11–20 of 39 posts
I think that it's impossible to rationally ignore the fact that economies seem to contort to absorb however many workers are available to it. I have yet to hear a totally convincing explanation for this, but it seems to happen.
interesting essay, but you could have made the exact same argument in the early years of the industrial revolution...as one example. 'The real problem with the economy is that it doesn't need you anymore' could have been said, and probably was said, many, many times throughout history, every time big technological changes appeared on the horizon. agriculture? sorry hunter gatherer, the economy doesn't need you anymor…
Someone did make that argument, and his name was Marx. He argued that machinery could be thought of as 'disembodied labor.'
> Clearly, more and more jobs will move from more developed nations to countries like China, and it is difficult to see how, as this process continues, the United States retains its leadership position. In fact, it seems entirely possible that the U.S. will exchange places with less well-developed nations.
The United States has never been good at continuing dominance in a field they invent. Basically, it gets invented in the USA, and another part of the world gets better at it and takes over within 30-70 years. Historically, the US economy would've collapsed many times over had we not kept "inventing our way out of it". If it keeps up, USA keeps going. If not, starts to fall apart. Of course, the following isn't true:
> And the labor that is needed can’t be done in more developed nations because there are people elsewhere who will happily provide that labor less expensively.
"Can't" isn't the right word. There's certainly enough people that would be happy to work for the ever-increasing buying power of a modern day $5 to $20 per hour, and people would pay a premium to not have to ship things across seas and to be closer to their factories. The problem is that the labor laws in the USA has changed it from an economy with very many $15-per-hour jobs into one with a few $40 to $70 per hour jobs due to our laws.
> When we create devices that individuals will be able to own that will be able to produce everything that we need, the solution will be at hand. This is not science fiction. We are starting to see that happen with energy with things like rooftop solar panels and less expensive wind turbines. We are nowhere near where we need to be, but it is obvious that eventually everyone will be able to produce his or her own energy.
This is, of course, very false. It ignores economies of scale. Energy will eventually get closer to free, but it will most likely be because of giant nuclear fusion or hydrogen plants or something like that. The trend is towards even fewer institutions providing our basic needs, not spreading it out. What will happen is people will turn to more "intangible" sorts of work - sciences, philosophy, aesthetics, design, communication, and so on. There'll be lots more people working on things that would have been frilly or an unnecessary luxury in years past.
> This means that a small number of people, the people in control of the creation of goods, get the benefit of the increased productivity.
False! The quality of life across everywhere has increased a lot faster than the quality of life has improved for the rich. Now, the barriers to entry into industry as all but disappeared, and the "American Dream" of rags to riches is more possible than ever. You can get the benefits of economy of scale without a lot of money by having Amazon host it for you or some such. I had dedicated warehouse and automated shipping for orders at a company I ran for $200 per month + $2.50 per package shipped at my small company. It's going to be possible to get wealthier than ever.
Now, the wages for unskilled labor will fall off a bit, even as the prices of things get cheaper. I don't know which will fall faster going forwards, but so far, prices of essential goods and luxuries have fallen faster than unskilled wages. But also, there's been a shift to skilled labor in the developed countries, and what Peter Drucker called "knowledge work". Yeah, gradually there will be less people needed to tar roofs and roof-tarring wages will fall, but nobody really wants to do that anyway. As cheap, easily installed roofings improves more and more, there will be less roof tarrers, but kids that would've become roof tarrers will become computer programmers or writers or systems engineers or biochemists or whatever.
> Unfortunately, that wealth will be held by a very small number of people. And their operations will need to employ very few people.
This is such old world thinking. Yes, there will be less traditional, unskilled jobs. No, those people won't die in the streets. People are resilient. They'll move into other, more necessary positions that fill the new needs, as the old needs get cheaper than ever to buy.
> In short you will have a few very wealthy folks, and a much larger majority that will just not be needed for the most important things that the country needs to do.
Author could've written this about cars too, and how it's going to kill all those horseshoeing and horsebreeding and carriage driving and carriagemaking operations, and how the world is going to be a mess, and it would've looked correct.
Again, interesting premise, hadn't thought about it, probably correct. The follow-on conclusions are way off base.
I think that it's impossible to rationally ignore the fact that economies seem to contort to absorb however many workers are available to it. I have yet to hear a totally convincing explanation for this, but it seems to happen.
The real puzzle is why anyone is ever unemployed.
I don't think that's going to happen. Technological progress does make small-scale production cheaper, but it makes large-scale production cheaper faster.
The other side of this, that I rarely hear discussed, is "What happens when automation renders some people permanently redundant?" It's an easy platitude to say that technology obviates some jobs whilst creating others, but the new jobs tend progressively to more complex and/or creative work, that use the leverage of technology to do work that would have once needed many people (if possible at all). Currently, the is…
The guy who started how stuff works had small book on the subject http://www.marshallbrain.com/manna1.htm . But what really happens is that stuff finally becomes so cheap that people will stop buying more than they need of it and will presumably spend the rest of the money on things that are hard to make by robots: books, movies, professional services. The they the robots can do that ? Well then we will finally have…
By this article's logic, at the point agriculture was developed and not everyone needed to hunt for food all day, a big chunk of the population should have sat idle and impoverished.
I think that it's impossible to rationally ignore the fact that economies seem to contort to absorb however many workers are available to it. I have yet to hear a totally convincing explanation for this, but it seems to happen.
That's what's supposed to happen. It's called Ricardo's Law of Comparative Advantage. For as long as people's labor has any value whatsoever , they ought to be employed. The real puzzle is why anyone is ever un employed.
The basic laws of supply and demand (price of labour will adjust until all labour is employed) should theoretically be enough to cover it. But I don't find this to be sufficiently explanatory of what we observe in the world.
For one thing, you would expect that the price of labour be extremely volatile, especially at the bottom, in response to technologically driven change. This is not the case. The price of labour tends to be stable and rises slowly across most categories at the bottom (though it does not necessarily keep pace with the economy).
For another, in such a world one would expect the effects of minimum wage on employment levels to be easy to predict (like price restrictions on the consumption of goods and services). They are not. We can play games in the extreme margins (see what happens if you set minimum wage to $1000 p/h), but in the moderate ranges, the effects are usually pretty foggy.
In any case, citing some fundamental economic principle is not what I meant when I said explanation. I meant at least to some idea of how the mechanics of that principle apply in this case.
Labour is different to most inputs in that production of its raw materials is not really sensitive to prices or market forces,. It is, from the market's perspective, arbitrary.
I think that it's impossible to rationally ignore the fact that economies seem to contort to absorb however many workers are available to it. I have yet to hear a totally convincing explanation for this, but it seems to happen.
That's what's supposed to happen. It's called Ricardo's Law of Comparative Advantage. For as long as people's labor has any value whatsoever , they ought to be employed. The real puzzle is why anyone is ever un employed.