Yesterday I considered a hypothetical question: what if job growth remains extremely low for the foreseeable future? I wish other commenters here had taken up the challenge but so be it.
As it turns out we’re not the only ones mulling this possibility over. I urge you to read Jeffrey Snider’s post at RealClearMarkets. Mr. Snider is the CEO and Chief Investment Officer of Atlantic Capital Management and in the post he articulates as good a description of the situation in which we find ourselves as any I’ve seen:
Manufacturing jobs have moved overseas over the last ten years as the dollar has been devalued. That was not a pressing problem since the service sector, especially health care, education and “business services”, filled in some of the gap. The majority of that gap was bridged by the “wealth effect” of rising asset prices leading to debt accumulation that fueled consumer spending (showing up as the near-zero savings rate). It follows from that that the beneficial cycle of labor specialization was increasingly based on asset prices and debt accumulation expressed through construction and service jobs, but also through increasingly imported goods where trade dollars flowed back to the U.S. as GSE debt (a unilateral system of trade where labor specialization was indirectly caused by the methodology of money circulating to households through real estate prices and debt, a cycle that no longer exists).
Now that the “wealth effect” has been put out of its misery, we are largely left with education and health care services. These specialized services, however, present a huge barrier to widening and broadening labor specialization due to the fundamental nature of education and health care. The fields encompassed within them require very specialized knowledge (or certifications that are not easily obtained, financially and cognitively). So, as the labor specialization of the housing bubble allowed for increasing employment in construction and finance (real estate, mortgage processing, insurance, etc.), the reversal has left those unfortunate people with little economic mobility in the economy as it exists today in an economy after ten years of dollar devaluation and manufacturing leakage.
In the “old days” of an economy that manufactured goods, labor could flow far easier in a dislocation because it was largely unskilled jobs that were eliminated and then relocated to other sectors. Such an economy with a higher proportion of manufacturing would better cope with construction jobs that might be eliminated in the collapse of a housing bubble. Construction or even real estate jobs are far more easily transferred to a manufacturing job than a health care job. The barriers to mobility are not zero in the former, but they are much lower than the barriers to transitioning to the latter.
A few notes on those remarks. First, his time frame is wrong. It’s not ten years but thirty years. Thirty years ago Ford and GM (just to name two biggies) had twice as many hourly workers, manufacturing workers, as they do today. The shedding of manufacturing jobs has been going on inexorably for thirty years.
Second, I think he mischaracterizes the “fundamental nature” of education and healthcare. The fundamental nature of education is that people are taught and learn. The fundamental nature of healthcare is that the sick are treated and cared for. Certification is an accident (in the Aristotelian sense). I think it’s beneficial but I don’t believe that should be taken to imply that it is essential that we maintain a small caste of practitioners at incomes higher than an unrestricted market would provide them.
I think that a better comparison would be between the medieval production of goods by highly skilled craftsmen who guarded their prerogatives (and their incomes) jealously and the production of goods after the Industrial Revolution in which a very much larger number of workers with significantly lower skills produced more goods than had ever been produced before.
I do think that he presents an excellent explication of an important aspect of the mobility issue I raised in my post. The one sentence summary of the post, however, is that GDP is a lousy way to measure the health of an economy.
Arnold Kling, writing at The American, confronts the hypothetical directly asking what if middle class jobs disappear? After a lengthy exposition he presents one very interesting factoid:
Using the latest Census Bureau data, Matthew Slaughter found that from 2000 to 2010 the real earnings of college graduates (with no advanced degree) fell by more in percentage terms than the earnings of high school graduates. In fact, over this period the only education category to show an increase in earnings was those with advanced degrees.
which you may notice conforms nicely to the “ear to the ground” analysis that I’ve been doing here.
He then launches into three alternative scenarios in which events may unfold, the first far-fetched, neither of the other two particularly appealing:
The most optimistic scenario is the one I consider least likely. Under this scenario, the supply of workers adapts to changes in technology. In particular, this means a future with relatively fewer workers whose skills are limited to following directions in well-defined jobs. Instead, more workers will have the cognitive ability, initiative, and self-discipline to constantly update their skills, adapt to new technology, and to participate in the creative part of creative destruction. Under this scenario, economic growth will be very high, and median earnings will also be high.
I do not believe that this optimistic scenario will emerge through more spending on education or even with education reform. My reading of the research is that variations in education techniques lead to differences in outcomes that tend to be small and transitory.6
If the optimistic scenario does arise, I suspect it will be the result of discoveries in biology. Perhaps pharmacology will succeed where pedagogy fails.
Turning to more realistic scenarios, I see the desirability of the outcome depending on the extent to which institutions serve to ameliorate problems created by disparities in ability. At one extreme, charities and government will develop humane, rational approaches for providing for the needs of people who are disadvantaged in an economic environment where rewards are concentrated among those who are disciplined, self-directed learners with creative gifts. At the other extreme, collective institutions will be arenas in which elites compete for resources, even when they claim to be fighting on behalf of the disadvantaged.
I would assess our current situation as closer to the adverse scenario. Our government is very responsive to cries for bank bailouts or to pleas for subsidies coming from well-connected companies, large (General Motors) and small (Solyndra). That same government is much less likely to target assistance in a charitable fashion.
Economist Steve Allen calculated that a $447 billion spending plan could be used to pay all 14 million unemployed workers $32,000 a year to take low-paying or volunteer jobs.7 While there may be no practical way to implement Allen’s approach, it does illustrate the deficiencies in existing stimulus proposals. Even according to the most optimistic estimates, these create or save many fewer jobs per dollar spent.
