The problems that the author describes are real, but IMHO he attributes them to the wrong cause. They are not caused by efficiency per se; they are caused by the enormous increase in the productivity of Capital relative to Labour.
There has been a 'cold war' between Capital and Labour for almost 200 years now, and it seems clear to me that we are currently witnessing the final victory of Capital. As the author describes, it is now possible for one person to create an idea, build a widget (particularly if it is a software widget) and distribute that widget to the whole world, because of the vast amount of productive Capital that has been created and is available for his/her use.
As hackernews readers who work in great startups know, the power of a small group of talented and committed people is astonishing in the modern world - because of the 'force multiplier' effect of Capital.
So what to do? (and the answer is not to 'reduce efficiency' or eliminate public corporations, heavens)
The answer is that in order to prosper, you must become a master of Capital. You must be able to use all the wondrous force-multiplier tools at your disposal. If you cannot, if you are rather dependent on your Labour to earn your crust, then in today's world you are going to be a peasant. This might be hard to hear (although probably not for HN readers) but it is true.
Of course, being able to use all this Capital requires education, and so at society's level, the solution lies in massive boosts to education funding. It seems blindingly self-evident to me that in our Capital-dependent world, tertiary education (university or vocational) should be provided free for all, paid for by the state. In fact, education is becoming more expensive globally; this trend is extremely pernicious, is causing massive problems and should be remedied as fast as possible.
The cost of this education provision is irrelevant - it is an investment that will repay itself many, many times over - and in any case it is well within the developed world's grasp. The total cost to the US of the Iraq war is at least $2 trillion. How many college educations would that have paid for?
The owner of capital in a knowledge society is those who have information. The "workers" in the information industry are the owners of their own means of production, namely their knowledge.
So I would slightly adjust your answer and say, it's a matter of becoming the master of your own means of production which means. Educate yourself and learn as much as possible. Every time an employer fires you or you move somewhere else you are taking your capital with you (the means of production)
But I would caution against talking about education. It's not about education it's about knowledge. Knowledge which can be acquired in so many other ways than education. In fact I would say the less your knowledge is based on education the more unique your knowledge is and thus the more valuable you are.
I agree with a lot of what you've written, except for one of my favourite topics that you've stumbled across--- the idea that increasing education funding will result in more education. I've pointed out a couple of times on hn that Canadians spend about $3000 less per student per year than Americans, and yet Canadian students consistently rank higher on average than American students.
By making clear that if you have the brain & brawn to work, and you don't produce, your needs WON'T be met by compulsory redistribution of the wealth of those who did.
By telling (and enforcing) students that if they do not achieve the performance standards set then they will not, because they CANNOT, take on more advanced material.
It's tragic that so many students get so far before they experience the message "if you don't do the work you won't pass the course."
One thing I've noticed is that education in the US seems to be lax until high school. At high school, the teachers ramp up the work that the students have and, because this increase in work is sudden, the pressure becomes more on getting the work done and turned in rather than actually learning the material. The problem with this is that this attitude of getting the work done vs learning the material hurts each student in college.
I agree that students are lax in college however, in my opinion, it is simply a reaction to being unable to cope with the increased responsibilities and pressures (not only academic but financial and social as well)
Perhaps one solution is to slowly increase the difficulty of elementary and middle schools. The goal would be to improve the work ethic in this country.
Another solution is to make it a necessity to perform well. In many colleges, the final grade is the only one that matters and this leads to students cramming before a final and then promptly forgetting the material. I don't see the work ethic in most American students I see in my Indian peers and my Chinese and Japanese friends.
You are here looking for "Super People". Young 20 something, learning and working hard in large scale problems. Great. They might make it big, and that's what we are looking for.
But don't confuse this with education. They'll educate themselves, and they'll pick the things/fields that they need and learn them better than you can do in a college. They'll figure out, they have super minds.
But you don't have lots of Super People. Fine. Make use of the ones you have, attract them from others countries, and build an environment that can generate them. That's all.
Now the guy making $100K/month selling his iPhone app, is probably in need of someone to do something for him. And he can afford to pay him generously. Home cleaning, food cooking, Home repair, Real Estate. He pays generously. So the other person benefits from this pay increase.
Unemployment problems solved. Yes, there will be a guy making $200K/month, and other one struggling to make $3K/month. However, the poor guy is already at benefit. He has access to an intelligent car, phone, Internet services, TV... that wouldn't be accessible without that super mind.
I think you have this backward. The main purpose of those market efficiencies is to get people to buy more shit by making said shit cheaper. This applies to electronic devices more than anything else.
I know a lot of people in the lower income brackets. I know literally nobody who doesn't have a cell phone.
Could you explain how "massive boosts to education funding" would solve this problem? I'm sure you could boost the number of degrees held by this method, but why do you believe you would create more "masters of capital"?
Also, you do realize that if you subsidize something more, you are likely to increase demand for it and raise prices further, right?
It isn't always true that subsidizing something increases its demand and thus its price. So it must be argued that this would be so in this particular instance.
