Transition Economics

Socially Responsible Automated Economies and Safety-Nets/Guaranteed Incomes that are Good for both Business & Economy

Transition Economics is the study of profiting society-wide from the building of automation and new science while setting social policy corrections that compensate for naturally occurring financial cycles in Capitalistic economies.

The AEA (American Economic Association) website explains that when observation shows phenomena that are absent in, or inconsistent with, available theories, Economic theorists look for new theories. Automation within our society are estimated to potentially reduce the number of jobs by 50% over the next 20 to 30 years and Governments need to understand what are the algorithms that will responsibly transition its citizens to other forms of income and retraining. Previous Economic fields have not endeavoured to create a direct relationship between “automation to export to guaranteed incomes” and “government automation investment vs. infrastructure spending” equation in previous theory, to name just a couple of Economic Transition examples.

The second primary concern of Transition Economics deals with necessary adjustments that must be made in Economic Controls governing four phases of a naturally recurring 60-year phenomenon in Capitalism called Cycle or Longwave Economics. Well-documented this past 4000 years, Cycle Economists noticed that systems and policies/controls in housing, monetary systems, interest rates, and wealth distribution must change with the natural transition from phases of Spring, Summer, Fall, and Winter (the Great Depressions that come every 60-years – historically validated in numerous thesis).

A Monopoly Game permits us to view a 60-year Capitalist cycle in about 60 or 90 minutes. Note how “status-quo” strategies from the beginning of the game, do not work reliably (or at all) near the end of the game – and also notice the Wealth Redistribution that is needed to begin the game (the cycle) again. In approximately 20% of Great Depresssions, War or Revolution was required to redistribute wealth, most Great Depressions however, found new funding sources to distribute. The Great Depression of 1835 was ended by the California Gold Rush which multiplied America's Gold Reserve by a reported ten-times.

This second area of Transition Economics is designed to correct the numerous changes in capitalist societies caused by each cycle's "phases" as phases within the cycle advance from Spring’s one-income-household and one-job-for-life model, to Winter’s very interrupted income and social support shortfall realities. Examples might include:

Example 1: Wealth Distribution Targets and Graduated Tax are important to maintain in any society. Holland has universal healthcare, daycare, guaranteed incomes, retirements, housing and offshoring controls – and as a result they also have one of the highest Per capita wealth creating Export rates in the world. Why? Because all citizens can generate commerce – and clearly citizens do just that when afforded the opportunity. In the 1980s, North America implemented Reagonomics (Trickle-down) and began lowering interest rates; by 2010's U.S. Federal Reserve Report, neither policy had distributed wealth into the hands of lower-income citizens and so inequity and social problems climbed steadily for 25 years. Canada and United Kingdom citizens have one-third Holland’s export per capita; Australia 1/6th; American create 50% less export than a Dutch Citizen.

What does this lost productivity cost each nation when they fail to permit Transition Economics changes? In America – $500 billion annually - based on Example 1 above, and in Canada, the United Kingdom, Australia – $60 billion are "lost" annually. Transition Economists argue that the costs of higher taxation for more services avert a “Penny-wise and pound-foolish” decision to ignore socialistic policy that enable 100% of citizens to participate in commerce. Transition Economists might say “An ounce of prevention is worth a pound of cure” in defense of statistically provable socialistic policy benefits and new revenues.

Example 2: Capitalistic Housing Policies must be reconsidered when a Winter Cycle is permitted by poor economic controls. Mortgages can often turn into Usury as interest rates fall-and-fall and Bubblenomics take control. A 5% interest rate increase tomorrow might turn 50% and more, of new homeowners into the street, and turn whole communities into ghost towns. Solving this problem is straight-forward, Socialistic Land Grant Housing Policies would not only give a second option to homeowners who cannot afford mortgages, but it would also permit young people to start a family at age 20 without the stress of waiting for University to finish, jobs to pay student loans, on-and-on. Could we switch back-and-forth from Land Grants to Home Ownership? Of course, yes.

Why must Transition Economics address both areas of Scientific Advance or Automation and Cycle-appropriate Financial Policy? The reasons are for problem-solving simplicity and real-world usability. In any scenario where Science or Automation might solve a major issue in society - perhaps upon the important social issue of Emissions-related Global Warming. Science might say that Thorium Reactors, Cold Fusion, Carbon-Polymer batteries and zero-emission diesel fuels, could all begin to solve the problem of Global Warming within five years. Financial considerations, however, might feel that they need to prevent or delay these developments to safeguard jobs or revenues. In this example, many governments put at risk up to 40% of their GDP Export revenues if Oil Production stopped abruptly? Politicians tend to be held accountable; and politicians generally front organizations that prefer to take responsibility for only tremendous economic leadership. So, Transition Economics solutions must also solve Financial realities that encumber science's success at the same time. Automation, in this context, is used to describe advances in fuel, nuclear, and battery science - which is also automation's goal. If financial problems are not resolved, science risks becoming unimplementable. Automation, like any other scientific advance, must be implemented within the parameters presented in the current Economic Cycle. Consider the following logic ...

