Is Your Job an Endangered Species?
online.wsj.com
online.wsj.com
Generally the change is n jobs paying $w / hour doing X being replaced by pn jobs paying $rw / hour doing Y. The markets generally ensure that p*r < 1 long term (for constant market size); however, the values of p and r, and the economies of scale of new technologies have a profound impact on their overall impact on important societal outcomes like inequality.
For example, consider a technological advance which has relatively low barriers to entry, such as voice over IP. In this case, r < 1 (people doing VoIP work get paid less, on average, than people at telcos before) but p > 1 (access to telecommunications technology is easier, so more people do it, even at fixed same market size). This creates more jobs and reduces income inequality.
However, in other cases, new technologies have higher barriers to entry than the existing manual option, p < 1, r < 1; medical equipment that is prohibitively expensive to manufacture and operate except for big players; small clinics close down and a few mega-clinics open up; while production is more efficient overall, the market is less efficient, and profits are higher for the few that remain in business. There are less jobs and more inequality.
The best possible outcome is when technology that makes jobs obsolete is low-cost and accessible to everyone; jobs are lost, but people don't need to work as much to make ends meet.
The worst is where new technology creates economies of scale that mean few big companies control major production but don't need many workers, but still charge only marginally less than the more labour intensive alternative; jobs are lost but prices don't go down by much. The only solution to maintain income equality is government taxation of those big companies combined with government public good expenditure (e.g. hiring the people who lost their jobs to do research).
(This is not to say that a 50-year-old who gets laid off would feel better if he had cheaper internet access. The effects of cheaper internet access overall, though, seem like they would end up producing cheaper food and other costs in the end, too.)
That is a very contentious issue. Let me use the dotcom boom as an example. In the early days not many people knew how to "make a website" and consulting companies raked in the cash. Then the knowledge got more widespread and the tools got better and basically any IT department could do it, so margins eroded, yet at the same time, more people and organizations had websites. With you so far.
But the people who were on the cutting edge of HTML and CGI in 1995 didn't stay there - they moved on up into different technologies, staying "ahead of the curve" and in the same relative position to the "average" IT worker. So there is no reduction in "inequality" (and that's a good thing - as an economy we need to incentivize people to look ahead). And the people who got into the game late find there are no jobs and have to retrain - and that is a net drain on their and the economy's wealth.
So I don't believe the effect is either to create more jobs (since the person who once was doing COBOL in 1995 is now doing COBOL ON COGS in 2011) and it doesn't reduce "inequality" either (since the HTML forerunner in 1995 is now doing, I dunno, iPhone apps).
This is tricky because we constantly move the goalposts. What counted as "making ends meet" in 1950-1970 era is now counted as "poverty" today, and is mainly limited to a few unlucky souls living on Indian reservations and other such depressed areas.
(This report from the census makes that exact comparison: http://docs.google.com/viewer?a=v&q=cache:fuZGrQqyd9QJ:w... )
If you truly want to make ends meet 1970's style, you don't need to work more than 26 weeks/year. Millions of people do this.
Median income per household (in 2008 CPI-U-RS adjusted dollars.) [[2008 : $50,303], [1968 : $41,995]] +19.8%
Consumer Price Index (CPI-U-RS) [[2008 : 316.2], [1968: 58.3]] +442.7%
To be honest, people below poverty line has not changed that much... [[2008 : 13.2%], [1968 : 12.8%]] +3.125%
http://www.ssa.gov/history/reports/boskinrpt.html
We might have 13.2% of people below the poverty line, but on the other hand virtually all the people currently below the poverty line have flush toilets. That wasn't the case in 1968 (see the link in my previous post). In fact, people below the poverty line in 2007 have a standard of living comparable to the middle class of 1968. Most of the poor live in a house with < 1 person per bedroom, a complete kitchen, 1/3 have a dishwasher, 2/3 have a washing machine, about half have AC, most have a car.
http://www.census.gov/prod/2008pubs/h150-07.pdf
My grandparents were middle class, and they didn't come close to that level of prosperity.
And the majority of people below the poverty level work less than half the year (by choice). Only 15% of poor adults work full time, 50 weeks a year.
While it is scary to be in the middle of a shifting trend in with a massive decline of old jobs, there will be a future that will take us completely by surprise. It will be unimaginable.
If you told someone from the industrial revolution that one day that people would pretend to be real people and then displayed in tiny little boxes and become the wealthy and elite of the world, they would think you were insane. The same would hold true if you told them that one day we would be able to all send our kids to schools and that they would start working in their mid 20's because their parents and the government could support and fund their development.
But each time, it seems, takes less and less time (we were farmers for thousands of years, hunter gatherers for hundreds of thousands of years but the industrial revolution is only a couple hundred years old).
And when we can no longer use humans? I don't know, but it seems that the only way we can ever end up in that situation is if we have achieved general ai, which is to say that we will be at the cusp of the singularity.
The industrial revolution may have made the work horse obsolete, but it had only one use. Humans have many.
Capitalism is just a mechanism for allocating resources, it's not any kind of moral judgment on anything.
However, I think there's a real possibility that, in the near future, automation will lead to a permanent increase in unemployment. Even if general AI proves to be a long way away (which I think it is), a lot of service jobs are algorithmic enough that they could became automated in the next few decades. If true, you end up with a small elite business/management class which finds themselves far wealthier than before; a few people who managed to hold onto their old jobs (domestic cleaners, plumbers, etc) or find new 'creative' jobs; and a vast unemployed underclass.
In theory with all our new machine-created wealth the entire underclass could live very comfortably on welfare. However, the way most societies are set up, that's unlikely to happen. The economic pie gets bigger but the people at the top suddenly find themselves with even more power and get an even bigger slice, and the people at the bottom get screwed.
