I just watched former Michigan Governor Jennifer Granholm’s TED Talk. She provides some nice insight as to what it is really like as a politician trying to grapple with the new realities of the modern world; trying to save jobs in America that just don’t make sense economically any more. Granholm also raises the need to address global climate change as an enigma on equal footing with economic issues. What makes her talk interesting is she sees that a solution to the climate change problem could also be a solution to economic woes, a surprising position given the normal myopia of politicians when it comes to linking environment with economy.
While I like the general slant of Granholm’s view, in particular with respect to proposing a feasible means of stimulating the move to green energy through competitive incentivization programs, I have to disagree that even a major shift to green energy in America is somehow going to bring back “good jobs”.
We can make all the windmills the world needs, and it won’t bring back the robust jobby-ness of the past, because things just don’t work that way. Economics is not going to change course because it would make it easier for us to structure our world. It would not take that many people to make all the windmills we would ever need, because in modern and efficient businesses it just doesn’t take many people to do things. If these green energy companies really did go on a hiring spree and started employing the numbers that politicians would like to see, they would be (a) unsustainable and (b) replaced by more efficient businesses with less costs.
The jobs are never coming back.
To be fair, this post is not so much directed at Granholm in particular, rather it’s aimed at the endless parroting of conventional wisdom about jobs inundating us from all directions. It is in fact, utterly unsurprising to hear a politician talking about a daring new plan to “bring jobs back to [Insert Place Here]”. Given how mercilessly politicians beat the long dead horse of job creation in literally every political speech, the only thing that is surprising is that people still somehow believe that politicians can create jobs.
And this is not to say that business people are the “real job-creators”, and government should just get out of the way. What those business owners and investors are really interested in is making more money. We are not really talking about people here, we are talking about capital, and capital investment flows to the most efficient mechanisms to accomplish work and thus accrue more capital.
In the 21st century, the rules of the game have changed. Capital growth has become decoupled from job growth, yet we still somehow seem to think that a growing economy is going create enough jobs to match the number of people looking for them. Or, maybe if we just trained people to better match the few sectors that are hiring, then there will be enough jobs for people? Please, go ahead and ask a recent University grad about that one.
In my first post to this blog, I talk about the trajectory the economy is on. We are headed towards untold abundance with little need for actual human labor. Examples like people who transport things (ie truck drivers, taxi drivers etc…) provide an easy illustration of how the automation of menial labor is pushing more and more people out of work, but menial service jobs could just as easily be replaced as computers become more adept at digesting natural human language. Even high level jobs could be at risk, as these very expensive positions are targeted by enterprising software companies.
We are not going to get there tomorrow, but eventually your job can be replaced by a computer (or part thereof). And if you don’t have a job today? You can at least partly thank technology for that. Yes, there are many factors involved here (globalization, tax regulations, economics etc…) but greatly increased worker productivity driven by technological innovation should be considered an increasingly important consideration.
Here is a simple example: If you had a magic box that could create (almost) anything for relatively low cost and required very little human labor to do so, what impact would that have on the economy?
At this point in my rant I am obliged to point out what should be obvious. People needing to work less and having greater and cheaper access to goods is a great thing. Industrial development is a good thing and it should not be unduly interfered with, beyond perhaps trying to make it less horribly destructive to the environment.
My point is this, we must accept this uncomfortable fact: There is no natural, physical, economic or legal law which states that economic growth creates more jobs. Yes, jobs have traditionally been a side-benefit of a strong economy, but believing that somehow if we just maintain a strong economy jobs will magically come back is nothing more then a collective delusion. The future is different than the past, deal with it.
It is time change the discourse about jobs. Enough with the increasingly absurd talk about “stimulating growth” because it is the “engine of job creation”. A 20th century approach for a 21st century problem is just not going to work. It is time to stop with the bullshit, suspend our collective illusions about jobs. The jobs are not coming back; now what do we do about it?
There exist policy changes that could help greatly to reinvigorate the job market of today. If there is not enough work to go around, then we can take measures to share the work more equally. Perhaps by decreasing retirement age, we can encourage employers to hire younger people. Shortening the work week could be another approach. How ironic it is that austerity measures everywhere are pushing to raise retirement age and decrease holidays? And this creates more jobs how?
As Wingham Rowan describes in his TED talk, we could also apply the dynamism of high frequency trading to ground level job markets, to get labour to where it is needed more quickly.
All of these ideas are great, and could have real impact on today’s problems, but the elephant in the room is what we do 20 years down the road. How are we going to structure a society that needs radically less human labour? This conversation needs to start now. If we accept the fact that the job market has fundamentally changed, then there are things that can be done about it, but we must first accept this as fact.
So lets take off the jobs coloured glasses and get on with it already.
UPDATE 2014: Since writing this article I have come to support the idea of instituting a basic income. I think it is an idea whose time has come. I am not so optimistic as to think it can solve all of our problems but it would go a long way to providing the kind of breathing room which people need to power economic innovation in today’s world. See Basic Income Means Basic Freedom
UPDATE: NYT article examining the trend of decoupling in the economy.
UPDATE: Not just America, here is a paper examining decoupling of wages and productivity in Australia
See the future
Thought Infection 
Socialism is the only logical solution
I personally don’t think that all out socialism is necessary, but I do feel that society should be organized around maximizing social goals in the end. Maximize human potential, health, comfort etc…
These are the goals of socialism or maybe a more future orientated resourceism.
So a eudaimonic society?
National Socialism was the party of choice in the 1930’s and hitler was very grateful to people like you… so was Stalin 🙂
Naturally, you know you just gave two fascist examples. Socialism becomes fascism only if citizens are diligent. The problem is that capitalism does, too, and that is rapidly occurring in the United States right now. The PATRIOT Act, the new version of the NDAA, the DMCA, the drone program, Obama’s “kill list”, domestic spying…. we’re not missing much that the USSR had except toilet paper lines, and those could well be coming.
to predict the future is like all guess just that..the imagination of we humans is more than the capitalists can account for..allways allways another way besides standard models for employment to evolve…and things will still have to be made and new things will have to be made,and food will still have to be grown and distributed etc.
Did this moron really drop the SOCIALISTS ARE NAZIS bomb this early in the conversation? I’m almost mind blown.
