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We’re not going to have a jobless recovery. We’re going to have a jobless future

275 points by yarapavan 15y ago

dreamdu5t 15y ago
LoL Don't fill the potholes? Who the fuck fills them then!?
- nostrademons 15y ago
  Self-driving dumptrucks.
- mcphilip 15y ago
  KFC, of course. http://www.inquisitr.com/20827/nobody-does-potholes-like-kfc/ http://www.inquisitr.com/20827/nobody-does-potholes-like-kfc...
  - dreamdu5t 15y ago
    So that's what the Ann Rand utopia looks like...
- dreamdu5t 15y ago
  Downvoted because my post is snarky? My point is factually valid. Public works DO create jobs, it's an empirical fact. Just because the OP hates the idea doesn't mean public works don't create jobs. Maybe he thinks UPS should fill the potholes, but either way, the only way to fill them is to hire people to fill them, whether the government or private business does it doesn't change the fact that someone was hired to do it.
  - bprater 15y ago
    Downvoted because it's not the kind of humor we prefer here. We enjoy well-thought out intellectual debate. You final paragraph here is what you should have posted initially -- it has substance.
  - ken_railey 15y ago
    Public works also destroy jobs, since the wealth to fund them has to first be extracted from the public.
    - dreamdu5t 15y ago
      Sure. That doesn't change the fact that they create them.
    - thisuser 15y ago
      There is no evidence that lowering tax rates creates jobs.
  - jerf 15y ago
    "Public works DO create jobs, it's an empirical fact." No it's not. Sometimes it does, sometimes it doesn't. It's never that simple. Along with the obvious broken window fallacy problems, you have to look at how you are paying for that public work. Taxing a net two median-pay jobs out of existence to create a single public works median-pay job is destroying a job, not creating one.
    - dreamdu5t 15y ago
      The definition of "public works" is building things using State money. There is no way to build roads without hiring people. This is an empirical fact. Unless you know of some way to maintain or build streets without hiring people? Again, it is an empirical fact that public works create jobs. At least public works that require hiring people. It's not hard to understand. Work needing to be done creates jobs, whether that is financed by the government or private industry doesn't change the fact that the work needing to be done requires employment. You can debate until the cows come home about whether specific public works are worth the money, but you can't debate whether or not they create jobs. Its a simple observational fact. Especially when the vast majority of public works require manual labor.
      - reinhardt 15y ago
        You clearly missed the GP's point and the reference to the broken window fallacy: http://lmgtfy.com/?q=broken+window http://lmgtfy.com/?q=broken+window
        dreamdu5t 15y ago
        No, I didn't. Maintaining infrastructure isn't breaking windows! Public works is not the equivalent of a glass-maker breaking the baker's window. It's the equivalent of hiring people to maintain the roads that allow the glass maker to get to the baker, but instead of the glass-maker paying for the road the baker and glass-maker distribute the cost through taxation. It's intellectually dishonest to even compare highway maintenance with breaking windows to create a job for yourself.
      - 15y ago
_delirium 15y ago
While this is not necessarily untrue, the prediction has been made a few times before, most notably during the early-20th-century wave of automation. Even the rather intelligent Bertrand Russell wrote a book in 1923, "The Prospects of Industrial Civilization", which spent a good deal of time worrying about that problem (though some of the other stuff he worried about did come closer to being true, like the prevalence of hyper-regimented work among the remaining jobs).
- ojbyrne 15y ago
  So one of the interesting perspectives I ran across recently said basically that "industrialization destroyed a whole class of jobs leaving millions of workers with no further economic role ever. But those workers were horses."
  - queensnake 15y ago
    ... and which way do you take that; that, because we're not horses, we're ok? Or, that horse-skilled people can indeed be left out forever? (It's possible; see this on the US' Supplemental Security Income (SSI): http://thelastpsychiatrist.com/2010/11/the_terrible_awful_truth_about_1.html http://thelastpsychiatrist.com/2010/11/the_terrible_awful_tr...)
    - ojbyrne 15y ago
      The latter basically. Technology wiped out the work of horses, so there's no reason it can't move up the "skills ladder" and wipe out more skilled employees.
  - scarmig 15y ago
    Very interesting. Are you suggesting horses play the part of Tyler Cowen's Zero Marginal Product workers in the Industrial Revolution? http://marginalrevolution.com/marginalrevolution/2010/07/zero-marginal-product-workers.html http://marginalrevolution.com/marginalrevolution/2010/07/zer... Also, if you remember where you saw that point specifically, I'd love to read it.
- 15y ago
ikarous 15y ago
Plenty of others have predicted the rise of unemployment in proportion to increased automation, and they've been wrong before. Maybe this time they'll be right. I don't know; I'm not economist nor do I possess a crystal ball. What I do know is that this whole situation is terribly discouraging for young people fresh out of school. My partner, for instance, recently graduated with a degree in civil engineering from a very challenging private school. He's been unable to find work as a starting engineer after a six month search, and I'm frankly out of ideas on how to keep him optimistic. Add to all this that his dad, a senior electrical engineer, just got laid off, and any encouraging words I say start to sound very hollow indeed. I fear that this high unemployment rate, temporary or not, is going to create a generation of career setbacks and failures to launch. A lot of people out there have it much worse, I know, but I still don't know what to say when this hard working young man can't even get responses back for internships and unpaid work.
- civilian 15y ago
  That sucks. I graduated in 2009 with a degree in Biochemistry, I fought for 7 months to get a job-- and when I did, I was laid off pretty quickly. I wish that I had watched this when I first started job hunting: http://tedxcmu.com/videos/charlie-hoehn http://tedxcmu.com/videos/charlie-hoehn I think his plan is good. The job hunt is dumb, demoralizing, and at the end of the day you aren't really making anything. Your partner should learn something! (Maybe learn programming? There's lots of jobs in that-- that's what I switched to.) At the very least he should continue doing civil engineering projects on his own. Boost his portfolio. (oh, also, my dad is an economist and he has a crystal ball. Best gag gift for an economist!)
  - chubs 15y ago
    I just watched that video. It's brilliant! I'm going to force my sister to watch it now :) Thanks so much for sharing the link
- petercooper 15y ago
  Plenty of others have predicted the rise of unemployment in proportion to increased automation, and they've been wrong before. Have they? In the long term, definitely, but in the short term, a sharp increase in automation is sure to have an effect on the amount of human labor required. Isn't a normal cycle that technology begins to replace workers but then those workers retrain and then get new types of jobs and recover their employability? It seems we're currently doing a poor job training existing workers and future workers, if anything.
ChristianMarks 15y ago
The OP's post could use some context. Ricardo’s concept of comparative advantage was forged in a world where labor and capital were essentially fixed. England could weave cloth more efficiently than Spain, but Spain could make wine more efficiently than England. Therefore, they would both benefit from trade given that each of these countries had a comparative benefit or efficiency to offer. The assumption under comparative advantage is, while the composition of employment would change under trade (more weavers employed in England and more wine makers in Spain), the level of employment would stay virtually the same. Meanwhile the citizens of England would get cheaper wine and the Spanish cheaper cloth. In today’s world, labor and capital are not fixed. Capital flows wherever the input costs are the cheapest, such as labor and materials. Companies can set up operations in many places around the world. For instance, an American multinational no longer has to produce in the country where it sells, given existing trade treaties that lower tariffs. They can shift production to China or Mexico where the labor costs are a fraction of what it is in the U.S. and not be penalized by tariffs or quotas. In effect workers get fired in the U.S.; this leads to a loss of income for the working and middle classes. The workers in Mexico and China benefit because they have jobs, albeit at low wage rates and substandard conditions in many cases. Contrary to received wisdom, prices for some products might be lower, but not significantly so. The difference in wages (from those in the developed world versus the developing world) goes to investors, or more accurately these days, management. This is trade by absolute advantage, not comparative advantage. For a while GDP growth seems to be fine. But with production set up abroad, the U.S. runs trade deficits and Americans by definition incur more debt to buy these goods. NAFTA encourages this. As a member of the WTO, China benefits from this trade agreement in that its goods are levied with lower tariffs than would otherwise be the case. Moreover, China manipulates its currency to keep it artificially low. Under a reciprocal trade regimen, the currency of a country that exports more than it imports should rise. A rising currency would act as a braking system to bring trade flows back into equilibrium. But the U.S. and China do not want that. China needs to keep selling goods to the world to continue growing fast enough to generate enough jobs. Despite its protests from time to time, the U.S. government does not want this because it is captured by the multinationals, which make much more money not employing Americans (or Europeans for that matter). So when media pundits and approved economists say they are puzzled by the lack of employment growth, it is theatre, a necessary piece of kabuki to keep their jobs as propagandists. Free trade under a truly Ricardian model of comparative advantage is theoretically beneficial to the world because at its heart lies the assumption of full employment. Instead what is touted as free trade is not Ricardian; it is a model of absolute advantage that ensures that the wages of labor are depressed, thereby enabling the rise in income for the top 1%. The problem for the