4 ms·

The article doesn't properly distinguish between simple changes in the type of work that is done and structural changes. Generally the change is n jobs paying

by A1kmm 16y ago

The article doesn't properly distinguish between simple changes in the type of work that is done and structural changes. Generally the change is n jobs paying $w / hour doing X being replaced by pn jobs paying $rw / hour doing Y. The markets generally ensure that p*r < 1 long term (for constant market size); however, the values of p and r, and the economies of scale of new technologies have a profound impact on their overall impact on important societal outcomes like inequality. For example, consider a technological advance which has relatively low barriers to entry, such as voice over IP. In this case, r < 1 (people doing VoIP work get paid less, on average, than people at telcos before) but p > 1 (access to telecommunications technology is easier, so more people do it, even at fixed same market size). This creates more jobs and reduces income inequality. However, in other cases, new technologies have higher barriers to entry than the existing manual option, p < 1, r < 1; medical equipment that is prohibitively expensive to manufacture and operate except for big players; small clinics close down and a few mega-clinics open up; while production is more efficient overall, the market is less efficient, and profits are higher for the few that remain in business. There are less jobs and more inequality. The best possible outcome is when technology that makes jobs obsolete is low-cost and accessible to everyone; jobs are lost, but people don't need to work as much to make ends meet. The worst is where new technology creates economies of scale that mean few big companies control major production but don't need many workers, but still charge only marginally less than the more labour intensive alternative; jobs are lost but prices don't go down by much. The only solution to maintain income equality is government taxation of those big companies combined with government public good expenditure (e.g. hiring the people who lost their jobs to do research).

ecuzzillo 16y ago
This made something click for me: I hear all the time about how a) technology makes people's lives better, but b) people's lives in the US seem to be sucking a lot lately. The sucking, this theory would predict, is due to people having their jobs obviated by technology, but then being screwed out of the good part of that technology, directly or indirectly, by phone companies with monopolies who conspire to charge by the gigabyte and therefore deny the wider economy the benefit of technological improvement. (This is not to say that a 50-year-old who gets laid off would feel better if he had cheaper internet access. The effects of cheaper internet access overall, though, seem like they would end up producing cheaper food and other costs in the end, too.)
gaius 16y ago
This creates more jobs and reduces income inequality. That is a very contentious issue. Let me use the dotcom boom as an example. In the early days not many people knew how to "make a website" and consulting companies raked in the cash. Then the knowledge got more widespread and the tools got better and basically any IT department could do it, so margins eroded, yet at the same time, more people and organizations had websites. With you so far. But the people who were on the cutting edge of HTML and CGI in 1995 didn't stay there - they moved on up into different technologies, staying "ahead of the curve" and in the same relative position to the "average" IT worker. So there is no reduction in "inequality" (and that's a good thing - as an economy we need to incentivize people to look ahead). And the people who got into the game late find there are no jobs and have to retrain - and that is a net drain on their and the economy's wealth. So I don't believe the effect is either to create more jobs (since the person who once was doing COBOL in 1995 is now doing COBOL ON COGS in 2011) and it doesn't reduce "inequality" either (since the HTML forerunner in 1995 is now doing, I dunno, iPhone apps).
yummyfajitas 16y ago
The best possible outcome is when technology that makes jobs obsolete is low-cost and accessible to everyone; jobs are lost, but people don't need to work as much to make ends meet. This is tricky because we constantly move the goalposts. What counted as "making ends meet" in 1950-1970 era is now counted as "poverty" today, and is mainly limited to a few unlucky souls living on Indian reservations and other such depressed areas. (This report from the census makes that exact comparison: http://docs.google.com/viewer?a=v&q=cache:fuZGrQqyd9QJ:www.census.gov/apsd/www/statbrief/sb95_9.pdf+indoor+plumbing+1950+usa&hl=en&gl=us&pid=bl&srcid=ADGEESgWgD4J1TSjrFebCwZX5tuY6G1ARvizkLhGyclPfIR6dag1cG4LeDEIaT5DJwgmoGtaQTuMQ3k9PmYxlZ9XJXrMQHHXnPnYwN64RSOodAbrr8yzJ7w0DaR4ERd2c2PqcEyDfP8Z&sig=AHIEtbSiu12SP12LYDhTfU-GEsc-X-Vuug http://docs.google.com/viewer?a=v&q=cache:fuZGrQqyd9QJ:w... ) If you truly want to make ends meet 1970's style, you don't need to work more than 26 weeks/year. Millions of people do this.
- crpatino 16y ago
  Would you care to elaborate on your point? If at all the US Census does not agree with the affirmation that "making ends meet is now easier than in the 1950's-1970's". Median income per household (in 2008 CPI-U-RS adjusted dollars.) [[2008 : $50,303], [1968 : $41,995]] +19.8% Consumer Price Index (CPI-U-RS) [[2008 : 316.2], [1968: 58.3]] +442.7% To be honest, people below poverty line has not changed that much... [[2008 : 13.2%], [1968 : 12.8%]] +3.125% source: http://www.census.gov/prod/2009pubs/p60-236.pdf http://www.census.gov/prod/2009pubs/p60-236.pdf
  - yummyfajitas 16y ago
    Using CPI-adjusted dollars is an incorrect way to measure inflation. We know CPI overstated inflation a LOT (the Boskin report says about 1.3%/year, up to 1996). Correcting your figures for this, we find CPI+Boskin adjusted median household income is actually up 72%. (This assumes CPI was not overstated after 1996.) http://www.ssa.gov/history/reports/boskinrpt.html http://www.ssa.gov/history/reports/boskinrpt.html We might have 13.2% of people below the poverty line, but on the other hand virtually all the people currently below the poverty line have flush toilets. That wasn't the case in 1968 (see the link in my previous post). In fact, people below the poverty line in 2007 have a standard of living comparable to the middle class of 1968. Most of the poor live in a house with < 1 person per bedroom, a complete kitchen, 1/3 have a dishwasher, 2/3 have a washing machine, about half have AC, most have a car. http://www.census.gov/prod/2008pubs/h150-07.pdf http://www.census.gov/prod/2008pubs/h150-07.pdf My grandparents were middle class, and they didn't come close to that level of prosperity. And the majority of people below the poverty level work less than half the year (by choice). Only 15% of poor adults work full time, 50 weeks a year. http://www.bls.gov/cps/cpswp2007.pdf http://www.bls.gov/cps/cpswp2007.pdf

