In sickness and in health

A few Decembers ago, when I was visiting with my folks in India, the maid came a tad later than usual and set about her tasks.  She started coughing.  My father told her that it was ok not to show up for work as long as she called and gave them a heads up.

But, there is a reason that maids and other workers report to work even when they are not well, or well enough: In most cases, they will suffer a cut in their earnings if they don't show up for work.  It is only a fraction of the labor force in India that has the benefits of sick leave and paid vacations.

Now, superimpose on such a framework the possibility of a viral disease. An epidemic, like COVID-19.  The scenario easily unfolds in your minds too, eh.

The US is only marginally better.

Service industry workers, like those in restaurants, retail, child care and the gig economy, are much less likely to have paid sick days, the ability to work remotely or employer-provided health insurance.
The disparity could make the new coronavirus, which causes a respiratory illness known as Covid-19, harder to contain in the United States than in other rich countries that have universal benefits like health care and sick leave, experts say. A large segment of workers are not able to stay home, and many of them work in jobs that include high contact with other people. It could also mean that low-income workers are hit harder by the virus.

It is a large labor force without sick leave:

For many workers, being sick means choosing between staying home and getting paid. One-quarter of workers have no access to paid sick days, according to Labor Department data: two-thirds of the lowest earners but just 6 percent of the highest earners. Just a handful of states and local governments have passed sick leave laws.
Only 60 percent of workers in service occupations can take paid time off when they are ill — and they are also more likely than white-collar workers to come in contact with other people’s bodies or food.

And, yes, they are the ones who interact a lot with other humans, unlike the app-developing software engineer who tries his best to not deal with fellow human beings!  The low-wage and part-time workers in the US are, thus, in a situation similar to that of the maid at my parents' home:

for the average worker without paid sick-leave access, the lost wages associated with staying home for about three days would amount to their household’s entire monthly grocery budget or monthly utilities budget.
The outlook can be similarly bleak for gig workers for, say, a rideshare company or food-delivery service — many of whom aren’t eligible for benefits that would allow them to stay home and receive health care when they’re sick,

It is not difficult to understand how the virus has already spread far and wide, right?

Can anything be done?

Expanding the law to include pandemics as major disasters – as some lawmakers have urged – would make it possible for the president to make sure individuals affected by an outbreak have the support they need.
It would only take small changes like these to make the unemployment insurance program more useful to those sick, quarantined or temporarily idled during a pandemic.
While this will not solve all the economic problems caused by COVID-19, or the next pandemic disease, it would give American workers and the broader economy a lot more breathing room.

Giving workers a lot more breathing room is what I have often argued as the urgent need to rework the social contract and implement a stronger safety net.  If only 63 million Americans cared!

Source

Trend lines, headlines, and politics

One of the two brand new courses that I will teach in the coming academic year will be about how much the world has changed--for the better--and yet the news headlines will have us believe otherwise.  (Instead of working on the syllabus, here I am "wasting" away my time!)

Consider one of the many awesome things that we have accomplished--thanks to every government in the world advancing literacy and spending money on education, children from any background can now attend school. (Sadly, there are countries where girls are not educated.)

What a fantastic cause for celebration!.  It is phenomenal an achievement that of all the humans who are 15 years or older, only about 13% is illiterate..  We humans deserve credit for making such a world happen.

However, to look at that kind of progress and to merely engage in self-congratulations is, well, not what I do.  To begin with, that is not my job--I am a critic, by choice and by profession.

But, the change for the better does not mean that we can rest easy; after all, there are a gazillion ways in which we ought to work towards improving the state of the world, for humans and non-humans alike.  In this context, if we were to merely engage in rah-rah about literacy even for the disadvantaged, we begin to overlook the serious troubles there.

Does one imagine, for instance, that a government school in rural Uttar Pradesh is anywhere near the quality of the school that I (and the commenter) went to?  Why are the kids in rural Uttar Pradesh condemned to those godawful schools where teachers might not even come to class, leave alone being horrible teachers in the classroom, while kids in Neyveli get much better education?  Not the kids' fault that they were accidentally born to their parents who live in a certain area, right?

Now, think about how education is merely one out of the gazillion ways in which the accidental birth makes a huge difference in one's life.

Most of us in the political left-of-center always worry ourselves to death that such inequality that arises for no fault ought to be addressed via public policies.  Even while celebrating the fantastic reductions in extreme and absolute poverty, we worry about the uneven competition that exists only because of the accident of birth.

My go-to-expert on these topics, Branko Milanovic, has written in plenty about these issues.  One of his recent empirical analysis showed how "the entire world’s economy is lifted by the open exchange of goods, but this growth is unevenly distributed. The “global upper middle class” — that is, working class individuals in wealthy nations — take it on the chin as less skilled jobs move to poorer nations. Meanwhile, the global middle class and the very wealthy benefit tremendously."

Some of us--yes, I have conveniently inserted myself into an excellent company!--have argued for years that this calls for a new social contract in which we can appropriately compensate the people and communities who lose in this global win.  I yell about this at other places too ;)

"The sensible solution for a wealthy nation is to open its borders to as much trade as possible, but to tax the beneficiaries of free trade to lift up those who lose out."  It is so obvious.  But, apparently obvious only to a few of us who have no political power to make this happen :(




Source

A new social contract for progressive capitalism

I searched my blog for the earliest post that included the label "Stiglitz."  I am not at all surprised that it was way back in 2008, not long after I re-started the blog.

In that post, I wrote, "It will be neat if neoclassical economics alters its course thanks to Amartya Sen, Joseph Stiglitz, and Paul Krugman. but, maybe that is asking for too much, eh!"

In my understanding, mainstream academic economics--and its political variation--did not significantly change in the more than ten years since then.  Even the nasty Great Recession did not force a sharp re-thinking in economics and politics!

There is a reason that I have keenly followed these three: They are not merely economists of repute, but also phenomenal thinkers.  And, they also write in a manner that makes even blokes like me understand the weight of their arguments.

Stiglitz has, forever it seems, yelling about the need to redo the social contract, so that it would reflect the conditions in which we live now.  There are a number of posts where I have quoted him, among many others, on the need for a new social contract.  Like in this post from three years ago.

It is also instructive to think about the comment there: "Stiglitz is in the same camp as Krugman and therefore I have to take many a gulp before I write this comment - lest Trumpesque unparliamentary language creeps in :)"  That comment is reflective of the intense political opposition that existed, and continues to exist.

