2015 March 21 Saturday
Migrating Millionaires And The Automated Society
Once the upper classes no longer need large numbers of service workers to wait on them the world's migrating millionaires are going to find some low population nations to take over and dominate.
Automation will be the big enabler. If robots can clean house, cook, do deliveries, do gardening, and many kinds of repair then the service class can be very small. Many services could be provided remotely.
The problem is that almost all the world's land is under control of existing local populations. How to create a millionaire's island sovereignty? Imagine a large group of millionaires buying influence and extensive holdings in a couple of Caribbean islands. They could pay the population of one island to move to the other island. Then the first island could become a millionaire's island. It would offer a very convenient location, nice weather, and escape from masses of proletarian voters.
Parts of the upper class are going to want their own sovereign state. If their state can be fully automated then it won't need a poor local populace that expects the right to vote. Given a group of people with collective wealth in the tens of billions where could they take over? How and where to create this sovereign state?
By Randall Parker at 2015 March 21 12:02 PM
Where are they going to own stuff? If they're all on an island, the proles they left behind will tax (or just plain nationalize) their remaining assets and assess import duties on their production.
From a prole's POV, getting the hostile elites out of one's country and politics would be a wonderful outcome.
E-P, Once factories need only a few workers they can be placed anywhere. So where not to place factories? Any places the proles will heavily tax or nationalize them.
The prole's point of view is wrong. If capital becomes fully mobile and the owners of capital become fully mobile then the proles will be SOL. That is what full automation does. It breaks the link between where the masses live and where product development and manufacturing get done.
Think it thru. Once a business no longer needs anyone below 110 IQ (or 115 IQ) then businesses can locate wherever they can colocate lots of smart people. Well, plenty of smart people already come to the US or Britain to work in STEM jobs. They'll go to other places. What's needed are nations large enough to hold smart people and with few others in their borders. Can these nations be set up? If they can they will be.
How to create a millionaire's island sovereignty? How and where to create this sovereign state?
Seasteading the ocean city-state?
Bio-engineered plagues ought carve out enough space to create vast plantations for the genetically modified super wealthy to live out their 500 year life spans in peace and security. If we can imagine it, there are those who would do it.
There is no doubt that the future capital will be essentially made of cognitive abilities. The wealthy will be wealthy by virtue of being smart and they won't need too much cash, gold, diamonds or even raw materials.
The capital flight elite that is migrating to evade taxes, those wealthy individuals who need to fear taxes, are not the brightest among the elite, as they fear that their creativity won't be sufficient for them to restart from scratch if their financial wealth is confiscated. Apparently, Elon Musk does not fear the high taxes in the US, as he is able to move on with new inventions: in his childhood he always knew that his photographic memory combined with his creativity and his capacity to work 90 hours per week, would always pay off. He just needed the critical mass of smart people who would work with him and he found them in Silicon Valley. He was determined to immigrate to the US not just because there is money to be made, but also because he knew that the smartest and most dynamic people are here. As long as the non-financial members of the cognitive elite are not persecuted for innovating and inventing new science and technology, they will not fear taxes too much. The reason a lot of French millionaires escape France is because in many business sectors in their country, the rigid environment does not encourage innovation and therefore once their wealth is confiscated they often cannot make new money. (In the list above, the French millionaires who leave their country represent a high percentage relative to the population of their country.)
But the elite won't have to buy a small island to create a new country because they can actually build that island from scratch. With the same resources they can move a lot of rocks and dirt from the bottom of the sea from one place to another and actually make an island in a relatively shallow region of the ocean. They can also build giant floating cities that will be practically unsinkable if they just chain together thousands of separate barges. They can perhaps get parts of Antarctica for themselves, in exchange for a few trillion dollars. After all, the top 1 % own nearly 49 % of the wealth in the world. (In 1929 the top 1 % owned only 44 %). If new thorium reactors were available, then it would be possible to send robots to the bottom of oceans to collect the necessary rocks and dirt to build islands from scratch. A new source of energy will thus be key.
Once a business no longer needs anyone below 110 IQ (or 115 IQ) then businesses can locate wherever they can colocate lots of smart people.
The 115+ IQ group is about 16% of the European-descended population, and much larger fraction of the E. Asian. That's far too many to fit on an island, and those "left behind" will be able to replicate much if not all of what the expatriated elites believe to be their exclusive province. After a while they will cease to need anything from the former elites, and become the new elites.
I'm waiting for the broad realization that Mark Zuckerburg, Sheldon Adelson and George Soros are not merely superfluous but genocidal enemies to hit the IQ 115+ segment of traditional Americans. After that, it's only a matter of time before there's a definable half-life of such parasites.
The wealthy won't be happy in a wealthy person only state. Inequality is what makes someone either satisfied or dissatisfied with their lot.
"The wealthy won't be happy in a wealthy person only state. Inequality is what makes someone either satisfied or dissatisfied with their lot."
That's a good point. And I would expand on this to say that "wealthy" seems to be completely defined in terms of inequality. That is inequality is precisely what makes someone "wealthy".
We don't say someone who owns a billion dollars worth of property, or who earns 10 million dollars a year, to be "wealthy" because the absolute values of billion and million are meaningful in themselves, but precisely because they have meaning in relative terms of inequality.
A man living on an island alone surrounded by robots would no longer be wealthy as we understand the term. He would only be wealthy if there were people poorer than him who were forced to work for him for their livelihoods, either directly or indirectly by maintaining the robots.
