2013 November 24 Sunday
America's Future: The New Feudalism
Writing in The Weekly Standard Charlotte Allen has a great (really, read it) piece about how Silicon Valley shows us our future: Silicon Chasm: The class divide on America’s cutting edge.
No middle class, unless the top 5 percent U.S. income bracket counts as middle class.
In other words, what is coming is the “new feudalism,” a phrase coined by Chapman University urban studies professor Joel Kotkin, a prolific media presence whose New Geography website is an outlet for the trend’s most vocal critics. “It’s a weird Upstairs, Downstairs world in which there’s the gentry, and the role for everybody else is to be their servants,” Kotkin said in a telephone interview. “The agenda of the gentry is to force the working class to live in apartments for the rest of their lives and be serfs. But there’s a weird cognitive dissonance. Everyone who says people ought to be living in apartments actually lives in gigantic houses or has multiple houses.”
An important point in the article: America's new technological giants and money making machines employ very few people. A few tens of thousands don't count for much as compared to the hundreds of thousands employed by many American industrial giants when they were at their peaks. Even today GM employs more than the top 5 Silicon Valley companies combined.
The middle class is going down and things are even worse for the cognitively below average. This is not a good time to be average.
What I want to know: Will the shrinking of the middle class and the use of greater quantities of imported labor cause some sort of popular reaction that will move the Overton window and enable changes in policy that will at least slow the decline of the middle class? Or will current trends continue unabated? I have no idea.
While techno-optimists foresee a coming golden age for the masses where robots make us all much more affluent my guess is that the robots won't work for the poor masses and capitalists will move capital and the most skilled workers to smaller nations. In other words, the masses might eventually gain the ability to vote for greater amounts of wealth redistribution. But the people they will want to redistribute from will have decamped for friendlier tax systems by the time that happens.
I think the key challenge for the upper class in the future is to carve out political systems they can control without any threat from mass democracy and in areas which have great weather. They need a place they can control which is like coastal California or Coastal Chile but without much native population. Where can they do this?
By Randall Parker at 2013 November 24 08:32 PM
"And now the two forces, Industry and Finance, are in a struggle to see whether Finance is again to become the master, or creative Industry." -- Henry Ford
Well, we know who won.
The best thing they could do would be to remove to some isolated locale and leave the rest of us to our own devices and good riddance. The thing is, for all their talk, they won't do it. They buy their own material, but only up to a point. When it comes right down to it, they know in their heart of hearts that they walked in and harvested the technological crop that had been planted and cultivated in the land grant colleges of the US long before they arrived on the scene to elbow the rightful beneficiaries into serfdom. They'll figure out some way to hang around and bitch and moan.
Where can they do this?
They can build their own islands
America's new technological giants and money making machines employ very few people. A few tens of thousands don't count for much as compared to the hundreds of thousands employed by many American industrial giants when they were at their peaks. Even today GM employs more than the top 5 Silicon Valley companies combined.
This is to be expected in an industry that is constantly increasing efficiency. Once an effective CASE (computer aided software engineering) becomes available, expect the number of coders to drop one or two magnitudes of order. Growth for the rest of us must come from other industries (oil and gas shale revolution, fusion power enhanced manufacturing. etc.).
"And now the two forces, Industry and Finance, are in a struggle to see whether Finance is again to become the master, or creative Industry." -- Henry Ford
Indeed. I view this as the fundamental war of this time. Finance seems to have had the upper hand over the past 20 years. Hopefully, 3D printing, DIY biotech, nanotechnology. and other developments will shift the balance to creative industry. Creative industry creates wealth. Finance alone is parasitical (kind of like socialism).
I should clarify that while there may be some, like Peter Thiel or Elon Musk, who have enough in common with the nation of settlers in the US that they will walk their talk, the rules of the game now favor the Chinese.
What game? What rules?
Why, the game of claiming that the real inventors deserve to have the highest suicide rate of almost any professional group because the benefits of their innovation should go to those capable of "capitalizing" on them -- although the centralization of capital resembled more the centralization of power in communist bureaucracy than anything out of an Ayn Rand novel.
For a long time, these "rules" worked for those invading the US but when the Chinese commies got wind of this con, they figured out to turn it to their advantage -- and they're just better at being commies, so they win.
This means the Chinese are likely to be the ones to construct the aforelinked floating islands in the tropical doldrums. At that point, the tortured Nation of Settlers in the US will flee to the protection of the Chinese communists, en masse because, again, the Chinese are simply better commies than are our "Nation of Immigrants".
Then, and only then, can we expect to see the likes of Page and Srinivasan pretend to walk their talk.
Great piece, I live in "Professorville", work at Stanford and am from Redwood City so I drive through Atherton every other day. I'm definitely less than a fraction of what this definition of "middle class" is. I'm lucky to have found a tiny studio (no kitchen) for $1000 a month. Something the article alludes to but doesn't explicitly state is the Tower of Babel that this area has become. More often than not I will hear less English spoken while walking down University Ave. than other languages (Indian, Chinese, Spanish, Russian, etc.) There is definitely not a "sense of community here. Everybody knows everybody, and you can make connections." Maybe among tech workers, but in my observation people are highly self-segregated by racial groups: Chinese, Filipino, Arab, Persian, Black) If I were to generalize about the type of person I see most often, it would be a mix of Chinese and Filipino.