By increasing higher education spending, while limiting the number of people who get in, we could create a system of free higher education. Such people, being released from the present system of debt burden when they graduate, might contribute more to economic growth. It might not work out that way but it could. I have no data either way except to say that in the U.S. the so called greatest generation mostly had free higher education.
Of course increasing higher education funding and spending it unwisely wouldn't be of much benefit.
How will we limit the number of people who get in? On what criterion?
One of the amazing things about the United States and several other countries with a mixed non-system of higher education, including both "public" (government-operated) and "private" (independently operated, but often heavily tax-subsidized) institutions of higher education is that almost anyone can get a higher education. Some get a higher education by having good credentials, and others get a higher education by having money, but almost anybody who desires to pursue higher education can pursue. By contrast, countries with "free" (list price near zero for students, because of taxpayer subsidies) systems of higher education usually have worse access to higher education and lower quality universities besides. Which system do you think offers the better trade-offs to the whole society?
After edit: the current university student I know best has so far not had to spend out of pocket to enroll in his degree program. He attends a state "flagship" university with a strong program in his intended major of computer science, and through the university's policies on need-based and "merit" scholarships, including the National Merit Scholarship, he has had an essentially full ride (tuition, fees, room, and board expenses) to date, while being able to find lucrative summer work as an intern at a local company. There are already some good paths to higher education for the young person who works hard preparing academically while of high school age and who pursues a major with significant problem-solving value in the free enterprise economy.
I was replying to the stated belief that increasing funding for education would cause an increase in demand and thereby increase the price of education. I merely posited that this wasn't necessarily the case. Indeed, if one controls demand by limiting access then the argument about prices necessarily increasing collapses.
Your reaction appears to be emotionally charged. Society is not prepared to provide the funds necessary for universal access to free higher education. Therefore some form of rationing has to occur.
A large percentage of students who graduate do so with a lot of student loan debt. Apparently it isn't the case that everyone can go to university for virtually free in the present system in the U.S.
If you read what I wrote I didn't claim you said that price would increase. Since it isn't necessarily true that the price of education would increase given more subsidies for it then one should argue that this is likely to be the case in this instance. Indeed, it seems unlikely to be so to me because it's easy to limit the demand.
But capital in itself isn't productive. What you saying is you can just produce/distribute/market a product for less than you could previously. I.e. your money goes further.
In order for this to be the case there must be reasons why this capital is so much more productive - one could then easily argue efficiency and/or cheaper labour.
I agree with you on many levels, especially on education. But I can't really compare Capital and labour in the same way you have - it's not either or.
And where are 20 year olds to aquire capital from? Who gets the greater % return on investment...the capital owners. Hence, Rich get richer. Poor and young get poorer, work harder for smaller crusts. The economic cycle repeats. Just faster. Thanks to automation.
Capital's multiplier effect includes all society's wealth available to you -- you're richer because you can buy aluminum foil for $1 a roll when it used to cost more than gold; richer due to COTS computers available at white and glass stores worldwide; richer due to the Internet; and richer due to open source software.
Even a poor person today has access to potentially far more labor-amplification than anyone in the past.
But people adjust to new stuff, so it doesn't contribute much to their happiness. But psychological things like lack of economic security,haviong time to be with yur kids and friends, being treated as shit at you're job, and you're relative wealth and status are what matter to humans.
Things like security, power, status and time(freedom) were always at the core of what it meant to be rich.
But do are new technological societies offer more of those things ? i'm not sure.
Let me just say, as a fellow white middle-class guy, you can't eat aluminium foil or COTS computers available at white and glass stores worldwide. Food prices are a larger percentage of average income than since records began. I would disagree with your definition of "wealth" on those grounds alone.
It is fairly easy for one person to live off of $20 of food a week. I say this as someone who has done it in a major east coast city, without ever clipping coupons, buying in bulk or buying on sale.
You can feed yourself for less than 1 hour of minimum wage a day. At no point in history has food been this cheap.
edit: Just in case this becomes a thift-fight, my $20 is relatively high as I was eating +2500 calories a day (running and bicycling a lot). And most of the time I'd be under $15, but the remainder would be spent on treats.
I have no idea what my calorie intake is, but I eat lots of fresh fruit, vegetables and meat, and I spend $200/ week. So, I'm curious what one's diet looks like when spending $20/ week. I'm not sure what else one could eat other than Ramen on that budget, and then I question the nutritional value of those calories. Just curious if you could give a better idea of what such a diet consists of?
Ramen was actually too expensive for me. (Spaghetti has identical nutritional information and costs less.)
If you are buying food on a minimal budget, you go calories per dollar (which I'll abbreviate as C/$). If you have money left over, nutrition per dollar.
Set a target - if you want to spend $14 a week, avoid buying foods that do worse than 1000 calories/dollar.
Sugar is 4000 C/$, flour and rice are about the same. Olive oil is 1000 C/$. Ice cream, 700 C/$. Oatmeal, 2000 C/$. Whole milk, 500 C/$. Potatoes (even instant flakes) and peanut butter are also good deals. Eggs and beans are cheap protein.
Vegetables are a bit trickier. Kale for instance is only 140 C/$. An all-kale diet would be $100 per week! Wheat sprouts were the best I could find at 400 C/$ (and that jumps to 700 if you can find a local supplier). Fruit is also tricky. Grow your own if you have space. Raspberries have great yield, require no effort besides picking them and grow almost everywhere. But I'll assume this is not an option.