In his latest opinion essay in The NY Times, Stiglitz writes:

We are now in a vicious cycle: Greater economic inequality is leading, in our money-driven political system, to more political inequality, with weaker rules and deregulation causing still more economic inequality.
If we don’t change course matters will likely grow worse, as machines (artificial intelligence and robots) replace an increasing fraction of routine labor, including many of the jobs of the several million Americans making their living by driving.

Even a casual reader of this blog knows well how much I have worried about these very issues, and which is why I have been yelling from my corner about the need for a new social contract.  A contract that would not dampen the innovative and creative forces in the marketplace, but would also provide a lot more support to the people and places that get left behind.

Stiglitz calls for a new social contract, through Progressive Capitalism.  A political economic structure that will be different from what we now have:

Most important, our exploitive capitalism has shaped who we are as individuals and as a society. The rampant dishonesty we’ve seen from Wells Fargo and Volkswagen or from members of the Sackler family as they promoted drugs they knew were addictive — this is what is to be expected in a society that lauds the pursuit of profits as leading, to quote Adam Smith, “as if by an invisible hand,” to the well-being of society, with no regard to whether those profits derive from exploitation or wealth creation.

This was the fork-in-the-road that we faced in the elections of 2016.  No thanks to two old white men, 63 million forced the country to take the wrong route despite all the flashing red lights warning us of danger ahead.  Let's see what we do in 2020.

A skeleton without flesh

Consider this statement:

Global health programs can increase life expectancy or decrease child mortality, but ultimately, people want a higher standard of living.

Re-read that.

And now think about that age old wisdom in "health is wealth."

The guy who flatly declared that it is all about economics? Stephen Moore, who was trump's economic policy adviser during the campaign.  He  wants to gut foreign aid to nothing.  As a nutcase Republican, Moore had the formula to prescribe for development:

All these countries have to do is cut taxes, provide private property rights and get involved in global markets  

Yep, cut taxes, provide property rights, engage in international trade, and within a generation even the Central African Republic can become a Singapore!

What a piece of shithead!

I could never understand the right-of-center's worship of economic growth.  Thus, their endless worship of the economic "successes" like China, for instance.

trump now presiding over such a worship means that we in the US too are doing everything to behave like how China does.  trump's people are hell bent on removing regulations that give priority for the natural environment or labor over economics.  Bizarre and awful.

In this essay about capitalism, the author quotes the profound political thinker Karl Polanyi:

fascism strips democratic politics away from human society so that “only economic life remains,” a skeleton without flesh.

Protecting the flesh, and keeping it healthy, means discussing the very idea that the likes of Stephen Moore, paul ryan, and the way right-of-center maniacs hate: The safety net.

we’d be better off with redistributive programs that are universal—parental leave, national health care—rather than targeted. Benefits available to everyone help people without making them feel like charity cases. Kuttner reports great things from Scandinavia, where governments support workers directly—through wage subsidies, retraining sabbaticals, and temporary public jobs—rather than by constraining employers’ power to fire people. “We won’t protect jobs,” Sweden’s labor minister recently told the Times. “But we will protect workers.” Income inequality in Scandinavia is lower than here, and a larger proportion of citizens work. Maybe a government can insure higher pay for its workers by treating them as if they were, in and of themselves, valuable. True, Denmark’s spending on its labor policies has at times risen to as high as 4.5 per cent of its G.D.P., more than the share America spends on defense, and studies show that diverse countries such as ours find it harder to muster social altruism than more racially and culturally homogenous ones do. Nonetheless, programs like Social Security and Medicare, instituted when a communitarian ethic was still strong in American politics, remain popular. Why not try for more?

Unfortunately, the maniacs are dead set against this.  They would rather govern with a fascist in the Oval office, as long as they can carry out their political agenda.  And they actively sell such a "development" model across the world too! :(

The dystopian social net

The friend always talks up a local organization. For all the good reasons, of course.  I have no problems with the work that they do.

But, I have always maintained that the presence, the need, and the growth of such organizations actually reflects something more serious that I have always been worried about: The breakdown in the social contract.  The big holes in the social safety net.

Consider, for instance, the homeless.  Whatever be the circumstance, there is something seriously wrong when there are homeless people out on the streets and in makeshift cardboard tents. Especially on cold and wet winter days and nights.  What happened to the social contract to take care of them?

Republicans decided a long time ago that this is not a collective problem that we need to address. To the typical Republican, protecting guns and protecting fertilized human eggs are the kinds of "collective" problems that taxes are for, and not to address real, in-your-face, human problems like homelessness.

Homelessness is not a blue-state problem nor a red-state problem.  It is not a problem faced only by fair-weather cities.   It is large-scale, with a whole range of reasons that are largely beyond the scope of any one local entity.  But, the rabid Republicans even stopped talking about these problems.  If they didn't recognize the problem, it does not exist, right?  And they can then press on with real problems like Haitians working with ISIS to steal all the American jobs!

These collective issues are then left to the liberal wusses and the truly religious to take care of them.  Our hearts bleed and we do our best to take care of them.  But, the massive effort requires the machinery of the government, which is exactly what the damn Republicans do not want to fund:

The dystopian social safety net alleviates pain and suffering, so it is necessary in the short term. But the roots of the pain and suffering need to be addressed, and when there are shortcomings (as there will be), the government should be the safety net, not only civil society.

A few months ago, I read about a group that was trying to help poor mothers post bail.  It is not as if these mothers had assaulted or killed.  Nope. It could even be simple scenarios like this: They have a broken brake light in their cars, which they have not fixed because of the precarious economic lives they lead.  The police officer tickets them, especially if the women are non-white. These women don't have the money to pay the ticket because they are dealing with far more pressing issues. And soon, well, the government decides that non-payment is a felony and they are jailed.

I donated money to that group.  That's what we bleeding-heart liberal wusses do.  But, groups like that shouldn't even have to exist in the first place!

But these programs, though wonderful and needed, shouldn’t have to exist in the first place. Of course, they should be praised and supported. But they should also be understood for what they are: temporary palliatives that we should not accept as long-term solutions.

Exactly.  But, guess who has to figure out the long-term solutions?

Such is the state of affairs, which we don't typically see in Scandinavia, for instance.  Why?  Because, the nearly all-white GOP is worried that the beneficiaries will be non-white people.

Is it, therefore, any surprise that the rabid republicans voted for the openly racist white male?  The surprise will be if he does not get re-elected!