As usual the right co-opts leftist terms to make their policies seem more palatable. National Socialism is not Socialism, and in fact the Nazis hated socialists. Crawl back under your rock, troll.
just in time inventory = centralized planning. there is no invisible hand, the pareto optimality only works in narrow subjective examples.
with the computing power we now have at our disposal, centralized planning could work. at least for core products and services (staple foods, essential garments, energy, water, et c). i’d prefer to see a free marketplace for ideas and innovation to remain, but the core items could be managed centrally.
@welinder, I like your proposal. The more “commodity” the industry, the more that centralization seems to make some sense. The more “creative” or “intellectual” the industry, the more that a laissez-faire approach will encourage innovation and steady improvement.
Basically, ask the question: “are we done with defining the industry’s inputs and outputs?”
For something like agriculture, maybe so. For web-design, clearly not.
But even agriculture has plenty of technological innovation going on all the time, and so it’s only the manual labor part of that is “commodity”. So, better to ask: “can we automate the given industry?”, and if so “how much?”. Where do we still need/want human beings to be involved.
To automate means having clear inputs and outputs, and also means we have sufficient technology to use that definition to actually do the work. To make a computer analogy: we need “source code” to define the work, a “compiler” to turn the abstraction definition into a concrete plan, and “hardware” to physically put the plan into action.
@ figjam88au
No, it’s not. “Socialism is the only solution” is the unthinking reaction of small-minded people who cling to the past notions without having any vision of what other alternatives look like. Technology has changed. The world has changed. Hence the potential solutions will not look like they did in the past.
There are another alternatives, based on freedom and the morality of voluntarism–not the regressive, immoral use of force of a collectivized society–but the voluntary choice, autonomy, and freedom of individuals in a decentralized world.
What the article rightfully gets at is the massive increase in efficiency from technology. But the danger that we face is right now is a lack of creativity on the part of a large portion of individuals in our society that see this as merely a negative thing, or even worse and much more dangerously, as some kind of excuse or justification for the use of socialism, which is the force of the state against individuals in society. That is regressive, uncreative, and doesn’t take into account that technology and the world has changed. (I’m not referring to the article’s author, but to figjam88au and others that advocate socialism.) There are positive alternatives. This massive increase in efficiency doesn’t just destroy traditional jobs, it brings with it immense opportunity for individuals.
Look toward the future. Look toward creating better and more positive alternatives.
Internet Education — Khan Academy, YouTube such as http://www.youtube.com/asapscience, Coursera, Unschooling, et al.
Food — Aquaponics, Hydroponics, CSA’s, etc.
3D Printing
Housing and Sustenance – The Earthship concept of self-sustaining, ultra-efficient housing (earthship.com)
And so many more.
The world is changing in the most amazing and most positive way that it ever has. And yes, will have to live through hard times where the old, hierarchal systems continue to fall apart. But it is very dangerous and highly immoral for individuals to react unthinkingly and advocate for an even more hierarchal and regressive system that is socialism. It is not only immoral due to the inherent use of force against others as its basis., but it is also regressive and unthinking because it doesn’t take into account that technology has changed, the world has changed, and hence the solutions have changed too. The world is heading toward decentralization and that brings with it better resilience, better security, and more freedom, autonomy, and opportunity for individuals. That is if we can survive and get past the point of uninformed and outright dangerous people who advocate for the regression to socialism. That is simply scary. That is why I speak up against it.
Stay positive. Help create the future. The future is bright.
p.s. I enjoyed the article. But to then see this first comment is very disappointing and that is what my response it to. It is morally reprehensible for anyone to advocate socialism. It shows a lack of understanding of the world and even a lack of morality. We need to stay positive and work on creating positive alternatives. The increase in efficiency is a challenge to the old structure of society, but with this comes immense, positive opportunity for the future when you really understand it.
I am amazed, flat amazed, how many people assume that socialism = “regressive, immoral use of force of a collectivized society” and cling to that mindset in the face of all reason or logic. It basically shows almost no knowledge of what Socialism actually is, or how many different forms of it there are.
Most countries across the globe right now use “democratic socialism,” which is quite capable of embracing and combining the freedoms and choices of democracy, the necessity of capitalism, and the compassion of a socialist structure that looks after all their citizens. And, in fact, most of the countries in the strongest economic positions right now are also the most heavily socialist, while those in the weakest give the least support to their citizens.
Even America, bastion of Capitalism, has its socialist tendencies. We support, collectively, through taxes, our roads, our police forces, our fire fighters, and other public services. All of these everyday and accepted interactions fall under the flag of a socialist setup. And we’re pretty much collectively agreed that allowing any of these things (roads, fire, police) to fall into private hands would be bad things. We have even seen the results of this, such as the police forces heavily financed by corporate dollars who attack law abiding citizens (look it up), private forces who attack anyone they want seemingly outside the law (look it up), or the fire fighters who allow houses to burn to the ground because someone couldn’t afford to pay their yearly fee (again, look it up). And can you imagine how many roads would suddenly become toll roads if they fell into private hands, or how high such tolls would be?
Socialism, at it’s base, is a method for looking out for the many instead of just the one. It’s a necessary backbone to a functioning civilization–a base agreement of rules and cooperation, of what we are willing to give each other to keep our streets clean, our futures bright, and our lives peaceful. People may differ in their ideas on how best to achieve these means (hence the many different philosophies of socialism and the many different ways it is actually utilized in practice and law all over the world), but at the end of the day, no one really wants a dog-eat-dog, winner-take-all world where you sleep with one eye open and one hand on your gun, always worried about what tomorrow may bring.
And those who seriously think socialism = oppressive fascism and nothing else need to stop listening to propaganda and start learning history and political philosophy. I am so sick of the demonization of cooperation and compassion in a society–as if somehow greed and back-stabbing competition were more “pure” and “natural”–I could just spit.
There’s a basic fallacy here: by assuming that there “isn’t enough work to go around”, you’re implicitly assuming that the amount of total demand for stuff is fixed. This is *possible* in a sci-fi cornucopia setting, but we’re a long way from that point.
To put it another way, if it takes less workers to produce the same amount of stuff (where “stuff” means everything from food, water, and shelter to green energy and social-networking applications), who says that the world will go towards the state “same amount of stuff, less jobs” rather than the “same amount of jobs, more stuff for all”. Historically, every productivity improvement has moved us in that direction.
In order to get to a state where society actually *needs* less human labor, we would have to reach a point where everyone has everything they could possibly want there for the asking. (There’s debate over whether this is even possible, but maybe in an everyone-lives-in-a-Holodeck scenario.) So, I think until we get to the age of magic nanotechnology, we’re pretty safe from running out of work.
