Socialism’s foundation : Other People’s money

Germany’s Richard David Precht demands, “I want the [guaranteed] basic income, to stave off the worst” („Ich will das Grundeinkommen, um das Schlimmste zu verhindern.“), without mentioning the fundamental causes of the problem issue of concern, glossing over the details of socialism’s foundation: other people’s money.  As he reveals, throwing money at the the problem, is easy.  There are unimaginably large amounts of money to be had for doing that, and more can always be created when the supply runs out.  Of course, that will either devalue all of the money in circulation, leave our descendants to pay off mountains of promissory notes, or both.

That is his proposal for a solution to a problem (automation and resulting unemployment) that makes him and very many others concerned (and we all should be), without examining the fundamental causes of the forces that drive the problem that concerns him.

Socialism's foundation, as seen by Richard David Precht, Ph.D. who demands basic-income guaranties

Richard David Precht, Ph.D. demands basic-income guaranties

(Unfortunately, a translation of the article into English could not be obtained.)

Still, Richard David Precht’s proposal does not address the fundamental flaw of socialism’s foundation, namely that other people’s money soon runs out, and we have already run out of it a long time ago.  Not only that, but we are also running out of people necessary to maintain the socialist economy.  For that, there is of course another solution.

If creating our own people, raising and educating them is insufficient and takes too long, get them ready-made from somewhere else.  What could be better for that than to create the demand for the Islamic migration and to substitute Muslims for those people it is too hard to educate and raise in the framework of the cultural traditions we have become accustomed to?  Why would anyone think that Muslims of young, military age will be ready to take on the obligation to pay off our debts and to take on the obligation to provide physical and financial support of our tottering, childless elderly?

Precht quite correctly explained that mechanization of work came about and is driven by the wish to liberate people from menial tasks, but he ignored the major, controlling motivation for automation: profit! For all goods and services, there is no better way to improve profit than to slash labour costs. The higher the portion of the unit cost of production made up of labour costs, the greater the incentive to automate the production process, so as to reduce the cost of manual labour through having the work performed by a machine.

That incentive is as old as humanity, the resistance to it probably almost as old. Not ever was the drive to automate work processes as profound and far-reaching as it was during the Industrial Revolution. It caused the Industrial Revolution, and it also gave us the word “sabotage,” a consequence of active opposition to the introduction of machines with which to replace workers. Frequently, active opposition was the reaction to that, by damaging the machines, whereby the workers hoped to make the machinery too expensive an alternative for replacing workers with machines. The damages were done, allegedly, with wooden shoes (Fr.: sabot) but why would protesting workers wreck their shoes when far better means of wrecking machinery was at their disposal, the tools and materials that their employers provided them with?

The principle force for mechanization is the cost of labour which it is to save on. There is no better driving force for accelerating the wish to mechanize and thereby the rate at which it is being done than to drive up the cost of labour. One of the many ways by which that it being done is to demand minimum wage laws and to clamor perpetually to have minimum wage rates raised. In consequence of that, businesses will save on wages, either by having fewer employees (and having the rest of them “work smarter” or “do more with less”), or to mechanize work processes, or to shut down.  Again, there, too, it would not be a bad idea to import more Muslims, to prop up that shaky cornerstone of socialism’s foundation, and hope that those don’t get to learn about what can be had in the way of demanding higher minimum wages, but they came to Germany and the other developed nations to become rich, right?  Good luck with that idea for strengthening socialism’s foundation!

That is why we see, for instance, more and more fast-food restaurants who replace minimum-wage employees with computer terminals (much like Automated Teller Machines, ATMs). Richard David Precht promotes a not-so-ingenious idea for the acceleration of the increases in unemployment rates: pay people a guaranteed income that is sufficiently high to give them a comfortable living, and have only those people who really want to, try to hold jobs.

Pay people not to come to work, what an idea! If only it were not for the pesky obsession (rather a necessity) of people who run businesses and corporations to want to make a profit. Our governments are the only “corporations” who can afford to run at a constant, ever escalating loss, it seems, but that is coming to an end, unless someone comes up with a miracle that makes money worth a lot in terms of what it enables the buyer to obtain but that makes it non-essential for corporations, governments, borrowers and lenders.

Margaret Thatcher (who was an avid and self-declared reader of the writings by Friedrich von Hayek, and she had wanted people to know about that, too) summed up the problem in this statement: “The trouble with Socialism is that eventually you run out of other people’s money.”  She had a good grip on what was wrong with the idea that other people’s money should serve as socialism’s foundation.

Yes, they all ran out of money, Germany, the U.S., the U.K., France, all of the countries who are members of the OECD, but not only they.  We hear much about the escalation of accumulated budget deficits, but that is not the whole picture.  The reality of the debts that crush all of the developed nations is that the official figures only address a very small portion of it.  The reality is far, far worse by factors of as high as ten, depending how creative a given country may have become in stating was it owes, of the extent to which it has burdened its citizens with its government debts that it will take generations to pay off, if ever.  The problem is not new. For example:

Already in 2013, the size of the U.S. national debt was frightening.

Already in 2013, the size of the U.S. national debt was frightening.

The situation with Germany’s national debt is similar.  The official figure represents only a small portion of what Germany in reality owes, and the German Government does all it can to keep full disclosure of its national debt and its trend over the years out of public view.  That leaves Richard David Precht’s demand in a quandary.

Precht is not the first liberal activist who wishes to solve social issues by throwing money at them, but no one can throw money at a problem when he has no money or if the money is worthless.  Throwing money at things is what got us into the bind with debts to begin with.  That is just one of the many things that are wrong with socialism’s foundation, other people’s money is like the sand in an hourglass, it runs out, and that will be the end.

We do have to re-think thing a little, and soon! Automation reduces the number of jobs available for people.  Is it more practical to,

  • Give everyone “free” money, so they can keep on buying and consuming;
  • Keep on with escalating automation, thereby to reduce the number of jobs for people;
  • Reduce automation, thereby to increase the number of jobs for people, or
  • Reduce the number of people, which will – at least theoretically – reduce automation?

There are no easy answers. See: The Rise of the Machines – Why Automation is Different this Time

#Automation  #GuaranteedIncomes #Unemployment

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