Thursday, 21 August 2014

09:40 – Here’s a headline I didn’t want to see: Winston-Salem ranks high in national poverty study

Winston-Salem was second to Colorado Springs by this metric, which essentially measures the growth rate of formerly middle-class people in the suburbs falling into poverty as a result of long-term unemployment. It doesn’t mean that the city is the second-poorest in the nation. Far from it. The city itself is actually excluded from this study, which counts only the surrounding suburban and exurban metro area. In terms of numbers and percentages of people in poverty, the Winston-Salem area is far from the worst in North Carolina, let alone the rest of the country. What’s disturbing about the results of the study is that the Winston-Salem metro area has experienced very fast growth in the numbers/percentages of formerly middle-class people who are now living lives of quiet desperation. Their unemployment compensation payments have run out–North Carolina has by far the stingiest unemployment insurance in the nation, both in terms of amount and duration–and they are now surviving on little or no income other than welfare and food stamps. Many married couples where formerly both were employed are now down to one income, and barely making it on that one income.

As I’ve said before, welcome to the new normal, the post-employment society. Even as manufacturing continues to grow in the US–which it has done every year for the last several decades–manufacturing employment continues to fall, as it has done for the last several decades. Factories that employed 5,000 workers were replaced by factories that employed 500 workers, which in turn are being replaced by factories that employ 50 workers, and the output has increased with each reduction in employee head-count. Not the output per employee, you understand, the absolute output. Many manufacturing employees produce literally ten times what their fathers did, and 100 times what their grandfathers did. Robotics is the death-knell for manufacturing employment. Robots are much cheaper than people, and do much better work.

The good news is that the output is all that matters, and manufacturing output is ultimately purely dependent on capital. Ignoring allocated capital costs and profit, something like 99.9% of the price of anything you buy is a result of labor costs. If labor costs could be eliminated entirely, the only costs that remain are allocated capital costs and profit, which are a very small percentage of the whole. (Materials costs are really just disguised labor costs: excluding allocated capital costs and profit, the cost of that ton of steel that goes into a new vehicle is very low. What costs money is getting it out of the ground, smelting it, and transporting it.)

So, the obvious problem is that we have robotically-produced BMWs and TVs and food and everything else consumers want. They’re all incredibly cheap, but no one has a job or any income, so no one can afford to buy anything. There is no consumer demand, so all the factories stop making things and shut down. That’s why I and many other libertarians advocate the Basic Income.

The Basic Income simply means that every adult US citizen gets a check every month from the government. There’s no means testing: we all get the same amount, whether we’re destitute or Bill Gates. That amount might be set at, say, $1,500 per month. And it replaces every government social welfare program at every level from local to federal. No more Social Security, Medicare, Medicaid, AFDC, etc. etc. No more government or military pensions of any type. No more bureaucrats overseeing all these hundreds of social welfare programs, either. No more subsidized government housing or medical care. No more subsidized government anything.

So, like every other married couple who are US citizens, Barbara and I get $36,000/year automatically from the government. We don’t have to work for it; it’s automatic. Bill and Melinda Gates also get $36,000/year, as do all those unemployed married couples that newspaper article was talking about. And any of us that choose to work can earn as much as we like or we can, without affecting our BI payment.

But, as people always ask, what about the huge costs involved in such a program? I always reply, “What costs?” We are already paying them, directly and indirectly. BI is simply a redesigned, much more efficient means of income redistribution than what we have now.