elites is that these are not sustainable political or economic policies because eventually unemployment will reach unacceptable levels and the right leader will come along and tell the real story to the American people. As long as the political power of the middle and working classes has been undermined and blunted, U.S. multinationals will not hire Americans if they can offshore production. Therefore, people need to be organized to buy goods and services from small businesses whose interests are more aligned with that of the nation. Also, Wall Street should be boycotted. Do not do business with big banks. (I belong to a credit union.) Invest in regional financial institutions. Wall Street, because of its power over Washington, has been able to push through unfair trade bills in exchange for the right to set up shop in those foreign countries that benefit from access to American markets. But it is a one-sided deal in practice. U.S. access to foreign markets translates to this: multinationals offshore production and export to the U.S. at low or nonexistent tariffs. If you want access to Chinese markets you must manufacture and hire people in China. Also, you must share your intellectual property with local firms. Multinationals accept this as the cost of doing business in China, although the real cost is being borne by the working and middle classes in this country. Unless there is a substantial reversal in these policies, expect many years of sub par economic growth and high unemployment in the U.S. So why should anyone be surprised when the U.S. GDP growth rate for the second quarter is dismal? Unless of course, they are paid to be surprised.
bsaunder 15y ago
If government wants to create jobs, they need to encourage businesses to create new value (by paying them to create that value). Employers will then hire people to create the value (and pay them (after skimming enough profit off the top to make it worth the effort)). The problem is, of course this requires the government to spend more (not less) which seems strongly against the current momentum. I'd suggest the modern version of the Depression era work programs and/or the 60s space race. Perhaps something launching a major technological leap in robotics (which ironically would exacerbate our job "problem").
- michaeldhopkins 15y ago
  Well, it's against the momentum because to okay such expenses, a culture must be created which okays many, many other expenses, and right now they are a bit of a threat to our being able to maintain current value-encouragement programs, let alone add new ones. I don't think that centralizing the value creation incentive engine was good anyway, but now it's barely possible.
rweba 15y ago
Perhaps this will prompt a substantial reorganization of society. Ideas like the http://en.wikipedia.org/wiki/Basic_income_guarantee http://en.wikipedia.org/wiki/Basic_income_guarantee might actually gain traction. Marshall Brain's novel http://www.marshallbrain.com/manna1.htm http://www.marshallbrain.com/manna1.htm is one recent exploration of similar ideas. But personally I'm sceptical if this will actually happen in the near future. As long as we don't have "Strong-AI" there are many jobs only humans can do well and a lot of those jobs don't require extensive education (nanny, nursing home attendant, customer service etc.)
scythe 15y ago
The argument, then, is that our ability to produce will outstrip our desire to consume, and so a fraction of people will be able to produce enough things for everyone to consume, which will lead to the rest not having jobs. The problem with the argument is that it does not really appear to me that our ability to produce has outstripped our desire to consume. The buying of things is currently rather high, and product shortages are not entirely uncommon. Rather, people cannot get paid a first-world living wage to produce the things we desire to consume, or they do not have the skills required to produce those things, etc. Somewhat related: are most other countries currently suffering high unemployment, or just America? If the answer is 'no', that seems to contradict the thesis of the article.
- Volpe 15y ago
  Australia has record low unemployment, and consistent growth since the GFC. (Largely due to the resources boom driven by china) N.B Australia's whole economy is worth about the same as the U.S's debt.
- Someone 15y ago
  The US is somewhat of an outlier; it moved from 'top of class' to 'comparable to the EU as a whole' in a few years (http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Unemployment_statistics http://epp.eurostat.ec.europa.eu/statistics_explained/index...., figure 3)
mdasen 15y ago
Do you have everything you want in life? I don't just mean, "do you have everything you want of what you could purchase with money today?" I mean everything you could want. Articles like this one make me feel like there isn't a lot left to do in the world - that we're close to stopping our progress toward better living standards. If we are stopping or slowing our progress toward higher living standards, then yes efficiencies do kill jobs. I don't see a jobless future. I see a future with a different mix of jobs. To be fair, the author does touch upon this a little as s/he is encouraging investment toward new industries. However, I don't share the author's sense that these new industries and new economies will definitionally employ fewer people. Automation and efficiencies have been seen since the industrial revolution. Two centuries in, all this automation doesn't seem to have driven unemployment to a skyward trend over the long run. If we were pursuing a finite goal, greater efficiency would mean that we would need less labor. However, I don't believe that our quest for better lives is a finite goal. People are always talking about things they wished existed or things they wished they had. That sounds shallow, but I don't just mean commodities; I also mean medical treatments. As labor becomes freed from current tasks, it can be put toward other uses. That doesn't mean it will be easy, but I think we're going to continue raising our standard of living and creating a better world. And that will require labor.
- dreamdu5t 15y ago
  While I agree with you, history also shows that unemployment and wealth disparity often do rise high enough to cause massive civil unrest. Yes, high unemployment isn't permanent or a long-term trend. That isn't really relevant though when you're talking about the prospect of blood in the streets prior to returning to decent levels. The US seems completely arrogant in the sense that they don't seem to think this can happen to them, or that their military superiority somehow insulates them from civil unrest.
  - tsotha 15y ago
    Or maybe it's not wealth disparity that causes civil unrest, but rather the absolute level of poverty on the low end. Here in the US there's no sign of any kind of generalized unrest. Far less than there was in the 70s when, according to the "disparity causes unrest" theory there should have been even less.
pg 15y ago
"Our new economy is shrinking because technology leads to efficiency over growth." Anyone who wants to make the claim that technology is net killing jobs has to be prepared to answer the question: why now? Technology has been killing (but not net killing) jobs for centuries. It's possible that technology could start to net kill jobs. But why now, when it hasn't in the past?
- AdamTReineke 15y ago
  Haven't we finally reached the point where all the discoveries of the Industrial Age and Information Age are coming together to enable companies to produce goods as efficiently as humanly possible? And won't advances in AI and robotics enable us to push beyond those human limits? I'd say that it hasn't in the past because up until 60 years ago, humans were the decision makers doing everything.
  - tsotha 15y ago
    So what's the big technological difference between this year and, say, four years ago? Why was unemployment below 5% then?
    - AdamTReineke 15y ago
      I suppose my argument wouldn't hold if you look at just 4 years, but I think it would if you look over a few centuries, as pg noted.
    - ajross 15y ago
      There was a speculative bubble in the world real estate market. This led to a lot of real cash circulating (e.g. people refinancing to pay for kitchen remodels so that they can flip their home). That popped, and all the excess economic activity disappeared with it. The article posits a broad trend. Short term boom and bust fluctuations will always happen.
      - tsotha 15y ago
georgieporgie 15y ago
"Don’t fill potholes. That won’t fix the economy." I'm not certain of the author's intent, but the one and only way that government can actually create jobs is to improve infrastructure. A better transportation network built today will have payoffs 20 years down the line. Unfortunately, it's hard to build a political career on such long-term goals. One of my favorite Planet Money episodes deals with this: http://www.npr.org/blogs/money/2011/04/05/135151990/the-tuesday-podcast-how-do-you-create-a-job http://www.npr.org/blogs/money/2011/04/05/135151990/the-tues...
- AdamTReineke 15y ago
  I read it more as a metaphorical pothole, like just patching small holes instead of fixing bigger problems.
- frankus 15y ago
  Not only that, but with strongly negative real interest rates, it can borrow money to pay people to fill potholes today for less than it would cost to wait. In fact, it's better than that: - That calculation doesn't include the savings in reduced wear and lack of deferred maintenance. - Construction labor is now much cheaper than it would be at full employment. - Growing consumption now would more than pay for itself in taxes from an averted "lost decade." Unfortunately the folks in Washington are still worried about 3% inflation and how interest rates are going to spike any day now. So we end up with spending cuts that will almost certainly worsen the deficit over a do-nothing approach.
InclinedPlane 15y ago
Is Meta: let me provide some reasons why this bubble/downturn unlike all previous ones and will last forever.
deleted 15y ago
[deleted]
lukifer 15y ago
I've noticed this trend, and it's greatly concerning. There are plenty of downsides to wage slavery, but overall there has been a historical improvement to human dignity and quality of life due to people being useful as units of production. As technology diminishes this and there are fewer roles that need to be fulfilled by actual humans, people will be forced to viciously compete over fewer and fewer jobs to stay out of abject poverty. So-called "knowledge work" isn't safe either, as these jobs gradually get gobbled up by software and specialized AI algorithms. Maybe the unemployed will be able to invent new jobs for themselves to create more wealth; maybe technology advances will make a welfare state trivially cheap to maintain. But I think the prospects for mass poverty are very real.
