8 ms·

The Great Decoupling

66 points by nrao123 11y ago

gambiter 11y ago
> the professors put forth as potential solutions [...] education, infrastructure, entrepreneurship, immigration, and basic research. Couldn't the other solution be less greed on the part of business owners? It seems like the bigger issue is that they just aren't paying their people enough.
- eli_gottlieb 11y ago
  Well, ok, the professors put forth as potential solutions inside the increasingly narrow Overton Window... such and such and so. Actually solving this crisis necessarily involves widening the Overton Window to include things like "strengthen labor in its bargaining position against capital" and "reduce the economic rents charged on land, natural resources, and intellectual 'property'".
- Afforess 11y ago
  >Couldn't the other solution be less greed on the part of business owners? Greed has very little to do with the problem. If one business pays their employees slightly less, and gains an edge over the competition by doing so, it forces their competitors to either adopt the same lowered pay rates, or slowly be defeated in the market. Only one "bad" actor has to be 'greedy' to force the entire market to chase lower wages. Often this can become a self-perpetuating system, driving down wages. It is probably impossible to prevent this sort of behavior. The incentives to avoid chasing lower wages do not exist, or are very weak. Also consider that higher wages increases incentives for businesses to automate labor. Even if you create a higher minimum wage, the pace of automation will increase. The fact of the matter is that the supply of jobs now no longer matches the number of employable people, and the supply will continue to shrink, indefinitely.
  - toomuchtodo 11y ago
    > Only one "bad" actor has to be 'greedy' to force the entire market to chase lower wages. Often this can become a self-perpetuating system, driving down wages. > It is probably impossible to prevent this sort of behavior. > The fact of the matter is that the supply of jobs now no longer matches the number of employable people, and the supply will continue to shrink, indefinitely. Hence why you tax productivity, and provide a strong social safety net with it (we will eventually need to go so far as a basic income, I'm sure of it). This graph from the BLS illustrates where those gains we're taxing come from (hint: software/automation productivity gains). Regulation is the only solution to enable a fair playing field for all, citizens and corporations alike. https://i.imgur.com/E2xd96M.jpg https://i.imgur.com/E2xd96M.jpg
  - beachstartup 11y ago
    this is part of it. however, things are just out-of-whack economically. in my company, we pay our most-senior engineers above-market wages, for a variety of reasons including retention, schedule demands, etc. for example, we pay a senior remote sysadmin in the south/midwest $150k. we are based in southern california where that salary would still be above-market. the truth of the matter is even if we paid him 200 grand, his real income would probably not be as good as it was 30 years ago. our local california engineers can't afford houses+family no matter how much we pay them (within reason - assuming single income). i know people from the previous generation who own multiple houses on what were modest single incomes. something fundamental is driving the cost component of everything through the fucking roof, without a corresponding increase in purchasing power. employers/managers can be only so generous - the dollar just isn't going as far. in other words, the actual purchasing power is accruing at the very very top in an entirely different class of ultra-rich people. small biz owners, middle managers and employees are getting shafted even though everyone is trying their hardest to keep things on an even keel.
    - meatysnapper 11y ago
      What is so expensive? Is it everday goods? Is it property in nice areas (or rent)? I suspect that the move back towards cities has something to do with it.
    - fraserharris 11y ago
