Category Archives: Economics

The United Nations: Gaza, climate change and UK welfare

This one is just personal commentary, not my normal futurology; even futurists have opinions on things today. Move along to my futurist pieces if you want.

These areas are highly polarized and I know many readers will disagree with my views this time and I don’t want to cause offence, but I think it is too important an issue to leave un-blogged. Maybe I won’t say anything that hasn’t already been said 1000 times by others, but I would not feel justified in keeping quiet.

Feel free to add unoffensive comments.

The UN started off as a good idea, but over some decades now its reputation has taken an occasional battering. I will argue that it has recently started to do more harm than good in a couple of areas so it should take more care. Instead of being a global organisation to solve global problems and ensure better life for everyone, in these areas at least it has become a tool for activists using it to push their own personal political and ideological agendas.

Last week the UN Human Rights Council condemned Israel for its action in Gaza and wanted to investigate it for war crimes, because they apparently weren’t doing enough to reduce civilian casualties in Gaza. The UN is also critical that far more Palestinians are killed than Israelis. Let’s look at that. My analysis echoes that of many others.

I am of course distressed by the civilian deaths in Gaza and Israel, just as I am in other conflicts, and wish they could be avoided, but watching the news and listening to the many voices, my view is that any blame for them must be assigned to Hamas, not Israel. I hope that the UN’s taking sides against Israel shares no common ground with the growing antisemitism we are now seeing in many of the public demonstrations we see about the conflict.

Israel does its best to reduce Palestinian civilian deaths by giving advanced warnings of their activities, even at the cost of greater risk to their own forces, so it seems reasonable to absolve them of responsibility for casualties after such warnings. If people remain in a danger zone because they are not permitted to leave, those who force them to remain are guilty. If civilians are forced to remain while the military evacuate, then the military are doubly guilty. War is always messy and there are always some errors of judgment, rogue soldiers and accidents, but that is a quite separate issue.

A superior military will generally suffer fewer casualties than their opponent. The Israelis can hardly be blamed for protecting their own people as well as they can and it isn’t their fault if Hamas wants to maximize casualties on their side. Little would be gained by forcing Israel to have random Israelis killed to meet a quota.

Hamas has declared its aim to be the annihilation of Israel and all Jews. There can be no justification for such a position. It is plain wrong. The Israeli goal is self-defense – to prevent their people being killed by rocket attacks, and ultimately to prevent their nation from being annihilated. There is no moral equivalence in such a conflict. One side is in the right and behaves in a broadly civilized manner, the other is wrong and behaves in a barbaric manner.

Israelis  don’t mix their civilian and military areas, so it easy to see which are which. Their civilian areas are deliberately targeted by Hamas with no warnings to cause as many civilian deaths as possible but Israel evacuates people and uses its ‘Iron Shield’ to destroy incoming rockets before they hit.

On the other side, the military in Gaza deliberately conceal their personnel and weapons in civilian areas such as primary schools, hospitals and residential areas and launch attacks from those areas. (UN schools have been included in that.) When they receive Israeli warnings of an attack, they evacuate key personnel and force civilians to remain. Hamas knows that innocent people on their own side will be killed. It deliberately puts them in harm’s way to capitalise on the leverage they can get for them via some western media and politicians and now the UN. The more innocents killed in incoming fire, the more points and sympathy they get, and the more battering the Israelis get.

I don’t see any blame at all on the Israeli side here. As the Israelis put it, they use missiles to defend their civilians, while Hamas uses civilians to defend its missiles.

If Hamas uses Palestinian women and children as a human shields, then they must be given the blame for the inevitable deaths, not Israel. They are murdering their own people for media and political points.

The UN, by fostering the illusion that both sides are equally bad, by condemning Israel, and helping Hamas in their media war, are rewarding Hamas for killing their own women and children. The UN is ignoring those critically important circumstances: Hamas using human shields, forcing people to remain in danger zones, putting military resources in civilian areas and launching attacks from there. The UN also ignores Israeli seeking to minimize civilian casualties via warnings and advanced mini-strikes.

The UN therefore forfeits any right to pontificate on morality in this conflict. They have stupidly rewarded Hamas for its human shield policy. Some extra women and children in Gaza will die because of the UN’s condemnation of Israel. It is proof that the human shields policy works. The long list of useful idiots with innocent Palestinian blood on their hands includes many Western journalists, news programs and politicians who have also condemned Israel rather than Hamas for the civilian deaths. The UN deserves condemnation for its words, but the victims will be innocent Palestinian civilians.

Let’s move on to look at another area the UN is doing harm.

The UN is the home of the Intergovernmental Panel on Climate Change. It is the source of scientific and socio-economic advice on a wide range of policies intended to defend the environment against global warming. I won’t look at the issue of climate change here, only the harmful economic policies resulting from poor IPCC advice aimed at reducing CO2 emissions:

Biodiesel – the IPCC produced extremely encouraging figures for palm oil plantation as a substitute for fossil fuels, leading to massive growth of palm oil planting. A lot of forest was burned down to make land available, causing huge immediate emissions in CO2. A lot of planting was on peat-land, causing the peat to dry out and biodegrade, again emitting massive amounts of CO2 into the air. Many poor people were evicted from their land to make room for the plantations. The result of this advice is that CO2 emissions increased, the environment was badly damaged in several ways, and many poor people suffered.

In western countries, huge areas of land were switched to grow crops to make biodiesel. This caused a drop in food grain production, with an increase in food prices, causing malnutrition in poor countries, unknown deaths from starvation and a massive increase in poverty. This policy is in reverse now, but the damage has been done., Very many poor people suffered.

Solar power farms have sprung up widely on agricultural land. Again this pushes up food prices and again the poor suffer. Since solar is not economic in most countries yet, it has to be subsidized, and poor people suffer additionally via higher energy bills.

Wind energy is a worse solution still. In Scotland, many turbines are planted on peat-land. The turbines need to have roads to them for building and maintenance. The roads cause the peat to dry out, making it biodegrade and leading to high CO2 emissions. The resulting CO2 emissions from some Scottish wind farms are greater than would have resulted from producing the same energy from coal, while a local ecosystem is destroyed. Additionally, 1% of the endangered white-tailed eagles in Scotland have already been killed by them. Small mammals and birds have their breeding cycles interrupted due to stress caused by the flicker and noise. Humans in nearby areas are stressed too. Wind energy is even more expensive than solar, so it needs even more subsidy, and this has therefore increased energy prices and fuel poverty. Poor people have suffered while rich landowners and wind farm owners have gained from huge subsidy windfalls. The environment has taken a beating instead of benefiting, money has been transferred from the poor to the rich and the poor suffer again.

Carbon taxes favored by the IPCC have been associated with fraud and money laundering, helping criminality to flourish. They have also caused some industries to relocate overseas, destroying jobs and local communities that depend on those industries. The environmental standards followed in recipient countries are sometimes lower, so the environment overall suffers. The poor suffer most since they find it harder to relocate.

Carbon offsetting has similar issues to those above – increasing prices and taxes, creating fraud opportunities, and encouraging deforestation and forced relocation of communities in areas wanted for offset schemes. The environment and the poor both suffer again.

The huge economic drain on national economies trying to meet emissions targets resulting from IPCC reports makes economic recovery in Europe much slower and the poor suffer. Everyone in a country suffers as a result of higher national debts and higher taxes to pay it back with interest. Enforced government austerity measures lead to cuts in budget increases for welfare and the poor suffer. Increasing economic tension also leads to more violence, more social division.

The IPCC’s political influence, making reports that are essentially politics rather than simply reporting good science, have led to its infiltration by political green activists who seek to introduce otherwise unacceptable socialist policies via the environmental door and also providing official accreditation for activist propaganda. This has subsequently led to corruption of the whole process of science followed in environmental circles, damaging public faith in science generally. This loss of trust in science and scientists now echoes across other spheres of science, making it harder to get public support for important science projects such as future medical programs, beneficial lifestyle changes, dietary advice and other things that will affect quality and quantity of life for everyone. It’s a pretty safe bet that the poor will suffer most, some people won’t live as long, and the environment will take more damage too.

A much more minor one to finish:

Going back to September 2013, the UN Human Rights Special Rapporteur Raquel Rolnik was heavily critical of the UK government’s attempt at removing the ‘spare room subsidy’ that allowed people to remain in council houses bigger than they need, designed to free up homes for families that need them. Why should this be a UN human rights concern? Regardless of political affiliation, most people agree that if new houses can’t be built fast enough, it makes sense to encourage families to downsize to smaller properties if they no longer need them, provided of course that policies allow for genuine specific needs. Even with poor implementation, it is hard to see this as a priority for a human rights investigation in the midst of such genuine and extreme abuses worldwide. The fact that this review occurred at all shows a significant distortion of values and priorities in today’s UN.

These are just a few areas where the UN makes a negative contribution to the world. I haven’t looked at others, though clearly some of its activities are praiseworthy. I hope that it will fix these meanderings away from its rightful path. If it doesn’t, it could eventually become a liability.

Road deaths v hospital hygiene and errors

Here is a slide I just made for a road safety conference. All the figures I used came from government sources. We use the argument that a life is worth any spend, and we might be able to shave 10% off road deaths if we try hard, but we’d save 30 times more if we could reduce NHS errors and improve hygiene by just 10%.

road safety v NHS

Sustainable capitalism – Ending exploitation

This blog is an extract from my book Total Sustainability. Just over 10k words

Sustainable capitalism

To see what needs adjusted and how to go about doing it, let’s first consider some of the systems that make people wealthy. With global change accelerating, in this period of global upheaval, the rise of new powers and decline of old ones, we have an opportunity to rethink it and perhaps make it better, or perhaps countries new to capitalism will make their own way and we will follow. If it is failing, it is time to look for ways to fix it or to change direction.

Some things are very difficult and need really smart people, but we don’t have very many of them. But as heavily globalised systems become more and more complex, the scope for very smart people to gain control of power and resources increases. Think about it for a moment. How many people do you know who could explain how big businesses manage to avoid paying tax in spite of making big profits beyond the first two words that everyone knows – tax haven? The money goes somewhere, but not on tax. This is one of the big topics being discussed now among the world’s top nations. No laws are being broken, it is simply that universally sluggish and incompetent governments have been outwitted again and again by smart individuals.

They should have had tax systems in place long ago to cope with globalisation, but they still haven’t. Representatives of those governments talk a lot about clampdowns, but nobody really expects that big business won’t stay at least 5 steps ahead. Consequently, money and power is concentrating at the top more than ever.

The contest between greedy and relatively smart business people and well-meaning but dumber (strictly relative terms here) politicians and regulators often ends with taxpayers being fleeced. Hence the banking crisis, where the vast wealth greedily that was accumulated by bankers over numerous gambling wins was somehow kept when they lost, with us having to pay the losses without ever benefiting from the wins, with the final farcically generous pay-offs to those who failed so miserably. The same could be said of some privatisations and probably most government contracts. It was noted thousands of years ago that a fool and his money are easily parted. The problem with democracy is that fools are often the ones elected. The people in government that aren’t fools are often there to benefit their own interests and later found with their fingers in the cake. Some of our leaders and regulators are honourable and smart enough to make decent decisions, but too small a fraction to make us safe from severe abuse.

