Jobs, automation, Engels’ pause and the limits of history
ftalphaville.ft.com
ftalphaville.ft.com
[...] generally speaking, when you look at the 20th century, it's the era of the masses, mass politics, mass economics. Every human being has value, has political, economic, and military value, simply because he or she is a human being, and this goes back to the structures of the military and of the economy, where every human being is valuable as a soldier in the trenches and as a worker in the factory.
But in the 21st century, there is a good chance that most humans will lose, they are losing, their military and economic value. This is true for the military, it's done, it's over. The age of the masses is over. We are no longer in the First World War, where you take millions of soldiers, give each one a rifle and have them run forward. And the same thing perhaps is happening in the economy. Maybe the biggest question of 21st century economics is what will be the need in the economy for most people in the year 2050.
http://edge.org/conversation/yuval_noah_harari-daniel_kahnem...
It may end before it fully starts, if computers do replace us. If not, things may get quite interesting (in a good way).
And voters are also able to influence humans' economic value, by fiscal expansion, job creation programmes, etc. If they care to.
It feels like the author is trying to sweep hard truths under the carpet of the last few paragraphs: "the problems [...] will naturally involve the issue of wealth distribution" and "such a world is likely to demand more than [...] incremental reform". Coupled with "Best to be prepared", it sounds like a call to batter up for an upcoming political storm, but it doesn't really suggest which "not-incremental reform" should be attempted, nor does it say anything about who should ask for such reforms and how.
Interestingly, China now seems to be going through the equivalent of the late 19th century phase where labour wages begin to rise roughly in line with productivity. They've largely built out their core infrastructure and mopped up most of the spare labour pool. China's development has been a huge factor in the economic conditions in the west. I'm wondering how the balancing out of the Chinese economy with ours will affect us.
Average wages in the Pearl River Delta don't seem to reflect this. Skilled wages are skyrocketing and even unskilled wages have upward pressure on them. The seemingly endless flow of cheap migrant labor is drying up.
What? There are 750 million (that is twice the population of the US, or 1.5 times the population of the EU) subsistence farmers in China. And that's only counting subsistence farmers as spare labor.
* technological progress
instead of:
* steady de-unionization and
* obfuscated trade policies designed to fuck normal people (NAFTA, CAFTA and now TTIP AND TPP).
tl;dr - "dem robots took 'er jerbs" and "pay no attention to the man behind the curtain writing trade policy".
If we want a more egalitarian distribution of wealth, we have to demand it.
The 1941 Rouge River strike it mentions in passing seems like a much better example.
Free trade equalizes the players... if you don't have capital, you get the shaft. NAFTA was bad for factory workers in the US, and it devastated the agricultural economy of Mexico.
In order for me to be able to pay rent and eat food, and still have money left over, means that I'm "making a profit" in the business of me. In perfect competition, companies don't make any money. Technology is taking us closer to perfect competition between laborers. Everyone is now in competition with everyone and isn't this what we would expect in perfect competition: no one saves any money, you only get paid enough to eat and live.
Software engineers are fine for now, but look at the competition between soft skill positions, it's so fierce that people are barely making it.
My point is that it isn't automation, it's the lowering of friction between different laborers, and the commoditization of knowledge workers.
Today, I know inner-city kids that can do this with Netflix and a tablet.
So I absolutely agree that we can't predict what kind of change is coming, which is why I disagree with this statement:
Creativity, subjective cultural judgment and empathy would still be there, but we can’t all become entertainers, art critics and psychologists.
Entertainers and therapists have historically only had the affluent as their clients, but distribution technology and efficiencies in other realms makes hiring these professionals more accessible all the time. Seeing a therapist or discovering a new pop star is no longer something relegated to the wealthy.
And I've always made my biggest earnings gains by making entrepreneurial moves. Automation and globalization absolutely benefit the entrepreneur. A person flipping burgers for $8/hr could buy a grill and 5x their income and easily run the administrative part of their new venture from a smart phone. If you're living in an economy that gives an advantage to the owners of the means of production, then the means of production is a good investment.
Plus you could also use it to watch TV on the commode.
Umm. Yes. All those stupid burger flippers, why don't they just buy grills...
