Should Manufacturing Robots Be Banned?

by James Wallace Harris, Saturday, November 19, 2016

alberteinsteinBecause my friends have been depressed since November 8th, I’ve been wondering what it would take to make both liberals and conservatives happy – and solve all our environmental problems. Once again, the election has shown, “It’s the economy stupid.” Without widespread economic security, the population will be unstably polarized. As long as such unrest exists, no other major problem can be solved. To solve the problems of sustainability, climate change, overpopulation, inequality, mass extinctions, pollution, will first require solving the problem with the economy.

Is that possible? Can we create an economy where most people find security? Corporations are at war with workers, either by moving jobs overseas, or by buying robots. Donald Trump promised he’d stop corporations from moving jobs. Would that help? No, the problem requires a global solution. Would banning robots help? Maybe. If capital was willing to accept higher production costs, employing more people, it should. However, robotics creates jobs too. And we have to decide if billions of people working like machines is a good thing. People want is a job they love. People want to feel creative, productive, worthwhile, and independent. Does a Foxconn assembly job provides that? Could we create enough jobs without banning robots? I doubt it.

If robots were regulated, and cars for example, had to be made by human hands, could they be made at affordable prices? Let’s bring in the environment now. What if we designed a sustainable transportation system, one that’s a blend of bicycles, cars, trucks, buses, trains, ships, and planes. Such a system needs to create jobs and protect the environment. Would building things like cars only by human hands create enough jobs, and still be profitable for corporations?

If we don’t outlaw robots, what would be the next solution? It’s obvious that free-market capitalism fails many workers and the environment. Capital ranks wealth over labor. The next solution would be a minimum income for people without jobs. This would be a tax on capital, something it also hates. Since capital hates both labor and taxes, it might need to decide which it hates more.

Conservatives claim if they had free reign their economic solutions would create more jobs. That claim is probably false. If their economic theories were true, they still want to ignore the environment. Ignoring the environment ultimately means economic self-destruction, so it can’t be a solution. Remember, any real solution must be economically and environmentally sustainable.

Capital’s current path is towards fewer workers and greater inequality. Since we originally stated that the base problem is economic security for workers, that brings us back to where we started. Liberals believe a growing economy/population can be designed to protect the environment. Conservatives believe a healthy economy can be built by ignoring the environment and population growth. Neither are realistic.

I’m not sure a solution is possible, which is more depressing than the Republicans winning all the branches of the government.

JWH

Should Robots Be A Major Political Issue in 2016

By James Wallace Harris, Sunday, July 12, 2015

We need to decide if we really want robots. Why are we working so diligently to build our own replacements? We need to decide before its too late.

humans-amc

As Democrats and Republicans declare themselves candidates for president in 2016, they each scope out issues they hope will define their electability. Donald Trump has gotten massive free PR by making very ugly statements about immigration. Bernie Sanders is staking claims around fair income and wealth inequality. None of the candidates have focused what I consider the defining issue for the next president—climate change. However, I’m also discovering a growing number of reports about automation, robots and artificial intelligence to make me wonder if robots shouldn’t be second to climate change on the 2016 party platforms.

Climate change, automation and wealth inequality are all interrelated. Illegal immigration is a minor issue in comparison. In fact, most of what the current crop of candidates focus on are old-moldy issues that are far from vital to our country. The 2016 election will define our focus until 2020, or even 2024. We’re well into the 21st century, so it’s past time to forgot about 20th century issues.

If you doubt me, read “A World Without Work” from the latest issue of Atlantic Monthly. Derek Thompson does a precise job of stating his case, so I won’t repeat it. Let’s just say, between automation and wealth inequality, there’s going to be a lot of people without jobs, and the middle class will continue to shrink at an even faster rate. Bernie Sanders political sniffer is following the right trail that will impact the most voters. Reporters should trail Sanders and not go panting after Trump. Follow smart people, not fools.

