> Modern economies are increasingly based around information. Information "wants to be free"—as the saying goes—but free things are bad for capitalism, because capitalism is about competition and making profits.
Tons of companies are based on providing information. Even if the information is public, sorting it and providing it efficiently has real value (such as google). Others do their own private research and re-sell it. Capitalists use and contribute to open source software. This statement is absurd.
> In time, technology is likely to drive many things to "zero marginal cost." Energy, for example, won't be subject to market forces. We'll just have a solar panel on the roof and each kilowatt hour will essentially be free.
In this "energy is free" economy, who will be building and providing me with my free solar panels, and then installing and maintaining the electrical system in my home or business? What happens when it's cloudy?
This whole article is like a undergraduate philosophy student who thinks he or she has the silver bullet for humanity, if only people would listen!
It's also using the word free in two different senses. Basically in the phrase "wants to be free" that's "free as in freedom, not as in beer." The meaning is that it's difficult to restrict the flow of information and you cannot reverse it. But then the author is claiming that information is free as in it doesn't cost anything. Then he's using the word information in two different ways, confusing "information economy" with data and then invoking some sort of magical osmosis by which an information economy doesn't involve money. Unpacking the chain of reasoning involved just in that single sentence, I see the following assumptions and arguments:
we have an "information economy"
information wants to be free
it doesn't cost anything to produce information
an information economy is one that doesn't cost any money to run
money is important to capitalism
without money capitalism doesn't work
since our economy doesn't require money to run, capitalism isn't working
Haha I always laugh at people who quote "information wants to be free" out of context. In the original speech in which the phrase was coined, the very next sentence was "information wants to be expensive".
Once you have made the capital investment for your solar panel, the electricity it generates is basically free. In economics terms, the marginal cost of an extra kW/h consumed is zero. This is different from the current economy where each marginal kW/h of electricity consumed costs the same price.
It's perhaps a bit of an oversimplification for OP to say "Energy won't be subject to market forces", since there will still be a market for solar panels. But the more that solar energy production is decentralized and commoditized, the less there will be a market for the generated energy itself.
This article is terrible. Not only is it full of false comparisons, but every example cited as a supposed failure of capitalism or free markets is actually the direct result of government intervention. A friend challenged me when I mentioned this, so I wrote a full take-down: https://gist.github.com/nateabele/cffa0c54ab0385bbba37
I believe that video contains a significant error. Around 13:00-16:00, it claims that a fractional reserve ratio of 9:1 with an initial capitalization of $1111.12 can lead to overall debt of almost $100,000 being issued. I believe this is incorrect and misunderstands how fractional reserve banking works.
The video's scenario is that a bank has a $1111.12 capitalization, no depositors, and issues a $10,000 loan to a customer who immediately writes a check for the $10,000 amount (which then gets deposited at another bank). The video seems to think that this bank can continue operating by fulfilling the check with $8888.88 of "debt money" that it just made up.
I'm pretty sure that the bank (call it A) has become insolvent and the check will not be able to be deposited at bank B. Bank B has no reason to accept Bank A's IOUs -- they aren't real money. If bank A doesn't have enough hard cash to satisfy the checks written by both its depositors and its loan customers, the bank has become insolvent and has to close its doors. So in reality, the 9:1 ratio means that $1111.12 of real money can only become $10,000 in "debt money", total, not $100,000.
Your link is describing the UK, which has no reserve requirement. So naturally, a ratio would not apply there.
> Money is created from nothing when banks lend.
In one sense you are right. If you add up everyone's net worth, it is greater than the amount of money issued by the central bank. But there is a natural limit on this process, because banks have to be able to fulfill checks cashed at other banks with real, central bank issued money.
The central bank in my country have issued similar reports describing the relationship between reserves and possible loans as indirect, even in the presence of the reserve requirement here. This requirement, as I understand it, a legal restriction, not an economic one, and it is rather soft. Imposing such a requirement does not fundamentally change the nature of how money is created.
> Banks have to be able to fulfill checks cashed at other banks with real, central bank issued money.
Increasingly less so. Especially since nobody buys a house with cash, and that's what most loans are for.
> Imposing such a requirement does not fundamentally change the nature of how money is created.
I never said that it did. I said that it imposed a limit on how much money can be created in this way.