Does not make sense. If machines can produce X amount of stuff, why will they not be the preferred way to produce 5X the amount of the stuff? Why will we use inefficient human labour to make up the surplus? Once a job is taken over by machines, it is gone for ever… irrespective of the amount of stuff required.
To maintain the same amount of jobs, we will need whole new classes of jobs which machines *cannot* do which the humans who are displaced will do instead. Can’t think of too many of those.
I disagree with the premise that we could somehow engineer ourselves into a downward spiral of unemployment. It seems the thinking here was that as technology increases, and machine labor becomes more inexpensive, manpower won’t be required to produce anything (the magic box). While I can agree that the nature of jobs will continue to shift away from manufacturing, I think it’s discounting the power of supply and demand to assume that large swaths of the population would be unemployed. As unemployment increases, the cost of labor decreases. At some point, there would be crossing of the cost/benefit curves of a machine versus a man. Then, employment once again increases. You could argue that this is a race to the bottom, and that income divide would markedly increase. But that is an entirely different conversation altogether. That said, a far more likely scenario is that the enterprising and entrepreneurial among us will continue to employ the population, because it is a usable resource. Can you name a single natural resource that isn’t used by someone to produce something? Don’t discount human ingenuity to find us all something to do. Somebody somewhere will always be willing to trade you a little bit of their money, for a little bit of your time.
Machines generally do not produce things by themselves. Rather, they act as a multiplier on the human labor invested in producing and controlling them. Until we have true Von Neumann-style self-replicating machines that literally require NO human input, this will continue to be true. Until that point, human labor is still a limiting factor on production, along with capital investment (machines) and natural resources.
If X labor can produce Y stuff, then increased robotics only means that X labor will produce 2Y, 10Y, or 100Y stuff. You’re only going to “run out of work” if the total amount of stuff produced exceeds the amount of stuff that everyone wants, which does not appear likely in the foreseeable future.
@fortytwo. you assume a flexible labor market. in reality, the wages people will accept are not very flexible- everyone has pretty fixed housing, food, transportation, and healthcare costs. until we find a way to bring down the cost of living, paying people dramatically less wages will just result in a lot of suffering.
But the reason we end up with more stuff, (food, water, shelter, iPhones, facebook, luxury cars, etc.) rather than less work to go around is because people need to find a way to earn a living. If this involves making stuff, and less people are needed to make that stuff, then the only way for this to work is to convince everyone that they need more stuff. I can’t say definitively, but it appears our *need* for human labor is likely just an illusion brought on by salesmen working to sell us crap we don’t need, (and people willing to make what they’re selling because they need a paycheck.)
But perhaps this pattern will be effective for a while longer, if people are always willing to believe that they need more stuff, something I suppose is quite possible, sadly.
It’s important to remember that only about a billion of us live fancy Western lifestyles. There are quite a lot of people in the world who have a lot of catching up to do.
>>There are quite a lot of people in the world who have a lot of catching up to do.
Most of whom also need jobs 🙂
” if it takes less workers to produce the same amount of stuff”
It takes FEWER workers.
Maybe we can put these people to work teaching English.
Despite either being offensive or having a very poor sense of sarcasm, you fail to even notice the rise and the necessity of a new education system, like the ones of Khan academy.
It may very well be that you would hardly actualy need a human teacher in person in order to learn english. Not only that, learning foreign languages on a classroom has always been the WORST method, the best students end up being the ones with extensive experience and exposure to the language outside class. In other words, no need for teachers.
Also there is a large number of people who learn foreign languages by themselves using only online resources. So yeah, what you were saying about teachers again?
I like your comment Django, but I have to agree with Noises that the demand will be met by increasing automated labour to meet whatever our needs or wants are.
Another way of looking at it is this: The shift to robotic labour will be one of mind as well. If we want something in the future, or want to provide a service or product to someone, figuring out a way to do it will be a matter of either (a) figuring out how to “program” a machine to make it for you or (b) simply asking a machine to do it for you. The idea to get a person to do something for you will seem strange.
It would be a little bit like me asking you to figure out a way to cross-reference phone numbers of all the people in a city with their street address and show it on a map. If I asked someone from 50 years ago to do this, they would come up with some sort of an index card system to do this whereas to us this is clearly a computational problem. Get the right databases and cross-reference them on a computer, it would never even occur to us to figure out another way to do it. In this way, it would never occur to someone in the future to figure out how people can make things in a factory, or accomplish simple service tasks.
Total demand for stuff is, essentially, fixed. Each human can only consume X amount of calories, use X amount of clothes and need X amount of energy. Sure, that may vary slightly over time but statistically speaking there’s no reason why we couldn’t find a value for all those things.
Obviously, notions like giving humans the right to own massive 80-room mansions and huge swaths of land just because they got lucky and/or were massive exploiters of others makes no sense whatsoever. Letting people have huge mansions makes no more sense than letting a person claim all of Australia as their personal fiefdom.
We need to get to a point where all humans have equal access to resources instead of like today where the thinnest possible sliver of humanity has an obscene overabundance whereas the vast majority are fearful, resource-starved and (in the case of 1 billion people or so) literally starving. The two are inexplicably linked, you can’t have massive abundance in one end without having massive suffering in the other.
What we need is to do away with the massively damaging factors like running things on a profit basis so that we can start making science-based decisions on how we use our joint resources – and in order to dramatically lower interpersonal stress we need all humans to have real equality insofar as resource access goes, in a single world system. Without that, we can never do away with wars, resource waste and massive pollution issues.
Frost – Who do you think have been the biggest advocates for a world economic system such as the one you are describing? Its the very same owners of capital and massive wealth that benefited from and exploited the current system and that have caused all the current problems in the first place. I would be very cautious about jumping on the “one world” bandwagon, can we really trust the very same people who caused the problems in the first place to be the ones to now fix it with some new system? I highly doubt they suddenly grew a social conscience and are advocating the destruction of a system which made them all the wealth in the first place.
I think we’re pretty close to being able to produce and distribute everything a person NEEDS, rather than wants. Desire is unlimited, but our needs are very easily definable, at least materially. If there were technologies in place to produce and distribute everything that a person might need, why not go for that?
