[old-gregg]

I think their disagreement stems from the difference in how they define "poor". Gates is certainly right (it just takes a bit of traveling to agree with him) that hungry-and-dying type of poor is rapidly disappearing all over the world.

But if you look at living-hand-to-mouth poor, I can understand John's reasoning. Yes, average incomes (productivity) have gone up but you also see how prices on commodities are rapidly raising in the developed countries to make up for that. [1]

This makes me wonder if the universal basic income is ever going to work. Look at insane costs of healthcare/education in the US - no doubt caused, in part, by "free money" either through government-assisted programs or employer-sponsored insurance.

Perhaps it's an inherent property of capitalism: some things always end up barely within reach of a lower class.

[1] Hence the need for things like http://en.wikipedia.org/wiki/Big_Mac_Index

[bsbechtel]

>Perhaps it's an inherent property of capitalism: some things always end up barely within reach of a lower class.

I wouldn't say that's true, we just need to figure out ways to produce those things cheaply enough (through automation, other technologies) that everyone can enjoy them. Take a look at agriculture in the US...even the poorest people here have access to (not very healthy) food whereas just under 100 years ago many were starving in the Great Depression. This is because agricultural technology has led us to an abundance of cheap food that everyone can afford at some level or another.

[unclebucknasty]

>we just need to figure out ways to produce those things cheaply enough (through automation, other technologies) that everyone can enjoy them

But, therein lies a paradox, right? I mean, when you seek to lower the cost of production through automation, technology, etc. you wind up displacing human workers, reducing labor demand, and putting downward pressure on wages. BTW, I'll add that lower wages are another significant way that companies reduce costs/prices.

The net result is that profits increase, which benefits a relative few rich, while the quality of life for many is reduced or stagnant at best.

In other words, this "race-to-the-bottom" walmart-ization of our economy seems to be, in large part, responsible for the income disparity we see today. Perhaps the poorest who would otherwise starve are benefited (even if through entitlements or aid which can now go further), and of course that's a very good thing. But, on balance, the world's wealth is accumulating to a very small number of people at an accelerating pace.

[kamaal]

>>But, therein lies a paradox, right? I mean, when you see..ay that companies reduce costs/prices.

There is hardly a paradox. Automation causes small term problems but great long term benefits. I won't go too far in history. But as early 1980's India saw massive protests and Nation wide bandhs to protest introduction of computers(and other automation) in the country. People just could not get themselves to accept that their jobs will be replaced by machines. But that event came to pass anyway. Many problems to people of that era in India, are even unknown to the youngsters in India now.

>>The net result is that profits increase, which benefits a relative few rich, while the quality of life for many is reduced or stagnant at best.

Again, I completely disagree. If you keep changing the definition of poor frequently then its nearly impossible to eradicate poverty ever. Poverty today is nothing like what it was even a century ago.

>> the world's wealth is accumulating to a very small number of people at an accelerating pace.

The world's wealth will always accumulate at places, professions and people which benefit from economies of scale. It doesn't matter which system of economics those people are in.

[kiba]

In other words, this "race-to-the-bottom" walmart-ization of our economy seems to be, in large part, responsible for the income disparity we see today.

It does the poor no good if they can't even afford the cheapest good.

[bsbechtel]

You guys are opening up a whole other can of worms getting into labor. We tend to think of labor as a cost of production and something to be minimized. Maybe we need to start thinking of labor as a (actually, the main) party responsible for creating the value the firm produces for society. Anytime value is created, it can go to 4 parties - the consumer (lower prices), the government (taxes), the shareholders (through profits), and the employees (labor wages). Maybe the reason our economy is so screwed up right now is because employees are getting a smaller and smaller share of the pie, not because technology is displacing jobs. If more people are out of work because of technology, great! That means we have more people who can go work on things like curing cancer and colonizing space :-)

[fennecfoxen]

> Maybe we need to start thinking of labor as a (actually, the main) party responsible for creating the value the firm produces for society.

Right. That's pretty much straight Marxist ideology. (I say this as a matter of fact, not as a matter of denigration per se.)

Idea for you.

It's a free country, relatively speaking. So if labor is truly primarily responsible for the value in something, perhaps you and a bunch of laborers should get together and start a business providing value to people, and paying lots of money to the labor. Assuming the labor is the primary thing that generates value, it should be easy - in fact, they can attract the best labor by paying more than they'd get in a regime which does not value their output.

If, however, you find that it is really hard to get started because it takes a lot of money to buy equipment (or to pay salaries of people programming vast troves of computer-code, which is more or less custom-manufactured capital)... if you find that it's hard to get started with labor alone, then you've effectively demonstrated that capital provides a significant part of the value.

