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How will those displaced by technology survive?

By Ad astra

Twenty Twenty-Four – our Orwellian destiny? drew parallels between the disturbing prophesies in George Orwell’s Nineteen Eighty-Four and the disquieting situation we are now experiencing as sophisticated technologies – robots and algorithms – are enabling the collection of more and more personal data that is being used increasingly by companies and political parties to manipulate our thinking, our behaviour and our decision-making. This is alarming because it threatens the very fabric of our society. You can read the details in Twenty Twenty-Four – our Orwellian destiny?

There is though an even more distressing accompaniment to these technological advances – the displacement of human workers by robots and algorithms. This piece addresses this issue. It is rather long because the ramifications are so complex. Please be patient.

We have already seen in our own country robots enter manufacturing to do work that previously was done by people. Thousands have been displaced, and made redundant. The number displaced by algorithms though will be greater still. Just look at some relevant facts from Twenty Twenty-Four – our Orwellian destiny?:

In the coming 10 to 20 years around half of today’s jobs will be threatened by algorithms.

Even today, algorithms perform 70% of all financial transactions.

People, who thereby earned a living to support themselves and their families, previously carried out those transactions. It won’t be long before virtually all such transactions will be algorithm-driven. The only ones left employed will be those who write the algorithms, and don’t be surprised if automatically generated algorithms appear that require even fewer humans.

As a result of automation and algorithm driven processes 40% of today’s top 500 companies will have vanished in a decade.

Reflect on that – during the next ten years, by 2027, 200 of the top 500 companies will disappear.

The top 10 global companies listed in the Fortune Top 500, and their current revenues in thousands of US dollars (that is billions), are:

  1. Walmart $482,130
  2. State Grid Corporation of China $329,601
  3. China National Petroleum $299,271
  4. Sinopec Group (China Petroleum & Chemical Corporation) $294,344
  5. Royal Dutch Shell $272,156
  6. Exxon Mobil $246,204
  7. Volkswagen $236,600
  8. Toyota Motor $236,592
  9. Apple $233,715
  10. BP $225,982

Note that three are in China, one is the world’s largest electric utility company in the world (State Grid Corporation of China), five are oil companies, two are automobile manufacturers, one is a giant retail outlet, and one an IT company.

Imagine how many workers they employ to do both manual and cognitive work.

Nobody knows whether any of these will be among the 200 of the top 500 companies that will disappear in the next decade; the list is provided simply to illustrate the size and financial strength of companies in the Top 500, so that an idea of their current workforce can be contemplated.

When such companies disappear, what, if anything, will replace them? What will workers in those companies do after their employers have gone? Will there be alternative work? If not, how will they live? Are governments planning for this eventuality? Are there any who are doing so? Is our federal government doing so?

Futurists assure us that as old jobs disappear new jobs will be created; many will be jobs that have never been heard of. Even as that is the case, it seems inevitable that there will be a net loss of jobs. It seems inescapable that many, many millions of workers around the world will lose their jobs; Richard di Natale asserts that 5 million Australian jobs will be lost in the next decade. Unless alternative jobs can be created, there will be vast numbers of unemployed. Many may never be able to work again, earn again, support a family again, or prepare for retirement. As job opportunities dry up permanently, some will never have a job. The desolation will be stupefying, and deeply distressing.

None of us can escape this unfolding tragedy. Even those with a job will rub shoulders with those without a job – in the streets, in the supermarkets, in shopping centres, at sporting venues, at meetings, and at church. Society risks being fractured. Tensions will rise as those who work are called upon to support those who don’t and can’t. Governments will have more calls on their social welfare support than ever.

Given the magnitude of the emerging problem of an expanding body of unemployed, what can be done? The unemployed can’t be abandoned to wallow in poverty and sink into homelessness. Yet that is what is already happening. Did you see Four Corners on Monday 13 March: The Price of the American Dream produced by French film-maker Helene Eckmann?

