America's Jobless Future?

http://www.theatlantic.com/doc/print/201003/jobless-america-future

by cwan • 16 years ago

69 76 16 years ago

johnohara• 16 years ago

In America, you are either self-employed or you're not.

So-called "unemployment benefits" are taxed as income meaning you are actually self-employed while receiving them. It's a matter of perspective. Where does your income come from and how much is it?

I'm an optimist. I believe growth in the production and movement of goods and services (the economy) will come from millions of people acting in their own self-interest. A massive collection of interconnected garages, basements, home-offices, libraries, schools, etc. -- all making stuff.

Government can stimulate all it wants, but the heart and soul of our success has always come from individual initiative.

RyanMcGreal• 16 years ago

Don't forget the economic role of cheap liquid fuels at relatively stable prices. Those days are over, probably for good. Any economic recovery is vulnerable as long as rising GDP triggers severe oil price volatility.

Edit can the person who down-voted this please explain why?

ccamrobertson• 16 years ago

Government can stimulate all it wants, but the heart and soul of our success has always come from individual initiative.

Agreed. It would seem then that it would make the most sense for government to focus on minimizing the overhead for formalizing those "individual initiatives" into businesses, rather than inefficiently allocate capital through stimulus (save all of the issues of how much of that stimulus capital is dissipated to essentially non-productive ends).

flogic3• 16 years ago

I'm going to go out on a limb here. This is the inherent weakness of the capitalist system. Eventually productivity outstrips need. The process is kinda backwards but that seems to be the truth. In my world, a manager lays people off to save money. Then they realize work isn't getting done because they have less people. So they use automation to fill the gaps. Those jobs don't come back.

stingraycharles• 16 years ago

Who makes the automation possible?

msluyter5• 16 years ago

We do, for now, but for every one job created for a software/hardware engineer, several (probably low skill jobs) may be destroyed. Compare the total number of, say, cashiers to software developers.

dsplittgerber4• 16 years ago

But the people laid off may found a great company afterwards. You look at the economy as a zero-sum game. But the pie is growing bigger nearly all the time.

bengebre• 16 years ago

As a thought experiment, isn't it possible that the pie (wealth) could grow larger but that the distribution of that wealth could be narrower due to technology and outsourcing of jobs? That may not be zero-sum, but it could certainly be problematic for wage earners.

msluyter5• 16 years ago

I assume you've been downvoted because there's a somewhat reflexive faith here that new classes of jobs will always be created to fill those that have been taken over by increased automation/productivity. That may be true, but for anyone who believes that, I recommend at least taking a look at the arguments Marshall Brain presents in his"Robotic Nation." One of his conclusions is that -- unlike with previous revolutions where new classes of jobs appeared to replace the ones that were destroyed (industrial for agricultural, for example) -- no new class of jobs appears to be on the horizon that is also not automatable.

lionhearted• 16 years ago

I can't recommend the book "Economics in One Lesson" highly enough. It answers this question.

Full text here: http://jim.com/econ/

I think it should be required reading for everyone during high school. This chapter is relevant:

"The Curse of Machinery" - http://jim.com/econ/chap07p1.html

Long story very short? We'll be okay. It's been a worry for a long time, and it's always been false. But the chapter of the book says it much better than me, and it's a short read. Actually, I'm going to submit this now as a separate submission. Really, highly recommended, very insightful stuff.

Edit: Submitted here if you'd like to discuss: http://news.ycombinator.com/item?id=1127345

jacoblyles3• 16 years ago

I am down-voting him because, after two centuries of automation, the unemployment rate still hovers between 5 and 10 percent. In short, his ideas have no basis in reality and he makes no attempt to justify them. It is simple internet pop economics, and the world has too much of it. Not down-voting people like this is what leads to politicians getting away with ignorant demagoguery on economic subjects and a population too ill-informed to call them out on it.

Sure, when the singularity comes things may be different. But if that is his case, then he should make the argument. The parent comment is just noise.

dsplittgerber4• 16 years ago

What about knowledge workers? They're a new class of workers. There is no AI good enough yet to replace a book author, a marketing manager, a lawyer etc. Will they ever be automatable? Probably. But who knows which new class will emerge after the knowledge workers..

jacoblyles3• 16 years ago

Tired old statistic: in the 1700s, 90% of American workers worked on farms. But because of automation, today only 2% of workers do and we are better off for it. We spend a smaller percentage of our resources on producing the food we eat and can put those resources to other uses. Also, it is not true that 88% of people are unemployed.

flogic3• 16 years ago

Yes but during the industrial revolution we had a lot of unmet need. Now, we are much better off. I'm not convince there is enough need to justify keeping everyone employed.

korch• 16 years ago

From a microeconomic perspective, the specialization of labor undoubtedly allows us to maximize production, yet from a macroeconomic perspective, I think you're right.

