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Retrotopia: A Question of Subsidies

This is the seventh installment of an exploration of some of the possible futures discussed on this blog, using the toolkit of narrative fiction. Our narrator visits a streetcar factory, asks some hard questions about the use of human labor in place of machines, and gets some answers he doesn’t expect...

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The phone rang at 8 am sharp, a shrill mechanical sound that made me wonder if there was actually a bell inside the thing. I put down the Toledo Blade and got it on the second ring. “Hello?”

“Mr. Carr? This is Melanie Berger. I’ve got—well, not exactly good news, but it could be worse.”

I laughed. “Okay, I’ll bite. What’s up?”

“We’ve managed to get everyone to sit down and work out a compromise, but the President’s got to be involved in that. With any luck this whole business will be out of the way by this afternoon, and he’ll be able to meet with you this evening, if that’s acceptable.”

“That’ll be fine,” I said.

“Good. In the meantime, we thought you might want to make some of the visits we discussed with your boss earlier. If that works for you—”

“It does.”

“Can you handle being shown around by an intern? He’s a bit of a wooly lamb, but well-informed.” I indicated that that would be fine, and she went on. “His name’s Michael Finch. I can have him meet you at the Capitol Hotel lobby whenever you like.”

“Would half an hour from now be too soon?”

“Not at all. I’ll let him know.”

We said the usual polite things, and I hung up. Twenty-five minutes later I was down in the lobby, and right on time a young man in a trenchcoat and a fedora came through the doors. I could see why Berger had called him a wooly lamb; he had blond curly hair and the kind of permanently startled expression you find most often in interns, ingenues, and axe murderers. He looked around blankly even though I was standing in plain sight.

“Mr. Finch?” I said, crossing the lobby toward him. “I’m Peter Carr.”

His expression went even more startled than usual for a moment, and then he grinned. “Pleased to meet you, Mr. Carr.  You surprised me—I was expecting to see someone dressed in that plastic stuff.”

“I’m not fond of being stared at,” I said with a shrug.

He nodded, as though that explained everything. “Ms. Berger told me you wanted to visit some of our industrial plants and the Toledo stock market. Unless you have something already lined up, we can head down to the Mikkelson factory first and go from there. We could take a cab if you like, or just catch the streetcar—the Green line goes within a block of the plant. Whatever you like.”

I considered that, decided that a good close look at Lakeland public transit was in order. “Let’s catch the streetcar.”

“Sure thing.”

We left the lobby, and I followed Finch’s lead along the sidewalk to the right. The morning was crisp and bright, with an edge of frost, and plenty of people were walking to work. A fair number of horsedrawn cabs rolled by, along with a very few automobiles. I thought about that as we walked. Toledo’s tier had a base date of 1950, or so the barber told me the day before, but I didn’t think that cars were anything like so scarce on American streets in that year.

We turned right and came to the streetcar stop, where a dozen people were already waiting. I turned to Finch. “The Mikkelson factory. What do they make?”

For answer he pointed up the street. Two blocks up,  the front end of a streetcar was coming into sight as it rounded the corner. “Rolling stock for streetcar lines. We’ve got three big streetcar manufacturers in the Republic, but Mikkelson’s the biggest. The Toledo system runs their cars exclusively.”

The streetcar finished the turn, sped up, and rolled to a stop in front of us. Strictly speaking, I suppose I should say “streetcars,” since there were four cars linked together, all of them painted forest green and yellow with brass trim. We lined up with the others, climbed aboard when our turn came, and Finch pushed a couple of bills down into the fare box and got a couple of paper slips—“day passes,” he explained—from the conductor. There were still seats available, and I settled into the window seat as the conductor rang a bell, ding-di-ding-di-ding, and the streetcar hummed into motion.

It was an interesting ride, in an odd way. I travel a lot, like most people in my line of work, and I’ve ridden top-of-the-line automated light rail systems in New Beijing and Brasilia. I could tell at a glance that the streetcar I was on cost a small fraction of the money that went into those high-end systems, but the ride was just as comfortable and nearly as fast. There were two employees of the streetcar system on board, a driver and a conductor, and I wondered how much of the labor cost was offset by the lower price of the hardware.

The streetscape rolled past. We got out of the retail district near my hotel and into a residential district, with a mix of apartment buildings and row houses and a scattering of other buildings: an elementary school with a playground outside, a public library, two churches, a couple of other religious buildings of various kinds, and then a big square building with a symbol above the door I recognized at once. I turned to Finch. “I wondered whether there were Atheist Assemblies here.”

“Oh, yes. Are you an Atheist, Mr. Carr?”

I didn’t see any reason to temporize. “Yes.”

“Wonderful! So am I. If you’re free this coming Sunday, you’d be more than welcome at the Capitol Assembly—that’s this one here.” He motioned at the building we were passing.

“I’ll certainly consider it,” I said, and he beamed.

By the time we got to the factory the streetcar was crammed to the bursting point, mostly with people who looked like office staff, and the sidewalks were full of men and women heading toward the factory gates for the day shift. We got off with almost everyone else, and I followed Finch down another sidewalk to the front entrance of the business office, a sturdy-looking two-story structure with MIKKELSON MANUFACTURING in big letters above the second story windows and in gold paint on the glass of the front door.

The receptionist was already on duty, and picked up a telephone to announce us. A few minutes later a middle-aged woman in a dark suit came out to shake our hands. “Mr. Carr, pleased to meet you. I’m Elaine Chu. So you’d like to see our factory?”

