2013 April 27 Saturday
Paraguay Grows At 13% This Year, Little Impact On Poor

Land owners need robotic laborers more than human laborers.

“Nearly all of the growth is driven by highly mechanized agriculture, which generates few jobs for the population,” said Andrew Dickson, an expert on Paraguay’s development policies at the University of Birmingham in Britain. “With a government that finances itself largely through value-added taxes and taxes on imports, you have a situation rather like a low-income African country.”

We are witnessing a big historical turn: the fate of the lower classes is decoupling from the fate of the upper classes. Low skilled people provide no advantage over machines. The era of Zero Marginal Product workers has arrived. The extent of this problem is being partially hidden in the United States by putting people into welfare programs which are mislabeled. Our welfare state for working age people is bigger than it looks.

Share |      By Randall Parker at 2013 April 27 11:10 AM 


Comments
John said at April 27, 2013 12:45 PM:

"Low skilled people provide no advantage over machines. The era of Zero Marginal Product workers has arrived."

But the land owners provide no advantage over machines either. Being a land owner or an owner of anything else just depends on holding the title to property protected by the government. A machine could hold the title to a piece of property protected by the government just as well as a human could. In fact, a machine could do it cheaper and more efficiently than any human could. For example, a small flash drive could hold the title to a piece of property without requiring costs such as food, water, etc. that a human property title holder would require.

Shouldn't land and other property owners also be considered Zero Marginal Product workers?

Randall Parker said at April 27, 2013 6:50 PM:

John,

No. A few points:

1) Capital makes the value of the land far greater.

2) Accumulation and management of capital is done far better by those smart people who have longer time horizons and management skills.

3) Computers are not yet displacing many brain workers. Rather, so far, they have been amplifying the value of brain workers on the job market. For example, people with mathematical skills are more valuable because computers can collect and process far more data. The statisticians and machine learning specialists can figure out how to process the data.

4) Computers are underutilized for doing professional work. I think this is especially true in medical diagnosis and treatment decisions.

5) Take away property owners and the farms would not get worked. By contrast, humans are getting removed from assembly lines, tech support systems, cash registers, bank teller stations and other work positions by computers. Those things still flow.

Mthson said at April 27, 2013 7:27 PM:

John,

Property is stored value. Money is also stored value.

So when someone buys property, like investing in a company, they don't get profits simply because they "hold the title to property," they get profits because they gave their stored value (money) to the company, which then used it to create further value.

So when someone says they'd never buy stock because if they did they'd be profiting from doing no work, that's just a failure of abstraction. The work was already done in order to create the stored value.

John said at April 27, 2013 10:19 PM:

Randall,

I didn't say anything about taking away property owners. I'm talking about replacing human property owners with machine or robot property owners. If the deed to your house were transferred to a machine, the machine would be the property owner of the house. So shouldn't land and other property owners also be considered Zero Marginal Product workers relative to machine property owners? A flash drive land owner would have much higher marginal product than a human one since the costs would so much lower. A flash drive requires no calories hence no food, water, etc. necessary.

John said at April 27, 2013 10:23 PM:

Mthson,

There are rents that accrue to property owners simply by virtue of holding the title to property. These are different from business profit or gains from risking assets and working.

If you buy a plot of land, and the population and economy around that land grows, rents will accrue to that land and then to you simply by virtue of you holding the title to that land, without the land or the money you paid for it being involved in the population and economic growth around it.

Randall Parker said at April 28, 2013 5:03 PM:

John,

A machine isn't (yet) capable of making the vast majority of the decisions about the property.

Look at Paraguay. The property owners are doing a great job making sure the government doesn't become a tool for sucking money from them to feed the lower class. A computer couldn't do that.

John said at April 28, 2013 5:50 PM:

Randall,

We're talking about owning i.e. holding the title to property, not about using or directing the property. Many human property owners make little or no executive decisions about the property they own.

The Paraguay example supports my point. The article you quote in your post notes that the Paraguayan government, which protects the titles to property in Paraguay, is not financed by the holding of property, but by value added taxes and taxes on imports. So the machine property owner would have even less to do. It wouldn't even have to pay taxes for holding the title to property.

