Sir Anthony, chairman of the construction equipment manufacturer JCB, said that the Government should subsidise the wages of workers who have been put on reduced hours because of falling demand.
Each year the western economies become something like 4% more efficient (data from a European Labour review). It is plain that this means 4% more redundancy. Since labour is that the primary channel for wealth distribution in the current paradigm it means that the only solution is to find more work for the redundant. This assumes that there are more products to invent, more things to consume, more markets to exploit and most importantly more raw materials. Yet all four of these remain largely ignored by economics. The doctrine has been so strong that these are assumed rather than seen as the unproven foundations of teh doctrine. Looked at from a position of Realism examining Life as the foundation, these 4 are wholly inappropriate. There is nothing more to invent, there is nothing more to consume, markets (and people) should not be exploited, and raw materials are profoundly limited. This challenges the whole paradigm of life in Western Capitalism. Its has all been argued in the blog at length.
But the solution is refreshingly simple. We can keep the same economic system, but with one small adjustment. Instead of subsidising wages in times of deflation, and then lifting subsidies in times of inflation: wage subsidy becomes the central mode of wealth distribution. Efficiency increases by 4% in 2009. 4% of GDP is thus ear marked for wage subsidy in 2010. It is managed like the tax system where people (or companies) apply for redundancy payments by proving that they have increased efficiency. Thus instead of laying off staff and buying a machine, they apply for the redundancy payments, keep the staff on reduce hours and buy the machine. Then machines can do what we were promised they would do since the times of the industrial revolution: save labour! Taxes are hugely increased it is true. And here is the one stumbling block...
There is an argument that is wearily and tiresomely turned out by the well paid to justify their wages. If we were not paid so much we would simply go somewhere else where we are well paid and the company/country etc would suffer a brain drain.
The argument is clearly written by very intelligent people who are obviously worth a lot of money! Implicit in this argument is the idea that the loss of these well paid people really would impact the welfare of the community.
Yet there are many solutions to a problem and employing a few excellent people at high wages likely has another optimum on the graph where more less skilled people are employed at lower wages. Let the brain drain happen and the economy adapt it makes no actual difference. Stone age man survived without financiers. Actually the only people who would lose are the people with high wages: so it's a rather impotent argument.
Contrary infact I think everyone would gain. We've seen the argument used a lot recently in the financial industry. It is clear that people in the financial industry do not work for the right reasons. They actually work for the money, not the job. When this happens an economy is doomed anyway. Do you really want to spend your money on things made by someone who cares only about getting money out of you? Or would you rather buy from someone who wishes to supply a good product? It is clear those companies who employ people interested in their wage over their job will fail anyway. So again let the brain drain happen. If it had happened in the 80's then it would not be our economy which would be having to bail out all the "brains".
There is a more obvious argument here anyway. Anyone with real intelligence realises that wealth and status are purely relative and of no real value. The real "brains" don't waste their time (and everyone elses) pursuing only symbols of their achievement. They simply gain real achievement - the first such achievement is jettisoning the burden of symbols. So by definition anyway left squabbling over their salary using any argument at all, has already proven themselves unworthy of it... which is also why they will get it because people with high salaries are almost by definition unworthy! A lot of people have complained about the bonuses recently - sadly these people are the least worthy. They clearly consider a high salary a thing worth having, yet they do not have the wit the earn it themselves so they are left berating the successful. They call it unjust: you explain that to the person who made your shirt for 1cents! If you think money means anything then the system is by definition unjust, because aren't we are all equal? If you take part in the game then don't complain if you lose! If you think the game pointless, then don't take part!
So ignore the arguments from the top about salary - that is ignorant and missing the point of the paradigm shift. Tax at the rate that increasing efficiency dictates.
For example the invention of a new range of computers with 2ce the computing power clearly brings with it redundancy. At the moment in America this is accounted as an increase in value of the company. Actually it is an increase in productivity and efficiency but at a huge cost. In the current system that means redundancy (for the many) and higher wages (for the few) i.e. higher wage inequality. Following from the comment given by Anonymous recently using Einsteins analysis of Capitalism: the gradual racheting of wages into the hands of increasingly few reduces the distribution of wealth and slowly contracts the market and the economy. So redundancy must be compensated immanently within the economic model. That seems a priori to me and it amazes me it was not a foundation stone of economics. At the moment economics does not deal with this and it is assumed that inventions and natural resources will come to the rescue of the incomplete system. People the economy cannot accomodate are thrown into the wilderness and here they must make a living: yet there is little wilderness left to put them!
I don't have to rerun further the deep arguments that ensue from this position. But quickly Progress. The big counter argument will be that the Human race will come to a stand still. No medical improvements, no technological marvels since people will no longer be fighting for a place in the market and will be sitting on government subsidy.
Such a position is based upon a misunderstanding of human nature. A simple self-reference argument will suffice. If the exchange system is Man's only motivation then what motivated Him to form the exchange system? It is a priori that people motivate themselves and finding a job, and spending money is just a small part of that. The ancient Greeks pursued knowledge for its own sake, a discipline which still exists. Einstein was never paid for his general theory of Relativity - he was paid to be an patent's clerk. The great discoveries have not been brought about by Exchange, but rather by Leisure. It is the respectfully rich, free from the need to create things who ironically create the greatest things. As if anyone really believes that human discovery is caused by exchange. Exchange is measured in money and a thief achieves the same achievement in the financial world as an honest tradesman. Money and exchange make nothing. The Human Race will "progress" regardless of the institutions: indeed the institutions are part of the directionless "progress" - it is not something that can be (or should be) stimulated but it is a symptom of a profound disquiet in the human mind.
It is the slave nations that have given us "civilsation". The Babylonians, Greeks, Romans, British, Americans: all these are built upon slavery. It is the slavery that brings freedom to the "free" classes. There can be no freedom if there are not slaves! Yet in the last 3 hundred years the slavery has continued but not in human form: in machine form. Fossil fuel driven engines have created the wealth of nations. But unlike in previous slave nations the people do not benefit from the freedom. One would expect leisure to increase. And with the increase in leisure the development of a culture of intelligence, politics, sports and refined art. One would expect the society to become ever more refined. Yet the Capitalism system seems to have achieved the opposite! This is quite remarkable given that societies since antiquiry have achived this simple task. It stems I believe from the need for the "free" to have a "slave" and when machines have become the slaves the rich still look to other humans to be "slaves". The need for status means that out of principle the masses will never have the chance to be "free" even when there is no practical reason for it. The myths of survival will remain simply to enforce the structures of "status" that seem so important to lower humans.
What is even more importantly missed is that things are relative. That is the point that the West misses again and again. The wheel was once the technological marvel of all time, greater than the rocket, greater than electricity. It transformed the world beyond recognition. Yet it no longer counts as an improvement because we are born with the wheel. The process of finding something "new" be it a fashion or a technological innovation is a mindless and futile game that simply seeks to divert us from "reality". Why do we need this excitement of the "new"? What is missing from our lives that we can't face the "present"? This is what will be "new" for mankind: His greatest innovation of all time: the realisation that he does not need to change, for he can live his life just as He is right now.
note: Robert Frank holds the same position that economic work toward status is wasteful. p376 Farewell to Alms: Gregory Clark
No comments:
Post a Comment