Science solves Global and Social Problems; so when Finance prevents Science, Transition Economics must present a satisfactory Financial solution for it as well.

The Global Automation of our presently Manual Economies

The technical field of automation is advancing at a rapid rate and no economic theory is presented to manage it, Transition Economics is suggested to set guidelines on how to weather the storm of the next 20 to 30 years of consistent automation change within our societies. Transition Economics develops new skills in core transitioning algorithms and is also explains the application of these skills in specific real world examples and business cases.

A criticism for Keynesian and other economic theorists is in their often exclusive use of mathematical proofs as evidence or measure of deductive reasoning. Any theory may be true in unrealistic isolation, similar to the 12th-century Fibonacci Sequence’s description of plant growth, but both in Science and in practical terms, 800 years later – Observation remains the only valid measure of a forest. The importance of the forest’s many other ecosystems cannot easily be modelled one on top of the other and many systems can be easily missed or forgotten.

In Economics, mathematics works well to model very specific and isolated systems like Supply and Demand, Interest Rate reactions, and Keynesian Economic theory, but it cannot as yet accurately predict the effect of hundreds and perhaps thousands of external economic influences that each relies upon probability and even luck (exceptions to highest-probability outcomes). In macroeconomics, invariably, mathematical modelling emerges purposefully and then proceeds in a direction of diminishing return-on-investment until we can dismiss calculated theories and return to observation altogether.

Science is both Observation and Calculation; one confirming the other. By scientific measure, therefore, Keynesian Economics could be seen to have delayed critical Wealth Distributions that may have directly contributed to a world war that killed 40 million in the 1930s and 1940s. If we believe this observation credible, Transition Economists would suggest a course that worked to avoid similar actions again - especially in today’s mature Nuclear Era. Keynesian economics is factually observed in history to be unsustainable as evidenced by today's latest Longwave Great Depression.

Longwave, or K-Wave Theory, is an excellent example of an economic theory divined through observation of repeating patterns alone; it is to economists what geysers are to geologists – if you can follow my analogy. K-Wave Theory is far more useful in determining which economic controls are appropriate for our capitalism’s cyclic seasons, than any other mathematically modelled system that we presently know of.

Economists organize by “field” – from Agriculture and Business then on to Urban Planning, and I foresee much work arising in this new field as World Peace Agenda (WPAs) Requirement Documents and Design Documents & Planning emerge.

History

Transition Economics was developed by an Epistemology Teacher of Cycle Economists and Applied Engineering - Edward Tilley, and first introduced in his December 2015 published book "World Peace - The Transition". Transition Economics was submitted alongside #WPProjects to the Nobel and TED Prize selection committees for consideration in 2016/2017. Economics Departments at Harvard, London School of Economics, Stanford, Martin-Oxford, and others have been invited to field Phd Thesis in support of building the algorithms needed to manage transitions in automation as described above.

Example Calculations

1. How to make automation charges simple, fair, and not labor-intensive for businesses.
2. Should a surcharge or higher tax rate be requested from an employer when releasing a worker due to automation?
3. Automated plants are more efficient and also use fewer working lights, security, worker amenities, and can run 7/24 in many cases.
4. What is the socially-responsible thing for a company to do when enjoying a higher rate of productivity and profit?
5. What should the rates for workers automated be – per industry?
6. Workers wishing to transition to either maintenance technician or automation development & improvement roles should be permitted and paid a higher business salary or government income?
7. Rules for offshoring restrictions should prefer local workers; should retrain and make all parties successful here at home wherever possible.If 20 men are rated as needed for road construction – which is now automated, should construction companies bid an equivalent cost per man and remit to government; or should the road owner pay a charge per kilometer of road installed – over and above the contractor’s bid?
8. When bus, taxi and truck drivers are no longer required – and passengers or goods are picked up and dropped off automatically, how will displaced drivers be charged for?
9. Construction equipment replaces local jobs at a mine in Kenya. The Government of Kenya requests salaries equal to the crew required to build the road manually. Which algorithm to follow?
10. Modelling - Modelling turns what-if questions and KPIs (key performance indicators) into charts which permit smart optimization of automation decisions.
11. Which models are important to each tier of our production economies?
12. To mining, forestry, farming, fishing; to

manufacturing, baking and food packaging; and to tertiary economy needs as well.

Important Data

CSQ Research is presently seeking leading University support and sponsorship for more than a dozen PhD Thesis in support of International Transition Economics Planning and Development:

• GDP Exports
• GDP Imports
• Highest Value GDP Industries World Wide
• # of Workers per Industry
• Number of Production Economy Automations
• Rate of Automation per Industry
• Cost of New Safety Nets per Automation
• GINI
• HDI
• Unemployment and Underemployment
• Minimum Wage
• Housing, Mortgage, and Usury Debt Limits
• Military Spending
• Underfunded Retirements
• Debt
• Real Estate & Housing
• Social Problems – see Wealth Distribution is Good for Business

To name just a few measures…

Optimal Rate of Transition

Due to technical difficulty, please view this link's chart describing Rate of Automation Per Industry in coming years ...

Automations Target Top Exports

With a basic understanding of which industry automations benefit the country and return investment most quickly, engineers should be enlisted and projects started to automate those most profitable exports in earnest.