dstein 15y ago
Fixing the economy will require more than entrepreneurs. I think it will ultimately require major socio-economic reform, possibly a conversion to Technocracy. Technology isn't just eliminating jobs, it's eliminating trade altogether. I can replace my watch with a smartphone app. That means the watchmaker, supply chain, retail store, and clocksmith are all out of business. And 3D printers could be the next mega-disruptive technology. What happens to manufacturing of all kinds when we have Star Trek style repicators in our basements? I'm just not convinced that entrepreneurship alone can combat the major macroeconomic changes that are coming.
- patrickk 15y ago
  "I can replace my watch with a smartphone app. That means the watchmaker, supply chain, retail store, and clocksmith are all out of business." I work as an iOS app developer, a role which didn't exist just three years ago. There are millions of developers out there on the various smartphone platforms, a market that Apple spawned after seeing what hackers could do by jailbreaking iDevices and loading apps on the iPhone without "permission". I wouldn't have a job now if I weren't for the iPhone (I live over 5000 miles from Cupertino) and there are many like me all around the world. Meanwhile, I can't think of a single watchmaker that has gone out of business.
  - wallflower 15y ago
    > I work as an iOS app developer, a role which didn't exist just three years ago. I respectably counter your statement with the idea that the job category existed, just not the platform specialization. > I wouldn't have a job now if I weren't for the iPhone You could have been able to find a job. What was your background before iOS development? (or was iOS development your first job) I'm not trying to disprove the fact that your source of income is iOS specialization. If you are indeed making the majority of your revenue from your own apps, big congratulations! My point is even though Apple created a tremendous ecosystem for independent developers, it may be a less than net zero gain (e.g. jobs in Visual Basic programming were lost and either there are much less new jobs in the new ecosystem and/or previously gainfully employed developers are unable to develop iOS competency and proficiency (no mean feat).
rmason 15y ago
I am an optimist. It helps that I have seen this cycle before in the late seventies. People spoke then of the new normal and that's a phrase that is trending once again. I spent my early youth in the newsroom and the tools I used everyday have become a trip back in a time machine for todays students: http://journoterrorist.com/2011/08/02/paperball2/ http://journoterrorist.com/2011/08/02/paperball2/ Technology and entrepreneurs will bail us out once again. Lots of fortunes have been wagered and lost betting against America.
rimmjob 15y ago
everyone should just become a computer scientist. problem solved
alphaBetaGamma 15y ago
The lack of pickup in employment numbers is not surprising when viewed in an historical context. There is very broad historical overview of sovereign crisis in “This Time Is Different”, by Reinhart and Rogoff, which also includes banking crisis. Looking at what I can find on Google books (I don’t have the book here), we have that historically the unemployment rate rises an average of %7 and that this lasts 4 years. Output falls more than 9 percent, but that down turn only lasts 2 years. So yes, a jobless recovery is what we should expect. From their summary on pp. 224 [1] that on average: - Housing prices decline %35 over 6 years. - Equity collapses %56 over about 3.5 years - Unemployment rises %7; down phases lasts 4 years - Output falls %9, downturn lasts 2 years. - Government debt rises %86. The main cause is not the bailout but from the collapse in tax revenues. - Frequent spike in government borrowing rates. So I would say we are not living anything unexpected. [1] http://books.google.com/books?id=Iihe6s0XincC&lpg=PP1&dq=this%20time%20is%20different&pg=PA225#v=onepage&q=unemployment%20&f=false http://books.google.com/books?id=Iihe6s0XincC&lpg=PP1&#3...
antidaily 15y ago
I can't help but wonder what our unemployment numbers would look like without housing crisis and the two wars. Would we be investing in things like energy, healthcare, and tech? People are sitting on cash because of uncertainties in the markets, not because tech killed all the jobs.
sshumaker 15y ago
The middle class is going away. And not coming back. All of those factory and middle management jobs are being replaced by cheaper labor in the one case (offshore or robotics) or by technological and communication efficiencies on the other. A prediction: Twenty years from now, there will only be two types of jobs in the United States: Creatives and those in the Service Industry. Creatives - anyone who creates things with their mind. Artists, yes, but also programmers, designers (graphic/web/product), musicians, directors, etc. The US won't necessarily have a monopoly in this department, but there's enough cultural barriers in many of these fields that it's likely we'll still have a very healthy presence there, at least for selling to the Western world. Everyone else will be in the service industry - and I'm referring to service jobs that cannot be outsourced, because they require someone local. Waiters, barbers, chefs, trainers, couriers. Nurses and caregivers. And lots of service jobs that don't exist today. Need someone to help assemble the product you just downloaded and 3d printed? The only jobs that will remain are the ones that we can't outsource to robots or cheap labor.
- pessimizer 15y ago
  The US imports a lot of its creatives, and a majority of its creatives when it comes to math and science. If capital moves somewhere else, creatives will move somewhere else.
chefsurfing 15y ago
In my opinion John Michael Greer's "The Long Descent" is the most realistic and most hopeful take on this vein of thinking and writing. It is also a well-written and easy to read book. The main takeaway is that our situation is not a problem with a solution, but rather a predicament or situation with various coping mechanisms. http://www.newsociety.com/Books/L/The-Long-Descent http://www.newsociety.com/Books/L/The-Long-Descent
- chefsurfing 15y ago
  However I should point out that JMG points to different root causes of "decline". His core thesis is that Peak Oil and net-energy / net-resource growth not meeting demand are the main determining factors in our shrinking economy. His hopeful response to this scenario is that although there will be far fewer jobs, there will be much more work.
ecounysis 15y ago
The onus is on individuals to add value to society. Don't sit around and wait for a job. Create your own job. There is not a shortage of jobs there is a shortage of entrepreneurs and go-getters.
- exit 15y ago
  aw shucks
switch 15y ago
Here's a different way to look at it. We will soon be in a leisure economy and 'jobs' will be something completely different. It'll be about helping people waste time/kill time rather than producing something of value. As we advance, we are moving to a scenario where there just isn't that much work to do. Leisure time is increasing more and more. More and more 'work' is becoming automated or being done by robots or algorithms. People just aren't needed in lots of places. If wealth was distributed equitably or even a little inequitably, then it would mean that most people could just take time off and spend their money on entertainment. You could argue this is already a big trend with movies, video games, devices that aren't necessary, etc. taking up more and more time. Since wealth is very inequitably distributed - it leads to lots of people being left in a leisure economy with very little money. These people 'need' jobs even though the economy itself doesn't have 'jobs'. The net is that we have technology doing this -> A small percentage are taking up most of the money and lots of people need jobs for money even though the economy doesn't really have jobs left for them. They will be forced to adapt to become entertainers/time waste-helpers rather than productive workers. instead of this -> People need to work less and wealth is reasonably distributed and people can do what they want without worrying about money.
jgmmo 15y ago
This is a classic economic fallacy. Invention of the plow improved efficiency and killed jobs, invention of the sewing machine improved efficiency and killed jobs, invention of the computer improved efficiency and killed jobs. They killed jobs in the short run but they made everyone in society better off on the whole. Sure, some workers had to be retrained -- and some workers could never find a job again. However such is progress. We are better off now because the next generation doesn't have to all be farmers, some can do this or that. It is a good thing when we require less humans to do the same amount of work than before. It means we free up human capital for more valuable uses. Because of the advancements in technology their children will have jobs that never could have existed if we still needed 90% of our population to farm just so that we would not starve. Now like 1% of our population is farmers. It's progress. Read: 'The Choice' by Russell Roberts Read: 'Economic Facts and Fallacies' by Thomas Sowell Read: 'Economics in One Lesson' by Henry Hazlitt
- prodigal_erik 15y ago
  I agree it's a long-term improvement, but if "some workers could never find a job again" happens to the majority all at once, they aren't going to quietly starve.
  - jgmmo 15y ago
    Anyone who is willing and able to transition to another way of earning a living, will. The majority of workers being replaced are not unwilling to find a new way earn a living, it's only the very old and the very stubborn that will have a difficult time finding their career 2.0
    - prodigal_erik 15y ago
      But earning a living doing what? I think that's why we're all having this conversation. If I got laid off today because someone finally wrote the ultimate software development AI, I have no idea what I would do instead. This seems to be one of the only career paths left with substantial unmet demand momentarily sheltering me from the Iron Law of Wages, and I lucked out in being obsessed with it.
achompas 15y ago
Don’t fill potholes. That won’t fix the economy. Uh, yes. Yes it will. The workers that fill those potholes will earn wages, which they can then use to pay for goods. By purchasing those goods, they pay other workers' wages, and the virtuous cycle continues. Listen HN, I love your knowledge of technology and entrepreneurship. But the economics posts on here are deplorable. We've seen disruptive technologies many times before: the cotton gin, the television, steam power, the car. In every one of those instances, our work force has adapted and moved into new jobs. The Internet is not some all-consuming monster; it cannot universally substitute for real goods; it will not replace jobs that need to happen in person.
