How Technology Is Destroying Jobs
technologyreview.com
technologyreview.com
You're looking at replacing a $50k/year worker with a system that costs $1mm in NRE and negligible ongoing cost. If interest rates are at 8% you're a fool. With interest rates at 3% you're a genius.
They kicked us into two massive recessions in a mere 10 years, two stock market crashes, and one giant real estate crash, destroying trillions in wealth through malinvestment. If the Fed severely distorts the economy - which it has been doing frequently (currently 'printing' 6% of the entire economy) - it leads Jane to appraise her financial surroundings incorrectly, inevitably leading to disaster.
Try figuring out a way to get minimum wage to keep up with even just 3% to 4% real annual inflation over 40 years. Impossible.
Try figuring out how to get Americans to make sound financial decisions with 3.x% mortgage rates. Impossible.
Try figuring out which stocks to buy, when everything is going up courtesy of easy money policies. When will the party stop? Only Bernanke & Co. know. It's not earnings growth driving the stock market, it's pure PE expansion.
Try keeping the savings rate up, when your dollar loses value every day that you attempt to hold onto it. So you spend it today when it has maximum purchasing power. Wait 10 years and it'll lose half of its purchasing power. The Fed spurs an anti-savings culture through inflation. Ever since Nixon unlocked the dollar from the gold standard, the savings rate has been in a death spiral, to the point where now America has an extreme negative savings rate when all debt is accounted for (and nearly everything priced in dollars has soared in price since 1971; from health care to education to commodities to stocks to housing, meanwhile the real standard of living is lower than it was 50 years ago).
At a time when America is creating more oil than nearly any other time in its history, oil prices are at $106+. See this USA today story from just a decade ago by comparison:
http://usatoday30.usatoday.com/money/industries/energy/2003-...
"Instability in oil producing nations like Iraq, Venezuela and Nigeria helped boost U.S. crude oil prices to an average of $31 a barrel in 2003, the highest yearly average in more than 20 years, energy experts said Wednesday."
Global commodities are of course priced in dollars primarily. As the Fed debases the dollar, the input cost of goods soars.
The Fed's policies affect every single aspect of the US and global economy. Their policies are extreme by any US historical measure, and the consequences are guaranteed to be extreme accordingly.
I think there's a much better case to be made that Congress' fiscal policy (and financial industry deregulation ) did that than that the Fed's monetary policy did.
> At a time when America is creating more oil than nearly any other time in its history, oil prices are at $106+.
Oil prices are driven by global supply and demand , not US production in isolation.
-There is NOT consensus that the Fed's creation of money caused the last two crashes. In fact, market monetarists argue the last recession was exacerbated by how LITTLE the Fed did. http://www.themoneyillusion.com/?page_id=3443
-Inflation is not 3%-4%. It has been very low since 2008. http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1&year1=2008&ye...
-Stock market gains have not been due to pure PE expansion. This is demonstrably untrue. http://www.multpl.com/
-Inflation does not, by itself, hurt savings rates. A world with 1% inflation and 1% interest should be identical to a world with 2% inflation and 2% interest (this is not strictly true, but the simple toy model is a good thought experiment to see where your reasoning fails.)
-American oil production has almost NO impact on global prices. In fact, causation works the other way around. High oil prices make more American oil fields profitable, and drives production. (Even OPEC has very little market power. Saudi Arabia arguably has the most market power.)
-The Fed was more aggressive than the central banks of most countries in the last recession (compare to BoE or ECB or whoever). The USA has recovered better than most other countries with passive central banks. There's not consensus, but many economists believe there is a causal connection. Your theory does not fit these data.
1. There's a crash (cause unspecified)
2. The Fed creates money to smooth things out
3. This new money eventually gets things going, but it comes at a price: the way it gets things going isn't sustainable
4. Once people (traders/investors/general public) realize it is/was unsustainable, they begin to unwind everything
5. This unwinding is a new crash (cause specified)
6. The Fed creates money to smooth things out
7. Rinse and repeat
No, but you try to force that argument by calling your article "How Technology Is Destroying Jobs". I don't see any citation in the article doing the same. They just matter-of-factly state what is happening and it's the author of the article trying to somehow convert that into a Luddite case.