Important Social Projects include Guaranteed Incomes and Social and Engineering Safety Nets in detail and in his TED Talk slide presentation which is embedded in the message of the World Peace – The Transition.

Transition Economics Safety-Nets

Safety-nets include Supported Retraining, Guaranteed Incomes and Engineering Development Funding

Accelerating Trends in Automation

Automations have started already in many industries and some of the safety-net costs may need to be offset by revenue generating initiatives very quickly now. Business-Government collaboration in sharing automation profit-sharing initiatives are suggested in order to avoid national debt becoming unmanageable in just the next few years.

Other Cycle Economics considerations

Unemployment and Underemployment

Consumption is the biggest percentage component of the GDP and economy. Consumers consume when they’re working, growing income, and are confident about their short-term economic circumstances. Not only do we have chronically high unemployment, it’s not going down, and the number of workers defined as “long-term unemployed” is at record levels.

The next chart shows the change in unemployment in this recession versus the prior ten recessions. Note that seven years in, we show unemployment comparatively higher and more consistent than in any other recession since the last great depression, which this certainly is as well.

Underfunded Retirements

Corporate layoffs of twenty-year workers, unfortunate investment instability and investment choices, and inadequate savings habits are creating very real concern for long term pension needs. Our corporations are failing us and they have a lot to answer for now.

According to the Employee Benefit Research Institute, 47% of workers age fifty-six to sixty-two are probably going to come up short in meeting all the expenses that retirement will throw at them. That’s half of the working population!

According to Public Integrity, the number of pensions at risk inside failing companies more than tripled during the recession. But not to be outdone, the public sector has even bigger problems. Related to the Municipal Finance Crunch referenced above, and poor investment results since 2000 have put many public retirement plans in dire straits.

This is a chart showing the state-by-state comparison of retirement fund status. To these statistics we also need to add Social Assistance and Medicare/Universal Healthcare as well.

Debt

The USA has record debt at $18.1 trillion by today’s count, which is approximately a debt to equity ratio of 15%. At the current rate, we’ll hit a point where we’ll be issuing debt to pay the interest on our debt. Fortunately the world has not lost interest in buying US debt. As borrowing rates begin to climb, debt will accelerate and we have to manage currency debasing leading to inflation and hyperinflation.

This is a look at the trajectory in debt accumulation.

Real Estate

By many measures, real estate is in a bubble in most major centers internationally that has become completely separated from economic indicators altogether. All Federal attempts to turn economies around and forgive debt failed back in 2010 and we stand poised to repeat the Usury Mortgage practices that created the 2008 housing-debt collapse as those that lost their houses at that time are coming back after seven years of bankruptcy forgiveness.

In 2015, 70% of homes were mortgaged and of these numbers

I discussed Bubblenomics in Chapter 13 – Land Ownership. We will expand on managing these KPIs throughout the Transition in the next book.

Worldwide Markets

The Top 10 Markets in the world were “crashing” in response to China’s Black Monday meltdown in August 2015. The United States was down 2000 points from highs, with two consecutive daily drops of 500 points. Japan’s Nikkei is extremely volatile and down more than 3000 points as well.

China plummeted 40% from highs earlier this year. Germany has lost one-fourth of the value of all German stocks. The UK, down 16% and their economy is on shaky ground. France’s stock are down 18%. Brazil plunged 12,000 points and is officially in recession as is Canada. Italy is down 15% with shaky economy as well. India stocks dropped 4000 points and finally Russia, was doing better than others, but half of their exports are oil and will suffer as long as oil prices stay low as they are today.

Point is, Financial Markets are of little and often negative benefit to low-income and middle-income families during Winter Cycles.

Reward Systems

Reward Systems in Capitalist societies can arguably, but also easily, be said to be upside-down from or opposite Social Benefit. I do not think anyone could credibly argue that a cancer care, burn unit nurse, or even elderly caregiver – does not deserve to come home to a well supported household with scenic vistas and a quiet backyard. At the other obvious end of the spectrum, financial-system leads produce little, evade tax professionally, off-shore engineering, and release long-time employees as high-pension-risk employees, while they themselves retire easily while drive fast cars to high-end homes, send their kids to private schools, and afford well-padded bonuses, parachutes and retirement packages.

High-Performance is ever important to incent in any society; reward systems should be based on meeting goals which include accountable Socially Responsible goals.

Transition Economy versus Transition Economics

Transition Economics should not be confused with “Transition Economy”. During the change-over of USSR States to Republics during Perestroika in 1986, the systems put in place to transition communist states into capitalist republics were called the “Transition Economy”. The “Transition Economy” went on to build housing bubbles and inequity as in other Keynesian Economic societies. Although Transition Economists study this transition and leverage some lessons-learned from that change-over, Transition Economics has very different targets and measures that create a sustainable economy long-term.

Summary

A weak economy is most felt when citizens are denied access to incomes – whether from Employment, Business Ventures, or Guaranteed Income Programs. Countries must work toward wealth distribution, increased foreign export, improvements in self-reliance and the automation of basic human needs and rights.