Meat is stupidly expensive per calorie. Spam is one of the better deals at 400 C/$, but I do have standards.
So anything cheap becomes a staple. Work these into being a large part of every meal. A lot of my breakfasts were "something on oatmeal" and a lot of my dinners were "something on rice". But the more you fill up on the cheap stuff the more money is left over for nice things.
The nice stuff you "ration". For example, I limited myself to at most 8oz kale and three pieces of fruit a day, as well as 8oz of nice steak a week.
Of course, budget a few bucks to flavor - soy sauce has no calories to speak of but it makes rice much more palatable.
Probably the biggest way to save money is to never eat any food you did not make your self. Lots of clever ways to do this. For example, lunch at work: fill a vacuum thermos with rice and boiling water, and it will be done in 90 minutes and keep hot until you eat it.
Can I afford to eat out all the time? Sure. But I like to cook and this is a fun little numbers game.
Thanks for the breakdown. It looks like you've put some significant time into getting those numbers and I'm going to keep them for future reference.
Our approaches aren't all that different as I cook all my meals at home now, but because I've forced myself to do this, I allow myself to buy whatever I want at the store. This gets especially expensive at the specialty meat store.
Good god man, $200 a week? How much meat do you eat?
Meat's expensive, but that is still a huge sum for just one person. Do you eat a lot of prepared food as well? Snack foods, boxed cereal, frozen prepared meals, etc.?
I spend between $100 and $150 a month feeding my family of four. Very little meat, lots of fruit and vegetables, eggs regularly, beans all over the damn place. The most expensive things in our diet are nuts, and next in line is the eggs/dairy.
And honestly, we only spend this much because we're not very disciplined. We could fairly easily keep our bill under $100 a month with better storage and more reliance on bulk foods.
I also hit somewhere in the the $100-200/week, especially if you include wine. And that is basically doing all my own cooking and no prepared meals. Meat is a large part of it, as is fresh fish, but I eat less meat the many people I know, however when I do buy meat I buy the best quality I can find. Basically I don't buy more than most people, but I tend to buy the more expensive stuff in each category. Especially my Cheese monger can see a 'sucker' from a mile away and always manages to convince me to buy something hideously expensive he's just imported from France.
I have no doubt that I could easily get under $100 a month if I had to, but I love food, love to cook, and have the money, so I see no reason not to spend that money on food.
I think he means you have easier access to means of productions. Which means you can produce and distribute, while in the past it's hard/almost impossible. A good example is a guy that made a cover for the iPad. This wouldn't be possible if the means of production are not accessible.
I think his message was that education IS the capital. By giving opportunity to people to acquire education and turn it into knowledge, people will have better chance of having a quality life.
As for the article, it starts off with good logic but then tends to be oversimplified and ignorant. There are many variables that have to be considered when discussing this type of subject and efficiency is just one of them.
But wait, education is pretty much free already. You can watch all of Stanford's lectures online. You just don't get a piece of paper saying you've been to Stanford. But that certification does not seem relevant to your point.
Businesses are investing capital in automation rather than hiring people in large part because laws artificially inflate the cost of labor. The government keeps making it worse with things like obamacare. I'm pretty sure CVS would rather have plenty of cashiers rather than self-checkout machines, but hiring them has become uneconomical despite very high unemployment.
I totally don't understand this perspective. I use automated checkout at every opportunity – despite the fact that it sucks – because the sooner people never have to suffer the indignity of being a cashier again, the better! Repetitive, dehumanizing jobs are a means to an end for those with no privilege. The challenge of this century is to find better means to that end.
There has been a 'cold war' between Capital and Labour for almost 200 years now, and it seems clear to me that we are currently witnessing the final victory of Capital. As the author describes, it is now possible for one person to create an idea, build a widget (particularly if it is a software widget) and distribute that widget to the whole world, because of the vast amount of productive Capital that has been created and is available for his/her use.
As hackernews readers who work in great startups know, the power of a small group of talented and committed people is astonishing in the modern world - because of the 'force multiplier' effect of Capital.
So what to do? (and the answer is not to 'reduce efficiency' or eliminate public corporations, heavens)
The answer is that in order to prosper, you must become a master of Capital. You must be able to use all the wondrous force-multiplier tools at your disposal. If you cannot, if you are rather dependent on your Labour to earn your crust, then in today's world you are going to be a peasant. This might be hard to hear (although probably not for HN readers) but it is true.
Of course, being able to use all this Capital requires education, and so at society's level, the solution lies in massive boosts to education funding. It seems blindingly self-evident to me that in our Capital-dependent world, tertiary education (university or vocational) should be provided free for all, paid for by the state. In fact, education is becoming more expensive globally; this trend is extremely pernicious, is causing massive problems and should be remedied as fast as possible.
The cost of this education provision is irrelevant - it is an investment that will repay itself many, many times over - and in any case it is well within the developed world's grasp. The total cost to the US of the Iraq war is at least $2 trillion. How many college educations would that have paid for?