Can a bourgeois be progressive?
I grew up bourgeois. Skiing, horseback riding, private school, vacations in France. My grandfather even died while fox hunting on horseback! In the Middle Ages a bourgeois was someone who lived in a village center (as opposed to a peasant farmer) and had certain privileges. In contrast to aristocrats, who lived entirely off the backs of others, bourgeois had “earned” their position through hard work and commerce. Today, a bourgeois may be defined as “a person with social behaviour and political views held to be influenced by private-property interest” (Webster).
The consequence of this framework is that you prioritize actions and activities that are based on a view of society as being organized through the control of capital – rather than through social or a collective decision making process. For better or worse, the framework we grow up in is very hard to escape. It is exceedingly rare for a person to fundamentally change who they are. A change of that depth can require a renunciation of religion, family, values and cultural identity. My case is no different.
To make our society function better we need to set realistic and achievable ways of living together in relative harmony. Asking people to give up their identities rarely works well. It was tried in totalitarian states (USSR, North Korea, Mao China,…) – the results were not pretty. In my opinion, the challenge is not so much to change our fundamental self, but rather to better understand realities that not our own. To facilitate day to day life we typically assume other people have a similar DNA, thought process and underlying skill-set. Said in a different way, we presume that we have a similar set of circumstances and are starting from the same point in the race of life. We therefore reason that another person can accomplish the same thing as us if only they were disciplined as us. The video below summarizes the fallacy.
If there is one common philosophy in the professionally successful upper middle class is that with hard work, discipline and education anyone can achieve success. This way of thinking is encapsulated in interviews with titans such as billionaire Charles Koch and Arnold Schwarzenegger. In both cases, there is a clear presumption that anyone can follow their lead. Koch and Schwarzenneger fail to acknowledge that they are unique in some way or had any sort of advantage. Koch was born into a wealthy family and received high levels of education. Arnold had a certain attitude an DNA that drove him to insane levels of work and motivation. As the hilarious Australian comic Tim Minchin said, even if you pull yourself up by your own bootstraps in a difficult situation, you still did not create the DNA that led you to succeed in a difficult situation and overcome obstacles nor did you create the social conditions that enabled success (rule of law, invention of money,… etc.). One simple example of luck is our health and the health of our families. Numerous studies show that to escape poverty in countries like the United States that does not have goo health care, you need to stay healthy and have your family stay healthy for decades. One illness can kill your chances to get an education or retain stable employment. We should all take a moment to pause and think about what it genuinely takes to be successful and I think we quickly realize that only part of it is attributable to the individual choices we make.
On the recommendation of Jordan Peterson (with whom I have serious disagreements with), I read The Road to Wigam Pier by George Orwell. It is perhaps one of the most impactful books I have read in a long time. The book is part reportage, part political commentary. Orwell tears apart the 1920s British left wing society that claims to be in solidarity with the working class, but in fact despises most of their habits. Orwell goes into the coal mines of Northern England and lives with the workers, to say the least, it was not a fun job and the living conditions were abominable. He goes on to skewer the righteous “progressive” liberal English society who has a clear disdain for the working class habits even though they claim to be in solidarity with the coal miners. Not much has changed.
This cleavage in the left is still present today. Well meaning progressives talk about social change (sometimes radical), helping the less fortunate and affecting meaningful improvement in society. Yet, these left wing progressives fail to reach out to the working poor and more importantly, they do not really respect them. The number of self proclaimed progressives who buy from Amazon, use Uber or wear clothes made in sweatshops in Bangladesh is astounding. All while proselytizing, the progressive left remains in its safe jobs and take nice vacations around the world.
Solidarity requires sacrifice. Words and actions will not make a meaningful dent unless you can demonstrate true devotion to a cause. The only way to show your true devotion is to knowingly, willingly and happily sacrifice pleasure for something you believe in. We sacrifice all the time for our children and family. We sacrifice for success in sports. We sacrifice for our businesses and careers. But, we often fail to sacrifice for the causes we claim to believe in.
By definition, liberal progressives believe that a well governed and democratic state can bring prosperity and justice. But, it is very easy to slip into a mindset of criticizing the state and criticizing taxes. Paying taxes is a form of sacrifice. You are giving up money that you could use for pleasure in exchange for security and social infrastructure services, in some countries, taxes also go to helping your fellow citizens lift themselves up. Of course, the very wealthy always find they pay too much taxes and that they can be both progressive and not sacrifice. This contradiction and fact that many progressives are lying to themselves was shoved in their faces by Rutger Bergman at Davos this year.