The episode was promoted with these words:

“I never figured I’d be in this kind of situation, for my kids to be in this kind of situation…I’m dumbfounded.”

“Make America Great Again!” was the catch cry that propelled President Donald Trump all the way to The White House. He tapped into the deep sense of unease felt by many Americans, that despite the nation’s economic recovery after the global financial crisis, they have been left behind. “It’s a struggle every day. How am I gonna make it today? How am I gonna make money to buy food, how am I gonna make money to cook my kids dinner at night?”

Four Corners portrayed the distressing story of those Americans desperately hoping for change – America’s shrinking middle class – who are fast joining the swelling ranks of the working poor. You will be surprised and disturbed by what you see.

Yet this is just what we can anticipate in our own country.

What can and should be done?

The response of the LNP has been dismal. Where is the evidence that it even recognizes this emerging problem let alone is doing something about it?

Not satisfied with making matters worse for the poorest sections of our community via the punitive 2104 Abbott/Hockey Budget, the then employment minister Eric Abetz came up with the brilliant requirement that the unemployed be required to apply for 40 jobs a month, a hopelessly unrealistic impost (especially in Abetz’ home state of Tasmania), designed to further humiliate those without a job. Then along came the requirement that job seekers applying for Newstart or Youth Allowance, who have not been previously employed, should face a six-month waiting period of no income support before they are eligible for payments.

More recently we had the Centrelink’s disastrous data matching program that targetted pensioners and the disabled demanding repayment of alleged overpayments. For a royal flush, add to these assaults the threatened Medicare co-payment system, and the LNP-approved reduction of penalty rates at weekends.

Why does the LNP do such things?

Because their political philosophy is grounded in the ‘Strict Father’ model of parenting that conservatives embrace, a concept explained in The myth of political sameness published on The Political Sword in December 2013. George Lakoff, who has studied American politics for decades, uses this metaphor:

The Nation is a Family.
The Government is a Parent.
The Citizens are the Children.

Building on the Nation as Family metaphor, Lakoff identifies two types of family based upon two distinct styles of parenting, which he assigns to conservatives and progressives respectively. When applied to the Nation as Family metaphor, they result in vastly different behaviours.

The two parenting styles are:
The Strict Father model, and
The Nurturant Parent model.

He’s what he has to say about the ‘Strict Parent’:

”In the conservative moral worldview, model citizens are those who best fit all the conservative categories for moral action. They are those who have conservative values and act to support them; who are self-disciplined and self-reliant; who uphold the morality of reward and punishment; who work to protect moral citizens; and who act in support of the moral order.

“Those who best fit all these categories are successful, wealthy, law-abiding conservative businessmen who support a strong military and a strict criminal justice system, who are against government regulation, and who are against affirmative action. They are the model citizens. They are the people whom all Americans should emulate and from whom we have nothing to fear. They deserve to be rewarded and respected.

“The American Dream is that any honest, self-disciplined, hard-working person can do the same. These model citizens are seen by conservatives as the Ideal Americans in the American Dream.”

By contrast, the unemployed, those who don’t or can’t work, are anathema to conservatives. They do not fulfill these criteria.

Lakoff summarises:

The conservative/liberal [progressive] division is ultimately a division between strictness and nurturance as ideals at all levels – from the family to morality to religion and, ultimately, to politics. It is a division at the center of our democracy and our public lives, and yet there is no overt discussion of it in public discourse. Yet it is vitally important that we do so if Americans are to understand, and come to grips with, the deepest fundamental division in our country, one that transcends and lies behind all the individual issues: the role of government, social programs, taxation, education, the environment, energy, gun control, abortion, the death penalty, and so on. These are ultimately not different issues, but manifestations of a single issue: strictness versus nurturance.

In Australia, an identical and just as fundamental division exists between the Coalition, the conservatives, and Labor and the Greens, the progressives. This division results in the striking differences in attitude, behaviour, rhetoric, policy, and indeed morality, which day after day define our own conservatives and our own progressives. It explains so much of the contrast we see.