- moe 15y ago
  it will not replace jobs that need to happen in person. I think we'll soon see robots take many of those jobs. And yes, I'm frequently ridiculed for that opinion. But I really think it will happen during my (late) lifetime.
- JeffL 15y ago
  Don't fall for the broken window fallacy. If the government wasn't taking money from people via taxation to pay for pothole fillers, then the taxpayers would have their money to spend on what they really want, which would also maintain the virtuous cycle. What you see is the pothole fillers spending money, but what you don't see is all the people who had their money taxed spending less. (If the taxpayers weren't spending their money, it would be in banks being loaned out to other people who would be spending it.) If what you're talking about is Keynesian government stimulating the economy in bad times by going into debt, that could also be accomplished by cutting taxes rather than borrowing to pay pothole fillers.
  - clarkevans 15y ago
    Well, yes, instead of having potholes fixed, we'd be repairing the frame of our cars instead, at much much higher cost (and not doing other things). Further, pothole fillers end up employing lots of different kinds of people than a millionaire would. Finally, banks tend to loan to people with money... they don't typically loan to those who don't have money; it's not a zero-sum game.
hristov 15y ago
I disagree. Technology does not kill jobs in manufacturing or services. It does in farming. But in manufacturing, and services more technology merely means that people get more stuff. People buy more clothes more gadgets, more of everything. Or if they buy the same amount of gadgets their gadgets are more complex, etc. Thus, when technology results in higher production it is usually matched with higher consumption. There are two things that are killing jobs in the US right now: the export of jobs offshore, and poverty. The US economy is actually creating shitloads of jobs, the problem is that we are creating them in China. China is still doing monetary tightening to slow down its growth. http://www.bbc.co.uk/news/business-14117778 http://www.bbc.co.uk/news/business-14117778 The other thing is poverty. Since the new deal the US has usually had some kind of mechanism to ensure that the middle and lower middle class is relatively protected and relatively well off. This included unions, minimum wage legislation, and various government programs. Nowadays most of these things are being eroded. This means that people cannot buy more stuff, which means that there are fewer jobs, which means people buy even fewer stuff, which results in even fewer jobs, etc. To determine whether technology is killing jobs, you can ask yourself the following hypothetical question: Does everybody in the world have every manufactured good or service they could possibly want? If the answer is true, then technology has killed all hope of future economic growth. But the answer is sooo far away from being true, that the question itself sounds ridiculous. So no it is not technology. It is something else in the way our society is ordered and run that is doing it.
caffeine5150 15y ago
Three things stand out in my mind as to what's making job recovery so challenging in the wake of the 2008 crisis: 1. Unlike e.g. the tech crash of 2000, 2008 was a crisis of credit, the lifeblood of all other industries. Their cautiousness in beginning to lend again will make recovery and therefore jobs growth extra long. 2. The 2008 crisis forced companies to find new efficiencies. Whole layers of middle management were eliminated in many cases without any downside and remaining employees were fine working harder to keep their jobs. Those 'unnecessary' excess positions take a long time to come back. It will require companies to feel flush and to get lax on this again. 3. I think most importantly, our economy largely comes down to consumer spending and the housing bubble didn't just drive inflated housing prices; it also enabled home equity lines of credit to buy boats, etc. Coupled with loose credit card lending standards, our economy was built upon unsustainable growth in consumer credit. I don't know when such a consumer credit environment will come back, but again, it will have to be preceded by a sort of boom in the economy. I agree that 'technology efficiency' etc. are not helping, but the heart of it are 1, 2 & 3 above.
dpatru 15y ago
The reason why America doesn't have more good jobs is that America is no longer the preferred place to run capital-intensive businesses that can employ large numbers of semi-skilled workers at high wages. For a large part of the 20th century, America was the best place to locate high-tech factories. Cadillacs were built in Detroit. Now Apple iphones are built in Shenzhen. The Americans that 40 years ago would be engaged in building and running factories employing hundreds and thousands of semi-skilled workers (requiring millions of dollars of capital), are now employing tens of high-skilled workers (requiring thousands of dollars of capital.) In short, the capital per entrepreneur ratio in America has dropped. As a result, entrepreneurs are employing fewer people.
stretchwithme 15y ago
Technology is essential to economic growth. When you accomplish a task with fewer resources and less labor, you have extra resources. You can take those extra resources and spend it on something else or lend it to someone else to spend on something else. There is no loss of jobs over all. The jobs have just moved. This is a process that has been going on forever. And its responsible for the high standard of living enjoyed by industrialized societies. Its only because of technology and the capital it has created that enable workers to get high wages. If wages didn't rise, workers would have a strong incentive to compete with their employers. They can borrow money and buy the same technology. This is exactly what goes on in Silicon Valley. And everywhere else in the world. The current dearth of jobs in many fields is the result of the collapse of the housing bubble and government policies that impair recovery, not being able to do more with less.
MarkMc 15y ago
Warren Buffett knows a thing or two about the outlook for jobs. Here's what he said on July 8, 2011: “We will come back big time on employment when residential construction comes back...it's not going to be 5 years from now...you will be surprised in my view how fast employment changes when that happens...I think in a few years we'll see unemployment at 6%" Full interview here: http://www.bloomberg.com/video/72140684/ http://www.bloomberg.com/video/72140684/
MarkMc 15y ago
It will be interesting to revisit this article in 5 years...let me get out my Google Calendar...
rberger 15y ago
Is this a bug or a feature? Shouldn't we be figuring out how to embrace this? Isn't this an symptom that the abundent future is arriving, but not evenly distributed? Is it not time to start figuring out how to create the vocabulary and institutions of modulating abundance instead of maintaining 19th Century institutions whose main purpose was to modulate scarcity? The fact that "Finance" is now over 30% of the US GDP shows a major bug in the current set of institutions. That is where abundance is being dampened into wasted wealth for 0.1% of the population who are using it to maintain artificial scarcity. It needs to flow to help fund creativity, R&D, experiments that will blow the doors off of scarcity and allow abundance to be well, abundant. And most people don't want JOBS, they want to live. But most of us have forgotten that and thus we keep trying for 100% employment when we should be working towards 100% UNemployment aka Living Life.
viandante 15y ago
I think you guys are missing the point. The point is not that people are jobless, the point is that what they would get paid if they worked is just too low for a decent life. At the correct price (even 1 cent per hr), everybody gets a job fast. Given that, the real problem is for the jobless to learn something of more value to the economy or accept lower salaries, it is not technology. If there was no technology development, things will be more expensive and the poor would be even more poor.
scotty79 15y ago
Are inmates counted as unemployed? I think technology slowly obsoletes economy. Pushes it towards more and more superficial exchanges and dissassociates price and value. Since society is built on economy it finds out clever ways to no longer valid equation work = wealth Young black people are missing jobs? Criminalise the thing they do and put them in jail. They are no longrt missing jobs an a handful of people might be hired to build and upkeep facilties where they are held. There are a lot of such mechanisms that suck excess of available human work.
jcslzr 15y ago
Yes, why? because NOBODY has enough money anymore. Think about the Ford Mustang, as my understanding it was the first sports car and is relatively new. What does it mean? it means before the mustang it did not matter how much money you had, you drive the same car as everybody else. Warren Buffet partner, dont recall his name now, has it right:"People will do a lot of things to be loved but will do Anything so other envy them" In other words marketing has achieved a society that is on an envy war, when everybody is looking for ways to save money, so they can spend it in more shinny things, that means jobs are going to be just enough to produce whatever is going to be sold. I live in Mexico, and from here what I see is that the USA is becoming Mexico, when I was hoping for the other way around.
robkinyon 15y ago
I replied to this at https://plus.google.com/116040034931930295896/posts/cwbtbquKRNY https://plus.google.com/116040034931930295896/posts/cwbtbquK...
antoinehersen 15y ago
"The Great Stagnation" from Tyler Cowen of Marginal Revolution, is a long essay that address this issues from an economist point of view. A wonderful read. http://marginalrevolution.com/marginalrevolution/2011/01/the-great-stagnation.html http://marginalrevolution.com/marginalrevolution/2011/01/the...
mvs 15y ago
How Technology is Recreating the 21st-century Economy http://www.parc.com/event/1499/how-technology-is-recreating-the-21st-century-economy.html http://www.parc.com/event/1499/how-technology-is-recreating-...
JDulin 15y ago
Although the world population has more than doubled from the middle of the twentieth century, technology has doubled many times more, and continues to at a much faster rate than our rate of consumption and reproduction. This exponential increase means that is only a matter of time until the efficiency of technology overtakes the amount of jobs that a society needs to produce more than it needs. Technology will net kill jobs someday if it isn't already. It remains to be seen whether that is happening now, or if this unemployment is just the symptom of a country that has borrowed too much.

