The answer to "what happens to workers being replaced" has always been "they'll find jobs elsewhere, every time you make a job redundant you create other new jobs", what I've seen called the "infinite work hypothesis" where there will always be new work and the problem is agility, job training, not demand.
There's a huge to-do list of jobs that need to be done at almost every level, from design and build of significant infrastructure in most countries around the world, to community-level support work.
It would be perfectly possible to retrain the long term unemployed for all but the most difficult design and management elements.
They're not done because the metrics of Wall St deem them "not profitable" - which means traders can't make quick gains out of them.
Allocating labor on the basis of whether or not traders and stock owners can profit in the short to medium term turns out to be an unintelligent way to strategise an economy.
But not the money to pay for these jobs.
> It would be perfectly possible to retrain the long term unemployed.
But who pays for this training?
> Allocating labor on the basis of whether or not traders and stock owners can profit in the short to medium term turns out to be an unintelligent way to strategise an economy.
Most companies are not publicly traded. These companies are not hiring the unemployed because they either don't need them or can't afford to (negative return on investment). The bottom-line matters to Mom & Pop stores as much as it does to big Corps.
This is wrong, in my estimation. Money exists right now that is lying idle, and moreover the more money is used, the more becomes available.
The past decade saw an enormous effort to dump money into the economy, to no avail. Nor is this new, there is even a name for this sort of thing: https://en.wikipedia.org/wiki/Liquidity_trap
The problem is not the lack of money, the problem is that vast majority of capital is controlled by a small group of people with limited vision and pecuniary interests.
These people will never allocate capital towards the enormous list of demands that go unfilled every day; nor should we expect them to. No one will build a road in your shitty small town just for your good health.
The more we structure our economy to produce this situation (concentration of wealth), the less we will find that unexpressed demands are being met by that economy.
We, the society, make the money. We could decide today that this is financed, either through printing, or through taxing. No theoretical problem.
Practically, those with the most resources have decided that they don't think we should take of those resources to support those with the least resources. But there's nothing inevitable about that. Historically, elite that are too powerful and too uncaring about the masses, end up on the guillotine/firing line/bottom of a pit.
You could have them go break large rocks into smaller rocks if you have an ideological bent against people being unemployed but unless those rocks can be sold to somebody for more than what unemployment benefit is there's no incentive.
Edit: Agree with the comments below. Rather than being idle there's many ways society could harness the skills and manpower of the unemployed for socially value adding, but perhaps not financially profitable, ventures.
See the contradiction here?
We could put these people to work engaging in labor that is valuable, but not as valuable as the cost of their welfare. I.e. pay them $7.25/hour to do $5/hour worth of labor (net cost to society = $2.25/hour).
Yet we don't. Instead we pay them to play video games (net cost to society $7.25/hour).
https://bfi.uchicago.edu/news/scholar-profile/faculty-spotli...
In the Portland area we have a large park (many square miles) that's being over-run by English ivy, and that's not going to be fixed without a lot of people going out and pulling it up by hand. If the city were to pay a bunch of workers with nothing better to do minimum wage it might be a lot cheaper than paying a team of regular permanent employees, and it could address part of the unemployment (and possibly some of the homelessness) problem.
If you pay someone $7.25/h to do nothing, that might be considered an incentive payment to not do work that does net harm to society.
While it would always be better to pay the $7.25 for something that might benefit the economy less in absolute terms, there is no "zero" that can be used to calculate a "net" cost of social welfare. Playing video games is not plowing a large vehicle through a crowd of people, or mixing fertilizer with #2 fuel, or strapping tiny backpacks filled with thermite and moisture-sensitive primers to bats, or cooking meth, or cooking krokodil desomorphine, or turning tricks in the park bathroom, or pooping in the neighborhood swimming pool.
One person can be very destructive, or at least thousands of dollars worth of annoying, before anyone would bother stepping in to check them.
But lets take your claim as given, namely that some classes of people are so dangerous if we don't pay them they'll harm us. If I thought you were right, then I'd probably turn to the Brexiters and Trumpkins for a solution. Are you really claiming that the poor are basically just gangsters and terrorists?