Too often, progressives seem to think we can have our cake and eat it too. They seem to think we can make society progress without substantial taxes or without change that will affect their lifestyle. Yet, countries such as Sweden, Denmark and Finland offer high qualities of life to the majority of their citizens because they pay very high taxes and their governments can therefore provide education, infrastructure and high quality services. The only other option for decent distribution of wealth is for the wealthy to voluntarily take modest salaries, as done in Japan. The latter option is possible, but only within an extremely strong culture. For western liberal countries, it seems the only path to progress is through higher taxation and forced sacrifice by the upper middle class and upper classes.Published on February 2, 2019
Radical change is difficult to manage
Progressive change remains the preferred option. Large systems are complex and involve relationships between people and unites of people (organizations) with intertwined interests, affecting a change is usually something that needs to be done progressively to limit the side effects of that change. In addition, most of the time, social, political and economic environments are stable. If you pick a random point in time there is rarely a need for big changes or for radical decision making. Despite this apparent stability, there are situations where major events creep out of the woodwork and shatter the monotony of our daily lives. When these events do happen, how do we know that an organization or nation should attempt to affect radical change rather than progressive improvements?
The core challenge is that there is no way to accurately predict uprisings, revolutions, market changes or economic downturns. There are at least three principal reasons why a sudden change in a stable system is so unpredictable.
The first reason is the well documented phenomenon commonly known as the “Black Swan” effect. This “Black Swan” is so named because Europeans thought all Swans were white until they discovered Black Swans in Australia. The surprise of finding a Black Swan was utterly unpredictable based on all prior European knowledge of Swans being white. We can boil down this type or issue to a set of false assumptions or a simple ignorance of the possible varieties available. As Donald Rumsfeld said, it is the “unknown unknowns” or things we do not know we do not know that can really surprise us.
The second type of surprise are “known unknowns”. For example, we know there is a certain level of discontent in all societies and a certain number of unhappy citizens, but we do not know when they will mobilize for change. Another example is our knowledge of the degradation of the natural environment due to global warming and other effects, but we do not know when a massive storm will appear of when the arctic permafrost will melt, releasing tremendous amounts of greenhouse gases that could change the ocean currents, leading to massive weather changes and likely economic collapse. Referred to as a Tipping point, some stable systems quickly flip into another state and it is tremendously hard to know where that point lies. If we had the ability to accurately predict big changes, we would simply avoid them. If a dictator can determine that a revolution or uprising is coming, he would act and the uprising would never occur. If the USSR had known the system was crashing in the late 80s, they may have done more to try to prevent it. Instead, leaders are nearly always caught flat footed when big changes arrive. The unpredictability of change makes leadership that much more important – it is easy to govern in times of stability, it is much, much harder to govern in times of change.
The third is the simple challenge or inertia in the face of a clear change. This is most common in the business world where new technologies regularly upset industries. It was pretty clear that internet penetration and bandwidth were constantly increasing since the 1990s. It was also clear that Blockbuster revenues and profits were progressively decreasing during that period. Despite this clear and present danger, Blockbuster made little to no effort to adapt their business model and emulate companies like Netflix (or buy them). Part of it was the inertia of a large organization and part of it was their business model which was based on retail outlines, physical assets and late fees. There are very few companies that successfully navigate a change in business models.
In stable environments, systems are usually robust and mechanic enough to survive idiotic leadership. Rome’s imperial machine trudged along through the reigns of buffoons such as Nero and Caligula (who named a hose Senator), but later struggled when real change reared its head. The real change that brought down the empire was likely a combination of religion, discontent in Northern Europe, falling production the mines in Spain, a lack of new territories to rape and pillage and a crumbling of social cohesion. External radical change is very, very hard to manage and this is especially true if it is multi-pronged and not from a single source (i.e. a clear enemy).
When we are forced to embrace radical change to survive, leadership is typically the determining factor in a successful outcome. Whether your own organization is undergoing radical change or whether it is an external change (i.e. change in technology or the market), the most critical thing is for the leadership to be strong, wise and be able to act quickly. The wrong decisions can have dire consequences, but no decision is usually even worse. Three historical examples of poorly managed radical change include the Spanish invasion of the Americas, the closing of China and the French Revolution.
When Cortès disembarked in Central America, the native Aztecs were dominant in the region. Cortès and his few dozen Spaniards were able to mobilize smaller rival clans and take advantage of the Aztecs lack of knowledge of Spaniards to topple a regime that had been in power for centuries. Had the Aztec leaders overcome their own history with rival clans and found compromise with them or had the Aztecs taken the time to gather intelligence on Cortès (even post landing) they likely could have stopped him or at least significantly delayed the devastation of the Americas by the European invaders. Instead, they went head on against Cortès based on their past experience with other tribes and the Aztecs were utterly destroyed.