My guess is that the more power is concentrated in governmental units, the less likely it is that our collective institutions will be geared toward achieving outcomes that are charitable and make efficient use of resources. Trying to get large sums of tax money past the grabbing hands of rent-seeking elites will be like trying to get a stagecoach full of gold past a horde of armed robbers.
Government’s role as an employer and as a regulator is likely to exacerbate earnings inequality going forward. Government pay scales and contract award policies tend to place a very high weight on formal academic credentials. This increases the advantages of advanced degrees both directly and indirectly. The more that government requires educational credentials, the greater the rewards to the providers of educational credentials. Of course, becoming a provider of educational credentials requires obtaining high credentials oneself.
I suspect that a more decentralized set of voluntary collective institutions would achieve better results. People are less likely to donate to institutions that provide windfalls only to elites, so that such organizations would lose out in a competitive environment. I believe that a scenario in which many people have dignified jobs and enjoyable lifestyles is more likely to emerge in an environment with decentralized voluntary charities than one with concentrated, coercive government.
There is one thing in Dr. Kling’s article with which I disagree vehemently. Characterizing those who have prospered over the last ten years as those who
have the cognitive ability, initiative, and self-discipline to constantly update their skills, adapt to new technology, and to participate in the creative part of creative destruction
is balderdash. Hothouse plants flourish because they’re in a hothouse. They do not flourish because they’re beautiful. They are kept in a hothouse because they’re beautiful. I see no evidence that Jamie Dimon or Jeff Immelt (just to name two)
have the cognitive ability, initiative, and self-discipline to constantly update their skills, adapt to new technology, and to participate in the creative part of creative destruction
Quite to the contrary I think that people who are in the sorts of jobs they have are very highly compensated (not the other way around) and they are the beneficiaries of an enormous level of public largesse.
I am smart, have initiative, and self-disciplined. I am not wealthy. Not all smart people with initiative and self-discipline are wealthy. Or even secure in their jobs. Dr. Kling is confusing essences with accidents.
Still, I recommend you read his article. Food for thought.
You know I hear this all the time, but I’m not so sure. The U.S. still manufactures alot. In fact, I seen articles suggesting we still are the worlds largest manufacturer…just that we are more efficient when it comes to labor as an input–i.e. we make more stuff with fewer people.
So how much of the “manufacturing jobs are moving overseas” is really just the result of automation and technological advancement? Everyone says, “those manufacturing jobs moved overseas and we’ll never get them back!!!11!!!Eleven!” Really, maybe it is that technology improved and yeah, we’ll never get those jobs back.
So right there I have to wonder…is the Snider on to something or just repeating a convenient meme that quite possibly isn’t even true.
Yeah, because they are moving over seas or because of technology improvements? Or even both?
Okay, I’ve looked for where Kling implies that this the explanation as to why some people have prospered over the last 10 years. Can you enumerate which paragraph this view starts in for me?
Here is my take on Kling’s article:
Best case scenario people become more adaptable in terms of information gathering and learning. In this case people can deal with structural changes in the labor market much more quickly and losses due to dislocations are minimized. On average growth is good and standards of living track closely to growth.
Good scenario: government comes up with good ways to help those who can’t adapt quickly. This is not optimal, but not as bad as the last scenario.
Bad outcome, government remains like it is where economic elites compete for resources government expropriates from others. In this case, while people who are adaptable (in the best case scenario) have a shot at moving up, it will be harder to do so. Growth will be lower, and we’ll have a growing disparity between groups.
I don’t think he sees the current “elites” as the best at adapting to new technologies/information. In fact, if anything they retard that kind of thing by making it harder for the rest of us to get it. Intellectual property rights being one example.
In paragraph 25 he comes closest to saying that outright. In paragraph 27 (where the quote comes from) he repeats it. In paragraph 29 he, presumably, extrapolates from the trend of the last ten years in his “optimistic scenario”.
I think there’s a completely different explanation of the phenomena he’s discussing: that a relatively small group has been able to secure privileges and protect themselves from competition. While it may be the case that they’re smarter, more disciplined, and harder working than the rest of us, that’s basically irrelevant to the privileges and protections. It’s the privileges and protections that have secured their incomes not that they’re smarter, more disciplined, and harder working. If we’d granted the same privileges and protections to auto workers, their jobs and incomes would be secured, too. Lousy cars would cost $80,000 each and you wouldn’t be able to find a VW or Toyota on the road.
Note that I’m not defending the protections. I just think we need to disaggregate the protections from the other factors.
If that’s not what he’s saying in those paragraphs, then the entire section is a mass of irrelevancies.
BTW, in reference to your comments on manufacturing and the exchange rate, I think that most analysts have hold of the wrong end of the stick. It’s not the exchange rates that are the problem. As I see it the problem is the combination of
– pegging the yuan to the dollar
– the centralization of the convertibility of the yuan in state-owned banks
– the Chinese government’s purchase of treasuries rather than other U. S. assets
– that most managers don’t understand comparative advantage but they do understand absolute advantage
In other words it’s not the exchange rate. It’s the mechanism by which the relationship between the two currencies is maintained.
I don’t think he is saying that the last 10 years the rich are rich becausse they are highly adaptable.
For example, in this paragraph (I think that it is 27),
Is not because current economic elites are highly adaptable to new information and technology. I think he is saying precisely what he says, that economic elites capture the benefits of increased productivity due to the information age.
