by Roger Bourke White Jr., copyright June 2014
When manufacturing and service "snap" one of the longstanding dreams of political liberals can become reality: We can have the Total Entitlement State (TES).
What will living in this environment be like for humans? That is the topic of this essay.
Two things will insure that, yes, humans will have sufficient resources after The Snap happens.
First, human population is going to peak in 2050 at about 9 billion people, then steadily decline thereafter. This will happen because humanity will urbanize and city people don't have enough babies to grow or even sustain their population. This is nothing new, it's true already. Look at the fertility rates of urban Western Europeans as an example.
Second, manufacturing productivity -- the efficiency in making things -- increases steadily, and will increase even more dramatically as third wave industrial processes and computer control become widespread. This is true and pervasive "green". It will steadily reduce the resources needed to provide for human material wants and needs.
Because of these two trends humans will not exhaust earthly resources, so TES can happen and be sustained indefinitely. This will be another human first.
Making an entitlement state work has been tried many times in human history. Here are some examples:
After World War Two the English tried for many years to make the entitlement state work. They nationalized industries, did a lot of central planning, and had the government hand out a lot of taxpayer money. Even with their best and most enlightened efforts the government kept running out of money -- the economy wasn't big enough or efficient enough to support the nation's entitlement aspirations. When Margaret Thatcher came to power the English tried a different, more deregulated, less entitled, tack, and it worked better in the sense that the national prosperity grew more quickly and the nation had more wealth to spread around to everyone.
The Greeks between joining the Eurozone in 2001 and their spectacular debt crisis of 2009 created a lot of jobs that did not boost productivity or the national wealth. These were de facto entitlement jobs. They were paid for by expanding Greek government debt, not by increasing national wealth. The good times ended when Greece crashed hard into its debt ceiling.
Update: Conversely, the Nordic countries, famous for being among the first socialists, have been moving towards an environment that pays more attention to productivity, as outlined in this 2 Feb 13 Economist article, The Next Supermodel.
The North Koreans and Cubans of today live in entitlement states. Some people are happy with the results, but many consider them as much failures as the Soviets came to be considered in Russia in the 1990's.
What these previous TES efforts had in common was lack of sufficient wealth to run the TES system. The result was the system could only be a temporary one, or in the cases of North Korea and Cuba, one where fear of external conquest was substituted for growing prosperity as a government sustainer.
In all these cases the TES system was established with great hope for making everyone's life better. But as time went on the people in the system became poorer compared to their neighbors who chose other, more performance-oriented systems, such as capitalism. Most cultures which tried this experiment moved away from the high level entitlement aspiration after a few decades and prospered more when they did.
This is the big difference between the previous attempts and the Post-Snap environment. With cybers dramatically enhancing productivity, and productivity being mostly outside of human hands, there will be enough resource even if most people don't produce much. People can have their cake.
The community's challenge moves from creating enough to deciding what to create and how to distribute it.
Update: This 24 Jan 13 WSJ editorial, Nicholas Eberstadt: Yes, Mr. President, We Are a Nation of Takers: Since 1960, entitlement transfers have grown twice as fast as personal income—to $2.3 trillion annually., outlines how much the entitlement state has been growing in the US. From the article:
"• As entitlement outlays have risen, there has been flight of men from the work force. According to the Bureau of Labor Statistics, the proportion of adult men 20 and older working or seeking work dropped by 13 percentage points between 1948 and 2008.
The American male flight from work is so acute that more than 7% of men in their late 30s (the prime working age-group) had totally checked out of the workforce, even before the recent recession. This workforce opt-out, incidentally, was more than twice that of contemporary Greece, the poster child for modern welfare-state dysfunction. The share of 30-somethings neither working nor looking for work appears to be higher in America than in practically any Western European economy."
Update: This 8 Feb 13 Reason article, Were the Luddites Right? Smart machines and the prospect for technological unemployment by Ronald Bailey, also addresses the issue of how the upcoming Snap is going to affect employment, but it's a bit confused in what it has to say.
