The Way Forward For Canada (and for us?)

I need to mull over Canadian Conrad Black’s op-ed in the National Post. In particular, I think this advice is worthy of consideration, not just for Canada but for the United States:

Primary industry (resource extraction) will require more jobs, secondary industry (manufacturing) will grow only marginally in employment terms, and if we must expand the service sector, and we will have to, let us just pay the proverbial hamburger-flippers and pizza delivery people better; at least they add value, unlike many office workers. (They all dress the same now anyway.) As a society, we have egotistically rejected value-adding work. The way to address wealth disparity, and it is indeed an issue, is to tax the velocity of money and distribute unstigmatizing income supplements to lower-income, employed people.

Discouraging primary and secondary industry while subsidizing work that adds little or no value doesn’t sound like a prudent policy to me but that’s what we’ve been doing.

17 comments… add one

  • michael reynolds

    Manufacturing is being slowly repatriated to the U.S., which had outsourced 56-million jobs, but the jobs aren’t coming back: The manufacturing is being conducted at 10% of the former manpower levels.

    Thank goodness there’s no such thing as technological unemployment.

    Teeming infestations of lawyers and consultants and stock brokers and merchant bankers and civil servants and other white collar employed people merely raise the velocity of money, the frequency of transactions. More and more people clip a percentage of money as it moves around but a lot of the economic growth is illusory.

    A theme of yours with which I agree. In Casinos they’re called skimmers and are often beaten up out back by the dumpsters before being fired. On Wall Street they’re given million dollar bonuses.

    In this, as in almost all fields of public policy, what we need is emancipation from hidebound thinking and rigid ideology, and a little creativity. We’re not seeing much of it now. The Canadian political parties are like three famished dogs tugging at the same threadbare door-carpet.

    We’re a third more efficient: we accomplish the same stasis with just two parties.

  • Red Barchetta

    Just an observation.

    Its fascinating to watch that when it fits a narrative owners are greedy and savvy, money grubbing horrorshows who won’t pay workers a “living wage.” But when it fits another narrative, they become stupid idiots, or closet philanthropists (heh), who are comfortable overpaying unproductive workers for no reason at all.

  • Michael, do you really see no distinction between “there’s no such thing as technological unemployment” and “technological unemployment is not the main problem we’re facing now”?

    As I see it there are three possibilities:

    1. Major technological unemployment—the end of work
    2. Other than in the short run technological unemployment is impossile.
    3. Major technological unemployment is possible but that’s not what’s happening now.

    I lean towards #3 and, frankly, see very little real evidence of #1. Lots of hot air but no hard evidence. Look at the graph in Kevin Drum’s post I linked to previously. If you go back through the BLS employment situation reports for the last four or five years you’ll find that most of those jobs aren’t minimum wage jobs.

  • michael reynolds

    I don’t think we have a good way of measuring what ain’t there. It’s not just a matter of “Job X Todays Date” being eliminated – I assume we can measure that. But can we measure Job Y that never existed because it had been pre-emptively eliminated?

    The industrial jobs the article speaks of, the ones being re-patriated, are not Job X Today’s Date, they’re Job Y. If it’s correct that we’re bringing manufacturing back without bringing back jobs it stands to reason that something rather than someone is doing that work.

    Say you lost your job welding cars at Ford. They send your job overseas. You’re unemployed, and the cause is “off-shoring.” We count that. Now Ford wants to bring manufacturing back, so they re-patriate and yet, you’re not hired back because an app/robot/machine is doing the work. Now, you didn’t lose your job to technology, but you are sure not getting it back because of technology.

  • Ben Wolf

    @Michael

    True, but that welder losing paid work and finding himself unable to get more wouldn’t be happening in an economy at full employment. In that environment our welder would be an idle resource just waiting to be re-purposed. Permanent job destruction by machines is a very recent phenomenon; for centuries the adoption of labor-saving devices has resulted in greater job creation over the medium-long term.

    If the welder were volunteering his services he’d have plenty of demand for his labor so we can’t really say there just isn’t work available. At the end of the day we again end up facing the reality of a paid work shortage rather than a nominal shortage.

    Once we get to that point, of accepting that being paid for one’s labor is the issue rather than no one needing labor, we’re left with a problem of financial flows.