Keep in mind the idea that people will be highly adaptable is an ideal and one that people are generally not geared towards. Just the other day a friend of ours was amazed that my wife can store pictures on her iPhone. He is just a few years older than me. He was also amazed at the apps she had downloaded to take different kinds of pictures. Another person my wife knows was shocked to learn recently you could move pictures off your phone and onto a computer. She is 32. Some people get it, some don’t. Those who do will have a better time than those who don’t.
HOWEVER! However, even those who do “get it” with technology and the information age will still have a considerable hurdle to over come given our current political environment where the current economic elites (some may get the technology thing, but most probably don’t) are having their interests looked after by policy makers they have bought an paid for.
I don’t think Kling is as naive as you make him out to be and you’ve made some assumptions about what Kling has written that I don’t think are there. For example,
The economic elite are not necessarily the one’s who are able to implement or utilize these productivity improvements. They are able to capture (most of) the increased benefits via the political process–e.g. the extension of intellectual property rights.
In other words, your explanation is his worst case scenario and the one we are currently in. Basically I read Kling as seeing the top n% (say 5% to 10%) seeing a rising standard of living with the top 1% or such seeing most of the gains. The remaining (1-n)%….good luck.
And no it isn’t a mass of irrelevancies. He is pointing out that the creative destruction process may be speeding up. Those who can adapt to changes in technology and are willing to learn will fare better than those who either can’t or wont, and that given our current situation the rent seeking elites will have it really well off.
Consider one of my past times, I play an MMO game. I’m in contact, when I’m on the computer (even not playing the game), with people all over the world. I keep up to date with things that happen in that game (the game is a persistent “world”, is that a new term/concept for you?) via a variety of programs. TeamSpeak and Mumble allows for voice communication. I also run an IRC client, Jabber client. I also check forums for our “group” in the game. There is a functioning market economy in the game for in game currency. Combat makes use of a variety of very complicated formulas (tracking, rate of fire, stacking penalties, and so forth) and I build and maintain spreadsheets for my various economic activities in the game. People do tests to derive the formulas since the game designers don’t share that information. Yes, all this for a game. When I tell people about it most look at me like I’m crazy. The idea of learning all this stuff or in some cases re-learning stuff has zero interest for them. And I haven’t even gotten into the in game political drama….
Or another more work oriented example, when I see a new statistical method I go “Oooohhh.” Many of my co-workers yawn. If I see an elegant bit of code I get excited, many of my co-workers shrug. Writing a program to be as compact as possible is an interesting challenge to me. When another co-worker wants information on something we haven’t done much analysis on I find those projects interesting. Merely querying a database and passing off data bores the shit our of me, but many co-workers are just fine doing precisely that.
@Steve- PVP server?
Steve
I’ve seen and read similar stats, that this country is still the world’s largest manufacturer. Our perception, though, is probably that China holds that claim, as their goods flood our marketplace.
IMO, people have a lot of misperceptions about this country that can be felt in almost every corner and sector. We often are envious of other country’s cheaper drugs, for instance, totally overlooking the fact that the United States does about 75% of the R & D to create these drugs, in the first place. This is where the cost lies, in the clinical trial phases. Once a drug is approved it enjoys a time of profitability until generics are allowed to be produced, which is where other countries sail in with cheaper drugs (on the coattails of our costly development).
People rail at our healthcare, forgetting that we practice higher standards of care than many other countries; that people come over here for their advanced care. All this may change, though, as the implementation of our new health care goes into effect. Sometimes people don’t realize what they have until they lose it.
As for the likelihood of new job creation coming on board in the future — the more regulations, bureaucracy, Union muscle exerted, and centralized government intervention the less likely, IMO, this will happen. We are closing our own doors of production and innovation by ideological mismanagement. I also think we are promoting elitism, in our education system, over encouraging people to learn trade skills applicable towards addressing pragmatic, daily life events and problems. Entrepreneurial ventures are also sidestepped because of bureaucratic complexities and greater personal risk factors — forgotten are the satisfactions of being a singular craftsman or self-employed. People, instead, seem to prefer the paternal cushion of larger corporations/institutions, public sector employment where there are more benefit/pension guarantees.
Basically, I believe our more unrealistic expectations and, as Obama recently phrased it, the general ‘softening’ of our people are lending itself to smaller niches of employment opportunities out there today, and in the near future.
Let me explain why I interpret what Arnold is saying the way I do a little more clearly. What’s the relationship between this:
and this
? There is either a causal relationship or there isn’t. If there is no causal relationship his “optimistic scenario” is at best time inconsistent and at worst incoherent because he’s assuming some mechanism that isn’t in the article itself to explain how this can occur.
If there is a causal relationship which way does it run? If he’s saying that the fact that the jobs that have seen increases are those for people with post graduate degrees that more people will apply themselves and pursue post graduate degrees he’s a) discounting half the population who effectively aren’t able to get post graduate degrees whatever they do and b) it’s another way of saying that people just aren’t trying hard enough. I think that fails on Occam’s Razorish grounds. It’s what Icepick keeps complaining about and rightly so, IMO. It’s not that they’re not trying. It’s that there’s nothing to try for.
What we’re left with is my interpretation: he’s coherent but altogether too self-congratulatory.
And then there’s the example of Germany. Right now the Germans seem to be doing pretty well and they have a lot fewer people pursuing higher education than we do. The Germans aren’t any harder-working or smarter than we are. What’s the difference?
Essentially, the Germans are more protectionist than we are. I know this at first hand. As a foreigner who was a manager for a German company in Germany managing mostly foreigners I can tell you that it was practically impossible to fire a German national regardless of how incompetent he was and the amount of paperwork I needed to produce for the foreign workers was truly unbelievable. Hundreds of pages per week.
