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We’re not going to have a jobless recovery. We’re going to have a jobless future

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Re: We’re not going to have a jobless recovery. We’re going to have a jobless future

#71

Post by Eliezer »

pg wrote: post #24

"Our new economy is shrinking because technology leads to efficiency over growth." Anyone who wants to make the claim that technology is net killing jobs has to be prepared to answer the question: why now? Technology has been killing (but not net killing) jobs for centuries. It's possible that technology could start to net kill jobs. But why now, when it hasn't in the past?

PG, what probability would you assign to the propositions "This time things are different" (empirically: the jobs won't come back 5 years from now) vs. "This time things are not different" (empirically: the jobs will come back 5 years from now)? Warning, if your probabilities are extreme enough, someone might want to bet you on it.

Presuming things are different, I see five obvious answers to the original question (and "all of the above" is also an option).

1) The amount of regulation and regulatory burden has increased sufficiently between then and now, that new business relationships have a much harder time replacing old destroyed business relationships. I.e., it's now more expensive to hire a new employee.

2) It's a novel change in the financial side of the economy. Like, capital-holders now try to make killings by investing in the right HFT funds instead of trying to go out and invest in new businesses. Implausible? Maybe, but finance has changed a lot recently, so the difference, if there is one, might be there.

3) The amount of re-education required to get a new job has increased enough to be a killer barrier to re-employment, whether because of employers having imposed an arbitrary demand for bachelors' degrees or because the jobs are actually more complex.

4) Ricardo's Law does allow individual regions to lose as a result of tech improvements, because if someone else beats your comparative advantage, people will want to trade with them instead of you. There's nothing ahistorical about the Rust Belt having a persistent recession within the US. This is now happening to the whole US; people no longer want to trade with us, but China is growing plenty.

5) The Thiel hypothesis: Recent technological developments are intrinsically more boring than past technological developments; people are trying to build web apps that will sell to Google for $10 million instead of trying to invent the next "microchip" or "electricity". It's not that the 21st century poses a novel obstacle to forming new business relationships to replace old ones; rather, 21st-century technologies that obsolete jobs are missing a wow factor or wealth-generating factor that previously increased demand or increased total wealth at the same time as obsoleting jobs.

Re: We’re not going to have a jobless recovery. We’re going to have a jobless future

#72

Post by bfung »

dxbydt wrote: post #56
pg wrote: post #24

"Our new economy is shrinking because technology leads to efficiency over growth." Anyone who wants to make the claim that technology is net killing jobs has to be prepared to answer the question: why now? Technology has been killing (but not net killing) jobs for centuries. It's possible that technology could start to net kill jobs. But why now, when it hasn't in the past?

>But why now, when it hasn't in the past? One might well ask, why not now ? Given a(t) t, where a(t) = rate of new jobs created per year -b(t) t, where -b(t) = jobs lost due to technology per year Problem is, the function a(t) is stable and predictable over time, because human populations are generally sigmoids ( http://en.wikipedia.org/wiki/Logistic_growth ) Whereas the function b(t) feeds on itself ( http://en.wiki…

So far in the 20min discussion, I like this answer best as it tries to outline the factors for even a crude estimation. I do have another variable to add that nobody has mentioned.

I think the sentiment, not explicitly conveyed in the article, is that "there are less jobs for the number of employable people". And there lies the rub. Perhaps net total jobs is still on the rise, but the rate of population growth is that much faster than the rate of jobs created. And it's not flat rates, but changing rates as well. When technology provides efficiency (I'm thinking scale, atm), it would probably push rate of jobs create slightly lower. With more people on the planet, instead of competing with 1 other person for 1 spot, a person might be competing with 10 other people for 2 spots, hence the sense of joblessness, and a culprit to blame.

Re: We’re not going to have a jobless recovery. We’re going to have a jobless future

#74

Post by benmccann »

cjy wrote: post #27
ChristianMarks wrote: post #10

The OP's post could use some context. Ricardo’s concept of comparative advantage was forged in a world where labor and capital were essentially fixed. England could weave cloth more efficiently than Spain, but Spain could make wine more efficiently than England. Therefore, they would both benefit from trade given that each of these countries had a comparative benefit or efficiency to offer. The assumption under compa…

You don't understand comparative advantage. As long as there is scarcity, comparative advantage matters. There were 24 hours in a day when Ricardo was around and there still are today. There are theoretical cases under which trade can make a country worse off, but they are rare situations and cannot be simplified down to "inputs flow around today but didn't during Ricardo's days". That doesn't even make sense. But wh…

The one part of his post that had some substance is that we're not participating in free trade on a level playing field because the Chinese won't freely float their currency and instead have it pegged.

Re: We’re not going to have a jobless recovery. We’re going to have a jobless future

#75

Post by patrickk »

dstein wrote: post #52

Fixing the economy will require more than entrepreneurs. I think it will ultimately require major socio-economic reform, possibly a conversion to Technocracy. Technology isn't just eliminating jobs, it's eliminating trade altogether. I can replace my watch with a smartphone app. That means the watchmaker, supply chain, retail store, and clocksmith are all out of business. And 3D printers could be the next mega-disrup…

"I can replace my watch with a smartphone app. That means the watchmaker, supply chain, retail store, and clocksmith are all out of business."

I work as an iOS app developer, a role which didn't exist just three years ago. There are millions of developers out there on the various smartphone platforms, a market that Apple spawned after seeing what hackers could do by jailbreaking iDevices and loading apps on the iPhone without "permission".

I wouldn't have a job now if I weren't for the iPhone (I live over 5000 miles from Cupertino) and there are many like me all around the world. Meanwhile, I can't think of a single watchmaker that has gone out of business.