We need to fix this problem and many other related if we are to achieve any form of sustainability in our capitalist world.

The undeserving rich

Magistrates in Britain once had a duty to distinguish between the deserving poor, who were poor through no fault of their own, and the undeserving poor, who were simply idle. The former would get hand-outs while they needed them, the idle would get a kick in the pants and told to go and sort themselves out. This attitude later disappeared from the welfare system, but the idea remains commonly held and recently, some emerging policies echo its sentiment to some degree.

Looking at the other end of the spectrum, there are the deserving and undeserving rich. Some people worked hard to get their cash and deserve every penny, some worked less hard in highly overpaid jobs. Some inherited it from parents or ancestors even further back, and maybe they worked hard for it. Some stole it from others by thievery, trickery, or military conquest. Some got it by marrying someone. Some won it, some were compensated. There are lots of ways of getting rich. Money is worth the same wherever it comes from but we hold different attitudes to the rich depending on how they got their money.

Most of us don’t think there is anything wrong with being rich, nor in trying to become so. There are examples of people doing well not just for themselves and their families and friends, but also benefiting their entire host community. Only jealousy could motivate any resentment of their wealth. But the system should be designed so that one person shouldn’t be able to become rich at the cost of other people’s misery. At the moment, in many countries, some people are gaining great wealth effectively by exploiting the poor. Few of us consider that to be admirable or desirable. It would be better if people could only become rich by doing well in a system that also protects other people. Let’s look at some of the problems with today’s capitalism.

Corruption

Corruption has to be one of the biggest problems in the world today. It has many facets, and some are so familiar in everyday life that we don’t even think of them as corruption any more.

As well as blatant corruption, most of us would also include rule bending and loophole-seeking in the corruption category. Squeezing every last millimetre when bending the law may keep it just about legal, but it doesn’t make behaviour creditable. When we see politicians bending rules and then using their political persuasiveness to argue that it is somehow OK for them, most of us feel a degree of natural revulsion. The same goes for big companies. It may be legal to avoid tax by using expensive lawyers to find holes in taxation systems and clever accountants to exploit them, re-labelling or moving money via a certain route to reduce the taxes required by law, but that doesn’t make it ethical. Even though it is technically on the right side of legal, I’d personally put a lot of corporate tax avoidance in the corruption category when it seeks to exploit loopholes that were never part of what the tax law intended.

Then of course it is possible to break the law and bribe your way out of trouble, or to lobby corruptible lawmakers to include a loophole that you want to exploit, or to make a contribution to party funds in order to increase the likelihood of getting a big contract later.

Lobbying can easily become thinly veiled bribery – nice dinners or tickets or promised social favours, but often manifests as well-paid clever chitchat, to get an MP to help push the law in the general direction you favour. Maybe it isn’t technically corrupt, but it certainly isn’t true to the basic principles of democracy either. Lobbying distorts the presentation, interpretation and implementation of the intentions of the voting community so it corrupts democracy.

So although there are degrees of corruption, they all have one thing in common – using positions of power or buy influence to tilt the playing field to gain advantage.

Exploitation

Once someone starts bending the rules, it affects other behaviour. If someone is happy exploiting the full flexibility of the letter of the law with little regard for others, they are also likely to be liable to engage in other ways of actively exploiting other people, in asset stripping, or debt concealing, or in how they negotiate and take advantage, or how they make people redundant because a machine is cheaper. It is often easy to spot such behaviour, wrapped with excuses such as ‘Companies aren’t charities, they exist to make money’, and ‘business is business’. There are plenty of expressions that the less noble business people use to excuse bad behaviour and pretend it is somehow OK. There are degrees of badness of course. For some companies, some run by people hailed as business heroes, anything goes as long as it is legal or if the process of law can be diverted long enough to make it worthwhile ignoring it. While ‘legal’ depends on the size and quality of your legal team, there is gain to be made by stretching the law. It can even pay to blatantly disobey the law, if you can stretch the court process out enough so that you can use some of the profits gained to pay the fines, and keep the rest. So corruption isn’t the only problem. Exploitation is its ugly sister and we see a lot of big companies and rich people doing it.

The price of bad behaviour and loose values

A common problem here is that we don’t assign financial value to honourable behaviour, community or national well-being, honesty, integrity, fairness or staff morale. So these can safely be ignored in the pursuit of profit. Business is justified in this approach perhaps, because we don’t assign value to them. If a company exists to make profit, measured purely financially, those other factors don’t appear on the bottom line, so there is no reason to behave any better. In fact, they cost money, so a ruthless board can make more money by behaving badly. That is one thing that could and should change if we want a sustainable form of capitalism. If we as a society want businesses to run more ethically, then we have to make the system in such a way that ethical behaviour is rewarded. If we don’t explicitly recognise particular value sets, then businesses are really under no obligation to behave in any particular way. As it is, I would argue that society has value sets that are on something of a random walk. There is no fixed reference point, and values can flip completely in just a few decades. That is hardly a stable platform on which to build anything.

Hardening of attitudes to welfare abuse

 

There is growing resentment right across the political spectrum against those taking welfare who won’t do enough to try to look after themselves but expect to receive hand-outs while others are having to work hard to make ends meet. At the same time, resentment is deepening against the rich who use loopholes in the law to find technically legal but morally dubious tax avoidance schemes. What these have in common is that they exploit others. There is a rich variety of ways in which people exploit others, some that we are so used to we don’t even notice any more. This is important in helping to determine what may happen in the future.

The few have always exploited the many

 

A while ago, I had a short break visiting the Cotswolds (a chocolate-box picture area of England). We saw a huge Roman villa, fantastic mosaics in the Roman museum in Cirencester, and a couple of stately homes. Then we went to Portugal where we saw the very ornate but rather tasteless Palace of Penna. It made me realise just how much better off we are today, when thanks to technology development, even a modest income buys vastly superior functionality and comfort than even royalty used to have to put up with.

I used to enjoy seeing such things, but the last few years I have found them increasingly disturbing. I still find them interesting to look at, but now they make me angry, as monuments to the ability of the few to exploit the efforts of the many for their own gain. So while admiring the landscape architecture of Lancelot (Capability) Brown, and the Roman mosaics, I felt sorry for the many people who had little or no choice but to do all the work for relatively little reward. I felt especially sorry for the people who built the Palace of Penna, where an obviously enormous amount of hard work and genuine talent has been spent on something that ended up as hideously ugly. Even if the artists and workmen were paid a good wage, their abilities could probably still have been put to much more constructive use.

But we don’t want equality of poverty

 

I strongly believe that we overvalue capital compared to knowledge, talent and effort, resulting in too high a proportion of wealth going to capital owners. Capitalism sometimes saps too many of the rewards of effort away from those who earn them. However, few people would argue for a system where everyone is poorer just so that we can have equality, as happened in communism, and as would be the result if some current socialists got their ways. The system should be fair to everyone, but if we are to prosper as a society, it also needs to incentivise the production of wealth.

Exploitation of society by the lazy and greedy

 

That of course brings us to the abuse at the other end, with some people who are perfectly able to work drawing state benefits instead (or indeed as well as wages from work) and thereby putting unjust extra load on the welfare system. This of course acts as a major drain on hard working people too and reduces the rewards of effort. Those who work hard may thus see their money disappearing at both ends, possibly taken by exploitative employers and certainly taken by the state to give to others. Exploitation is still exploitation whether it is by the privileged or the lazy. We all want the welfare system, because another powerful force in human nature is to care for others, and we instinctively want to help those who can’t help themselves. But that doesn’t mean we want to be taken advantage of.

Rewarding effort is essential for a healthy economy

As a general principle, extra effort or skill or risk or investment should reap extra reward. If there is too little incentive to do put in more work or investment, human nature dictates that most people won’t do it. The same goes for leading others or building companies and employing others. If you don’t get extra reward from enabling or leading other people to create more, you probably won’t bother doing that either. Very many communes have started up with idealism and failed for this reason.

In both of these cases, a few nice people will do more, even without financial incentive, simply because it makes them feel good to work hard or help others, but most won’t, or will start doing so and quickly give up when appreciation runs dry or they become frustrated by the laziness of others.

While effort and investment and skill and leadership must all be rewarded to make a healthy economy, it is a natural and fair consequence of rewarding these that some people will become richer than others, and if they help many other people also to do more, they may become quite a lot richer than others.

‘To each according to their effort’ is a fundamentally better approach than ‘from each according to their ability and to each according to their need’ as preached by communists – it is simply more in tune with human nature. It makes more people do more, so we all prosper. Trying to level the playing field by redistributing wealth too much deters effort and ultimately makes everyone worse off. A reasonable gap between rich and poor is both necessary and fair.

But we shouldn’t let people demand too much of the rewards

 

However, an extreme gap indicates that there is exploitation, that some people are keeping rather too much of the reward from the efforts of others. As always, we need to find the right balance. Greed does seem to be one of the powerful forces in human nature, and if opportunity exists for someone to take more for themselves at the expense of others, some will. I don’t believe we should try to change human nature, but I do believe we should try to defend the weak against exploitation by the greedy. Some studies have shown a correlation between social inequality and social problems of crime, poor education and so on. That doesn’t prove causality of course, but it does seem reasonable to infer causality in any case here.

In some large companies, top managers seem to run the company as if it were their own, allocating huge rewards for themselves at the expense of both customers and shareholders’ interests. Such abuse of position is widespread across the economy today, but it will inevitably have to be reined back over time in spite of fierce resistance from the beneficiaries.

The power of public pressure via shame should not be underestimated, even though some seem conspicuously immune to it. Where the abusers still decide to abuse, power will come either by shareholders disposing of abusers, or regulators giving shareholders better power to over-rule where there is abuse, as is already starting to happen, or by direct pay caps for public sector chiefs. The situation at the moment gives too much power to managers and shareholders need to be given back the rights to control their own companies more fully.

Reducing market friction

 

There are many opportunities to exploit others, and always some who will try to take the fullest advantage. We can’t ever make everyone nice, but at least we can make exploitation more difficult. Part of the problem is social structure and governance of course, but part is also market imperfection. While social structure only changes slowly, and government is doomed to suffer the underlying problems associated with democracy, we can almost certainly do something about the market using better technology. So let’s look at the market for areas to tweak.

Strength of position

 

Kings or slave owners may have been able to force subjects to work, but a modern employer theoretically has to offer competitive terms and conditions to get someone to work, and people are theoretically free to sell their efforts, or not.

Then the theory becomes more complex and the playing field starts to tilt. People have to live, and they have to support their dependants. Not everyone is born with the intellectual gifts or social privileges that enable them to be entrepreneurs or high-earning professionals who can pick and choose their work and set their own prices. If someone can’t sell their efforts directly to a customer, they may have to accept whatever terms and conditions are available from a local employer or trader.