For most of human history, China was the most powerful and wealthiest nation in the world. Yet, after their leadership decided to close the country in the early 15th century the country progressively became poor and backwards. The once mighty country became so weak that small Europeans armies were able to force China to give up parts of its territory and allow the import Opium so that Europeans could make a handsome profit at the cost of millions of drugged Chinese. This trend of submission continued until the Chinese revolutions in the early 20th century. A fifty year period of turmoil and challenge followed and only ended with death of Mao. While the communist regime provided some benefits in the form of longer lifespan, dignity for peasant workers and freedom from servitude. Despite the progress China was headed in a very bad direction when Mao died in 1976. At the time, there was a significant and complex power struggle that could have gone a different way. Instead of the election of Deng Xiaoping as leader, the communist party could have chosen a safer bet in the form of a Mao stooge who would have prolonged or worsened the situation. The Chinese miracle rests largely on the outstanding leadership of Deng, without him it is hard to imagine China as it is today. Deng ably navigated the factions within the communist party and throughout China, opening up the country and starting an economic miracle no one could have predicted.
For most of European history, France was the wealthiest and most powerful nation in Europe. It had a larger territory and a stronger government than most rival powers. Despite its apparent advantage, when uprisings began in the late 18th century, the French king failed to compromise or react in a semi intelligent way. His failure to take a quick decision for either a constitutional monarchy (like the English) or a violent crackdown against the Republicans probably led to his beheading and the decades of violence of the French Revolution and the Napoleonic wars. Had the king taken a more moderate tone it seems likely that the aristocracy would have survived like the other European aristocracies that still exist today. A failure to lead in times of radical change led to the loss of many heads.
In a more modern and less violent context, this failure to enact radical change is visible in the corporate world. The number of large, dominant companies who fail to act is astounding. Despite their McKinsey consultants and their Harvard MBAs, company after company fail to change in the face of clear and present danger. The list is long and is not limited to the commonly known cases of failure – Nokia, BlockBuster, Kodak, Sears and more. As Amazon leader Jeff Bezzos said, even “Amazon will eventually go bankrupt”. Like it or not, our external environment will change and we must adapt or die. How can know when to make radical changes to a stable organization that is facing a changing environment?
The need to made radical change lies not only with the dominant powers, but also with the opposition that is trying to change things. The Arab uprisings of 2010-2015 held tremendous promise, but ultimately mostly failed to affect progress. Libya is in a full out civil war, Bashar Al-Assad seems poised to remain in power, the Egyptian military is stronger than ever and Yemen is blood stained battlefield. Only Tunisia seems to have improved its situation. Was this outcome a failure of leadership? I do not know enough about these complex situations to comment, but it seems that to unseat a strongman government, there must be a high level of cohesiveness in the opposition forces. If there is not a high level of cohesion or a controlling faction in the uprisings, the division of the opposition ultimately leads to its downfall. The Bolsheviks took control of the Russian revolution in 1917 and the Jacobins did a similar move during the French Revolution – ensuring the revolution happened. The failure of a strong willed party to take control in the Arab Uprisings and remove the pillars of support from the old regimes may may have led to their failure.
But the question remains, when do you know that radical change is needed? Even if we know radical change is needed, how do we mobilize the forces and undercut the current structure. The most well-known how-to manual for starting a revolution is the recently deceased Gene Sharp’s “From Dictatorship to Democracy”, also a documentary. But, the book does not clearly identify how to know when to start such a revolution – only how to conduct one.
Of course the flip side to all of this is to ask when radical change is not needed and should be stopped before it creates more problems than it solves. In Canada, there was attempted revolutions (or at least uprisings) in 1837 as well as Québec independence efforts in 1980 and 1995, all of which failed. Would Québec or Canada be better had they succeeded? We do not know, but stopping those radical changes certainly came down to questions of leadership at the time.
I do not have any sort of conclusion or specific proposal on the necessity of radical change. The topic is too vast and complex to offer any simple analysis. But, despite it complexity, I believe that in the next twenty years we will be confronted with a number of questions that may require radical change in our society. The list is long, but my top ten external events that will require us to choose between radical change or dire consequences are:
- The rise of China,
- Resistance to antibiotics,
- Collapse of US power,
- Collapse of the US dollar as our reserve currently,
- Disintegration of the European Union,
- Uprising in Saudi Arabia,
- Impacts of global warming and pollution,
- Ecological system collapse and impacts on our food supply,
- Housing market crash in China and elsewhere, and
- Cybersecurity issues.