Another way to grasp the impact of the robot revolution is sign up for News360.com and follow the topic robotsmanufacturing automation, machine learning, natural language processing and artificial intelligence. Over a period of time you’ll get my point. Our society is racing to create intelligent machines. I’m all for it, but I’m a science fiction geek. If we don’t want to make ourselves into Neanderthals, we should think seriously about evolving homo roboticus. Being #2 in the IQ rankings will suck. But then if we embrace plutocracy and xenophobia, maybe we deserve to be replaced by AI machines.

If all of this is too much trouble, and you just want learn through the emotional catharsis of fiction, watch the new TV show, Humans on AMC. The show covers all the major robot issues, and sometimes in subtle ways. So spend some time thinking about the individual scenes in this show. Humans is very creative. Then start flipping the channels and pay attention to how often robots and AI come up in other shows. It’s like all the water is rushing away from the shorelines and we need to worry about when the tsunami will hit us.

JWH

Where are the Economists in the 2012 Election?

I have memories of past presidential elections going all the way back to 1960, and it seems to me that past elections spent more time with actual economists in the spotlight?   Have you seen any economist this election year?  In the past, CBS, NBC and ABC would routinely interview economists about politics, but I haven’t seen hide nor hair of them this year.  Has politicians and the public given up on the Ph.D.s of the dismal science?

We have numerous computer climate models to predict the weather, and we have gigantic cosmological models of the universe, telling us how our universe was formed 13.7 billion years ago, so why don’t we hear about super computers contemplating the economy?  You’d think both the Republicans and Democrats would offer some kind of scientific proof to back their economy philosophies.  Are we supposed to just believe what the candidates tell us without reference to academic authority?

economic-model

From what I’ve read, economists work with computer models all the time.  They have been refining their equations for decades.  So why don’t we see economic superstars interviewed on television?  Why aren’t their computer models shown on the nightly news?

First off, it’s impossible to predict the future, but we can model rough trends.  Modeling complex systems is hard.  Modeling the Big Bang and the formation of the universe is easier than modeling the weather, which is more successful than modeling the economy, but modeling the world economy should not be impossible.  Most Americans would want a model of the U.S. economy, but I would imagine it wouldn’t be very accurate without it being part of the model of the world economy.  No matter what Romney or Obama get to do for Americans, it will affect the rest of the world, and then they will affect us right back.

I know very little about economics, but I wonder why economists can’t build an economic model that allows the average citizen to understand  how various tax plans would affect the economy.  What would happen if Romney did get to kill off PBS and Big Bird?  What would happen if we added three trillion to the national debt while the economy recovers?  What would balancing the budget do to the economy?

Here’s the thing about computer models, the more data points the more accurate the model.  A data point would be like a weather station collecting all kinds of measurements.  The best economy model would contain 311,591.917+ data points, one for each citizen of the United States, and to be really accurate, have 7,043,958,151+ points for every person in the world.  We also need one data point for every business in the world.  Another for each aspect of government.  And each data point would measure many factors, such as various tax rates, incomes, assets, debts, etc.  And we’d need equations for every interaction.  So if we lower the corporate tax, how would it affect all other data points?

For example, Romney claimed his criteria for deciding on government spending was:  Does the cost of a program justify borrowing the money from China?

Okay, I can accept that.  But how do we decide for each program?  It can’t be just whim.  Let’s take PBS.  I heard that $450 million of the Federal budget goes to PBS, and that’s just 15% of it’s funding.  What do we get for borrowing $450 million dollars from China by giving it to PBS?  If we had an economic model, could we calculate the early childhood educational benefit of Sesame Street?  PBS teaches me a tremendous lot about American History.  How valuable is American History to American citizens?  Can you put a dollar amount on it?  PBS teaches me a lot about science and nature.  Does that have value?  Can that kind of educational TV be quantified as expanding the economy in some way?

PBS might be an economic powerhouse of early childhood and adult education that generates many times it’s $450 investment.  Just because conservatives want to save a few bucks on their tax returns are we being penny wise and pound foolish to get rid of PBS?  Can we really know without numbers?