In Lake Wobegon, everybody is above average

As trump continues to merrily sail with the supporting white supremacist winds (thank you, New Yorker) it is not only his adopted party folks who are trying to figure out how to deal with him and their own political futures--the Democrats are seemingly having a tougher time figuring out what message they want to convey to voters in 2018 and 2020, other than being anti-trump.

The temptation is to go uber-left.  After all, that was Bernie Sanders' platform, and of Elizabeth Warren's too.  I hope better sense will prevail.

Take for instance the case of minimum wages.   It is tempting to think that we can make the lives of the lower-income households by simply mandating higher wages.  If only the world were that simple:

There is new evidence that raising the minimum wage pushes business owners to replace low-skilled workers with automation. And it shows that old, young, female and black low-skilled workers face the highest levels of unemployment after a minimum-wage increase.
Economists Grace Lordan of the London School of Economics and David Neumark of UC Irvine studied 35 years of government census data for their working paper, which was released in August, titled "People Versus Machines: The Impact of Minimum Wages on Automatable Jobs."

After a long gap, I recently went to Target.  I was shocked that even that store has introduced self-checkout counters.  Which is exactly what happens when we make labor more expensive:

These automatable jobs include positions like supermarket check-out clerks, who can be replaced by self-service checkout cashiers, and assembly-line workers in manufacturing plants, who can be replaced by robotic arms. Low-skilled workers, for the study, are defined as those who have a high school diploma or less.

As Catherine Rampell writes:

It’s easier, or perhaps more politically convenient, to assume that “pro-worker” policies never hurt the workers they’re intended to help.

Or, as I learnt in graduate school, the road to hell is paved with good intentions!

More from Rampell:

We’ve already seen preliminary evidence that raising wages in Seattle to $13 has produced sharp cuts in hours, leaving low-wage workers with smaller paychecks. And that’s in a high-cost city. Imagine what would happen if Congress raised the minimum wage to $15 nationwide.
In West Virginia, the median hourly wage is just $14.79; in Arkansas, it’s $14.48; and in Mississippi, it’s a depressingly low $14.22. A $15 minimum wage could be binding on more than half of jobs in these states. In fact, in every state (not including D.C.), it could cover at least a quarter of positions.

Two years ago, I wrote in an op-ed about the minimum wage increase in Oregon:

Be careful what you wish for, we are advised. But then we don’t follow that advice anyway.

This guy gets pissed off that I always critique without offering solutions.  I will once again say the same thing: We work out the solutions politically.  Unlike a challenge of how to get humans to the moon and back, or how to vaccinate people, these are not technical issues.  In a democracy, we are, therefore, at the mercy of voters and politicians.

On this issue of minimum wages, all I can state with certainty is this: We do need to increase the federal minimum wage from the pathetic low of $7.25.  (States can have their own minimum wages, but it cannot be lower than the federal minimum.)  What is more urgent is the need to strengthen the safety net for the workers--from health care to child care to affordable housing to ... The new social contract that I have been arguing for years.  A new contract for which those with earnings that are way higher than the minimum wages have to pay higher taxes.  This much I know for sure.  The rest is up to the Democratic Party in 2018 and 2020.

The new normal is ... a new slavery?

In graduate school, a professor casually commented that unemployment is a privilege of the rich.  The poor simply cannot afford to be unemployed, he argued.

I had a question right then but did not ask.  I was way too self-conscious about my accent and I worried that I might have to repeat the question in order to be understood.  I stayed quiet.  The question was this: What if people are working but the returns are next to nothing.  You know, like slaves.  Like hamsters running forever but not really going anywhere.

That question continues to bug me.  I have forever worried that the automation means that owners of those digital abstractions will get to hoard way more money than ever before.  This, in a political environment that discourages redistribution of income, will lead to workers working away but ...

The NY Times adds more to my worries, via this chart:

Soure

So ...

The message is straightforward. Only a few decades ago, the middle class and the poor weren’t just receiving healthy raises. Their take-home pay was rising even more rapidly, in percentage terms, than the pay of the rich.
...
In recent decades, by contrast, only very affluent families — those in roughly the top 1/40th of the income distribution — have received such large raises. Yes, the upper-middle class has done better than the middle class or the poor, but the huge gaps are between the super-rich and everyone else.

Megan McArdle, who is by no means left of the political-economic center, writes about the slow wage growth even though unemployment rate is at a low, low 4.3 percent:

So this slow wage growth may simply be what the labor market now looks like. Earlier eras of tight labor markets produced big increases in wages, but those increases were matched by rising worker productivity. Today, employers striving for productivity may replace the worker altogether, either by outsourcing to a lower-wage country or by giving that job to a machine.
So the biggest mystery is not why U.S. wage growth seems stuck even as unemployment falls. The biggest mystery is how we’re going to adjust our economy, our culture and our politics to the new normal.

It is no mystery to me--I have forever blogged about the need for a new social contract.  If only this president and his minions, and the likes of Paul Ryan and Mitch McConnell who manically advocate tax-cuts for the wealthy, will honestly respond to these real trends, instead of inventing their own alternative facts!

I. Told. You. So.

But then you, like everybody else, would not listen to me!

In many posts here, I worried about the rapid annihilation of jobs in the retail industry.  In recent posts, like here and here, I expressed my concerns that unlike previous economic revolutions, this will not lead the displaced workers into more productive jobs.  Automation is king, of course,

It is not that the retail job losses are only in large metropolitan areas.  Nope.  They hit hard--perhaps even hardest--the very areas that also coincide with the regions that elected trump, whose empty rhetoric on coal and manufacturing apparently swayed the voters:

Small cities in the Midwest and Northeast are particularly vulnerable. When major industries left town, retail accounted for a growing share of the job market in places like Johnstown, Decatur, Ill and Saginaw Mich. Now, the work force is getting hit a second time, and there is little to fall back on.
Moreover, while stores in these places are shedding jobs because of e-commerce, e-commerce isn’t absorbing these workers. Growth in e-commerce jobs like marketing and engineering, while strong, is clustered around larger cities far away. Rural counties and small metropolitan areas account for about 23 percent of traditional American retail employment, but they are home to just 13 percent of e-commerce positions.
E-commerce has also fostered a boom in other industries, including warehouses. But most of those jobs are being created in larger metropolitan areas, an analysis of Census Bureau business data shows.

Of course that is the story.  Any lame-brained pretentious economic geographer in small town Oregon could have told you that!