Location makes traders powerful

 

In fact, most people have to look and see what jobs there are locally and have to apply for one of them because they need the money, and can’t travel far, so they are in a very poor bargaining position. By contrast, capital providers and leaders and entrepreneurs and traders have always been in an excellent position to exploit this. In a town with high unemployment, or low wages, or indeed, throughout a poor country, potential employees will settle for the local wage rate for that kind of work, but that may differ hugely from the rate for similar work elsewhere.

The laws of supply and demand apply, but the locations of supply and demand need not be the same, and where they aren’t, traders are the ones who benefit, not those doing the work. Traders have existed and prospered for millennia and have often become very wealthy by exploiting the difference in labour costs and produce prices around the world.

Manufacturers can play the same geography game

 

Now with increasing globalisation, those with good logistics available to them can use these differences in manufacturing too, using cheap labour in one place to produce goods that can be sold for high prices in other places. Is it only the margins and the balance of bargaining power that determines whether this exploitation is fair or not, or is it also the availability of access to markets? What is a fair margin? How much of the profit should we allow traders or manufacturers to keep? If not enough, and markets are not free and lubricated enough, potential producers may stay idle and be even poorer because they can’t sell their efforts. If too much, someone else is getting rich at their expense.

Making access to free global markets easier and better will help

 

We need to create a system where people on both sides are empowered to ensure a fair deal. At the moment, it is tilted very heavily in favour of the trader, selling the product of cheap labour in expensive markets. When someone has no choice but to take what’s going, they are weak and vulnerable. If they can sell into a bigger market, they become stronger.

If everyone everywhere can see your produce and can get it delivered, then prices will tend to become fairer. There is still need for distributors, and they will still need paid, but distributors are just suppliers of a service in a competitive market too, and with a free choice of customer and supplier at every stage, all parties can negotiate to get a deal they are all content with, where no-one is at an a priori disadvantage.

It may still work out cheaper to buy from a great distance, but at least each party has agreed acceptable terms on a relatively level playing field. The web has already gone some way to improving market visibility but it is still difficult for many people to access the web with reasonable speed and security, and many more don’t understand how to do things like making websites, especially ones that have commerce functions.

If we can make better free access to markets, then unfair exploitation should become less of a problem, because it will be easier for people to sell their effort direct to an end customer, but it will have to become a lot easier to display your goods on the web for all to see without undue risk. Making the web easier to use and automating as much as possible of the security and administration should help a lot. This is happening quite quickly, but it needs time.

Import levies can reduce the incentive to exploit low wage workers

 

Levies can be added to imported goods so that someone can’t use cheap labour in one area to compete with the equivalent product made in the other. This is well tried and operates frequently where manufacturers pressure their governments to protect them from overseas competition that they see as unfair. However, it is usually aimed at protecting the richer employees from cheap competition rather than trying to increase wages for those being exploited in low wage economies. So it is far from ideal. Better a tool that allows pressure to increase the proportion of proceeds that go to the workers.

Peer pressure via transparency of margins

 

Another is to provide transparency in price attribution. If customers can see how much of the purchase price is going to each of the agents involved in its production and distribution chain, then pressure increases to pay a decent wage to the workers who actually make it, and less to those who merely sell it. Just like greed and caring, shame is another powerful emotion in the suite of human nature, and people will generally be more honest and fair if they know others can see what they are doing.

However, I do not expect this would work very well in practice, since most customers don’t care enough to get ethically involved in every purchase, and the further away and more socially distant the workers are, the less customers care. And if the person needing shamed is thousands of miles away, the peer pressure is non-existent. Yet again, location is important.

Transparency to the workforce

 

In economies across the developed world, typically about half of the profits of someone’s ‘job’ go to the person doing it and the other half goes to the owners of the company employing them. Transparency helps customers decide on supplier, but also helps employees to decide whether to work for a particular employer. They should of course be made fully aware of how they will be rewarded but also how much of their efforts will reward others. In a good company, the chiefs may be able to generate greater rewards for both staff and shareholders (and themselves), but as long as the details are all available, a free and informed choice can be made.

The community can generate its own businesses

 

In a well automated web environment, some company types would no longer be needed. Companies are often top down designs, with departments and employee structures that are populated by staff. The reverse is increasingly feasible, with groups of freelancers and small businesses using the web to find each other, and working loosely together as virtual companies to address the same markets the traditional company once did. But instead of giving half of the profits to a company owner, they reap the full rewards and share it between them. The administrative functions once done by the company are largely off-the-shelf and cheap. The few essential professional functions that the company provided can also be found as independents in the same marketplace. Virtual companies are the 21st century co-operative. The employees own the company and keep all the profits. Not surprisingly, many people have already left big companies to set up on their own as freelancers and small businesses.

Unfortunately, this model can’t work everywhere. Sometimes, a large factory or large capital investment is needed. This favours the rich and powerful and large companies, but there is again a new model that will start to come into play.

Investors don’t have to be wealthy individuals or big companies. They can also be communities. In a period where banks have become extremely unpopular, community banking will become very appealing once it is demonstrated to work. Building societies will make a comeback, but even they are more organised than is strictly necessary in a mature web age.

Linking people in a community with some savings to others who need to borrow it to make a business will become easier as social and business networking develops the trust based communities needed to make this feasible. Trust is essential, but it is often based on social knowledge, and recommendations can be shared. Abusers could be filtered out, and in any case, their potential existence creates a sub market for risk assessors and insurance specialists, who may have left companies to go freelance too. Communities may provide their own finance for companies that provide goods and services for the local community. This is a natural development of the routine output of today’s social entrepreneurs. Community based company creation, nurturing, staffing and running is a very viable local model that could work very well for many areas of manufacturing, services, food production and community work. Some of this is already embryonic on the net today as crowd-funding, but it could grow nicely as the web continues to mature.

Whether this could grow to the size needed to make a car factory or a chip fabrication plant or a major pharmaceutical R&D lab is doubtful, but even these models are being challenged – future cars may not need the same sorts of production, a lot of biotech is suited to garden sheds, and local 3D printing can address a lot of production needs, even some electronic ones. So the number of industries completely immune to this trend is probably quite small. Most will be affected a bit or greatly. Companies that are deeply woven into communities may dominate the future commercial landscape. And as that happens, the willingness and the capability to exploit others reduces.

If we move towards this kind of system, companies will be more responsive to our needs, while providing a stronger base on which to build other enterprises. Integrated into community banking, it is hard to see why we would need today’s banks in such a world. We could dispense with a huge drain on our finances. Banks contribute no extra to the overall economy (taken globally) and siphon off considerable fees. Without them, people could keep more of what they earn and growth would accelerate.

Exploitation via celebrity?

 

In the UK, we don’t get very good value for money from our footballers. They get enormously generous pay for often poor performance. Individually, few of them seem to be intellectual giants, but the industry as a whole has grown enormously. By creating a monopoly of well supported clubs, they have established a position where they can extract huge fees for tickets, merchandising and TV coverage. The ordinary person has to pay heavily to watch a match, while the few people putting on the show get enormous rewards. This might look like exploitation at first glance, but is it?

It is certainly shrewd business dealing by the football industry, but mainly, the TV companies seem to be stupid negotiators. If they declined to pay huge fees to air the matches, the most likely outcome is that fees would tumble to a very nominal level quickly, after which the football associations would have to start paying the TV channels for air time to sell the game coverage direct to fans, or else distribute coverage via the net. They would have no choice. TV companies could easily end up being paid to show matches. When viewers each have to pay explicitly to watch rather than have the fees hidden in a TV license or satellite subscription, the takings would drop and the wages given to footballers would inevitably follow. However, they would still be paid very well, probably still grossly overpaid. We may still moan at them, but they would then simply be benefiting from scale of market, not exploiting. If you can sell unique entertainment or indeed any other valuable service to a large number of people you can generate a lot of income. If you don’t need many staff, they can be paid very well. Individual celebrities have emerged from every area of entertainment who get huge incomes simply because they can generate small amounts of cash from very large numbers of people. If many individuals vale the product highly, as in top level boxing for example, stars can be massively rewarded.

It is hard to label this as exploitation though. It is simply taking advantage of scale. If I can sell something at a sensible price and make a decent income from a small number of customers, someone better who can sell an even better product at the same price to a much larger number of people will be paid far more. In this case, the customer gets a better product for the same outlay, so is hardly being exploited, but the superior provider will get richer. If we forced them to sell better products cheaper than someone else’s inferior one, simply to reduce their income, we would destroy the incentive to be good. No-one benefits from that.

Entertainment isn’t unique here. The same goes for writing a good game or a piece or app, or inventing Facebook. In fact, the basis of the information economy, which includes entertainment, is very different from the industrial one. Information products can be reproduced, essentially without cost without losing their value. There are lots of products that can be sold to lots of people for low prices that do no harm to anyone, add quality to lives and still make providers very wealthy. Let’s hope we can find some more.

So even without exploitation, we will still have the super-rich

 

There will always be relatively poor and super rich people. But I think that is OK. What we should try to ensure is that people don’t get rich by abusing or exploiting others. If they can still get rich without exploiting anyone, then at least it is fair, and they should enjoy their wealth, within the law, provided that the law prevents them from using it to abuse or exploit others. Let’s not punish wealth per se, but focus instead on how it has been obtained, and on eliminating abuses.

In any case, there is a natural limit to how much you can use

 

As the global population climbs, and people get wealthier everywhere, the number of super-rich will grow, even if we eliminate unfairness and exploitation totally. But if we take huge amounts of money out of the system and put it in someone’s bank account, they will not be able to dispose of it all. In most cases, without great determination and extravagance indeed, the actual practical loading that an individual can make on the system is quite limited. They can only eat so much, occupy so much land, use up so much natural resource, have so many lovers. The rest of the world’s resources, of whatever kind, are still available to everyone else. So their reward is naturally capped, they simply don’t have the time or energy to use up any more. Any money they put in investments or cash is just a figure on a spreadsheet, and a license to use the power it comes with.

But while power is important in other ways, it is not directly an economic drain – it doesn’t affect how much is left for the rest of us. Above a certain amount that varies with individual imagination, taste and personality, extra wealth doesn’t give anything except power. It effectively disappears, and supply and demand and prices balance for the rest accordingly.

Power takes us full circle

 

When we have spent all we can, and just get extra power from the extra income, it is time to start asking other kinds of questions. Some would challenge the right of the super-rich to use their wealth to do things that others might think should be decided by the whole population. Should rich people be allowed to use their wealth to tackle Aids in Africa, run their own space programs, or build influential media empires? Well, we can make laws to prevent abuses and exploitation. We can employ the principle of ‘To each according to their effort’. Once we’ve done that, I don’t see how or why we should try to stop rich people doing what they want within the law.

Was the Roman villa I visited built by well rewarded workers? Probably not. Could something equivalent be built by a rich person who has done no harm to anyone, or even brought universal good? Yes. It isn’t what they build or how much they earn that matters, but how they earned it. Money earned via exploitation is very different from money earned by effort and talent.

In future, I will have to read up on the owners of stately homes before I get angry at them. And we must certainly consider these issues as we build our sustainable capitalism in the future.

