Andy Kessler

WSJ: Universal Basic Income - Zuckerberg’s Opiate for the Masses

 https://www.wsj.com/articles/zuckerbergs-opiate-for-the-masses-1497821885

At Harvard’s commencement last month, dropout Mark Zuckerberg told eager graduates to create a new social contract for their generation: “We should have a society that measures progress not just by economic metrics like GDP, but by how many of us have a role we find meaningful.” He then said to applause: “We should explore ideas like universal basic income to give everyone a cushion to try new things.” Who wouldn’t like three grand a month?

Having the government provide citizens with a universal basic income is the most bankrupt idea since socialism, but others in Silicon Valley still have been proselytizing money for nothing. “There will be fewer and fewer jobs that a robot cannot do better,” Tesla CEO Elon Musk said at the World Government Summit in Dubai earlier this year. “I think some kind of universal basic income is going to be necessary.”

Robert Reich, President Clinton’s labor secretary, summed up the wrongheaded thinking a few months ago: “We will get to a point, all our societies, where technology is displacing so many jobs, not just menial jobs but also professional jobs, that we’re going to have to take seriously the notion of a universal basic income.”

This is a false premise. All through history, automation has created more jobs than it destroyed. Washboards and wringers were replaced by increasingly inexpensive washing machines, while more women entered the workforce. Automated manufacturing and one-click buying has upended retail, yet throughout the U.S. millions of jobs go unfilled. With Amazon’s proposed purchase of Whole Foods , the online giant is primed finally to bring efficiency to the last mile of grocery shopping—but don’t count on all grocery jobs to disappear.

The economics, which they apparently stopped teaching at Harvard, are straightforward: Lowering the cost of goods and services through automation allows capital—financial and human—to attack even harder problems. Wake me up when we run out of problems.

These kinds of predictions aren’t new, and they’ve been wrong almost always. In 1930 John Maynard Keynes envisioned that his grandchildren would have a 15-hour workweek. Sam Altman, who runs the startup incubator Y Combinator, dabbles in similarly bold but meaningless statements. “We think everyone should have enough money to meet their basic needs—no matter what, especially if there are enough resources to make it possible,” he wrote last year, while admitting he has no idea “how it should look or how to pay for it.”

WSJ: The Radial Tire Lesson for Silicon Valley

 https://www.wsj.com/articles/the-radial-tire-lesson-for-silicon-valley-1496604821

(updated to reflect iPhone X naming convention)

Want to know what scares tech executives? It’s not competition from China, WannaCry ransomware attacks, or being coded out of existence by Mark Zuckerberg clones. It’s radial tires.

Until around 1970, almost all cars and trucks rolled on bias-ply tires. Under the rubber treads, nylon belts ran diagonally, at 30 or 45 degrees, forming a crosshatch. This allowed for stronger sidewalls and cheaper manufacturing. The problem was that bias-ply tires needed to be changed every 12,000 miles.

Then along came radial tires. Introduced in 1949 by Michelin, radials have steel belts inside that run across the tread at a 90-degree angle. They are wider, better at dissipating heat, and safer. Although radials cost a little more to manufacture, they last at least 40,000 miles.

The first American car that came with radials was the 1970 Lincoln Continental. Four years later, Goodyear was making only radial tires. Other companies missed out and paid dearly. By the end of the decade, radials effectively had 100% market share for cars.

Which brings us back to Silicon Valley. In the 1980s and ’90s, technology was changing so fast that a new computer was almost disposable. You upgraded every few years. But as innovation slowed, they lasted longer, which meant fewer people buying computers.

Bill Gates was worried about this all the way back in 1991. “When radial tires were invented,” he said in an interview, “people didn’t start driving their cars a lot more, and so that means the need for production capacity went way down, and things got all messed up. The tire industry is still messed up.”

During the dot-com boom, Mr. Gates invoked the analogy again. “Every time I read about optic fibers or wireless, I say to myself, ‘Wow, that sounds like radial tires,’ ” he said. “When they got radial tires did people drive four times as much just because the tires lasted longer? No, the industry shrank.”