A few minutes later we’d exchanged our hats, coats and jackets for safety helmets and loose coveralls of tough gray cloth. “Just under half the streetcars manufactured in the Lakeland Republic are made right here,” Chu explained as we walked down a long corridor. “We’ve also got plants in Louisville and Rockford, but those supply the railroad industry—Rockford makes locomotives and Louisville’s our plant for rolling stock. Every Mikkelson streetcar comes from this plant.”

We passed through double doors onto the shop floor. I was expecting a roar of machine noise, but there weren’t a lot of machines, just workers in the same gray coveralls we were wearing, picking up what looked like hand tools and getting to work. There were streetcar tracks running down the middle of the shop floor, and I watched as a team of workers bolted two wheels, an axle, and a gear together and sent it rolling down the track to the next team. Metal parts clanged and clattered, voices echoed off the metal girders that held up the roof, and now and then some part got pulled from the line and chucked into a big cart on its own set of tracks.

“Quality control,” Chu said. “Each team checks each part or assembly as it comes down the line, and anything that’s not up to spec gets pulled and either disassembled or recycled. That’s one of the reasons we have so large a share of the market. Our streetcars average twenty per cent less downtime for repairs than anybody else’s.”

We followed the wheel assemblies down the shop floor from the team that assembled them into four-wheel bogies, through the teams that built a chassis with electric motors and wiring atop each pair of bogies, to the point where the body was hauled in on a heavily-built overhead suspension track and bolted onto the chassis. From there we went back up another long corridor to the assembly line that built the bodies. It was all a hum of activity, with dozens of tools I didn’t recognize at all, but every part of it was powered by human muscle and worked by human hands.

I think we’d been there for about two hours when we got to the end of the line, and watched a brand new Mikkelson streetcar get hooked up to overhead power lines, tested one last time, and driven away on tracks to the siding where it would be loaded aboard a train and shipped to its destination—Sault Ste. Marie, Chu explained, which was expanding its streetcar system now that the borders were open and trade with Upper Canada had the local economy booming. “So that’s the line from beginning to end,” she said. “If you’d like to come this way?”

We went back into the business office, shed helmets and coveralls, and proceeded to her office. “I’m sure you have plenty of questions,” she said.

“One in particular,” I replied. “The lack of automation. Nearly everything you do with human labor gets done in other industrial countries by machines. I’m curious as to how that works—economically as well as practically—and whether it’s a matter of government mandates or of something else.”

I gathered from her expression that she was used to the question. “Do you have a background in business, Mr. Carr?”

I nodded, and she went on. “In the Atlantic Republic, if I understand correctly—and please let me know if I’m wrong—when a company spends money to buy machines, those count as assets; that’s how they appear on the books, and there are tax benefits from depreciation and so on. When a company spends the same money to do the same task by hiring employees, they don’t count as assets, and you don’t get any of the same benefits. Is that correct?”

I nodded again.

“On the other hand, if a company hires employees, it has to spend much more than the cost of wages or salaries. It has to pay into the public social security system, public health care, unemployment, and so on and so forth, for each person it hires. If the company buys machines instead, it doesn’t have to pay any of those things for each machine. Nor is there any kind of tax to cover the cost to society of replacing the jobs that went away because of automation, or to pay for any increased generating capacity the electrical grid might need to power the machines, or what have you. Is that also correct?”

“Essentially, yes,” I said.

“So, in other words, the tax codes subsidize automation and penalize employment. You probably were taught in business school that automation is more economical than hiring people. Did anyone mention all the ways that public policy contributes to making one more economical than the other?”

“No,” I admitted. “I suppose you do things differently here.”

“Very much so,” she said with a crisp nod. “To begin with, if we hire somebody to do a job, the only cost to Mikkelson Manufacturing is the wages or salary, and any money we put into training counts as a credit against other taxes, since that helps give society in general a better trained work force. Social security, health care, the rest of it, all of that comes out of other taxes—it’s not funded by penalizing  employers for hiring people.”

“And if you automate?”

“Then the costs really start piling up. First off, there’s a tax on automation to pay the cost to society of coping with an increase in unemployment. Then there’s the cost of machinery, which is considerable, and then there’s the natural-resource taxes—if it comes out of the ground or goes into the air or water, it’s taxed, and not lightly, either. Then there’s the price of energy. Electricity’s not cheap here; the Lakeland Republic has only a modest supply of renewable energy, all things considered, and it hasn’t got any fossil fuels to speak of, so the only kind of energy that’s cheap is the kind that comes from muscles.” She shook her head. “If we tried to automate our assembly line, the additional costs would break us. It’s a competitive business, and the other two big firms would eat us alive.”

“I suppose you can’t just import manufactured products from abroad.”

“No, the natural-resource taxes apply no matter what the point of origin is. You may have noticed that there aren’t a lot of cars on the streets here.”

“I did notice that,” I said.

“Fossil fuels here don’t get the government subsidies here they get almost everywhere else, and there’s the natural-resource taxes on top of that, for the fuel that’s burnt and the air that’s polluted. You can have a car if you want one, but you’ll pay plenty for the privilege, and you’ll pay even more for the fuel if you want to drive it.” 

I nodded; it all made a weird sort of sense, especially when I thought back to some of the other things I’d heard earlier. “So nobody’s technology gets a subsidy,” I said.

“Exactly. Here in the Lakeland Republic, we’re short on quite a few resources, but one thing there’s no shortage of is people who are willing to put in an honest day’s work for an honest wage. So we use the resource we’ve got in abundance, rather than becoming dependent on things we don’t have.”

“And would have to import from abroad.”

“Exactly. As I’m sure you’re aware, Mr. Carr, that involves considerable risks.”

I wondered if she had any idea just how acutely I was aware of those. I put a bland expression on my face and nodded. “So I’ve heard,” I said.

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