Kling works from principles and ideology rather than empiricism.
“The most optimistic scenario is the one I consider least likely. Under this scenario, the supply of workers adapts to changes in technology. In particular, this means a future with relatively fewer workers whose skills are limited to following directions in well-defined jobs”.
He seems to be under the impression that no one has had to adapt to technology before. Note to Kling: we’ve been hearing this sort of thing since the start of the Industrial Revolution, and your obsessive focus on technology is the same sort of neo-liberal claptrap that got us into this mess. We have a demand problem, and part of that is a negative trade balance draining demand from the domestic economy.
“Instead, more workers will have the cognitive ability, initiative, and self-discipline to constantly update their skills, adapt to new technology, and to participate in the creative part of creative destruction.”
Creative destruction is a term so broadly used it no longer has any meaning, nor is it useful in describing how our economy functions or in diagnosing problems. I’d also like to know how Kling has determined that workers will somehow get smarter: we went through a period of tremendous technological advance from the early twentieth century on, so whya hasn’t the “brighter, more disciplined, more gung-ho thing” happened before? One wonders if Kling is even aware a technological world existed before 1999.
“Under this scenario, economic growth will be very high, and median earnings will also be high.”
And where did that analysis come from? We were repeatedly told BY KLING, the Tofflers and the Gingrichs of the world that the new information society would rapidly progress through the 1990’s and bring about the high growth and high wages he now suggests won’t be forthcoming any time soon. Has he at any point admitted his technocentric outlook was off or has he just continued, decade after decade to preach the same dogmatic and fact-free opinions he’s always pushed?
Hey Kling: 1998 called and wants its Dow 99,000, computers on the moon technophilia back.
Where to begin?
The same people who today use computers daily, surf the net, pay bills from an iPhone are the same people who could not turn on a computer 15 years ago. The stupid of today will be the intelligent of tomorrow. This is one of the greatest periods in human history, and when history is written, it will be unimaginable that anybody alive today was not capable of something.
Each person has a different body of knowledge, but much of this knowledge will overlap other people’s body of knowledge. Also, each person has a different capacity to store knowledge, and there are multiple methods to process this knowledge. Furthermore, people are more adaptable as the need and/or desire increases.
The first link to the Jeffrey Snider article is an excellent description of how an economy works. There are some points that could be debated, but overall it is good.
The second link to the Arnold Kling article is mind boggling. The entire essay is a big steaming turd of nonsense. While much of it was mushy crap, there was onetruly hard piece of fecal matter amongst it:
“If the optimistic scenario does arise, I suspect it will be the result of discoveries in biology. Perhaps pharmacology will succeed where pedagogy fails.”
He posits many people today are unemployable in any capacity due to advances in productivity and automation. The exact opposite has been the case, but somehow this time it will be different. Since history eviscerates this theory, he must explain why the past has been different. Sadly, he actually believes this shit, and his solution is to have the government and charities pay for busy work.
The problem with the country are the parasites at the top and bottom, but the ones at the top are the worst. Both feed off of the middle class. Getting rid of the deadweight and rent seekers will allow the country to create jobs.
Most of human history has been dynamic, and this is why the doomsday scenarios never materialize. The static times are usually not pleasant. During these times the people are usually living in a shit covered environment, and it only makes sense that a static theory would be covered in shit.
————————-
RE: ND oil fields
The value of the oil fields is not the immediate job creation. The value is the cheap oil. In addition to cheap energy, petroleum products are everywhere (plastics, chemicals, etc.). Lower oil prices will have a massive ripple effect throughout the country, and it will occur more quickly than most people imagine. Getting oil out of the ground does not take decades.
I did find it amusing that Kling’s reference of Schumpeter seemed disparaging. As noted here a few days ago, Schumpeter was quite prescient. It kinda makes you wonder what else he was right about. But what do I know?
“For the Snark was a Boojum, you see.”
“The most optimistic scenario is the one I consider least likely. Under this scenario, the supply of workers adapts to changes in technology. In particular, this means a future with relatively fewer workers whose skills are limited to following directions in well-defined jobs. Instead, more workers will have the cognitive ability, initiative, and self-discipline to constantly update their skills, adapt to new technology, and to participate in the creative part of creative destruction. Under this scenario, economic growth will be very high, and median earnings will also be high”
Germany’s GDP last quarter showed 0.2% growth and what strength it has is dependent on continuing to get other countries to buy lots of its stuff by covertly subsidizing its own exports. If the EMU does break up Germany’s trade surplus goes with it; in fact the entire structure of the Eurozone is designed to ensure peripheral nations run trade deficits with the core.
Ben Wolf
“Has he at any point admitted his technocentric outlook was off or has he just continued, decade after decade to preach the same dogmatic and fact-free opinions he’s always pushed?”
These questions are not asked in polite society.
Steve,
Eveonline has just a single server, and everyone PvPs (player vs. player) whether they want too or not.
The in game political drama makes it into mainstream news like the New York Times and others.
BBC article
The “Learning Curve” in Eve Online.
My previous post was supposed to have Dave’s quote on the German economy rather than another Kling-fest. Sorry, getting tired.
No, he is under the impression that some people will embrace and adapt to new technology quickly. It is why I still schlep my ass into a building to do work in a cubicle I can do from home without spewing all those GHGs into the atmosphere and wasting 2-3 hours (or more) a day in traffic.
Eventually everyone will embrace and use the latest technology, but not everyone will be an early adopter. That is what he is saying.
