Hahaha, Truthordeal, I love that response to the robot problem: "Let's hire people to manage them!" That gave me a good laugh, because that's exactly what corporations will do too, I think. I just love this robot stuff, I couldn't stop thinking about it once I started looking it up recently. We're on the verge of the "Model T" phase of a new robotics era, and the economic repercussions could be vast. I'll bet the Internet caught many economists by surprise, so this is something that the field of economics needs to investigate seriously.
It is worth mention that automation is already extensive throughout U.S. industry. We've gotten machines to do a lot of our work for us; they're simply not exotic little androids. In industries from steel production to tea production, automated labor far outstrips manual labor. I actually think that we are
not on the leading edge of a robotics revolution; I think we've already had the revolution, and many of the jobs that
could be automated, already have been. There undoubtedly will be a next great leap forward in this regard, assuming society doesn't collapse, and of course there will always be incremental gains in automation (punctuated by sudden jerks forward), but the next major revolution awaits advances in automated
intelligence, not in automated physical labor capacity per se.
J, I wonder if it's more likely that we'll begin extracting resources from outside Earth rather than reduce our level of resource consumption? It's probably wishful thinking on my part though. The way things are going, the environment will most likely turn out to be one of those "I told you so" things, and there will be a huge scramble to innovate before the human race depletes its resource base and simply dies off.
Perhaps asteroid mining would be viable if we'd get off our friggin' butts and get on with the space program, but, as it is, we've barely begun to go down that road and we still have most of the huge capital investments ahead of us...just as we're entering an era where we're going to be less able to spend huge amounts of money on long-term investments. Back when I was more naive, I figured we'd solve the asteroid mining problem long before Earth's native sources began to run out, but now I think that that's totally unrealistic. Thus, we'll have to go through an era of severe resource constraint.
Now, some resources are renewable, like fish and trees, and well-managed fisheries and forests are going to go a long way toward helping ensure that the supplies will keep flowing. As for non-renewable resources, most of those are reusable--especially metals. Already, more lead comes from recycled car batteries than from lead mines. Other commodities will follow suit. That's the good news: None of those materials have disappeared totally. They're out there. The bad news is that a great deal of them are still in use and thus not eligible for recycling, while others have been thrown out and will have to be reclaimed. That won't always be feasible, especially stuff that's been lost to the oceans.
Realistically, though, our lifestyles are on a collision course with resource shortages, and no amount of craftiness will enable us to continue with things as they are. It's a good thing change is a natural part of the social equation, because we're going to need to continue to find totally different ways of doing things, or else we're going to have to accept a serious reduction in our material quality of life, which would be very bad--not least because it would destabilize the globe.
As for taxing the wealthy, I fear it's simply going to be politically infeasible to bump up the highest bracket to the 80%s and 90%s our grandparents saw during World War II era. However, there may be more palatable options. A couple years ago in a Political Economics class I read that in Japan, CEO pay is limited to a legally defined multiple of a given company's average worker salary, but I can't find the proof to back that up online now, so I'm not sure. Still, it's an interesting idea, and something that would go over well with sensible voters -- provided that the pay structure is also somehow linked to the CEO's actual performance, which is something I am finding complaints about with the Japanese corporate system.
I don't know whether it's a
law or not, but I can back you up on the fact that Japanese corporate executives are paid much less than their American counterparts.
It's a moot point, however, because the
thievery that goes on in corporate America occurs only in small part through direct compensation. The really obscene executive profits come from stocks (that's the big one), bonuses, retirement and severance packages, and other forms of indirect income. In fact, one of the reasons that this is how things work in America is that, years ago, people made exactly the same arguments as the one you just made: Let's cap salaries. We set up a system that discouraged the kinds of salaries that executives would otherwise have awarded one another, but, in so doing, we didn't stop them from taking all that money. They just found other ways to give it to themselves.
And stocks really are a huge part of the equation. This is a serious problem, because in theory stocks are an ideal form of compensation: If you do a good job, your company will prosper and your stocks will be worth a lot more money. Thus, stocks are an incentive to lead well. In practice, however, stock prices are only loosely connected to the actual quality of a company's performance in business. Instead, stock prices are tied primarily to short-term profitability and to the appearance of maximal monetization and "optimal" (read: maximal) cost-cutting. Indeed, one of the inherent flaws in Corporate America today is that the long-term wellbeing of companies (to say nothing of customers or the nation as a whole) is oftentimes at odds with these companies' own stock prices. It's led me to wonder whether or not we can do better by actually
limiting the amount of stock an executive can own in the company they run. I have serious reservations about that, however, which leads me back to my original prescription of tax hikes and tax reform.
Really, everything else is a distraction. Our bloated, arcane financial system is symptomatic of people having more money than they know what to do with. That can be fixed through tougher regulation. The only solution for the underlying flaw in our economy itself, however, is for people to simply not have access to that kind of money without paying enormous taxes on it. It makes sense to me: That money comes from other people. Those who succeed big-time, should pay back the country and the people who gave them their spoils, because the truth of the matter is that nobody can succeed alone.
From the other direction--and I neglected to mention this last time--we're going to have to get serious again about breaking up large companies, and regulating the daylights out of those that can't be broken up (beyond a certain point) due to infrastructural reasons.
A comment on promotion of higher education: it is extremely romantic and noble to think that educated people automatically land jobs, but in reality our economy is best at generating service sector jobs for which no such education is required...
Right you are. There is a serious issue here: Much of the job growth over the past decade has been in the low-paying service industries. Labor unions have declined in power, meaning that many industries are pitted in a race to the bottom in terms of how they will treat their employees. (I have a half-baked theory which states that Republicans in the South are so pissed off about everything because their jobs royally suck and they're venting their frustration by trying to spread their special brand of misery to the rest of us.)
The need for skilled labor is going away with the developments of outsourcing and automation. The greatest gateway to the middle class is vanishing along with these jobs.
Professional jobs are in good shape; if you can get one of those degrees then you're all set--except for the hundred thousand dollars in loans you're likely to accrue in the course of your education. But most people are not professionals; they have an undergraduate degree or no degree at all. They may have a vocational degree, but that's becoming less likely. Becoming more likely is that they'll have a two-year accounting or business degree; those are practically worthless except to the extent companies use them to make hiring decisions.
The bottom line is that fixing the economy is not going to be accomplished by putting more people into college. It's rather the other way around: Fixing the economy will have the effect of putting more people into college. And to fix the economy...you guessed it: tax hikes on the rich. I'm sorry to be so repetitive on that point, but in macroeconomic terms our problem is quite simple: There's a hole in the economy and it leads to the well-to-do.