Stupidity

You might think that the people at the top would be the smartest, but unfortunately, they usually aren’t. Some studies have shown that CEOs have an average IQ of around 130, which is fairly good but nothing special, and many of the staff below them would generally be smarter. That means that whatever skills might have got them there, their overall understanding of the world is limited and the quality of their decisions is therefore also limited. Considering that, we often pay board members far more than is necessary and we often put stupid people in charge. This is not a good combination, and it ultimately undermines the workings of the whole economy. I’ll look at stupidity in more detail later.

With corruption, exploitation, loose values, no real incentives to behave well, and sheer stupidity all fighting against capitalism as we have it today, it is a miracle it works at all, but it does and that argues for its fundamental strength. If we address these existing problems and start to protect against the coming ones, we will be fine, maybe even better than fine. We’d be flying.

Sustainable Automation

There are some new problems coming too, and sometimes major trends can conceal less conspicuous ones, but sometimes these less conspicuous trends can build over time into enormous effects. Global financial turmoil and re-levelling due to development are largely concealing another major trend towards automation, a really key problem in the future of capitalism. If we look at the consequences of developing technology, we can see an increasingly automated world as we head towards the far future. Most mechanical or mental jobs can be automated eventually, leaving those that rely on human emotional and interpersonal skills, but even these could eventually be largely automated. That would obviously have a huge effect on the nature of our economies. It is good to automate; it adds the work of machines to that of humans, but if you get to a point where there is no work available for the humans to take, then that doesn’t work so well. Overall effectiveness is reduced because you still have to finance the person you replaced somehow. We are reaching that point in some areas and industries now.

One idea that has started to gain ground is that of reducing the working week. It has some merit. If there is enough work for 50 hours a week, maybe it is better to have 2 people working 25 each than one working 50 and one unemployed, one rich and one poor. If more work becomes available, then they can both work longer again. This becomes more attractive still as automation brings the costs down so that the 25 hours provides enough to live well. It is one idea, and I am confident there will be more.

However, I think there is another area we ought to look for a better solution – re-evaluating ownership.

Sometimes taking an extreme example is the best way to illustrate a point. In an ultra-automated pure capitalist world, a single person (or indeed even an AI) could set up a company and employ only AI or robotic staff and keep all the proceeds. Wealth would concentrate more and more with the people starting with it. There may not be any other employment, given that almost anything could be automated, so no-one else except other company owners would have any income source. If no-one else could afford to buy the products, their companies would die, and the economy couldn’t survive. This simplistic example nevertheless illustrates that pure capitalism isn’t sustainable in a truly high technology world. There would need to be some tweaking to distribute wealth effectively and make money go round a bit. Much more than current welfare state takes care of.

Perhaps we are already well on the way. Web developments that highly automate retailing have displaced many jobs and the same is true across many industries. Some of the business giants have few employees. There is no certainty that new technologies will create enough new jobs to replace the ones they displace.

We know from abundant evidence that communism doesn’t work, so if capitalism won’t work much longer either, then we have some thinking to do. I believe that the free market is often the best way to accomplish things, but it doesn’t always deliver, and perhaps it can’t this time, and perhaps we shouldn’t just wait until entire industries have been eradicated before we start to ask which direction it should go.

Culture tax – Renting shared infrastructure, culture and knowledge

The key to stopping the economy grinding to a halt due to extreme wealth concentration may lie in the value of accumulated human knowledge. Apart from short-term IP such as patents and copyright, the whole of humanity collectively owns the vast intellectual wealth accumulated via the efforts of thousands of generations. Yettraditionally, when a company is set up, no payment is made for the use of this intellectual property; it is assumed to be free. The effort and creativity of the founders, and the finance they provide, are assumed to be the full value, so they get control of the wealth generated (apart from taxes).

Automated companies make use of this vast accumulated intellectual wealth when they deploy their automated systems. Why should ownership of a relatively small amount of capital and effort give the right to harness huge amounts of publicly owned intellectual wealth without any payment to the other owners, the rest of the people? Why should the rest of humanity not share in the use of their intellectual property to generate reward? This is where the rethinking should be focused. There is nothing wrong with people benefiting from their efforts, making profit, owning stuff, controlling it, but it surely is right that they should make proper payment for the value of the shared intellectual property they use. With properly shared wealth generation, everyone would have income, and the system might work fine.

Ownership is the key to fair wealth distribution in an age of accelerating machine power. The world economy has changed dramatically over the last two decades, but we still think of ownership in much the same ways. This is where the biggest changes need to be made to make capitalism sustainable. At the moment, of all the things needed to make a business profitable, capital investment is given far too great a share of control and of the output. There are many other hugely important inputs that are not so much hidden as simply ignored. We have become so used to thinking of the financial investors owning the company that we don’t even see the others. So let me remind you of some of the things that the investors currently get given to them for free. I’ll start with the blindingly obvious and go on from there.

First and most invisible of all is the right to do business and to keep the profits. In some countries this isn’t a right, but in the developed world we don’t even think of it normally.

The law, protecting the company from having all its stuff stolen, its staff murdered, or its buildings burned down.

The full legal framework, all the rules and regulations that allow the business to trade on known terms, and to agree contracts with the full backing of the law.

Ditto the political framework.

Workforce education – having staff that can read and write, and some with far higher level of education

Infrastructure – all the roads, electricity, water, gas and so on. Companies pay for ongoing costs, maintenance and ongoing development, but pay nothing towards the accumulated historical establishment of these.

Accumulated public intellectual property. It isn’t just access to infrastructure they get free, it is the invention of electricity, of plumbing, of water purification and sewage disposal techniques, and so on.

Human knowledge, science, technology knowhow. We all have access to these, but that doesn’t necessarily mean that there should be an automatic right for anyone to use them without due compensation to the rest of the community. We assume that as a right, but it wasn’t really ever explicitly agreed, ever. It has just evolved. If someone invents something and patents it, we assume they have every right to profit from it. If they use an invention in common ownership, such as the wheel, why should they not pay the rest of society for the right to use it for personal commercial gain?

Think of it another way. If a village has a common, everyone has the right to let their animals feed off the grass. That works fine when there are only a few animals, but if everyone has a large herd, it soon breaks down. The common might be taken under local council control, and rented out, returning due value to the community. So it could be for all other commonly held knowledge. And there is a lot of it, thousands of years’ worth.

Culture is also taken for granted, including hand-me-down business culture, all the stuff that makes up an MBA, or even everyday knowledge about how businesses operate or are structured. So are language, and social structure that ensures that all the other supporting roles in society are somehow provided. We may take these for granted because they belong to us all, but they are a high value asset and if someone gains financially from using them, why should they not pay some of the profits to the rest of the owners as they would for using any other asset?

So the question is: should business pay for it, as it pays for capital and labour?

This all adds up to an enormous wealth of investment by thousands of generations of people. It is shared wealth but wealth nonetheless. When a company springs up now, it can access it all, take it all for granted, but that doesn’t mean it is without value. It is immensely valuable. So perhaps it is not unreasonable to equate it in importance to the provision of effort or finance. In that case, entrepreneurs should pay back some of their gains to the community.


Reward is essential, but fair’s fair

A business will not happen unless someone starts it, works hard at setting it up, getting it going, with all the stress and sacrifice that often needs. They need to be assured of a decent reward or they won’t bother. The same goes for capital providers, if they are needed. They also want something to show for the risk they have taken. Without enough incentive, it won’t work, and that should always be retained in our thinking when we redesign. But it is also right to look at the parallel investment by the community in terms of all the things listed above. That should also be rewarded.

This already happens to some degree when companies and shareholders pay their taxes. They contribute to the ongoing functioning of the society and to the development to be handed on to the next generation, just as individuals do. But they don’t explicitly pay any purchase price or rent for the social wealth they assumed when they started. The host community needs to be better and more explicitly integrated into the value distribution of a company in much the same way as shareholders or a board.

The amount that should be paid is endlessly debatable, and views would certainly differ between parties, but it does offer a way of tweaking capitalism that ensures that businesses develop and use new technology in such a way that it can be sustained. We want progress, but if all jobs were to be replaced by a smart machines, then we may have an amazingly efficient system, but if nobody has a job, and everyone is on low-level welfare, then nobody can afford to buy any of the products so it would seize up. Conventional taxes might not be enough to sustain it all. On the other hand, linking the level of payments from a company to the social capital they use when they deploy a new machine means that if they make lots of workers redundant by automation, and there are no new jobs for them to go to, then a greater payment would be incurred. While business overall is socially sustainable and ensures reasonably full employment, then the payments can remain zero or very low.

But we have the makings of an evolution path that allows for fair balancing of the needs of society and business.

The assignment of due financial value to social wealth and accumulated knowledge and culture ensures that there is a mechanism where money is returned to the society and not just the mill owner. With payment of the ‘social dividend’, government and ultimately people can then buy the goods. The owner should still be able to get wealthy, but the system is still able to work because the money can go around. But it also allows linking the payments from a business to the social sustainability of its employment practices. If a machine exists that can automate a job, it has only done so by the accumulated works of the society, so society should have some say in the use of that machine and a share of the rewards coming from it.

So we need to design the system, the rules and conditions, so that people are aware when they set up a business of the costs they will incur, under what conditions. They would also know that if they change their employment via automation, then the payments for the assumed knowledge in the machines and systems will compensate for the social damage that is done by the redundancy if no replacement job exists. The design will be difficult, but at least there is a potential basis for the rules and equations and while we’re looking at automation, we can use the same logic to address the other ethical issues surrounding business, such as corruption and exploitation, and factor those into our rules and penalties too.

There remains the question of distribution of the wealth from this social dividend. It could be divided equally of course, but more likely, since political parties would have their priority lists, it would have some sort of non-equal distribution. That is a matter for politicians.

Summarising, there are many problems holding business and society back today and standing in the way of sustainable capitalism. Addressing them will make us all better off. Some of them can be addressed by a similar mechanism to that which I recommend for balancing automation against social interests. Automation is good, wealth is good, and getting rich is good. We should not replace capitalism because it mostly works, but it is now badly in need of a system update and some maintenance work. When we’ve done all that, we will have a capitalist system that rewards effort and wealth provision just as today, but also factors in the wider interests – and investment – of the whole community. We’ll all benefit, and it will be sustainable.


Sustainable tax and welfare

Tax systems seem to have many loopholes that stimulate jobs in creative accountancy, but deprive nations of tax. Sharp cut-offs instead of smooth gradients create problems for people whose income rises slightly above thresholds. We need taxation, but it needs to be fair and transparent, and what that means depends on your political allegiances, but there is some common ground. Most of us would prefer a simpler system than the ludicrously complicated one we have now and most of us would like a system that applies to everyone and avoids loopholes.

The rich are becoming ever richer, even during the economic problems. In fact some executives on bonus structures linked to short-term profits appear to be using the recession as an excuse to depress wages to increase company profits and thereby be rewarded more themselves. Some rich people pay full tax, some avoid paying taxes by roaming around the world, never staying anywhere long enough to incur local tax demands. It may be too hard to introduce global taxes, or to stop tax havens from operating, but it is possible to ensure that all income earned from sales in a country is taxed here.