All of the above issues are highly unpredictable in terms of when or where they may happen or what the consequences might be. The assassination of the Archduke of the Austro-Hungarian empire led to the slaughter of millions of people and the restructuring of the entire world. It was a match that set a tinderbox alight. No one knows what big event may alter our realities and is therefore critical that our leaders and systems be designed to avoid catastrophic failures such as Blockbuster, the Aztec empire or the French revolution. We must prepare ourselves for the eventuality of large changes by increasing the robustness, flexibility and adaptability of our countries and organizations.Published on January 20, 2019
On the current collapse of the liberal order
“Real artists ship!” – a famous line from Steve Jobs.
Steve extolled that great people not only have great ideas, but they execute on them and deliver them to customers. If there is one reason that the liberal order seems to be collapsing around the world, I would propose that it is due to a failure to deliver improved living conditions to the majority of the citizens. Problem solved!
In the excellent Munk debate between David Frum, former speechwriter for George W. Bush, and Stephen Bannon, former advisor to Donald Trump, they lay out a clear vision of what is at stake. While Frum claims that liberalism is the only way forward, Bannon states that future lies with populism. He goes onto say that the only real question is whether the populism will be left wing or right wing. Bannon explains how the middle and lower middle class have been left behind and have not been able to realize the ‘American Dream’. With stagnant wages, rising housing prices and greatly increased precarity of jobs, this is not some radical populist plot – it is reality.
People have expectations. Expectations are usually set by your family and societal context – if you are born in the West, you are typically told that if you work hard, you can get ahead. When you do work hard and realize that you can never catch up with rising costs and a class that has a head start, you understandably grow frustrated. The liberal elite, which I assure you exists, has great difficulty realizing that this is the reality for many people. Why exactly they cannot realize this is a bit confusing to me. For one, I would argue that the liberal elite is in many ways biased against the understanding of unfairness in society because they have succeeded personally. Some may even have come from lower middle class backgrounds, but most are likely to have come from upper middle class backgrounds. They say – “If I could do it, why can’t someone else?”. Yet, many With moderately wealthy parents had tonnes of hidden benefits – parents could pay for their school and support them during their studies as well as provide a safety net in case of failure. Many people from this class were able to excel and obtain a good education, good positions in society and even start profitably companies. In many situations they underestimate the value of the support they received. In many ways, this family or cultural support is similar to environmental externalities, it is something you are vaguely aware of, but you do not think it is That important or that it applies to you. This accounting failure is as relevant as our greenhouse gas emissions. We do not see the environmental or social damage of our actions because they are externalities that are not actually calculated in the costs of services. Similarly, we do not count the social (or biological) advantages we were given.
As the wealth gap widens and the ‘deplorables’ (term coined by Hillary Clinton about Trump supporters) fall further and further behind, they turn to alternative means of changing the system. I know people who were both Bernie Sanders supporters and Donald Trump supporters. From a political point of view, this is completely contradictory – one advocates for strong socialism and one is for a free for all with no regulations. Yet, the commonality between the two is clear – they both propose something that is quite different from the offerings of Reagan, Bushes, Clinton and Obama. They are proposing a major restructuring of the state.
This cleavage in society cannot continue indefinitely. Either the liberal elites will come to their senses and implement real change or a populist force will take over. Historically, right wing populists have been more successful thanks to their lack of respect for individual rights, rule of law or other niceties. Right wingers can and will grab power, whatever the cost. The left wing populists (except radicals), tend to play a bit more by the rules and are thus hobbled in their quest for power. That is not to say that the rise of right wing populists is inevitable, it is not. However, the only way to get society out of this populist death spiral is to start delivering higher quality services and more opportunity at a much faster rate.
We can criticize China and its government for many things – spying, human rights violations, pollution,… etc. But, there is one thing that Chinese government very much believes in – improving the quality of life of its citizens. If China had a slogan, it might be “Build, build, build!”. By injecting massive amounts of money into physical and digital infrastructure, China has lifted hundreds of millions of people out of poverty and offered hope to all. Their prioritization of material progress over nearly all else has allowed the government to stay in power and maintain the support of the people. The shear scale of China’s infrastructure cannot be communicated in words, you need to go and see. Metros, high speed rail, skyscrapers, highways, the list is so long. In the west, our governments have been mired in analysis and have failed to deploy the ressources of the state to actually improve people’s daily lives. The people view government as a wasteful apparatus that supports liberal elites and inefficient bureaucracies who are more interested in their own interests than those of the citizens. This, my friends, is the source of our problem.