I hate it that politicians expect us to take their opinions as facts.  I also hate that so many of my fellow citizens think opinions are facts.

Romney tells people we should say no to PBS, but other than his opinion, what’s backing that idea?  Is his opinion about PBS right?  I’d like to see an economic study done on the impact of PBS before I’d accept cutting  PBS from the budget.  Even as a jobs incentive program, how many jobs are created with that $450 million dollar investment?

Economics might be the dismal science, but I’d rather hear facts and figures about the economy from an economist than a politician.  I just can’t accept opinions from the left and right, I want some hard cold facts to chew on.

JWH – 10/6/12

Balancing The Budget–The Purpose of Governments

People hate taxes, but what really riles them is seeing their tax money wasted, misspent or used for purposes that are against their way of thinking.  As our current civil war is heating up over the budget I think we need to draw a bigger picture of why we pay taxes.  Understanding the purpose of governments should help.  I think we can see governments going through four stages:

  • Civilization – creating Law and Order
  • Human Rights – creating freedom for individuals
  • Prosperity – creating sustainable wealth for all
  • Environmentalism – the stewardship of the Earth

If you look at the history of mankind, or just to places around the world where civilization is collapsing you’ll understand the value of a stable government.  Generally civilization starts with the might of individuals, so often early governments are ruled by tyrants, kings, and men with guns.  Sometimes the powerful are enlighten leaders, but often they are just men who want to amass wealth and women.  We saw what happens to civilization when we take out the strong man as when the U.S. took over Iraq.

Most people have an innate desire for law and order and will submit to all kinds of governments, but sooner or later they want to be treated better.  Sometimes this coincides with theocracy, other times it arises out of secular ideals, such as democracy.  For most of history the right to rule was assumed as descending from God.  It’s much easier to accept government from a leader if you assume his rulings are not personal whims but the fulfillment of a divine plan.

The Old Testament is really a history of building a nation.  The spiritual leaders tried to convince the Israelites to create law and order based on God’s rules.  The trouble is people have a hard time agreeing whether the rules are right or not.  Often powerful leaders must pander to the whims of the people, so over the centuries the idea of rights for people evolved.

At first taxes were just to maintain the wealth and might of the leadership, but eventually the masses started expecting their leaders to give them something in return.  Generally this was law and order and a semblance of justice.

By the time the United States was formed people wanted to rule themselves and create a just and ordered society.  They created The Bill of Rights.  Of course, at the time women, African Americans and Native Americans weren’t considered for these rights, but it’s a step in the evolution of Human Rights for all.  Government became something run by the people for the people.  Taxes were meant to maintain civilization and provide a fair treatment of all people, given them the opportunity to prosper and seek happiness.  Taxes went to maintaining civilization and guaranteeing a legal system that protected human rights.

Population was sparse and people were expected to make their own way or die.  There were few social support systems, mostly the charity of individuals and churches.  Many conservatives want this kind of government, but there’s two major problems to this.  First is the explosion of population.  Second the explosion of wealth brought on by the industrial revolution.  For many years governments tried not to interfere with human growth or the creation of wealth, but it’s now too late for that kind of thinking.

The third stage of government is the management of over population and the regulation of wealth.  Government cannot ignore these problems without hurting human rights and even civilization.  The mismanagement of wealth can lead to economic collapse and social disorder.  Back in pioneering days wealth came from the land.  If people failed they died or moved on.  Now the population lives off the economy, which to most is an abstraction.  That’s why it’s so hard to understand why the government needs so much tax money.

If the Republicans got their way and reduced the size of the government and drastically lowered taxes America would end up looking like India or Pakistan.  Overpopulation would hinder the creation of wealth.  Sure, some wealthy people would get much richer, but most of the population would get much poorer.  The purpose of our taxes is to maximize the well being of the population to allow the maximum creation of wealth for all.  In other words, a chicken in every pot.  The trouble is some people don’t like paying for other people’s chickens.