Ensuring full taxation

Electronic cash opens the potential for ensuring that all financial transactions in the country go through a tax gateway, which could immediately and at the point of transaction determine what tax is due and deduct it. If we want, a complex algorithm could be used, taking into account the circumstances of the agencies involved and the nature of the transaction – number crunching is very cheap and no human needs to be involved after the algorithms are determined so it could be virtually cost-free however complex. Or we could decide that the rate is a fixed percentage regardless of purpose. It doesn’t even have to threaten privacy, it could be totally anonymous if there are no different rates. With all transactions included, and the algorithms applying at point of transaction, there would be no need to know or remember who is involved or why.

In favour of a flat tax

Different sorts of income sources are taxed differently today. It makes sense to me to have a single flat tax of rate for all income, whatever its source – why should it matter how you get your income, surely the only thing that matters is how much you get? Today, there are many rates and exceptions. Since people can take income by pay, dividends, capital gains, interest, gambling, lottery wins, and inheritance, a fair system would just count it all up and tax it all at the same rate. This could apply to companies too, at the same rate; since some people own companies and money accumulating in them is part of their income. Ditto property development, any gains when selling or renting a property could be taxed at that rate. Company owners would be treated like everyone else, and pay on the same basis as employees.

I believe flat taxes are a good idea. They have been shown to work well in some countries, and can stimulate economic development. If there are no exceptions, if everyone must pay a fixed percentage of everything they get, then the rich still pay more tax, but are better incentivised to earn even more. Accountants wouldn’t be able to prevent rich people avoiding tax just by laundering it via different routes or by relabelling it.

International experience suggests that a flat tax rate of around 20% would probably work. So, you’d pay 20% on everything you earn or your company earns, or you inherit, or win, or are given or whatever. Some countries also tax capital, encouraging people to spend it rather than hoard, but this is an optional extra. There is something quite appealing about a single rate of tax that applies to everyone and every institution for every transaction. It is simpler, with fewer opportunities to abdicate responsibility to pay, and any income earned in the country would be taxed in the country.

There are a few obvious problems that need solved. Husbands and wives would not be able to transfer money between them tax-free, nor parents giving their kids pocket money, so perhaps we need to allow anyone tax-free interchange with their immediate family, as determine by birth, marriage or civil partnership. When people buy a new house, or change their share portfolio, perhaps it should just be on the value difference that the 20% would apply. So a few tweaks here and there would be needed, but the simpler and the fewer exceptions we introduce, the better.

Welfare

So what about poorer people, how will they manage? The welfare system could be similarly simplified too. We can provide simply for those that need help by giving a base allowance to every adult, regardless of need, set so that if that is your only income, it would be sufficient to live modestly but in a dignified manner. Any money earned on top of that ensures that there is an incentive to work, and you won’t become poorer by earning a few pounds more and crossing some threshold.

(Since I first blogged about this in Jan 2012, the Swiss have agreed a referendum (in Oct 2013) on what they call the Citizen Wage Initiative, which is exactly this same idea. I guess it has been around in various forms for ages, but if the Swiss decide to go ahead with it, it might soon be real. At a modest level of payment, it is workable now, the main issue being that there still needs to be a big enough incentive for people to work, or many won’t, and the economy would dive. The Swiss are considering a wage of 2000 Francs per month, which might be too generous, as it would allow a household with a few adults to live fairly comfortably without working. Having noted that, I still think the idea itself is very sound, the level just needs to be carefully set to preserve the work incentive.)

There is also no need to have a zero tax threshold. People who earn enough not to need welfare would be paying tax according to their total income anyway, so it all sorts itself out. With everyone getting the same allowance, admin costs would be very low and since admin costs currently waste around a third of the money, this frees up enough money to make the basic allowance 50% more generous. So everyone benefits.

Children could also be provided with an allowance, which would go to their registered parent or guardian just as today in lieu of child benefits. Again, since all income is taxed at the same rate regardless of source, there is no need to means test it. There should be as few other benefits as possible. They shouldn’t be necessary if the tax and allowance rate is tuned correctly anyway. Those with specific needs, such as some disabled people, could be given what they need rather than a cash benefit, so that there is less incentive to cheat the system.

Such a system would reduce polarisation greatly. The extremes at the bottom would be guaranteed a decent income, while those at the top would be forced to pay their proper share of taxes, however they got their wealth. If they still manage to be rich, then their wealth will at least be fair. It also guarantees that everyone is better off if they work, and that no-one falls through the safety net.

If everyone gets the allowance, the flat tax rate would mean that anyone below average earnings would hardly pay any income tax, any work that someone on benefits undertakes would result in a higher standard of living for them, and those on much more will pay lots. The figures look generous, but company income and prices will adjust too, and that will also rebalance it a bit. It certainly needs tuned, but it could work.

In business, the flat tax applies to all transactions, and where there is some sort of swap, such as property or shares, then the tax could be on the value difference. So, in shops, direct debits, or internet purchases, the tax would be a bit higher than the VAT rate today, and other services would also attract the same rate. With no tax deductions or complex VAT rules, admin is easier but more things are taxed. This makes it harder for companies to avoid tax by being based overseas and that increased tax take directly from income to companies means that the tax needed from other routes falls. Then, with a re-balanced economy, and everyone paying on everything, the flat rate can be adjusted until the total national take is whatever is agreed by government.

This just has to be simpler, fairer, and less wasteful and a better stimulus for hard work than the messy and unfair system we have now, full of opportunities to opt out at the top if you have a clever accountant and disincentives to work at the bottom.

The economy today is big enough to provide basic standard of living to everyone, but thanks to economic growth it will be possible to have a flat tax and a basic welfare payment equivalent to today’s average income within 45 years. If those who want economic growth to stop get their way, the poor will be condemned to at best a basic existence.

Linking tax and welfare to social networks

We often hear the phrase ‘care in the community’. Nationalisation of social care has displaced traditional care by family and local community to some degree. Long ago, people who needed to be looked after were looked after by those who are related or socially close, either by geography or association. It could be again, and may even be necessary as care rationing is a strong likelihood. Meanwhile, wealth is being redefined in many countries now, with high quality social relationships becoming recognised as valuable and a major contributor to overall quality of life.

Social care costs money, and will inevitably be rationed as the population ages, so why not link it back to social structure as it used to be? In much the same way that financial welfare is only available to those that need it, those with social wealth could and perhaps should be cared for by those who love them instead of by the state. They would likely be happier, and it would cost less. Those that have low connectedness, i.e. few friends and family, should then be the rightful focus of state care. Everyone could be cared for better and the costs would be more manageable.

We already know people’s social connectedness very well, it is indicated by many easily measurable factors, and every year it gets easier. The numbers and strength of contacts on social networking sites is one clue, so is email and messaging use, so is phone use. Geographic proximity can be determined by information in the electoral roll. So it is possible to determine algorithms based on these many various factors that would determine who needs care from the state and who should be able to get it from social contacts.

Many people wouldn’t like that, resenting being forced to care for other people, so how can we make sure people do take care of those they are ‘allocated’ to? Well, that could be done by linking taxation to the care system in such a way that the amount of care you should be providing would be determined by your social connectivity, and providing that care yields tax discount. Or you could just pay your full quota of taxes and abdicate provision to the state. But by providing a high valuation on actual care, it would encourage people to choose to provide care rather than to pay the tax.

Social wealth could thus be linked to social tax, and this social tax could be paid either as care or cash. The technology of social networking has given us the future means to link the social care side of social security into social connectedness. Those who are socially poor would receive the greatest focus of state provision and those who gain most socially from their lives would have to put more in too. We do that with money, why not also with social value? It sounds fair to me.

Scottish Independence

Apologies to my international readers, this one is just about Scotland.

Some Scots want independence and their leader Salmond promises that he will deliver a land of milk and honey. I wrote a few months on some reasons I don’t think they should go their own way:  http://timeguide.wordpress.com/2013/11/24/scottish-independence-please-dont-go/

The economics really don’t look good if they choose to do so anyway. A survey just published suggests 38.6% of large businesses and a third of small one would consider moving out of Scotland if it gains independence. That doesn’t mean they actually will, but it does suggest a potential financial problem. This week we have also learnt that European Law would require the Royal Bank of Scotland to move to London if it happened, since they do most of their business in the UK and banks have to be resident in the country where it does most of its business.

Salmond has suggested making loads of cash from wind farms. If every hectare of Scotland were covered in wind turbines at maximum density, it wouldn’t even make enough energy to replace England’s coal power stations. Hardly Saudi Arabia is it, as Salmond once claimed? Oil is still there in the sea in reasonable abundance, they might win ownership of much of it, and they could extract it for some more years. But not many. Thanks to the recent goings on with Russia, shale gas is starting to look a lot more desirable. England’s recoverable reserves estimates increased by 50% this last week. We have a lot of shale gas, and it will be much cheaper than oil or Russian gas if we can get past the current fracking objections. The same goes for many other countries that might otherwise be tempted by North Sea oil. Even if we can’t use our own shale gas, US shale gas production can expand a lot and could fill much of our needs too. So there may not be much demand for Scottish oil for much longer.

Each Scot is currently subsidised by English taxpayers. The subsidies allow Scottish students free University education (while the English have to pay £9000 per year). Elderly care is free, prescriptions are free. Estimates of the subsidy vary depending on the political allegiance of the source, but a BBC figure of over £3000 per head seems reasonable. An independent Scotland would have no reason to expect to keep receiving that.

A study 15 months ago based on stats collected by the Office of National Statistics pointed out that only 12% of Scots contribute more to the state than they receive back in total benefits. A reasonable assumption is that some of those 12% work for the big banks and other large companies that will move to London, and some work for the smaller businesses that would also consider leaving. Some of those will leave, and that will mean that an even smaller proportion of Scots are net contributors to the state. They might feel pretty unhappy if the politics still means that they are then expected to pay even more taxes to make up the deficit, so more of those ‘considering leaving’ might actually do so. A vicious circle will force more and more Scots onto the train to London or overseas. Scotland would soon be full of net receivers from the state, used to a heavily subsidised standard of living and willing to vote for anyone who will keep borrowing more and more to pay for it. Those that can will leave.

It is hard to escape the conclusion that a newly independent Scotland will very soon start to see its standard of living very significantly degraded. Even after tightening its belt a few times, it is likely to see its economy slide deeper into debt. Not a good prospect at all.

The future of mining

I did an interview recently on future mining, so I thought I’d blog my thoughts on the subject while they’re all stuck together coherently.

Very briefly, increasing population and wealth will generate higher resource need until the resources needed per person starts to fall at a higher rate, and it will. That almost certainly means a few decades of increasing demand for many resources, with a few exceptions where substitution will impact at a higher rate. Eventually, demand will peak and fall for most resources. Meanwhile, the mining industry can prosper.

Robotics

Robots are already used a lot in mining, but their uses will evolve. Robots have a greater potential range of senses than humans, able to detect whatever sensors are equipped for. That means they can see into rock and analyse composition better than our eyes. AI will improve their decisions. Of course, we’ll still have the self drive vehicles, diggers and the other automation we already expect to see.