If we can actually make government efficient, deliver new infrastructure to people at a rate that they find reasonable and demonstrate that the average quality of life will improve – the liberal order can be saved. There is no other solution. We cannot debate our way out of this situation or placate people with false promises and occasional tax cuts. We need to build infrastructure both quickly and for the long term. The list of key deliverables is not long – faster and better medical service, well paid jobs, faster and better transportation and higher quality education for all – do that and the rest will follow.Published on December 20, 2018
AI will Not Cause Structural Unemployment
Last week I blogged about the false arguments for Basic Income, one of which is automation. The media has been talking about automation and its consequences on the job market for the past few years. As with many memes, this is driven by an original set of books and thinkers who identified AI as an emerging technology that will whip out many jobs – both white collar and blue collar. The media then fed on itself, generating more articles and books on the subject. “Newspaper X wrote about it, why don’t we have a big piece on it?” – said some editor somewhere. The thing with this whole automation creating unemployment is that there is no evidence for it.
Automation and technology obviously eliminate jobs; however, the consequence of this is higher economic productivity and wait for it, wait for it,…. more consumption! We humans don’t stop once we have one car, a decent size house and an annual vacation (see 1950s); no, that would be far too reasonable. We need more stuff! We buy a bigger house, a second car, a cottage, and more vacations!
Humans love stuff. After tens of thousands of years of starving to death in caves and mud huts, physical possessions bring comfort, security and status. When we do manage to automate something we just move on to some other problem. Here are some well known automations we have accomplished:
– Farming (unskilled labour) – something like 95% of the population was in farming.
Horse rearing, training, selling, riding – A lot of horses
– Drafting blue prints (semi-skilled labour) – replaced by AutoCAD.
– Making electrochemical film, selling and using it (skilled labour) – Kodak had 350,000 employees at its peak.
– Moving from manual handling of shipping material to standardized containers (unskilled labour) – lots of people!
– Car manufacturing (semi-skilled labour)
The list of eliminated or transformed industries is long and continuously growing. Many of these industries were absolutely massive and represented significant parts of our economy prior to being obliterated by technology. Yes, the jobs disappeared, but new ones appeared. The transition is tough, but we have done alright so far. A basic rule of economics is that if an asset has a utility it will be used. Humans are an asset, they will thus be used to do something – the question is whether they will be used for high value work or low value work. Think – café barista vs. aeronautical engineer.
The second part of the argument about automation is that we will run out of jobs for the displaced workers. I find this preposterous. Anyone who thinks we will run out of jobs simply has no imagination. Here are some straightforward ways we could employ many people:
– More teachers & better teachers
– Rebuild our crumbling infrastructure (just this is likely enough to employ enough people to replace all AI displaced jobs)
– Build high quality housing and more affordable housing
– More caregivers for our aging population
More aid workers and people to help in crises (Yemen, Myanmar,…)
And that is without even inventing new jobs like social media experts, sustainability advisors, artisanal coffee makers, micro-brewers, or Artificial Intelligence consultants! Will technology have a major impact on our communities, of course! Will we have to adjust our political and economic system to compensate for some out of work white collar people and secretarial jobs, yes. But is the world going to end or change dramatically, no.
Like any deployment of technology, AI will be deployed progressively. We should see a progressive impact – not a sudden overnight one. If we really think that automation is an emerging force that will lead to mass unemployment, we would already be seeing signs of this and especially so in the countries that are the most advanced in AI deployment. The countries with the best technology in the world – Germany, US, China, … all have the lowest unemployment rates. It is therefore difficult to see how we can both be creating unemployment through AI and have the lowest unemployment rates.Published on November 25, 2018
The Problems with the Basic Income Discourse
Basic Income came into the mainstream media three or four years ago when Switzerland launched a petition for a national referendum. Since then, the mouvement has grown but it seems to be stalling in its growth. Pilot projects have been ended or closed and other projects have publicly explained how hard it is to run a basic income project. Nevertheless, thousands of people around the world continue to fight and mobilize for the most important social reform since universal health care. The question I ask myself and the mouvement is, “What is the best way to advocate for basic income?”
Google Search Result Trends for Basic Income over the past 5 years
State of Affairs
Since 2014, I have been active in the basic income community, acting as the Québec spokesperson for Canadian Basic Income Part Network and as a founding member of Revenu de Base Québec (Basic Income Québec). We have organized activities, met with political entities, conducted interviews and promoted basic income in Canada. I have participated in numerous conferences, read many books and discussed the topic of basic income with many people.
As Basic Income researcher and activities Karl Widerquist has pointed out, we are in the third wave of the basic income movement. He explains,
“Support for unconditional basic income (UBI) has grown so rapidly over the past few years that some might think the idea appeared out of nowhere. In fact, activists have been floating the plan – and other forms of a basic income guarantee (BIG) – for over a century. It experienced a small wave of support between 1910 and 1940, followed by a down period in the 40s and 50s. A second and larger wave of support happened in the 60s and 70s, followed by another down period in most countries until the early 2000s. Today’s discussion took off around 2010 and has grown in strength with each passing year. It is UBI’s third, and by far its largest, wave of support yet.”