  • Red Barchetta

    I can only point out what we do and what those like me do – adapt to technology or die. You can continue to till the soil by hand and employ a hundred laborers, or buy a tractor and produce goods with 5 laborers at a fraction of the cost. (This is what I mean when I say the benefits of innovation and investment accrue mostly to consumers, and to laborers, provided, as Ben points out, there is an economy to absorb them rather than an administration extolling the virtues of being on the dole.)

    Despite all assurances from consumers that they will “Buy American” or want to save the hallowed “Family Farm,” they will take the better price deal. And they should. And how do you all know this as well from your daily lives? Think Wal-Mart.
    Dave’s #3 is clearly reality, and why we need to focus like a laser on economic and job growth, not on how the disincentives in ObamaCare will open up exciting new vistas to the human experience.

  • michael reynolds

    But Ben, if this phenomenon of uncounted technological unemployment exists, then how do we get to full employment? If we really are repatriating manufacturing – which I always heard was the Holy Grail of employment — and yet not adding many jobs, there is clearly a problem of technological unemployment.

    Take a basket of all job types. When you’re unemployed each of those is potentially a way back into the work force. If we started with 100 job types in our basket, and due to technology we’ve eliminated 20, we have obviously reduced society’s ability to hire you. Our cushion is thinner. Instead of Unemployed Guy having 100 things he could do, he only has 80. Or 60. Or 40.

    This would be technological unemployment, but not counted as such. Real just the same. And it fits the facts – if the article is correct. And it would explain, at least in part, why job growth is so slow. And yet since we cannot count it, it would not exist from the perspective of the Numerati.

    What if it’s responsible for just a quarter of unemployment? Take the current 7.3% official rate. That would make it responsible for 1.8% of the overall unemployment rate, without which our official unemployment rate would be just over 5% and we’d all be singing happy days, right?

    So, am I wrong that we have:
    1) A phenomenon (technological unemployment) that can exist in theory.
    2) An inability to accurately measure same.
    3) Jobless repatriated manufacturing that certainly suggests technological unemployment is occurring.
    4) Persistent widespread unemployment possibly being affected by a phenomenon we can sense but not measure.

    And does this not then in turn suggest, if we cannot accurately diagnose, then we don’t really know how to improve the employment picture?

  • michael reynolds

    Red:

    Despite all assurances from consumers that they will “Buy American” or want to save the hallowed “Family Farm,” they will take the better price deal. And they should. And how do you all know this as well from your daily lives? Think Wal-Mart.

    That’s only true in parts of the society. You and I could both buy the cheapest Scotch. We don’t. Personally I despise the “Buy Local” obsession since it often means “Buy Mediocre” but it’s a real thing. Don’t know how big it is, but I’d point out it didn’t even exist 10 years ago and now I can name half a dozen restaurants around here that fetishize local product.

  • TastyBits

    Malthusian predictions fail because they assume a trend will continue without adjustment. If people were beginning to become unemployable, people would begin to have fewer children. The hordes of unemployable roaming the streets like zombies would correct itself.

    The actual reason why things get better is because of human nature. A human will try to figure out a way to get anything of value extra from his fellow humans. He will invent a good, service, or investment for that extra value.

    No robot or computer would ever create a product called the “Pet Rock”. (You youngsters need to google it.) The entertainment industry will never be replaced by robots or computers, and movies are manufactured goods.

  • michael reynolds

    Tasty:

    Actually technology is putting a lot of people out of business in entertainment. There are fewer people needed to edit a movie, for example, because computers make it much faster and easier to do. There are fewer people drawing individual cartoon cells because computers do a lot of that. Matte painting has largely disappeared. There are fewer book editors. The music industry has been decimated thanks to file sharing.

    At the point of the spear, the writers and directors haven’t been hurt much, and we may not be replaceable by machine, but secondary people are being hurt. And again, jobs that might otherwise have existed, do not because of technology. I’m working on a project right now for which I would have had to hire a full-time assistant/researcher 10 years ago. But with things like Google Street View, Bing Images, Amazon, Netflix, etc… I can’t justify the expense. I would in effect be hiring someone to Google for me.

  • TastyBits

    @michael reynolds

    … Google Street View, Bing Images, Amazon, Netflix …

    These did not spring forth from the foreheads of the founders. The software and hardware that Hollywood uses is similar. XBox One and GTA V need humans, and GTA V had better have some g*ddamn f*cking humans, computers, or space aliens working on a PC port.

