A Ghost in the Machine: Technology's Contribution to Income Disparity

"We never predicted that capitalism would be eaten by its own son, technology." 

- Eric Weinstein, Hedge Fund Manager and Mathematical Physicist

One of the troubling, saddening, and not-so-commonly-known things about our historic place in the arc of human technological advancement and the evolution of capitalism is that the intrinsic value of human labor is diminished.

In public discourse, we often blame the social problem of 'affordability' somewhat accurately: it's inflation, bureaucracy, greed, that make things expensive. This exists alongside the truth that technology makes things cheaper and our lives better. It does. Capitalists in superior competitive positions love technology, because they can leverage it to dominate their industries and competitors, and to amplify their wealth. But at what cost?

I will argue herein that the cost of technological advancement is to our culture and lifestyle, our health and happiness. At the core of growing wealth disparity is an unseen truth: technology replaces skills, thereby diminishing the intrinsic value of human labor, fortifying a techno-feudal caste system of displaced workers, tech workers, and tech owners. There is a ghost in the machine. 

To understand this conclusion, let's start with this simple truth: the wealth of a population or organization or ultimately an individual is limited by markets, because people won't buy what they don't want or need. If a technology was invented that allowed Nestle, for instance, to make a trillion dollars worth of chocolate bars with only one employee and dominate the market for chocolate bars, they still would only produce as much as people will buy, because the market for chocolate bars is only so much. Where are they going to store the extra bars? The cost of the excess product would reach a natural asymptotic utility. The owners of Nestle, therefore, will only win the wealth of the market value, and no more. 

According to Gemini, the world market value of chocolate bars is $119 billion. Technology can make chocolate bars cheaper by lowering overhead and increasing productivity. Nestle can increase their marketing budget to try and increase demand. But Nestle can't expand the market for chocolate bars past whatever it is in the moment. The total wealth that can exist in a population, therefore, is not based on the potential of what can be produced, but rather by what a business can sell, according to market demand. 

This future, where a dominant Nestle is operated by one employee with infinite productivity is not as crazy an analogy as you may think - we are already well on our way there. The implementation of technology and the concomitant increase in individual productivity has been occurring slowly for a long time, slow enough that people have hardly noticed, and worse, they have forgiven it. We are, after all, on the precipice of a wave of technology that will forever transform human culture and lifestyle -- artificial intelligence, humanoid robotics, nanotechnology, quantum computing, etc. 

Imagine the autoworker who was first replaced by early robotics decades ago. Most would presume that these people were simply let go to find work elsewhere. In actuality, organizations don't like layoffs unless absolutely necessary -- it's bad press. Often, workers whose jobs are automated are moved into other positions where the intrinsic value of their labor is diminished. They are now working an invented job with the same pay, while producing less value. When the recession comes, and layoffs are trending, now is the time when that employee gets the axe. But the documented reason for the layoff is the recession, not automation, the actual cause. Even the worker doesn't notice that her labor was diminished by the true enemy, technology. 

Understanding that technology is both good and evil is a controversial sentiment that is gaining popularity. Even millennials can remember a time when the internet was chat rooms, forums, and blogs, before it succumbed to the pathetic narcissism and false idolatry of social media. But not many realize how the intrinsic value of our labor is ruining our ability to participate with traditional lifestyles like home ownership, parenthood, and self-sufficiency. We hear only what our overlords tell us, while the value of our labor -- and of technology's labor -- funnels up to them and away from the workers themselves in psychopathic disproportion. 

How to Implement UBI Sustainably

Make it Solvent

There are only a few ways to sustainably implement UBI that uphold its core values (giving wealth to people equally while not taking wealth from individuals):

1.  Monetize public goods, like leasing federal land, unlocking new wealth to share with all
2.  Leverage the gains in automation by taxing the supply chain on wealth created by robots
3.  Capture value in social capital that individuals can't, like personal data or attention
4.  Eliminate bureaucratic waste and trade the wealth gains for equal cash payments for all

Avoid the Pitfalls of Progressive Liberalism

Printing money, taxing the rich, and means testing DO NOT UPHOLD THE VALUES OF UBI. Many of these sentiments stem from cultural values or personal views that are toxic, like hating the rich, blaming capitalism for their problems, discomfort with power imbalances, paternalizing the government, or viewing greed as the enemy. None of this has anything to do with the economic logic of UBI, which spells out clearly its true intention: to boost the prosperity of all Americans. Ending poverty, for instance, is not the core intention of UBI - it is merely a side effect of boosting the prosperity of all. Many of the poor are left out of means tested programs due to administrative difficulties, insolvency of funds, complex application processes, etc. Under UBI, no one is left out, thus 100% of the people in need get it. 

