Entitlement in Society (Part 3): Diminishes Quality of Life

“From each according to his ability, to each according to his needs,” a slogan Karl Marx popularized.  This is not a new enlightened idea; it’s the basis of communist philosophy.  It sounds almost identical to what I am hearing in the CNN article “Are Jobs Obsolete?” , which prompted this three part blog series. It’s an idea that destroys happiness, stunts growth and ultimately diminishes quality of life. For the article to make any sense, we have to assume that the benefits of society (our GDP) will be divided among workers and non-workers so everyone’s needs are met.  Need, therefore, is the thing that gets rewarded, not execution, not production and not performance.

So why would this flawed ideology lead to diminishing quality of life?  It does not account for human nature and economics.  People evolve their behavior towards what rewards them more. Let’s walk through the incentives … According to the article who are the people that will be supported while not working?  Let’s assume the author meant the people out of work today.  It’s also assumed that the same number of people will be working, producing value and supporting those that are not able or willing to work.  Is this assumption valid? What happens to young people just entering the work force? Entry-level jobs don’t pay the most and aren’t always the most exciting jobs, so if the difference in income is nominal for taking that tough first job vs. sitting at home, a larger percentage of young people will choose not to take those entry-level or tough jobs.  That means they will never get to begin their careers; they will not develop skills or work ethic.  This will permanently consume value and not produce value.  Over time, more people will be on the take and a larger percentage of workers’ salaries will be used to pay for the additional non-workers.

Are people going to work two jobs if most of the money goes to support a neighbor who is not working?  Are they going to work late to make a deal happen or meet a deadline?  The drive to push and produce more becomes diminished. With more people taking from society and less people producing for society, those who are producing will produce less for society.  The incentives permanently trend us toward lower production.  Less production means less of everything to divide amongst everyone.  That means, less quality of life for everyone.  Eventually, the whole society fails because financially the workers can no longer or will no longer support the non-workers.

What about the risk takers and entrepreneurs who start entities that create most of the jobs?  Why would someone risk their career, put in 80-90 hour weeks, risk their health, risk damaging their personal relationships, and pay for the right to do it in the beginning if there was no big upside at the end?  In the book Freakonomics, it’s shown that most street drug dealers make less than minimum wage.  They have a one in four chance of being shot.  An average dealer has been arrested 5.9 times.  Why do they do it when they could work in McDonald’s, make more, with much less risk and trouble? The potential upside.  At the top of the ladder, they could be wealthy.  They have a small shot of making it, but they would rather suffer for the shot.  Why do people gamble money at casinos or play the lottery when the odds are obviously against them?  They are incentivized to take risk for the extreme upside.  Without the extreme upside, very few people will start businesses.  That means fewer jobs, and less production by society.

The whole premise of the article assumes that continued automation can do most things for us.  Who is going to stay late and create the next great thing?  That “robot driving the car” mentioned in the article requires companies to spend money to test, design and build it. They do that, on the hope they get a big financial return.  Engineers need to work all night for months to beat a competitor.  Who is going to risk their money and life for the next great thing if the value from that risk and effort is taken and “shared”?  Innovation and efficiency improvements will slow down dramatically, further killing quality of life.

So, we now have more people taking from society, less people producing for society, and those producing, producing less for society.  The incentives permanently trend us towards lower production.  Less production means less of everything to divide among everyone. That means, less quality of life for everyone. Eventually, the whole society fails because financially the workers can no longer, or will no longer, support the non-workers.

Remember why communist Russia failed?  They did not produce enough per person to keep up with the US financially.  Their quality of life was terrible; the incentives for their people were wrong. When people work, they add value to society. The more people productively producing, means more incremental value being added to society, which means the quality of life overall improves.

So, where do we end up after my three blogs addressing the CNN article “Are Jobs Obsolete?”? Encouraging a non-working society reduces individual happiness, stunts economic growth, lowers the quality of life for everyone, and is financially unsustainable. Encouraging a working society increases personal happiness, quality of life, economic growth and is financially sound. You decide which kind of society you prefer.