> Increasingly less so. Especially since nobody buys a house with cash, and that's what most loans are for.
This is not a matter of nuance. If I sell my house for $500k, the buyer wires me $500k that shows up in my bank account. To complete this wire, the seller's bank has to move $500k of cold hard central bank cash to my bank. This isn't fuzzy or flexible. If the seller's bank can't do this, the seller's bank is insolvent and has to close its doors or take some other measure to get more central bank money.
It is true that I might then go buy a new house for $600k, using my $500k as a downpayment on a new loan. And if the seller of my new house uses the same bank as the buyer of my old house, only $100k of central bank money actually moved anywhere.
But if I don't do that, the banks are on the hook to actually move money comprising the full amount of the sale. The video I linked to upthread fundamentally misrepresents this fact.
If all human jobs are eliminated, that means you never have to hire a human to get something accomplished.
"But what about those who can't afford the super expensive robots?" you say?
If they are too expensive, you'll just have to trade with your fellow humans who also can't afford them, just like you do now. Millions of people all over the world do jobs that are already automated. The Amish even do it right here in the US, if you need a blatant example.
Of course, robots will become cheap just like every technology eventually gets cheap. They are only expensive in fantasies where only one variable is allowed to change and all logical consequences are ignored.
The reality is that building houses and growing food and transportation and medical care and many other things are all going to get much cheaper.
And so will writing code, prototyping new inventions, market assessment, manufacturing and distribution. Anybody that wants to dream up new apps or physical inventions all day will be able to sell to a global market. A global market of bots who filter the millions of new things for the exact needs and desires of their human masters.
In terms of GDP per capita, I live in one of the lowest income counties in a state that is well below the national average. I'm not sure if many of the points made in this article would be felt so viscerally by someone living in SF making $100k+/yr, but I found it very interesting.
It's worth noting that I have received exactly $0.00 in government subsidization (student loans, disability, unemployment, etc) - I've never applied for or received a penny of it. Perhaps the most interesting thing about rural communities like mine is that the people here who actually make money - farmers - are among the largest recipients of government subsidization in human history due to a subsidy program which was conceived when industrialized agriculture was still a nascent technology.
I feel there is a sort of cognitive dissonance when it comes to things like this in that many successful people are where they are in large part due to the governmental aid they've received,but these same people tend to be the most intense detractors of any legislation that would help everyone else.
I don't have any good answers and I sensed a bit of naivety in the article, but I feel it made some good points and asked a lot of very important questions.
I meant direct cash-in-your-pocket subsidies like the ones I mentioned, including food stamps. I get what you're saying, the point of that post wasn't woe is me... but the quality of roads, policing, and public education also tends to not be so high in lower income areas.
I'm not pretending to have all the answers, but I think we could do much better as a society.
Do we have to hash this out in every HN thread that touches on economics? These arguments are very weak.
Plenty of people don't believe in police. Plenty of people homeschool and / or don't like what government schools have done.
The "who will build the roads" trope is so tired that - and I'm not kidding here - one of the ice cream vendors at the Porcupine Festival has a best-selling flavor, "Who will build the rocky roads?"
Maybe we wouldn't have to hash this out in every thread if you'd explain how some people don't benefit from police or public roads (whether you "believe in them" or not).
The truths of which the masses now approve are the very truths that the fighters at the outposts held to in the days of our grandfathers. We fighters at the outposts nowadays no longer approve of them; and I do not believe there is any other well-ascertained truth except this, that no community can live a healthy life if it is nourished only on such old marrowless truths.
> I don't mean to be undiplomatic, but there's no way I'm going to encapsulate this is an HN comment. Books! You must read books!
Books are text. There is not actually anything preventing you from conveying the relevant information in an HN comment. Here, I'll do it from the other side.
There is clearly no physical law that says private companies can't hire construction workers to build roads. But private roads are economically inefficient.
Roads cost money to construct but not to use. Road maintenance costs are overwhelmingly dominated by natural forces (i.e. weather). Therefore the efficient price for road use is a fixed cost of construction/maintenance and ~$0 per mile.