Seasteading costs too much for the amount of "land" you get.
The wealthy do not need all the 115+ IQ folks to be moved to any one island. What they need is to move key pieces of capital and key research and development facilities and staffs outside of the high tax welfare states. The highest value added steps are what will move. The highest IQ people will move. This already happens now with brain draining the rest of the world to staff American engineering departments. Instead of America somewhere else will be the destination. I already know Indian software developers who have been recruited to Singapore and South Korea. Americans and Brits, Taiwanese and Chinese get recruited to jobs in Singapore too.
Island size: some are quite large. New Zealand is two islands. Australia is a really big island and a smaller island. These places are contenders for some of the places where high IQ people will concentrate. What is hard for me to foresee: what will trigger a clustering in a few of the smaller countries?
Yet the wealthy tend to cluster together rather than live near poor folks. They've become concentrated in a small number of counties in the United States. They will cluster together even more in the future as their need for lower skilled services workers diminishes. They've got 2nd and 3rd homes on islands and in Switzerland.
Any such state will need very strong military capabilities or it won't last long. Maybe an army of robots. It will certainly need to have nuclear weapons and satellite surveilance.
Maybe some millionaires could realize that they might not need that much to live well. A world of a very low percentage of millionaires and a very high one of poor is not a good idea. To isolate oneself from the rest is not an escape really. I mean millionaires have to live in this world too.
A system of greater global equality would be a lot better even for them than fleeing to islands with nice weather. Sooner of later it becomes very dangerous to be, feel, live and act in a very different way from the great majority. Let's think globally.
Until one rich guy realizes he can take over the entire island by enrolling the poor as his own personal army.
A transnational cognitive elite from different racial and cultural backgrounds is not going form when, say, a Chinese elite can rally his own people to take power from a European or Jewish elite.
Of course, the emigration of the cognitive elite is actually a national security risk: if the cognitive elite moves to a militarily unprotected island, then the Caliphate can easily kidnap the scientists and force them to develop weapons that are superior to anything that we have in our arsenal. After all, during the Cold War both the US and USSR sometimes prevented their military scientists from traveling abroad without supervision.
But on a practical and more realistic level, the truth is that someone whose IQ is superior to the average intelligence of his family, would morally owe something to his family because he was lucky enough to get the rare good genes from his family, and if he or sh were to move to another neighborhood, this would actually impoverish the gene pool of his original community. This process of class mobility is how the gene pools of the upper and lower classes progressively get weaker and stronger.
I think you're wrong. I suspect these millionaires will increasingly move to upscale areas of elite Western cities, like NYC, London, Paris, etc. Tyler Cowen already mentioned this in "Average is over".
It makes sense. Islands or small countries do not have enough entertainment, intellectual stimulants, peer-level competition or arts.
Sure, non-Americans can own apartments in NYC and non-Brits can own apartments in Britain. They can minimize the amount of time they spend in any one country as a way to avoid having to pay income taxes. But they'll still need a home base country that has little or no income tax. Plus, they'll want to keep their robotic factories somewhere that has low taxes - not high tax Western countries.
So I expect them to split their time between high and low tax locales in a way that minimizes taxes but maximizes pleasure from life.
The whole idea is that there won't be any poor people on the billionaire islands.
"The whole idea is that there won't be any poor people on the billionaire islands."
How are you defining "poor" here? There would be people on the biollionaire islands providing labor, right? And the wages they earn from their labor would have to be a lot less than would be sufficient to buy into the billionaire islands and own the robot factories and hire labor, otherwise they wouldn't be working for the biollionaires. So they would have to be a lot poorer than the billionaires, no?
Randall, virtually all of the rich need access to markets to stay rich. Most assets are valuable only because they produce income. The rich may need workers, and they definitely need customers. If the big countries they've fled decide to cut off access to those workers and/or customers, then the rich won't stay rich for very long.
A lot of US companies, of course, have already found a middle way to accomplish part of what you describe - Google, Microsoft, Apple, etc. They claim to earn their income elsewhere, while their American owners use their wealth to bribe politicians not to tax them what they really owe. If ever they went all the way, however, the American government would ultimately be forced to call them on it.
"Sure, non-Americans can own apartments in NYC and non-Brits can own apartments in Britain. They can minimize the amount of time they spend in any one country as a way to avoid having to pay income taxes. But they'll still need a home base country that has little or no income tax."
Large, rich countries (i.e., Japan, Korea, Europe, America) have the power to clamp down on tax havenism because the rich need access to those markets for business reasons, and want access to them for personal reasons. If you're rich you may move to a Caribbean island to avoid paying taxes, but it's unlikely you'll want to stay there all the time. The vast majority of business activity can't be conducted from a small island, either. You can move Google to Nassau, but America and Europe can respond by banning Google. You can build a factory run entirely by machines in Monaco, but Europe can respond by banning imports from Monaco. Big countries with high social and infrastructure spending can be costly, but they're the ones providing you with customers and workers.
Jamaica may be cheaper, but it comes with Jamaica's people. Not long ago an Aussie mining billionaire, Gina Rinehart, was complaining (some would say salivating) about the fact that workers in Africa are willing to work for a dollar a day. I wanted to tell her that if she enjoyed Africa's cost structure - and medical infrasructure, and respect for private property, and general disregard for human life - she should move there.
America, Europe, etc. can levee higher taxes on the rich than Africa and Barbados because America has a lot more to offer them - for now, at least.