Oh, maybe it's because McDonalds can leverage automation and globalization a lot better than your entrepreneurial burger flipper. There's a tiny bit more to a Burger venue than buying a grill. "Running the administrative part from your smartphone" doesn't exactly tip the scale.
The very same regulation encouraged by their lobbying: https://www.opensecrets.org/lobby/clientsum.php?id=D00000037...
(Come on. I like local and independent restaurants, but suggesting that literally every person should own a fully independent business, even burger flippers, is just plain silly.)
When a person leaves the workforce and becomes an entrepreneur who is instead drawing on the workforce to run their business, then they are benefiting the labor market from both the supply and demand sides.
There's probably a tipping point that when enough people in an economy become entrepreneurs that prices for labor of all kinds rise on their own.
On a completely unrelated note, if you ever find yourself in North East Ohio, I have some nice apartments you can stay at that are much cheaper than the local hotels:
https://www.airbnb.com/rooms/2235649
The airports are a bit of hike to here, though, so you may want to use Uber.
Yep. These two companies, valued at $13B and $40B respectively, employing 800 and 2000 people respectively, are the definition of "little guy". It doesn't get more underdog than that. /s
I'm the little guy. Airbnb and Uber are the automation that enables my apartments to compete with the Holiday Inn and Marriott less than a mile away.
Just the average 'little guy' with 3 spare apartments...
I'd wager the guess most $8/hr burger flippers (or $12/hr Uber drivers) might disagree with your self-assessment.
In the end, I'm simply advocating for the decisions that got me from there to here.
That was not my point, the big guy can of course always be overcome. It's just not a very interesting case to debate because only 0.000001% of our burger flippers will ever get that lucky.
My point was that most of his praised "automation and globalization" actually works against the remaining 99.99999% of burger flippers.
These trends remove the very inefficiencies from markets that previously gave breathing room to independent actors. You don't realistically buy a grill anymore, you join a franchise, on the terms of a "big guy".
It seems to me, that the people who drive for Uber or let out their homes/apartments on AirBnB have no control over their destinies. If they are banned from the platform, their "business" is over.
What Uber and AirBnB have really achieved, is to replace management with an API: allocating work, evaluating performance, and firing people in automated fashion.
Those who utilize these platforms are something like contractors (though with less legal footing); not small business owners.
If this trend continues to the extreme, perhaps by 2050 most of the workforce will be managed by software. Imagine it, a nation of mechanical turks and task rabbits.
Those who utilize these platforms are something like contractors (though with less legal footing); not small business owners.
I don't differentiate between a small business owner and a contractor. When exchanging labor for money (which everyone does in one way or another), a savvy laborer will take on enough extra burden to maximize their share of the profit.
Yes, AirBnb and Uber have replaced management with an API, but so have ZipCar and VRBO and FlipKey and Relay Rides. This gives the laborer an unprecedented level of choice, which forces all of the parties involved to compete on, among other things, price. This competition drives up the profits for the laborer.
A nation of mechanical turks and task rabbits may not be a bad thing at all. Remember, labor exploitation occurs in environments when the owner of the means of production keeps an inordinate share of the profit. The APIs don't own the means of production, they're simply enabling people to turn assets they already have into the means of production. This effectively mobilizes a nation of entrepreneurs to capture markets they previously had no way to capture.
Your definition of exploitation is ridiculously narrow. Mechanical turks and task rabbits are tenant farmers. The actual asset that they need to own and maintain isn't a means of production for the landlord, it's just another attribute to exploit.
The landlord controls the work assignments and because the API breaks work into tiny atomic units, the tenant is stuck trying to gobble up whatever task is available. There's no competitive force to drive up compensation... it's a race to the bottom, because the workers lose all of the advantages they have as employees. (ie. hiring an FTE is high friction)
This trend isn't mobilizing a nation of entrepreneurs, it's bringing back the 19th century trend of day labor for the lower classes -- except they don't even get a commitment to a day's pay!
Once Capitalists are able to pay the worker less than the value produced by the labor a surplus labor forms and this results in the capitalists' profit. This is what Marx meant by “surplus value,” which he saw as “an exact expression for the degree of exploitation of labor-power by capital, or of the laborer by the capitalist.”
http://en.wikipedia.org/wiki/Exploitation_of_labour
A pure entrepreneur doesn't get exploited because he gets all the profits. A full employee (working in a profitable enterprise) gets fully exploited because he gets the pay he agreed to when he was hired regardless of the profit he generates.