But the typical private solution to paying for roads is tolls. Tolls don't match the efficient cost structure. They convert sunk costs into variable costs which inefficiently reduces usage of the valuable resource. This error compounds itself. If covering construction/maintenance costs would cost $.25/mile but that price deters some usage, then the price has to be raised to meet total costs against the lower usage, so the price goes to $.40/mile. That would deter yet more usage which increases the price to $.50/mile. The price stabilizes at quite a high price point that deters a large amount of productive use of the roads.
Another problem with tolls is that they don't match the value received from the resource. Someone who doesn't drive at all but once had to have an ambulance take them to the hospital will have derived the full value of the rest of their life from having the roads but will have paid hardly anything, which puts higher costs on everyone else and further compounds the inefficiency above. In a less extreme example, someone who ships a small quantity of high value freight over the roads is receiving the same value from them as someone who ships a large quantity of low value freight, but is paying significantly less.
So tolls are terrible, but what says a private group can't build roads and then charge a fixed annual cost to local residents for access to them? That actually works perfectly well, except that it's irresistibly coercive. Government-level coercive. Either you pay the "road tax" or you aren't allowed to leave your house and no one can visit you or deliver anything to you. It works for exactly the same reasons and in the same ways that government roads work because that's effectively what it is. The taxing power is derived from a monopoly on travel rather than a monopoly on force, but travel is important enough to make that a distinction without difference.
Now you've got a counterargument to make. The road company could have competitors. If they're doing a crappy job then someone else can build different roads and people will sign up for the other one. It would have to be a really, really crappy job because it would have to justify the cost of a second road network, but in theory it's possible, right? But not in practice. The "tax local residents for access to the roads" model is the most efficient one because it most accurately tracks the operator's actual costs. If someone is operating under that model, they're going to win in the market against someone who isn't. They're going to capture every customer whose road usage if charged per mile would put them over the fixed annual cost. But the per-mile competitor still has the same fixed costs, so for every switching customer they then have to increase the per-mile price, while the annual-price competitor can lower the annual price. In every iteration, the heaviest using customers who still use the per-mile roads realize that the new per-mile price puts them over the annual price, switch to the annual price company and cause another iteration, until the annual price company has 100% of the customers. Because their pricing model is more efficient.
So OK, both competitors can charge a fixed annual price, right? And then the same thing happens but the advantage goes to the one with more customers to start with. They have the same costs but more customers to amortize them over so they can charge lower prices and the lower prices attract more customers, creating a feedback loop that destroys the competitor. Or, if the competitors are willing to set prices that won't allow them to recover their maintenance costs, it creates a price war that, again, destroys one of the competitors (whichever one has the smallest cash reserves) and reinstates the monopoly. Which is why roads are a natural monopoly.
So the only efficient way to have "private roads" is to have a monopoly road company that collects periodic "road fees" from basically everyone regardless of how much they use the roads. But it's still a monopoly and monopolies can be very abusive if unchecked. So maybe what we need to prevent that is to make sure the local residents own the company, so they get a vote in how their road fees are used and how the roads are maintained. Do you see where this is going?
Jeez you're cogent, diplomatic, polite, and helpful.
Thanks for this reply.
In general: I don't object to text as a medium, but to threaded posts as a format.
Thinking outside the box of owned land property - and how roads might be done better, for example - takes a lot more volume and research than is practical here.
I take it you are privileged enough to spend most of your time in areas served by fairly complete road systems. You could be responding to someone who does not, especially since that person lives in "one of the lowest income counties in a state that is well below the national average". There are no "roads" as you would identify them in many such places. They do have jeep trails etc. but no government built them.
It really doesn't matter. All the modern (not literally home made from the raw materials) goods and commodities they have were delivered in very large part on mainstream infrastructure. Roads, railway, through airports and cargo ports, etc. That includes every vehicle they drive, the fuel they burn, clothes they wear, food they eat. The electricity they use, even the fuel they use to run generators if they're off the grid (and the generators themselves). The cost of all that has to some extent been subsidised.
Modern economies and technological supply and support chains are so massively integrated that this is unavoidable. Yet most of us are obliviously unaware that they even exist.