Update: This 2 Feb 13 Economist artice, The Nordic Countries: The New Supermodel, talks about how the Nordic countries have transformed from mostly TES aspirations into a more balanced mode. The most interesting part is how important good cooperation and shared goals between business and government have evolved and allowed this prospertity to happen.
Marx and Engles wanted workers to control the means of production. But in the Post-Snap world there will be very few human workers dealing with core manufacturing and services, and robots will control the means of production. The Marxist dream becomes irrelevant, although it will remain emotionally powerful. There will still be many people who think of themselves as workers and who spend lots of time and attention on demanding their fair share.
So, distributing wealth will still be a big, important question: Who will control what gets put into the pie, and how it is shared? This will remain a chronic hot issue of the Post-Snap TES cultures.
The resource allocating decisions will be split between cyber and human. During the first (human) generation of the Post-Snap, humans will have a good grasp on the cost-benefit of the choices and be aware of cost-benefit issues. But that competence will fade in the second generation and beyond because the humans raised in the TES environment will not often be involved in cost-benefit choices -- home economics will be even more scorned than today -- so the cyber deciders will handle these issues more and more. What humans will continue to evaluate and offer good feedback on are the emotional issues of the manufacturing and service choices -- things such as branding, fashion and promotion.
Each nation and culture will get to the TES lifestyle from different starting point. This is important because there doesn't need to be anything uniform about the TES lifestyle. This is a prosperous time, it will support a lot of variety.
The following are some approaches roughly in the order that they may happen.
The trading cities, such as Hong Kong and Singapore, are likely to be the first places that snap. They will snap first because they are wealthy, they are sensitive to cost-benefit, and they are aware of what's happening around the world -- they keep up on hot trends. These days these trading cities do both manufacturing and deal making (trading). The manufacturing side will be dramatically affected, the trading side less so because it is more people-oriented.
People will be displaced from manufacturing jobs and service jobs that can be automated, such as driving. Given that the people of these cities have a habit of being light on their employment feet, many will find other kinds of jobs fairly quickly and easily. In these environments TES will still mean having a lot of people looking for and finding productive work.
Historically the US has been a manufacturing and trading powerhouse. And this has supported a potent mix of democracy and capitalism. Industrializing is a big challenge for human thinking, and the US has consistently stayed on top of that challenge for two hundred years. The US version of TES is likely to retain this entrepreneurial spirit more than other versions, but how that will interact with the reality of cyber-making-things is hard to predict.
Unlike the trading states above, the American community supports a lot more diversity in political and social thinking. Much of this diversity is expensive, in terms of productivity, but national attention has historically stayed focused on growing the pie. But this is not a given. America can get distracted. One example of recent distraction was the 1930's FDR era, when fairness became more important than productivity. Another example is the decline of the major cities in the Midwest region from national powerhouses to national basket cases.
The various European cultures have been experimenting with Industrial Age TES the longest of any cultures. The various forms of socialism, including Fascism and Communism, were aspiring to TES. Marx and Engles expected Germany to achieve it first. So TES will come easily to Europe and it will be based on socialism.
Part of the failure in those 20th century socialist experiments in TES was that humans were doing the producing and TES didn't incentivize people to pay attention to productivity. This flaw has been pointed out by capitalists again and again. But if the producing is in the hands of the cybers, then that fundamental flaw in socialist forms of TES disappears. Variants of the European socialist forms can happen and endure.
The recent rise of China as an industrial power demonstrates once again that top-down can work as a growth promoter -- decentralized capitalism is not the only way to successfully industrialize, although China's current approach does mix in a lot of free market too. China's TES, like America's, will remain manufacturing sensitive. It has and is building a middle class that honors STEM (Science, Technology, Engineering, Math). The STEM people will be experimenting vigorously with how to stay relevant.