I'd estimate at least 90% of people living under the poverty line would never choose to commit a violent crime or property crime if their survival needs were assured. Malum prohibitum crimes and regulatory infractions are another story. Having more money means you can smoke higher-quality marijuana, and usually with less police interference. Having more money means you can pay speeding and parking fines without spending any nights in the county jail.
"Poor people" are not just one big homogenous group. They have their righteous saints and their sleazy lowlifes, and everything in between, just like every other economic class. The former deserve society's help, whereas the latter can sometimes be bribed to behave better.
Welfare doesn't stop the terrorism that still happens in places that have welfare, because those terrorists aren't murderously mad about being poor. It certainly stops food riots, at least until the system collapses. The crime in the Chavez-unraveled Venezuela is quite different from terrorist activity in Europe.
Also, what's the point of making a quantifiable estimation (your "90%") if you have no actual data behind it? Just say you believe something based on observation; throwing out a nice round percentage to describe your belief, even as a figure of speech, does a disservice to real attempts to quantify phenomenon in a discussion.
Are my perceptions wrong? Do you have any evidence to support your claim?
Also, why can't vigorous policing - rather than paying tribute to violent criminals - also solve the problem?
http://apps.npr.org/unfit-for-work/
The fact is that the poor aren't working yet they are consuming.
http://www.census.gov/content/dam/Census/library/publication...
This has been extremely destructive to the environment and has not done anything for the Japanese economy for the last 20 years.
It has been effective as a way of transferring taxpayer money to construction company presidents' pockets.
That's actually not the same thing. The parent comment's "have them go break large rocks into smaller rocks" carried the connotation of useless make-work. Your link describes a facet of concrete production, which is hardly useless.
Here is the key part of the article: "critics claim this is merely a reversion to the LDP’s traditional policy of pork-barrel spending on concrete structures"
Concrete itself has no inherent value. In Japan concrete is being used to ruin the natural environment as part of government make-work schemes, with very little discernible material benefit:
https://www.newscientist.com/article/mg15320645-500-forum-la...
https://welovecarbondioxide.wordpress.com/2015/10/15/japans-...
http://joshnjaxnjapan.blogspot.com/2010/03/concrete-rivers-o...
Is the same true of the US? Are those anti-government republicans right? Will it be actively harmful if the US government does even one more thing?
I'd also like to replace as many (currently overpaid) government workers with welfare types as possible. Why pay $50k/year to a unionized govt janitor when you can just order someone currently on welfare to do the same job for no extra money?
When I say they are criminal organizations, I refer to organizations with rates of disability fraud as high as 97%.
http://mtaig.state.ny.us/assets/breaking_news/Newsday_7-23-1...
http://www.independentsentinel.com/a-must-read-federal-judge...
https://nypost.com/2014/08/06/nearly-all-lirr-workers-have-d...
What I'd suggest is that if they don't cause trouble, we don't send them to jail.
And yet, this turns out to be the most succesful strategy civilization has used so far.
It's just that to survive to the long term you have to get through the short and medium term, where a lot of froth and misallocation happens.
(This is not unique to this point in history, BTW - during the Rennaissance-era Age of Exploration and Second Industrial Revolution, there were also massive speculative bubbles, ventures that didn't work out, misallocation of capital, and outright fraudulent schemes. Most of them were swept away in the periodic financial panics. One way of looking at the situation today is that you have governments who are determined to avoid a panic at all costs, but the process of panics & financial crises is what sweeps short-term-oriented people out of the market, so without them they can offload the costs of short-term thinking onto the taxpayers.)
Exactly, which turns these "short term bubbles and money-grabbing schemes" into long term institutionalized parasitic organizations which slowly erode the foundation for small business. A healthy forest sees many small forest fires to clean out the dead brush. Without these small fires, a major fire event can wipe out a forest.
Many political arguments arise from disagreements over whether a given task is best handled by market or the government, but there are few who would prefer to live in either a pure government-run society or a pure unregulated free market with no government services.