      There is little evidence of an unaffordability of everyday expenses (beyond inflation) apart from housing costs. There are three underlying trends driving super-inflation of housing costs are: a) House prices are correlated to what the maximum monthly mortgage a household is willing to pay in a geographic area. For most of developed world, the average household now has two income earners. b) The previous generation benefited greatly from the suburbanization of cities. Cheap land was converted into reasonably priced housing (subsidized by highway expansion). We've reached the point where this cheap land is now so far from the city center that the downsides (commute, job opportunities) exceed the cost savings. c) We are seeing large economic network effects in agglomerating around fewer large metros (ex: NYC, LA, Bay Area, Chicago, Houston, DFW, Atlanta, DC). These metros have not responded with sufficient housing construction or transportation infrastructure despite the continued growth in population.
- mikeash 11y ago
  These are policy ideas, which is to say, actions that might be taken by the government. I can see how the government might provide education, build infrastructure, encourage entrepreneurship, boost immigration, and perform basic research. I don't see how the government could cause less greed on the part of business owners. That may be a solution in the sense that if it happened it would work, but how would you make that happen?
  - jtbigwoo 11y ago
    You'd enact redistributive tax and spending policies and high minimum wages. You'd reduce government spending for corporations. You'd make it difficult to fire workers. You'd make the U.S. more like Europe, basically.
    - eli_gottlieb 11y ago
      Europe has its own problems, despite the many things it does right, because it still entrenches the rent-extraction powers of the elite. In fact, it often does so more than the USA: real-estate often isn't taxed at anything like proportional rates in some European countries, and European laws are often harsher on debtors and bankrupt entrepreneurs than American ones.
    - mikeash 11y ago
      I'd put that in a different category than "less greed." What you're doing is adjusting the consequences of the greed, but not directly adjusting people's emotional states and desires. You might even indirectly adjust the emotion, but to describe what you're actually doing you'd describe it as you have here, not "less greed." It's the difference between describing what you'll do and what you want to happen. Too many people simply state the latter and then declare victory. "Why don't we just solve global warming by producing less CO2?" To me, "less greed" is solidly in that category.
- jerf 11y ago
  In general, at any scale from the personal to the societal, "Just be better!" is not an actionable solution.
- deleted 11y ago
  [deleted]
carsongross 11y ago
One interesting thing that happened in 1971 (right when the income divergence occurred, which I view as the major problem) was that Nixon closed the gold window: http://en.wikipedia.org/wiki/Nixon_Shock http://en.wikipedia.org/wiki/Nixon_Shock Association of course does not prove causation, as a graph of murders and IE usage will demonstrate. But it is suggestive. I wonder if the unlimited leverage that the financial system had access to after the gold window closed allowed them to suck out more and more of the productivity gains. This graph suggests that this might be so: http://www.yesmagazine.org/blogs/david-korten/images/financial-sector-as-percent-of-u.s.-gdp http://www.yesmagazine.org/blogs/david-korten/images/financi...
- cstoner 11y ago
  An alternate hypothesis is that starting in 1971, labor union participation in the US began its decline. Rather than needing to use leverage, as you suggest, they just directly filtered the increased productivity gains to the top of the company. Also, I'm not really sure that your graph shows anything except that the financial industry has been growing since the 40s.
  - Kalium 11y ago
    Also related is that that's roughly when automation began replacing unskilled high-wage labor. A lot of things happened at once, I think.
bkeroack 11y ago
Note that the decoupling correlates closely with the computerization of society/business around the mid-1980s. The market for most types of human labor is soft in advanced economies, and getting softer. We don't grow the economy by assembling a huge workforce to do/build something, we grow it when (relatively) tiny teams build a new tool, create a new market or disrupt an existing industry. One could argue that there are lots of projects out there that could use people to do physical labor. My response to that is that it has become extremely expensive to employ workers in physical jobs in the US, due to declining health of the general population (obesity, etc) and the overhead of things like disability insurance/worker's compensation. Since the US has essentially no social safety net to speak of, the primary source of welfare ends up being workplace injury-related benefits. This