This third stage of government is really about stimulating the economy.  The first stage was about creating social stability, law and order.  The second stage was about making everything fair for all.  Now some people think the third stage is about providing handouts for the poor, but that’s not really true.  What’s really happening is government is trying to create prosperity.  Henry Ford paid his workers a decent wage because he wanted them to be well off enough to buy the cars he made.  The modern role of government is to make sure the greatest percentage of its citizens contribute to the economic growth of the nation and all benefit fairly.

Now I didn’t say the role of the government is to get everyone a job.  Our population has grown way to large for that to be possible.  But if we ignored the people without jobs, the number of them would pull down the nation economically.  Look back at the Great Depression.  People on social security, welfare or unemployment still contribute to economic growth through the spending of government money.

Like it or not, the role of government has become the regulation of wealth and stimulus of economic growth.  Now this might not be done fairly, efficiently or wisely, but it’s the job the government has to do.  Reducing the government will only make our problems worse.  The belief in pure capitalism is a fantasy.

There is emerging a fourth role for government, environmentalism.  Our populations are now so large, and the creation of wealth so vast, that they are consuming the planet.  If governments don’t become ecology cops we’re all going to die from self destruction.

Conservatives want to roll back governments to stage 1 and 2 functions.  Actually them seem to want stage 1.5, law and order with some theocracy, something akin to Old Testament times.  Even though most conservatives call themselves Christians they don’t seem to want to pursue Christ’s job of feeding and healing the poor.  They seem to want law based on their religion, and to only pay taxes for things that benefit them directly, like roads and armies.  That kind of government would probably work if the population density was like it was 2,000 years ago.

Like it or not, government has to be big.  It has to be in the business of managing wealth and population dynamics.  If we took away all those entitlement programs the country would go down the drain.  Our economy is based on economic activity.  Even if we had a smaller population that wouldn’t help the economy, look at Japan, with it’s declining population.  And we also much face up to the problem that a heated economy is killing the planet.

If governments are going to succeed at stage three and four they will need to invent new ways to manage wealth and population, and reducing taxes or making the government smaller just isn’t a solution for solving those problems.

Also, notice the interactions between the stages.  Without stage 1, stage 2 can’t exist.  Without stage 2, stage 3 can’t exist.  You’d think stage 4 would be above stage 1 because if the ecology collapses, so will civilization.  But without civilization you can’t think of ecology.  So it becomes a circular process.

JWH – 2/27/11

Richocracy

Who rules America?  We all like to think we do, since we believe we live in a democracy.  But what if that’s not true?  If you watch the new documentary film Inside Job by Charles H. Ferguson you might think the rich rule us, and they’re doing a bad good job because of the 2007-2010 financial crisis.  Greed triumphs over wisdom.  Richocracy is a form of oligarchy, where the extreme tiny minority of the very rich have the power of ruling.  The insight of Inside Job is these people reign whether the Republicans or Democrats are in control.

We do not see the real ruling rich in Inside Job, but their representatives, Henry Paulson, Ben Bernanke, Timothy Geithner, Alan Greenspan, the CEOs of the leading financial institutions, and their philosophical spin-doctors, the economists that teach in academia and consult in Washington.  Many of these men stay in power regardless of which political party is in the Whitehouse or Congress.  They rule by economic theory that justifies getting more wealth for the richocracy.

It’s all very obvious when you think about it.  Money is power, the people with the most money have the most power.  With very large amounts of money and power its possible to change both the laws of the land, and the rules of business.  Furthermore the richocracy hire the top Ivy League economists to justify their wild money making schemes.

To me, the most damning evidence revealed in Inside Job is how the richocracy made the credit rating agencies  a total sham.  Wall Street created investment systems that insiders knew were worthless but got them rated AAA so gullible banks, investors, retirement systems, local, state and foreign governments, would buy.  These investors of little people’s money used these corrupt credit ratings in their decision making, and thus trillions were stolen.