275 points by yarapavan 15y ago

dreamdu5t 15y ago

LoL Don't fill the potholes? Who the fuck fills them then!?

nostrademons 15y ago
Self-driving dumptrucks.
mcphilip 15y ago
KFC, of course. http://www.inquisitr.com/20827/nobody-does-potholes-like-kfc/ http://www.inquisitr.com/20827/nobody-does-potholes-like-kfc...
- dreamdu5t 15y ago
  So that's what the Ann Rand utopia looks like...
dreamdu5t 15y ago
Downvoted because my post is snarky? My point is factually valid. Public works DO create jobs, it's an empirical fact. Just because the OP hates the idea doesn't mean public works don't create jobs. Maybe he thinks UPS should fill the potholes, but either way, the only way to fill them is to hire people to fill them, whether the government or private business does it doesn't change the fact that someone was hired to do it.
- bprater 15y ago
  Downvoted because it's not the kind of humor we prefer here. We enjoy well-thought out intellectual debate. You final paragraph here is what you should have posted initially -- it has substance.
- ken_railey 15y ago
  Public works also destroy jobs, since the wealth to fund them has to first be extracted from the public.
  - dreamdu5t 15y ago
    Sure. That doesn't change the fact that they create them.
  - thisuser 15y ago
    There is no evidence that lowering tax rates creates jobs.
- jerf 15y ago
  "Public works DO create jobs, it's an empirical fact." No it's not. Sometimes it does, sometimes it doesn't. It's never that simple. Along with the obvious broken window fallacy problems, you have to look at how you are paying for that public work. Taxing a net two median-pay jobs out of existence to create a single public works median-pay job is destroying a job, not creating one.
  - dreamdu5t 15y ago
    The definition of "public works" is building things using State money. There is no way to build roads without hiring people. This is an empirical fact. Unless you know of some way to maintain or build streets without hiring people? Again, it is an empirical fact that public works create jobs. At least public works that require hiring people. It's not hard to understand. Work needing to be done creates jobs, whether that is financed by the government or private industry doesn't change the fact that the work needing to be done requires employment. You can debate until the cows come home about whether specific public works are worth the money, but you can't debate whether or not they create jobs. Its a simple observational fact. Especially when the vast majority of public works require manual labor.
    - reinhardt 15y ago
      You clearly missed the GP's point and the reference to the broken window fallacy: http://lmgtfy.com/?q=broken+window http://lmgtfy.com/?q=broken+window
      - dreamdu5t 15y ago
        No, I didn't. Maintaining infrastructure isn't breaking windows! Public works is not the equivalent of a glass-maker breaking the baker's window. It's the equivalent of hiring people to maintain the roads that allow the glass maker to get to the baker, but instead of the glass-maker paying for the road the baker and glass-maker distribute the cost through taxation. It's intellectually dishonest to even compare highway maintenance with breaking windows to create a job for yourself.
    - 15y ago

_delirium 15y ago

While this is not necessarily untrue, the prediction has been made a few times before, most notably during the early-20th-century wave of automation. Even the rather intelligent Bertrand Russell wrote a book in 1923, "The Prospects of Industrial Civilization", which spent a good deal of time worrying about that problem (though some of the other stuff he worried about did come closer to being true, like the prevalence of hyper-regimented work among the remaining jobs).

ojbyrne 15y ago
So one of the interesting perspectives I ran across recently said basically that "industrialization destroyed a whole class of jobs leaving millions of workers with no further economic role ever. But those workers were horses."
- queensnake 15y ago
  ... and which way do you take that; that, because we're not horses, we're ok? Or, that horse-skilled people can indeed be left out forever? (It's possible; see this on the US' Supplemental Security Income (SSI): http://thelastpsychiatrist.com/2010/11/the_terrible_awful_truth_about_1.html http://thelastpsychiatrist.com/2010/11/the_terrible_awful_tr...)
  - ojbyrne 15y ago
    The latter basically. Technology wiped out the work of horses, so there's no reason it can't move up the "skills ladder" and wipe out more skilled employees.
- scarmig 15y ago
  Very interesting. Are you suggesting horses play the part of Tyler Cowen's Zero Marginal Product workers in the Industrial Revolution? http://marginalrevolution.com/marginalrevolution/2010/07/zero-marginal-product-workers.html http://marginalrevolution.com/marginalrevolution/2010/07/zer... Also, if you remember where you saw that point specifically, I'd love to read it.
15y ago

ikarous 15y ago

Plenty of others have predicted the rise of unemployment in proportion to increased automation, and they've been wrong before. Maybe this time they'll be right. I don't know; I'm not economist nor do I possess a crystal ball. What I do know is that this whole situation is terribly discouraging for young people fresh out of school. My partner, for instance, recently graduated with a degree in civil engineering from a very challenging private school. He's been unable to find work as a starting engineer after a six month search, and I'm frankly out of ideas on how to keep him optimistic. Add to all this that his dad, a senior electrical engineer, just got laid off, and any encouraging words I say start to sound very hollow indeed. I fear that this high unemployment rate, temporary or not, is going to create a generation of career setbacks and failures to launch. A lot of people out there have it much worse, I know, but I still don't know what to say when this hard working young man can't even get responses back for internships and unpaid work.

civilian 15y ago
That sucks. I graduated in 2009 with a degree in Biochemistry, I fought for 7 months to get a job-- and when I did, I was laid off pretty quickly. I wish that I had watched this when I first started job hunting: http://tedxcmu.com/videos/charlie-hoehn http://tedxcmu.com/videos/charlie-hoehn I think his plan is good. The job hunt is dumb, demoralizing, and at the end of the day you aren't really making anything. Your partner should learn something! (Maybe learn programming? There's lots of jobs in that-- that's what I switched to.) At the very least he should continue doing civil engineering projects on his own. Boost his portfolio. (oh, also, my dad is an economist and he has a crystal ball. Best gag gift for an economist!)
- chubs 15y ago
  I just watched that video. It's brilliant! I'm going to force my sister to watch it now :) Thanks so much for sharing the link
petercooper 15y ago
Plenty of others have predicted the rise of unemployment in proportion to increased automation, and they've been wrong before. Have they? In the long term, definitely, but in the short term, a sharp increase in automation is sure to have an effect on the amount of human labor required. Isn't a normal cycle that technology begins to replace workers but then those workers retrain and then get new types of jobs and recover their employability? It seems we're currently doing a poor job training existing workers and future workers, if anything.

ChristianMarks 15y ago

The OP's post could use some context. Ricardo’s concept of comparative advantage was forged in a world where labor and capital were essentially fixed. England could weave cloth more efficiently than Spain, but Spain could make wine more efficiently than England. Therefore, they would both benefit from trade given that each of these countries had a comparative benefit or efficiency to offer. The assumption under comparative advantage is, while the composition of employment would change under trade (more weavers employed in England and more wine makers in Spain), the level of employment would stay virtually the same. Meanwhile the citizens of England would get cheaper wine and the Spanish cheaper cloth. In today’s world, labor and capital are not fixed. Capital flows wherever the input costs are the cheapest, such as labor and materials. Companies can set up operations in many places around the world. For instance, an American multinational no longer has to produce in the country where it sells, given existing trade treaties that lower tariffs. They can shift production to China or Mexico where the labor costs are a fraction of what it is in the U.S. and not be penalized by tariffs or quotas. In effect workers get fired in the U.S.; this leads to a loss of income for the working and middle classes. The workers in Mexico and China benefit because they have jobs, albeit at low wage rates and substandard conditions in many cases. Contrary to received wisdom, prices for some products might be lower, but not significantly so. The difference in wages (from those in the developed world versus the developing world) goes to investors, or more accurately these days, management. This is trade by absolute advantage, not comparative advantage. For a while GDP growth seems to be fine. But with production set up abroad, the U.S. runs trade deficits and Americans by definition incur more debt to buy these goods. NAFTA encourages this. As a member of the WTO, China benefits from this trade agreement in that its goods are levied with lower tariffs than would otherwise be the case. Moreover, China manipulates its currency to keep it artificially low. Under a reciprocal trade regimen, the currency of a country that exports more than it imports should rise. A rising currency would act as a braking system to bring trade flows back into equilibrium. But the U.S. and China do not want that. China needs to keep selling goods to the world to continue growing fast enough to generate enough jobs. Despite its protests from time to time, the U.S. government does not want this because it is captured by the multinationals, which make much more money not employing Americans (or Europeans for that matter). So when media pundits and approved economists say they are puzzled by the lack of employment growth, it is theatre, a necessary piece of kabuki to keep their jobs as propagandists. Free trade under a truly Ricardian model of comparative advantage is theoretically beneficial to the world because at its heart lies the assumption of full employment. Instead what is touted as free trade is not Ricardian; it is a model of absolute advantage that ensures that the wages of labor are depressed, thereby enabling the rise in income for the top 1%. The problem for the elites is that these are not sustainable political or economic policies because eventually unemployment will reach unacceptable levels and the right leader will come along and tell the real story to the American people. As long as the political power of the middle and working classes has been undermined and blunted, U.S. multinationals will not hire Americans if they can offshore production. Therefore, people need to be organized to buy goods and services from small businesses whose interests are more aligned with that of the nation. Also, Wall Street should be boycotted. Do not do business with big banks. (I belong to a credit union.) Invest in regional financial institutions. Wall Street, because of its power over Washington, has been able to push through unfair trade bills in exchange for the right to set up shop in those foreign countries that benefit from access to American markets. But it is a one-sided deal in practice. U.S. access to foreign markets translates to this: multinationals offshore production and export to the U.S. at low or nonexistent tariffs. If you want access to Chinese markets you must manufacture and hire people in China. Also, you must share your intellectual property with local firms. Multinationals accept this as the cost of doing business in China, although the real cost is being borne by the working and middle classes in this country. Unless there is a substantial reversal in these policies, expect many years of sub par economic growth and high unemployment in the U.S. So why should anyone be surprised when the U.S. GDP growth rate for the second quarter is dismal? Unless of course, they are paid to be surprised.

