe-culativearena(exceptin the lastsections of the Appendix). The ideaspresentedinthisbookdonotdependon the oc-currence of the technologicalsingularity. The standardwehave set is...

... todecline.Rememberthatwearetalkinghereaboutaverageworkers.Toget the graphabove,youmighttake the dis-tribution of incomesin the UnitedStates and thenelimi-nateboth the richest and the poorestpeople.Thengraph the averageincome of the remaining“typical”people (the bulk of consumers) ... tolookinalittlemoredepthatsome of the mostwidelyheldconventionalassumptionsabout the future and seeiftheyarereallyreasonable: The primaryforcethatwillshape the comingdecadeswillbeglobalization.Offshoring of jobs and the con-tinuingmigration of manufacturingtolowwagecoun-tries ... whocontrols technology.  And as of the mo-ment,thatcontinuestolargelybe the UnitedStates.Inthatsense, the future for the U.S.couldpotentiallybemuchbrighterthan the conventionalwisdomsuggests.Butthatisonlyifwecanadapt, and thatwillbeaveryse-riouschallenge. The UnitedStatesisfundamentallyacon-servativecountry....

... elimi-nates the jobsthatprovideincometoconsumers. The es-sentialideaisthatweshouldimposesomecombination of aconsumptiontax and/ oraspecialdirecttaxonbusinessthatcaptures the incomewhich,inanon-automatedecon-omy,wouldbepaidoutinwages.Overtime,as the wagespaidtoaverageworkersdecrease(asapercentage of reve-nue),thesetaxeswouldbegraduallyincreasedtorecaptureatleastaportion of thisincome. The overallobjectiveistorecapturejust the optimalamount of income and thengetitinto the hands of consumerssothattherewillbesuffi-cientconsumerdemandtocontinuedriving the economy. Once the income ... capturesourinterestforatime, the moststrikingrealizationisthatnothingelsehaschangedin the tunnel.Aswewatch,weseethat the lightscontinuetosoftlyimpact the panelson the walls of the tunnel as consumers purchase products and services. The businesses in the tunnel make no dis-tinctionsbasedon the color of the lights.Overtime, the process of creativedestructioncontinuesjustasit ... riskthroughout the entireworld economy, and thiswilleven-tuallyinvolvetransitioningtoamorerobustmodel. The Market Economy of the Future The scheme that I have proposed above essentially in-volvesadoptingspecialtaxestorecapture the incomefromlost jobs and then having the ...

... havestrongeducations and training.Thesepeoplearebeneficia-ries of the informationage.On the toxicwastelandside of the fence, are relatively unskilled workers. These people THE LIGHTS IN THE ... dramaticallynegative.In the UnitedStates,twothirds of workers and thereforeconsumers—donothaveacollegedegree.Whileeffortstoimproveeducation and trainingarelaudable, the realityisthatthisisnotlikelytooffset the impact of geo-metrically accelerating technology. Infact,Ithinkthat the THE LIGHTS IN THE TUNNEL ... Amazonhavebeenheavilyimpactedbyboth technology and globa-lization.Theyoftensurvivebystringingtwoorthreeparttimejobstogetherorworkinlowwagejobswithfewben-efits. The obvioussolutionisforustofindawaytoofferthesepeopleadditionaltraining—sotheycanhopoverto the goodside of the fence.Ithinkthat the problemwiththisscenarioisthat the fenceisgoingtomove, and itmaymoveveryrapidly. The goodside of the fenceisgoingtocontract, and increasingnum-bers of well-educatedworkersaregoingtofindthemselvessuddenlyon the toxicside.AsIpointedoutinChapter2,we...