If a mine can be fully automated, it may reduce deaths and costs significantly. Robots can also have a rapid speed of reaction as well as AI and advanced sensing, and could detect accidents before they happen. Apart from saving on wages, robots also don’t need expensive health and safety, so that may see lower costs, but at the expense of greater risks with occasional flat robots in an automated mine. The costs of robots can be kept low if most of their intelligence is remote rather than on board. Saving human lives is a benefit that can’t easily be costed. Far better to buy a new machine than to comfort a bereaved family.

Robots in many other mixed mines will need to be maintained, so maybe people’s main role will often be just looking after the machines, and we would still need to ensure safety in that case. That creates a big incentive to make machines that can be maintained by other machines so that full automation can be achieved.

With use of penetrating positioning systems, specialist wanderer bots could tunnel around at will, following a seam, extracting and concentrating useful materials and leave markers for collector bots to gather the concentrates.

NBIC

With ongoing convergence of biotech, nanotech and IT, we should expect a lot of development of various types of bacterial or mechanical microbots, that can get into new places and reduce the costs of recovery, maybe even reopening some otherwise uneconomic mines. Development of bacteria that can transmute materials has already begun, and we should expect that some future mines will depend mainly on a few bucketfuls of bacterial soup to convert and concentrate resources into more easily extracted reserves. Such advanced technology will greatly increase the reserves of material that can economically be extracted. Obviously the higher the price, the more that can be justified on extraction, so advanced technologies will develop faster when we need them, as any shortages start to appear.

Deep Sea

Deep sea mines would provide access to far greater resource pools, limited mainly by the market price for the material. Re-opening other mines as technology improves recovery potential will also help.

Asteroid Mining

Moving away from the Earth, a lot of hype has appeared about asteroid mining and some analyses seem to think that it will impact enormously on the price of scarce materials here on Earth. I think that is oversold as a possibility.  Yes, it will be possible to bring stuff back to Earth, but the costs of landing materials safely would be high and only justified for those with extreme prices.  For traditionally expensive gold or diamonds, actual uses are relatively low and generally have good cheaper substitutes, so if large quantities were shipped back to Earth, prices would still be managed as they already are, with slow trickling onto the market to avoid price collapse. That greatly limits the potential wealth from doing so.

I think it is far more likely that asteroid mining will be focused on producing stuff for needed for construction, travel and living in space, such as space stations, ships, energy collection, habitation, outposts etc. In that case, many of the things mined from asteroids would be things that are cheap here, such as water and iron and other everyday materials. Their value in space might be far higher simply because of the expense of moving them. This last factor suggests that there may be a lot of interest in technologies to move asteroids or change their orbits so the resources end up closer to where they are needed. An asteroid could be mined at great length, with the materials extracted and left on its surface, then waiting until the asteroid is close to the required destination before the materials are collected and dispatched. The alternative that we routinely see in sci-fi, with vast mining ships, is possible, and there will undoubtedly be times they are needed, but surely can’t compete on cost with steering an entire asteroid so it delivers the materials itself.

Population growth and resource need

As human population increases, we’ll eventually also see robot and android population increase, and they might also need resources for their activities. We should certainly factor that into future demand estimates. However, there are also future factors that will reduce the resources needed.

Smarter Construction

More advanced construction techniques, development of smarter materials and use of reactive architecture all mean that less resource is needed for a given amount of building. Exotic materials such as graphene  and carbon nanotubes, boron derivatives, and possibly even plasma in some applications, will all impact on construction and other industries and reduce demand for lots of resources. The carbon derivatives are a double win, since carbon can usefully be extracted from the products of fossil fuel energy production, making cleaner energy at the same time as providing building and fabrication materials. The new carbon materials are a lot stronger than steel, so we may build much higher buildings, making a lower environmental footprint for cities. They are also perfect for making self-driving cars as well as their energy storage, power supply and supporting infrastructure.

IT efficiency v the Greens

Miniaturisation of electronics and IT will continue for decades more. A few cubic millimetres of electronics could easily replace all the electronics owned by a typical family today. Perversely, Greens are trying hard to force a slower obsolescence cycle, not understanding that the faster we get to minimal resource use, the lower the overall environmental impact will be. By prolonging high-resource-use gadgets, even as people get wealthier and can afford to buy more, the demands will increase far beyond what is really necessary of they hadn’t interfered. It is far better for 10 billion people to use a few cubic millimetres each than a few litres. Greens also often want to introduce restrictions on development of other advanced technology, greatly overusing the precautionary principle. Their distrust of science and technology is amazing considering how much it can obviously benefit the environment.

A lot of things can be done virtually too, with no resource use at all, especially displays and interfaces, all of which could share a single common display such as a 0.2 gram active contact lens. A lot of IT can be centralised with greater utilisation, while some can achieve better efficiency by decentralising. We need to apply intelligence to the problem, looking at each bit as part of an overall system instead of in isolation, and looking at the full life cycle as well as the full system.

Substitution will reduce demand for copper, neodymium, lithium

Recycling of some elements will provide more than is needed by a future market because of material substitution, so prices of some could fall, such as copper. Copper in plumbing is already being substituted heavily by plastic. In communications, fibre and mobile are already heavily replacing it. In power cables, it will eventually be substituted by graphene. Similar substitution is likely in many other materials. The primary use of neodymium is in wind turbines and high speed motors. As wind turbines are abandoned and recycled in favour of better energy production techniques, as future wind power can even be based on plastic capacitors that need hardly any metal at all, and as permanent magnets in motors are substituted by superconducting magnets, there may not be much demand for neodymium. Similarly, lithium is in great demand for batteries, but super-capacitors, again possibly using carbon derivatives such as graphene, will substitute greatly for them. Inductive power coupling from inductive mats in a road surface could easily replace most of the required capacity for a car battery, especially as self driving cars will be lighter and closer together, reducing energy demand. Self-driving cars even reduce the number of cars needed as they deter private ownership. So it is a win-win-win for everyone except the mining industry. A small battery or super-cap bank might have little need for lithium. Recycled lithium could be all we need. Recycling will continue to improve through better practice and better tech, and also some rubbish tips could even be mined if we’re desperate. With fewer cars needed, and plastic instead of steel, that also impacts on steel need.

The Greens are the best friends of the mining industry

So provided we can limit Green interference and get on with developing advanced technology quickly, the fall in demand per person (or android) may offset resource need at a higher rate than the population increases. We could use less material in the far future than we do today, even with a far higher average standard of living. After population peaks and starts falling, there could be a rapid price fall as a glut of recycled material appears. That would be a bleak outcome for the mining sector of course. In that case, by delaying that to the best of their ability, it turns out that the Greens are the mining industry’s best friends, useful idiots, ensuring that the markets remain as large as possible for as long as possible, with the maximum environmental impact.

It certainly takes a special restriction of mind to let someone do so much harm to the environment while still believing they occupy the moral high ground!

Carbon industry

Meanwhile, carbon sequestration could easily evolve into a carbon materials industry, in direct competition with the traditional resources sector, with carbon building materials, cables, wires, batteries, capacitors, inductors, electronics, fabrics…..a million uses. Plastics will improve in parallel, often incorporating particles of electronics, sensors, and electronic muscles, making a huge variety of potential smart materials for any kind of building, furniture of gadget. The requirement for concrete, steel, aluminium, copper, and many other materials will eventually drop, even as population and wealth grows.

To conclude, although population increase and wealth increase will generate increasing demand in the short to medium term, and mining will develop rapidly along many avenues, in the longer term, the future will rely far more on recycling and advanced manufacturing techniques, so the demand for raw materials will eventually peak and fall.

I wrote at far greater length about achieving a system-wide sustainable future in my book Total Sustainability, which avoids the usual socialist baggage.

San Francisco is the front line of capitalism reform, begging the question: who owns the city?

I watched on the news tonight how people who have lived in San Francisco for decades are being evicted from their homes by landlords eager to cash in on the rich rents they can charge to incoming techie types on large salaries from the tech giants.

The news program showed the hippie generation blockading the luxury buses taking people to work at Google. Google pays well to get high quality intellect. There is nothing wrong with that. Those employees have lots of cash but they still need accommodation, so the poor are kicked out of their rented accommodation because they can no longer afford the rents. So it finds itself at war with the longer term residents who made the city what it is, the reason Google wants to be there. 

A simple question sums up the whole problem. Who owns San Francisco? Answering that isn’t simple and leads directly to how we must change capitalism if it is to survive, and since we must, we eventually will. The gentle protests of the weak and disenfranchised in San Francisco will once again put that hippy generation at the front line of change.

I am no expert on San Francisco. I went to Menlo Park once to give a talk, then left, spending less than a day there in total. I’ve seen it many times on TV and the media of course. It is famed for the hippies, Alcatraz, being a gay hub, being the focus of west coast IT development, and a few movies. Some other things happen there, but these are the things it is mainly known for.

A city is lots of things. It is the land, with some buildings and infrastructure on top, and some resources below. Some is owned collectively, some by individuals or companies. Those are very important, but they are only a fraction of what a city is. It is also the people - the activities that go on there, the culture, the customs, the ideologies, the intellectual activities, the business, the entertainment, and it is also a brand – when someone thinks of San Francisco, a bunch of associations appears in their minds, just like any commercial brand, making it very different from London or New York or LA. It is also the geography –  the location, the climate, the risks of quakes. And it is also the history, the accumulated associations over decades.

When a property developer buys a building somewhere, they may add to  its physical value by renovating it, decorating it, extending it, or adding some nice furnishing. But any property developer has a choice of where to buy, and chooses an area they think will increase in value. The increase in value comes from all the other intangibles I just mentioned, (mostly what economists call social capital, but I don’t like using jargon where ordinary words do perfectly well) so the underlying question is: why should all the value increase go to the developer. In essence they are getting all the efforts and talents of everyone else, all the magnetism they create, for free. Why? Why should they get it all? Why should the person living in the flat not get it? It is they who are the magnet. You can get a flat anywhere. The reason you want that one is because of where it is. Does that value-add not belong to everyone who made that place the place to be?

Look at it another way. Suppose it’s the 1960s. You are a hippie and you want to go where it is happening. Suppose all the hippies had a flash of insight and realised what would happen 50 years later. Suppose they all decided to build their own town next door. Suppose they decided that capital isn’t everything, and decreed that the value of each property there would be split. Part would be the physical property and that would increase in value at the construction industry inflation rate. The other part of the property value would be the cultural value, and that would increase to whatever the market stands. The property developer would get a fair ongoing rent for that class of property. The community would get the remuneration for the value they have added. Each year a market valuation would show how much property has increased in value, how much value of new business has been generated because of the local atmosphere. The people who lived there the last year would get a share of that. A hippie moving into the area wouldn’t go to San Francisco, that sterile could-be-anywhere town with no culture. They’d go to the really cool trendy town next door where everyone wants to be and property costs a fortune. But as they live there, as they contribute to the area’s atmosphere, so they too get a ‘citizen wage’, their share of the value add. That offsets the rent they pay the next year.