There are already technologies in the works that could make this a reality. Google’s self-driving cars, for instance, could distribute food from where it’s grown to where it’s consumed. And then there’s the entire field of robotics. If we can design self-repairing robots, and robots that do all the work for our basic necessities, at some point it’s going to become easier to simply give that stuff to the people who need it rather than trying to sell it. The same goes for clothing, and shelter, and water. Automated systems can be designed, and they can be built, and they can be maintained indefinitely by robots.
The fact that production of “stuff” is becoming more efficient (in terms of human labour required) along with more “stuff” being needed (as I agree has been historically the case) is not enough to say that we will not run out of work.
The reason being that the two may not cancel out. What’s important is the rate at which those two factors change. Surely it’s feasible that technology will increase at a rate at which production becomes more efficient very rapidly compared to the rate at which humans desire new things.
Yes, there’s always a bottleneck for humans to invent new things, but I think it takes a very small proportion of people in the world to create new things.
Aren’t you assuming that the owners/shareholders of the companies that make the stuff will pass along the savings of increased productivity to the consumers through lower prices instead of using it to increase their profits. Demand will not increase if the cost stays the same. So some manufacturers might go along with the “same jobs, more stuff” while others are content with their increased profits and are in the “fewer jobs, same stuff”. There’s also “fewer jobs, more stuff”, which you seem to have left out.
Also, cheers on pairing magic with nanotechnology. Your pessimism and short-sightedness are showing.
I agree with your post entirely!
We’re moving to a world where unemployment is going to be more common because stuff gets done using less labour than it did before.
Why is someone without a job considered a bum? I believe we’re going to have to change the way we think about employment.
We’re also going to have to institute some strong economic redistribution since many more folks won’t be able to look after themselves economically.
There are lots of very powerful people standing in the way of course. As in all things, America leads the way in good and bad. The changes will likely happen there first.
Let’s tap the brakes on redistribution (Marxist). There is plenty of work out there. I know first hand because I am having a tough time hiring to fill the open positions for my employer. I think the first reality is that 4 year high education isn’t preparing students for the jobs that are available. Sure, 17th century Russian Lesbian Literary Studies sounds like a good idea. Too bad there isn’t much demand in the job market for such a degree. I’d also point out that our population just about everywhere is declining. More work for less people. More than anything, I think we are feeling the effects of the end of a debt super cycle driven by loose central banking policies organized about the theories of Keynes. There are a great many people that knew 40 years ago this day would come because of the policies of the central banks but nary anyone would listen. Now that the day has come its not time to give up on capitalism yet.
The Issue isn’t the theories of Keynes (which have been demonstrated to be fairly accurate), the problem is with the experiment of supply side economics.
50 years ago there was real concern about how we were going to structure our society around the need to only work 20 or fewer hours per week. They saw a trend and made a set of assumptions that held more or less true until the late 70’s/early 80’s. Once the political decision was made to allow massive profit taking from corporations at incredibly low taxation rates, the process of redistributing wealth from the bottom to the top started rolling (the result of which was also predicted by keynesian economic theory). Since then there have been no real increases in wealth at the bottom.
Wait, what? There are people with PhDs in hard sciences that cannot find jobs in their field, and go on to do something. There are people doing PhDs in the hard sciences because they cannot find jobs with a bachelor’s in their degree, when it might have looked promising when they began their degree.
Kurt Vonnegut, a modern american prophet, wrote a book about this called “Player Piano”–brilliantly titled. Think about it.
I highly recommend picking it up if you are interested in a future where a significant portion of the population is not needed to work to keep things going.
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Production for the sake of survival will decrease, yes. But all these folks not working will want entertainment and engagement in their leisure activities – and that creates jobs of a different sort. Somebody’s got to come up with those good TV shows (no, really, please… somebody, anybody!), and that new rock climbing equipment, and those new games we will all be playing for hours and hours on end. The creative parts of those new leisure products and services will still require human brains and thinking and, for lack of a better word, inspiration. Jobs will shift from button pushers, lever pullers to story creators and ways to capture and optimize those leisure hours.
We have a need to work… create… be useful.
I totally agree with you there, and I think such a future where we are free to do such things is an awesome proposition.
Where I worry, is that western society is founded on principles of work ethic. We compel people to work with things like healthcare and debt to to a point where the decision is really work or die. The truly sick part is that we maintain this pressure cooker, in the face of an economy that is rapidly outgrowing a need for workers. Something needs to be done.
I think that’s absolutely the most important point.
people aren’t just going to suddenly be satisfied doing absolutely nothing. There is going to be much more free time for creative thought, and creating the next big thing.
This is a good point, but i think you’re missing something… education. What will happen to the factory workers replaced by automation? They certainly didn’t go to art school or film school to be able to create those good shows you are asking for. And how will they be able to consume this new media if they don’t have jobs to pay for it? Some people don’t have a creative side, so what will a math oriented person to do to compete with a calculator?
Agreed! I have a similar (if not nearly as erudite and well-written) perpective on my blog here: https://considerforexample.com/hello-robots-goodbye-civil-society/
Yo bro I agree.
Thanks for writing this so clearly. These sorts of ideas and concepts are hard for people to grasp since for some this is less “thinking outside of the box” and more “thinking outside of the universe”. It’s a tough cookie to crack but an even tougher recipe to learn or know.
Again, thanks for providing such a clear through-point for these ideas.
Have a read at Queen of Angles and Slant by by Greg Bear, and consider how he handles “the disaffected.” In his labour-free future, a goodly portion of the population lives in subsistence housing and amuses itself with virtual reality – bread and circuses. http://en.wikipedia.org/wiki/Queen_of_Angels_(novel)
Haven’t read it, but it sounds really interesting, I’ll have to pick it up
They’re both great reads that have stood the test of time!
Check out Sacred Economics by Charles Eisenstein. He details how money has reached the realms of a simple, abstract agreement, and we can free up capital in the financial system by implementing a zero or negative interest currency and backing it by pollution credits and other green ideas which reward innovative, environmentally friendly behaviour. We dont have to change anything in our society, simply the way our money works. The book is free to download online as an ebook here:
http://sacred-economics.com/about-the-book/
If you want to hear or watch Charles detailing his ideas a little further he also features on a great podcast with London Real here:
It is not simply technology (and trade) but that the adoption of capital is subsidized vis labour which is taxed.
