That’s the displacement story, but suppose that robots are extremely cheap. There is no obvious reason they shouldn’t be cheap. After all, we probably won’t need any rare materials to make robots. And presumably robots could be mostly manufactured by other robots, so the labor involved wouldn’t be expensive. In this case, we should be able to buy a robot at our local hardware store or from our favorite internet retailer for a few hundred dollars.
Once we buy the robot, we can have it clean our house, cook our food, mow our lawn and do all sorts of other tasks that we may not want to do ourselves. We can probably even save on our food budget by having the robot plant and tend a vegetable garden. If robots are doing all this work for us and we no longer need to buy and maintain a car to meet our transportation needs, we should have all have a high standard of living.
But suppose that patents and related protections keep the price of robots high. And instead of technology driving down the cost of transportation with self-driving cars to almost nothing, patent monopolies allow the top executives and shareholders of Uber or its equivalent to get very rich at the expense of the rest of the population. In that scenario, most people may not benefit to any great extent from technology. In that case, robots may take our jobs, but instead of the benefits from productivity growth being passed along in higher wages and lower prices, as was true in past decades, the benefits go to minority of well-situated individuals. Continue reading
Category Archives: #MLKGlobal
It would take black Americans two hundred and twenty-eight years to have as much wealth as white Americans have today
Everyone knows that wealth is unequally distributed. The work of Thomas Piketty has made this a mainstream concern. But the magnitude of the gap between white and black Americans is on a different scale. According to a recent report from two progressive think tanks, CFED and the Institute for Policy Studies, white households own, on average, seven times as much wealth as African-American households (and six times as much as Latino ones). The Forbes 100 billionaires are collectively as rich as all black Americans combined. At current growth rates, it would take black Americans two hundred and twenty-eight years to have as much wealth as white Americans have today.
Some of the reasons are clear: the unemployment rate among black Americans is roughly twice that of whites, and black people earn, on average, between twelve and twenty-two per cent less than white people with similar education and experience. But the wealth gap between black and white Americans is much bigger than the income gap, thanks to a toxic combination of institutionalized discrimination, persistent racism, and policies that amplify inequality. As Thomas Shapiro, a sociologist at Brandeis and the co-author of the seminal book “Black Wealth/White Wealth,” told me, “History and legacy created the racial gap. Policies have maintained it.” Together, they contribute to what he’s called “the hidden cost of being African-American.” Continue reading
Inequality and democracy
Of the features of modern society that exacerbate that fear and threaten that hope, the distribution of wealth may not be the most important. Money matters to people, but status matters more, and precisely because status is something you cannot buy. Status is related to identity as much as it is to income. It is also, unfortunately, a zero-sum game. The struggles over status are socially divisive, and they can resemble class warfare.
Basic Income for India
First, any universal programme is expensive.
For example, if we were to give every adult exactly the amount of income that defines the poverty line, which would ensure that everyone would be brought above the poverty line, calculations suggest the bill would amount to 11% of the GDP (Gross Domestic Product). This is just a hypothetical example. One can, of course, offer a lower amount per person that would be more affordable.
However, in this context, a sense of perspective is needed in discussing expenditures on programmes aimed at the poor, who by official estimates, constitute 30% of the population. Calculations suggest that if we take just twice the amounts that define the poverty line, almost 80% of the population lives below that.
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Oxfam: UK one of the most unequal countries
The richest 1% of the UK population owns more than 20 times the wealth of the poorest fifth, according to Oxfam.
That made Britain one of the most unequal countries in the developed world and contributed to the vote for Brexit, the charity said.
Its analysis found that about 634,000 Britons were worth 20 times as much as the poorest 13 million people. Continue reading
Poor growth and/or increases in inequality owe as much to global forces as domestic policies
Note two things here. First, there are a lot of dots with very low income growth, low enough to deserve the label “stagnant”. Second, wherever similar-coloured dots are on an upward slope, higher-income groups left their lower-income compatriots behind. Aside from the very lowest deciles (who are often cared for with welfare benefits), that very often seems the case. Again, Lakner and Milanovic looked into this, and wrote: “Some examples with particularly low real growth rates among rich economies include almost the entire lower halves of the income distributions in Austria, Germany, Denmark, Greece and the United States. They all had overall 20-year growth rates of less than 20 per cent which translates, in the best case, as 0.9 per cent per capita annually.”