Saudi Arabia and Russia have in common that much of the wealth coming into the country comes from resource extraction. Ironically, this means that transitioning to wealth coming from cyber productivity may be a fairly smooth one. This is because their middle classes are practiced with wealth managing, not wealth creating. This means that when the wealth controllers, the governments, push, the middle class doesn't push back very hard compared to places where the middle class feels their importance in wealth creation. That famous Coolidge/Sloan saying, "The business of America is business." is not true in these cultures, which means they more willingly support ruler "hobbies" such as extreme religious practices and corruption-supporting crony capitalism.
TES is likely to continue supporting the culture that supports these hobbies, and the transition may be a smooth one.
India is a curiosity. It has supported democracy since the 1950's in spite of the deep poverty and widespread poor education which should have made it an unworkable environment. One of the big curiosities is whether this democracy and rapid growth can mix? This is one of the big differences between the India and China approaches to industrializing. What the Indian version of TES will come out like is hard for me to say.
The failed states move into TES is likely to resemble the Russia/Saudi approach because these areas also do not have a middle class with a habit of "pushing back". The difference is: They don't have a big government to push back against! What they have are comparatively powerful regional governments, NGO's and shadow governments such as organized crime instead. The governmental force is not strong in these areas, Obi Wan.
This means there will be huge variety, but the common theme will be outside providing of welfare. These will be "welfare states" where those that rule maintain their power because they hand out the goodies handed to them by other, richer, Post-Snap states, and the cyber infrastructure these outside states build up locally. These people will be very used to having money handed to them by outsiders, the switch will be that cybers become the outsiders.
The governments of these states maintain themselves on fear of external conquest. If they have not reformed to using some other justification for ruling by the time cyber-supported TES is ready to come to them, they will be working hard at keeping the external aggression fear alive while the productive base of the culture is being transformed to cyber-based. This will be tricky, but not impossible. These two have maintained their societies in stable form in the face of sixty years of globalization going on around them. This is just another wrinkle... but a big one.
The cyber infrastructure will be financed externally, other snapped cultures around the world will pay to set up the infrastructure in these cultures. This will be considered a dirt-cheap expense to those outside cultures which have snapped a decade earlier. The local governments will likely dramatically customize what is brought in. They want it to sustain their fear-of-external-enemies theme.
The communities that have been most spectacular to historians are those that have pursued The Big Vision, whether they are TES or not. So a Big Vision TES is likely, and if successful, will be a shining beacon to other communities.
The Big Vision community is one that has a popular over-riding vision that much of the community can enthusiastically back, and much of the rest can moderately back. Historic examples are America's westward expansion, America's recovery and prosperity during and following World War II, German and Italian unification in the late 1800's, and Ancient Egypt's unification which produced the Pyramids.
The advantage of having the big vision is that it reduces acrimony between various sub-communities -- people bicker less and cooperate more. This leads to lots of material progress and lots of community optimism.
Nice stuff... but it's tricky, real tricky, to engineer. Most often the call for a Big Vision falls on deaf ears. If the community pays attention there's the threat that the leadership will lead people over some sort of adventurist cliff -- Hitler's rule in Germany being a spectacular example of that kind of bad outcome. The Space Race in the 1960's, on the other hand, was a big vision that ended with little downside.
So aspiring to Big Vision is likely to be part of the attention span in many TES communities.
This 24 Nov 12 Economist article, Where are the jobs for the boys?, talks about Abu Dhabi's government's efforts to solve their local employment problems. Here the government looks upon jobs more as solving a social stability problem as well as a business productivity problem. The result of having dual goals for employment is having a lot more government jobs, and a lot of those seem to be "make work" jobs. This is the Greek model, but because Abu Dhabi's oil income is large compared to the GNP, it's working here better than it has in Greece.
Because in the future the GNP's of most nations will be large, and sustained on cyber activities as Abu Dhabi's now is on oil, this Abu Dhabi situation may be a model for many TES's around the world in two or three decades.
This 24 Nov 12 Economist article, The new maker rules: Big forces are reshaping the world of manufacturing, talks more about how manufacturing is on the verge of experiencing more disruptive technology change. This is likely to be close to the last change in manufacturing that humans directly experience. Soon, these kinds of changes will be something the cyber community is aware of, and only a few dedicated STEM humans.