Maintaining a Consumer Economy

MAINTAINING A CONSUMER ECONOMY

Tom Easton

Professor of Science (ret.)

 

Any economy has a number of components. Consumers buy stuff—food, furniture, clothes, electronic devices, appliances, cars, houses—for their own use. Businesses buy stuff—raw materials, manufacturing equipment, buildings, advertising—that they need in order to provide products to other businesses, government, and of course consumers. Government buys stuff using revenue derived from taxes on businesses and consumers. Businesses pay taxes on what they earn from, ultimately, consumers.

Without income from consumers, everything stops.  That seems a downright trivial point, doesn’t it? What on Earth could do away with the ability of consumers to provide cash flow for businesses and governments?  After all, as long as consumers have jobs, they have income, as long as they have income, they buy stuff, and as long as they buy stuff, the economy hums merrily along.

BUT!

A number of recent studies project that by mid-century computers will be able to do something like 80 percent of all the jobs now held by human beings (Stuart W. Elliott, https://issues.org/byline/stuart-w-elliott/ , “Anticipating a Luddite Revival,” Issues in Science and Technology, Spring 2014, and “Artificial Intelligence, Robots, and Work: Is This Time Different?” Issues in Science and Technology, Fall 2018.) “Safe” jobs that demand more skills are in education, health care, science, engineering, and law, but even those may be matched within a few decades.  “In principle,” Elliott says, “there is no problem with imagining a transformation in the labor market that substitutes technology for workers for 80% of current jobs and then expands in the remaining 20% to absorb the entire labor force.  [But] We do not know how successful the nation can be in trying to prepare everyone in the labor force for jobs that require these higher skill levels. It is hard to imagine, for example, that most of the labor force will move into jobs in health care, education, science, engineering, and law. … At some point it will be too difficult for large numbers of displaced workers to move into jobs requiring capabilities that are difficult for most of them to carry out even if they have the time and resources for retraining. When that time comes, the nation will be forced to reconsider the role that paid employment plays in distributing economic goods and services and in providing a meaningful focus for many people’s daily lives.”

If Elliott is on target, in a few decades we may face a dire situation: No jobs, or at least a great many fewer jobs. No income for the majority of people. Much less stuff being bought. Much less revenue for businesses. Much less taxes for government. And an economy that is NOT humming merrily along.

How can we fix the situation? Since we are not about to ban AI and robots, it comes down, as Elliott says, to reconsidering “the role that paid employment plays in distributing economic goods and services.”

It would seem wise to start the process of reconsidering earlier, rather than later. So let us ask ourselves what other ways there are to supply people with goods and services.

We could give them away. “From each according to their abilities, to each according to their needs” is an ideal at the heart of Communism, and thereby anathema to capitalists. “From each” also is predicated on people working to create the stuff people need.  It doesn’t really consider the role of advanced AI and robots.

So just give it all away? Put it in a big-box “store” and let people help themselves? That might work. But some people would insist that we can’t just let the Welfare State conquer everything. They would want to restrict access to the “deserving.” Some would insist on some form of rationing. Some would have screaming fits about how this just isn’t the way we’ve always done it.

If restricting access to the “deserving” concerns you, consider that some writers have suggested that money could be replaced with something like “reputation points” (akin to up-voting on Reddit). That is, people other people think are “deserving” can get more stuff. Of course, then you have to worry about what “deserving” means to people. Members of your church? Fans of your team or show? Other gun nuts? Anti-gun nuts? Members of your union? Folks who pick up garbage on the side of the road?

Another approach would be to subsidize consumption. Give people money to replace lost income, and then everything works as before. Where do you get the money? Tax the robots, the corporations, or the rich (who can only continue to be rich if people can continue to buy the stuff their businesses make). Speaking of screaming fits…

This approach is best known as “Guaranteed Basic Income” (https://www.thebalance.com/universal-basic-income-4160668). It’s been tested in a number of locations, with varying degrees of success, and some people think it will discourage people from working. Perhaps it would, if jobs were available, but if jobs are not?

Can we create jobs? In the depths of the Great Depression, the last time there was a serious shortage of paid employment, the government created the Civilian Conservation Corps (https://en.wikipedia.org/wiki/Civilian_Conservation_Corps ) and the Works Public Administration (https://www2.gwu.edu/~erpapers/teachinger/glossary/pwa.cfm ) to help. Such things could help again, but they would surely not provide enough jobs for everyone.

As Elliott says, we are going to need an answer to the problem. None of the answers are likely to appeal to political conservatives. But we will be forced to choose and implement one or more.

The alternative is to crash the economy and to put the poor (meaning almost everyone) into camps.

Or we could just ban AI and robots.  Seriously. It’s been suggested. The primary target of such a ban is—so far—weaponized “killer bots” (https://www.stopkillerrobots.org/ ). But the threat to jobs does have the Teamsters wanting to ban self-driving trucks; see “Teamsters Try to Nix UPS Drones, Self-Driving Vehicles,” Automotive Fleet, January 24, 2018; https://www.automotive-fleet.com/channel/safety-accident-management/news/story/2018/01/teamsters-union-seeks-to-prevent-ups-drone-usage-self-driving-vehicles.aspx .

I don’t think it’s possible to ban a technology. If you do it in one country, others carry on and quite happily sell you the stuff you so conscientiously refused to develop yourself. Then you start worrying about being competitive and the ban is gone.

I suspect we’ll wind up subsidizing consumption.

 

 

My next post will consider what the loss of paid employment implies for the future of higher education, much of which is explicitly vocational.

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