“Every time you lose a corner store, every time you lose a restaurant, every time you lose a small clothing store, it detracts from the quality of life, as well as the job loss”

Yes, that is exactly how the downward spiral happens.  While in the aggregate customers are all better off thanks to the efficiency offered by e-commerce and automation, the impacts are local and tangible.  

As I have often argued here, politicians need to, therefore, rework the social contract and strengthen the safety net.  Instead, trump and his (adopted) party are hell bent on shredding even the minimal safety net of today.

This situation will only worsen with the increasing level of automation that we can and should expect.  So, what can be done?

Part of the answer will involve educating or retraining people in tasks A.I. tools aren’t good at. Artificial intelligence is poorly suited for jobs involving creativity, planning and “cross-domain” thinking — for example, the work of a trial lawyer. But these skills are typically required by high-paying jobs that may be hard to retrain displaced workers to do. More promising are lower-paying jobs involving the “people skills” that A.I. lacks: social workers, bartenders, concierges — professions requiring nuanced human interaction. But here, too, there is a problem: How many bartenders does a society really need?

Exactly.  It is not as if we need a gazillion bartenders and waiters.  Right?

So, can we think creatively in another way? 

The solution to the problem of mass unemployment, I suspect, will involve “service jobs of love.” These are jobs that A.I. cannot do, that society needs and that give people a sense of purpose. Examples include accompanying an older person to visit a doctor, mentoring at an orphanage and serving as a sponsor at Alcoholics Anonymous — or, potentially soon, Virtual Reality Anonymous (for those addicted to their parallel lives in computer-generated simulations). The volunteer service jobs of today, in other words, may turn into the real jobs of the future.

If trump and his (adopted) party cannot even understand how retail jobs vastly outnumber coal mining jobs, there is no way on earth will they even begin to understand that paragraph!

Who will pay for these jobs? Here is where the enormous wealth concentrated in relatively few hands comes in. It strikes me as unavoidable that large chunks of the money created by A.I. will have to be transferred to those whose jobs have been displaced. This seems feasible only through Keynesian policies of increased government spending, presumably raised through taxation on wealthy companies.

Yep, this will take reworking the social contract by increasing the tax on the gazillionaires--not by offering them more tax cuts!

Anything else that will be restatement of what I have been talking about and writing about for ever?

As for what form that social welfare would take, I would argue for a conditional universal basic income: welfare offered to those who have a financial need, on the condition they either show an effort to receive training that would make them employable or commit to a certain number of hours of “service of love” voluntarism.
To fund this, tax rates will have to be high. The government will not only have to subsidize most people’s lives and work; it will also have to compensate for the loss of individual tax revenue previously collected from employed individuals.

If only you would listen to me!

Here is the most interesting twist; the author of that essay, on how to deal with the increasingly sophisticated automation that borders on artificial intelligence, is:

Kai-Fu Lee is the chairman and chief executive of Sinovation Ventures, a venture capital firm, and the president of its Artificial Intelligence Institute.

Some day, sooner than later, there will be a few people who will regret not having listened to me ;)

The frightful adjunct economy

The US is embarking on a potentially disastrous experiment--to create freelance work without a social safety net.  This does not bode well.

Freelancers are not new to the higher education industry--over the years, the system has been increasingly employing part-timers, whom we refer to as "adjuncts."  In large metropolitan areas like Los Angeles, it is not uncommon for adjuncts to teach classes at more than one college.  Given the time they spend traveling from home to different campuses, they are also referred to as "road scholars."

Life as an adjunct is tough.  The additional income is great if one already has a full-time job.  This was my story when I started teaching in California.  But, without a full-time job, and relying on adjunct positions means they have to keep the departments and students happy--else, they lose the gig.  And, if budgets tighten up, they are the first ones to be let go.

When they lose their jobs, the former adjunct professors scramble for health insurance--this is a benefit that is tied to the job.  The lack of a national health plan was addressed only a few years ago with Obamacare, which might be gone really soon.  Retirement and disability benefits are also benefits that full-timers have.

This adjunct thing has not worked out well in higher education.  And now we are taking this disastrous approach to the rest of the economy, via Uber, and AirBnB, and ...

The industry that drove America’s rise in the nineteenth century was often inhumane. The twentieth-century corrective—a corporate workplace of rules, hierarchies, collective bargaining, triplicate forms—brought its own unfairnesses. Gigging reflects the endlessly personalizable values of our own era, but its social effects, untried by time, remain uncertain.

Remains uncertain is an understatement.

Normally, every efficiency has a winner and a loser. A service like Uber benefits the rider, who’s saving on the taxi fare she might otherwise pay, but makes drivers’ earnings less stable. Airbnb has made travel more affordable for people who wince at the bill of a decent hotel, yet it also means that tourism spending doesn’t make its way directly to the usual armies of full-time employees: housekeepers, bellhops, cooks.

We are rushing to decimate full-time work, and replacing that with part-time "gigs" that do not offer benefits and in a society with a frayed and tattered safety net.  All these are profound political transformations, but without the needed political discussions!

A century ago, liberalism was a systems-building philosophy. Its revelation was that society, left alone, tended toward entropy and extremes, not because people were inherently awful but because they thought locally. You wanted a decent life for your family and the families that you knew. You did not—could not—make every personal choice with an eye to the fates of people in some unknown factory. But, even if individuals couldn’t deal with the big picture, early-twentieth-century liberals saw, a larger entity such as government could. This way of thinking brought us the New Deal and “Ask not what your country can do for you.” Its ultimate rejection brought us customized life paths, heroic entrepreneurship, and maybe even Instagram performance. We are now back to the politics of the particular.
For gigging companies, that shift means a constant struggle against a legacy of systemic control, with legal squabbles like the one in New York. Regulation is government’s usual tool for blunting adverse consequences, but most sharing platforms gain their competitive edge by skirting its requirements. Uber and Lyft avoid taxi rules that fix rates and cap the supply on the road. Handy saves on overtime and benefits by categorizing workers as contractors.

 I don't understand how people think that all these will work out without serious discussions on a new social contract that reflects the rapidly changing 21st century conditions.  A new social contract will require the mega-mega-rich to spare a few dimes, but the GOP is only keen on giving them more tax breaks!

If all that doesn't worry one, there is more:

We are, all of us, in inescapable thrall to one of the handful of American technology companies that now dominate much of the global economy. I speak, of course, of my old friends the Frightful Five: Amazon, Apple, Facebook, Microsoft and Alphabet, the parent company of Google.