Re: We’re not going to have a jobless recovery. We’re going to have a jobless future

#76

Post by Someone »

scythe wrote: post #21

The argument, then, is that our ability to produce will outstrip our desire to consume, and so a fraction of people will be able to produce enough things for everyone to consume, which will lead to the rest not having jobs. The problem with the argument is that it does not really appear to me that our ability to produce has outstripped our desire to consume. The buying of things is currently rather high, and product…

The US is somewhat of an outlier; it moved from 'top of class' to 'comparable to the EU as a whole' in a few years (http://epp.eurostat.ec.europa.eu/statistics_explained/index...., figure 3)

Re: We’re not going to have a jobless recovery. We’re going to have a jobless future

#77

Post by ww520 »

ChristianMarks wrote: post #10

The OP's post could use some context. Ricardo’s concept of comparative advantage was forged in a world where labor and capital were essentially fixed. England could weave cloth more efficiently than Spain, but Spain could make wine more efficiently than England. Therefore, they would both benefit from trade given that each of these countries had a comparative benefit or efficiency to offer. The assumption under compa…

I am curious. How does Germany do it? It has high labor cost yet it maintains its manufacture leadership and has export surplus. China and Germany become manufacture powerhouses yet have vast difference in labor cost structure.

Re: We’re not going to have a jobless recovery. We’re going to have a jobless future

#78

Post by dxbydt »

achompas wrote: post #63
dxbydt wrote: post #56

Earlier quoted context omitted.

>But why now, when it hasn't in the past? One might well ask, why not now ? Given a(t) t, where a(t) = rate of new jobs created per year -b(t) t, where -b(t) = jobs lost due to technology per year Problem is, the function a(t) is stable and predictable over time, because human populations are generally sigmoids ( http://en.wikipedia.org/wiki/Logistic_growth ) Whereas the function b(t) feeds on itself ( http://en.wiki…

Your question ("why not now?") dodges pg's main point: we've been through this many times before, and the catalysts behind this recession (especially poor financial liquidity) do not suggest a material, structural shift in the type of work available in our economy. The housing market is poor and businesses are hesitant to invest, but robots have not replaced the pimply kid at McDonald's just yet.

> we've been through this many times before

'past predicts future' is not exactly commensurate with a point of inflection. perhaps a real-life example can help - a medical transcription firm in India hires 25 Indians to transcribe medical records. I then sell the CEO a copy of voice recognition software. He is so happy with the results, he fires 24 and keeps 1 Indian to fix the occasional transcription typos! After one month, he finds the transcription error rate is unacceptably high, so he hires one more Indian to fix typos. For the past 1 year, these 2 Indians & that software has chugged along, making money. Now that CEO is happy, making money, and has opened his second office in India, with another copy of the software & just 2 more Indians to babysit and bugfix! True story. Any way you cut it, that's net job loss. First, a bunch of housewives in Atlanta who transcribed for a living lost their livelihood, but you can rationalize that by saying, hey atleast 25 Indians got hired. But 23 out of those 25 Indians lost jobs & 1 piece of software ended up doing the job! Now unless the Atlanta housewives and the 23 Indians end up working for the voice recognition software company ( a very remote possibility ) or end up in a brand new job ( even more remote possibility ) given their limited skills, there is definitely a block of time when there is net job loss. Ofcourse eventually some of these people will learn new skills and/or are absorbed into new jobs etc...atleast, that's the hope. But the intervening reality can't be wished away. I still think this story will have a happy ending, but so far I don't see it.

Re: We’re not going to have a jobless recovery. We’re going to have a jobless future

#79

Post by rdouble »

dstein wrote: post #52

Fixing the economy will require more than entrepreneurs. I think it will ultimately require major socio-economic reform, possibly a conversion to Technocracy. Technology isn't just eliminating jobs, it's eliminating trade altogether. I can replace my watch with a smartphone app. That means the watchmaker, supply chain, retail store, and clocksmith are all out of business. And 3D printers could be the next mega-disrup…

Swiss watchmakers have reported record sales since 2008. The guys who own the smartphone factories in China really like luxury automatic watches.

http://www.bloomberg.com/news/2011-01-21/switzerland-s-watch...

Re: We’re not going to have a jobless recovery. We’re going to have a jobless future

#80

Post by gvb »

pg wrote: post #24

"Our new economy is shrinking because technology leads to efficiency over growth." Anyone who wants to make the claim that technology is net killing jobs has to be prepared to answer the question: why now? Technology has been killing (but not net killing) jobs for centuries. It's possible that technology could start to net kill jobs. But why now, when it hasn't in the past?

"Our new economy is shrinking because technology leads to efficiency over growth."

I disagree with this premise. IMHO, it is much simpler: we as individuals lived beyond our means for 20+ years by borrowing money against our houses and against our personal word (e.g. credit cards). We as governments lived beyond our means in terms of direct spending as well future spending promises (e.g. promising retirement/pension/medical benefits that are funded by borrowing or not funded at all). Big companies also promised retirement (pension) benefits that assumed a continuing growth of the investments that backed the pensions - that didn't work out so well.

"But why now, when it hasn't in the past?"

In the past, we relied on general growth exceeding our indebtedness, "growing" our way out of our debt. This is a game that cannot go on forever... and the longer it goes on, the worse the crash will be at the end. Right now, it is looking pretty tough.

In short, we lived beyond our means for 20+ years. We will have to live "below our means" for a substantial number of years to balance our past spending against our current and future incomes... and that assumes we have the will to make the hard decisions to truly reduce our spending rather than claiming to reduce spending, but the "reductions" are 2/5/10 years in the future.

A big part of living "below our means" is buying less, paying down our debt, which means lower demand and thus lower job levels.

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