Image from Salon

How then will the unfolding tragedy of increasing and intractable unemployment be managed? What will the LNP do in the face of its overbearing conservative elements? What will progressives, such as Labor and the Greens, do? Will they simply follow the Strict Father and Nurturant Parent models respectively that so govern their behaviour?

Already we have seen the LNP punitively apply the Strict Father model to the unemployed and the never employed. They see them as ‘leaners’ and ‘dole bludgers’ who are uninterested in finding work, lazy about applying for jobs, fussy about what work they will do, quick to quit if they don’t like a job, preferring instead to sleep in, watch TV and drink VBs. They aggressively tell them, indeed all of us, that ‘the age of entitlement is over’. Except, of course, for them!

The LNP exhibits anger towards those without a job, believes that those who don’t have one are lesser beings that ought to be hounded, demeaned, humiliated, and left minimally supported. How on earth can the LNP, while harbouring such attitudes, manage the tsunami of job losses that we know is coming as automation and algorithms sweep across our nation and the globe? They have not uttered one word about this peril. Do they have any idea what to do? Will their Strict Father approach permanently disable them politically? Will they ever be able to offer a solution? I doubt it.

Yet there are solutions, there are ways of managing the inevitable changes to our society.

What then is possible?

Two concepts are gaining momentum:
A universal minimum basic wage for all working age citizens, whether or not they have a job.
A shorter working week, so that more people can be employed to do the work that is available.

Richard di Natale promoted the latter in his National Press Club address on 13 March. It’s an idea, but it is embryonic. I won’t expand on it here. Instead, I’ll focus on the concept of a universal basic wage as a counter to the rising unemployment resulting from automation.

In the July/August 2014 issue of Politico Magazine there was a seminal article by Nick Hanauer, billionaire investor in Amazon titled: The Pitchforks Are Coming – For Us Plutocrats

His long article that extends over several web pages, is well worth reading in full, but here are some excerpts:

He advocates a minimum basic wage for everyone. .

To highlight the need for it, he begins by contrasting extremely rich oligarchs like himself with the rest of US society to demonstrate the rapidly rising inequality there, something that will progressively worsen as job losses and unemployment due to automation bite:

“The divide between the haves and have-nots is getting worse really, really fast. In 1980, the top 1 percent controlled about 8 percent of U.S. national income. The bottom 50 percent shared about 18 percent. Today, the top 1 percent share about 20 percent; the bottom 50 percent, just 12 percent.

“But the problem isn’t that we have inequality. Some inequality is intrinsic to any high-functioning capitalist economy. The problem is that inequality is at historically high levels and getting worse every day. Our country is rapidly becoming less a capitalist society and more a feudal society. Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution!

“And so I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds: “Wake up, people. It won’t last.”

“If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.”

Here is his argument for a minimum basic wage:

“The model for us rich guys here should be Henry Ford, who realized that all his autoworkers in Michigan weren’t only cheap labor to be exploited; they were consumers, too. Ford figured that if he raised their wages, to a then-exorbitant $5 a day, they’d be able to afford his Model Ts.

“What a great idea. My suggestion to you is: Let’s do it all over again. We’ve got to try something. These idiotic trickle-down policies are destroying my customer base. And yours too.

“It’s when I realized this that I decided I had to leave my insulated world of the super-rich and get involved in politics. Not directly, by running for office or becoming one of the big-money billionaires who back candidates in an election. Instead, I wanted to try to change the conversation with ideas—by advancing what my co-author, Eric Liu, and I call “middle-out” economics. It’s the long-overdue rebuttal to the trickle-down economics worldview that has become economic orthodoxy across party lines – and has so screwed the American middle class and our economy generally. Middle-out economics rejects the old misconception that an economy is a perfectly efficient, mechanistic system and embraces the much more accurate idea of an economy as a complex ecosystem made up of real people who are dependent on one another.