I remember seeing Steve Jobs downtown once (he lived a mile down my street) and I even spoke briefly to Larry Page and Sergey Brin at the Stanford coffee house. It's a very apt analogy to call large parts of Silicon Valley "servants quarters". Dozens if not hundreds of Mexicans and other Latinos drive, bicycle or walk from 5th Avenue in Redwood City (the worst, crime-infested area) directly across El Camino Real to Atherton to serve as maids, gardeners, nannies, etc. On any given day you'll see numerous illegals lining 5th avenue or any Home Depot parking lot between San Jose and San Mateo, waiting for contractors to pick them up and pay them tax-free cash. You'll often have multiple families living in single family homes, draining what little "affordable" housing is left in the area. The kicker is this recent push by that SOB Zuckerberg to push for amnesty and the increase of H1-B visas. The greed of the elites knows no bounds. It'd be great if the occupy Wall Street types got a clue that their liberal, Silicon Valley overlords are just as bad as any Wall Street banker, but they've bought into the hype of these companies being green and progressive. Obama usually has a fundraiser in Atherton when he makes an SF stop. I'm not looking forward to the traffic and helicopters this week if he does.
The tech giants may not depend on a lot of employees for their fortunes but they do depend on their patents. If they moved to a tiny country their patents would be ignored and their wealth would shrink.
Regarding patents, you can get them in any country you want. I could live in Outer Bumfsckistan and get as many US patents as I wanted.
" patents, you can get them in any country "
You would need the US government to make sure they were enforced to make money on anything sold in the US. If Apple and the other tech giants moved all their operations to a tiny country I would not count on the US government on continuing to enforce them to the same degree as they currently do. Randall's scenario only makes sense if companies are willing to risk losing out on sales in the big countries.
"I should clarify that while there may be some, like Peter Thiel or Elon Musk, who have enough in common with the nation of settlers in the US that they will walk their talk"
"Then, and only then, can we expect to see the likes of Page and Srinivasan pretend to walk their talk."
Incidentally, this is a great clip from a recent panel with Peter Thiel and Google's CEO Eric Schmidt where Thiel calls out Google for being unable to innovate and says that Google has $50 billion in cash but can't innovate and just puts out propaganda about innovation. Schmidt literally concedes that he has no response to Thiel:
If Apple and the other tech giants moved all their operations to a tiny country I would not count on the US government on continuing to enforce them to the same degree as they currently do. Randall's scenario only makes sense if companies are willing to risk losing out on sales in the big countries.
If the U.S. government stopped enforcing intellectual property rights with regards to foreign companies, such foreign companies could stop respecting the intellectual property of U.S. entities, including all music and movie copyrights. Free streaming of all movies and free downloads of all music. This would completely destroy Hollywood and the music industry. Also, all U.S. patents would then be considered "free-ware" as well. U.S. pharmaceutical patents would be the next to be dis-guarded.
The U.S. government would have much more to loose than to gain with this strategy.
" would have much more to loose than to gain with this strategy. "
That would depend on how many companies left the US. The US government ignored foreign intellectual property rights in the past when they thought the country benefited and could do the same in the future. The other flaw in Randall's scenario is that if companies left big countries to avoid income taxes the big countries could raise tariffs against the small countries the companies relocated to.
"This means the Chinese are likely to be the ones to construct the aforelinked floating islands in the tropical doldrums."
Have you seen these plans from a major Japanese construction company for floating, habitable artificial islands in the tropical doldrums : http://www.shimz.co.jp/english/theme/dream/greenfloat.html
They look similar to what you're talking about but without the atmospheric vortex engine in the central tower. Instead they propose a plant factory in the central tower.
I really do not get why you think patents are an issue. First off:
- International corps already file for patents all around the world.
- International corps already have lots of factories all around the world too (especially China).
- If they put lots of robot factories on Ascenscion Island or Iceland instead of China why would the US change its policy about patent enforcement?
Plus, do you think patents matter that much?
A lot of wealth is in a combination of the code base, the knowledge of the engineers, the relationships of managers and sales reps with other companies, and the large customer bases which provide the revenues to employ all the people who keep the system going up learning curves. Some of the more successful internet companies are only filing patents as a protective measure against the lawsuits filed by large numbers of parasites who have created nothing, who have filed ridiculous patents on obvious stuff, and who have bought lots of patents to do the same.
Outside the US the lower level of patent protection is actually a feature in many industries, not a detriment.
BTW, Alex Tabarrok has written a good book (forget its title) about patents and innovation. You can see from reading it just how broken our current patent system has become.
