The Automation Hump

In the previous post we seemed to hit a hump. In the long run we have all the energy, resources, and manufacturing we need, but it seems that no one has a job. The path to the future seems to be:

1. Automation
2. ??????
3. Utopia

I think today we are all stuck on what that second step is. The fear is it will be more like:

1. Automation
2. ???????
3. Dystopia

Is Universal Basic Income the Solution

Before Andrew Yang pushed his idea of a Universal Basic Income (UBI), I came to a similar conclusion as a solution for poverty. On the Media did a series called Busted: America’s Poverty Myths. The big takeaway I had is there is no specific type of poor person. I think the only consistent thing you can say about the poor is they have less money than the rest of us. So one solution is to just give them more money. Also many people don’t get benefits not because they wouldn’t be eligible, but because they don’t have the time to jump through the hoops of the bureaucracy. Largely because they are too busy going to their minimum wage job. The UBI gets rid of the bureaucracy and puts the money in the hands of the people who need it the most. It is also not a new idea Richard Nixon actually look at proposing something like this in 1969. It is even now a bill put forward in California.

Stress of Change is Reduced

UBI goes forward and gives everyone $1,000/month. Automation also starts displacing people. It is still an open question if new jobs replace the old ones that existed. Even if there are new jobs, training may also be needed so you may be looking at a lot of displaced workers. However, all those people are guaranteed a softer landing than before. Also the economy may also grow. The tax cuts of the past that went to the rich do not trickle back into the economy it just gets added to their savings. Money that goes to the poor immediately goes back in the economy providing growth.

Labor Becomes Mobile

In some cases with public assistance there was a residency requirement to get on assistance. So even if you wanted to move to find a job if you are poor you can’t afford it due to loss of assistance. With UBI this stops being a problem.

The Path to Bespoke Capitalism

The 2008 financial crisis led to job losses. People eventually recovered, but one part of the recovery was people starting their own businesses. There are many people who were in unfulfilling careers for some of them the downturn in the economy led them to find their own path. Once again with some level of guaranteed income it makes it easier to try something new.

One thing mass production gives us is a bunch of cheap and standardized goods. On one level this is good on another it leads to a bunch of homogenized culture. As the basic needs are met there is a need for individualization and customization. A major coming change is 3D printers, you can create your own custom objects or easily find downloadable content.

The economy grows due to the infusion of money at the bottom from UBI. Also the demand for uniqueness grows in both physical and non-physical goods. Services like Netflix, Hulu, and Amazon Prime have changed how we find and consume entertainment. It has also opened up a bigger demand for content. Technology also has lowered the cost enough that making content for narrow markets. We also have a small barrier of entry in making content thanks to YouTube and the various blogging tools.

Switch to the Long Tail

Big business by its size needed to focus on the most popular and most good it could sell. Smaller business can look at the long tail of the distribution. Instead of focusing on the desire of the masses (the green part of the graph) you focus on the thousands or even individuals who are looking for custom goods or content. It is not the recipe for a big business. It is the recipe for many small businesses. Finding the right customers may be a challenge but we have managed with UBI to add once again a buffer to failures.

Getting Over the Hump

So here we can add some of the paths to the Bespoke Capitalist future:

1. Automation
2. Productivity gains reduce working hours due to same level of productivity/hour.
3. Job losses happen due to contraction of labor demand.
4. UBI helps to strengthen the economy by infusing more money at the bottom.
5. More leisure time increases demand for custom goods and experiences.
6. More small business takes up the custom demand for goods that large industry finds unprofitable.
7. Utopia?

While there are a lot of questions this is a future we can all hope for.