The Future of Work [1]

The Invisible Elephant

Value in an Economy

Let’s look at an ice-cream cone, think about the cacao that comes from thousands of miles away, the milk, the wheat that makes the waffle… think about the refrigeration, the refrigerant, the energy that runs the machines… Behind the humble ice-cream is an incredibly complex economy — Milton Friedman would have called it a miracle — and the ice-cream can be very inexpensive, in this case 1.58€ for 6 of them.

But the moral here is different from Friedman’s. The value of the ice-cream is actualised when you consume and enjoy it; left melting in some corner it is not a good, but waste. The goal of an economy is to increase the well-being experienced by consumers through goods and services — having a system for organising production is an intermediary means to that end.

Leisure Creates Growth

The traditional thinking has been: those who labour deserve to enjoy the fruit of their work — that was true, the production of essential goods used to closely depend on people working, in the image of labouring hard in a field or next to some machinery— back then it was a question of economics.

Our current reality is most welfare states already spend a third of the budget on transfers. What used to be apparently profitless activities are now massive businesses and industry sectors. Our upcoming reality is the production of essential goods will hardly rely on human labour in the menial form.

When fewer tourists arrived in Turkey, it’s a scene of devastation: thousands of hotels remained idle, millions of livelihoods lost. When it’s missing, you can see clearly what used to create a booming economy was the tourists, it was created by leisure and consumption. And were the holiday makers doing harder work or working longer than the tourism workers to save up for it? No, they had more advanced productivity levels.

The nature of development is productivity. All gains — rising living standards, tax revenue, real improvement in the economy — all come from increase in productivity, that is, the ability to produce more goods with less work. We become more developed when we do easier, more enjoyable, creative, fulfilling, meaning-giving work.

Our Economy is Token Economy

We live in the age of post-industrial, global, hyper-leveraged monetary capitalism (high-power liquidity is created by a banking system), where big money is no longer a representation of value derived from production, but a game of who has the power to write down numbers in the books. When we look at someone buying a burger for $1, or the burger-flipper being paid $10, we are looking at a phenomenon, of one corner or facet in the grand system of the economy and production. We’re looking at a tool, a facilitating technology that mediates distribution in an economy.

When large corporate machines grow their profit catchment, when they spend and make billions, when trillions of Quantitative Easing gets created, when more than $30 trillion just “vanished” in the global financial crisis, when those who owned lots of assets now own more assets while real wages continued to decline, we are not looking at the same phenomenon. It’s no longer a question of economics, but one of power.

The economy will continue to grow, productivity will keep increasing, the capacity to produce goods will be greater, we as a society in aggregate will have more wealth than ever. The real question then, is distribution.

The real question is, what kind of society we want to live in.

Reinvent Money?

Obviously we need a financial tool that serves three functions:

• Denominator of prices
• Medium of exchange
• Store of value

All these functions can be replaced by products other than a central bank-modulated currency, for example:

• Index based denominators
• Consumer credit providers, plus inter-bank clearing
• Asset portfolios

Then, on a deeper level, money serves many social goals, e.g.:

• Rewards and incentives for creating value
• Indicator of ability to manage resources (for allocating roles accordingly)
• Delayed consumption (enable banking of uncap productive output)

Well, it looks like the current monetary systems are not even that good in serving these functions. Can they be served by other inventions?

How Australia Could Fund UBI

Around the world, governments are facing budgetary woes, and they are quick to attack the safety net (many implementations are not well-funded). Subsequently the most obvious “brilliant” strategy is trying to inconvenient and humiliate the non-participating into productivity by making the claim process increasingly burdensome and unpleasant. Hopefully people will soon see the ridiculous myopia and backwards thinking of such measures.

Our nation is the same village. The welfare state is a democratic imperative as fundamental as law and order. The threat of poverty does not belong in the tool-set of a modern economy. I see UBI as an inevitable solution that both fulfills this imperative and undermines the grip of the state.

Here are some suggestions for funding it:

• Retain current transfer inflows: currently, we already spend a big portion of the budget on transfer payments, the first step is to preserve the sources of these receipts
• Develop Crown Portfolios in several sub-categories:
  1) Traditional natural rent e.g. extraction, spectrum licences
  2) Market access rent (cf. “Google Tax”) negotiated with large companies
  3) IP Catchment: reaping the fruits of supporting research — Qualcomm made $37B in the last five years just from licensing, CSIRO makes quite a bit from Wi-Fi — Australia as a whole can develop much larger holdings.
• Use the returns on sovereign funds to create academic endowments, one annuity at a time. Basically a life-term stipend granted to a student, for those who want into engage in a relatively austere life of research work. Once the flow is set up for packaging these income products, they can also be purchased by private philanthropy.
• Savings from no longer having to fund Centrelink and related admin.
• Special capital gain tax, e.g. 90% CGT on real estate, comes with the additional benefit of curbing speculative pressure on prices.
• Introduce estate tax and tax on unimproved value of land.
• Radical measures to reduce the cost of living: e.g. mandated quotas for smaller apartments for developers, subsidised cafeteria with $3 lunches, develop a national common layer of MOOCs. More importantly we need to fund public spaces for free-time, museums, libraries, community events, built environment for learning and social activities, co-working spaces — because more important than sustaining a living is to live, to find meaning in actively experiencing life and building a future together.