" do not get why you think patents are an issue "
The article was about tech giants like Apple. Apple's wealth depends on patents to limit competition. If the article referred to Walmart or Exxon patents would not be an issue.
If companies moved their robot factories and headquarters to the Ascension Island China and the US would not care about their patents and/or raise tariffs on Ascension Island goods and services because China and the US have no interest in protecting the income of companies in the Ascension. The tech giants wealth depends on access to big countries markets. If they moved all their operations to a tiny country they would risk losing access.
Curtail the term of their patents. period. Two weeks of patent protection.
No more begging for table scraps in the form of jobs that don't exist serving the patent overlords. Destroy the patent system. Laissez-nous faire now must mean we have the right and ability to make our own things with our own ideas and technology. A patent is a government monopoly and is a rent and a TAX on all of us. What is even worse is we have been taxed twice over for them to raise the toll gates on OUR technology. That f*****g stupid BIG DOG built by Boston Dynamics was paid for by us, the US taxpayer and it goes on and on.
Regards tech giants like Apple: There aren't many tech giants like Apple. The Silicon Valley tech giants take very different approaches to patents. Apple uses them aggressively to try to slow and block competition. But the some pretty big others mostly collect patents as defensive measures against Apple, Microsoft, and the patent parasites of "non-practicing entities (NPEs)" that exist to file and pursue parasitic unjustified patent lawsuits. In one really big company I'm familiar with the filing of patent claims against competitors is extremely rare. The patent portfolio is purely defensive against parasites.
Alex Tabarrok proposes patents with different time lengths depending on the nature of the innovation. You can read that to find out which attributes he thinks should factor into the time length of a patent. His proposals sound pretty reasonable to me.
In the future robotics will be very much a manifestation of object oriented programming, in the sense that robots will be hierarchically programmed to build other robots. (Note carefully that in this future paradigm, the term "robot" will include the mining machines, trucks, etc., that will be used to extract the metals that will be use to build all the robots.) This means that the main cost of the robots will be the energy that they will consume.
For this reason, if a very effective source energy is established, such as the thorium molten salt reactors or other sources of energy that will be both clean and very abundant, this would change the entire paradigm. In this case, the rich will be able to afford to donate billions of robots to the world governments to take care of the poor. As an added benefit, tt is also worth noting that the most effective birth control drug is fat, in the sense that when the poorer masses are provided a lot of money to be comfortable to be rich and fat, they just don't reproduce, and their fertility declines below maintenance level.
So the key is the establishment of reliable and very abundant energy sources, which will require going way beyond fossil fuels. Most of the electricity is used by industry (in industrialized countries), not houses. Even electric cars would require only an expansion of about 10 to 20 % of the power grid, the robotic factories will require the power grid to expand by a factor at least 2 to 10, maybe more.
In this video it is explained why and how Richard Nixon cancelled the development of the thorium reactors in favor of uranium, because in the short run the uranium based nuclear industry would have created more jobs in regions that supported his political interests:
The original development of thorium reactors at Oak Ridge national laboratory had great momentum, but it was blocked.
But now, there is renewed interest in developing the thorium molten salt reactors, which would be very clean (the only nuclear waste would have a half-life of a few hundred years), and very efficient in terms of operating costs, and the fuel would last many thousands of years even if the whole world uses it.
Ian thanks for the Shimuzu link. I was not aware of that specific proposal but I am not surprised; there is a kind of inevitability to this general idea of relocating humanity to tropical doldrums seasteads -- particularly if the Japanese can lose their agency role to the US government and start to act as part of the Asian sphere of influence.
That is how far from the founding Nation of Settlers the US government has departed.
I remember reading one of the Nolo Press patent books about a decade ago. The book illustrated an interesting change in the patent system that I, at the time, was unaware of.
In the old days, a patent that was rejected required the return of all source materials to the patent applicant. This means that any inventor had the option of tweaking his designs to better fit the model of novelty and non-obviousness that the patent system demanded and re-submit his patent application.
Under the new system, that changed. Now, a patent application that is rejected by the patent office has all of the patent application materials published about a year and a half after the patent is rejected. This means that small inventors do not get their designs back and what they created becomes public record.
That is why you have patent trolls. Patent trolls look for published patent office technologies that were not granted an exclusive status, re-tweak them, and then re-submit the patents.
Looking at the Shimizu (not "Shimuzu" as I previously typoed), "Green Float" I find it interesting that they have actually built the tower required for the oceanic version of the solar updraft tower algae biosphere, but I didn't see any mention of solar updraft tower technology -- nor of algae technology being central to the food chain. I also didn't see any mention of using the electricity to sequester atmospheric CO2 in the concrete they are using to construct the Green Float.
That tower is damn expensive but the arithmetic in my SUTAB proforma indicates it may really be feasible. If so, that is yet another possible energy source for the electrolytic sequestration of CO2 in concrete, in addition to AVE, LFTR and LENR. I've been focused on the AVE because if it works well it is a near-term sledge hammer to the problem to seasteading via electrolytic concrete.