Yeah that's fine but we've really moved the goalposts here. OP mentioned that OP had never received student loans or disability payments. Somehow that inspired a rude comment based on some very developed-world assumptions concerning public infrastructure. Yes, in most situations we see, it's good for public infrastructure to be built using public money. That doesn't mean that someone who e.g. purchases a kerosene lamp to light her home at night should feel thankful toward the government officials who haven't yet nationalized and dismantled the container port that offloaded it, who haven't yet closed the dirt road over which it was hauled by truck, whose military hasn't yet run the local store that sold it out of business for insufficient bribery. Hell, all the infrastructure we're discussing might well have been built during a previous government that was violently overthrown by the current one! Who should she thank in that case?
When I was last in a "developing" nation, back in January, my hosts observed that the only existing paved road outside a large city, over which bus, truck, and agricultural traffic was solid day and night, was built and maintained by the federal government rather than the provincial one, because otherwise the money just disappeared. When we reflexively castigate those with questions about the use of public money (or frankly, in this thread, who are misunderstood to have posed such questions), we're protecting those who are glad for no questions to be asked. That's true in both "developing" and "developed" nations.
Well I'm 30 and have been unemployed all my life. I'm safe at home, trying to make a game. Jobs aren't necessary anymore. That's what the industry and automation are for. In a way, you can say capitalism allows the development of industries, which in the end seems to reduce the necessity of having capitalism in the first place.
I didn't read the article, but I always sense there is this weird belief that "people must work and belong to something so that society can function". I can't really express it. What bothers me is that somehow, even after the new deal and social programs, not having a salary or income is seen as some sort of a bad thing, and often, it will be a bad thing for your mental health (isolation, lack of personal goals).
I guess that is what people don't like about capitalism, is that it builds an inability for anyone to share and live in communities normally, because the political argument of altruism seems to lead to communism and soviet evils. It's really hard to make a link between capitalism and the lack of fulfillment, despite the increase in wealth, but at some point I'm sure people would prefer an economy which isn't so focused on growth, but rather on long term development.
What a statement. It rings of naivete. How would you pay for your living expenses? Are you living with someone who pays your living expenses? Do they work? Or are you on social welfare?
Who maintains the automation? Who designs these systems? Until robots and AI can do everything (which is a long way away), there's always going to be something that no one wants to do. Getting paid is an incentive to do it. We are also a long way from becoming a non growth focused economy. Until such a time as strong AI and a non growth focused economy become a reality (if ever), jobs are necessary, and always will be.
People also like to be useful, to feel like they matter, or be part of something greater than themselves. Jobs are one avenue for this fulfilment. Someone who is intentionally unemployed is not being useful. If you are on welfare, or your supported by family, then you are a burden. Others are required to work, but you choose not to at their expense. Why are you entitled to do what you want, when others can't? That is seen as unfair, so you cop resentment.
"I always sense there is this weird belief that "people must work and belong to something so that society can function"."
I suspect you believe this to justify your lack of motivation for employment. There is a big epidemic of this type of attitude in Japan (neet's) [1], where young people refuse to work and just live off their families income. It might be different if you had decided to quit your job and make your dream game. You were never employed and don't want to be.
I think we are in a weird point in western society, where we are generally more well off than any other time. The basic costs of living are relatively low for a single person, particularly if they live with their parents. A lot of the basic things have become much easier than before. So, its much easier to be unemployed (particularly in welfare based societies), and people will find all sorts of ways to justify their apparent lack of motivation.
I live in france, and am on welfare. Unemployment has been at 10% for a long time now.
What I mean is that we should not encourage people to do any job, and let them pursue things they like instead. So many people live on minimum wage, and don't go back to school.
I think it's a great thing to live with your parents. And if there are a lot of NEETs in japan, maybe there are reasons behind it which go beyond "naivete". Calling this an epidemic without trying to understand the reasons behind it is easy.
> Jobs are one avenue for this fulfillment.
What about working at fast food, mopping floors, bullshit jobs, etc? Fulfillment happens when you are educated enough to work in a domain you can be fulfilled with. Nobody gets a raise in those jobs.
> Others are required to work, but you choose not to at their expense.
Nobody is required to work, they decided to, it's consented, not slavery, and get both the advantages and the downsides. That's exactly what I'm talking about here. People can do what they want, yet if they work, most of the time it will be minimum wage, because everyone wants to work, so of course employers will always drive wages down. So of course it makes sense to stay unemployed.
> and people will find all sorts of ways to justify their apparent lack of motivation.
Why should people have any motivation? Is it some kind of a moral duty? Don't you read that people can be angry, desperate and resentful about their economic situation?
