Submitted by Thad Beversdorf via FirstRebuttal.com,
I recently wrote a piece about Bill Gross’s May Investment Letter. In the letter Bill predicts a jobless society in the not too distant future suggesting technology will replace human labour at a lower cost.
Now to solve this problem Bill proposes the government implement a program of Universal Basic Income (UBI – an allowance for the citizenry to enable them to consume which will be paid for by government). The point of my article was that capitalism (i.e. free markets) would never seek a jobless society. It is only through socialism that investors can generate profits in a jobless society. Without government subsidies investors are incentivized to optimize not minimize labour costs. And that if Bill was proposing what he was proposing he doesn’t understand or believe in free market capitalism.
In short, the problem of a jobless society is not a problem unless we implement Bill’s solution to the problem. Meaning it is only by way of the very solution proposed (UBI) that investors would seek a jobless society. A truly government concept.
While most understood my point it seems the syllogism, to many, was lost in translation. I’ve had an abundance of comments by Bill’s likewise faux ‘free market supporters’ explaining that preventing profit maximization by not allowing investors to replace humans with robots is akin to socialism and that we must allow the free markets to be efficient. But I wasn’t suggesting preventing anything, only that a jobless society is an impossibility in a free market. And so it was obvious to me I had done a poor job of clarifying my point sufficiently so that even the low hanging fruit could eat. Therefore, given the immense significance of this subject currently, I’d like to take another stab at it by getting rid of the literary clutter from my article and really simplify the point. It is an extremely important matter as it transcends into the concept of ‘free’ trade agreements (think NAFTA, GATT, TTIP &TPP) for obvious reasons.
Here is the same point from my earlier piece but without the clutter.
Solve this riddle.
A true free market exists with no government intervention. So let’s assume no government exists and thus no government income subsidies of any form can exist. The following then is a representation of a free market at work:
Investment requires profit, profit requires consumption, consumption requires income, income requires investment, investment requires profit….
Now explain, in a free market i.e. in a world with no government, how do investors profit if income (i.e. labour cost) is taken to zero? (And remember with no government no additional public debt i.e. money stock or welfare can be created.)
Send a note to the Nobel committee if you come up with a viable answer. You are a sure bet to win.
A second riddle…
If we are going to simply print money and hand it out with no expectation or means to pay it back, why would we not print enough to make everyone wealthy?
Socialism is not about equality, quite the opposite. If it were, The ECB would be discussing limitless debit cards paid for by the Central Banks. Socialism is a mechanism to subsidize profits and cement control of the masses.
So to those that couldn’t get it on the first pass…. how do you like them apples? Great.
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