... acentrallyplanned economy,  and perhaps most chillingly, the overthrow of govern-ments and a“dictatorship of the proletariat.”In the wake of the collapse of communism, these ideas ... Amazon 49 Blinder,AlanS.,“IsGovernmenttooPolitical?”ForeignAffairs,No-vember/December1997.Web:http://www.foreignaffairs.org/19971101faessay3815/alan-s-blinder/is-government-too-political.html50JeremyRifkin, The End of Work: The Decline of the GlobalLaborForce and the Dawn of the Post-MarketEra,NewYork,PenguinGroup,1995. Chapter 4: Transition 51CorneliaDean,“ScientificSavvy?InU.S.NotMuch”,NewYorkTimes,August30,2005,web:http://www.nytimes.com/2005/08/30/science/30profile.html52SeeChrisAnderson’s The LongTail:Why the Future of BusinessisSellingLess of More,abookbasedonanarticleinWiredMagazine,October20 04. Web:http://www.wired.com/wired/archive/12.10/tail.html53JohnMaynardKeynes,“EconomicPossibilitiesforourGrandchil-dren,”(writtenin1930),EssaysinPersuasion,NewYork,W.W.Norton,1963.Web:http://www.econ.yale.edu/smith/econ116a/keynes1.pdfp.195footnote,Einstein’sviewontechnologicalunemployment,see:WalterIsaacson,Einstein:HisLife and Universe,NewYork,Simon&Schuster,2007,p .40 3.Chapter ... 38RobertJ.Shapiro,Futurecast:howsuperpowers,populations, and globaliza-tionwillchange the wayyoulive and work,NewYork,St.Martin’sPress,2008.39ThomasL.Friedman, The WorldisFlat:ABriefHistory of the TwentyFirstCentury,NewYork,Farrar,Strause and Giroux,2005,2006. 40 China’shighsavingrate the result of governmentpolicy,see:Ea-monnFingleton,In the Jaws of the Dragon:America’sFatein the ComingEra of ChineseHegemony,NewYork,St.Martin’sPress,2008. 41 PietraRivoli, The Travels of aT-Shirtin the Global Economy: AnEcono-mistExamines the Markets,Power and Politics of WorldTrade,JohnWiley and Sons,NewYork,2005,p 40 . 42 Ibid.p 142 . 43 JeffRubin and BenjaminTal,“WillSoaringTransportCostsRe-verseGlobalization?,”CIBCWorldMarketsStrategEcon,March27,2008.Web:http://yaleglobal.yale.edu/about/pdfs/oil.pdf 44 Revenueperemployeenumbers.Source:GoogleFinance,basedon2008revenue. 45 “…growthwithoutjobcreation.”, The Economist,August11,2003.Web:http://www.economist.com/agenda/PrinterFriendly.cfm?Story_ID=1985889 46 Huether,David, The Case of the MissingJobs,BusinessWeek,April3,2006.Web:http://www.businessweek.com/magazine/content/06_ 14/ b3978116.htm 47 Technicallythismightbebettercalled“regressive”or“reversepro-gressive”since the deductionishigheratlowerwagelevels.However,thosewordshavenegativeconnotations… 48 FareedZackaria, The Future of Freedom:IlliberalDemocracyatHome and Abroad,NewYork,W.W.Norton&Co.,2003,p.172-173.Notes...

... hasquicklyattracted the notice of the Securities and ExchangeCommission and mayresultinnewregulation.Astheseexamplesshow,wecanexpectthat the rate of change and the volatility of nearlyeverythingarounduswill ... securitieswerethensoldtobanks and financialinstitutionsallover the world,with the understandingthattheywereverylowriskinvestments.When the subprimeborrowersstarteddefaulting, the value of the mortgage-backed securitiesplunged, and the derivativesdidnotworkasexpected.Inmanycasesitwasdifficultorimpossibletocalculatetheirvalue.Inaddition,financialinstitutionshadengagedinmanyothercomplexinterrelationships ... Drive-throughbanksprovidedausefulconveniencetocustom-ers and alsooftenofferedextendedhours of operation. The pointIammakinghereisthatoffshoringisreallya precursor of automation. Offshoring is what you do THE LIGHTS IN THE...