Would we have had this financial crisis if we had honest credit ratings?  I don’t think so.  Most people who invest money have very little knowledge of how their money is put to work.  They have to trust the institutions that hold their savings.  Those institutions use the credit rating systems like Moody’s and Standard & Poor’s to understand risk.  An AAA rating is suppose to be as secure as U.S. government bonds.  How do you feel about your retirement money being invested in schemes rated AAA (prime) but should have been rated CCC (extremely speculative).

But that’s the point of this film, greed corrupts everything.  People ignore risk when they think they can make a quick buck.  The solution to that is regulation.  Capitalism without rules is chaos.  The richocracy fights all regulation with every fiber of their souls.  That’s how they use the Republican party.  Regulation slows down wild speculation, but it’s the bubbles of wild speculation that create wild piles of wealth.  But in recent decades most new forms of speculation have been no more rational then Ponzi schemes.  The richocracy love the Ponzi scheme because it’s a quick way to take away a lot of money from the suckers and give it to the very few, the richocracy.

As Inside Job points out, in the old days investment firms invested their own money and they were very careful how it was used.  Over recent decades investment firms started investing ever larger growing pools of money that didn’t directly belong to the money managers, so it became ever more easy to bet on riskier schemes.  Governmental financial regulations are designed to keep investing money within the bounds of reality.  Which means no Ponzi schemes.  And all systems for quick riches ultimately come down to a Ponzi game.

Now the real question to ask:  What can us little people do about this?  The people with all the money have all the power, but the legal system is suppose to be based on democracy.  Democracy is corrupted by lobbying.  The more money you have, the more lobbyists you can buy.  For the little people to gain power they either have to find ways to get their own lobbyists, or force a political change to the lobbying system.  But the inherent nature of the richocracy really precludes the second option from happening.

The ultra rich is often called the top 1% of America, but that would be over  3,107,044 people.  My guess is the richocracy is actually much smaller than that, maybe only the top .1%, or a little over 300,000 people.  Those other almost three million people are hardcore richocracy wannabes.  So we can think of it as us (99%) versus them (1%).  You’d think the little guys would have the power, but they don’t, because all the wealth is with the 1 per-centers.

But that’s an illusion too.  Us little guys have a lot of wealth too, but we let the richocracy manage it for us.  Of course, we’re just as greedy as they are.  We want 10% returns on our retirement investments and take risky chances with our 401k money.   It would be possible to lobby with our money but we don’t control how its invested.

We don’t make the laws of the land, the laws of business, nor the theories behind government and finance.  We think we have power with our votes, but I’m not so sure about that anymore.  As Inside Job shows, people voted for Obama because they wanted change in the financial systems but he failed to deliver.  Obama hired the same richocracy representatives that were used by the Republicans, and regulation was once again avoided.

Essentially us little people have no power and all we can do is sit by and hope the richocracy doesn’t drive the country into absolute ruin.  We can hope the richocracy can learn from their own madness but Inside Job also points out that all the people that caused the recent crisis walked away rich.  The richocracy is evidently waiting for the economy to settle down so they can start up the next bubble.  They know how to get fabulously wealthy from financial bubbles.  The trouble is if you look back at the history of these bubbles, they are getting larger each time, and the country and us little people are suffering more with each new cycle.  How many more can we survive?

JWH – 11/14/10

Are We Living Through an Economic Paradigm Shift?

 

Because of the economic crisis of the last two years, people and businesses are cutting back on their spending.  Our economy is based on consumer spending and I’m now talking to a lot of people who have sworn off spending like the used to when they lived heavily in debt.  On the news there are reports of companies sitting on large cash reserves.  Some economists had hoped the economy would have already turned around but consumer spending and jobs don’t reflect that.  In Detroit, the Big Three automakers are out of the red ink and into the black  by being leaner and meaner.  They are making more money selling fewer cars.

