Productivity and Distribution

I have found technical argument useless in this matter, since the right-wingers just drown out everyone else with their phony charts and graphs, and supposedly "scientific claims." This is the same sort of thing that happens with "Creation Science," and "Right to Life:" The proponents of some truly unscientific ideas pretend their religious beliefs are a scientific case. The real scientists and experts are hounded out of the room, and people's eyes and ears are filled with utter nonsense dressed up to look and sound right.

So, I would like you to imagine certain states of affairs, and to ask, as did Robert Kennedy, 'why not?'

Suppose - just suppose - that there is a factory staffed by automated machines - robots - that make clothes. This factory can make any kind of clothing, from any kind of material, in any size. This factory exists because the machines which make clothes are controlled by computers. Computer programs adjust a given design to any person's measurement automatically. All the ultimate consumer need do is select the design, and get measured.

Such a factory almost, but not quite, exists today. There are two main reasons it does not:

1. No one has taken the time and trouble to write the necessary software. All of the requisite equipment already exists. Textile factories that make things like rugs, towels and cloth are already automated this way. (It is feasible to write this software. Some "toy" versions are already out there.)
    
2. The cost of sweatshop labor in places like Thailand and Burma is still lower than the cost of the programming. "Capitalists" are unwilling to invest more capital, but perfectly willing to exploit (mostly female) sweatshop labor in very poor countries.

This situation is likely to change in the near future. Unfortunately, the enserfed seamstresses are racing to the bottom against robots (computers) who never lose. Once computers replace the sweatshop seamstresses, clothing factories will again be feasible in the First World. Such a factory could be located anywhere. Its "workers" - the technicians who setup and control the process - can be located anywhere. Factory and worker locations would then be decided by factors such as real estate costs and proximity to markets.

This process has already run that course in the semi-conductor industry. The "fabs" that make chips, and factories that make electronic products, are highly automated. The work is done by robots, programmed and maintained by a few, well-paid humans. This is why computers have become very cheap commodities. It is also why technology is no longer an industry beloved of investors, because profit margins are being squeezed more and more.

A similar story can be told in many industries: robots do the work, and people run the robots. The few industries that are not automated, that are still labor-intensive - medical care is the leading example, are beset by huge and increasing costs. All this is part of the story of increasing productivity.

The result of increased productivity in the United States is that most of the requirements of middle-class life are manufactured by very few human workers.  More accurately, the very few workers oversee the robots which produce the goods needed for middle class life. In this kind of society, the main problem is not making the things people need and want, it is distributing those things to the consumers. When the denizens of the First World lack food, clothing or housing, there is a "supply-side" problem, but not the one conjured up by conservative supply-side economists. What is needed is not more factories or cheaper wages, but mechanisms for consumers to buy the product; the problem is supplying the consumer, not making more stuff.

Therein lies the solution of all the arguments about Social Security and Medicare. In fact, there are plenty of goods and services to support the Baby Boomer retirees and many other non-workers as well. In America, and many other countries, it is more than possible for 1/3 of the population to support the other 2/3. Why? Because of the "think factory" that will make the clothes, and all the other quite real automated factories that produce everything else. Just note: in the First World, it only takes 1 of every 100 workers to produce all the food we eat as well as the huge agricultural surplus that has become a world-wide political problem.

So, the retirement problem is not taxes or the cost of supporting pensioners or the supposed burden on our children and grandchildren. The problem is allocating a portion of the needed goods and services, which we have in excess, to the retired population. That is the real "supply-side" problem.

Now, amazingly, this is the very same problem of distribution that plagues medical care. We actually have enough doctors, nurses, hospitals, clinics, etc, but in our capitalist society they are misallocated. This is because the wealthy few can bid up the price of services (resources) they demand, and thus drain those resources at the margin. This raises the price for everyone else to unaffordable levels. A simple example is the rich person who gets cancer. Freaked out, the rich sickee hires every doctor in sight to treat his case. While, usually, maybe 2-3 doctors are necessary to treat and manage the condition, the rich patient will have 8 or 10 doctors in attendance. If there are barely enough resources to go around, this runs up the cost for everyone else. Our rich sickee makes medical care more expensive everywhere, because he takes up any slack in the system, and forces someone else to bid up the price or forego treatment. This is the result of classical, conservative economic analysis.

It is true that rich patients or consumers won't cause a distortion in the system, when there is more than enough to go around. One would have to buy huge amounts of Coke or Pepsi to force soft-drink prices up, but no one has any reason to corner the soda pop market. So, there's enough soda and prices remain "reasonable." (I also note that the medical care system might have surplus capacity, if medical practitioners were not so hidebound and resistant to change.)

Where this analysis leads is this: there are more than enough goods and services available to support U.S. retirees for the foreseeable future. Further, no particular or extraordinary "sacrifice" need be demanded of younger workers to support the Baby Boomer bulge. What is required, and all that is needed, is the regulatory mechanism to re-distribute the wealth. That means taxing the rich and giving to the poor.

Is redistribution a national disaster?  NO, because there is already a surplus of the goods and services needed to support the non-working population. The wealth taxed away from the wealthy cannot be used productively in a society plagued by a surfeit of stuff. All that the untaxed wealth does is reduce consumption, and prevent the sensible and compassionate transfer of goods. Going one step further, not taxing is the disaster, because it reduces consumption and thereby leaves production or productive capacity unused.

Note: I do not think taxes should be confiscatory. Some method of determining what is "surplus capital," and what can be rationally invested needs to be devised. This is best done in the tax code, by specifying what is or isn't taxable or tax-exempt.  Experience shows wealthy investors respond quickly and appropriately to the tax code.

Finally, what this shows is that resistance to solving the Social Security problem is irrational. Those opposed just want to keep all their money, because they are greedy. They love their money more than they love justice. They love it, even if it is utterly useless and counter-productive.