produces a powerful secondary-gain situation that incentivizes injury for those who work physical jobs. I don't think people intentionally get hurt of course, but rather when they do sustain an injury it becomes economically advantageous to prolong it as much as possible since the job is hard and their pay for working is so low. Usually it's the only way for menial laborers to get a paid vacation, and (sadly) getting permanent disability benefits is like early retirement. I'm not advocating for getting rid of those benefits, but rather changing the incentives so that working pays more, everybody gets some form of paid vacation, and that there are safety nets/alternatives for the poor. We need to recognize that our economy simply needs fewer people working to function (I don't know if the basic income is the right solution, but it could be).
- jtbigwoo 11y ago
  >> Note that the decoupling correlates closely with the computerization of society/business around the mid-1980s. It also correlates closely with the decline of labor unions.
  - forgotAgain 11y ago
    Agreed. In the 80's Reagan fired the striking air traffic controllers. It was the start of society's war against unions. The US was very strange at the time in that most people viewed themselves as upper middle class. Of course they weren't but the idea let many people look down on union members as an undeserving underclass. That in turn was used by capital owners to create support for legislation outlawing activities by upstart union members against the more deserving mid and upper classes.
michaelochurch 11y ago
My theory is that we're in danger of a global repeat of the Great Depression that hammered North America and, to a lesser extent, Europe in the 1930s. The last one, in the 1920s, was caused by ill-managed prosperity, I would argue. You had sudden gains in agricultural productivity, which led to crashing commodity prices, which eventually led to rural poverty. One might have "expected" farmers to move into the cities and become the new middle class, and some did, but that doesn't work out so well when thousands or millions of poor, hungry people are doing the same thing. What was just "rural poverty" (of course, half the country was still rural) in 1925 became more widespread by 1927-28 (noticeable slipping demand for consumer products) and finally was recognized as a Great Depression after it tanked the stock market in 1929-32. We have, in 2015, a lot of ill-managed prosperity. We have a culture in Silicon Valley that glorifies ill-managed prosperity. (What else do you call funding Clinkle?) And the same thing that happened to food prices in 1900-30 (slow at first, accelerating toward the end) is happening to almost all human labor in 1985-2015. It may not end well. Including the damage brought by the war, I'd argue that most of Europe didn't get out of the Depression (manifest somewhat differently over there, especially in the fascist countries) until the late 1950s.
- frandroid 11y ago
  Are you saying that poor peasant led to the Great Depression? I thought runaway speculation did...
  - paulpauper 11y ago
    Thee cause was probably a combination of speculation, leverage, overbuilding, and so on. No one really knows the exact trigger, but a popular opinion seems to be that the Smoot–Hawley Tariff Act made it worse -although even that is debated. The stock market crash lead to margin calls and the sudden evaporation of millions of dollars of wealth and that probably triggered a cascade effect, as business obligations could not be met due to the sudden loss of wealth.
  - michaelochurch 11y ago
    You're conflating the October 1929 stock market crash with the Great Depression. They happened around the same time and they're related but they're not the same thing. The 1987 and 2001 stock market crashes didn't cause decade-long depressions, and the 1987 crash was a larger drop than 1929. One-day crashes make headlines but aren't that damaging to the underlying economy unless it's already very brittle.
paulpauper 11y ago