bsaunder 15y ago

If government wants to create jobs, they need to encourage businesses to create new value (by paying them to create that value). Employers will then hire people to create the value (and pay them (after skimming enough profit off the top to make it worth the effort)). The problem is, of course this requires the government to spend more (not less) which seems strongly against the current momentum. I'd suggest the modern version of the Depression era work programs and/or the 60s space race. Perhaps something launching a major technological leap in robotics (which ironically would exacerbate our job "problem").

michaeldhopkins 15y ago
Well, it's against the momentum because to okay such expenses, a culture must be created which okays many, many other expenses, and right now they are a bit of a threat to our being able to maintain current value-encouragement programs, let alone add new ones. I don't think that centralizing the value creation incentive engine was good anyway, but now it's barely possible.

rweba 15y ago

Perhaps this will prompt a substantial reorganization of society. Ideas like the http://en.wikipedia.org/wiki/Basic_income_guarantee http://en.wikipedia.org/wiki/Basic_income_guarantee might actually gain traction. Marshall Brain's novel http://www.marshallbrain.com/manna1.htm http://www.marshallbrain.com/manna1.htm is one recent exploration of similar ideas. But personally I'm sceptical if this will actually happen in the near future. As long as we don't have "Strong-AI" there are many jobs only humans can do well and a lot of those jobs don't require extensive education (nanny, nursing home attendant, customer service etc.)

scythe 15y ago

The argument, then, is that our ability to produce will outstrip our desire to consume, and so a fraction of people will be able to produce enough things for everyone to consume, which will lead to the rest not having jobs. The problem with the argument is that it does not really appear to me that our ability to produce has outstripped our desire to consume. The buying of things is currently rather high, and product shortages are not entirely uncommon. Rather, people cannot get paid a first-world living wage to produce the things we desire to consume, or they do not have the skills required to produce those things, etc. Somewhat related: are most other countries currently suffering high unemployment, or just America? If the answer is 'no', that seems to contradict the thesis of the article.

Volpe 15y ago
Australia has record low unemployment, and consistent growth since the GFC. (Largely due to the resources boom driven by china) N.B Australia's whole economy is worth about the same as the U.S's debt.
Someone 15y ago
The US is somewhat of an outlier; it moved from 'top of class' to 'comparable to the EU as a whole' in a few years (http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Unemployment_statistics http://epp.eurostat.ec.europa.eu/statistics_explained/index...., figure 3)

mdasen 15y ago

Do you have everything you want in life? I don't just mean, "do you have everything you want of what you could purchase with money today?" I mean everything you could want. Articles like this one make me feel like there isn't a lot left to do in the world - that we're close to stopping our progress toward better living standards. If we are stopping or slowing our progress toward higher living standards, then yes efficiencies do kill jobs. I don't see a jobless future. I see a future with a different mix of jobs. To be fair, the author does touch upon this a little as s/he is encouraging investment toward new industries. However, I don't share the author's sense that these new industries and new economies will definitionally employ fewer people. Automation and efficiencies have been seen since the industrial revolution. Two centuries in, all this automation doesn't seem to have driven unemployment to a skyward trend over the long run. If we were pursuing a finite goal, greater efficiency would mean that we would need less labor. However, I don't believe that our quest for better lives is a finite goal. People are always talking about things they wished existed or things they wished they had. That sounds shallow, but I don't just mean commodities; I also mean medical treatments. As labor becomes freed from current tasks, it can be put toward other uses. That doesn't mean it will be easy, but I think we're going to continue raising our standard of living and creating a better world. And that will require labor.

dreamdu5t 15y ago
While I agree with you, history also shows that unemployment and wealth disparity often do rise high enough to cause massive civil unrest. Yes, high unemployment isn't permanent or a long-term trend. That isn't really relevant though when you're talking about the prospect of blood in the streets prior to returning to decent levels. The US seems completely arrogant in the sense that they don't seem to think this can happen to them, or that their military superiority somehow insulates them from civil unrest.
- tsotha 15y ago
  Or maybe it's not wealth disparity that causes civil unrest, but rather the absolute level of poverty on the low end. Here in the US there's no sign of any kind of generalized unrest. Far less than there was in the 70s when, according to the "disparity causes unrest" theory there should have been even less.

pg 15y ago

"Our new economy is shrinking because technology leads to efficiency over growth." Anyone who wants to make the claim that technology is net killing jobs has to be prepared to answer the question: why now? Technology has been killing (but not net killing) jobs for centuries. It's possible that technology could start to net kill jobs. But why now, when it hasn't in the past?

AdamTReineke 15y ago
Haven't we finally reached the point where all the discoveries of the Industrial Age and Information Age are coming together to enable companies to produce goods as efficiently as humanly possible? And won't advances in AI and robotics enable us to push beyond those human limits? I'd say that it hasn't in the past because up until 60 years ago, humans were the decision makers doing everything.
- tsotha 15y ago
  So what's the big technological difference between this year and, say, four years ago? Why was unemployment below 5% then?
  - AdamTReineke 15y ago
    I suppose my argument wouldn't hold if you look at just 4 years, but I think it would if you look over a few centuries, as pg noted.
  - ajross 15y ago
    There was a speculative bubble in the world real estate market. This led to a lot of real cash circulating (e.g. people refinancing to pay for kitchen remodels so that they can flip their home). That popped, and all the excess economic activity disappeared with it. The article posits a broad trend. Short term boom and bust fluctuations will always happen.
    - tsotha 15y ago

georgieporgie 15y ago

"Don’t fill potholes. That won’t fix the economy." I'm not certain of the author's intent, but the one and only way that government can actually create jobs is to improve infrastructure. A better transportation network built today will have payoffs 20 years down the line. Unfortunately, it's hard to build a political career on such long-term goals. One of my favorite Planet Money episodes deals with this: http://www.npr.org/blogs/money/2011/04/05/135151990/the-tuesday-podcast-how-do-you-create-a-job http://www.npr.org/blogs/money/2011/04/05/135151990/the-tues...

AdamTReineke 15y ago
I read it more as a metaphorical pothole, like just patching small holes instead of fixing bigger problems.
frankus 15y ago
Not only that, but with strongly negative real interest rates, it can borrow money to pay people to fill potholes today for less than it would cost to wait. In fact, it's better than that: - That calculation doesn't include the savings in reduced wear and lack of deferred maintenance. - Construction labor is now much cheaper than it would be at full employment. - Growing consumption now would more than pay for itself in taxes from an averted "lost decade." Unfortunately the folks in Washington are still worried about 3% inflation and how interest rates are going to spike any day now. So we end up with spending cuts that will almost certainly worsen the deficit over a do-nothing approach.