If they did that, the rewards would go to those who create them. Isn’t that the way it should be? Why should someone get all the rewards just because they provided some cash up front, but perhaps did nothing more to contribute? Why should the property owner also be the assumed owner of the value the community has added to the area? Why is capital more important than investment of time, energy, emotion, and love?

The hippies didn’t do that, neither did the gay community. Now the enormous value they all added to San Francisco is all going to the property developers, 100% of it, even though all they did was own the flats. In gratitude, they are now evicting those contributors to make way for others whose sole advantage is having more cash to offer. That is capitalism. Well, if that is so, capitalism needs to change.

We are watching economics evolve worldwide. In most developed countries, automation is concentrating wealth with the company owners. Buy 100 machines and employ no staff, keep all the proceeds to yourself, and get rich. It looks very different, but actually it is the same. The provision of the capital is assumed to be the only part that matters. The access to a market, the development of all the infrastructure, the culture in which the product will be used, the political stability, the banking system, the accumulated human knowledge that went into every aspect of the product, every other aspect of the modern world that makes the product possible, and makes it possible to sell – all of that is assumed to be of no value and receives none of the proceeds other than the same tax rate that a company would pay if it contributed heavily to culture and society and employed thousands of employees. If it were given an agreed value, that could become a part ownership of the company, proceeds allocated to the capital providers and the silent partner culture capital provider.

Capitalism worked well when the immaturity of technology meant that about half of the wealth generated went to employees and half to the owner. You could get very rich, but others still had enough income to buy your products, and it all kept working. If we automated every job and a few people own all the machines, nobody else could afford to buy and capitalism would grind quickly to a halt. We aren’t there yet, but somewhere like that is the ultimate destination if we don’t start adjusting it. Even those wealthy young programmers could be automated by an advanced AI.

So we need to adjust capitalism. Working out some way of valuing the entire cultural contribution of a society or region so it can stand side by side with the provision of capital would be a good start. Then some sort of culture tax can distribute wealth between the factory owners and those who own the culture in which it exists, i.e. all of us.

Capitalism is a good idea, one that has served America and the free world very well. It doesn’t need thrown away, just adjusted a bit. We need to look at it afresh and realize that capitalism isn’t the same as materialism. Just because something isn’t physical doesn’t mean it has no value. Surely we already understand that with all the media we consume? All we need to do is extend that understanding a bit further, to the other intangibles. Everyone contributes to the character of a city, from the mayor down to the bum on the street with a begging bowl.

So looking at San Francisco and the bus demos, it seems that the nouveau riche of the internet generation are only rich because of the inability of capitalism itself to keep up. Google is only wealthy because the rest of the market is slower to evolve, even most of the IT industry. They can only make money at all because the internet hasn’t evolved fast enough and much of the original dream is yet to be realized. It it had kept up, the perfect market would have no need for ads and they’d have little income.

San Francisco beautifully illustrates the clash of the permanent and the transient, the old and the new, the material and the emotional. Its done it a few times before, and it may again now.

If Gibbon were alive today, he wouldn’t be writing about the rise and fall of the Roman Empire. He’d be writing about San Francisco and the decline and fall of overly simplistic capitalism. I’m no Gibbon, but I hope I managed to explain my point.

Will population grow again after 2050? To 15Bn?

We’ve been told for decades now that population will level off, probably around 2050, and population after that will likely decline. The world population will peak around 2050 at about 9.5 Billion. That’s pretty much the accepted wisdom at the moment.

The reasoning is pretty straight forward and seems sound, and the evidence follows it closely. People are becoming wealthier. Wealthier people have fewer kids. If you don’t expect your kids to die from disease or starvation before they’re grown up, you don’t need to make as many.

But what if it’s based on fallacy? What if it is just plain wrong? What if the foundations of that reasoning change dramatically by 2050 and it no longer holds true? Indeed. What if?

Before I continue, let me say that my book ‘Total Sustainability’, and my various optimistic writings and blogs about population growth all agree with the view that population will level off around 2050 and then slowly decline, while food supply and resource use will improve thanks to better technologies, thereby helping us to restore the environment. If population may increase again, I and many others will have to rethink.

The reason I am concerned now is that I just made another cross-link with the trend of rising wealth, which will allow even the most basic level of welfare to be set at a high level. It is like the citizen payment that the Swiss voted on recently. I suggested it a couple of years ago myself and in my books, and am in favour of it. Everyone would receive the same monthly payment from the state whether they work or not. The taxes due would then be calculated on the total income, regardless of how you get it, and I would use a flat tax for that too. Quite simple and fair. Only wealthier people pay any tax and then according to how wealthy they are. My calculations say that by 2050, everyone in the UK could get £30,000 a year each (in today’s money) based on the typical level of growth we’ve seen in recent decades (ignoring the recession years). In some countries it would be even higher, in some less, but the cost of living is also less in many countries. In many countries welfare could be as generous as average wages are today.

So by 2050, people in many countries could have an income that allows them to survive reasonably comfortably, even without having a job. That won’t stop everyone working, but it will make it much easier for people who want to raise a family to do so without economic concerns or having to go out to work. It will become possible to live comfortably without working and raise a family.

We know that people tend to have fewer kids as they become wealthier, but there are a number of possible reasons for that. One is the better survival chances for children. That may still have an effect in the developing world, but has little effect in richer countries, so it probably won’t have any impact on future population levels in those countries. Another is the need to work to sustain the higher standard of living one has become used to, to maintain a social status and position, and the parallel reluctance to have kids that will make that more difficult. While a small number of people have kids as a means to solicit state support, but that must be tiny compared to the numbers who have fewer so that they can self sustain. Another reason is that having kids impedes personal freedom, impacts on social life and sex life and adds perhaps unwelcome responsibility. These reasons are all vulnerable to the changes caused by increasing welfare and consequential attitudes. There are probably many other reasons too. 

Working and having fewer kids allows a higher standard of living than having kids and staying at home to look after them, but most people are prepared to compromise on material quality of life to some degree to get the obvious emotional rewards of having kids. Perhaps people are having fewer kids as they get wealthier because the drop of standard of living is too high, or the risks too high. If the guaranteed basic level of survival is comfortable, there is little risk. If a lot of people choose not to work and just live on that, there will also be less social stigma in not working, and more social opportunities from having more people in the same boat. So perhaps we may reasonably deduce that making it less uncomfortable to stop work and have more kids will create a virtuous circle of more and more people having more kids.

I won’t go as far as saying that will happen, just that it might. I don’t know enough about the relative forces that make someone decide whether to have another child. It is hard to predetermine the social attitudes that will prevail in 2050 and beyond, whether people will feel encouraged or deterred from having more kids.

My key point here is that the drop in fertility we see today due to increasing wealth might only hold true up to a certain point, beyond which it reverses. It may simply be that the welfare and social floor is too low to offer a sufficient safety net for those considering having kids, so they choose not to. If the floor is raised thanks to improving prosperity, as it might well be, then population could start to rise quickly again. The assumption that population will peak at 9 or 9.5 billion and then fall might be wrong. It could rise to up to 15 billion, at which point other factors will start to reassert themselves. If our assumptions on age of death are also underestimates, it could go even higher.

Automation and the London tube strike

I was invited on the BBC’s Radio 4 Today Programme to discuss automation this morning, but on Radio 4, studio audio quality is a higher priority than content quality, while quality of life for me is a higher priority than radio exposure, and going into Ipswich greatly reduces my quality of life. We amicably agreed they should find someone else.

There will be more automation in the future. On one hand, if we could totally automate every single job right now, all the same work would be done, so the world would still have the same overall wealth, but then we’d all be idle so our newly free time could be used to improve quality of life, or lie on beaches enjoying ourselves. The problem with that isn’t the automation itself, it is mainly the deciding what else to do with our time and establishing a fair means of distributing the wealth so it doesn’t just stay with ‘the mill owners’. Automation will eventually require some tweaks of capitalism (I discuss this at length in my book Total Sustainability).

We can’t and shouldn’t automate every job. Some jobs are dull and boring or reduce the worker to too low a level of  dignity, and they should be automated as far as we can economically – that is, without creating a greater problem elsewhere. Some jobs provide people with a huge sense of fulfillment or pleasure, and we ought to keep them and create more like them. Most jobs are in between and their situation is rather more complex. Jobs give us something to do with our time. They provide us with social contact. They stop us hanging around on the streets picking fights, or finding ways to demean ourselves or others. They provide dignity, status, self-actualisation. They provide a convenient mechanism for wealth distribution. Some provide stimulation, or exercise, or supervision. All of these factors add to the value of jobs above the actual financial value add.

The London tube strike illustrates one key factor in the social decision on which jobs should be automated. The tube provides an essential service that affects a very large number of people and all their interests should be taken into account.

The impact of potential automation on individual workers in the tube system is certainly important and we shouldn’t ignore it. It would force many of them to find other jobs, albeit in an area with very low unemployment and generally high salaries. Others would have to change to another role within the tube system, perhaps giving assistance and advice to customers instead of pushing buttons on a ticket machine or moving a lever back and forward in a train cab. I find it hard to see how pushing buttons can offer the same dignity or human fulfillment as directly helping another person, so I would consider that sort of change positive, apart from any potential income drop and its onward consequences.

On the other hand, the cumulative impacts on all those other people affected are astronomically large. Many people would have struggled to get to work. Many wouldn’t have bothered. A few would suffer health consequences due to the extra struggle or stress. Perhaps a few small business on the edge of survival will have been killed. Some tourists won’t come back, a lot will spend less. A very large number of businesses and individuals will suffer significantly to let the tube staff make a not very valid protest.

The interests of a small number of people shouldn’t be ignored, but neither should the interests of a large number of people. If these jobs are automated, a few staff would suffer significantly, most would just move on to other jobs, but the future minor miseries caused to millions would be avoided.

Other jobs that should be automated are those where staff are give undue power or authority over others. Most of us will have had bad experiences of jobsworth staff, perhaps including ticketing staff, whose personal attitude is rather less than helpful and whose replacement by a machine would make the world a better place. A few people sadly seem to relish their power to make someone else’s life more difficult. I am pleased to see widespread automation of check-in at airports for that reason too. There were simply too many check-in assistants who gleefully stood in front of big notices saying that rudeness and abuse will not be tolerated from customers, while happily abusing their customers, creating maximum inconvenience and grief to their customers through a jobsworth attitude or couldn’t-care-less incompetence. Where people are in a position of power or authority, where a job offers the sort of opportunities for sadistic self-actualisation some people get by making other people’s lives worse, there is a strong case for automation to avoid the temptation to abuse that power or authority.

As artificial intelligence and robotics increase in scope and ability, many more jobs will be automated, but more often it will affect parts of jobs. Increasing productivity isn’t a bad thing, nor is up-skilling someone to do a more difficult and fulfilling job than they could otherwise manage. Some parts of any job are dull, and we won’t miss them, if they are replaced by more enjoyable activity. In many cases, simple mechanical or information processing tasks will be replaced by those involving people skills, emotional skills. By automating these bits where we are essentially doing machine work, high technology forces us to concentrate on being human. That is no bad thing.

