3 ms·

Maybe someday I'll write an extensive rebuttal to the idea that jobs will be destroyed by automation and a significant fraction of the populace will be left per

Maybe someday I'll write an extensive rebuttal to the idea that jobs will be destroyed by automation and a significant fraction of the populace will be left permanently unemployable or unable to earn a living. Here are two factors that are important though. First, money has to be spent somewhere, and robots don't have bank accounts. Money saved through reduction of costs due to automation will naturally end up being spent elsewhere. We'll end up with a much different mix of jobs than previously, but overall employment levels will not diminish. This has already happened numerous times even in the last century. Far fewer people are employed in mining and agriculture. Far fewer people are employed in manufacturing. And so on. Jobs change, the economy changes, people adapt. Second, wages for "the lower castes" won't fall or be left behind as much as people imagine. A big reason why being Baumol's cost "disease". Personally I don't view "labor" as a sad, helpless group of unwashed masses a la the "proletariat". I don't think they need to be babied or rescued from the terrifying advance of modernity, I think they need to be empowered to make the adaptions that they've always been capable of. The "labor" of the future that I imagine is a labor of skilled and passionate people, many of them self employed. We're already seeing trends in that direction happening with things like craigslist, etsy, and kickstarter. A considerable amount of growth in the 21st century economy is coming not from "professionals" like software devs but from effectively blue collar folks, people who craft or cook or build or provide services.

mtdewcmu 13y ago
>> First, money has to be spent somewhere Not really. When business owners save money on labor and have no need to reinvest in production, the money goes to corporate profits and gets siphoned off by Wall Street and wealthy investors. They can't spend it all, and it basically accumulates. I have a pet suspicion that all this idle money is what fuels the investment bubbles that we seem to be having more and more of.
- brc 13y ago
  For that to be true, then you have to imagine rich people sitting around on hoards of gold and gems or stuffing cash into mattresses. For a start, the largest groups of investors are pension funds storing aggregate savings of normal workers. For a second, even when companies like Apple hoard cash, it's not just sitting in a Cupertino vault. It is in a bank account, and that bank is then lending the money out for other uses. Your example also assumes that businesses automatically get to keep surplus earnings through cost savings. This may. Be true in some cases but overall will be dictated by the elasticity of the market they are in. Most markets face significant competition, and so most of the benefits of automation flow through to the customers, who then either get a better product for the same price, or the same product for less. This leaves them with more cash to spend on other things, which, coupled with innovation and newly freed resources, as well as surplus capital, creates entirely new businesses and jobs. This cycle has repeated many times over many centuries and is likely to continue unless capital formation, entrepreneurship and market freedom are messed with. Every generation has a quota of Luddites who think that this time things will really turn out for the worse, but he evidence doesn't support that theory.
  - mtdewcmu 13y ago
    Paul Krugman has written at length (exhaustive length) about this. The rich invest money rather than spend it. Investment doesn't automatically create jobs. Jobs are what redistribute money back to a large number of people, who then turn into consumers and spend. The proof that money is being permanently redirected to the rich is the income inequality that's well-documented and increasing. The idea that jobs have come back in the past and history must repeat isn't comforting. It's not simply automatic.
nkoren 13y ago
The data simply doesn't support your claims. > First, money has to be spent somewhere Financial instruments such as derivatives and hedge funds do very little to put money back into the real economy. If they did, then you would not see wealth becoming concentrated in a historically unprecedented way among the upper 0.1%. For your first claim to be true, you'd have to show that this is not occurring, when of course it is. > Second, wages for "the lower castes" won't fall or be left behind as much as people imagine. Since the mid 1970s, in inflation-adjusted terms -- and despite enormous productivity growth -- mean incomes have stagnated and median incomes have fallen. (And note that inflation-adjustment doesn't compensate for the cost of housing or education; if those were included in the calculation then "The lower castes" would already be worse off than at any time since the Depression.) For your second claim to be true, you'd have to show that this has not happened, when of course it has. Note that the decoupling of productivity and wages coincides with the advent of microcomputers and industrial robotics, and job losses have been greatest in the industries which those innovations affected. So the story of technology-driven wage stagnation and unemployment is not some speculative story about the future: it's the story of the developed world's economic development over the last 40 years.
- dualogy 13y ago
  > Financial instruments such as derivatives and hedge funds do very little to put money back into the real economy. If they did, then you would .. see run-away inflation on store shelves before year's end ;) Sounds flip but think about it.. are you really suggesting there's not enough money circulating in the real economy? Are you sure that's what you want? The vast expansion of dollars over the last decades was never a real problem because the new cash largely didn't enter the real economy and ended up abroad or in ultimately arbitrary asset valuations, from stocks to houses to bitcoins to xyz. You want all those dollars to circulate in your local real economy? Think hard and long on this one ;D > Note that the decoupling of productivity and wages coincides with the advent of microcomputers and industrial robotics, and job losses have been greatest in the industries which those innovations affected. So the story of technology-driven wage stagnation and unemployment is not some speculative story about the future: it's the story of the developed world's economic development over the last 40 years. You're right but that all that automation could instead very well also have led to real wealth gains for the masses of people, middle class and low income -- if the wealth tech created hadn't been fully gobbled up by Fed, Wall St. and US Govt. That's my own crazy theory.. ;)