The tax rate for hiring labour is high vs the rate for capital expenditure. Economic efficient production reflects that government policy: a tractor gets a tax break but the driver of that tractor (and the employer) subsidizes with his income (and payroll) tax that tax break for the “business investment”. Furthermore that tractor is depreciated over time while the worker gets more expensive as he gets older. Eventually the employer starts looking at driverless tractors purely due to government imposed distortions. Not technology.
Remember the mantra: “There is only one tax payer”? Companies have enjoyed the benefits of this philosophy for decades yet the results are still striking– today there *really is* only one tax payer.
If companies were not first class citizens (paying the least in tax yet wielding the most political power) their tax rates would mirror those of individuals, they could depreciate their employee costs yet not their buildings.
End government distortions to the economic environment and companies will hire. But you basically must force them to do so.
I believe that it is absurd to suggest that there “isn’t enough work to go around”. As long as people have needs/wants that are not being met, there is work that needs doing. It is possible that there are not enough jobs to go around… although I know there are job openings right now for many things; It’s just that people aren’t qualified for them. That sounds like an education problem to me. It is true that as more and more machines do the menial tasks, the new tasks that need doing include things like maintaining/building machines. But you need people educated to do that kind of work.
You might to hear what this guy has to say: http://www.pauljorion.com/blog_en/
One of the few that predicted the current crisis…
Have you checked out the book, The End Of Work ?
While the solutions it is a bit 90s in places, the point it makes that we should all work less hours to spread the work around makes sense.
Productivity gains in the last 30 years have almost exclusively gone to increasing the wages of those at the top, they should really be spread more evenly.
Thoughtful post, glad to find your blog today 😉 The future… I suspect it may well be more like the distant past than the recent past. The recent past handed a wonderful life to western middle class… the distant past had a far more un-even, un-protected shape to it. Global connection = global competition for commodity skills… the challenge is how to Un-Commoditize your skills…
There is always something to do. If there is a lack of jobs, just create one. What you need is a fair share of the money. So you need a method to stop people from hoarding the money and watching how it grows stale so that they have to hoard even more money. That’s a type of job you just don’t need.
What I really wonder about is something that is not thought of by most business people at some point time.
How do the business people that want to make money think about making money if nobody else has money to spend due to not being able to work because there are no jobs?
Excellent question, Im very surprised you’re the first to actually ask it!
want more jobs? Where is the shirt your wearing made? We can create more jobs ourselves by only purchasing things made in the U.S. If everyone stopped buying the stuff made in China(all our jobs were shipped overseas in the 80’s by president Reagan) we would have plenty of jobs. We need to stop complaining and do it ourselves. We have the power to change it, with every dollar we spend. Spend those dollars wisely and we’ll create jobs for each other. We can’t wait for the government to do anything. What are they going to do anyway?? We can put ourselves back to work ONE DOLLAR AT A TIME ! WE have the Power to change it!
This is actually not nearly as much of a solution as you think. In fact, just based on free-market forces (without the need for a concerted buy-American effort), much of the manufacturing sector is coming back to the States (and other 1st world countries). The problem, is that while manufacturing will come back, it won’t bring jobs with it. The reason manufacturing is coming back is because automation is getting to the point where it is getting more cost-effective than even the slave wages paid to Chinese and Bangladeshi workers abroad. And once that happens, it just makes sense to build products for Americans in American factories, so as to cut down on shipping costs etc. In 20 years, Foxxconns half-million Chinese workers will have turned into a hundred thousand American robots, and no amount of buying made-in-the-USA is going to turn those robots into human jobs.
“the only thing that is surprising is that people still somehow believe that politicians can create jobs”
Well, not that I love politicians, but they DO create jobs. Might not be smart about it, might not be what people want, but they do create jobs. What do you think lobbyists do for a living? They represent some company/industry and try to persuade congress to pass favorable bills.
Not all the time do these bills create jobs, but sometimes they preserve jobs. Either way simple examples like build or fix some kind of transit (highway, rails, bus etc). The defense industry lobbys just so people can still crank out tanks that go sit in Arizona, not smart, but jobs nonetheless. The auto bailout, who knows what would have happened otherwise, maybe 1 of the big three would have ended up like Lehmen brothers and be gone forever? Preserved jobs
Anyways, I’m neither agreeing or disagreeing with lobbying and job creation/preservation, but I found it surprising that you somehow believe they have no hand in some jobs out there. At the same time I agree they can’t create jobs for _everybody_ but don’t take their extremes to the opposite end and pretend they cant create jobs for _anybody_
@anon y mouse,
“preservation” != creation
Maybe those jobs need to be destroyed so that capital can be better allocated somewhere else in the economy. If that is the case, then politicians are just preventing the proper allocation of resources.
Yes, you can argue that some family was able to pay their bills because of a bailout, but what about the counter-factual? What about those jobs that couldn’t be created because capital was misallocated by the politicians and/or cronies?
I think you’re right. To some extent and in the short term, some jobs will come back. Some of these will be essentially fake: the UK government for one is involved in a whole host of employment and anti-benefit “initiatives” which are essentially massaging unemployment figures at the expense of the underprivileged’s living standards. But even some of the real jobs, in the sense that the industrial revolution first came up with the notion of a 9-5 “day job”, will evaporate, or at any rate mutate to the point where they don’t look much like jobs any more.
Even if we decide not to move entirely to socialism we will still reach a point where, to avoid destitution on a scale as yet unimagined in human history, we simply have to decouple people’s access to basic living standards from the actual wage they earn. That doesn’t mean that we no longer reward hard work: but measuring the full extent of that reward for hard work, first and foremost with a single number – that of the annual salary – will no longer be feasible in an underemployed society. Either that, or we have to come up with a different way of working out that headline salary figure, which is sort of the same thing.
Methods of increasing employment, at the expense of some natural resource, are clearly no longer infinitely extensible. We are rapidly reaching the point where such environmental goods can no longer be treated as externalities. Climate change, local pollution events, and even the loss of urban green spaces, show that in the very attempts to perpetuate the system of “employmentism”, we undermine the quality of life that is presumably the point of such a system in the first place. We are already consuming the earth’s resources at a rate of nearly two years’ worth, per year. Where do we go from here? How do we avoid a Malthusian catastrophe, the sort of thing that one might offhandedly propose on a Slashdot comment, but the very contemplation of which offends our deepest, most basic human sympathies?