“Which is why the fundamental law of capitalism must be: If workers have more money, businesses have more customers. Which makes middle-class consumers, not rich businesspeople like us, the true job creators. Which means a thriving middle class is the source of American prosperity, not a consequence of it. The middle class creates us rich people, not the other way around.”

Subsequently, he was interviewed about his ideas on Lateline by Steve Cannane, which you may find interesting viewing.

Many are thinking along this line.

Another article you may enjoy reading is in The Guardian of 6 March 2017 titled: Utopian thinking: the easy way to eradicate poverty by Rutger Bregman, subtitled: Keeping people poor is a political choice we can no longer afford, with so much human potential wasted. We need a universal basic income..

He concludes: “It’s an incredibly simple idea: universal basic income – a monthly allowance of enough to pay for your basic needs: food, shelter, education. And it’s completely unconditional: not a favour, but a right. But could it really be that simple? In the last three years, I have read all I could find about basic income. I researched dozens of experiments that have been conducted across the globe. And it didn’t take long before I stumbled upon the story of a town that had done it, had eradicated poverty – after which nearly everyone forgot about it.”

He goes on to describe what happened in the Canadian town of Dauphine, northwest of Winnipeg, beginning in 1974. It makes exciting reading.

Richard di Natale mentioned the concept in an answer to a question at his National Press Club address, the only federal politician I have heard to do so. He mentioned that it is being trialled in several countries, notably Scandinavian nations.

So there is an answer to the question: How will those displaced by technology survive?

Image by Scott Santens

One is the idea of a universal minimum basic wage for all whose income is insufficient to meet basic needs for food, shelter, education and healthcare.

Another is the idea of job sharing so that some who are overworked relinquish work to those who, displaced by technology, have none, or too little – Richard di Natale’s ‘shorter working week’.

There are solutions to the growth of technology-induced unemployment, ones that have already been shown to be effective, and others that are worth a trial.

But who is even thinking about the problem, let alone doing anything?

The Greens have begun, but what of our government and our opposition? So far, oppressive silence and indolence is all we have seen from the major players. With their Strict Father mindset, we can expect nothing from the LNP, but where is Labor with its Nurturant Parent mindset?

What do you think?

Does this scenario scare you?

What should governments be doing to prepare for the unemployment that technology will unleash?

This article was originally published on The Political Sword

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  1. Ill fares the land

    One point I would make is that those who profit from the advance of technology don’t really give a shit about how many lose their jobs because of those advances and the impoverished lives those people will be condemned to lead. The slavish pursuit of technology, almost for its own sake, is about profits – it is thus and always has been thus.

    If the owners of capital did care about the lives of those thrown out of work by their decisions might well have not pursued profits by shifting their jobs to low cost, low-legal framework countries (where there are few, if any regulations protecting workers or trying to curb pollution or corruption). The gap between rich and poor has only accelerated as a result of high-paid, or comparatively high-paid workers losing their jobs to technology.

    When I watch the opening scenes to the movie Soylent Green, where the mobs of poor clamour for their weekly government food handout while the privileged and the rich live behind walls to keep the poor out, I think to myself that the globe is definitely headed in that direction. Unless the rich are made to compensate the poor for the poverty that the decisions of the rich force them into (there are only so many people who can get jobs making coffees, walking the dogs, cleaning the houses or washing the cars of the rich), the world of the future will be a pretty ugly place – as if it isn’t already. Of course, predictions about the future are often hopeless, but we have seen the effect of this kind of change on low-paid workers for at least 3 decades now, so a prediction requires only a little bit of extrapolation.

  2. stephentardrew

    Great article well thought out and succinct.