Ultimately, I think this whole debate on wages, STEM, wealth inequality, and automation boils down to IQ. http://greyenlightenment.com/winner-take-all-nation/ http://greyenlightenment.com/winner-take-all-nation/ IMHO, people are falling behind because of low IQs and the winner-take-all economy that enriches some, but doesn't leave a whole lot for everyone else. Today’s hyper-meritocracy is amplifying the socioeconomic ramifications of individual cognitive differences such that a person with an IQ >110 is much more likely to succeed than someone with an IQ <90, whereas decades ago the disparity wasn't so obvious. The solution, on the other hand, -I don't know. No one really knows, and that's why this is such a big debate. So many people realize that this is one of the most pressing issues of the 21st century. How are we going to develop a compromise or solution that handles automation-related jobs loss and inequality. Some propose a basic income; others want redistribution; others wants more spending on education, and so on... From students fresh out of college and in debt, to people looking for jobs, or people who have been laid-off, we're all a part of this debate. Economics is not just for economists - now more than ever we all experience it in our everyday lives.
paulpauper 11y ago
The decoupling is also obvious when comparing advanced degree employment and income versus those with only high school or 'some college'. It's also pronounced between majors, with STEM earning more. these trends have accelerated since 2008.
digikata 11y ago
Personally, I blame spreadsheets. Well, not spreadsheets per se, but their ability to ease quantification of certain money streams above others. They make it easy to optimize profit margin in the short term, and dismiss long-term, difficult to quantify investments. The short term numbers are nice and solid, and the long term risk and investment are fuzzy. In the near past, this focus improved the economy, but now I think we're in a stage of overoptimization of short term profits over real value. You can see where real GDP is now beginning to tail off in the charts - it happens later than the salary drop but it's there. Company lifetimes are getting shorter (showing misallocation of risk & R&D, and less buffer to weather mistakes & downturns), general numbers of new business starts are lower (suspect this is a side effect of less time & salary for workers). Worker salaries are hit as a big side effect too.. how you do quantify long term value of a worker - it's easier to quantify short term worker outputs as shallow primary effects and ignore the longer term secondary effects of retention and experience. Now compare fuzzy secondary effects against the calculation of short term profit projections. You can see how jobs are easily slashed, or moved overseas... even if three to five years down the line you lose some efficiency (it's not quantified so it doesn't exist in a cost-benefit trade off).
phkahler 11y ago
The obvious solution is birth control. It's not that there are too few jobs, it's that there are too many people. Offer free permanent birth control to any low income person who wants it. This is only a partial fix of course, but one that would help long term.
- dragonwriter 11y ago
  > The obvious solution is birth control. It's not that there are too few jobs, it's that there are too many people. Jobs aren't fixed, such that reducing the number of people will align people with jobs. Reducing people will reduce jobs, so if you commit to that method of trying to get them in alignment, you'll end up tail-chasing with more and more aggressive population reduction efforts until you recognize that the approach doesn't work.
  - phkahler 11y ago
    I disagree. With mass production/farming/entertainment/etc you can provide for N number of people with N/k people. This has not always been the case. There were things not getting done, so when automation came along it freed up people to get some of the less critical things done. I believe we are rapidly moving into a time when there are not more things to be done and we actually have an excess of people (see China and India for examples). I knew it was a huge risk to my rep to post that, but hey, gotta get the idea out there. More specifically, lets say it takes 10,000 people to meet the needs of 12,000 people. You might then think it takes 20,000 to support 24,000, but you'd be wrong. Increasing production does not scale that way, there is a sort of viable minimum after which scaling is easier. So 5000 people would not be able to serve 6000 because there isn't the critical mass needed to do everything (these number are purely fictional of course). It's like mining. It takes a lot of people to dig and move earth, but once society gets advanced enough we can have bulldozers and dump trucks, and as you need more mining you just use bigger machinery rather than more machinery with more operators - or you make them autonomous so there fewer operators. TL;DR the number of people it takes to provide for a society is not directly proportional to the size of the population.