I know Marx is beyond dated, and that it's only permitted to speak of him using hushed tones in serious conversation, however, in Das Kapital one of his fundamental arguments was that the long-run problem Capitalism is destined to face and ultimately lose to will be the problem of over-production. Which sounds counter-intuitive, as how could over-production possibly be bad? His argument is interesting and worth studying for itself, even if it is mostly outdated.

codexon2• 16 years ago

how could over-production possibly be bad?

Over-production results in a general glut. http://en.wikipedia.org/wiki/General_glut

Real demand is still present, but the lack of liquidity in a general glut artificially depresses demand. Fed chairman Ben Bernanke explains:

but the story that captivated Bernanke involved a town full of shoe factories that closed during the Depression, leaving the community so poor that its children went barefoot. "I kept asking, Why didn't they just open the factories and make the kids shoes?

The reason is because the community didn't have anything to offer the factory owners. The factory owners know that the community doesn't have money to pay for shoes, but on the other hand the community would have money if these factories paid them instead of closing the factories.

These problems would go away if anyone could own a factory and have access to the materials, which many people above have said. However, this goes against the tenets of a capitalist free market: where someone is free to own much of the resources/land/factories/IP, which sets the barrier to entry beyond what most people can pay.

euroclydon• 16 years ago

I'm over 3/4 of the way though the article and it just keeps getting more depressing. Somebody please hide all the sharp objects!

I've felt for a while that high unemployment (20-30%) is the normal state of affairs. 20% of folks should probably be engaged in some sort of sustenance living. It wouldn't really have to be that bad, like digging in dumpsters or anything, but just living in a commune, farming, and building their own debt-free shelter.

jcromartie• 16 years ago

Comfortable high-tech subsistence farming is around the corner. Efficient local renewable energy, RepRap machines, domestic robots... it's going to be a very interesting century.

rcoder• 16 years ago

Farmers are the original pioneers of "renewable energy." Their main energy source is sunshine, converted directly to foodstuffs by some amazing works of generic engineering (a.k.a. "plants). Biofuels? Yeah, they've been burning corn and vegetable oils for decades. Robots? How about biological labor aids -- horses, herding dogs, chickens, etc.

Regardless, there's a reason you seldom hear "comfortable" and "subsistence farming" in the same sentence. Growing enough food to feed yourself is a full-time job, even with modern agricultural tech. Yeah, there could be a singularity-style event that makes traditional farming obsolete, but RepRaps and Roombas ain't it.

sharms3• 16 years ago

It is important to note that roles which are automated only require a shift in skill set. Cashiers may turn into Uscan machines, but Uscan machines require more administrators and support staff.

With the money saved with the automated, the retailer may choose to cut prices, or reinvest in their business. If they cut prices, consumers now have money to invest in other industries, the demand spawning new positions. If they reinvest in their business, these positions, not previously open, will also be available.

If they simply take their savings, and pay it out to share holders / keep it in the bank, this allows more capital for investment.

The more steps that are automated, the more abundantly we will all live. It is a great thing in terms of material desires.

DenisM4• 16 years ago

fast forward: there is one person who is producing all our food and one person who is producing all out clothing. they trade with each other and the rest of the people have nothing to offer in return for food.

sharms3• 16 years ago

In this scenario, if there is only one person providing food, at that point it becomes economically viable for individuals and consumers alike to produce food, and fill that void.

You didn't include it in your comment, however it is important to note how much each producer is producing. With economies of scale, it is likely both producers create enough goods to exceed the demand of either consumer. Rationale being if "food producer" became efficient enough to put all other food producers out of business, they likely can feed more than just the clothing producer.

imgabe2• 16 years ago

If technology advances to the point where one person can make enough food or clothing for the world, then surely each person can manage to make their own food or clothing.

nostrademons• 16 years ago

Surely the person who produces food wants more out of life than just producing food?

That's the way it's worked out in the real world. About 1% of the population produces all our food. And that frees the rest of us up to make movies. And write novels. And organize the world's information. And allow people to live 30 miles from their jobs. And let them cross the country or travel the world on a whim. And live in climate-controlled boxes with nice furniture.