Yes, I too can distort another’s argument. Kling made it quite clear that that scenario was the best case scenario and the one he saw as least likely. But you conveniently ignore that in your attempt to tear down his argument.
Yeah, if we quickly and efficiently embraced new technology growth might be considerably higher. Problem is most people probably wont do that. We tend to be creatures of habit.
The Jerk Store called and they are running out of you. :p
Uhhmmm…this needs some work, IMO…
That is some people will adopt new technology, give it long enough and yeah most people will make the switch. And the question though, is there and advantage to being an early adopter. If the answer is yes, and it translates into faster growing income, then that could be one factor in a growing disparity in incomes. Please note the qualifying terms I used like “some”, “could” and “is there”.
“No, he is under the impression that some people will embrace and adapt to new technology quickly. It is why I still schlep my ass into a building to do work in a cubicle I can do from home without spewing all those GHGs into the atmosphere and wasting 2-3 hours (or more) a day in traffic.”
And yet he doesn’t say that. You said it for him.
“Yes, I too can distort another’s argument. Kling made it quite clear that that scenario was the best case scenario and the one he saw as least likely. But you conveniently ignore that in your attempt to tear down his argument.”
I don’t need to tear down his argument. It’s the same technophilic libertarian nonsense we’ve been getting for twenty years and has yet to materialize, but now it has metastasized from the triumphal, expansive “information society” to just being the “best-case scenario”.
Notice he provides no argument as to why it would be best case. He just says it and you roll over like a dog and say “YES!” I also noticed that YOU “conveniently ignored” the complete lack of evidence for the best case scenario creating a high growth, high wage economy. He just makes the claim, and like a dog you roll over and say “YES!”
Kling has made a career of bad calls and bad opinions. It’s what he does and it’s impossible to take him seriously when he has NO understanding of how our economy functions. He’s the David Broder of futurist fantasy.
If I say, “I think the economy will enter a recession in the next six months,” does that mean I want the economy to enter into a recession?
Kling is positing outcomes that he thinks might happen. That doesn’t necessarily mean he thinks that is the way things should be.
No, he did.
Bullshit. He was quite clear that he was discussing a best case scenario that he sees as least likely.
Regarding the best case scenario and what I actually said vs. Ben’s hysterical claims:
So I’m not sitting here saying, “YES!!”
I can see how Kling’s best case scenario could result in higher growth. For example, I don’t think our employment/unemployment issues are just due to low aggregate demand. I think there are structural problems, Dave has touched on them such as a massive over-investment in financial services. If we had a labor force that could better handle structural changes, then I can see how the economy would be better.
I think that everything changed when China and India started to join the modern world. Those with below average intelligence and skills will never again make what they could have made 30-40 years ago. However, I think there is still a chance that we could have a real, though smaller middle class. However, it will take continued gains in productivity, and some way to link productivity to wages. We have lost that. Increases in profits and productivity now go almost completely to management and, maybe, shareholders.
I am a bit more optimistic about the ability of our workforce to change than some people. As Douthat and Salam noted in their book, kids nowadays do not stay at the same job very long anymore. I have seen it with my own daughter. They are moving to new jobs and learning new work much more frequently than we older folks ever had to do.
Steve
I’d also like to know how Kling has determined that workers will somehow get smarter….
We’re going to do it by importing tens of millions of Third World peasants to replace the DIM natives. The elites have decided to elect a new populace.
@Steve V.
I think he’s saying something a lot less rosy than that:
Adaptability to emerging technologies will produce more losers — those having to take low-end service jobs because they are either not self-directed or do not possess the cognitive capability (or both) — than winners (those who can adopt the new technologies). I take that to be his meaning when he says, “The new jobs that emerge may not produce a middle class. ”
I think he’s really pretty pessimistic about the whole thing.
Most of human history has been dynamic, and this is why the doomsday scenarios never materialize.
yes, and doomsday will never materialize until it does.
To anyone who I may have misled, I sincerely apologize. To clarify, I was specifically referring to the population of persons using computing devices today but excluding the population of persons who were using them 15 years ago. The excluded population would also include persons who were not alive 15 years ago. In addition, the iPhone had not been created 15 years ago, but this is conjecture by me. I also have no knowledge of the ability to pay bills online 15 years ago, and again, I did not intend to imply that this was possible. I would like to stress that it may have been possible, but I have no knowledge of this.
The point was that many of the people who could not or would not “do computers” 15 years ago can and will now “do computers”. A simple point, really.
I did not address how this occurred. In some cases, it was required by their j0b, and in others, the technology became more “user friendly”. Facebook is probably a large driver. Many grandparents use computers and the internet because it is one way to keep up on the grandkids. It may not be up to my standards, but it is more than many of them thought they were capable 15 years ago.
I could continue in 15 year increments going back 100 years finding similar examples. The point is that people will adapt. As to when they will adopt new technology, I did not address that issue. I would place the time as 5 to 7 years for many, and 10 to 15 years for most. I would suggest that early adopters succeed due to factors other than a specific technology.
Again, I did not address disparity of income. I would suggest that this topic is more complex than most people realize. To start, an individual’s incomes is variable over time.
“For the Snark was a Boojum, you see.”
Steve Verdon
“Kling is positing outcomes that he thinks might happen. That doesn’t necessarily mean he thinks that is the way things should be.”
My understanding of his theory is that increased production will result in lower job opportunities. The increased production is through technology and more skilled workers. This will result in a large number of people who will never be able to find work.
He then examines the past changes in productivity through the last 100+ years. Each of these caused disruptions, but he explains that they found work in new industries. There was some nonsense about the ability of these workers to transition, but for some reason, the farm worker was not able to be a factory worker.