Hunter gatherers were real stable for a long long time. One person, or even a fairly large group of people couldn't cause much trouble.
We're moving much faster, which again i think is cool, but it's much riskier. An obvious one, there are enough nuclear weapons to wipe out humans in a few hours. I don't think nuclear war is coming any time soon, but we've only been at this 'high tech' stuff (i'm picking agriculture, neolithic revolution) for about 10,000 years. Wealth of nations is around 250 years old - traders are much older of course, but 10k seems like a good upper bound. Can we avoid nuking ourselves for 10k years? I sure hope so.
Anyway, there are existential risks, and other, less dangerous things like world wars that have the potential to be much worse than a guy with a club.
Also, there's not much incentive in the system to not wreck the system. For, example "The big short" is a fun movie. "Too Big To Fail" is a much more in depth look.
I guess, my point is, That strategy is a powerful tool. It's not a pat answer to all the world's woes. It's wise to treat it like any other dangerous piece of equipment. Be aware, be alert. It's ok to take a little more time with power tools to avoid cutting off an arm.
This is what I find interesting about the Amish. They are not, as I understand things, truly anti-technology, they are anti-adopting every new thing as soon as it's available.
I wonder if they're the ones who are going to have the last laugh if/when this house of cards tumbles (although in all likelihood it'll probably be the Sentinelese).
They consider the social and lifestyle impacts of technology. Which can be quite profound.
There are also differences among Amish settlements, with the Swartzentruber Amish, of Michigan, the most conservative: http://amishamerica.com/who-are-the-swartzentruber-amish/
(The site generally has a great deal of information on the Amish.)
I wasn't declaring it's success as a 'good' it's more a point of fact that other systems (e.g. socialism) weren't able to survive as competition.
The period in which the American economy was growing most was when it was also most organized. The post-war consensus was about scientific management of industry and the economy, not about free markets and profit maximization; that dogma only took hold in the 80s (both in business schools and in politics), and it has been a steady downhill since then from the relatively sunnier period of high-level management. The American economy was heavily planned through most of that period (mostly through the military), and the beleaguered stump remains in the form of public funds for research and development flowing into private industry (the Internet, biomedical research, semiconductors, defense, etc).
What short-term profit mostly succeeded at doing was producing the largest and most rapid accumulation of private wealth and power the world has seen in a century.
http://d3i6fh83elv35t.cloudfront.net/newshour/wp-content/upl...
Non-sequitur, I also found this, one of the coolest figures I've seen in a while: http://www.zerohedge.com/sites/default/files/images/user5/im...
The problem with that is that the post-WWII period was much different than today. Pretty much every other advanced economy besides the US had been economically devastated by a long and bloody war. The US didn't have to be competitive to compete against a Germany or a Japan where people were boiling shoes to eat the leather or catching rats for meat. They only had to be relatively competent. Also, both before and after WWII, scientists flocked to the US, fleeing from repressive and doomed regimes. US R&D got a huge boost from these people.
Another question is just how "organized" the economy actually was back then. Most of the really complicated regulations like Sarbannes-Oxley were still far in the future in the 1940s. By the time the EPA was created in the 1970s, the US was already well on its way to stagflation and economic incontience. Tax rates looked high back then, but just like today, most truly wealthy people found ways around paying them.
Of course the government has a role to play in funding research and moderating some of the excesses of capitalism. But to argue that some bureaucrat can just push a button and bring back the golden years of the 1950s is a leftist fantasy.
In the same way, if we could have a benevolent dictator, he would certainly govern better than our crappy government. But dictatorship is inherently unstable because the most ruthless person seizes power. So the dictator could not stay benevolent for long. Better not to have the dictator, even if it means having a less efficient government.
Allocating R&D funds based strictly on "whether or not traders and stock owners can profit in the short to medium term" is relatively new in the US (although you could argue it was the norm before we became a superpower). Our most exciting projects still come from outside that model -- crazy billionaires that want to go to Mars, meager NSF/NASA budgets, and things that mutually benefit Defense/DARPA and the economy.
May I ask, is this what you call success?