  3. Matters Not

    The slavish pursuit of technology, almost for its own sake, is about profits

    Indeed. The ‘development’ of technology and its ‘adoption’ by others is invariably about the ‘displacement’ of labour power. In my household, for example, I don’t ‘scrub’ the clothes now like my mother did, I leave it to the washing machine (not talking about the wife here). Once I used a ‘carpet sweeper’ – now a vacuum cleaner. Used to dictate letters – then graduated to a word processor which also displaced the ‘filing clerk’ – remember those?

    At a more macro level, there were those who wove thread into material via hand looms – soon displaced by steam power. Giving rise to the mythical Captain Ned Ludd who recognised the threat ‘technology’ posed to employment and chose to resist same by smashing that infernal labour displaying technology.

    The problem in a nutshell isn’t about labour displacing technology (who really wants to carry buckets and spades, when bulldozers can do the same task far quicker and better)? Rather, the difficulty is how does a society claim its due reward – given that the technology developed came from the society in the first place. After all, the individual(s) concerned didn’t discover , develop their ‘new way’ in an environment that was devoid of a social context.

    Presumably, they went to a school (socially provided), acquired socially provided ‘knowledge; – proceeded to a University – again acquiring social, historically developed knowledge and skills and then applied those skills to develop new technology that threatens to destroy the society that nurtured them. Seems to me the ‘moral’ case can be easily made. As for the legal and popular acceptance of a social debt that ought to be repaid and the mechanisms to do just that? Might require deeper thinking.

  4. Harquebus

    Machines creating virtual currency for other machines to trade and create virtual wealth. Brilliant!

    By consuming the least, the unemployed are actually doing less damage than the “wealth creators”. There are too many jobs requiring consuming scarce resources, causing too much pollution and there are far far too many people.

    This is how the 1% get their wealth.
    “In reality – as noted by the Bank of England, Britain’s central bank – 97% of all money in circulation is created by private banks.”

    Paying workers more will not make them more productive. Energy is what enables jobs and surplus energy which, we don’t have, enables growth and energy, from now will be always be harder to get.

    Search criteria: peak energy per capita

    A universal basic income will ensure that we all have enough to eat. That requires doing what is required and that ain’t even being contemplated yet. Power down and stop making babies.

    Oh, and how to defeat artificial intelligence. Pull the plug.


  5. Matters Not

    Harquebus, if I ‘believed’ as you apparently do, I would possibly make the difficult moral decision and ‘jump’. Take one for the overall good of humanity, and reduce the population by one.

    Thankfully, I don’t. And neither should you. Get a life – while you are still able. LIVE! Smell the roses. Look at some sunrises (But not too many sunsets – because you might beome depressed.)

  6. Roswell

    Matters Not, speaking of sunrise and wealth …

    A long time ago I had a friend who was wealthy beyond imagination and spent his days sleeping in. We jealous ones – searching for something we had that he didn’t – kept telling him he was missing the best part of the day: sunrise.

    “I don’t miss it” he confessed. “I tape it and watch it when I get up”.


  7. Harquebus

    When I first learned to write, it was with a pen and inkwell. Two years later I marveled at the latest technology; the ball point pen. 25 years later, my fingers touched a keyboard for the first time and now I can program a computer in 5 different languages. Technological progress has truly been a wild ride, especially for those that understand it.

    Matters Not
    Yeah, one will make a lot of difference eh? I think I will let fate decide.


  8. Matters Not

    Yeah, one will make a lot of difference eh? I think I will let fate decide.

    So little steps don’t matter? I thought you were a believer in:

    As for:

    Technological progress has truly been a wild ride, especially for those that understand it.

    I particularly liked: especially for those that understand it. Perhaps you have a link?

  9. Harquebus

    Matters Not
    You might have noticed that, my mindset has recently changed from preventing calamity to all hope is lost so, some things that I have said in the past might no longer apply. As one who has tried to minimize their ecological impact for over 2 decades, I don’t feel that I should put myself ahead of those who are doing the most damage. I am hopeful that, having had a little practice with getting by on next to nothing, that I will outlast most which, is all one needs to do during our soon to come brutal transition from a high energy to a low energy society. Let others make that sacrifice. Involuntary population reduction is now locked in.