InclinedPlane 15y ago

Is Meta: let me provide some reasons why this bubble/downturn unlike all previous ones and will last forever.

deleted 15y ago

[deleted]

lukifer 15y ago

I've noticed this trend, and it's greatly concerning. There are plenty of downsides to wage slavery, but overall there has been a historical improvement to human dignity and quality of life due to people being useful as units of production. As technology diminishes this and there are fewer roles that need to be fulfilled by actual humans, people will be forced to viciously compete over fewer and fewer jobs to stay out of abject poverty. So-called "knowledge work" isn't safe either, as these jobs gradually get gobbled up by software and specialized AI algorithms. Maybe the unemployed will be able to invent new jobs for themselves to create more wealth; maybe technology advances will make a welfare state trivially cheap to maintain. But I think the prospects for mass poverty are very real.

dstein 15y ago

Fixing the economy will require more than entrepreneurs. I think it will ultimately require major socio-economic reform, possibly a conversion to Technocracy. Technology isn't just eliminating jobs, it's eliminating trade altogether. I can replace my watch with a smartphone app. That means the watchmaker, supply chain, retail store, and clocksmith are all out of business. And 3D printers could be the next mega-disruptive technology. What happens to manufacturing of all kinds when we have Star Trek style repicators in our basements? I'm just not convinced that entrepreneurship alone can combat the major macroeconomic changes that are coming.

patrickk 15y ago
"I can replace my watch with a smartphone app. That means the watchmaker, supply chain, retail store, and clocksmith are all out of business." I work as an iOS app developer, a role which didn't exist just three years ago. There are millions of developers out there on the various smartphone platforms, a market that Apple spawned after seeing what hackers could do by jailbreaking iDevices and loading apps on the iPhone without "permission". I wouldn't have a job now if I weren't for the iPhone (I live over 5000 miles from Cupertino) and there are many like me all around the world. Meanwhile, I can't think of a single watchmaker that has gone out of business.
- wallflower 15y ago
  > I work as an iOS app developer, a role which didn't exist just three years ago. I respectably counter your statement with the idea that the job category existed, just not the platform specialization. > I wouldn't have a job now if I weren't for the iPhone You could have been able to find a job. What was your background before iOS development? (or was iOS development your first job) I'm not trying to disprove the fact that your source of income is iOS specialization. If you are indeed making the majority of your revenue from your own apps, big congratulations! My point is even though Apple created a tremendous ecosystem for independent developers, it may be a less than net zero gain (e.g. jobs in Visual Basic programming were lost and either there are much less new jobs in the new ecosystem and/or previously gainfully employed developers are unable to develop iOS competency and proficiency (no mean feat).

rmason 15y ago

I am an optimist. It helps that I have seen this cycle before in the late seventies. People spoke then of the new normal and that's a phrase that is trending once again. I spent my early youth in the newsroom and the tools I used everyday have become a trip back in a time machine for todays students: http://journoterrorist.com/2011/08/02/paperball2/ http://journoterrorist.com/2011/08/02/paperball2/ Technology and entrepreneurs will bail us out once again. Lots of fortunes have been wagered and lost betting against America.

rimmjob 15y ago

everyone should just become a computer scientist. problem solved

alphaBetaGamma 15y ago

The lack of pickup in employment numbers is not surprising when viewed in an historical context. There is very broad historical overview of sovereign crisis in “This Time Is Different”, by Reinhart and Rogoff, which also includes banking crisis. Looking at what I can find on Google books (I don’t have the book here), we have that historically the unemployment rate rises an average of %7 and that this lasts 4 years. Output falls more than 9 percent, but that down turn only lasts 2 years. So yes, a jobless recovery is what we should expect. From their summary on pp. 224 [1] that on average: - Housing prices decline %35 over 6 years. - Equity collapses %56 over about 3.5 years - Unemployment rises %7; down phases lasts 4 years - Output falls %9, downturn lasts 2 years. - Government debt rises %86. The main cause is not the bailout but from the collapse in tax revenues. - Frequent spike in government borrowing rates. So I would say we are not living anything unexpected. [1] http://books.google.com/books?id=Iihe6s0XincC&lpg=PP1&dq=this%20time%20is%20different&pg=PA225#v=onepage&q=unemployment%20&f=false http://books.google.com/books?id=Iihe6s0XincC&lpg=PP1&#3...

antidaily 15y ago

I can't help but wonder what our unemployment numbers would look like without housing crisis and the two wars. Would we be investing in things like energy, healthcare, and tech? People are sitting on cash because of uncertainties in the markets, not because tech killed all the jobs.

sshumaker 15y ago

The middle class is going away. And not coming back. All of those factory and middle management jobs are being replaced by cheaper labor in the one case (offshore or robotics) or by technological and communication efficiencies on the other. A prediction: Twenty years from now, there will only be two types of jobs in the United States: Creatives and those in the Service Industry. Creatives - anyone who creates things with their mind. Artists, yes, but also programmers, designers (graphic/web/product), musicians, directors, etc. The US won't necessarily have a monopoly in this department, but there's enough cultural barriers in many of these fields that it's likely we'll still have a very healthy presence there, at least for selling to the Western world. Everyone else will be in the service industry - and I'm referring to service jobs that cannot be outsourced, because they require someone local. Waiters, barbers, chefs, trainers, couriers. Nurses and caregivers. And lots of service jobs that don't exist today. Need someone to help assemble the product you just downloaded and 3d printed? The only jobs that will remain are the ones that we can't outsource to robots or cheap labor.

pessimizer 15y ago
The US imports a lot of its creatives, and a majority of its creatives when it comes to math and science. If capital moves somewhere else, creatives will move somewhere else.

chefsurfing 15y ago

In my opinion John Michael Greer's "The Long Descent" is the most realistic and most hopeful take on this vein of thinking and writing. It is also a well-written and easy to read book. The main takeaway is that our situation is not a problem with a solution, but rather a predicament or situation with various coping mechanisms. http://www.newsociety.com/Books/L/The-Long-Descent http://www.newsociety.com/Books/L/The-Long-Descent

chefsurfing 15y ago
However I should point out that JMG points to different root causes of "decline". His core thesis is that Peak Oil and net-energy / net-resource growth not meeting demand are the main determining factors in our shrinking economy. His hopeful response to this scenario is that although there will be far fewer jobs, there will be much more work.

ecounysis 15y ago

The onus is on individuals to add value to society. Don't sit around and wait for a job. Create your own job. There is not a shortage of jobs there is a shortage of entrepreneurs and go-getters.

exit 15y ago
aw shucks

switch 15y ago

Here's a different way to look at it. We will soon be in a leisure economy and 'jobs' will be something completely different. It'll be about helping people waste time/kill time rather than producing something of value. As we advance, we are moving to a scenario where there just isn't that much work to do. Leisure time is increasing more and more. More and more 'work' is becoming automated or being done by robots or algorithms. People just aren't needed in lots of places. If wealth was distributed equitably or even a little inequitably, then it would mean that most people could just take time off and spend their money on entertainment. You could argue this is already a big trend with movies, video games, devices that aren't necessary, etc. taking up more and more time. Since wealth is very inequitably distributed - it leads to lots of people being left in a leisure economy with very little money. These people 'need' jobs even though the economy itself doesn't have 'jobs'. The net is that we have technology doing this -> A small percentage are taking up most of the money and lots of people need jobs for money even though the economy doesn't really have jobs left for them. They will be forced to adapt to become entertainers/time waste-helpers rather than productive workers. instead of this -> People need to work less and wealth is reasonably distributed and people can do what they want without worrying about money.

jgmmo 15y ago

This is a classic economic fallacy. Invention of the plow improved efficiency and killed jobs, invention of the sewing machine improved efficiency and killed jobs, invention of the computer improved efficiency and killed jobs. They killed jobs in the short run but they made everyone in society better off on the whole. Sure, some workers had to be retrained -- and some workers could never find a job again. However such is progress. We are better off now because the next generation doesn't have to all be farmers, some can do this or that. It is a good thing when we require less humans to do the same amount of work than before. It means we free up human capital for more valuable uses. Because of the advancements in technology their children will have jobs that never could have existed if we still needed 90% of our population to farm just so that we would not starve. Now like 1% of our population is farmers. It's progress. Read: 'The Choice' by Russell Roberts Read: 'Economic Facts and Fallacies' by Thomas Sowell Read: 'Economics in One Lesson' by Henry Hazlitt

prodigal_erik 15y ago
I agree it's a long-term improvement, but if "some workers could never find a job again" happens to the majority all at once, they aren't going to quietly starve.
- jgmmo 15y ago
  Anyone who is willing and able to transition to another way of earning a living, will. The majority of workers being replaced are not unwilling to find a new way earn a living, it's only the very old and the very stubborn that will have a difficult time finding their career 2.0
  - prodigal_erik 15y ago
    But earning a living doing what? I think that's why we're all having this conversation. If I got laid off today because someone finally wrote the ultimate software development AI, I have no idea what I would do instead. This seems to be one of the only career paths left with substantial unmet demand momentarily sheltering me from the Iron Law of Wages, and I lucked out in being obsessed with it.

achompas 15y ago

Don’t fill potholes. That won’t fix the economy. Uh, yes. Yes it will. The workers that fill those potholes will earn wages, which they can then use to pay for goods. By purchasing those goods, they pay other workers' wages, and the virtuous cycle continues. Listen HN, I love your knowledge of technology and entrepreneurship. But the economics posts on here are deplorable. We've seen disruptive technologies many times before: the cotton gin, the television, steam power, the car. In every one of those instances, our work force has adapted and moved into new jobs. The Internet is not some all-consuming monster; it cannot universally substitute for real goods; it will not replace jobs that need to happen in person.