Fund UBI with a Strategy of Diversification

There are many nuanced and distinct mechanisms for applying the four things above. I've personally heard over a few dozen great ideas. We should do as many as possible, just like diversifying an investment portfolio to mitigate risk. This will ensure that UBI is eternal and can grow over time as technology improves. 

Is Yang more conservative than Trump? The answer may surprise you.

Yang, Tulsi, and Bernie are the Dems who seem to draw a lot of conservative support from Trump supporters, conservatives, and libertarians, but Andrew Yang in particular draws a lot of support from the most freedom-loving folks, libertarians, who generally don't like Trump's fiscal irresponsibility and his willingness to brush economics to the side in favor of politicking.

To clarify, most philosophies are complex and contain many dimensions, but if you were to distill down the difference between the left and the right, it would ultimately come to the difference in the role of government - the big government left (communism) and the zero government right (anarcho-capitalism). But one notch from the anarchists are libertarians, who believe that minimal government is the best way to preserve freedom. In fact, most agree that some degree of government is necessary; libertarians merely believe in the smallest version possible.

With that being said, this is what fascinates me: libertarians are flocking to Andrew Yang, a Democratic candidate who at face value sounds socialist, wanting to give a handout to every American. The reasons why libertarians like Andrew Yang are more fascinating than most people realize, in two important ways:

1) All of his policies are designed around freedom.

His flagship proposal, the Freedom Dividend, was invented and popularized by libertarian economists, from Thomas Paine to Milton Friedman. Yang was even endorsed by popular libertarian entrepreneur Elon Musk. In fact, there is even a Republican presidential candidate running under a similar proposal - himself a declared libertarian! The reasons why libertarians like the Dividend are complex, but come down to unlocking and growing new wealth by monetizing public-owned goods, growing the economy by fluidizing money, boosting overall economic prosperity, shrinking government roles, taking pressure off public services, protecting the means of production from socialist sentiment, and providing more freedom for individuals to pursue happiness. All of this with the side effect of ending poverty and homelessness forever.

And that's just one policy. His positions on everything - from abortion, circumcision, and recreational drug use to taxes, business regulations, and the court system - all uphold liberty as a central virtue. He believes the Dividend will take financial pressure off the abortion decision therefore lower them without restricting healthcare access. He's against circumcision personally but wants parents to educate themselves before choosing on their own. He wants to replicate Portugal's drug model of decriminalization, who saw huge success in solving overdoses, use/abuse, and addiction. He favors consumption tax on luxury goods over all other forms of taxation, which is more voluntary than other forms of taxes. He opposes breaking up businesses. Finally, he favors term limits for judges which creates a more dynamic court system.

Immigration is one thing that differentiates him greatly from Trump, because Trump believes that immigrants dissolve our cultural fabric, take our jobs, and endanger our communities. Yang, on the other hand, refers to immigrants as "human capital" and believes they fulfill the American legacy. If the freedom to move where you want is a central liberty, then clearly Yang is more conservative in this arena in regard to libertarian thinking.


2) He demonstrates aptitude in economic logic and fiscal responsibility.

While Trump threatens tariffs, advocates bank bailouts, and reinforces corporate welfare and subsidies, Yang is consistently polished in his business acumen.

Yang once said, "In this country, we have two problems: a revenue problem and a spending problem. To solve the revenue problem, we need to go where the money is. Companies like Amazon are paying zero in taxes while automating away jobs. If we implement even a tiny value-added tax, we can raise billions of dollars to fund the Freedom Dividend." This position highlights Yang's focus on fiscal responsibility - a stark contrast to Trump's leadership, which has exploded the deficit, leaving many conservatives reeling. Indeed, no businessman worth their salt would cut revenues while raising the budget, which is exactly what Trump has done with our country.

When it comes to business, Yang totally outclasses Trump. Out of three attempts to build companies from nothing, Yang has succeeded twice (the first attempt coincided with the economic crisis in 2008). Trump, by comparison, inherited a fortune and maintained it through crony capitalism, bullying, fame, and media manipulation. In Yang's words, "Entrepreneurs like me consider Trump to be more of a marketing charlatan than a real builder."

There is a world of difference between an entrepreneur and a real estate mogul. It's the difference between serving demand and restricting supply. It's the difference between building for the community and hoarding for oneself. It's the difference between community and hierarchy. It's the difference between watching out for the people and watching out for the company. It's the difference between humanity and narcissism. It's the difference between good and evil.