mtdewcmu 13y ago

>> First, money has to be spent somewhere Not really. When business owners save money on labor and have no need to reinvest in production, the money goes to corporate profits and gets siphoned off by Wall Street and wealthy investors. They can't spend it all, and it basically accumulates. I have a pet suspicion that all this idle money is what fuels the investment bubbles that we seem to be having more and more of.

brc 13y ago
For that to be true, then you have to imagine rich people sitting around on hoards of gold and gems or stuffing cash into mattresses. For a start, the largest groups of investors are pension funds storing aggregate savings of normal workers. For a second, even when companies like Apple hoard cash, it's not just sitting in a Cupertino vault. It is in a bank account, and that bank is then lending the money out for other uses. Your example also assumes that businesses automatically get to keep surplus earnings through cost savings. This may. Be true in some cases but overall will be dictated by the elasticity of the market they are in. Most markets face significant competition, and so most of the benefits of automation flow through to the customers, who then either get a better product for the same price, or the same product for less. This leaves them with more cash to spend on other things, which, coupled with innovation and newly freed resources, as well as surplus capital, creates entirely new businesses and jobs. This cycle has repeated many times over many centuries and is likely to continue unless capital formation, entrepreneurship and market freedom are messed with. Every generation has a quota of Luddites who think that this time things will really turn out for the worse, but he evidence doesn't support that theory.
- mtdewcmu 13y ago
  Paul Krugman has written at length (exhaustive length) about this. The rich invest money rather than spend it. Investment doesn't automatically create jobs. Jobs are what redistribute money back to a large number of people, who then turn into consumers and spend. The proof that money is being permanently redirected to the rich is the income inequality that's well-documented and increasing. The idea that jobs have come back in the past and history must repeat isn't comforting. It's not simply automatic.

nkoren 13y ago

The data simply doesn't support your claims. > First, money has to be spent somewhere Financial instruments such as derivatives and hedge funds do very little to put money back into the real economy. If they did, then you would not see wealth becoming concentrated in a historically unprecedented way among the upper 0.1%. For your first claim to be true, you'd have to show that this is not occurring, when of course it is. > Second, wages for "the lower castes" won't fall or be left behind as much as people imagine. Since the mid 1970s, in inflation-adjusted terms -- and despite enormous productivity growth -- mean incomes have stagnated and median incomes have fallen. (And note that inflation-adjustment doesn't compensate for the cost of housing or education; if those were included in the calculation then "The lower castes" would already be worse off than at any time since the Depression.) For your second claim to be true, you'd have to show that this has not happened, when of course it has. Note that the decoupling of productivity and wages coincides with the advent of microcomputers and industrial robotics, and job losses have been greatest in the industries which those innovations affected. So the story of technology-driven wage stagnation and unemployment is not some speculative story about the future: it's the story of the developed world's economic development over the last 40 years.

dualogy 13y ago
> Financial instruments such as derivatives and hedge funds do very little to put money back into the real economy. If they did, then you would .. see run-away inflation on store shelves before year's end ;) Sounds flip but think about it.. are you really suggesting there's not enough money circulating in the real economy? Are you sure that's what you want? The vast expansion of dollars over the last decades was never a real problem because the new cash largely didn't enter the real economy and ended up abroad or in ultimately arbitrary asset valuations, from stocks to houses to bitcoins to xyz. You want all those dollars to circulate in your local real economy? Think hard and long on this one ;D > Note that the decoupling of productivity and wages coincides with the advent of microcomputers and industrial robotics, and job losses have been greatest in the industries which those innovations affected. So the story of technology-driven wage stagnation and unemployment is not some speculative story about the future: it's the story of the developed world's economic development over the last 40 years. You're right but that all that automation could instead very well also have led to real wealth gains for the masses of people, middle class and low income -- if the wealth tech created hadn't been fully gobbled up by Fed, Wall St. and US Govt. That's my own crazy theory.. ;)