Silicon Valley may provide a few interesting case studies for you if you wish not to do the exercise yourself at this time.

[unclebucknasty]

There is no need to test whether capital provides value, as it obviously does. Your parent was speaking to viewing labor as providing the primary value.

I noticed though, that your test's premise started as a means to challenging your parent's assertion that labor provided the primary value (i.e. you implied that capital provided the primary value). But, your test's conclusion was that capital provided only significant value, which no one is arguing. Apparently, you couldn't bring yourself to conclude that capital provided the primary value, perhaps because your test doesn't prove it.

But, I have an exercise for you. Imagine starting a company with very little capital, but plenty of labor (i.e. people willing to work for a share in future profits). Now, imagine starting a company with $1B and no labor.

In any case, regardless of which you deem technically "most" valuable, there is still the question of degree: that is, do the rewards accrue to the parties proportionate to their value?

[bsbechtel]

I actually run a painting company where we pay our employees roughly double the industry standard, and we're one of the (if not the) fastest growing painting companies in the state we are located. As owners, my business partner and I are investing every penny we can back into R&D and new technology to improve our efficiencies. Both provide value.

[unclebucknasty]

Good points. Of course, I'm going to quibble a little, else I wouldn't be replying!

>...our economy is so screwed up right now is because employees are getting a smaller and smaller share of the pie, not because technology is displacing jobs"

But, the two are related right? When tech displaces jobs, which it of course has, then there is lower demand for labor and the price of labor (wages) goes down. There are other forces as well, but all primarily stem from a drive to keep costs (and hence prices) down, while keeping profits up.

>If more people are out of work because of technology, great! That means we have more people who can go work on things like curing cancer and colonizing space :-)*

I know that was half tongue-in-cheek, but would that it worked that way! Alas, what we value economically versus what would benefit us as humans are too infrequently aligned. There will come a day though, when only a tiny fraction of the population will be "neccessary" to create what the world produces. It will be interesting to see how society realigns itself and evolves when so few people need to do traditional (economic) work.

[kamaal]

>>There will come a day though, when only a tiny fraction of the population will be "neccessary" to create what the world produces. It will be interesting to see how society realigns itself and evolves when so few people need to do traditional (economic) work.

We are already there, and we seem to be doing just fine. I guess only ~3% of US population today works in farms compared to >70% a century back. The only thing is work keeps changing. People have better things to work on. That has always been the trend since mankind even existed.

If the effort required to produce something goes down, prices too go down significantly.

[w1ntermute]

> That means we have more people who can go work on things like curing cancer and colonizing space

Labor isn't 1-for-1 substitutable. You can't take a 50 y/o manual laborer with a high school education who's been displaced by robots and just turn him into a cancer researcher or rocket scientist.

[bsbechtel]

It's not, but humans are dynamic beings who can learn new skills, not stagnant machines with one single function. 100 years ago half our population was illiterate, yet we overcame the displacement of thousands of farm workers due to technology. We will continue to do this throughout history again and again.

[unclebucknasty]

I could read that two ways and I'm not sure which you intended.

1.) That no matter how cheap we make things, it does no good if the production of those goods causes some to be so much poorer (even down to zero) that they still cannot afford it.

If that's what you meant, then we are in agreement.

2.) That we need to make things cheaper however we can, so that the poorest can afford it.

If that was your point, then well, that's the paradox. Some are poor (or poorer) because of the measures taken to produce cheap goods.

I think you meant 1.) but wasn't sure.

[bsbechtel]

I meant there is still lots of technology to be developed that can make many goods much cheaper than they are today, and as they become cheaper due to technology, then more people will be able to afford those goods.

I wasn't really thinking too deeply on how the cost of labor affects the price of goods, but I tend to have the general attitude that if everyone in a firm (including management and the owners will accept 0 profits) wants to work for free to make their goods the cheapest on the market, then they are free to do so (and there is a reason you don't see this in our society...it doesn't last long). However, I think it's a crime, and a serious problem when shareholders and top management reap billions in profits off the backs of thousands of wage workers who earn $7.25/hr and then rely on government welfare programs to support themselves...that's basically the government subsidizing cheap labor for big corporations.

[saalweachter]

Well, sort of.

In the US, about 85% of households are "food secure". Non-capitalist sources -- eg, charities or government assistance -- close the gap for about 9% of households, and in the remaining 6% of households one or more people are missing meals.

I don't really think that's a success.

[JumpCrisscross]

Being able to complain about 94% food security is something of a social miracle, in the grand arc of history.

