In C.S. Lewis’s The Voyage of the Dawn Treader (1952), the troublesome Eustace Scrubb, shirking his work, wanders off, only to find himself in the presence of a dragon. And not knowing the ways of dragons, Eustace himself becomes one. The narrator identifies the principal source of Eustace’s trouble:
It is hard to suppress schadenfreude as legislators offer proposals to tax the endowments of our elite universities. Their administrators and professors are overwhelmingly Democratic—indeed left-liberal Democrats. They regularly support candidates who want to raise taxes on for-profit corporations and individuals.
Even more piquantly, most of the taxes proposed would target only wealthy universities. Of course, soaking the rich is de rigueur for the left-liberal. And the most serious proposals are coming from blue states, like Connecticut, that are desperately seeking new sources of revenue as business and individuals flee the state’s already onerous taxation and its job killing regulations.
Nevertheless, these are bad ideas.
Perhaps the biggest technology story of the year is also the most general—the recognition that machine intelligence is poised to displace more people in the labor market more rapidly than ever before. Among many other treatments, two economists wrote a well reviewed book, the Second Machine Age, on the subject, the financial commentator Nouriel Roubini took note of the trend, and the New York Times recently wrote a long piece trumpeting the development. I wrote about machine intelligence’s imminent invasion of the legal space. But this news is all around us. Google and others are developing self-driving cars. Self-service kiosks are replacing cashiers.
The cause of this development is the most important phenomenon of our age—the relentless exponential increase in computer power. Until a certain level of power is reached, computers cannot compete with humans. But once they get into a domain they can improve rapidly until they oust human competitors.
Last week, in what promises to be the start of a protracted and important judicial battle, a judge in California struck down five statutes in the state’s Education Code on the grounds that they prevented children attending public schools from receiving an education that is commensurate with their state constitutional right to equal protection under the law. The statutes judged unlawful were those preventing Californian district school boards from withholding tenure from incompetent teachers or firing them once they had gained it, plus another obliging them to give priority to their more long-serving, but less effective, teaching staff over more recent, but more effective, teaching appointments when, for economic reasons, lay-offs had to be made.
The key message of Stephen King’s book is that “we” have been living beyond our means. In his words: “We became delusional. We convinced ourselves that capital markets could deliver ever rising prosperity. We thought we could borrow without limit, always confident that the future would be better than the past.” And not for one moment, he adds, “did we think we would ever succumb to Japanese-style economic stagnation or Argentine-style broken promises.” King emphasizes that we are all in the same boat, and that we were all wrong. It is fair to say, however, that some raised a voice of…