    As for proving my knowledge of I.T, this is the only supporting link that I have.

    Avoiding data retention

    You’ll just have to trust me that my diploma does state “Computer and Information Science”.


  10. astra5

    I thank you all for your comments and the intriguing dialogue.

    In case you think that awareness of the consequences of the advent of robots and algorithms is a recent revelation, read the words of the final sermon of the Reverend Martin Luther King Jr. on March 31st 1968, just one week before his assassination. Titled: ’Remaining Awake Through a Great Revolution’ he said: “There can be no gainsaying of the fact that a great revolution is taking place in the world today. In a sense it is a triple revolution: that is, a technological revolution, with the impact of automation and cybernation; then there is a revolution in weaponry, with the emergence of atomic and nuclear weapons of warfare; then there is a human rights revolution that is taking place all over the world…”

    At that time in the US a group of prominent academics, journalists, and technologists formed the Ad Hoc Committee on the Triple Revolution, which delivered its report to President Lyndon Johnson and the media in March 1964, over 50 years ago. It warned that: “cybernation (or automation) would soon result in an economy where ‘potentially unlimited output can be achieved by systems of machines which will require little cooperation from human beings’. The result would be massive unemployment, soaring inequality, and, ultimately, falling demand for goods and services as consumers increasingly lacked the purchasing power necessary to continue driving growth.”

    The Ad Hoc Committee went onto propose a radical solution: “…the eventual implementation of a guaranteed minimum income made possible by the ‘economy of abundance’ such widespread automation could create, and which would ‘take the place of a patchwork of welfare measures’ that were then in place to address poverty.”

    Reference: The Rise of the Robots – Technology and the threat of Mass Unemployment, Martin Ford: OneWorld Books, 2015.

    This was over 50 years ago!. Yet here we are in 2107 without a plan for managing the inevitable tsunami of robots and algorithms that will sweep millions out of work onto the chaotic scrapheap of the unemployed. What on earth are our governments doing? Can there be a task any more important than preparing for an identified disaster?

    The government and civil authorities in North Queensland prepared for Cyclone Debbie. They knew it was coming, where it would strike, and how hard. They knew the likely consequences. They planned for it. Yet the much more devastating cyclone of unemployment subsequent to automation seems to have attracted little attention.

    Everyone knows its coming, and what the consequences for our society will be. The Greens are aware and have suggested plans to cope with it. But where are our governments, the other political parties, and civil authorities? Silent and indolent – asleep at the political wheel!

    Yet the cyclone of unemployment is already upon us. This week there was a report on youth unemployment:

    “Underemployment among young people is now at its highest in the 40 years since it has been officially counted, according to a report from the Brotherhood of St Laurence released on Monday.

    “In February underemployment was 18% of the youth labour force, affecting even more young people than unemployment, which was 13.5%.

    “In total, some 659,000 young people were unemployed or underemployed – defined as having some work but wanting more hours. There were 282,000 young people unemployed and 377,000 underemployed.”

    This week Jon Faine devoted two hours on ABC Radio Melbourne to this distressing matter. The stories told by several young people unsuccessfully seeking employment that rang in, were heart-rending.

    But who is listening? Who in government cares? Who is planning?

  11. silkworm

    Foolish men, stupid men, they thought doing nothing could make them happy.

  12. silkworm

    “Rather, the difficulty is how does a society claim its due reward – given that the technology developed came from the society in the first place.”

    The problem was identified and solved one hundred years ago by Henry George. Community wealth is stored in land, which is privately owned and the rent collected by rent seekers. The solution is simply for governments (the community) to retake control of rents. (The real problem then becomes, how does the community take control of the government away from the rent seekers.)