I don’t see any straight answer to this myself. Some of it definitely comes down to growing your own food, generating your own energy, repairing your own stuff; reducing the waste currently inherent in our late-capitalist lifestyles, in ways which themselves add more satisfaction and fulfillment through our human desire to create, make, fix. If that job/wage transaction is no longer going to make any sense, then we need to work out how individuals can move closer to self-sufficiency in the future: not because we want to phase out the state, which provides our safety nets and helps enable us to be the people we would most like to be; but because we want to phase out grinding poverty and the misery of want.
Reblogged this on evolveSUSTAIN.
when everything that can be automated will be automated humans will have more time to engage in creative activities like painting, cooking gourmet food etc. I think that the following article is quite relevant to the discussion, to quote “Only a creator culture can save us”:
“http://www.aeonmagazine.com/living-together/damien-walter-creator-culture/
Do you think that the owner class will keep us alive if we don’t work anymore for our money?
I am afraid that they will not, already there are plans to reduce the number of people on this planet.
I think the “we don’t have to work anymore in the future” thought is a nice one but also very naive, as long as we have a super greedy class it won’t happen.
Great piece!
I agree entirely, particularly with your suggestion that we should be thinking about these problems now, and not many seem to be taking that seriously.
There is a major point that I think is missing in your piece, though. Economic drivers encourage money making activities, but do not necessarily create jobs, as you point out (because technology creates efficiencies that create capital with less labor). But while human labor may not be necessary to create more efficiency and thus capital, most of the economy is composed of unnecessary activities that exist purely for the sake of economic opportunity.
In other words, while technology increases the efficiency of the transportation industry such that driverless cars may replace taxi, bus, and truck drivers, that logic applies internally with the goal of improving the efficiency of the transportation industry. The economy as a whole can create new jobs that don’t require efficiency, like making oreos. Nobody “needs” oreos, but they exist because someone can make money producing them and essentially creating a market for their existence (whether that is a good thing is another story).
For anyone interested, what got me into this issue was:
Martin Ford’s book, “The Lights in the Tunnel,”
Jaron Lanier’s wonderful Edge.org interview – http://www.edge.org/conversation/the-local-global-flip ,
and Douglas Rushkoff’s piece on cnn.com, “are jobs obsolete?” – http://www.cnn.com/2011/OPINION/09/07/rushkoff.jobs.obsolete/index.html
What Lanier suggests is that we start monetizing the activities that we spend most of our time on, creating and consuming content online. I’ve worked at a tiny startup trying to tie the general economic problem of employment, with the problem of getting content creators paid (shameless plug!): https://www.momeant.com
I have to agree with Seth Godin in that we have entered a connection economy, where ideas matter more than “stuff.”
While I agree with you in that there will be less and less jobs in “stuff creation,” there can be a new economy build on networking and relationships, where the creative-types win versus the investor capitalists.
You also hit the nail on the head when suggesting lowering the retirement age versus raising it would open up more employment opportunities for the youth population, although there are pension and retirement plan costs to take into consideration.
How many people does it take to screw in a light bulb? None, the light bulb screws itself in now. Once humans are out of the equation, they don’t receive money for screwing in the light bulb, thus have no money to pay for light. But should a human benefit from the light bulb? Without humans, was it even necessary for the light bulb to screw itself in? A human comes along with an idea for a better self-screwing light bulb, but no one has the money to pay for it. What then?
I think we’re on the cusp of a paradigm shift. Think about this: in the 50s and 60s families could be supported by one primary breadwinner, not so today.
Which means that we are requiring more workers to be in the marketplace, if we could go back to a living wage that isn’t stagnant – where we can make it so everyone willing to put in the work, can at least have a roof, and some feature comforts for themselves and their family, while their spouse can afford to be a stay-at-home mom/dad – we will see more jobs available because the workforce will shrink by nearly half.
Imagine a society where we aren’t killed by work, e.g. :
– the average work week is 4×8 hour days (32 hours per week + some ability to work from home when projects need completed).
– retirement age: 55-60, Have longer time to play/experience life/live. Doing this will free-up a lot of job-space for new workers/college grads, create less stress, create less medical issues as a result of stress.
Single-working families will result in less crime/smarter kids/less school shootings/more responsible youth, I’m no expert but I’m sure latchkey kids and kids without a full-time mom/dad figure have more opportunity to be rebellious, or criminal, or basically learn bad behaviors that carry on into adulthood.
We need to go to a society where not everybody needs to work or have a job, but everybody receives bare minimum enough to live on. Some sort of living wage for everyone–but those who can’t find a job/must devote x hours to volunteer projects at charities, etc…
My point is exactly that, as it starts to make less and less economic sense to keep us employed, what happens to us? Do we really need to maintain such draconian social constructions to keep us working in a society that is doing more and more with less and less labor?
This is the type of badly needed conversation that can’t even start as long as we maintain the view that growth is always equal to job creation.
I think a lot of people are missing a crucial aspect in this discussion and that is that the economy is global and not local. Capital and the owners of capital are not constrained by borders or a sense of nationalism like most of the actual labor force. If every job in America disappears it doesn’t mean that there aren’t jobs somewhere else, like say China. Yes, the types of jobs and the automation of others are changing as technology changes but that doesn’t mean that there will eventually be no jobs at all. We have to recognize that there is real possibility that America may well become a third world country in time. The US and many European countries experienced vast increases in wealth and standard of living in the last 100 years but it came at the expense of not developing other nations and keeping them in poverty because that is how the system works. China, which was once on par with other 3 world countries in terms of standard of living and wages is fast becoming the new America in terms of the dramatic increase in the middle class and increasing wages. This is all a result of companies who moved production from America over to China from the 1970’s onward. Production and capital will move to where the cheapest inputs are such as natural resources, labor, etc. So when jobs vanish in America its not worrying the owners of capital because they will always be able to find a market. I also don’t think any industry would automate themselves out a market that could afford the product being made. I think the likely scenario is that some industries may be fully automated but many will remain either un-automated or partially automated still requiring the need of human labor. A great book about the future of the global economy and what the labor force will look like is “Millennium: Winners and Losers in the Coming World Order” by Jacques Attali which can actually be downloaded for free on scribd here http://www.scribd.com/doc/27478499/Millennium-Winners-and-Losers-in-the-Coming-World-Order-1991-Attali
I just touched on this in my post last week about Education and Creativity. We are still educating people like they are in the Industrial Age, but we have moved to the Information Age. We need creativity in the workforce, and it has to start in schools.