66 points by nrao123 11y ago

> the professors put forth as potential solutions [...] education, infrastructure, entrepreneurship, immigration, and basic research. Couldn't the other solution be less greed on the part of business owners? It seems like the bigger issue is that they just aren't paying their people enough.

eli_gottlieb 11y ago
Well, ok, the professors put forth as potential solutions inside the increasingly narrow Overton Window... such and such and so. Actually solving this crisis necessarily involves widening the Overton Window to include things like "strengthen labor in its bargaining position against capital" and "reduce the economic rents charged on land, natural resources, and intellectual 'property'".
Afforess 11y ago
>Couldn't the other solution be less greed on the part of business owners? Greed has very little to do with the problem. If one business pays their employees slightly less, and gains an edge over the competition by doing so, it forces their competitors to either adopt the same lowered pay rates, or slowly be defeated in the market. Only one "bad" actor has to be 'greedy' to force the entire market to chase lower wages. Often this can become a self-perpetuating system, driving down wages. It is probably impossible to prevent this sort of behavior. The incentives to avoid chasing lower wages do not exist, or are very weak. Also consider that higher wages increases incentives for businesses to automate labor. Even if you create a higher minimum wage, the pace of automation will increase. The fact of the matter is that the supply of jobs now no longer matches the number of employable people, and the supply will continue to shrink, indefinitely.
- toomuchtodo 11y ago
  > Only one "bad" actor has to be 'greedy' to force the entire market to chase lower wages. Often this can become a self-perpetuating system, driving down wages. > It is probably impossible to prevent this sort of behavior. > The fact of the matter is that the supply of jobs now no longer matches the number of employable people, and the supply will continue to shrink, indefinitely. Hence why you tax productivity, and provide a strong social safety net with it (we will eventually need to go so far as a basic income, I'm sure of it). This graph from the BLS illustrates where those gains we're taxing come from (hint: software/automation productivity gains). Regulation is the only solution to enable a fair playing field for all, citizens and corporations alike. https://i.imgur.com/E2xd96M.jpg https://i.imgur.com/E2xd96M.jpg
- beachstartup 11y ago
  this is part of it. however, things are just out-of-whack economically. in my company, we pay our most-senior engineers above-market wages, for a variety of reasons including retention, schedule demands, etc. for example, we pay a senior remote sysadmin in the south/midwest $150k. we are based in southern california where that salary would still be above-market. the truth of the matter is even if we paid him 200 grand, his real income would probably not be as good as it was 30 years ago. our local california engineers can't afford houses+family no matter how much we pay them (within reason - assuming single income). i know people from the previous generation who own multiple houses on what were modest single incomes. something fundamental is driving the cost component of everything through the fucking roof, without a corresponding increase in purchasing power. employers/managers can be only so generous - the dollar just isn't going as far. in other words, the actual purchasing power is accruing at the very very top in an entirely different class of ultra-rich people. small biz owners, middle managers and employees are getting shafted even though everyone is trying their hardest to keep things on an even keel.
  - meatysnapper 11y ago
    What is so expensive? Is it everday goods? Is it property in nice areas (or rent)? I suspect that the move back towards cities has something to do with it.
  - fraserharris 11y ago
    There is little evidence of an unaffordability of everyday expenses (beyond inflation) apart from housing costs. There are three underlying trends driving super-inflation of housing costs are: a) House prices are correlated to what the maximum monthly mortgage a household is willing to pay in a geographic area. For most of developed world, the average household now has two income earners. b) The previous generation benefited greatly from the suburbanization of cities. Cheap land was converted into reasonably priced housing (subsidized by highway expansion). We've reached the point where this cheap land is now so far from the city center that the downsides (commute, job opportunities) exceed the cost savings. c) We are seeing large economic network effects in agglomerating around fewer large metros (ex: NYC, LA, Bay Area, Chicago, Houston, DFW, Atlanta, DC). These metros have not responded with sufficient housing construction or transportation infrastructure despite the continued growth in population.
mikeash 11y ago
These are policy ideas, which is to say, actions that might be taken by the government. I can see how the government might provide education, build infrastructure, encourage entrepreneurship, boost immigration, and perform basic research. I don't see how the government could cause less greed on the part of business owners. That may be a solution in the sense that if it happened it would work, but how would you make that happen?
- jtbigwoo 11y ago
  You'd enact redistributive tax and spending policies and high minimum wages. You'd reduce government spending for corporations. You'd make it difficult to fire workers. You'd make the U.S. more like Europe, basically.
  - eli_gottlieb 11y ago
    Europe has its own problems, despite the many things it does right, because it still entrenches the rent-extraction powers of the elite. In fact, it often does so more than the USA: real-estate often isn't taxed at anything like proportional rates in some European countries, and European laws are often harsher on debtors and bankrupt entrepreneurs than American ones.
  - mikeash 11y ago
    I'd put that in a different category than "less greed." What you're doing is adjusting the consequences of the greed, but not directly adjusting people's emotional states and desires. You might even indirectly adjust the emotion, but to describe what you're actually doing you'd describe it as you have here, not "less greed." It's the difference between describing what you'll do and what you want to happen. Too many people simply state the latter and then declare victory. "Why don't we just solve global warming by producing less CO2?" To me, "less greed" is solidly in that category.
jerf 11y ago
In general, at any scale from the personal to the societal, "Just be better!" is not an actionable solution.
deleted 11y ago
[deleted]

carsongross 11y ago

One interesting thing that happened in 1971 (right when the income divergence occurred, which I view as the major problem) was that Nixon closed the gold window: http://en.wikipedia.org/wiki/Nixon_Shock http://en.wikipedia.org/wiki/Nixon_Shock Association of course does not prove causation, as a graph of murders and IE usage will demonstrate. But it is suggestive. I wonder if the unlimited leverage that the financial system had access to after the gold window closed allowed them to suck out more and more of the productivity gains. This graph suggests that this might be so: http://www.yesmagazine.org/blogs/david-korten/images/financial-sector-as-percent-of-u.s.-gdp http://www.yesmagazine.org/blogs/david-korten/images/financi...