  13. Gabe

    I’m confused by those Fortune 500 stats… surely “thousands of US dollars” should read MILLIONS of US dollars otherwise these are sub-billion dollar companies. Either way, adding “(that is billions)” just muddies the waters further, because that would mean for example that Walmart is making 482,130 Billion?!?! Perhaps an algorithm wouldn’t make that mistake 😉

  14. astra5

    You are right. The text is confusing. The figures are taken directly from Fortune Top 500 and are correct as at 31st January 2016, but the text ‘…current revenues in thousands of US dollars…’ should have read ‘…current revenues in millions of US dollars…’. Walmart’s revenue was $482,130 millions, that is $482,130,000,000, or $482.13 billion. This figure is confirmed by a Google search: https://g.co/kgs/I7QD9m.

    I can’t correct this on AIMN, but Michael Taylor might be able to.

  15. astra5

    You are also right …(that is billions)… is redundant.

  16. Photontrace

    Nurturing Parent Government? I don’t rate its chances very highly if 1% of the children lock all the cake in the safe, swallow the key and forget the combination. Yeah sorry. For the last 10 minutes I have had too much fun with this “society as family” metaphor. I especially dislike the child role for citizens, though I have been engaged in conversations with people who, sadly, seem to view themselves that way.

    Seems to me the whole point of the citizen role is to be an adult and behave like one. I desire a situation where citizens have responsibility equal to our liberty. The advances in technology give me hope of that but this hope could be taken away, if we continue to vote for politicians who are less able to embrace our technological future than most of those who they govern.

    Thank you for this article. It covers a lot of points that should be of interest to anyone who takes on the responsibilities of political power. One of the best I have read in awhile.

  17. astra5

    Thank you for your kind comment.

    You are right – the problem is not that we do not know what technological changes will do to employment, it is that we do not have politicians who know what to do, or have any motivation to do so even if they did. We are being let down by the very people we ought to be able to rely upon to manage the revolution in robots and algorithms and the devastating effect it will have on employment. Their neglect is pitiable, almost criminal.

  18. economicreform

    How is a supplementary income scheme to be funded? Any form of net spending by a sovereign government (i.e. the injection of net financial assets into the non-bank private sector) enhances the ability of the private sector to spend, save and invest – a surplus for the private sector, if you like. And such a surplus is what the private sector needs in order to prosper, and even in some circumstances to stave off recession. The only important economic issue is whether such spending can be restrained – on an ongoing basis – to a level consistent with the ability of the economy to accommodate it without the onset of undue inflationary pressures. For this reason, and because the health of the real economy fluctuates, I think a fixed basic income is a bad idea. A much better idea is a varying national dividend, paid into citizens’ bank accounts by the central bank. The magnitude of these ongoing but variable payments would be determined by a statutory body acting independently of government – on a monthly basis. I’m not in favour of the central bank doing it, given their poor record of achievement and their ties to and sympathies with the commercial banking system. What I am talking about here is not a replacement of a living wage, but a supplement to it. However for those who are unemployed, there would be an additional supplement – perhaps means tested – but very different from the “dole” (as presently envisaged and implemented) in its mode of operation. Once determined it would not require ongoing justification, and any subsequent employment would see it terminated without any fuss.

  19. Kyran

    “The model for us rich guys here should be Henry Ford, who realized that all his autoworkers in Michigan weren’t only cheap labor to be exploited; they were consumers, too.”
    Funny thing, Ad astra. My older lad returned from a 19 hour trip. He drove, in his vehicle, from Melbourne to Ballarat, to work his ‘shift’. Nineteen hours, for nine hours pay, plus allowance for travel expenses. Ah, the benefits of a salary package. At least he has a job.

    astra5, your post at 9.48 cross referenced the ideology and the practice. Ford, in trying to understand the industrial revolution, pretty well understood that he had decades to address that revolution. We now get to address the technological revolution, on a daily basis, and try and apply the same criteria, as if we had decades. Then there’s this nasty environment thing. We may have decades.
    How can it possibly be that we have so much knowledge, yet only bathe in our ignorance?
    Thank you Ad astra and commenters. Take care

  20. David Bruce

    Thank you for bringing this topic to a wider audience.