However, this third wave has no guarantee of success. Most importantly, the current basic income mouvement is full of contradictory ideas, incompatible political views and overly simplistic ideas of social change. I will not go into each argument in detail, but suffice to say that the mouvement will likely be undone by itself, not by a malicious external actor or a passive general population. Any successful mouvement must focus on a message and propose a concrete change. The civil rights mouvement in the states advocated for equal rights and voting rights for black Americans, the French revolutionaries advocated for a National Assembly made up of normal(ish) citizens and the women’s voting rights mouvement advocated for the right to vote. Basic income seems simple on the surface, but most mouvements are not clear in what they are asking for or why. Without clarity, we will not succeed in gaining the mass political support that is necessary for changing our social safety net and the power structure of society.
Four common arguments I hear for Basic Income:
- Automation will force us to implement a basic income
- We can pay for a basic income through more taxes
- Massive inequality will force us to implement a basic income
- Basic income can be implemented without structural reforms to our monetary system
Automation will force us to implement a basic income
In this age of low cost access to high technology and the constant improvement of Artificial Intelligence (AI), automation is seen as a path towards basic income. We are told that our work will be automated and robots and software will do anywhere between 10-50% of what humans are currently doing. This mass automation will create mass unemployment and we thus we need to implement a tax on AI and robots and use those taxes to fund a basic income. Sounds nice.
The issue with this argument is that it goes against all historical evidence of the impacts of technology on labour and society. There is absolutely no evidence anywhere, at any time, in any country, that automation and new technology created permanent and structural unemployment. Yet, we are told that this time is different and we need to prepare. Why it is different remains very unclear. All historical evidence points to the fact that as we automate an industry, all we do is shift resources to a new industry. The transition can be painful and many people struggle to shift jobs, but the main impact of higher levels of automation (otherwise known as efficiency gains) is increased consumption.
One such example of increased consumption when you expect the opposite is the claim of dematerialization – the idea that new technology allows us to replace physical things and will reduce our consumption of raw materials. Vaclav Smil outlines this phenomenon in his excellent book Making the Modern World,
“In an overwhelming majority of cases, these complex, dynamic interactions of cheaper energy, less expensive raw materials, and cheaper manufacture have resulted in such ubiquitous ownership of an increasing range of products and more frequent use of a widening array of services that even the most impressive relative weight reductions accompanying these consumption increases could not be translated into any absolute cuts in the overall use of materials. Indeed, there can be no doubt that relative dematerialization has been a key (and not infrequently the dominant) factor promoting often massive expansion of total material consumption. Less has thus been an enabling agent of more.”
Basically Vaclav Smil is saying that though we have dematerialized industries (paper vs. Digital, phones vs. Letters, digital cameras,…) – all we do is consume more of those materials in other industries.
This counterintuitive phenomenon was first described in relation to energy consumption by William Stanley Jevons, an English economist in 1865,
“It is wholly a confusion of ideas to suppose that the economical use of fuels is equivalent to a diminished consumption. The very contrary is the truth. As a rule, new modes of economy will lead to an increase of consumption according to a principle recognised in many parallel instances
(Jevons, 1865, p. 140;).”
He is saying that savings from increased efficiency of energy conversions have been a factor in promoting more frequent use of that energy source and in driving up the overall use of the energy source. Personally, I can attest to the fact that the reduced cost of air travel has led me to travel more (it’s not just me). The reduced cost of food has led me to eat better food. The lowered cost of telecommunications has led me to get a better phone and send more emails, etc. The list is long.
A few years ago I saw the Canadian ecologist David Suzuki speak. He explained that when he grew up in the 1950s, houses in Canada were on average 1000 square feet. Today Canadian houses are well over 2500 square feet on average. He explained that if only we could stay in 1000 square feet, our consumption levels would be such that the environment would be in better shape and our lives would be better. The problem is, humans enjoy creature comforts. We could all live with less, but we do not want to and never will.
Some on the left blame this on our capitalist marketing driven society that leads us to become mindless consumers. But even they do not shun the luxuries of modern life. They do not give up their phones, safer cars, lower priced clothes or other items that were brought to them thanks to higher efficiency and cheaper labour. The truth is humans want to feel safe and lead rich lives. We do not actually want more than 6-8 weeks of vacation a year and we prefer nice stuff over time. This is just human nature and it is malleable to a certain extent, but not that much.
A subsection of the Automation Debate, is that we have created a enormous quantitates of “Bullshit Jobs”, a term coined by anthropologist David Graeber. These jobs are defined as soul crushing, mindless jobs that entail either bureaucracy or producing some service that is not really “needed” by society.