[1stop]

Well sure if you limit your sample size to "The richest country in the world" then yeah you are doing great! 5 Stars! The world is perfect. Go Team America!

Meanwhile there are more people than the entire population of the US starving else where. I'd hazard the guess that that's worse than at any other time in history.

[seanmcdirmid]

> Meanwhile there are more people than the entire population of the US starving else where. I'd hazard the guess that that's worse than at any other time in history.

Considering that there are more people now than at any other time in history, this almost always a safe and lazy guess to make (that their are more people in situation X than at any other time in history).

[1stop]

Right, which is why I made it. But to use that as an excuse is to say: "An individual Human life is worth less now than before", which is at the very least controversial.

[saalweachter]

Yeah, I'm not sure whether to say "only 85%[1]" or "a full 85%". Regardless, it's less than the 100% we should be aiming for.

[1] Side quibble: 94% is capitalism + socialism; capitalism alone is only giving you 85%, and that's if you don't count minimum wage as non-capitalist.

[mattmcknight]

charity isn't socialism.

"Socialism is an economic system characterised by social ownership of the means of production and co-operative management of the economy" - http://en.wikipedia.org/wiki/Socialism

[saalweachter]

"capitalism + redistribution of resources by the state", if you prefer. But I fear the American-English battle for the word "socialism" is lost.

While food banks are important, as nearly as I can tell most people aren't relying on private charity alone. (I wasn't able to find a number online, but the numbers I did find were that a boatload of people are relying on SNAP, and a huge fraction of the people on SNAP are also relying on food banks, and that number is roughly comparable to the number of people who visit food banks each year, so the number of people who visit food banks without relying on SNAP must be quite small.)

[pistle]

Which is good enough... let us be judged against hunter gatherers. We kick ass.

[old-gregg]

Very true, that's why I say "perhaps... some things". While technology may have worked well for food, I just don't see how this can be applied to housing, education, healthcare, legal expenses and taxes [1]: these tend to expand/shrink based on how much money you have and "pin" the poor to a certain "ceiling" of disposable income leading to the perpetual hand-to-mouth cycle despite encouraging growth of metrics like GDP/capita.

[1] This BTW may explain why new middle class in emerging economies tends to consist of real estate people, doctors, lawyers and (true in ex-USSR countries) government bureaucrats: they get to benefit from growing GDP first.

[bsbechtel]

I'd say you're just not thinking creatively enough. Manufactured homes significantly reduced the cost of owning a home, and just the other day I saw an article talking about 3D printing homes with concrete and how it could drive the cost down even further. The same goes for the other things you mentioned....flood the market with doctors and healthcare costs would go down, we just need med schools to accept more people instead of limiting their enrollment to drive up tuition fees because they want their school to be prestigious and 'the best'. The poorest people can and deserve access to the many goods the wealthy enjoy, we just haven't figured out the technology and economics in each of these areas yet to do it :-)

[kiba]

Manufactured homes significantly reduced the cost of owning a home, and just the other day I saw an article talking about 3D printing homes with concrete and how it could drive the cost down even further.

The problem is the cost of land, not the manufacturing of homes, per se.

[kamaal]

Its both actually. Land cost is largely addressed these days by large rising apartment housing complexes.

[bsbechtel]

That's a fair point.

[belorn]

> housing, education, healthcare, legal expenses and taxes

Interesting grouping, as each is more or less fully depended on government to limit supply and create scarcity. The only really exception looks to be housing.

Education is information, and information is only held limited thanks to copyright.

Health care seem to spend most of its money to pay for patents.

Legal expenses differ strongly between countries and different legal system. Some demand the loosing party to pay for both sides, some demand that both side pay their own costs, and lastly some ask government to provide/pay for legal aid. In system where looser pay (or government), there tend to be limits on how much a lawyer can demand.

[Domenic_S]

> even the poorest people here have access to (not very healthy) food

I saw just a story yesterday (?) on I think KPIX news of a family bringing in less than $1700 a month (living in San Jose mind you) and they filmed her going to the food bank. Her grocery bags were filled with fresh produce! I thought that was pretty neat.

Maybe staged for the cameras or a lucky break.

[wavefunction]

Food banks and their volunteers try to provide the healthiest food they can, but often-times are dependent on donations. I am lucky to volunteer with some folks at one and it's like Christmas morning for us when we've got fresh fruits and vegetables to handout to folks!

Most food banks are barely scraping by on whatever hard-work and good-will the volunteers and their community are able to muster.

I would prefer to see this family (probably working pretty hard right now) to make a living income, with their children seeing the rewards that their parent's hard work and discipline has brought them.

Maybe not spending $75,000 on artisanal strippers in one night, but a fulfilling life of self-agency.