    Now that pot is becoming there is an entire new industry that will need new products that you have not even begun to dream up. You are old enough to remember the Pet Rock. Can you imagine what a bunch of potheads are going to think up to part you and your money?

  • TastyBits

    @michael reynolds

    Your political opponents are predicting Obamacare are going to cause the collapse of the healthcare and/or health insurance companies. You have countered that for the last six years all their predictions have been wrong.

    What if this time is different? What if they are right? According to you, we should be prepared for these outcomes.

    At one time, I leaned toward the doom and gloom, but when I read your comment, I realized you were making the same argument I was making. I believe in being logically consistent and philosophically sound. I did a full stop to rethink my doom and gloom position.

    I got lazy, and I have taken a wait and see approach. Your comment has altered my thinking in a profound way. I now must explicitly establish a basis for my doom and gloom, or I must take a wait and see approach.

    I would suggest that you reexamine your argument. On the other hand, we could be moving towards a Star Trek world.

  • Ben Wolf

    @Michael,

    One of the things I like about you is you ask good questions, ones that make me think as well.

    So, am I wrong that we have:
    1) A phenomenon (technological unemployment) that can exist in theory.
    2) An inability to accurately measure same.
    3) Jobless repatriated manufacturing that certainly suggests technological unemployment is occurring.
    4) Persistent widespread unemployment possibly being affected by a phenomenon we can sense but not measure.

    And does this not then in turn suggest, if we cannot accurately diagnose, then we don’t really know how to improve the employment picture?

    One way of finding at least a partial answer is to look at productivity gains. The more productive a worker is the more they can produce and, therefore, the fewer workers need if we assume the same level of output is desired.

    2000-2007 2.6
    2007-2013 1.6

    The faster productivity grows the more output per worker, which means that over time fewer workers are need to produce the same amount of stuff. According to the BLS the years 1947-1973 saw average annual productivity gains of 2.8%, the fastest growth since we started keeping those kinds of records. But those were also years of nearly full employment, which I define as 2-3% unemployment.

    Now look at the next entry for 1973-1979: 1.2% annual growth. Productivity is slowing which should relieve pressure on job loss, yet unemployment was averaging 6-7%.

    1979-1990: 1.5%. Historically high unemployment yet productivity still below the historical average.

    1990-2000: 2.2% and the only period in the last forty years when we approached full employment.

    2000-2007: 2.6% This one is an outlier. High productivity growth while unemployment was bouncing around from 4.5-5.5% Unacceptably high for me, but not terrible either. A number of economists have suggested the unusually high gains were almost entirely the result of Wal-Mart and its effect on the retail sector. It’s an explanation that isn’t nailed down solidly but I think it’s probably correct.

    2007-2013: 1.6% High unemployment and historically low productivity growth.

    I fully acknowledge there are more variables than this as it’s a complex issue, but for a blog comment I think we can go with it. Rather than seeing unemployment increase in some measure of proportion to productivity growth, we’re seeing employment levels and productivity rise together. Note the periods of high growth/employment also occurred during years of strong effective demand as businesses invested in improving their productive capacities, while periods of low growth/low employment occurred in tandem with weak demand.

    This is one of the reasons I don’t think technology is playing a role greater now than it has in the last seventy years.

  • Ben Wolf

    Please ignore “2000-2007 2.6, 2007-2013 1.6″ in the column as I couldn’t see it and assumed I’d successfully deleted it.

  • Ben Wolf

    Out of curiosity, was that a useful comment? Sometimes I’m not sure I’m communicating effectively and the Glittering Eye audience can be a tough crowd.

  • TastyBits

    @Ben Wolf

    I think you did a good job, and I appreciate a well ordered argument. I am always wary of numbers. They tend to lie.

    It still does not explain why GTA V has not been ported to PC.

  • The only thing that I would add to Ben’s analysis is this. Michael writes:

    An inability to accurately measure same.

    Even in the absence of the ability to measure technological unemployment accurately you should be able to observe a broad trend. There isn’t one. That doesn’t require accurate measurement just directionality.

    What we actually observe is a painful reduction in the number of jobs that’s dwindled slowly over time. That just doesn’t support the claim.

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