My engineering program at University was a Co-Op program, meaning we were placed or took jobs in our field when we were not following courses. I distinctly remember a classmate who got a promising Coop position at a mine in British Columbia. When he returned from his job at the end fo the semester, he explained what he did. He was responsible for monitoring the pH levels of a variety of materials in the mine and titrating the substances and then logging the information in Excel. The job was excessively boring as he was repeating the same task day after day. At the end of his internship, he asked his employer why they did not buy a titivating machine to automate his job. They explained that they compared the cost of the machine with the cost of his internship and decided he was cheaper.
The lesson here is that the cost of labour is a major driver of automation. Had he cost more, they would have bought the machine. Henry Ford said, “If you need a machine and don’t buy it, then you will ultimately find that you have paid for it and don’t have it.”. This is generally true. Increasing labour costs will lead to more automation, but it will just lead to higher productivity and more consumption, not unemployment. Basic income will likely drive up labour costs as workers will have more negotiating power.
Another subsection of the automation argument is that we do not need to work, or we do not need to work in a patriarchal capital directed economy where we do not have freedom. While we could easily debate the benefits and downsides of cooperative organizations vs. hierarchical ones, I prefer to focus on the fact that people get most of their human interactions, identity and self worth through the work that they do. The work we engage in and the people we spend our days with are a huge part of our lives.
Though our work environments are never perfect and our work is never as engaging as we might want, the net benefit of working with other people towards a common goal – even if it is making hamburgers at a fast food chain – responds to our basic human need to feel we are part of something larger than ourselves. This topic of alienation in the workplace is well studied, needless to say I will not resolve the question here. But, if the Basic Income mouvement needs to change one thing – it is to stop labelling people’s jobs as pointless or bullshit. They are not and it is insulting to tell someone that their job is stupid and useless, because if you do you are in a rather direct sense insulting the person for the choices they made or had to make.
So, in conclusion, automation will not lead to mass unemployment, just more consumption and do not tell people there jobs are useless, because they usually are not.
We can pay for a basic income through more taxes
The way you pay for basic income determines what basic income is and how it is perceived. If basic income is paid though increased taxes it will make people perceive it as another social welfare program. This is a massive problem. Last time I checked, people are not marching in the streets for more welfare programs – rather the opposite.
Many participants in the basic income Mouvement do not see paying for BI through taxes as a problem. They proudly proclaim that we can pay for basic income, which at a rate of 1000$ per person per month generally amounts to doubling the government’s budget, through taxes on the rich and corporations. The practical implementation of such a radical tax increase in a globalized world with high capital mobility boggles my mind.
At a recent basic income talk in Montréal, I asked Evelyn Forget, the famed researcher who studies the 1970s Mincome basic income project in Manitoba, “How should we fund basic income?”
She responded that “increase everyone’s taxes and the taxes on corporations.” While there is certainly room to increase taxes on certain parts of society, you cannot double state revenues through income or corporate tax increases. No economist, politician or sensible person thinks that a basic income is fundable through tax increases and if the basic income mouvement proposes this as the path forward it will realize that it has no political or social support from the middle class, who already feel overtaxed and underrepresented (see Brexit, Trump,…). Proposing large tax increases is a death sentence for the basic sentence movement.
Two factors severely limit our ability to raise taxes. First, capital is more mobile than ever. Companies and people can move their money and investments across boarders and into new legal entities faster than government can catch up. If the basic income mouvement proposes to increase taxes to pay for a basic income, they will find that a tax increase of 20-40% is required. This will position basic income as a social welfare program that is transferring money from hard working citizens (who pay the majority of taxes in modern society) to people who want to engage in their passion for African drums.
Basic income advocates need to clearly state that BI will not be paid through income tax, otherwise, the mouvement will never succeed. There are other taxes we could use, but not labour related taxes.
Massive inequality will force us to implement a basic income
Another argument is that the increasing inequality in society will lead to basic income. Again, I do not think there is much historical evidence that massive inequality is met with better distribution of resources by the society’s leaders. The only way to improve distribution of ressources is through social mouvements and though BI may be a social mouvement in some senses, there is nothing inevitable about it correcting inequality. We lived under aristocracy and insane inequality for all of human history and the European revolutions took hundreds of years of work to build materialize (with many failed attempts). The communist revolutions in Russia, China and elsewhere were battles drenched in blood. The only way to reduce inequality is through a massive social battle (usually bloody). Generally speaking, people are willing to live under massive inequality for centuries (not saying this is good, just true).