Sir Ken Robinson in my hero. Here are a couple of his TED Talks that make a good argument for how we need to fix education, thereby improving employment and new job creation.
I also really like Sugata Mishra’s recent talk on the subject.
Education (as it currently exists) is obsolete
I also saw an article about a Computer programmer recently on Hackernews, who learned mostly via Apprenticeship, which I think is something we could move towards here in America(They do it a lot in Europe). Ideally we should know enough about Math/English and general educational requs by graduating High School, so when we get out we could focus 100% on learning skills that are related to the field we want to go into.. Math is important in a lot of computational stuff, but the most used thing in math is adding and subtracting 1.. and then the computer does that you just need to tell it to do it.
The world is now changing way faster than we can keep up, and everything we know/do is gotta break before long because it is just not efficient, and not working. There is a better way, but we need to figure out how to make it happen.
Yes, I was very glad to hear more about his “hole in the wall” computers.” I enjoyed his earlier talks where he shared his results.
My daughter is a toddler, so her education is becoming a concern for me. I don’t want her to become an unhappy cog in the great machine twenty years from now. It is daunting to concider what she should learn to be ready for what the world will look like then.
I agree that the current education system is obsolete.
comment on TED video> http://www.youtube.com/watch?v=GMynksvCcUI
Wow. Use the words “green energy” + “job creation” and the political “science” grad waters the planet with her self-righteous tears.
I have a couple of words ‘FREE TRADE’ Why on earth did the west buy into it and why not slam the door on it now! Oops, I forgot, TRILLIONS IN DEBT and Americans have painted the world into it’s corner.
No deary-eyed Governor will fix the world with so called “green energy” “job creation” BECAUSE, capitalists are not interested and government subsidies are a pay-out-scams to their political supporters.
America is going down and when the elephant rolls over, Canada will be the first to feel it.
while i agree with the decoupling principle discussed here. i’m left feeling that this piece is an apologist rant excusing the effects of untethered neo-liberal globalization. the jobs could come back if we just adopted a more protectionist stance. when you export something to china, the Chinese charge a 28% import tariff, when someone imports something into the US we charge a 4% tariff. combine the tariff’s with currency manipulation and massive subsides and the illusion of a free global marketplace is shattered. the US has a large enough domestic market that we could pursue some degree of economic protectionism and still have a target market of 330 million consumers. globalization is a scam that benefits the 1%.
@ figjam88au
No, it’s not. “Socialism is the only solution” is the unthinking reaction of small-minded people who cling to the past notions without having any vision of what other alternatives look like. Technology has changed. The world has changed. Hence the potential solutions will not look like they did in the past.
There are another alternatives, based on freedom and the morality of voluntarism–not the regressive, immoral use of force of a collectivized society–but the voluntary choice, autonomy, and freedom of individuals in a decentralized world.
What the article rightfully gets at is the massive increase in efficiency from technology. But the danger that we face is right now is a lack of creativity on the part of a large portion of individuals in our society that see this as merely a negative thing, or even worse and much more dangerously, as some kind of excuse or justification for the use of socialism, which is the force of the state against individuals in society. That is regressive, uncreative, and doesn’t take into account that technology and the world has changed. (I’m not referring to the article’s author, but to figjam88au and others that advocate socialism.) There are positive alternatives. This massive increase in efficiency doesn’t just destroy traditional jobs, it brings with it immense opportunity for individuals.
Look toward the future. Look toward creating better and more positive alternatives.
Internet Education — Khan Academy, YouTube such as http://www.youtube.com/asapscience, Coursera, Unschooling, et al.
Food — Aquaponics, Hydroponics, CSA’s, etc.
3D Printing
Housing and Sustenance – The Earthship concept of self-sustaining, ultra-efficient housing (earthship.com)
And so many more.
The world is changing in the most amazing and most positive way that it ever has. And yes, will have to live through hard times where the old, hierarchal systems continue to fall apart. But it is very dangerous and highly immoral for individuals to react unthinkingly and advocate for an even more hierarchal and regressive system that is socialism. It is not only immoral due to the inherent use of force against others as its basis., but it is also regressive and unthinking because it doesn’t take into account that technology has changed, the world has changed, and hence the solutions have changed too. The world is heading toward decentralization and that brings with it better resilience, better security, and more freedom, autonomy, and opportunity for individuals. That is if we can survive and get past the point of uninformed and outright dangerous people who advocate for the regression to socialism. That is simply scary. That is why I speak up against it.
Stay positive. Help create the future. The future is bright.
p.s. I enjoyed the article. But to then see this first comment is very disappointing and that is what my response it to. It is morally reprehensible for anyone to advocate socialism. It shows a lack of understanding of the world and even a lack of morality. We need to stay positive and work on creating positive alternatives. The increase in efficiency is a challenge to the old structure of society, but with this comes immense, positive opportunity for the future when you really understand it.
Reblogged this on KnoGimmicks Social Media & Web Design.
Cool, thanks
There is no natural, physical, economic or legal law which states that economic growth creates more jobs.
Except Okun’s law
Okun’s law is more accurately called “Okun’s rule of thumb”
http://en.wikipedia.org/wiki/Okun's_law
Of course its derived from empirical evidence, like much of science- we aren’t talking about axiomatic set theory. But where is your empirical evidence or theoretical model?
This is a blog post, not an economic white paper my friend. Decoupling can happen though, I would suggest reading more about that if you’re interested
http://www.nytimes.com/2012/12/12/opinion/global/jobs-productivity-and-the-great-decoupling.html
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You cite Krugman’s post on the future of robot labor. But you do know Krugman would completely disagree with you, right?
He’d say it’s aggregate demand that’s holding hiring back, not robots.
Companies aren’t hiring because consumers aren’t buying because companies aren’t hiring because consumers aren’t buying…
The NYT article about companies hoarding cash is entirely consistent with an aggregate demand explanation.
I see you’re an immunologist. Do you know what I mean when I contrast demand with your structural unemployment? I think non-experts can make valuable contributions to almost any debate, but if you’re going to write a blog post on the age-old structural vs. demand-driven unemployment question, you might want to at least acknowledge that there’s a big ol’ debate going on out there about this very issue.
This is a blog post from somebody who likes to speculate on the future. Hence the tagline “A blog about the future and everything else” not something like “Economics by and economist”. From the “I see you’re an immunologist” comment, I can see that you sir are kind of a dick. Nonetheless, you may still have something to add to this conversation so I won’t censor you. Also do feel free to write your own blog post in retort.