The economic booms of the past twenty-five years all coincided with an overheated economy of people spending beyond their means and investors going crazy over unwise investments.  Could we be moving into an era of caution?  In previous busts we turned the economy around fast by going back to spending freely, but we don’t seem to be doing that this time.

I notice a lot of things that might point to different trends.  Something like 80 million baby boomers are approaching retirement and they are finally realizing it’s time to save and not spend.  I know that’s how I feel.  But also, after a big economic crisis people fear insecurity and want to hang onto their dollars.  Remember how the Depression era people lived for the rest of their lives?  That generation was shocked by the easy spending of the Baby Boom generation.

The younger generations out there now live a lot more frugally than the Baby Boomers.  They often live with their parents longer, and they learn to adapt to lower paying jobs.  And they are heavily into credit card and school loan debt, so they don’t have the resources to spend freely.

The rising cost of living have made the retired generations living on fixed incomes already cautious about spending, and now that they lost a lot of their retirement capital they have to make every dollar go twice as far.

But there are other clues lying around too.  When the economic crisis hit, television, newspapers and magazines were flooded with advice on how to live with less and I think a lot of people took up this advice and now like living with less.  The most popular story at the New York Times at the moment is “But Will It Make You Happy?” about people who have downsized their life to find more happiness.  Psychologists are telling people owning things won’t make you happy, it’s what you do that does.  If this modern Thoreau like philosophy catches on it will put a huge dent into the economy.

Logic tells us if everyone lived by the best popular advice, saving money, spending wisely, eating well, this would be a tremendous shock to the economy.  To have 5% unemployment our economy has to run hot with overspending.

And look what the Internet has done to the economy.  Before the Internet there were many music stores in every city selling CDs, now they are practically gone.  People use to spend hundreds of dollars each month on their cable bills and now people are happy with Netflix.  People use to spend big bucks on software and now they want free open source programs.  Amazon is putting local bookstores out of business by underselling them, and now with Kindle, they are putting an even bigger hurt on them.  I pay Rhapsody $9.99 a month to listen to all the music I want, where I used to spend $100-200 a month on CDs.

My wife and I have always bought new cars, but we’re thinking about buying used next time because the cost of an average new car has gotten so high.

We try to spend when we can because we know it helps the economy, but we want to spend wisely, like house renovations, and we also try to buy new products that are energy saving.  The whole ecological movement is also making people spend less.

In the news pundits talk about a “New Normal” for the economy because things are not turning around quickly like economists expected.  It’s pretty obvious if we want the “Old Normal” we need to act like we did then and we’re not.  Maybe young people will, but I’m getting too close to retirement to spend without caution.  My new normal is to hang onto every buck I can, and when I spend a buck make it count.

The only solution for the government to counter this new normal is to spend like crazy to put people to work.  The New York Times is also running a story, “Defying Others, Germany Finds Economic Success.”  Germany took a different route out of the economic crisis and it appears to have paid off.  Beside spending wisely, they think they found a solution for unemployment.

Government officials here are confident they found the right approach, including a better solution to unemployment. They extended the “Kurzarbeit” or “short work” program to encourage companies to furlough workers or give them fewer hours instead of firing them, making up lost wages out of a fund filled in good times through payroll deductions and company contributions.

In my naive way, I’ve always wondered in bad economic times that instead of laying off ten percent of the population, why not just cut everyone’s pay by ten percent.  Then in boom times, pay people more.  It sounds like Germany is trying something like that and its working.

I’m not an economist, nor do I like watching all the talking heads on TV talk about the economy.  But like Bob Dylan said, you don’t need a weatherman to know which way the wind blows.  If we’re living in a new economic paradigm, then we might need to be patient.  Blaming the Democrats or the Republicans is pointless.  We need to break the old political and economic cycles.  The federal government should spend money on improving America.  That will create value worthy jobs. 