While automation moves people away from repetitive,boring, dangerous, low dignity tasks, or those that give people too much opportunity to cause problems for others, I am all in favour. Those jobs together don’t add up to enough to cause major economic problems. We can find better work for those concerned.

We need to guard against automation going too far though. When jobs are automated faster than new equivalent or better jobs can be created, then we will have a problem. Not from the automation itself, but as a result of the unemployment, the unbalanced wealth distribution, and all the social problems that result from those. We need to automate sustainably.

Human + machine is better than human alone, but human alone is probably better than machine alone.

Machiavelli and the coming Great Western War

In the 16th century, Machiavelli set in motion the Great Civil War that will start in Europe and spread to the USA and will happen towards the end of this century.

The problem behind it is increasingly skilled manipulation of the sequential processes of presentation, perception, interpretation, deduction and consequent behaviour. Machiavelli is often cited for his great skill in manipulating people via these processes. Centuries on, this manifests in modern society most conspicuously in the twin fields of marketing and politics. Sadly, both have forgotten their proper places.

Professional politics has been replacing vocational service for some time already, and this trend still has far to run. Politicians are less interested in genuinely serving society than furthering their own interests and maximising and holding on to power, often regardless of cost to the electorate. They treat the electorate not as a customer but as a resource to be exploited.

Marketing as a capitalist tool harnesses the most powerful tools available from psychological science and technological capability. It has migrated steadily from the useful purpose of making society aware of new things they may want towards the far less benign manipulation of the customer in favour of those products. Marketing no longer contributes to society, it now treats customers as prey and siphons off valuable resources to maintain itself. It has become a vampire.

Separately, these are already problems, but they are no longer separate. As politics has developed in the last couple of decades, the convergence of marketing and politics has matured a great deal. We call it spin and spin has become far more important than what could be considered in everyday thinking as truth. Un-spun delivery of important information to the electorate so that they can make free and informed decisions has become a rarity.

As we are becoming all too familiar, modern politicians have become highly adept at avoiding answering questions, deflecting them, answering different questions than they are asked, disguising and burying real information that they can’t avoid revealing under heaps of irrelevance and behind thick walls of weasel words. We expect now that they are will only be reasonably open and  honest with us when they are revealing good news and even then they will try to exaggerate their own part in it.

This is a dangerous trend that may eventually lead to civil war. In the everyday world, two reasonable people with different value sets can learn to live alongside peacefully. They will usually broadly agree on the raw facts in front of them. They will interpret them slightly differently, i.e. extract different meanings from those facts because they have learned to look at things differently. Due to their internal thinking processes and prejudices they will draw significantly different conclusions from those interpretations and will initiate very different behaviours as a result. In the political/marketing world we are experiencing now, the differences at each of these stages are subject to some deliberate amplification as well as some that emerges non-deliberately from complex interactions within the socio-economic-techno environment. Because of this combined amplification of otherwise minor differences, the gulf between people on the left and right of the political spectrum has been increasing for decades and will likely continue to increase for several more. It may become less and less easy for them to agree to live peacefully side by side and accept their differences. They may increasingly see each other as enemies rather than neighbours. So today, we witness clash of ideology in the Middle East, in a few decades, it will be our turn.

Reinforcement of attitudes is already being caused by technology that shows us what we are already prone to search for. People who read right wing media have right wing attitudes reinforced and affirmed. Those who read left wing media have left wing attitudes reinforced and affirmed. Neither side is routinely exposed to opposing ideology except filtered through their own media which has an interest in reinforcing their attitudes and demonising the other. They see all of the negatives and few of the positives of the other’s point of view.

Although there will remain a centre ground where differences between people are small, amplification of small differences and subsequent reinforcement means that many will be drawn to the extremes and have their positions there entrenched. With many people on either side, with a strongly opposing set of interests, and competition over resources, ideology and control, eventually conflict may result. I believe this may well be the source of a widespread civil war starting in Europe and spreading to the USA, that will take place in the second half of this century. After a long and bitter conflict, the Great Western War, I believe dual democracy will result throughout the West, where two self-governing communities peacefully share the same countries, with some shared and negotiated systems, services and infrastructure and some that are restricted to each community. People will decide which community to belong to, pay taxes and receive benefits accordingly, and have different sets of rules governing their behaviors. Migrating between the communities will be possible, but will incur large costs. We may see a large-state left with lots of services and welfare, and lots of rules, but high taxes to pay for it, and a small state right with increased personal freedom and lower taxes, but less generous welfare and services.

We already see some of this friction emerging today. Demonisation of the opposing ideology is far greater than it was 20 years ago. It is becoming tribalism built large. Each political party uses the best marketing know-how in their spin machines, making sure their supporters see the right facts, are taught to perceive them in the right way, interpret their causation in the right way, do the analysis on the remedial possibilities in the right way and therefore choose and back the right policies. Each side can’t understand how the other side can possibly end up with their viewpoints or policies, except by labelling them as demons.

How often have you heard terms like ‘the nasty party’? How often do the right portray the left as spendthrift incompetents who want someone else to pay for their lack of responsibility, while the left portrays the right as greedy, selfish judgmental people who want to exploit the poor rather then help them. I read left and right papers every day and I’d say I see those attitudes presented as indisputable fact pretty much every day. We see the arguments in welfare, education, health care, support for overseas military intervention, even environmental care. When we can only have one government in power, we ensure that half the population always feels angry.

We see frequent demonstration and even riots as the left moans about spending cuts while right wing groups moan about immigration. We see fierce arguments regularly on every area of policy – privacy erosion, crime control, renewable energy subsidies, public transport provision, health care. There often seems little room for compromise, it is one getting their way and the other suffering. It seems inevitable that if the polarisation continues to increase along current lines, that we will see each side want to go their own way. The left will want the state to remain in control and grow in power, the right will demand a degree of independence and to be rid of a community that expects them to pay for everything but appears wasteful. With a single flavoured government in each country, civil war would erupt and spread as each country realises it has the same problems and the same potential solution. Just like the American Civil War, it will be fiercely fought, and it will eventually come to an end. But with two irreconcilable policies it wont end with a structure as we have now. Democracy in it current form, where each part of the community seems only to want to further its own interests at the expense of the other, will have failed. The left and the right will have to settle with going their own way, with their own resources financing their own spending. Those who want to pay high taxes but receive high welfare and a guaranteed high service provision by the state will be able to choose it. Those who prefer a small state that interferes little with their lives, to keep their earnings and finance their own services will be able to choose that. The two communities will have their own governments, their own presidents of prime ministers, or any future governing structure they choose. Some things have to be done geographically, such as defence, roads and policing. Governments covering the same areas will simply have to negotiate until they agree on the provision levels. Above that they could add whatever they want from their own resources.

In future blogs, I will write about some of the forces of amplification that I referred to. These ultimately are the engine that drives the system towards ultimate conflict, and need to be examined. But for now, it is sufficient to raise the issue.

 

We should help the poor, but not via global warming compensation

At the Warsaw climate summit, some developing countries argued that the rich, developed world, should compensate poor countries for the effects of global warming such as the recent typhoon. That is a very bad path to tread indeed.

Like almost everyone reading this, I am all for helping poor people to the very best of our ability, wherever they live. But we should do so because we can help them and because we want to help them, for the best of human reasons, not because we’re being forced to via some perverse compensation scheme.

As I argued in my book Total Sustainability, if we want to live in a sustainable world, we need to fix not just those things that directly affect the environment such as pollution and resource use, but also things that indirectly affect the environment via human impacts. We need to look at economics, politics, society, business and cultural effects too, and deal with the problems therein that would eventually adversely affect the environment and human well-being such as exploitation and corruption.

Let’s ignore for the time being the fact that global warming has levelled off for 16 or 17 years now even while CO2 levels have skyrocketed. Let’s ignore the fact that environmental catastrophes have always happened, and that it isn’t possible to attribute any particular weather-related disaster to ‘climate change’ or ‘global warming’. There is no shred of evidence linking the recent typhoon to CO2 levels. Let’s ignore the fact that the number and severity of storms has declined, so the level of problem has actually gone down as CO2 level has increased. Let’s ignore those facts because the overwhelmingly important overall fact is that we don’t yet understand what is happening to our climate, nor how much of any changes we observe are natural and how much are due to human activity, still less the attribution to particular human activities. The only evidence I need cite for that assertion is that almost all of the climate models have grossly overstated the amount of warming we should have seen by now. If they are genuinely the result of the best understanding of climate we have and not scientific corruption or deliberate misrepresentation and tweaking to get the right answer, then we can be certain that some of the equations or factors in them are wrong, or still worse, missing. 

If we don’t even understand how climate works, if we don’t understand the effects of human activity on the climate, then it is utterly ridiculous to attribute particular environmental catastrophes to the behaviour of particular countries. A sensible demand for compensation would need to demonstrate a causal link between an act and a result. We are nowhere near the level of scientific understanding required for that. Even if we were, or if we eventually get to that point; even if future scientists could conclusively show that rich countries’ CO2 emissions caused a particular storm, we still would have no justification for compensation to developing countries. Let’s help them as much as we can, but let’s not use human-caused global warming or climate change as the reason.

Why not? Here’s why:

One of the chapters in my book was called  ‘the rich world owes no compensation to the poor world’. The world only has the technological capability to support a population over seven billion because of the activities of our ancestors. Without the industrial revolution, the energy it used, the pollution it generated, the CO2 it led to, very many of those alive today would not be. We owe no apology for that. It is only through that historic activity that we are where we are, with the technology that allows poor countries to develop. Developing countries are developing in a world that already has high CO2 levels and is still largely economically and technologically locked into CO2-intensive energy production. That is simply the price humanity overall has paid to get where we are. When a developing country builds a new power station or a road or a telecomms network, it uses today’s technology, not 16th century technology – the century where modern science and technology arguably really started. Without the rich world having used all that energy with its associated environmental impact, they’d have to use 16th century technology. There would be no rich world to sell to, and no means to develop. Developing is a far faster and easier process today than it was when we did it.

Our ancestors in the rich world had to suffer the pain hundreds of years ago – they were the giants on whose shoulders we now stand. It was mostly our ancestors in the rich world whose ingenuity and effort, whose blood, sweat and tears paid for a world that can support seven billion people. It was mostly they who invented and developed the electricity, telecoms, the web, pharmaceuticals and biotech, genetically superior crops, advanced manufacturing and farming technology that make it possible. That all cost environmental impacts as part of the price. The whole of humanity has benefitted from that investment, not just rich countries, and if any compensation or apology were due to the rest of the world for it, then it has already been paid many times over in lives saved and lives enabled, economic aid already enabled by that wealth, and the vastly better financial and economic well-being for the future developing world that resulted from that investment. The developing world is developing later, but that is not the fault of our ancestors for making our investment earlier.

Amount of compensation owed: zero. Amount we should give for other reasons: as much as we can reasonably afford. Let’s give through compassion and generosity and feeling of common humanity, because we can and because we want to, not because we are being forced.