This time will be different, and like the farm worker, many people will not be able to transition. There is some nonsense about schools and learning. He then cites online learning as an example. Most teachers will be out of work, and they too will be reduced to the fate of the farm worker.
I was willing to accept the pharmacology remark as humor:
“If the optimistic scenario does arise, I suspect it will be the result of discoveries in biology. Perhaps pharmacology will succeed where pedagogy fails.â€
I then got to his solution for the unemployable. The government and charities would combine to put these people to work. What exactly are they going to do? If there were something for them to do, why would the government and charities need to help them?
He is asserting that people are out of work due to ATM machines, and when this is combined with self-checkout, these people will never find work. Kling can state it anyway he wants, but this is the basic theory.
I would expect the ATM machine theory from a fifth grader, but sadly, this is considered scholarly.
“For the Snark was a Boojum, you see.”
I don’t propose regulation as the unitary cause of our economic problems nor do I propose the streamlining of regulation as the unitary solution to our economic problems. I don’t think there are any grand solutions. I’m proposing it as an incremental solution. Something that might help a little.
There are lots of things that could help a little without costing anything and IMO we should be implementing them with all due haste. If you’ve got a single dispositive cause and a single grand solution, bring them out.
Actually doomsdays materialize with some frequency. I imagine some bright bulb back in the 13th century was pointing out that densely-packed cities combined with poor sanitation and increasing international travel might breed epidemics. And I’m sure it wasn’t news to people in 17th century London that close-packed wooden buildings filled with candles was a potential problem. There were certainly people in the early 20th century who foresaw that the machine gun would cause battles to bog down and become wars of attrition.
Not sure if dinosaur pundits existed.
As Ice points out: doomsdays don’t happen until they do.
That said, why would a shift to a less job-oriented society necessarily be apocalyptic? Ask the average chicken de-boner in a reeking, dangerous plant in Delmarva if she’d rather come to work or sit home watching TV and raising her kids. It’s not doomsday unless we choose to make it so by failing to adapt. It’s change, it’s different, but it’s hardly the Black Plague or thermonuclear war.
“Revalorization” of the trades is all well and good, jan, but two re-upholsterers might be able to make livings where 20 can’t. Not to say that couldn’t help incrementally.
That is an area where really small business loans might be useful for original equipment and rent outlays.
On another topic, related to Steve V’s proficiency with programming — in this market right now, even highly adaptable people aren’t finding jobs because industries can stand on the “two years experience doing xyzh” rather than extending a little time for the xyz person to come up to speed on h. That’s one of Icepick’s complaints and not his alone.
“He who does not work neither shall he eat” goes back at least two thousand years in Western culture. I think it will be hard to stamp out and that’s what you’d need to do to have a society in which work was not required.
Could that go back so far as the dawn of the agricultural transition, Dave?
The earliest appearance of the statement of which I’m aware is in Second Thessalonians which dates to around 50AD.
RE: “Doomsday”
It should have been “doomsday predictions”, and they should be limited to “the end of the world as we know it” (teotwawki). It was a tad bit melodramatic, but it was to stress the silliness of the vast majority of these predictions. The reason they do not happen is because there are feedback loops, and these are not factored into the scenario.
I would not include the Bubonic Plague or the London fire in this. These were catastrophic events, but to my knowledge, they were not predicted. I would not include the machine gun, but I would include nuclear weapons in the doomsday prediction category.
For about the last 2,000 years, we have been in “End Times”, and the latest prediction was for a specific day & time. When that prediction failed, it was recalculated, and my guess that there will be another recalculation. The worldwide population is now estimated to be 7 billion, and the doomsday predictions are back again. There are Nuclear war and Ebola like doomsday predictions, and they never seem to materialize.
The population cannot get much larger than is sustainable. Once the natural limit is met, the growth rate will begin to decrease. The young, old, and sick will be have a shorter life span, and through attrition, the population will decrease. For the past 100 years, almost all instances of mass starvation are intentional. Nuclear war scenarios do not account for people being “rational actors”. I would argue that terrorist and rogue States include feedback loops, but I am in the minuscule minority.
For a pathogen to be effective, it cannot kill off the host too quickly, and this is a limiting factor. When they can, people move. In the cases where the cannot or will not, there are catastrophic results, but the pathogen is usually alien to the population. In addition, immunity to the pathogen develops, and the catastrophic results diminish. The 1918 flu pandemic is a modern example, but it was not catastrophic. A modern example would be a bird flu pandemic. This is a likely scenario, but it also has a limiting feedback loop. The mechanisms are known as are the results.
There are additional modern doomsday predictions, but in order to limit controversy, I will refrain from including them. I would include a super volcano eruption and asteroids impact as possible scenarios, but these are natural disasters. We do prepare for then, but since they are not man-made, we cannot prevent them.
This is not a complete discussion of the doomsday topic, but it should be illustrative of the point. It would take a lot more time and “ink” to develop it fully.
The inclusion of fewer future job opportunities is that one of Kling’s arguments is that increased productivity will result in decreased employment opportunities. This decrease will be so great that a government solution will be required. I am not sure if the charities inclusion is due to the scope of the problem or not.
I not only reject his argument, but I will deride it every chance I get. I consider it a doomsday prediction because he discusses the past 100+ years of disruption from technological advances. His discussion includes the effects of these transitions. Basically, the people out of work find jobs in new industries. With the exception of the farm worker, the job skills for most people would still be relevant, but this time it would be different. 14 million unemployed people will be the “good ol’ days”.