The improvements should be ones that the majority want.  What kind of infrastructure do we want?  We should reevaluate war spending.  Is there a cheaper way to fight terrorism?  Does illegal immigration help or hurt the economy?  I have no idea.  Does universal health care help or hurt the economy?  If we did away with Social Security and Medicare, millions would be put out of work, and most families would have to spend their savings taking care of their aging parents.  I think it’s pretty obvious that killing off these entitlement programs would devastate the economy and make everyone poorer.

We need to rethink common assumptions.  Is big government bad?   Would paying less taxes stimulate the economy?  I’m not so sure.  The federal government produces a lot of jobs, and those people who hold them spend a lot of money that create more jobs.  We know it’s impractical for everyone to work for the government.  We just need to know which jobs are best created from tax dollars and which jobs are best created from business dollars.

K-12 teachers, police, fire fighters and soldiers have traditionally come from tax dollars.  And it’s pretty obvious we have a lot more health care workers if they come from the tax dollar too.  Although it might be interesting to take a state, maybe Texas or Alaska, since they are so conservative, and do away with all civil servants and see what happens.  Would life be better if every road you drove was a toll road, and if you wanted teachers for your kids, you hired them yourself, and if you wanted protection from criminals you carried your own gun?

I’m just thinking out loud.  I’m predicting the economic recovery will take much longer than expected because new kinds of jobs need to be created.  I don’t think Republicans will bring about instant change in the new elections.  I’m guessing the economy will stay painful for a long time and that pain will shape a new economy.  Global warming started decades ago and it’s already shaping a new economy.  Over population started long ago too and the current illegal immigration patterns almost follow the laws of physics.  The same physical laws will explain the never ending melting pot of ethnic diversity.

The world’s population has doubled in my lifetime.  That’s bound to make a paradigm shift.  Too many conservatives want things the way they were when the population was half of what it is now.  That’s not possible.   We need to prepare for an economy with several billion more people, in an era of growing scarcity, and whacked out weather.  There’s no going backwards.  If we returned to the overheated economics of before we’ll never solve the global warming problem.  As it is, we’re like a bottle full of ants and mother nature is starting to shake that bottle vigorously.  It’s time to do everything we can to slow down and live cautiously.

JWH – 8/15/10

Is The Internet Bad For The Economy?

Since the earliest days of Amazon.com I have been buying shelf loads of books from this innovate Internet business every year.  Then I stopped going to record shops and bought my CDs from them too.  Later on I bought running shoes, electronic gadgets, printer ink, and anything else that was convenient.  I buy a lot more books because of Amazon.com’s heavily discounted prices, no state sales tax and free shipping on orders over $25.  Now that the economy has taken a fall, I’ve got to wonder if my buying habits helped in knocking it out?

None of my favorite bookstores have gone under, but they’re struggling.  All my old record stores are dead.  So is the place where I bought my running shoes.  And all the small computer shops I used to visit have disappeared.  My state is hurting from low revenue, mostly gotten from sales tax rather than an income tax.

I buy a lot of audio books.  Audio books used to be $25-150 on cassettes and CDs, but I get them for $9.54 each at Audible.com as a digital download.  I never would have bought many titles if I had to pay the old prices, but if retailers now sold them for $15-25 a book, and Audible.com didn’t exist, I would buy 3-4 titles a month.

I used to buy 2-4 CDs a week.  Now I buy none because I pay $120 a year for unlimited listening on Rhapsody.com.  I used to buy a lot of software, but most of the programs I use today are free.  My wife and I used to collect DVDs, but now we have Netflix.  We used to pay for photo prints to give to people, but now we email copies.

I’ve got to ask:  Is the Internet hurting our capitalistic system?  I love the Internet.  I would never want to give it up.  But survival in this world depends on economic activity.  And comfort and security depends on everyone having a job and the economy doing well.  A 2% rise in unemployment, which we’ve recently experienced, has brought fear and misery.  What will 10% do to our sense of well being?  Do you remember the early 1980s?  People are talking about this financial crisis being the worse since the Great Depression.  1932 had a peak of 25% unemployed.  I have no way of imagining that level of bad times, and I don’t think anyone under 95 can really remember what it was like either.  We really don’t want to go there, and need to consider doing almost anything not to.