Enjoy, for now, because "It’s too late to escape."

How will you bet on Man v. the Machine?

Intellectually, rationally, I have a very tough time understanding how trump could have campaigned telling workers that he will bring back their old jobs.  It is beyond my imagination and understanding.  It is a crime to intentionally mislead gullible and helpless people by promising a future that simply cannot happen.  Yet, he did.  And he won telling such tales that have no basis in reality.

I, on the other hand, have been telling students for years that the reality of business decision-making, and the reality of advancement in science and technology, mean that anything that can be outsourced will be outsourced and anything that can be automated will be automated.

An essay by David Rotman--the editor of MIT Technology Review--is about all these issues, which make me worry even more about the demagoguery:

It is “glaringly obvious,” says Daron Acemoglu, an economist at MIT, that political leaders are “totally unprepared” to deal with how automation is changing employment. Automation has been displacing workers from a variety of occupations, including ones in manufacturing. And now, he says, AI and the quickening deployment of robots in various industries, including auto manufacturing, metal products, pharmaceuticals, food service, and warehouses, could exacerbate the effects. “We haven’t even begun the debate,” he warns

For a while now, I have also been telling students that the transition that we are now in will be challenging.  Painful for some.  Just like how the Industrial Revolution was a painful adjustment process.  The pain that led the Luddites to break a few machines.  But, that didn't stop the Industrial Revolution, did it?

I often quote Andrew McAfee--also at MIT--when I tell students that we haven't seen nothing yet.  Rotman writes that the changes coming our way will be beyond our imagination:

Joel Mokyr, a leading economic historian at Northwestern University, has spent his career studying how people and societies have experienced the radical transitions spurred by advances in technology, such as the Industrial Revolution that began in the late 18th century. The current disruptions are faster and “more intensive,” Mokyr says. “It is nothing like what we have seen in the past, and the issue is whether the system can adapt as it did in the past.”

Adapting to the changes will require principled and responsible political leaders.  Exactly the kind that we do not have today.  The November 2016 election threw out the only candidate who tried to bring a level of reason and responsibility.  That candidate talked a lot about the need for retraining, for which the US spends very, very little:

Even that little bit that we spend, well, left to the GOP they want to gut it because they will rather spend the money to strengthen the military, and provide taxcuts to the rich!

Not only might automation and AI prove particularly prone to replacing human workers, but the effects might not be offset by the government policies that have softened the blow of such transitions in the past. Initiatives like improved retraining for workers who have lost their jobs to automation, and increased financial protections for those seeking new careers, are steps recommended by the White House report. But there appears to be no political appetite for such programs.

How terrible!

The economic anxiety over AI and automation is real and shouldn’t be dismissed. But there is no reversing technological progress. We will need the economic boost from these technologies to improve the lackluster productivity growth that is threatening many people’s financial prospects. Furthermore, the progress AI promises in medicine and other areas could greatly improve how we live. Yet if we fail to use the technology in a way that benefits as many people as possible (see “Who Will Own the Robots?”), we risk fueling public resentment of automation and its creators. 

It is way, way, way more difficult to understand these issues and convey these to voters who need to be educated on such matters.  It is far, far, far easier to simply yell and tweet Make America Great Again!  What an asshole trump is, and what a bunch of assholes the GOP leaders are!

Automate or die

My class freaked out when we got to discussing the economic geography of the future that will be highly automated.  Well, these are the latest class to get all worried; I have been doing it to students for a few years now.  Because, it has been an open secret that automation has been replacing humans at various jobs here in the US. However much trump wants to tell his people that China, Mexico, and India are to be blamed for their job losses, automation is the real story.

And that story has barely begun.  You ain't seen nothin' yet!

Imagine if trump and his people were to even glance at the headlines that USA Today recently had:

Bill Gates: If a robot takes a human job, it should be taxed

Read that again.  It is Bill Gates.  Yes, that Bill Gates.  He is making an argument that robots taking jobs from humans should be taxed.

Not a human in China, Mexico, or India, but a robot right here in America!

Ah, but all these are nothing but fake news anyway, right Mr. President?

There is a reason that Bill Gates wants to talk about taxing robots.  Robots are not the real problem.

Well, automation is for real, and the robots--physical and software agents--are an unstoppable force.  But, we humans are the ones designing and using the robots, right?  Who benefits from the use of automation?

Answering that question, which is what Gates does, means that trump and the Republicans have to seriously engage with a topic that they would rather not: Redistribution.  Or, if you prefer the milder phrase that I have been blogging about for years: The Social Contract.

The NY Times gets to that in its editorial:

While breakthroughs could come at any time, the problem with automation isn’t robots; it’s politicians, who have failed for decades to support policies that let workers share the wealth from technology-led growth.

You think that the fabled white working class will not support this, if the logic is explained to them?  They will immediately embrace it.  They will demand a new social contract.  But, of course that is exactly what trump and his party do not want to do.  After all, the white nationalist party hates the very idea that some brown-skins might also benefit from this redistribution!

The editorial gives a quick lesson in economic history, and then concludes with:

Economic history shows that automation not only substitutes for human labor, it complements it. The disappearance of some jobs and industries gives rise to others. Nontechnology industries, from restaurants to personal fitness, benefit from the consumer demand that results from rising incomes in a growing economy. But only robust public policy can ensure that the benefits of growth are broadly shared.
If reforms are not enacted — as is likely with President Trump and congressional Republicans in charge — Americans should blame policy makers, not robots.

My guess is that such reforms will not even be discussed.  And trump and the GOP will continue to blame China, Mexico, and India, and the white voters will continue to vote for the white supremacists who promise to beat up on the non-whites.

Empathy and the social contract

First, read the following excerpt:

It is impossible to imagine Bill Gates’s wealth without Bill Gates’s ingenuity and effort. But it is far easier to imagine Bill Gates’s wealth being produced by someone other than Bill Gates within the institutions of modern American economic society than it is to imagine Bill Gates generating Bill Gates’s wealth in a different time and place – in France in the 1700s, or in the Central African Republic today – in which society was or is less tolerant of entrepreneurial capitalism and the accumulation of personal billions, and where the community of engineers that gave rise to and became America’s tech sector is absent. Indeed, at some point in Microsoft’s history it was Microsoft the information-processing organism that was more critical to Bill Gates’s wealth accumulation than Bill Gates himself. People, essentially, do not create their own fortunes. They inherit them, come to them through the occupation of some state-protected niche, or, if they are very brilliant and very lucky, through infusing a particular group of men and women with the germ of an idea, which, in time and with just the right environment, allows that group to evolve into an organism suited to the creation of economic value, a very large chunk of which the founder can then capture for himself.