cstoner 11y ago
An alternate hypothesis is that starting in 1971, labor union participation in the US began its decline. Rather than needing to use leverage, as you suggest, they just directly filtered the increased productivity gains to the top of the company. Also, I'm not really sure that your graph shows anything except that the financial industry has been growing since the 40s.
- Kalium 11y ago
  Also related is that that's roughly when automation began replacing unskilled high-wage labor. A lot of things happened at once, I think.

bkeroack 11y ago

Note that the decoupling correlates closely with the computerization of society/business around the mid-1980s. The market for most types of human labor is soft in advanced economies, and getting softer. We don't grow the economy by assembling a huge workforce to do/build something, we grow it when (relatively) tiny teams build a new tool, create a new market or disrupt an existing industry. One could argue that there are lots of projects out there that could use people to do physical labor. My response to that is that it has become extremely expensive to employ workers in physical jobs in the US, due to declining health of the general population (obesity, etc) and the overhead of things like disability insurance/worker's compensation. Since the US has essentially no social safety net to speak of, the primary source of welfare ends up being workplace injury-related benefits. This produces a powerful secondary-gain situation that incentivizes injury for those who work physical jobs. I don't think people intentionally get hurt of course, but rather when they do sustain an injury it becomes economically advantageous to prolong it as much as possible since the job is hard and their pay for working is so low. Usually it's the only way for menial laborers to get a paid vacation, and (sadly) getting permanent disability benefits is like early retirement. I'm not advocating for getting rid of those benefits, but rather changing the incentives so that working pays more, everybody gets some form of paid vacation, and that there are safety nets/alternatives for the poor. We need to recognize that our economy simply needs fewer people working to function (I don't know if the basic income is the right solution, but it could be).

jtbigwoo 11y ago
>> Note that the decoupling correlates closely with the computerization of society/business around the mid-1980s. It also correlates closely with the decline of labor unions.
- forgotAgain 11y ago
  Agreed. In the 80's Reagan fired the striking air traffic controllers. It was the start of society's war against unions. The US was very strange at the time in that most people viewed themselves as upper middle class. Of course they weren't but the idea let many people look down on union members as an undeserving underclass. That in turn was used by capital owners to create support for legislation outlawing activities by upstart union members against the more deserving mid and upper classes.

michaelochurch 11y ago

My theory is that we're in danger of a global repeat of the Great Depression that hammered North America and, to a lesser extent, Europe in the 1930s. The last one, in the 1920s, was caused by ill-managed prosperity, I would argue. You had sudden gains in agricultural productivity, which led to crashing commodity prices, which eventually led to rural poverty. One might have "expected" farmers to move into the cities and become the new middle class, and some did, but that doesn't work out so well when thousands or millions of poor, hungry people are doing the same thing. What was just "rural poverty" (of course, half the country was still rural) in 1925 became more widespread by 1927-28 (noticeable slipping demand for consumer products) and finally was recognized as a Great Depression after it tanked the stock market in 1929-32. We have, in 2015, a lot of ill-managed prosperity. We have a culture in Silicon Valley that glorifies ill-managed prosperity. (What else do you call funding Clinkle?) And the same thing that happened to food prices in 1900-30 (slow at first, accelerating toward the end) is happening to almost all human labor in 1985-2015. It may not end well. Including the damage brought by the war, I'd argue that most of Europe didn't get out of the Depression (manifest somewhat differently over there, especially in the fascist countries) until the late 1950s.

frandroid 11y ago
Are you saying that poor peasant led to the Great Depression? I thought runaway speculation did...
- paulpauper 11y ago
  Thee cause was probably a combination of speculation, leverage, overbuilding, and so on. No one really knows the exact trigger, but a popular opinion seems to be that the Smoot–Hawley Tariff Act made it worse -although even that is debated. The stock market crash lead to margin calls and the sudden evaporation of millions of dollars of wealth and that probably triggered a cascade effect, as business obligations could not be met due to the sudden loss of wealth.
- michaelochurch 11y ago
  You're conflating the October 1929 stock market crash with the Great Depression. They happened around the same time and they're related but they're not the same thing. The 1987 and 2001 stock market crashes didn't cause decade-long depressions, and the 1987 crash was a larger drop than 1929. One-day crashes make headlines but aren't that damaging to the underlying economy unless it's already very brittle.