We all need to be conscious of our economic impact.  Spending frugally, staying out of debt, making careful purchasing decisions, and all those lessons financial advisors taught us might not be the right thing to do right now.  Would spending a few dollars more for each book and paying the sales tax be a better choice for my local economy than ordering from Amazon?

This afternoon my wife and I wanted to watch a movie together, but there was nothing on at the theater we wanted to see.  So we thought we’d go by Target and buy Kung Fu Panda.  It was $19.99 plus almost $2 in tax.  I could get it from Amazon for $15.99, a savings of almost $6.  But we decided to wait a couple of days for when it comes in via Netflix.  The rental cost would be less than the tax, thus saving over $20.

We didn’t buy Kung Fu Panda.  We just didn’t feel like spending $22 for something so trivial in these economic times.  If Kung Fu Panda would have been on sale for $12.99 we would have come home with a new DVD.  I wanted to help the economy, and considered a 4 DVD set of Dexter Season One for $17.99 plus tax or a 6 DVD set of Northern Exposure Season 6 for $14.99, both of which seemed like excellent buys, but I’ve been spoiled by Netflix.  Why buy something to own when I only expect to watch those shows one time?

See, the Internet has turned me into a bad consumer.  It’s saved me a lot of money, plus it’s more efficient because I don’t have to maintain a physical copy of something that would clutter up my house.  But I’ve deprived a local business of income, took jobs away from the local economy, and reduced the tax revenue of Tennessee.  My gain is a loss for my community.

Either we have to design an economic system with the efficiency of the Internet in mind, or we need to go back to our old ways.  I’m reminded of an old science fiction story.  I can’t remember the title, but it was about a future where the poor had to consume on schedule, while the rich were free to consume as needed.  An example, the poor had to change their shirts several times a day to keep production up in shirt factories. 

Do we really want an economy where people need to buy DVDs rather than rent so more people will have jobs?  Or buy a new gas-guzzling SUV every three years.  I’m sure you get my drift.

Well, the answer might be yes.  If we want to keep the old economy going.  And we might until they invent a new economy.  This is all very hard.  What if you could buy a car that would last 300,000 miles, and used little or no gas, being mainly powered by solar panels on your garage’s roof.  What does that do to GM or Exxon?  If environmental technology, ET, becomes just as efficient as information technology, IT, what does that do to the economy?

What if I took the money I saved by using the Internet and spent it on renovating my house with local labor, buying from local suppliers, but with the goal of making my home more energy efficient?  Will that help the new economy, or just delay the death of the old economy?  I already bought a new SEER 16 HVAC that’s saving me hundreds of dollars a month on energy.  That’s $9300 that went into the local economy, but now my monthly nut to the utility company is smaller.  I could start spending money on insulation, better windows, better appliances, and all of that will add to the economy.

Eventually, I’ll have a very energy efficient house, and I’ll start putting much less into the economic system.  It’s like switching from buying DVDs to renting them.  At some point being efficient leads to less economic activity.

Yes, I think the Internet is bad for my old local economy, and bad for our old national economy.  What’s needed is a new economy.  It’s called a steady-state economy, one that’s not based on growth.  Is the financial crisis that has come down on us going to be the metamorphosis that we must endure before becoming butterflies in a new economic world?  Will Barack Obama return to old tricks to solve our new problems?  Or can he be Copernicus seeing the Ptolemaic economic solar system with new vision?

We can always go back to a wood-chopping, horse and buggy world.  We could turn off the Internet.  This financial crisis may force many to give up cell phones, Internet and cable TV.  Without the Internet, most people will have little need of a personal computer.  Going backwards is possible and may happen.  We may have to prop up the old economy, but is that what we want?

It’s very important that we all pay attention.  In the next few years, a lot of decisions are going to be made.  Where are you going to throw your support?  Every dollar spent is a vote.

JWH – 11/15/8