PART2, 台科大高等土木施工學教材(2021), Advanced Civil Engineering Construction

MT KAO (Blog: http://mtkaoforum31.blogspot.tw/) (mtkaoforum31@gmail.com)

2. The income distribution change in the total economy last few hundred years; and its implication to the earning and social status of professionals:

1) The ratio between the income through personal capability and efforts, and that from investment and bequests (between generations) does change since the industrial revolution; and how it influences the allocation of talent between generations. 

(1) Labor income: salary, remuneration, bonus, prize. Capital income: profit, dividend, interest, rent and royalty. 

(2) Prior to the industrial revolution, the income generated from bequest was high compared to that from laboring in Europe and US. The ratio kept constant for 100 years until World War I and a downward trend started cutting the figure by half until it surged again in 1980. Now it reaches the same level as 1790. The same u curve could also be obtained for the ratio between capital and income.

(3) Before industrialization, farmland was main source of wealth and income in Europe and US, and government bonds issued in countries able to manage fiscal policies well also provided alternatives for investment. Otherwise there’s no mean that personal talent or professional skill would earn a decent income for individuals.

(4) So in the old days that the only way people to remain in or ascend to high society had to go through inheritance or marriage. When after World War I the professionals continued to increase their income and wealth by their own merit, people started to herald it as the beginning of a new era of more inclusive capitalism and trust the trend would not revert. But what happened between 1980 and now proving that it was just a transitory deviation. 

(5) Proper income in 19 Century means at least you have to obtain 20 to 30 times of average national income, and only top1% rich people would achieve it. Professions like lawyer, accountant and engineer would get at best 10 times of average national income and considered as slightly better than the “poor”.

(6) Bonaparte Napoleon first noticed the problem and agreed to give high pay to reward his ministers so that they might match the aristocrats for respectable living, which means an income no less than 50 to 100 times of average national income.

2) Continuous technology improvement makes economy flourish and life better; still some people in each social class need to struggle for livelihood and survival as distribution inequality persist.

(1) Technology is a major driver of productivity and economic growth creating prosperity. The top riches no more need so many people to attend them and mid income people can enjoy comfortable life far better than many of their forbearers in higher centile of income.

(2) Exploring the effects of technology on income and wealth will find inequality aggravated after years 2000. The undisputable root causes are advancing technology and borderless globalization marked as The Second Machine Age. Would people like Luddites during the first industrial revolution fear that the skills of their craft would go dumb so this time their commotion justifiable, or really the smart machine and AI would create more jobs and enhance life quality?

(3) The computer/digital revolution is a major driver of inequality: It favors more skilled over less skilled; it increases the return to capital owners over labor; it enables or turbo-charge globalization, reducing employment and constraining wage-able services; it increase the income advantages of superstars and the super-lucky; it generates rents in highly imperfect markets.

(4) As we understand now, progress in sensor technology allows machines to detect and respond to their environment; additive manufacturing displaces labor while reducing waste in materials, lowering the costs of customization and allowing for producing on demand(opposed to forecasted demand); the most surprising is in artificial intelligence (AI), machines uses learning algorithms and high speed network access to massive databases to perform complex tasks without the benefit of algorithms that tell them precisely what to do.

(5) In the fundamental feature of market systems, most people including engineers gain their income by selling their labor, if they’re rendered technologically redundant or no longer command an income adequate to provide a socially acceptable standard of living.

3) What will a young civil engineer choose to be? Occupational, professionals or super managers considering their restrained income compared to capitalist and renter (or rent seekers)? Is it correct to borrow “meritocratic extremism” to justify the tremendous pay difference among the individuals?

(1) The engineering services need to obtain their clients’ trust and confidence, distinguishing them with the manufactured products and/or services by ordinary people. Compared with workers, clerks and other occupational, the professionals place much attention to guarantee the quality of their output and refrained from remuneration based on quantity completed especially within specific time. He thinks and acts on behalf of his client and always consider himself is unique in delivery of art, crafts and services committed to the client. 

(2) But now that significant share of the income shaped by skill-biased and capital augmenting technical change; the professionals of conventional definition may not be in a steering position, that software, tradable programs and even AI will do much of the engineers’ job diminishing their clout in retaining work opportunities and sharing income .     

(3) Is actually income generated by digital capital shared with certain kinds of complementary human capital, including innovators, entrepreneurs, and top executives? Among them, the super managers with winner take all mentality popular in US deserve our attention because they may pride themselves with “meritocratic extremism”, nose in the air.

4) Will it be practical for engineers to follow code of engineering ethic in terms of faith, integrity, law abiding, and conduct of secrecy at the era when digital economy and artificial intelligence is about to dominate.

(1) Engineering ethic request the engineers to take responsibility toward society, environment and the colleagues. As FIDIC maintains: To be fully effective not only must engineers constantly improve their knowledge and skills, but also society must respect the integrity and trust the judgement of members of the profession and remunerate them fairly. And it’s the brief requirement.

(2) The “information technology intensity of a company”-as measured by the ratio of its IT capital stock to its total stock –rises in modern engineering company demanding more return than from human capitals previously formed by employed engineers.

(3) When the income generated by digital capital becomes more significant, at the same time corporate governance practices and social norms will also change allowing more rent-seeking behavior because there will be less humanity control by smart machine and AI. Will it be the same easy to and simple for professionals to follow code of engineering ethic when their sharing in total company income much less than before.

5) Can “Engineering as a Vocation” be honored in Taiwan when material reward is meager compared with devotion paid? Can the passion, inspiration and rationality as a professional be kept as the vocation is life time choice?

6) Lines from “Capital in the Twenty-First Century” by Thomas Piketty, “Le Pere Goriot” by H Balzac, to tell how the excellent brains were paid by ruling class historically.

“Your annual income will be 1,200 Franc when you’re in 30’s without giving up rob of blending. You can get married with daughter from gristmill collecting rent 6,000 livre annually. If you’re lucky you can have 5,000 Franc annual incomes as a public attorney, and you can married with mayor’s daughter. If you don’t mind to do something under table, you could become general attorney at your 40s. But allow me to remind you, there’re only 20 general attorneys in entire France, and the number of the people thirst for the jobs maybe more than 20,000, among them many clowns ready to sell out their relatives and friends. If you don’t do this; you can be a lawyer, spend 1,000 franc every month to borrow a small office; for 10 years you must keep relationship with the people, kiss any solicitor you know's rob and beg him to reward you some cases, in addition, you need to bow to every people you meet in the court as a lawyer. Tell me can you tell the names of 5 lawyers younger than 50 in Paris who have had annual income more than 50,000 Franc?”  (Vautrin said to Rastignac)