Randall Parker said at April 28, 2013 6:35 PM:

John,

Who chooses the property managers?

will starve for food said at April 28, 2013 7:25 PM:

without surplus population to feed, there isn't a need for so much farm land.

maybe condos for robots is the real estate investment to riches?

will starve for food said at April 28, 2013 7:27 PM:

without surplus population to feed, there isn't a need for so much farm land.

maybe condos for robots is the real estate investment to riches?

John said at April 28, 2013 7:41 PM:

Randall,

There are rents that accrue to property owners simply by virtue of holding the title to property before or without any property management taking place. It is the exclusive title to the property provided by the government that creates this economic rent. The rental value of a plot of land, for example, can exist without any management of the land taking place.

Randall Parker said at April 28, 2013 8:18 PM:

John,

If you own a farm and have a manager for it you have to actively manage the manager and watch for problems. But farmers are doing most of the management and other work themselves.

The rental value of a plot of land: for what purpose? Logging? Farming? Someone else has to get utility from renting the land or the renting won't take place.

John said at April 28, 2013 10:07 PM:

Randall,

If you own a piece of property and hire a property manager, the manager receives a wage for his labor. If you manage the manager, there is a "wage" associated with this activity. Managing the manager does not create the rental value of the property. If you're a landlord and you hire a property manager to make sure the lawn is mowed every week, and you manage the manager by driving by the house once a week to see if he has mowed it, this activity of driving by the house once a week and looking at the lawn does not create the rental value of the property.

asdf said at May 1, 2013 10:37 PM:

Randall,

Let us say I inherit my Aunt's Upper East Side apartment. I can charge many thousands of dollars a month in rent. Now, if I don't really want to do the work of renting it out and I pay a person. I can likely find someone to do that reliably for a small fraction of that rent every month. What exactly am I doing to earn all the money? Someone else is managing it. Yet I'm getting thousands of dollars in value out of the thing every month for what? Deciding to hire the manager. Checking in once a year to make sure they aren't ripping me off. Even if they are most of the heavy lifting of protecting my property will be done by police and the courts. It's not like I need to do that stuff myself.

So how is it I can earn more then many STEM workers in Manhattan earn at their jobs for what seems to amount to a few hours of work a year tops? Could it be that I'm just collecting a "economic rent".

We could change the issue away from inheritance. I could simply have been some schmuck that bought an apartment back in the 1970s because I got a job in the city. I had absolutely not clue about the massive changes that would have resulted in NYCs revitalization at the time. And yet I still would have seen my apartment increase in value dramatically even though it had nothing to do with my insight or management. That windfall could easily have been worth more then my entire earnings in the time I lived in NYC.

Randall Parker said at May 2, 2013 8:29 PM:

John,

Who are the "you" who would replace the human owners with robotic owners? Are you really the government who want to use the "robotic owners" as a way to avoid resistance from human owners to your desire to do with the property what you want?

To put it another way: What's the motive?

I understand the motive to use robots to plant, tend, and harvest crops: lower costs so that the owner makes more money. But whose costs are you trying to lower by cutting out the human owner?

Or perhaps the real question is this: what other problem are you trying to solve?

asdf,

I happen to know a guy who owns rental property in NYC. I asked him about it once. He described a system of taxes, fees, very high repair costs, insurance, and other costs that make his ROI incredibly low. The city government gets a much higher ROI from the property than he does. I think he just likes the feeling of ownership.

People who strike it rich by buying the right stuff at the right time: Yes, it happens. But what of it? I mean, is this a reason to cut out landlords? Imagine instead government owned apartment buildings. Well, some governments do. How well does that work out?

One can cite examples and patterns of unfairness. But one needs to present a practical alternative or make peace with the assorted unfairnesses.

asdf said at May 3, 2013 6:18 AM:

ROI has nothing to do with it. That assumes a purchase price. The whole point of ROI is that the price will rise to the point that no matter how much value the asset produces it will balance out. In my examples the purchase price is zero (inheritance) or much lower then market (buying at the right time). So ROI is neither here nor there.

"But one needs to present a practical alternative or make peace with the assorted unfairnesses."

You already mentioned it. Your friend pays lots of taxes and fees on the land. Make them higher. That will reduce the purchase price and the ROI will remain the same.

Tax revenue for services needs to be raised. I would rather raise it from passive assets then active work income.


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