paulpauper 11y ago

Ultimately, I think this whole debate on wages, STEM, wealth inequality, and automation boils down to IQ. http://greyenlightenment.com/winner-take-all-nation/ http://greyenlightenment.com/winner-take-all-nation/ IMHO, people are falling behind because of low IQs and the winner-take-all economy that enriches some, but doesn't leave a whole lot for everyone else. Today’s hyper-meritocracy is amplifying the socioeconomic ramifications of individual cognitive differences such that a person with an IQ >110 is much more likely to succeed than someone with an IQ <90, whereas decades ago the disparity wasn't so obvious. The solution, on the other hand, -I don't know. No one really knows, and that's why this is such a big debate. So many people realize that this is one of the most pressing issues of the 21st century. How are we going to develop a compromise or solution that handles automation-related jobs loss and inequality. Some propose a basic income; others want redistribution; others wants more spending on education, and so on... From students fresh out of college and in debt, to people looking for jobs, or people who have been laid-off, we're all a part of this debate. Economics is not just for economists - now more than ever we all experience it in our everyday lives.

paulpauper 11y ago

The decoupling is also obvious when comparing advanced degree employment and income versus those with only high school or 'some college'. It's also pronounced between majors, with STEM earning more. these trends have accelerated since 2008.

digikata 11y ago

Personally, I blame spreadsheets. Well, not spreadsheets per se, but their ability to ease quantification of certain money streams above others. They make it easy to optimize profit margin in the short term, and dismiss long-term, difficult to quantify investments. The short term numbers are nice and solid, and the long term risk and investment are fuzzy. In the near past, this focus improved the economy, but now I think we're in a stage of overoptimization of short term profits over real value. You can see where real GDP is now beginning to tail off in the charts - it happens later than the salary drop but it's there. Company lifetimes are getting shorter (showing misallocation of risk & R&D, and less buffer to weather mistakes & downturns), general numbers of new business starts are lower (suspect this is a side effect of less time & salary for workers). Worker salaries are hit as a big side effect too.. how you do quantify long term value of a worker - it's easier to quantify short term worker outputs as shallow primary effects and ignore the longer term secondary effects of retention and experience. Now compare fuzzy secondary effects against the calculation of short term profit projections. You can see how jobs are easily slashed, or moved overseas... even if three to five years down the line you lose some efficiency (it's not quantified so it doesn't exist in a cost-benefit trade off).

phkahler 11y ago

The obvious solution is birth control. It's not that there are too few jobs, it's that there are too many people. Offer free permanent birth control to any low income person who wants it. This is only a partial fix of course, but one that would help long term.

dragonwriter 11y ago
> The obvious solution is birth control. It's not that there are too few jobs, it's that there are too many people. Jobs aren't fixed, such that reducing the number of people will align people with jobs. Reducing people will reduce jobs, so if you commit to that method of trying to get them in alignment, you'll end up tail-chasing with more and more aggressive population reduction efforts until you recognize that the approach doesn't work.
- phkahler 11y ago
  I disagree. With mass production/farming/entertainment/etc you can provide for N number of people with N/k people. This has not always been the case. There were things not getting done, so when automation came along it freed up people to get some of the less critical things done. I believe we are rapidly moving into a time when there are not more things to be done and we actually have an excess of people (see China and India for examples). I knew it was a huge risk to my rep to post that, but hey, gotta get the idea out there. More specifically, lets say it takes 10,000 people to meet the needs of 12,000 people. You might then think it takes 20,000 to support 24,000, but you'd be wrong. Increasing production does not scale that way, there is a sort of viable minimum after which scaling is easier. So 5000 people would not be able to serve 6000 because there isn't the critical mass needed to do everything (these number are purely fictional of course). It's like mining. It takes a lot of people to dig and move earth, but once society gets advanced enough we can have bulldozers and dump trucks, and as you need more mining you just use bigger machinery rather than more machinery with more operators - or you make them autonomous so there fewer operators. TL;DR the number of people it takes to provide for a society is not directly proportional to the size of the population.