Even today, fear is an important driver of the modern economy. You cannot eliminate all of that with a basic income. There are some jobs that need to get done, we need people to take out the garbage, man the airports, clear the roads and do the millions of other low paying jobs that a modern global civilization requires. Should these people be paid more? Yes! Should they have better working conditions? Yes! Should they have better social protection? Yes! Should they be better recognized by society? Yes! But, is basic income the solution to their precarious social position, as proposed by Guy Standing? No.
Unions, higher minimum wage and better social programs for daycare, medicare and education are the solutions. Basic income is not a replacement for the social safety net or labour law improvements, it is complimentary. There are a lot of jobs that need to get done and the way to close the inequality gap between low paying jobs and high paying jobs is too increase minimum wage and wages in general (see Australia, Europe,…). Inequality will not lead to basic income and basic income is not a solution to inequality – though it will help.
Basic income can be implemented without structural reforms to our monetary system
Let’s be honest, a real basic income is a massive injection of capital into the lower part of society. This injection of capital into the economy can be done; we saw it happen with the quantitative easing of the banking sector after 2008 where trillions of dollars were injected into the economy without inflationary consequences.
First, it is important that we clarify what money is. Most people think of money as a physical thing, which of course it is not (see Gold standard people). Sometimes they think of it as an immaterial thing that government manipulates and it should be made physical or restricted (see Bitcoin). In the end, money is an accounting system with credit and debt. A central government controls this system (that was not always the case) and tries to keep the credit and debt in check as the economy grows or contracts. Your dollars are simply credit from the government – it is money the government will give you, but in the meantime you can trade it for goods and services. See Graeber on the history debt. This system of credit and debt is pretty good (see modern society), but it has some accounting problems.
Some basic income advocates such as Stanislas Jourdain of BI France have moved from the BI mouvement to a quantitative easing for the people mouvement. There are also basic income advocates who are Social Creditists. Social Creditists are an old and fascinating mouvement who advocate for a form of basic income that is calculated through the purchasing power of consumers and the costs of doing business. They state,
“The faulty nature of the financial system has two fundamental and complementary aspects. On the one hand, the financial system, as it presently operates, generates an ever-increasing gap between the rate at which the prices of ultimate goods and services are produced and the consumer incomes that are simultaneously liberated in the course of their production. This is primarily, though not exclusively, due to the way in which real capital (machines and equipment) are financed and their costs accounted for under existing financial and industrial cost accountancy conventions and the concomitant displacement of human labour. On the other hand, a particular monopoly, i.e. the monopoly of credit-creation currently exercised by banking institutions, makes use of this artificial scarcity of consumer credit to enforce a self-serving policy on the members of economic associations. They relieve the lack of consumer credit (chiefly by issuing loans) but only on asymmetrical terms that transfer purchasing power, property, and control over the economic policy of governments, businesses, and individuals to themselves.
8.The solution to these problems is to create and issue a sufficient volume of debt-free money in the form of the compensated price and the National Dividend to equate the rate of flow of final prices with the rate of flow of consumer purchasing power. This would restore balance or financial equilibrium to the circular flow while simultaneously ensuring that all prices are fully liquidated as they come on to the consumer market. A sufficiency in the rate at which consumer credit is injected into the economy would also provide adequate support for the issuance of additional producer credit up to the physical capacity of the economy or the psychological satiety of the consumer. The rate of flow of producer credit would be released so as to finally correspond isomorphically to the real demand of consumers. Whatever production is physically possible and desired by the population could be made financially possible.”
While they do not mention a basic income explicitly, the consequences of their proposal are pretty clear. They are particularly concerned about the correction of accounting issues in the modern economy reflected in the gap between wage growth and purchasing power. This blog post cannot outline all the challenges and benefits of that, but suffise to say they are advocating for massive monetary policy changes.
At the end of the day, a real basic income will require monetary policy changes to balance the growing inequality of return on capital with the growth in labour wages. This can be done in a few ways, but basic income may be the most elegant solution. It is important that Basic Income advocates properly understand money and the system that creates and destroys it. We cannot take shortcuts and a real basic income mouvement will advocate for reforms to the monetary system that compensates humans for their participation in society.
Conclusion: A dividend or death
At least to me, it is clear that if the Basic Income mouvement wants to continue to grow, we need to stop stating things that are not true. We cannot pay for basic income through income tax, automation will not lead to unemployment or to a basic income, basic income is not going to solve inequality and monetary reform is necessary to basic income. We need to build a coherent message that is based on a concrete proposal for reforming society and changing the very nature of our relationship to money, debt and labour.
In my opinion, the only viable path for basic income to be put in place is through a dividend system. This system would pay out from our common ressources, state corporations and the issuance of new money at a calculated rate. It’s not complicated and frankly, I think it is an easier sell than a vague and idealistic proposal of taxing the rich or letting robots pay for basic income.Published on November 17, 2018