That paragraph can easily be used as some kind of an ideological  Rorschach test.  Upon reading that, one can get pissed off and defend Gates's gazillions, or one might applaud in agreement that Gates has been unfairly hogging it all, or ... whatever.

To me, what makes that paragraph standout is this: The author, Ryan Avent, is senior editor and economics columnist at The Economist.  You might remember him from one of my earlier posts?  One of the many reasons why I have been a long-time reader of the Economist is this: It is not an ideological outfit.  It is not like the Nation or the Wall Street Journal.  There is a sensibility that reflects a much broader understanding, which Avent also displays in his essay.

In the essay from which I had excerpted that paragraph, Avent makes an argument that will certainly make one sit up:

The wealth of humans is societal. But the distribution of that wealth doesn’t rest on markets or on social perceptions of who deserves what but on the ability of the powerful to use their power to retain whatever of the value society generates that they can.

His follow-up sentence?  "That is not a radical statement."

After quoting Adam Smith and the wonderful advantages of trade and specialization, Avent writes:

Secure in the knowledge that societal growth would not reduce redistribution (and could indeed increase the value available for redistribution by increasing global output) the incentive to draw the borders of society tightly would be curtailed. The challenge, of course, is to create the broad social interest in an encompassing redistribution. How to do that?

Isn't that the challenge that I have been struggling with all my adult life!  How do we create the broad social interest in redistribution that is needed along with the open borders, trade, and specialization?  How do we develop a social contract that will include redistribution, which the ideologues from the right hate, while also allowing for free trade that the ideologues from the left hate?

Avent writes that Adam Smith the philosopher wrote about that too.  "The force of human empathy can be made to serve either openness or societal mercantilism."  Here again the problem is that we are far more empathetic to people like us, but not towards people completely unlike us.  We conveniently forget that deep down we are all humans, but only view each other through nationalistic or religious or ethnic, or whatever divisive lens we want to use.

There is a better answer available: that to be ‘like us’ is to be human. That to be human is to earn the right to share in the wealth generated by the productive social institutions that have evolved and the knowledge that has been generated, to which someone born in a slum in Dhaka is every bit the rightful heir as someone born to great wealth in Palo Alto or Belgravia. ...
Rich societies can find ways to justify their great wealth relative to others: their members can tell themselves stories about the great things they did that others could not have done that made them wealthy beyond imagination. Alternatively, they could recognize the wild contingency of their wealth, cultivate human empathy, and do what they can to extend the wealth of humans to everyone.

If only we had more empathy.  If only we spent at least as much time thinking about what it means to be human as we spend on entertaining ourselves.  If only ...

May we please work on a new social contract?

In the old, old days, I would wander in the library and read whatever interested me.  The key word is "interested"--because there were plenty of occasions when I was interested in what I read but had no idea what the author was writing about.  It is like watching an avant garde movie, La Sapienza for instance, and then later reading up to understand the subtext.

These days, I don't aimlessly walk around in libraries.  I browse from home.  Saves me a whole lot of walking, but my fingers ache! ;)

It is through browsing that I came across this interview in the Harvard Business Review.  I got excited because it features everything that I talk and write about: Globalization, labor, robots, footloose corporations, welfare safety net, gig economy, college education, ... Aren't you, too, impressed with what the interview covers?

HBR's editor interviews some guy who was the head of some firm that I had never heard about.  Let's be honest here; I can't know it all! ;)  The guy is Jeffrey Joerres who apparently " led ManpowerGroup for 15 years before stepping down in 2015."  I had to check with Wikipedia (more achy fingers) to find out how big a firm that is.

I want to focus on a couple of observations that Joerres offers in that interview:

Companies are doing more “micro footprinting,” and that takes a nomadic mentality: You’re ready to pick up and move when required. Large footprinting, on the other hand, means you’re committed to a community for better or worse. More and more, companies will need to take a dual approach, establishing large locations and more-temporary, smaller operations at the same time.

Did you also catch that sentence? "Large footprinting, on the other hand, means you’re committed to a community for better or worse."  In the old days, companies were committed to the communities that were their home.  GM in Flint, Michigan, was that classic model.  But, those days ended almost all of a sudden.  Gone.  Which means that local governments and people can/should never, never, never, assume that a corporation will come to stay for the long haul.

Elsewhere, Joerres says:

In many ways, what we have now in the U.S. is similar to the early 19th century, when the Luddites first worried that machines were going to steal their jobs. We must deal with the reality that when full-scale robotics and AI arrive in a broad-based, affordable, easily justifiable way, we’ll see enormous waves of workers put out of work and ill prepared to take on very different jobs. This is going to create challenges that our institutions are not ready for.

It is one thing for a semi-baked nutcase like me to keep saying that.  As my old grad school professor made sure we understood, it is not what you say but who you are when you say that.  In this case, plenty will/should listen to what Joerres says.

We are not ready for the changes that are coming.  Not only are we far from ready, the existing system is terribly broken:

Our institutions are inadequate. Look at unemployment compensation, welfare, Social Security—these were all put in place in the middle of the past century. And they were based on certain assumptions: that when you lost your job, you would go through a process and on the other side find a job that you’d then have for a long time. Today that’s not going to happen. Look at the gig economy, look at parsed work—all these models just allow us to move faster. My dad had a second job. He went to a gas station after he got home from his first job, and he ate his dinner in between. Well, second jobs look different now. Uber is a second job. So what do you do when someone is collecting unemployment and takes a job with Uber to moonlight while he’s in training for a new full-time job? Should he lose food stamps or health care because he’s earning a little extra money to get by? Our systems look broken because they’re trying to fit things into the way the labor markets worked in the past.

Ahem, how long have I been saying this by yelling all the time about the need for an updated social contract?

Ok, are universities the panacea?

The same goes for broad-access universities. They’re built on the old labor models. They’re not turning out graduates with the skills companies need. So we have to refashion these institutions that are so important to our society.

In case you are wondering what a "broad-access university" is, well, those are the overwhelming majority that are not the elite research universities and liberal arts colleges.  The "broad-access university" description includes the university where I teach.  Again, in how many different op-eds and blog-posts have I been complaining about the old-fashioned higher education structure?