> then you are a burden
That's the worse thing you can call an unemployed person. Not only am I not interacting with anybody, but now I should feel guilty for my situation? How do you want me to improve my situation if you accuse me? I don't really like to continue this kind of conversation, because it only deal with social constructs, which aren't really good standards.
If you are unemployed because you are genuinely unable to find work, then that's an entirely different matter (and I apologise, and wish you all the best for finding work). I got the impression that you were unemployed by choice, especially given your various statements (and the rest of this post is partially prefaced on that assumption). Therein lies the problem. While your personal situation may work for you, it will not work for a vast majority of people. So my response was in regard to the various broad unqualified statements you made. I personally don't have anything against your choice. I can understand where you are coming from. However, your statements seem to reveal a certain level of naivete.
There are many people that must work in order to pay their families living expenses as they are married and have children. Even with welfare they might not have enough money to live above the poverty line. So they must work. While they could choose not to work, its hardly much of a choice.
I'm guessing your living with your parents (based on your statements). What if your parents decided to stop working? While in your circumstance they might have saved up enough money to live comfortably for many years, they had to work to get it in the first place. There are many people that cannot live with their parents for various reasons.
> Jobs are one avenue for this fulfillment.
I didn't say jobs are the only avenue for fulfilment, merely one avenue to it. People in undesirable jobs generally aren't there by choice. This breaks down your assertion that jobs aren't necessary.
> I think it's a great thing to live with your parents. And if there are a lot of NEETs in japan, maybe there are reasons behind it which go beyond "naivete". Calling this an epidemic without trying to understand the reasons behind it is easy.
Its an epidemic regardless of the reason behind it. I'm fully aware of the tough working conditions many face there, and that it will drive some to avoid employment due to the unbearable pressure. I suspect there are many that are simply just unmotivated to work, and have the means to do so.
>> and people will find all sorts of ways to justify their apparent lack of motivation.
> Why should people have any motivation? Is it some kind of a moral duty? Don't you read that people can be angry, desperate and resentful about their economic situation?
This is where I see the issue. You have formed opinions which justify your lack of motivation and project it onto others. Your situation might work for you, but it does not work for everybody. Yet you do not understand this:
"I always sense there is this weird belief that "people must work and belong to something so that society can function". I can't really express it. What bothers me is that somehow, even after the new deal and social programs, not having a salary or income is seen as some sort of a bad thing, and often, it will be a bad thing for your mental health (isolation, lack of personal goals)."
These social programs only function because others work. Their taxes pay for your expenses. These welfare systems are designed for people who are unable to find work, despite trying to find it. While there are some places trialling basic income, until most of the western world moves to it (unlikely any time soon), you are a burden to society. Now maybe in a few years, you will finish making your game (i hope it goes well), and it will sell well, justifying your unemployment. Until then many people will not understand your choice, and even dislike you for it. As I said previously, it would be a different matter if you quit your job to make your dream game. People can see you have a goal and are motivated - that you don't intend to remain a burden.
>> then you are a burden
> That's the worse thing you can call an unemployed person. Not only am I not interacting with anybody, but now I should feel guilty for my situation? How do you want me to improve my situation if you accuse me? I don't really like to continue this kind of conversation, because it only deal with social constructs, which aren't really good standards.
If you are seeking work and unable to find it, then I agree, its not a good thing to say to an unemployed person. However, I'm assuming you are unemployed by choice. If you are isolated, you need to work on a social life. It is your choice to be isolated. If you are actively trying to seek employment, then you should absolutely not feel guilty.
So what? Work is consented, not forced. If nobody wants to pay them better, they won't work. If they have the means to work, but don't want to work, what's the point of calling this a lack of motivation? It's basic supply and demand at work. Maybe society has to find a better way to employ those people. I think unemployment is sustainable. If you decide to work, you have more money, but an unemployed person will still have enough to live.
> Their taxes pay for your expenses.
Money is just an indicator, but it doesn't explain structural phenomenons. If you make abstraction of money, work is overrated. Automation removes a lot of necessary work. Haven't you seen how less people are need to grow food? Haven't you seen how many workers machines replace?