The sweet spot for the modern worker, in my mind, is to keep as much of the profit as is possible by being as close to the entrepreneurial end of the spectrum as possible.
The point is, there's more money to be made running a burger cart than working at McDonald's, cleaning houses from clients on Craigslist than working for Molly Maid, fixing cars yourself than working at PepBoys.
The main barriers to entry for these workers is marketing, book keeping, and inventory management, and all three of those barriers are reduced because of automation and globalization.
Would it be so terrible to give people the option between starting a business after high school and going to college? Would you rather a bad student default on their student loans or a bad entrepreneur default on their business loans?
Then again, the market may be providing a solution to this capital problem. Have you checked your mail lately? I get a letter everyday from a credit card company offering 12-24 months without interest. That's more than enough time to start a small business. It may be subsidized by the financially illiterate, but that's a whole 'nother can of worms.
But that happens when the non-wealthy have spare cash to spend and not when they are cash strapped because they are out of good jobs.
> the terrifying scenario in which half of all jobs are quickly lost to automation
This completely ignores the very long development that such advances will take and the fact that most jobs won't just be displaced over night. For years we've been able to replace toll collectors with baskets and yet there are still toll collectors employed. Change will happen but it won't be sudden and there will be plenty of time to adapt.
Anyone who believes we're going to have fully self driving cars in the next 7 years is living at the "peak of inflated expectations" on the Gartner hype cycle.
And yes, count me along the people that expect fully self driving cars to be available in 7 years. I also expect truck driving to be an extinct profession by about there (10 years at most). City driving will probably live longer, and people'll probably keep driving their own cars.
Yes, they can't merge on the freeway now. People keep not understanding the behaviour of exponential growth, and keep getting surprized once only in a single doubling things grow from "only half there" to "completely done".
(And I'll be among the first to call the end of Moore's law. But altough our electronics are not in exponential growth anymore, it's still growing increasingly fast.)
The deal has always been...you run things and get the most rewards, but everyone does better over time. They need to uphold their side of the bargain.
Sorry, this point of view is delusional at best.
That being said, since the late seventies they have been accumulating wealth at an ever increasing rate and not raising the wages of their employees, investing in education of their employees children, or investing in infrastructure. Instead of raising wages as profits rose they started offering cheap credit.
At some point that trend has to be reversed and the people that run this place will have to care about the people that live in it. There's an upper boundary on how much suffering people are willing to put up with.
Also, I love how you think I'm delusional even though you didn't seem to understand what I was saying. I'm really tempted to be rude to you. Seriously. But I'm trying to tone down my online responses to match what I would say in real life. People need to remember that in the end they are speaking to another person.
Feel free to be rude if you need to get it out of your system. The beauty of reality is that it doesn't change based on emotion, yelling or screaming. A circle is still a circle. My position is factually correct and shooting the messenger will not change reality. I could literally stop right now, tell you "you are right; we are run by a bunch of evil elites" and that would not change the facts of the matter. A circle, is still a circle.
"when they were actually fulfilling their role of stewarding the country"
Again, this is delusional. What role? Who gave them that role? Did they accept that role? Sorry brother, your choice of words might just be a bit misguided. Again, you are not delusional, the ideas you are putting forth through your choice of words are. Maybe this ideology would like them to have had this role (or have it now). Did they sign-up for it at some secret meeting?
"a type of social compact where the elites were granted a great deal of autonomy in running the country"
One more time. What grant? Who granted it? Was there a contract? Did all the "elites" from east to west coast circulate a secret telegram agreeing to some kind of a deal in order to be granted privileges? And, did these contracts get ratified on a yearly basis for over 200 years in order to reach today's elite?
Please think. You are probably repeating something you were taught. And, if it was taught by a liberal leaning institution it is likely that they also told you that the US is evil and we all deserve to die. It's OK to listen to all points of view. That's how we learn. What isn't OK is to do so and not use critical thinking to evaluate the validity of what is being proposed.
"and the people that run this place will have to care about the people that live in it."