I love a solution that Joerres offers:

I think we need an iterative model. Why does it have to be all in or all out? Why can’t someone be on partial welfare? Or on partial unemployment compensation? If a worker loses her job that paid $50,000 a year but can only find a new job for $40,000, her unemployment compensation goes away, but she has lost $10,000. Why don’t we make up the difference for her for another six months because she had what it took to go out and find a job? Some people might see that as a giveaway. It’s not. It’s a small price to pay to encourage that worker to get back into the market. I’d rather pay someone to be in the market than out of the market.

Exactly!  If only we could talk about such important issues, instead of the wasted time and energy on crap!

Captain Goodhope is dead. Long live General Malaise!

I first came across the idea of "social contract" in graduate school.  "Aha!"  I realized that my teenage infatuations with various anti-social political elements were nothing but a result of my frustrations with the existing atrocious social contract and a desire to contribute to rewriting it.

In recent years, as the global economic geography began to tear up the fabric of the fabled middle-class life in America, I started yelling again my frustrations with the political system that was seemingly uninterested in rewriting the social contract.  Of course, nobody listens to me.

The frustrations got worse when the political faces for the rewriting came in the form of Bernie Sanders and the fascist!  Major Buzzkill got promoted to General Malaise ;)

The next best thing then is to wallow in excellent company.  Like with Laura Tyson and Anu Madgavkar.

The consequences of such failures are far-reaching. Stagnating or falling real incomes do not just act as a brake on consumption demand and GDP growth; they also fuel social and political discontent, as citizens lose confidence in existing economic structures.

Yep. And, unlike me, those two are awesomely qualified people to say that.

MGI surveys in France, the United Kingdom, and the US have found that people whose incomes are not growing, and who do not anticipate an improvement, tend to view trade and immigration much more negatively than those who are experiencing or foresee gains. The Brexit vote in the UK and bipartisan opposition to trade agreements in the US are clear signs of this.

In case you are wondering about MGI: It ain't any socialist think-tank!  McKinsey Global Institute is as pro-capitalist as it can get, as I am sure this guy would attest to.

Another expert--this time a male, for a change--who is a columnist at another pro-capitalist publication, The Economist, also states the same ideas, using different words:

I think we are headed for a really important era in economic history. The Industrial Revolution is a pretty good guide of what that will look like. There will have to be a societal negotiation for how to share the gains from growth. That process will be long and drawn out. It will involve intense ideological conflict, and history suggests that a lot will go wrong.

A lot will go wrong?  Looks like I have company in the buzzkill department ;)

 Bernie Sanders and Donald Trump are two sides of the beginning of this social evolution. Bernie is pushing along the direction of, "let’s distribute more." Trump is pushing along a related direction which is, "let’s exclude others who are not like us."

I tell ya, misery loves (excellent) company!

So, what kind of challenging political/ideological issues can we expect in the near future?

What comes next would be higher wage subsidies and in-kind benefits, like tuition-free college or subsidized health care. But it’s coming, and the debate will be: If we’re going to pay people to do work that isn’t necessary, who do we let into the system? Who is allowed to benefit?

If only we the people could talk about all these as responsible adults.  Oh well, democracy ain't perfect!

We have met the enemy. It is us!

A few weeks ago, I wrote here--yet again!--about how reworking the social contract years ago could have helped in many ways. It is darn frustrating that something that has been so obvious was never the majority view, and continues to be marginalized. All I can do is keep talking/writing about it by pointing out that there are others with real influence--unlike my irrelevant status at work in life.

Enough about me.  Let us get to the issues, right?

Joseph Stiglitz, who is a recipient of the Nobel Prize in economics and whose heart has always been in the correct place, writes:

Under the assumption of perfect markets (which underlies most neoliberal economic analyses) free trade equalizes the wages of unskilled workers around the world. Trade in goods is a substitute for the movement of people. Importing goods from China – goods that require a lot of unskilled workers to produce – reduces the demand for unskilled workers in Europe and the US.
This force is so strong that if there were no transportation costs, and if the US and Europe had no other source of competitive advantage, such as in technology, eventually it would be as if Chinese workers continued to migrate to the US and Europe until wage differences had been eliminated entirely. Not surprisingly, the neoliberals never advertised this consequence of trade liberalization, as they claimed – one could say lied – that all would benefit.

Way back in graduate school, which is when I was getting introduced to various political economic thoughts that I had to quickly understand after years spent in science and technology,  And that was also when I got to understand some of the discussions on fairness and social contract.  I have loved that idea of "social contract" since then.  Stiglitz writes about the social contract:

But they can’t have it both ways: if globalization is to benefit most members of society, strong social-protection measures must be in place. The Scandinavians figured this out long ago; it was part of the social contract that maintained an open society – open to globalization and changes in technology. Neoliberals elsewhere have not – and now, in elections in the US and Europe, they are having their comeuppance.
Globalization is, of course, only one part of what is going on; technological innovation is another part. But all of this openness and disruption were supposed to make us richer, and the advanced countries could have introduced policies to ensure that the gains were widely shared.
Instead, they pushed for policies that restructured markets in ways that increased inequality and undermined overall economic performance

If I--a nobody--am pissed off that nobody listened to me, think about Stiglitz who has been very much a part of the domestic and international political institutions and, yet, has not been able to bend the political will on this.  I wonder how angry he is!

Stiglitz writes that "the problem was not globalization, but how the process was being managed."  And that is also the point in this NY Times editorial.

Trade and globalization have been miraculous for hundreds of millions all around the world.  Without that economic dynamic, we would not have had the flourishing middle class populations in China and India, for instance.  When talking with my parents yesterday, my father remarked that a couple of decades ago, he could not afford to even pay for the autorickshaws and, instead, he and my mother used the public transport buses if they wanted to visit with people,  which they loved doing.  Two decades of trade later, there are now Chinese and Indian tourists traveling all over the world--the kind of travel that not too long ago was almost exclusively an American possibility because only Americans were rich enough for that.  

If only we would recognize that the world is much better off now.  The problem is not globalization but our collective failure to understand the urgency, the importance, of rewriting the social contract in which those who are losing out will be compensated.  

One hundred years of ... "Inquilab Zindabad"?

The Russians who talk with Svetlana Alexievich in Secondhand Time are pissed off at how their lives have been ruined.  Their hate for Mikhail Gorbachev, whom we in the west laud, is not superficial.