by A1kmm 16y ago

ecuzzillo 16y ago

This made something click for me: I hear all the time about how a) technology makes people's lives better, but b) people's lives in the US seem to be sucking a lot lately. The sucking, this theory would predict, is due to people having their jobs obviated by technology, but then being screwed out of the good part of that technology, directly or indirectly, by phone companies with monopolies who conspire to charge by the gigabyte and therefore deny the wider economy the benefit of technological improvement. (This is not to say that a 50-year-old who gets laid off would feel better if he had cheaper internet access. The effects of cheaper internet access overall, though, seem like they would end up producing cheaper food and other costs in the end, too.)

gaius 16y ago

This creates more jobs and reduces income inequality. That is a very contentious issue. Let me use the dotcom boom as an example. In the early days not many people knew how to "make a website" and consulting companies raked in the cash. Then the knowledge got more widespread and the tools got better and basically any IT department could do it, so margins eroded, yet at the same time, more people and organizations had websites. With you so far. But the people who were on the cutting edge of HTML and CGI in 1995 didn't stay there - they moved on up into different technologies, staying "ahead of the curve" and in the same relative position to the "average" IT worker. So there is no reduction in "inequality" (and that's a good thing - as an economy we need to incentivize people to look ahead). And the people who got into the game late find there are no jobs and have to retrain - and that is a net drain on their and the economy's wealth. So I don't believe the effect is either to create more jobs (since the person who once was doing COBOL in 1995 is now doing COBOL ON COGS in 2011) and it doesn't reduce "inequality" either (since the HTML forerunner in 1995 is now doing, I dunno, iPhone apps).

yummyfajitas 16y ago

The best possible outcome is when technology that makes jobs obsolete is low-cost and accessible to everyone; jobs are lost, but people don't need to work as much to make ends meet. This is tricky because we constantly move the goalposts. What counted as "making ends meet" in 1950-1970 era is now counted as "poverty" today, and is mainly limited to a few unlucky souls living on Indian reservations and other such depressed areas. (This report from the census makes that exact comparison: http://docs.google.com/viewer?a=v&q=cache:fuZGrQqyd9QJ:www.census.gov/apsd/www/statbrief/sb95_9.pdf+indoor+plumbing+1950+usa&hl=en&gl=us&pid=bl&srcid=ADGEESgWgD4J1TSjrFebCwZX5tuY6G1ARvizkLhGyclPfIR6dag1cG4LeDEIaT5DJwgmoGtaQTuMQ3k9PmYxlZ9XJXrMQHHXnPnYwN64RSOodAbrr8yzJ7w0DaR4ERd2c2PqcEyDfP8Z&sig=AHIEtbSiu12SP12LYDhTfU-GEsc-X-Vuug http://docs.google.com/viewer?a=v&q=cache:fuZGrQqyd9QJ:w... ) If you truly want to make ends meet 1970's style, you don't need to work more than 26 weeks/year. Millions of people do this.

crpatino 16y ago
Would you care to elaborate on your point? If at all the US Census does not agree with the affirmation that "making ends meet is now easier than in the 1950's-1970's". Median income per household (in 2008 CPI-U-RS adjusted dollars.) [[2008 : $50,303], [1968 : $41,995]] +19.8% Consumer Price Index (CPI-U-RS) [[2008 : 316.2], [1968: 58.3]] +442.7% To be honest, people below poverty line has not changed that much... [[2008 : 13.2%], [1968 : 12.8%]] +3.125% source: http://www.census.gov/prod/2009pubs/p60-236.pdf http://www.census.gov/prod/2009pubs/p60-236.pdf
- yummyfajitas 16y ago
  Using CPI-adjusted dollars is an incorrect way to measure inflation. We know CPI overstated inflation a LOT (the Boskin report says about 1.3%/year, up to 1996). Correcting your figures for this, we find CPI+Boskin adjusted median household income is actually up 72%. (This assumes CPI was not overstated after 1996.) http://www.ssa.gov/history/reports/boskinrpt.html http://www.ssa.gov/history/reports/boskinrpt.html We might have 13.2% of people below the poverty line, but on the other hand virtually all the people currently below the poverty line have flush toilets. That wasn't the case in 1968 (see the link in my previous post). In fact, people below the poverty line in 2007 have a standard of living comparable to the middle class of 1968. Most of the poor live in a house with < 1 person per bedroom, a complete kitchen, 1/3 have a dishwasher, 2/3 have a washing machine, about half have AC, most have a car. http://www.census.gov/prod/2008pubs/h150-07.pdf http://www.census.gov/prod/2008pubs/h150-07.pdf My grandparents were middle class, and they didn't come close to that level of prosperity. And the majority of people below the poverty level work less than half the year (by choice). Only 15% of poor adults work full time, 50 weeks a year. http://www.bls.gov/cps/cpswp2007.pdf http://www.bls.gov/cps/cpswp2007.pdf