    Your models of society and the Strict Father role are particularly apt. So when the Strict Father role fails to practice what is preached, the family quickly loses respect for the hypocrite. As we see the public failures of our so-called political masters/leaders and their unethical behaviours, it makes me so angry to hear them pontificating on moral values, We have 3rd generation politicians who have only know work as political party organisers, and 3rd generation public servants who have only known Canberra as their world view. As agents for the oligarchs who fund them, I wonder if we should warn them that the pitch forks are coming?

  21. astra5

    economic reform, Kyran and David Bruce
    I’m responding to you collectively as my Internet has slowed to dial-up speed, so uploading comments is tedious.

    I thank you all for your contributions.

    I note your ideas economicreform. Whether they would work better than a universal basic income is for economists to assess. Because I’m not an economist, I won’t venture my own opinion. But I see you do agree with the notion of a supplement to a living wage, but not a replacement of it. And “for those who are unemployed, an additional supplement – perhaps means tested – but very different from the ‘dole’ (as presently envisaged and implemented) in its mode of operation.”

    The question for we, the voters, is: “Why are our political parties not wrestling with the issue of mass unemployment consequent upon automation?” As yet I have no plausible answer.

    Thank you for your comment, your good wishes, and the story of your son’s employment. Many young people are experiencing similar situations, where they a being ripped off by unscrupulous employers.

    I agree wholeheartedly with your concluding comment: “How can it possibly be that we have so much knowledge, yet only bathe in our ignorance?” Indeed, how?

    David Bruce
    Thank you for your comment. You have extrapolated the ‘Strict Father’ model shrewdly. As you say, our current crop of politicians and public servants are so set in this mould that they cannot be persuaded otherwise. We see it every day when politicians pontificate, reciting the catechism to which they have subscribed all their lives.

    Nothing will change their mantras, their chants, their beliefs, their attitudes, or their behaviour. Facts and logic are irrelevant to them. Reasoned argument is fruitless. Psychologically, perhaps the best substitute for frustration at their way of behaving is to watch with amusement their antics as they play their pathetic political games in their Canberra sandpit. I wonder do they ever reflect on how foolish they look, and how poorly the public views them and their childish behaviour. Perhaps their salary and perks is enough inducement for them to ignore how we feel!

  22. Andreas Bimba

    I have no doubt that economics Professor Bill Mitchell has the answer to full employment even if the age of intelligent machines is likely to make the task even more challenging. He is an adherent and originator of the branch of macroeconomics called Modern Monetary Theory and has written extensively on the issue of unemployment. He basically recommends that any national government of a nation with its own sovereign currency like Australia generally run deficits of sufficient magnitude to keep unemployment and underemployment near to zero and also use a job guarantee scheme to provide worthy and adequately paid jobs for any remaining unemployed. This approach is not likely to produce ongoing inflation as long as otherwise idle resources are put to productive purposes. This approach is not new and was applied successfully during the economic stimulus period after the Great Depression most notably in Japan, Germany, the US and New Zealand, during WW2 and for most of the post war period up to the late 19 70’s.

    The additional government spending capacity that is made available can be used for good social, environmental or economic purposes. Worthy purposes can be funded such as clean energy, transitioning to a sustainable economy, public transport, affordable housing for all, local parks and infrastructure, the arts, environmental protection, education, healthcare and agedcare for example.

    A generous universal basic income on the other hand if funded by federal government deficit spending is likely to be inflationary as little new productive output is to result from the recipients. In other words the economic pie does not increase by much and little ongoing societal benefit is provided. Good luck with finding sufficient taxation revenue as an alternative non inflationary funding source from the business sector or already overstretched taxpayers.

    Here is a recent relevant article from Bill Mitchell.

    Why are CEOs now supporting basic income guarantees?

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