Their lives were ruined because they were told that if they kept doing whatever they were doing, then the state would take care of them later on in their lives.  And then Gorbachev introduced perestroika and glasnost and the system fell apart.  The Soviet Union fell apart.  Their lives fell apart. As the book portrays, at the top of the system,  Marshal Sergei F. Akhromeyev, chief military adviser to President Mikhail S. Gorbachev, committed suicide, while a "commoner" literally set himself on fire.

The book also  helps me understand the frustrations of the typical middle-class people here in the US, or in Britain.  They were told that if they kept doing whatever they were doing, then their lives were set and that everything would work out fine.  The Soviet Union fell apart. China and India opened up. The world's economy dramatically changed. The lives of the typical middle-class were altered forever, and tomorrow seems immensely more uncertain than yesterday ever was.

What puzzles me is this: Observing the world from the banks of the Willamette, and working at a podunk university where I am ignored and shunted away to a voiceless corner, I have been commenting for a long time about the urgency to fundamentally restructure the social contract, fully recognizing that the economic forces of today do not resemble those from the New Deal era, with technology further complicating things with innovations that keep upending more jobs.

So, ... I wondered when it was for the first time that I argued about the need for a new social contract.  I was curious not about my writings in my blog, but in this guy's--I thought it might be a good indicator of how I have been yelling outside like a mad man ;)  I tracked it down--May 23, 2013.  At the end of a lengthy rant, I wrote there:

 it is one loud reminder that the social contract is in tatters.
Of course, we are not going to agree on how to re-work and re-word a new contract. But, the shame of it all is that while a bunch of us folks from different parts of the world are talking about it here, the ones who should talk about these--the Congress--will stage some dramas, take a few photos, and then go home to screw people up some more.

Imagine if three years ago Congress here, and the Parliament in the UK, had really done constructive things in order to ease the new challenges that the typical middle class was facing.  Instead, they didn't do shit.  To make things worse, they further tightened the screws on the middle class. by slowly dismantling the little bit that was left.  For instance, Mike knows well how expensive college has become now compared to his father's days when the government offered his father a much better social contract.  College is merely one aspect of the social contract.

I didn't give up.  Almost exactly three years ago--June 26, 2013--at the end of another lengthy comment at another post, I wrote (note that OWS is Occupy Wall Street):

I don't think it is about economic growth as much as it is a disagreement over how the growth ought to be shared. It will be easier if only it were about economic growth alone. Turkey has had some fantastic growth over the years. It is really not about wanting more growth there. OWS was not about more growth, and neither are the protests in Brazil.
In a few previous posts, here and at my blog, we have agreed, while disagreeing, that the time is ripe, or even overripe, in terms of rewriting various aspects of the social contract that exists within each country. Mere economic growth does not seem to be sufficient, though at least modest rates might be necessary.
I suspect that these issues will not go away any time soon because rewriting those contracts won't be easy.

I tell ya, it is the story of my life that nobody listens to me--not even Ramesh! ;)

David Brooks notes in his column over at the NY Times:

Their pain is indivisible: economic stress, community breakdown, ethnic bigotry and a loss of social status and self-worth. When people feel their world is vanishing, they are easy prey for fact-free magical thinking and demagogues who blame immigrants.

Brexit, Bernie, and Trump are, therefore, no surprise to me.  It is an interesting ironical coincidence that these are fomenting another revolution nearly a hundred years since that history-changing October Revolution. Oh, wait, the October Revolution was in November, and the US elections will be almost exactly the same date: November 8th.  Cue the Twilight Zone theme ;)

I wonder how Putin and Russia will mark the one hundredth anniversary--not by inviting Gorbachev, I am sure!

ps: I intentionally used "Inquilab Zindabad" in the title of this post--to remind Ramesh about his post in 2013 ;)

The poor will always be with us?

Soon after the fall of the Soviet system, in an issue devoted to poverty, The Economist included a lengthy essay with a title that was something like "the poor will always be with us."  Only when reading that piece did I know that the magazine newspaper was playing on a verse from the Bible.

Over the years, we have certainly seen a dramatic reduction in the number of poor around the world, and the percentages now are nothing compared to decades past.  But, we still have the poor, especially in rich countries.  When we overlay on this the issues of income inequality and the implications of the digital revolution, is there anything else that we can do?

Why not simply give everybody money and take care of poverty?

Figure out a reasonable amount — the official poverty line amounts to about $25,000 for a family of four; a full-time job at $15 an hour would provide about $30,000 a year — and hand every adult a monthly check. The minimum-wage worker stretching to make it to payday, the single mother balancing child care and a job — everybody would get the same thing.
Poverty would be over, at a stroke.
Being universal — that is, for the homeless and the masters of the universe alike — the program would be free of the cumbersome assessments required to determine eligibility. It would also escape the stigma typically attached to programs for the poor.

That is the very idea of Basic Income.  

In my classes, I present students with a thought experiment.  The digital technology is getting better by the minute and software and physical robots are making the economy highly productive. At the same time, quite a few, whose jobs have been eliminated thanks to the "digital workers" are earning little even  when working a lot.  So, in the near future, if the "digital workers" are productive enough and all it takes is a little bit of taxes on the rich to guarantee everybody a basic income, will the students support such an idea?

Switzerland put that to test, via a referendum:

Final results from Sunday's referendum showed that nearly 77% opposed the plan, with only 23% backing it.

Among those who opposed it, there was a worry that the open borders would immediately attract quite a few:

Luzi Stamm, a member of parliament for the right-wing Swiss People's Party, opposed the idea.
"Theoretically, if Switzerland were an island, the answer is yes. But with open borders, it's a total impossibility, especially for Switzerland, with a high living standard," he said.
"If you would offer every individual a Swiss amount of money, you would have billions of people who would try to move into Switzerland."

This is only the beginning.

Finland is gearing up to launch a large-scale trial next year, and a more limited effort is current underway in Utrecht, the Netherlands. Y Combinator, the US-based investment company, is doing a pilot in Oakland, California. The government of Ontario, Canada, is launching a test this year, and GiveDirectly, a cash transfer charity, is doing a test in Kenya.

Do not hastily conclude that it is only the knee-jerk liberals who support the idea.

Some thinkers on the right, too, have managed to overcome their general distaste for government welfare to support the idea. This month, Charles Murray of the American Enterprise Institute will publish an updated version of his plan to replace welfare as we know it with a dollop of $10,000 in after-tax income for every American above the age of 21.

We need to continue to think about these, and more, because we need to design a new social contract for the twenty-first century, in order to replace the highly frayed safety nets from the previous era.