To quote the esteemed philosopher Ed Anger, “I am pig biting mad”.
“For the Snark was a Boojum, you see.”
Dave:
We’ve made bigger adjustments without the world coming to an end. For example equal treatment for women, which has been inconceivable for almost all of human history and then was accepted, more or less overnight.
This choose-to-work notion has been a feature of science fiction for a long time, most popularly in Star Trek. The intellectual ground has already been prepared. All that’s required is a shift in perception, from seeing work as a duty to seeing work as a privilege. I’m not saying it would be painless or easy, but despite being quite young (ahem) I’ve lived through a number of such paradigm shifts that were supposed to be shattering and turned out to be ‘meh.’
The internets and various apps are destroying jobs left and right and in ways people may not anticipate. I think teachers are on the endangered list. The people who man information booths? Superfluous. Order takers at drive-throughs and restaurants? Why? Here’s one you may not have thought of coming down the line: sign painters and manufacturers. In the world of GPS and Siri why do I need a giant highway sign pointing the way? I just need to turn right in 100 yards.
The tipping point has been reached. We just don’t need 100% of people working in order to support a very comfortable life for 100% of the people. We could quite easily redistribute income right now leaving the rich still rich but the 9% unemployed in decent condition. If over time that number shifted from 91/9 to 85/15 to 70/30 we would survive.
True, however….
Janis, in a town of approximately 80,000 people I’m in now, 88% of the businesses, consisting of 6500 separate entities, are ones employing 20 people or less. These are considered small businesses, and they are able to survive, some even thrive. My husband and I are a part of this sector, having two full-time employees, along with an array of sub-contractors we give work to when needed.
Even an individual craftsman, only helping “incredmentally,’ nevertheless, has a valuable place in filling necessary but smaller job gaps and holes, here and there. Shoe men, glass makers, artists can manage their lifestyles by having low overhead costs, making their own hours, sans all the bureaucratic burdens common with big business endeavers. I know people in smaller communities who are making a living at woodworking, a chemical engineer doing stained glass work, an accountant who is living off the grid, has become a ‘blacksmith’ creating a sustainable iron works business.
It seems to me that in the era of advancing technology, providing a larger and larger non-human workforce, people need to think out of the box as to what skills they personally have which could adapt to some kind of specialization or function needed in society. The grand employment puzzle is vastly different now, meaning that the puzzle pieces also need to change and reconfigure themselves to new shapes which can fit into smaller niches of giving products or services where needed.
Euphoria takes another trip down the yellow brick road.
When you go down that path, there is no returning. Once people accept non-working as a ‘given,’ you won’t be able to walk them back through an employment door, without force.
Today my husband was at our neighborhood market. In front of him at the check stand was a gentleman who paid for his groceries with food stamps. He gave the cashier a coupon for $10 off, giving him cash on hand. Then he wanted one of their recyclable bags. When the cashier said they weren’t ‘free,’ he was aghast! “Why not?” he exclaimed. “After all, I’m on food stamps!” The girl repeated her comment, adding they were a dollar plus tax. He begrudgingly dug into his pocket and involuntarily purchased a bag.
Here is a man living in an upper middle class neighborhood (he mentioned the street he lived on), getting food stamps, coupons and yet still complaining about having to buy his own recycle bag (which, I suppose he thought the store should have given him too). Behavior, suggesting a taken-for-granted entitlement bent, will be created by having such socially engineered concepts put into place.
Actually it suggests a poor person. Have you ever been poor, Jan? I have.
Do me a favor, I have an important text for you to read: http://www.biblegateway.com/passage/?search=Matthew+5-7&version=NIV
RE: Regulations
The Regulation Debate should be re-framed. One of the basic disagreements is responsibility. The “Regulations are Good” argument usually is based upon the government protecting the indivual, and the “Regulations are Bad” argument usually is based upon the individual and the business protecting the individual. The pro regulation side assumes that without regulations businesses will do anything (everything?) to make a profit. The anti regulation side that when individuals are responsible for their safety, businesses will need to act responsibility.
Regulations do protect people. One example would be the FAA. An airline will not calculate how many passengers could be killed before profits will drop, but safety will not be as large a concern until profits drop. Regulations also protect business’s profits. The airlines were far more profitable before deregulation under Reagan. The price competition has lead to additional fees, but between the individual and the airline, this will be resolved because it will affect their profits.
Food Safety regulation is another topic debated. Part of the anti regulation argument is that businesses will self regulate when individuals are responsible for their safety. Restaurants that make their customers sick will go out of business, and therefore, food safety regulations are a burden on restaurants. Restaurants derive no benefit from these regulations.
I would argue that businesses do derive a large benefit from these regulations. I will only eat at places that I know will not make me sick. In addition to the local restaurants, I will only eat at the known safe national chains, and without Food Safety regulations, this number will be limited. The Food Safety regulations allow me to eat at any restaurant known to be inspected, and this increases the customers to a restaurant. When I travel to another city, I can eat at any restaurant. This is an example of a win-win situation.
But, this is actually a win-win-lose situation. The individual wins. The local restaurant wins. But the national chains lose. Some of the customers at the local restaurant would have gone to the national chain with out Food Safety regulations. For the national chain to win, the regulations would need to be more burdensome. Large businesses can absorb the additional costs easier than small businesses, and as established businesses fail, they gain new customers. In addition, the cost to start a new business increases, the competition for large businesses decreases. One would expect the large business to express little or no objections to increased regulations, and one might not be surprised that the large business would provide help in writing the regulations.
NOTE: The restaurant example is only meant to be illustrative.