I'm now in a place of "discouraged unemployment". Meaning I had many interviews and did not get hired. The more unemployment you have, the more candidates will get discouraged to find a job. That's my situation currently. I think labor and the socioeconomic model need to change. You can't tell people to fit in a mold they don't like. Will a bank loan me money to work on my game ?
Other details you might not know: France is currently in a roar because the left government want to pass a law which is more liberal towards labor. France is pretty conservative in term of economic policy (despite the fact that welfare is generous). The fact is that in france, you literally CANNOT fire someone if you want to, or it's VERY difficult to do so. That might be the main reason people like me are in long term unemployment, and are refusing to make new concessions. I already gave my resume to the city company who deals with trash, and I got no answer. So in short, don't pretend you can advice everybody to work in fast food. That will only get votes for candidates like Sanders.
And this is why Americans have such an issue with socialism, it's the exact ethos that makes people want to reduce / remove the welfare state. An able-bodied 30 year old, who has never had a job, lives off the state, and feels justified in this situation.
The UK used to have an unofficial version of UBI in the 70's and 80's when it was feasible, if somewhat difficult, to mooch off the benefits system, including getting reasonable low end accommodation. This had a kind of freakonomics effect on the wider economy that we can see today.
It's how nearly all musicians, artists, designers, actors etc were surviving during those decades and why they didn't end up abandoning their dreams to office jobs.
That 'Withnail & I' existence certainly wasn't one that many others would choose due to the low income and otherwise tawdry lifestyle, but it was actually the engine for the big success story behind UK culture - which has turned out to be one of its biggest exports and biggest draws.
The reason London is now seen at the world's coolest city where everybody wants to come to study, live, invest, and set up shop is its cultural capital and that can be traced back to the fact that all of the people running clubs, fashion designers, and musicians etc were enabled off that benefits system.
I like the idea of basic income but I don't like the idea of raising income tax. I think capital gains tax should be raised and there should be a special tax on passive income.
All Passive income sources are essentially small monopolies - If you own an asset from which you derive passive income without having to work at all; the dynamics of this are not so different from a corporation having a monopoly over an industry. At the root, why should some people get paid for doing nothing at all while others get nothing. Doing nothing should have the same market value no matter who you are.
Your idea is basically discouraging (and punishing) saving. You are completely missing the fact that those "savings" are reinvested into the economy via loans, credit, capital, etc.
Agreed, but so are near zero (or effectively negative) percent interest rates we've had for quite some time now, which coincidentally tends to benefit rent seekers in the economy. Raising taxes on some forms of "passive" income seems not that unreasonable under the current circumstances.
The simple answer is that they're risking their capital. If someone buys a tent house, they now have an asset that can burn down (insurance only making them partially whole), or get a renter who draws out zero payments for months. Or just the bottom falling out of the market.
I wonder if basic income is better structured as some sort of dividend from the profits of automation. This way, retirees (who vote in large numbers), have an incentive to support legislators who claim to support increased automation.
Paul Mason is a very good television journalist although he has moved away from the BBC to Channel 4. Good that he may be, I don't feel the urge to read any of his books on how the post-Capitalist world is supposed to work out.
Recently in an old book shop I found a shelf full of ideas from around the dot com era of how our post-whatever society was going to be. I feel that Paul Mason's books are doomed to go to this same shelf of 'forgotten dreams'.
Sounds like it really wants to differentiate itself from the "old kind of socialism", which has a heritage of thought which already contains a lot of the things mentioned here.
And, as with most socialist thought, tends to kick up a lot of cries and moans from the self-professed economists in the room.
> Modern economies are increasingly based around information. Information "wants to be free"—as the saying goes—but free things are bad for capitalism, because capitalism is about competition and making profits.
Tons of companies are based on providing information. Even if the information is public, sorting it and providing it efficiently has real value (such as google). Others do their own private research and re-sell it. Capitalists use and contribute to open source software. This statement is absurd.
> In time, technology is likely to drive many things to "zero marginal cost." Energy, for example, won't be subject to market forces. We'll just have a solar panel on the roof and each kilowatt hour will essentially be free.
In this "energy is free" economy, who will be building and providing me with my free solar panels, and then installing and maintaining the electrical system in my home or business? What happens when it's cloudy?
This whole article is like a undergraduate philosophy student who thinks he or she has the silver bullet for humanity, if only people would listen!