[specialist]

"Look at insane costs of healthcare/education in the US - no doubt caused, in part, by "free money" either through government-assisted programs or employer-sponsored insurance."

Huh?

Even with the modest ACA reforms implemented to date, the growth of healthcare costs has already slowed down. First time since the 90s.

Medicare, which is most akin to single payer in other countries, is the most efficient guarantor (highest medical loss ratio). Long term cost reduction requires extending Medicare to all and embracing the capitation model. Bonus points for resuming prior levels government funded basic R&D.

Tuition costs are rising as subsidies have been removed and student loans have been privatized. The combination created a bubble. Which happens often enough when deregulation and privatization co-occurs, that my hunch is it's casual.

So while universal basic income may prove to lead to inflation, your two examples do not support that argument.

[mattmcknight]

"Even with the modest ACA reforms implemented to date, the growth of healthcare costs has already slowed down."

It's sort of hard to parse what you are saying, but the growth in spending (not costs) went down before the enacting of PPACA. This is likely due to the recession, and something of a counterpoint to those that claim healthcare is subject to inelastic demand.

Having the highest medical loss ratio is not equivalent to being the most efficient, as many services do not warrant claims. Capitation is inferior to market pricing in many ways and not "required" to reduce costs. Another solution is to force providers to charge a single posted price to all consumers, instead of practicing price discrimination. This achieves the purported benefit of single payer, while still allowing for people to choose how much they want to spend on medical services.

Tuition costs rose as subsidies increased. Without subsidies, they couldn't have risen. This created a bubble, which often happens when the government provides price insensitive support to markets.

I am not saying that these are the only answers, but you seem awfully sure of some counterfactuals...

[specialist]

"Capitation is inferior to market pricing in many ways and not "required" to reduce costs."

Don't confuse markets with incentives.

"Another solution is to force providers to charge a single posted price to all consumers, instead of practicing price discrimination."

Not mutually exclusive.

"This achieves the purported benefit of single payer, while still allowing for people to choose how much they want to spend on medical services."

Until there's price collusion, an oligarchy, natural monopoly. In other words, the exact situation we had with the "free market". (The healthcare exchanges have introduced competition.)

"Tuition costs rose as subsidies increased."

What subsidies? State funding for higher ed has fallen thru the floor. Given the current trend, most public universities will be 100% tuition funded in a few years.

"you seem awfully sure of some counterfactuals"

You mean reality? I worked in healthcare and now higher ed. I'm reasonably sure I know the score.

[mattmcknight]

>Don't confuse markets with incentives. I'm not confusing markets with incentives, I am suggesting that markets are the best known means of finding prices. Forcing capitation reduces the creation of new business models. The model already exists (in insurers like Kaiser that provide their own services), and can be chosen by consumers when appropriate.

>Not mutually exclusive. Didn't say they were, but you used the word "require", implying there is only one way.

>Until there's price collusion, an oligarchy, natural >monopoly. In other words, the exact situation we had with > the "free market"." The health care providers of the US do not consist of a monopoly and never have.

>(The healthcare exchanges have introduced competition.) No, they have reduced competition by declaring that you can only offer one of four products to consumers and by regulating the pricing. In many cases, the exchange features only one product.

>"What subsidies?" Loans and grants. State funding for private universities hasn't fallen through the floor, yet their tuition continues to rise.

The common thread is that subsidies on the consumer side (in higher ed, healthcare, and home ownership) increase demand and thus increase prices.

>>you seem awfully sure of some counterfactuals" >You mean reality? I worked in healthcare and now higher ed. >I'm reasonably sure I know the score." No, I mean counterfactuals, where you suppose how the world would be different if some set of things that didn't happen did happen. (e.g., if state subsidies for higher ed hadn't fallen over the past 10 years, private tuition costs wouldn't have risen faster than inflation for the past 30 years)

I didn't mean to make a personal comment there, I just tend to fixate on little things like when the confidence level seems to be overstated. Surely these things are rather complex, or they wouldn't be such difficult problems to solve.

[dllthomas]

"The common thread is that subsidies on the consumer side (in higher ed, healthcare, and home ownership) increase demand and thus increase prices."

But it is worth noting that in the long term that is only if there is something preventing the industry from growing (limited resources, barriers to entry). Otherwise, supply will respond to the increased demand and prices will be driven back toward the cost of production.

[yummyfajitas]

Medical loss ratio is a stupid metric. A simple way to increase it: reduce fraud protection. For example, suppose you reduce fraud protection by $1, resulting in an increase in undetected fraud by $2.

Medical loss ratio = (med cost + $2) / (admin cost - $1) will go up.