moe 15y ago
it will not replace jobs that need to happen in person. I think we'll soon see robots take many of those jobs. And yes, I'm frequently ridiculed for that opinion. But I really think it will happen during my (late) lifetime.
JeffL 15y ago
Don't fall for the broken window fallacy. If the government wasn't taking money from people via taxation to pay for pothole fillers, then the taxpayers would have their money to spend on what they really want, which would also maintain the virtuous cycle. What you see is the pothole fillers spending money, but what you don't see is all the people who had their money taxed spending less. (If the taxpayers weren't spending their money, it would be in banks being loaned out to other people who would be spending it.) If what you're talking about is Keynesian government stimulating the economy in bad times by going into debt, that could also be accomplished by cutting taxes rather than borrowing to pay pothole fillers.
- clarkevans 15y ago
  Well, yes, instead of having potholes fixed, we'd be repairing the frame of our cars instead, at much much higher cost (and not doing other things). Further, pothole fillers end up employing lots of different kinds of people than a millionaire would. Finally, banks tend to loan to people with money... they don't typically loan to those who don't have money; it's not a zero-sum game.

hristov 15y ago

I disagree. Technology does not kill jobs in manufacturing or services. It does in farming. But in manufacturing, and services more technology merely means that people get more stuff. People buy more clothes more gadgets, more of everything. Or if they buy the same amount of gadgets their gadgets are more complex, etc. Thus, when technology results in higher production it is usually matched with higher consumption. There are two things that are killing jobs in the US right now: the export of jobs offshore, and poverty. The US economy is actually creating shitloads of jobs, the problem is that we are creating them in China. China is still doing monetary tightening to slow down its growth. http://www.bbc.co.uk/news/business-14117778 http://www.bbc.co.uk/news/business-14117778 The other thing is poverty. Since the new deal the US has usually had some kind of mechanism to ensure that the middle and lower middle class is relatively protected and relatively well off. This included unions, minimum wage legislation, and various government programs. Nowadays most of these things are being eroded. This means that people cannot buy more stuff, which means that there are fewer jobs, which means people buy even fewer stuff, which results in even fewer jobs, etc. To determine whether technology is killing jobs, you can ask yourself the following hypothetical question: Does everybody in the world have every manufactured good or service they could possibly want? If the answer is true, then technology has killed all hope of future economic growth. But the answer is sooo far away from being true, that the question itself sounds ridiculous. So no it is not technology. It is something else in the way our society is ordered and run that is doing it.

caffeine5150 15y ago

Three things stand out in my mind as to what's making job recovery so challenging in the wake of the 2008 crisis: 1. Unlike e.g. the tech crash of 2000, 2008 was a crisis of credit, the lifeblood of all other industries. Their cautiousness in beginning to lend again will make recovery and therefore jobs growth extra long. 2. The 2008 crisis forced companies to find new efficiencies. Whole layers of middle management were eliminated in many cases without any downside and remaining employees were fine working harder to keep their jobs. Those 'unnecessary' excess positions take a long time to come back. It will require companies to feel flush and to get lax on this again. 3. I think most importantly, our economy largely comes down to consumer spending and the housing bubble didn't just drive inflated housing prices; it also enabled home equity lines of credit to buy boats, etc. Coupled with loose credit card lending standards, our economy was built upon unsustainable growth in consumer credit. I don't know when such a consumer credit environment will come back, but again, it will have to be preceded by a sort of boom in the economy. I agree that 'technology efficiency' etc. are not helping, but the heart of it are 1, 2 & 3 above.

dpatru 15y ago

The reason why America doesn't have more good jobs is that America is no longer the preferred place to run capital-intensive businesses that can employ large numbers of semi-skilled workers at high wages. For a large part of the 20th century, America was the best place to locate high-tech factories. Cadillacs were built in Detroit. Now Apple iphones are built in Shenzhen. The Americans that 40 years ago would be engaged in building and running factories employing hundreds and thousands of semi-skilled workers (requiring millions of dollars of capital), are now employing tens of high-skilled workers (requiring thousands of dollars of capital.) In short, the capital per entrepreneur ratio in America has dropped. As a result, entrepreneurs are employing fewer people.

stretchwithme 15y ago

Technology is essential to economic growth. When you accomplish a task with fewer resources and less labor, you have extra resources. You can take those extra resources and spend it on something else or lend it to someone else to spend on something else. There is no loss of jobs over all. The jobs have just moved. This is a process that has been going on forever. And its responsible for the high standard of living enjoyed by industrialized societies. Its only because of technology and the capital it has created that enable workers to get high wages. If wages didn't rise, workers would have a strong incentive to compete with their employers. They can borrow money and buy the same technology. This is exactly what goes on in Silicon Valley. And everywhere else in the world. The current dearth of jobs in many fields is the result of the collapse of the housing bubble and government policies that impair recovery, not being able to do more with less.

MarkMc 15y ago

Warren Buffett knows a thing or two about the outlook for jobs. Here's what he said on July 8, 2011: “We will come back big time on employment when residential construction comes back...it's not going to be 5 years from now...you will be surprised in my view how fast employment changes when that happens...I think in a few years we'll see unemployment at 6%" Full interview here: http://www.bloomberg.com/video/72140684/ http://www.bloomberg.com/video/72140684/

MarkMc 15y ago

It will be interesting to revisit this article in 5 years...let me get out my Google Calendar...

rberger 15y ago

Is this a bug or a feature? Shouldn't we be figuring out how to embrace this? Isn't this an symptom that the abundent future is arriving, but not evenly distributed? Is it not time to start figuring out how to create the vocabulary and institutions of modulating abundance instead of maintaining 19th Century institutions whose main purpose was to modulate scarcity? The fact that "Finance" is now over 30% of the US GDP shows a major bug in the current set of institutions. That is where abundance is being dampened into wasted wealth for 0.1% of the population who are using it to maintain artificial scarcity. It needs to flow to help fund creativity, R&D, experiments that will blow the doors off of scarcity and allow abundance to be well, abundant. And most people don't want JOBS, they want to live. But most of us have forgotten that and thus we keep trying for 100% employment when we should be working towards 100% UNemployment aka Living Life.

viandante 15y ago

I think you guys are missing the point. The point is not that people are jobless, the point is that what they would get paid if they worked is just too low for a decent life. At the correct price (even 1 cent per hr), everybody gets a job fast. Given that, the real problem is for the jobless to learn something of more value to the economy or accept lower salaries, it is not technology. If there was no technology development, things will be more expensive and the poor would be even more poor.

scotty79 15y ago

Are inmates counted as unemployed? I think technology slowly obsoletes economy. Pushes it towards more and more superficial exchanges and dissassociates price and value. Since society is built on economy it finds out clever ways to no longer valid equation work = wealth Young black people are missing jobs? Criminalise the thing they do and put them in jail. They are no longrt missing jobs an a handful of people might be hired to build and upkeep facilties where they are held. There are a lot of such mechanisms that suck excess of available human work.

jcslzr 15y ago

Yes, why? because NOBODY has enough money anymore. Think about the Ford Mustang, as my understanding it was the first sports car and is relatively new. What does it mean? it means before the mustang it did not matter how much money you had, you drive the same car as everybody else. Warren Buffet partner, dont recall his name now, has it right:"People will do a lot of things to be loved but will do Anything so other envy them" In other words marketing has achieved a society that is on an envy war, when everybody is looking for ways to save money, so they can spend it in more shinny things, that means jobs are going to be just enough to produce whatever is going to be sold. I live in Mexico, and from here what I see is that the USA is becoming Mexico, when I was hoping for the other way around.

robkinyon 15y ago

I replied to this at https://plus.google.com/116040034931930295896/posts/cwbtbquKRNY https://plus.google.com/116040034931930295896/posts/cwbtbquK...

antoinehersen 15y ago

"The Great Stagnation" from Tyler Cowen of Marginal Revolution, is a long essay that address this issues from an economist point of view. A wonderful read. http://marginalrevolution.com/marginalrevolution/2011/01/the-great-stagnation.html http://marginalrevolution.com/marginalrevolution/2011/01/the...

mvs 15y ago

How Technology is Recreating the 21st-century Economy http://www.parc.com/event/1499/how-technology-is-recreating-the-21st-century-economy.html http://www.parc.com/event/1499/how-technology-is-recreating-...

JDulin 15y ago

Although the world population has more than doubled from the middle of the twentieth century, technology has doubled many times more, and continues to at a much faster rate than our rate of consumption and reproduction. This exponential increase means that is only a matter of time until the efficiency of technology overtakes the amount of jobs that a society needs to produce more than it needs. Technology will net kill jobs someday if it isn't already. It remains to be seen whether that is happening now, or if this unemployment is just the symptom of a country that has borrowed too much.