I find it fascinating how this kind of sentiment is often uttered by Americans. Other western countries have long accepted the fact that we should better put the rewards of technological progress into a social system that at least takes care of the people who cannot anymore contribute to the workforce. In the US, the delusion of full employment for everyone as part of the fight against evil socialism seems strong as ever. I suppose it works as a good scare.
An example would be people who are looking forward to the technological singularity which will make all work obsolete, and usher in a utopia.
The people cited in the article talk about jobs becoming obsolete. The author talks about jobs being destroyed.
Even in such a situation, what incentive besides purely humanitarian does an individual with a job have to sacrifice income for those who do not?
Currently you can justify subsidising a non productive person in the hopes that they will be productive later. What happens if that is highly unlikely and instead they devote their time to breeding more people who will also likely become unproductive and require subsidy?
For example if you gave software developers a bunch of cash and told them to work on whatever they wanted, how many would go and build video games or invent esoteric programming languages (fun but not important) vs how many would want to build (or worse maintain) a system for the administration of taxes (less fun but very important). Hell, how many would even develop software at all vs just take up some other activity of even less value.
Therefor the best way to motivate these people is to extrinsic motivate them with money. However what happens if most of that money is taken as taxation and spent on people who sit around and do whatever they want all day? Do they still have the same incentive to do the boring but necessary jobs?
There will be luxuries some people want that are beyond the reach of those who live just on the guaranteed basic income. Those people will do the jobs that have not yet been replaced by technology to earn the extra money they need.
For instance, some people might want more living space. Some might want fancier cars than those people on the GBI can afford. Some might fancy a boat. Some might want a high end home entertainment system. Some might like expensive food and drink.
Open source software is an interesting example, but I think it mostly supports my case.
If you look at the projects out there, you can divide them into roughly 3 camps.
1) Projects that have a lot of paid developers working for companies or organisations that pay wages to their developers. So stuff like Android , V8 and Ubuntu would fall into this camp.
2) Projects that people were not necessarily paid to develop , but were developed mostly as a biproduct of something that they were or as a way to do that thing more effectively. "Scratch an itch" software effectively. I guess something like RoR would fall into this category.
3) Pure passion projects that were developed for fun. This is the only group that is purely intrinsically motivated.
The thing with projects that fall into camp #3 is that they tend to be stuff that the developer themselves found useful or interesting rather than something that necessarily serves society at large, though the two may sometimes intersect there is no guarantee.
If you don't make peoples incomes at least somewhat dependant upon the software they develop you will see far more camp #3 projects than camps #1 or #2.
" time to pay everyone to stay at home"
There are various levels of "paying everyone to stay at home" There is moving to a part-time employment model. There are also possibilities for interesting good things to happen to the labor market once everyone is not trapped in "must always work" mode.
I know I would certainly not willingly give up half my hours and income and have to put all of my work in a state where someone else can take over every few days.
I think the taxman's bludgeon would be the weapon of choice here.
>I know I would certainly not willingly give up half my hours and income and have to put all of my work in a state where someone else can take over every few days.
What do you propose as an alternative? A worker-class and a loafer-class? Prisons? Eugenics? Population control isn't very warm and fuzzy. https://www.youtube.com/watch?v=u5iFESMAU58&list=PL381A1925D...
Then you have to define what counts as "work", does reading HN count towards your daily allowance since it is tangentially related to your work? What about reading documentation? Or is it only the hours you are typing code into an editor?
All options seem undesirable when you take them to their logical conclusions.
Not me man, I have a job. I just said taxes because that seems like the favorite/most humane weapon of gov't with which to influence people.
>All options seem undesirable when you take them to their logical conclusions.
Such is the case for doing nothing as well, I believe.
>In 1900, 41 percent of Americans worked in agriculture; by 2000, it was only 2 percent.
"By 2011, a significant gap appears between the two lines, showing economic growth with no parallel increase in job creation"
It seems the data set is US jobs only. In our new flat world, how many jobs did US-based companies create in other countries that previously were created in the US?
Not sure the US middle class has been destroyed, more that it has moved to other countries.
Free-marketism, by contrast, exerts no moral judgement on the needs (or wants) of individuals nor who can provide by what ability, and lets the individuals work those parameters out in a decentralized fashion. If one wants to pursue "frivolous" careers, that's fine, so long as the needs that require the effort of other people (materiel, supply, whatever) can be met through free enterprise.