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Macroeconomic policy, not technology, undermines workers bargaining power
Well, a big part of the story is that the UK (like the U.S.) has a very weak labor market. This was a result of conscious policy decisions. The Conservative government put in a policy of austerity that had the effect of reducing demand in the UK and slowing the rate of job creation. In this context, of course employers get to call the shots.
Serious people would address the context which has denied workers bargaining power. It is not “technology” as Harris and his elite Trumpians would like to pretend, it is macroeconomic policy. But Harris has no time for talking about macroeconomic policy. He dismisses a plan put forward by Labor Party Leader Jeremy Corbyn to produce full employment as, “either naive or dishonest” adding “but they reflect delusions that run throughout Labour and the left.” Continue reading
An Economic Bill of Rights for 21st Century: the Universal Basic Income
An Economic Bill of Rights for 21st Century
In the summer of 1967, King announced what was to be the most expansively radical adventure of his life – a national movement called the Poor People’s Campaign, mobilizing Black, White, Hispanic, Native American. It was to demand an annual $30bn federal investment to deliver full employment, guaranteed annual income, 300,000 units of low cost housing per year.
Tragically, Dr. King was assassinated on 4th April 1968, and the April 16 edition of USA Look magazine carried a posthumous article from King titled “Showdown for Nonviolence” — his last statement on the Poor People’s Campaign. The article warns of imminent social collapse and suggests that the Campaign presents government with what may be its last opportunity to achieve peaceful change — through an Economic Bill of Rights. Three weeks after Dr King’s death, the Committee of 100 — set up to lobby on behalf of the campaign – called for just this – an economic bill of rights with five planks to deliver economic justice.
- A meaningful job at a living wage
- A secure and adequate income for all those unable to find or do a job
- Access to land for economic uses:
- Access to capital for poor people and minorities to promote their own businesses:
- Ability for ordinary people to play a truly significant role in the government
Despite the intervening decades since the Poor People’s Campaign, it is true to say that Dr King would recognise the same issues today as he faced then – inequality, corporate power, racism and militarism. Now, we have other factors that also need to be incorporated – climate change, the total capture and consolidation of political power by the financial and business class; the globalisation of the neo-liberal agenda (north and south alike). So, it is imperative for our renewed Economic Bill of Rights to reflect this.
Among the big ideas, the one that will be integral for us to solve the first 2 demands of the 1968 Economic Bill of Rights in the 21st century is the universal basic income. Continue reading
The effects of poverty costs the UK £78bn a year
The Joseph Rowntree Foundation (JRF) estimates that the impact and cost of poverty accounts for £1 in every £5 spent on public services.
The biggest chunk of the £78bn figure comes from treating health conditions associated with poverty, which amounts to £29bn, while the costs for schools and police are also significant. A further £9bn is linked to the cost of benefits and lost tax revenues. …
The JRF report, called “counting the cost of UK poverty”, estimates that 25% of healthcare spending is associated with treating conditions connected to poverty.
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UK Child Poverty is getting worse
The number of children living in poverty in the UK has jumped by 200,000 in a year, according to the latest official data.
There were 3.9 million children living in “relative poverty” in 2014-15, up from 3.7 million a year earlier, the figures from the Department for Work and Pensions show.
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The case for Universal Basic Income
But, after a Conservative government ended the project, in 1979, Mincome was buried. Decades later, Evelyn Forget, an economist at the University of Manitoba, dug up the numbers. And what she found was that life in Dauphin improved markedly. Hospitalization rates fell. More teen-agers stayed in school. And researchers who looked at Mincome’s impact on work rates discovered that they had barely dropped at all. The program had worked about as well as anyone could have hoped.
Mincome was a prototype of an idea that came to the fore in the sixties, and that is now popular again among economists and policy folks: a basic income guarantee. There are many versions of the idea, but the most interesting is what’s called a universal basic income: every year, every adult citizen in the U.S. would receive a stipend—ten thousand dollars is a number often mentioned. (Children would receive a smaller allowance.)