We agree on that one 100%. However, it isn't the elites, it's the hordes of crooked and incompetent politicians who are destroying this nation from the inside out. And the hordes of ignorant voters who let them get away with it. Their only motivation is to stay in office and enjoy the ride on the taxpayer's back. They don't care about you, me or our children. That's the problem.
"accumulating wealth at an ever increasing rate and not raising the wages of their employees"
One thing has nothing whatsoever to do with the other. Executive compensation and employee wages are controlled by different variables and different market forces. Nobody is going to pay a welder $100 per hour because it would be a violation of fiduciary responsibility to do so when the market does not support such a wage due to either local forces or the fact that in a global economy you can get a welder in China (or wherever) for $5 per hour. The executives running that company are paid based on the performance of the enterprise, investor or stockholder returns, etc. Different metrics.
It's like proposing that you should pay your gardener twice as much as prevailing market rates because you got a new job and your salary doubled. And, BTW, not to be an evil elite, you ought to also call your cable company and ask them to charge you twice as much. And your electricity rate should be twice as much. In fact, you should pay twice as much for everything or you are evil. Why? Because it isn't fair that you are accumulating more wealth now and the employees who service you directly or indirection won't see their salaries improved.
Of course this is a flawed and ridiculous exampled but it does illustrate the point about the ends of the scale not being drive by the same variables. Making such a connection is nothing short of nonsense.
Any entrepreneur knows this. If you are running a business, large or small, one of your goals is to not pay more than the lowest possible market rate for anything you need. Why? Because your customers will get on Amazon and look to pay the lowest possible price for the widget you and a hundred other manufacturers make. And so, it's a closed feedback loop where you, the entrepreneur or executive, are controlled by a range of market variables in your decision making. You simply can't pay your welders twice as much because sales improved. That is not how the real world works.
Many years ago Apple was nearly out of business. Today they are one of the richest (if not the richest) companies in the world. Was Steve Jobs evil elite for not doubling or tripling his programmer's wages as the company skyrocketed and he got filthy rich? No. Of course not. Nobody would propose that when it comes to Steve Jobs but most of the same people would crucify executives running companies like GE, Ford, GM and others under much lesser growth scenarios. This is due to three things: 1- Ignorance of the business process; 2- Academic indoctrination; 3- Attacking the "elites" as a tool for political alignment and gains.
I could go on but I'll stop here. All I ask is that you try to reason through some of what you are saying. Show me ONE, just ONE country run by poor people. And, if you find one, show me the degree of economic, educational, industrial, scientific, health and standard-of-living success they've had. Now compare it to any other society where, yes, if you have financial resources you can move in circles often denied to the masses. Not under some "grant", "deal" or "plan" but simply because that's the way it works. Obama does not invite you or me to the White House. He invites actors, singers, entertainers, industry leaders and political heavy-weights. Why? Because he is par of the "elite" now and that's the way it works. Yes, there's a side of society most of us will never see or experience. It's the people buying $250K cars when we might struggle buying a $250K house. Get over it. That does not make them evil and it does not create a secret society of evil-doers under some equally secret pact to act with the goal to oppress the little guy. That, my friend, is delusional.
Going back to the grind brother...
It was an implicit social contract. I never said or implied that people got together in a smoky room.
I'm going to go out on a limb and say that your either a conservative or a libertarian with the smug way that you are telling me "how the world works".
If you look at rising wages and corporate profits...they both rose at roughly the same rate until the advent of cheap credit lines in the mid to late seventies. At that point, business stopped giving larger shares of the profits to employees and started loaning it to them. By that I mean businesses banked the profits, didn't issue raises in the same way, and then the banks made credit cards available with the surplus deposits to people that, until then, didn't have them. I don't know how you could look at the divergence of profits and wages around '75 in any other way. It's obviously a better situation from a financial standpoint if you are running a business or are an "entrepreneur", but it had deleterious effects as well.
I never implied this was evil. I don't really use the word "evil" a lot in writing or language. It smacks of magical thinking. I think that most of this stuff is largely amoral.
So, lets see. You've called me delusional. You've essentially made my argument out to be some laughable conspiracy theory...while not really rebutting what I actually said. You've insinuated that somehow I don't love my country because I'm an unthinking liberal idiot? You've lectured me on business. You're kind of a dick.
How bout you just leave me alone?