Regulations are not the only area where this is the case. Taxes are another area. These debates tend to be one-dimensional – left right. Occasionally, a second dimension is added to form quadrants. There are many additional dimensions, but many of them will have little effect on the overall situation. In the hard sciences, Physics is theoretical, and Engineering is practical. Both are needed, but you would not send a Physicist to do an Engineer’s job. If Regulations were more like Engineering Standards, we would experience far fewer economic catastrophes.
“For the Snark was a Boojum, you see.”
Michael,
The guy wasn’t poor. He lived in a upper middle class area, but seemed to know all the ploys on getting benefits.
As for being poor…my parents grew up way below the poverty line. In turn, our family was blue-collar modest. I started working at 11 — full time @ 16. I worked and paid my way through college. When I married, young, we furnished our apartment with alley rejects. My life has been built more on thorns than roses.
The guy wasn’t poor. He lived in a upper middle class area, but seemed to know all the ploys on getting benefits.
Living in an upper middle class neighborhood may just be residual accoutrements of wealth. He might well be poor NOW. He may be so underwater on his house he can’t move. Or any of a number of other scenarios. Or perhaps he’s a Welfare King.
I see a lot about “adaptability to changing technology”.
I know a lot of older adults who will never be proficient with computers. I don’t know any kids who aren’t. Even the dimmest can still text and surf. Growing up with it seems to be a very big advantage.
The biggest problem I see is too comfortable a safety net (or more accurately ever higher implicit tax rates on the poor who would lose means tested benefits if they got a job). Motivation to be dependable or stick out a less than ideal job will be lacking.
If the middle class does continue to shrink, I think that a more generous EITC is in order – something that more than eliminates the high implicit marginal tax rate due to loss of means tested benefits. I’m very disappointed that most of the Republican candidate plans want to eliminate the EITC.
Jan:
Then remember where you came from and stop thinking there’s some virtue in contempt.
“Then remember where you came from and stop thinking there’s some virtue in contempt.”
So true. It usually strikes me that those who claim they were poor and now have contempt for the less well off, were those whose “poor” period consisted of not making much money after they left home. They did not go through not being able to get a job because there were none to be had, or missed a lot of meals because there was no money to pay for food.
Steve
“Then remember where you came from and stop thinking there’s some virtue in contempt.”
Well, yes, but the psychic rewards are a lot less. There but for the grace of God goes everybody else but me, doncha know.
Michael,
Contempt?
I find the poverty status of some people questionable. If they are deliberately misrepresenting themselves on financial statements in order to receive monetary assistance, then I do find that contemptible.
My Mom used to play cards at a senior center in town. In the course of various conversations, elderly women would gossip how they juggled assets into their children’s names, along with other clever schemes, in order to qualify for certain low-income programs that were means tested.
If you don’t think that entitlement programs and fraud don’t often times go hand and hand then think again.
Also while there is indeed virtue in helping others truly in need of assistance, I see no virtue in indiscriminately redistributing wealth of others as a way to assuage the social conscience of wealthy liberals. If one genuinely and generously wants to participate in spreading his/her own good fortunes around, that is what I would call virtuous.
Furthermore, when I help a person out, sometimes very spontaneously, my only request is, if or when they ever have a similar opportunity, to do the same for someone else. Freely giving to others comes from the heart. When it’s a voluntary gesture there is an entirely different energy involved, one that is enormously gratifying and warming to both the giver and receiver.
A different energy involved?
Really? New Age meets Rand? Sounds like a good beginning for a cult.
Michael,
Yep! ‘Wanting’ to do something, ‘aspiring’ to make a difference, has a totally different after taste than being ‘forced’ or ‘mandated!’ You seem like a salty individual. I would think you would understand how inner and outer motivations differ from each other, as to the quality of the end product and/or feeling of satisfaction each begets.
The biggest problem I see is too comfortable a safety net (or more accurately ever higher implicit tax rates on the poor who would lose means tested benefits if they got a job). Motivation to be dependable or stick out a less than ideal job will be lacking.
Too comfortable? Funny. Just saw an article the other day that most UE folks no longer receive UE Compensation. The problem will get worse. 99 weeks doesn’t seem like that long a time if you’ve been out of work 182 weeks. Also, making 1/4 of what you used to make doesn’t seem all that comfortable.
Comfort has a range of levels I suppose. I’m talking about the level of comfort significantly above where you’re still eating, have more than adequate, and having a roof over your head.
You are talking about an uncomfortable change in lifestyle. If you have to sell your house and a bunch of possessions because you are now living on 8k instead of 36k, it’s tough, but only when compared to your old lifestyle. A lot of successful people have these kinds of stories in their backgrounds. I worry that taking these experiences away altogether will lead to a dearth of successful hard-working people who made their way out of necessity.
“have more than adequate” was supposed to read “have more than adequate access to basic medical care”. oops.
You are talking about an uncomfortable change in lifestyle. If you have to sell your house and a bunch of possessions because you are now living on 8k instead of 36k, it’s tough, but only when compared to your old lifestyle.
And what happens after you’ve sold all your stuff that has value, drained your bank account, spent all your savings, down-graded your life, and THEN run out of assistance and still can’t find a job because there aren’t enough jobs to go around? Living under a bridge is also just a down-grade in lifestyle.
Do you honestly know anyone like this (someone not mentally ill, willing to move anywhere there’s a paying job)? I don’t. I don’t know anyone who knows anyone that this has happened to. I can name several who regularly apply for unemployment after getting fired or laid off so that they can smoke pot and watch TV until their benefits are exhausted, though.