Natural resources which are accessible are being consumed at high rates, and access to further resources will likely require the use of existing reserves put toward that goal.
True socialism - on the soft European model - has literally mountains of evidence for it.
The basic problem is maximising productive - i.e. innovative and practical - activity, and not allowing the economy to financialise, which replaces actual activity with meaningless proxy casino activity.
Capitalism on its own concentrates wealth and chokes off its own air supply. Government management on its own ossifies into bureaucracy and oligarchy.
There's a sweet spot between the two where government provides stable markets, seeds R&D, and prevents excessive concentration of wealth and power, but talented and inventive individuals are still rewarded for talent and invention, and the cost of entry for new business ideas is as low as possible.
Exactly. In the US, right now, paved roads are being downgraded to gravel* because interests aren't willing to allow the money be spent to keep up public infrastructure.
https://www.wired.com/2016/07/cash-strapped-towns-un-paving-...
Infrastructure overinvestment is extremely destructive to the environment, and at least in Japan and China has led to economic problems:
https://www.theguardian.com/world/1999/jul/27/jonathanwatts
http://www.slate.com/articles/business/project_syndicate/201...
Public policy should be focusing on ways to scale down infrastructure and reduce population.
> It would be perfectly possible to retrain the long term unemployed for all but the most difficult design and management elements.
Job training is one of those Reaganisms that has proven not to work in a capitalist economy: http://www.cornellpress.cornell.edu/book/?GCOI=8014010004030...
Part of the reason that training is not profitable is that there is no real way for companies to recoup money spent on it. If you spend large amounts of effort training someone, you still have to pay them the same salary as someone already trained, or your competitors will hire them away.
This isn't an individual virtue thing, it's a government/society thing. But there's lots things that could be valued, especially infrastructure stuff, for instance:
1. Better quality roads that are better maintained
2. Catching up on neglected maintenance of public infrastructure (e.g. bridges, etc).
3. New water projects in California needed to meet current demand. I recently read that no major projects have been undertaken since the 70s even though the population there has greatly increased.
4. List mile fiber to homes, even in rural areas.
5. Better public transit.
6. Building redundancy into critical infrastructure systems where it doesn't currently exist.
7. etc.
That's just a bunch of random stuff I listed off the top of my head. If unemployed people are sitting idle, why shouldn't society pursue projects like these or similar?
That is false on its face. If you buy a robot to replace a welder, you indirectly employ the people who design, build, and maintain that robot. True, and those are higher paid jobs than the welder. But at the end of the day, the person running the factory where said robot is used did an analysis and concluded that it was cheaper to buy the robot than to employ the guy it replaced. That means fewer total man-hours in the workforce, since those man hours are billed at a higher rate and are still lower TCO.
TL;DR - if your TCO goes down by employing higher paid people you have caused a net-loss in jobs. TCO ~= rate*man_hours so if TCO goes down while rate goes up...
TCO goes way down -> price of product goes way down -> sales go up because price is lower.
It doesn't always happen that way, but sometimes it does. uber is a good example. By reducing cost of car rides, I pay someone to ride in their car 10X the amount I used to.
If Americans wanted to live a 1916 lifestyle, not many of us would have at work. But we buy a lot more stuff and use a lot more services.
We've automated away nearly every job people did in 1875's America. But we all still have jobs.
BUT, that is where we are at now with our FUNDS miss-allocated to some other task rather than the encouragement of small business growth
With higher rents and lower pay rates for fewer jobs, people cannot afford the consumer goods even though they have become cheaper with the increased supply. That decrease in demand further drives down the prices such that even with maximum automation, that business is no longer profitable. The people maintaining the robots get laid off. What happens then?
In fact, the inverse is considered a fallacy: https://en.wikipedia.org/wiki/Lump_of_labour_fallacy
"The Luddite Fallacy Fallacy"
Of course, it didn't help that wealth was very heavily centralized in Japan -- the eight zaibatsu families, the Cho:shu and Satsuma fiefdoms (the army and navy respectively), and the imperial family owned probably a majority of the country's wealth, and the common people were too poor to buy very much or stimulate the economy...