One striking thing about guaranteeing a basic income is that it’s always had support both on the left and on the right—albeit for different reasons. Martin Luther King embraced the idea, but so did the right-wing economist Milton Friedman, while the Nixon Administration even tried to get a basic-income guarantee through Congress. These days, among younger thinkers on the left, the U.B.I. is seen as a means to ending poverty, combatting rising inequality, and liberating workers from the burden of crappy jobs. For thinkers on the right, the U.B.I. seems like a simpler, and more libertarian, alternative to the thicket of anti-poverty and social-welfare programs. Continue reading
How to tackle idleness: progressive taxation and basic income
Our recommendations here are radical: we are committed to strong, progressive taxation. That means we believe that as income rises the proportion of the total income that a person pays in tax should rise as well. It is a principle of tax justice, usually described as vertical equity, that few would wish to dispute. However, the UK tax system does not deliver vertical equity in a great many cases. It is our opinion that this is best addressed by a complete redesign of the Income Tax, National Insurance and benefits systems: nothing less will do if we are to tackle institutional impediments to idleness.
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Universal basic income to eliminate poverty
Eduardo Porter has a column up with the provocative headline “Why a Universal Basic Income Will Not Solve Poverty,” which intrigued me because my understanding from reading coverage by Vox’s own Dylan Matthews and others was that a UBI most certainly would solve poverty.
Having read Porter, I remain unconvinced. His argument turns out to be something more like “a universal basic income would be expensive” or “a universal basic income is an example of a poorly targeted public policy.” The former is clearly true, and the latter is at least something clearly worth talking about. But Porter’s own numbers make it very clear that a UBI would eliminate poverty in the United States and would do so at a price that, though high, is within the realm of possibility. Continue reading
Inequality in the USA
Although America has the largest economy in the world, real wages have not gone up since 1972 because most workers have experienced stagnating incomes for decades. Across the country middle-income Americans face a precarious economic future. Median income has fallen in over 80% of America’s counties since 2000, a trend that is accelerating. Even mortality rates reflect growing income inequality. Poor and rural Americans now die at rates well above that of wealthy and urban Americans. Continue reading
American Poverty
Recently, the Brookings Institution published a report looking at the same idea but giving it a different name. The paper, builds on research from the British economist William Beveridge, who in 1942 proposed five types of poverty: squalor, ignorance, want, idleness, and disease. In modern terms, these could be defined as poverty related to housing, education, income, employment, and healthcare, respectively. Analyzing the 2014 American Community Survey, the paper’s co-authors, Richard Reeves, Edward Rodrigue, and Elizabeth Kneebone, found that half of Americans experience at least one of these types of poverty, and around 25 percent suffer from at least two. Continue reading
Economic cost of widening inequality in the UK
Tracy McVeigh, “Inequality ‘costs Britain £39bn a year’,” 16 March 2014, Guardian
The ever-increasing gulf between rich and poor in Britain is costing the economy more than £39bn a year, according to a report by the EqualityTrust thinktank. The effects of inequality can be measured in financial terms through its impact on health, wellbeing and crime rates, according to statisticians at the independent campaign group.
Researchers pointed to the fact that the 100 wealthiest people in the UK have as much money as the poorest 18 million – 30% of all people – and said that the consequences of such unusually high rates of inequality needed to be acknowledged by politicians.
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Trends of income inequality in 5 advanced economies
Eduardo Porter, “A Relentless Widening of Disparity in Wealth,” 11 March 2014,
Source: “Capital in the 21st Century,” by Thomas Piketty.
Corruption is by far not the main factor behind persisting poverty in the Global South
Jason Hickel, “Flipping the corruption myth,” Al Jazeera, 1 February 2014
Many international development organisations hold that persistent poverty in the Global South is caused largely by corruption among local public officials. In 2003 these concerns led to the United Nations Convention against Corruption, which asserts that, while corruption exists in all countries, this “evil phenomenon” is “most destructive” in the global South, where it is a “key element in economic underperformance and a major obstacle to poverty alleviation and development”.
There’s only one problem with this theory: It’s just not true.
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Tipping Point North South 