Now, if you have read my post then I think my position should be pretty clear. Productivity is up, wages are down, capital is up, jobs are down. It is pure idealism to think that technology has played no role in that. Whether it is a temporary situation or more structural, only time will tell.
I actually think Krugman is short of the mark on this one, but I am not so sure he would completely disagree with what I have said. Here is an interview where you he discusses some thoughts on the impact of technology on the economy. http://www.businessinsider.com/paul-krugman-on-technology-and-inequality-2013-2
If the immunologist remark offended you, I apologize. But the point was you’re not an economist. Perhaps as a result, you wrote a blog post on a basic question in economics without addressing (and perhaps even realizing) that you’ve stumbled on an open debate. Imagine if an economist wrote a blog post saying that he knew the mechanism of TCR-MHC recognition, and the critical parameter was the off rate, and he never even mentioned that it’s an open area of research. You’d be miffed, yes?
I’m not going to write a blog post about it. Just google it, or grab an economics textbook. To many of us, structural explanations of our current economic picture are dangerous because they absolve the government of doing anything about the unemployment picture via monetary and fiscal policy. Scan Krugman’s blog a little more closely, and you’ll see many, many references to this idea. While you seem to be backing off and saying your post is about the distant future (and Krugman would agree with you on the distant future, or at least speculate with you), your post seems to very much be about the today. “The jobs are never coming back,” for example.
You also might want to google a little bit about the economic history of the Great Depression. It’s actually really interesting. In the 1930’s, a lot of people made arguments that the jobs were never coming back because of, you guessed it, machines. Except in this case we were talking about assembly lines and manufacturing. It seems like every time there’s a large depression, structuralism comes to the fore. So far, business cycles and demand have held up well, but you’re free to disagree, and I actually think 30-40 years from now you might be right. You should at least acknowledge, however, that lots of people who know more about this than either of us are debating the topic constantly.
I think we are mostly in agreement here, with the main difference being I think it’s going to take 10-20 years to get to where you think it’s going to take 30-40 years… Really time will only tell
As an economist I can tell you that there are many economists who don’t have a clue how the economy actually works. Instead of observing the economy and explaining how it works based on the factors that are actually driving it they choose to force the facts to fit their theory of how it works. You have just as much right as anyone else, especially an economist, to weigh in on this debate regardless of whether its been ongoing or not. I think the fact that you’re not an economist actually adds a fresh perspective to this issue. It really makes me mad when economists act as if nobody else but themselves should be able to be involved in a debate about economic issues. Its that type of insular, elitist mentality that leads to a stagnation of ideas and solutions.
Very interesting post. Wise, informed, brilliantly written.
Thank you
You’re welcome. Thanks for sharing!
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Very short-sighted post and very short-sighted comments here because no one is questioning this erroneous assumption: “We are headed towards untold abundance with little need for actual human labor.” See PO3TIC’s comment about the global economy. Automation technology is racing forward, yes. But billions of people in developing economies are increasing their consumption. Commodity prices are rising, not falling. They will continue to rise. Stuff’s getting more expensive, not less.
Old jobs aren’t coming back, that part’s true. The demand for new jobs though — designing and operating the machines that will fulfill new, record levels of global consumption — is limitless.
This stuff becomes very obvious when you’ve lived in a developing economy for some period of time. There is an unprecedented surge of growth and consumption which Americans are not taking part in. Stuff is not becoming free, because billions of hungry mouths are finally making enough money to eat as well as we do.
I think what is short-sighted is taking the view that people in developing nations will always be cheaper then automation. Exploiting the 3rd world for labor will not continue to be socially or economically acceptable. Technology becomes cheaper every year, and human labour becomes more expensive. Automation will win in the end.
In the same way, we wouldn’t employ anyone, no matter what country they live in or how cheap their labour is, to sit in a room and perform calculations (as they did in the age before computers), we will not employ people to mindlessly assemble baubles in sweatshops in 20 years.
Sorry but this comment just misunderstands what is going on in the world. The American media focuses on the most sensational cases of exploitation, but ignores the actual trends. An Indian software developer who’s being paid USD $1,500 a month isn’t being exploited, relative to his cost of living he’s earning a great income. This isn’t just socially accepted where he comes from, he’s the envy of his peers.
Anyway, economic forces WILL cause inflation and drive up the cost of his labor, but they’ll drive up his cost of living too, and he’ll pay more commodities. Commodities are at the center here, not cheap labor. He is going to buy more commodities and pay more for them. That is going to bring up the world price for those commodities. Even if robots water the corn, someone will need to design and maintain the robots for a long time to come.
Your analysis completely ignores this. I take an optimistic view: that technology and increasing demand will roughly balance each other out. Your view however is incomplete: you don’t even mention the fact that the prices of things are rising. This is the most powerful economic trend since industrialization and it doesn’t even factor into your analysis. Sorry, technology is very powerful, but so is the rising consumption of 5 billion people. If Asia, South America, and eventually Africa all developed, we would be talking about, over time, adding fifteen Americas to the world economy. It’s going to take a LOT of technology just to keep commodity prices where they are, let alone bring them down. Because raw material costs are going up, technology won’t make life ridiculously cheap in our lifetimes unless the developing world is denied access to it (both unjust and unlikely). What it will do is provide the productivity that enables more people to live at our standard.
I think we will have to agree to disagree on the point of whether technology can outpace demand out not. We can come back to this thread in a few years time and see
All I read so far is the title and Have to say…THHHAAAAANNNKKKK YOOOUUUUU!!!! You just said out loud what a lot of us were thinking…..Now onto the article itself.
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What you say is true of large machinery items, perhaps. But as for everyday household items, it is only true as long as consumers are willing to continue buying products made this way. There is a growing movement to reject such products. The “buy local” movement focuses on artisan products at realistic prices inbstead of cheap junk mass produced. It is growing by leaps and bounds. Families like mine, not rich by any stretch of the imagination, understand low wages are the result of the policies you describe and we carefully use our limited funds to support real jobs of local people instead – a quality, not quantity philosophy. The economy is a social construct. There is no such thing as an inevitable outcome. Efficiency as it is currently understood has shot well past the point of diminishing returns. As more people realize that, reloicalization – smaller scale redundancies for lical and regional production – is recognized as the only viable solution to mass unemployment and the disfunctional “efficiency at all costs” paradigm. The costs to society are far too high.
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