I think this guy makes a fairly convincing argument: http://www.marshallbrain.com/robotic-nation.htm
If you have the time, his scifi novella about the social impacts of mass job loss due to automation is also OK (like a lot of amateur scifi, some of the writing and characterisation is pretty bad, but the ideas are interesting). Worth a read if you have the time. http://marshallbrain.com/manna1.htm
Season 2 of the Wire also touches on similar themes. (It's obviously not sci-fi, but it made me rethink my belief that "automation is fine, people just need to not be so picky about finding new jobs").
This reoccurring pattern of a labor market becoming liquid and transitioning has happened before. Hong Kong skyrocketed in unemployment when trade opened in China and most "algorithmic" jobs migrated across the border literally overnight. Education became a central part of the economy and the country moved forward.
So far, the exact opposite of this has occurred. The economic pie has gotten vastly bigger, inequality has increased significantly, and welfare has done nothing but grow.
I have read Manna (http://marshallbrain.com/manna1.htm) and strongly recommend it in the context of this post.
One popular idea of dealing with this uncomfortable idea is Singularity, where all those now-useless people will vanish from eyes in a giant brain-hug. So unsurprisingly this 1-2-3-?-profit kind of recipe became popular with techno-futurists. But IMO a Great Unrest or a new Great War due to social tensions, followed by surviving clique of humanity drowning in machine-supported hedonism is more realistic.
Which was why I was surprised to see a recent article about how IT was near the top of the best paying jobs list. I think though that list must have only been taking into account salaried employees.
To be fair though as a programmer, unlike say a carpenter, if one of the logs overflows the risk of being crushed to death by it is considerably less.
...from the Federal Reserve, which printed money for that purpose. "Quantitative easing" is printing money just as surely as if they'd fired up printing presses at the mint.
Slimers are those that work in finance and on Wall Street
I think he was pretty even-handed.
Citation needed? I kind of like knowing the guy poking me with syringes is a trusted professional.
I ran the numbers, assuming a work force of waves hands 150 million, a 4 million turnover represents 2.666% So if we apply that annually, the chance that you will keep your job each year is only 72.3% (NB: if you're going to tell me my math is wrong (a) don't bother and (b) you need to take into account that some people will lose more than one job in a year)
That might not seem too bad, but take a two year time span, and it looks more like only 52.3% of having continuous employment with a single employer.
However, even leaving aside the issue of calculating the size of the job seekers market (e.g. some people will have given up and not even register anymore), it doesn't take into account people leaving the job market due to retirement, people leaving the job market for other miscellaneous reasons (births, deaths, moving overseas) and people entering the job market for the first time or re-entering.
It just seems like a gross over-simplification to take only these two numbers in isolation, without even providing context.
I was talking to a bloke today, nice guy, very capable. But he's out of work and his licence was suspended for excessive speeding. He says it is simply not worthwhile looking for work at the moment because without transport it is just too impractical.
Now, the Libertarian in me wants to say that the sequence of bad events that happened to him is simply the result of the consequences of his bad choices. Perhaps I would feel differently if he and his partner were in a truly desperate situation (they're not starving, they're not going to lose their home). Perhaps I'm less sympathetic because of his obvious bad choices that led him to this.
But what if the things that led him to this point weren't (or weren't so obviously) his fault? Bad things happen to good people too. The rain falls on the righteous and the wicked alike.
Of my circle of acquaintances, I think every single one of the blokes has been unemployed at some time in the last year except for this one guy who somehow hangs on despite having a really terrible boss.
On the other hand, of the working women that I know, none of them have been unemployed in that same time span (some have taken maternity leave and then come back to work at reduced hours).
This gives me pause. Because in the workplace, especially large corporations, I always see the women being given the shitty demeaning jobs. Go post some letters for me, go get the birthday cake etc. It is never a bloke that gets sent to buy the birthday cake.
Oh, no, wait, there is one girl who keeps losing her job, but she is a mentally handicapped.
Anyway, the moral of the story is; unless you're willing to tug forelock and suck up to the man start your own business (doesn't mean you are immune to being fired, but generally if you do a good job the golden parachute is a better option than the leather boot on the neck).
This is a common meme, but I just don't see it. Where is our crumbling infrastructure? At least in my area, the infrastructure works fantastically.
We had one bridge collapse due to a design flaw, which was so surprising that it became national news. Now we need to replace every bridge, potentially introducing new design flaws in the process? Seems like a massive overreaction to me, probably on the same scale as our overreaction to 9/11.
http://www.economist.com/blogs/gulliver/2010/12/age_americas...
Sounds like a job for Watson & Watson, LLP.
And lawyers don't have much to fear. They will win in the end; they always do...
http://www.amazon.com/dp/098271632X
It's about a hacker who reprograms a Furby, finds that he's created the New New Thing, and then hangs on for dear life as his startup rises and falls.
It's "creative destruction", as told through a work of fiction.
How do you know that this would create jobs? How would you actually go about imposing a wealth tax? Do you believe you could make such a scheme revenue-neutral? (Or, if you don't want to, have you considered the effect on public-sector jobs and on people who are currently benefited by what the public sector does?) Is anything remotely like this politically feasible? Do you have any actual economic analysis behind this, or is it just idle sloganeering?
(A patient is feeling sick. Someone comes by and says "Recite a prayer over him, and paint his face green; that'll make him feel better". Do I need to have an alternative treatment in mind in order to say "You've given no reason to think that that will work. And if prayer is going to do any good, surely it matters just what sort of prayer to what deity." ?)