Capitalism is a different beast altogether, where "the accumulation of capital" is in and of itself considered a moral virtue.
The results of technology advancement are various and complicated. It's not all white and black.
Also it should be noted that technology is a double edged sword and can also make things worse. An example: a big farming corporation decides to improve profits by using new chemicals to preserve their food longer. Of course this may seem like a productive decision on paper, but it could actually be unproductive to society as a whole if the chemical has subtle but negative side effects that take a bigger toll.
We need a stronger social safety net because there's just not going to be enough wealth-producing activity for humans to do that we will all be able to live on that alone.
If you're right we are headed towards a society where we are collectively resting on the backs of the robots who are there to do our most mundane chores. If the robots produce enough economic output then, assuming our society restructures itself to distribute that economic output proportionally, we should be able to arrange it so that we lift everyone out of poverty.
Or maybe the robots will decide they no longer need us and that will be that. It could go either way, really.
Some solutions include higher taxes to make an assured living wage. This is possible today but not if everyone keeps raising the standard of what a "living" wage is. If we could produce a guaranteed living wage, we could get rid of minimum wage and thus give people a ladder to compete in markets they otherwise wouldn't be able to get experience/train in. This would be because you could literally work for free, so the company could only see a benefit to hiring you (rather than being stymied by minimum wage).
The wealth disparity is normal, look at any statistical data like humans and you will see outliers. Thus you will see people with ideas that are a million times more productive than others. Don't worry, if someone else gains wealth and you didn't lose, it does indirectly benefit you. Don't be jealous bro.
the only solution i see without massive inequality is one where we can distribute wealth. it's not jealousy. it will be a technological utopia if executed correctly - nobody will have to work, we all get to do whatever we want all day.
there will always be inequality, but if we live in a just society it will be one where the least well off person is still reasonably well off. a guaranteed living wage might do that - and that's exactly what i'm talking about, actually. but there might be enough breathing room in the future to give more than a living wage.
obviously it's a little pie in the sky at this point, but in 10 years it won't seem so much.
It is certainly true that wealth disparities may be the price paid for the benefits of a free market economy but that does not make them unimportant. I think most would agree that an extreme case where a single individual owns 100% of the wealth and nobody else has anything would be a poor society, so the question becomes where does one start to worry?
If somebody can be one million times more productive, and you are one of the million people put out of work and unable to find further employment then you absolutely do lose.
There's plenty I'd like to hire people to do, but can't afford to dole out "minimum wage" (much less a "living wage") and prolific benefits for - not because I'm cheap, but because I've only got limited funds to spend. Result is the unemployed have fewer options, and the self-altruistic compel others to support them.
This begins to lead to an unsustainable situation in which the workers wage is no longer enough to sustain their own life in the economy.
Then you end up with three basic options.
1) Simply let people starve or rely on begging/charity/crime.
2) Support people via welfare or minimum income guarantee schemes, leading to a more socialist economy where there is no expectation to work. This increases power of government significantly because people are now dependant on these handouts for their livelihood.
3) Reduce expectations of quality of life. Stop building suburban homes and start building large "workers dorm" type accommodation. Feed people more effectively from shared canteens rather than individuals cooking for themselves etc. Hope that income from the spending of the wealthy and exports can keep the economy up when general consumer spending starts to drop.
A classic narrow view meme, overlooking many other balancing factors. Thanks to increased automation: prices drop (making basics & luxuries more affordable to all), new markets are created, new mundane jobs are created before they can be automated. The cycle repeats; disparities happen, but they get worked out and equilibrium is restored.
I'm concluding the biggest barrier to self-sustinence is socialistic government has made functional low-income living practically illegal. You can't live in settings considered normal not long ago, you can't start businesses without traversing a bureaucratic nightmare, you can't own land without near-prohibitive taxes amounting to rent.
We've been here before many times. It will work out, suffering thru the same unlearned-from mistakes.
There is also nothing to guarantee that new labour intensive industries will appear enabled by new technology. Startups are a classic example of this, they often employ extremely few people compared with their valuations and share of the economy.
You could eliminate minimum wage laws to make automation or outsourcing less attractive but with that you have to accept a regression in living standards for a great many people.