That's also the long-term solution to unemployment. Eventually, somebody figures out something else that the rest of the population would like to have, and puts all of those out-of-work workers to work doing it. The computer industry didn't even exist 50 years ago. The automobile and household appliance industries didn't exist 50 years before that. The oil, railroad, middle management, engineering, and office worker industries didn't exist 50 years before that. These have all been born out of workers being freed up from previous shrinking industries (eg. manufacturing, domestic servants, farming, textiles) and put to use in new emerging ones.

Retric3• 16 years ago

A key point you are missing is that unless Uscan machines require fewer people to support then they are not cheaper than the people they replace. Automation tends to replace 1000 jobs with 100 jobs which pay more per person but less in aggregate. The general rule is (New Jobs) * (Pay) < (Lost Jobs) * (Pay) with the difference split between the consumers and the owners of the company.

Now society should become more productive, but many of the workers are going to fall into more general and less useful professions. EX: We don't need vary many farmers today, yet we produce far more food than ever. IMO, this suggests the introduction of basic welfare state funded by the increased prosperity. But we can also just waste the extra productivity with a huge military, increased litigation, and a truly massive prison system.

CapitalistCartr• 16 years ago

"IMO, this suggests the introduction of basic welfare state funded by the increased prosperity. But we can also just waste the extra productivity with a huge military, increased litigation, and a truly massive prison system."

I'd suggest education would be a preferable alternative to either of those.

rbranson• 16 years ago

Good point, but don't ignore the opportunity created on a continuous basis because of these "Uscan machine" scenarios.

The extra value created here can be traded for things that would have previously been unattainable, which in turn grows other industries and markets. A good example is the relatively recently materialized cell phone industry, which was viewed as a luxury not but 15 years ago, and is now practically ubiquitous. This has added $40-$100/mo to the average functional adults expenditures. While it may have replaced the $50/mo spent on the home phone line, you're replacing that with $40-$100/mo for each person in the home. Mobile phones increase our productivity by saving time and nowadays allow us to make more informed decisions on the spot.

This example continues because there was a fundamental shift in the type of labor employed by these mobile phone companies. In the early days of the industry, specialized salespeople pulled large salaries selling expensive phones and highly trained technical people answered technical support calls. Now that costs have dropped massively and reliability has drastically improved, these people have been replaced by relatively low wage employees (customer service reps and salespeople), and opportunity has opened at the "bottom."

I do agree that we waste a ridiculous amount of our capital on societal "overhead" that could otherwise be put to good use.

plesn• 16 years ago

That's the theory. In the actual world, unumployment keeps a pressure on salaries that increases the difference between rich and poor (which leads to problems with consumption and credits...), capital saved by the share holders isn't properly reinvested in real economy (financial investments in companies are algebraically negative...).

In other words, automation and technology are tools in human's hands, and we still have to fight for our material/educationnal/environmental/human desires.

CoryMathews2• 16 years ago

The reason America is jobless is because everyone is in debt. People (talking majority) spend more then they make. They take out 3 year financing on toasters (exaggerated but sadly not much). To be in debt is a way of life. People buy things on credit long before they have the money to pay it off. Thats why America is in a recession and jobs are closing.

If people (again majority) had common sense as most on HN seem to have then America would be fine.

The second major reason IMO that America is going to be jobless is because the overhead cost of everything is far to high, especially in government. It takes so many people to sign off for anything that it will end up costing way more then it should. Take a look at large government states vs small government states and tell me which is doing better. (ie Cali vs Texas) Cali has to raise taxes to pay for all the overhead which causes business owners to pay more which causes them to not hire more people.. Pretty easy to see what needs to happen.

sharms3• 16 years ago

I would love to disagree with you on this (my opinions on economics stray pretty far from normal). I believe precisely the reason America is so successful is because of debt.

A worker who does not work a day never gains that day of work back. Debt allows workers to perform their tasks fully allocated as there is always work available, whether or not work has already been done in return for them.

Ie if there was no debt, everyone would have to wait for a task to be finished before they could perform a service in return, causing lost work that can never be made up for.

The only time this system falls flat is if everyone decides they need services all at once, which historically is not common.

petercooper2• 16 years ago

To be in debt is a way of life. People buy things on credit long before they have the money to pay it off.

Like, say, houses? Or a college education?

The problem isn't debt, per se - it's reaching a level of debt that can't be easily serviced by future earnings. Debt/credit is useful to invest in assets that return benefits to you over the period of paying the debt off. The ability to make these investments are a cornerstone of why the West has been so successful over the past 3-400 years.

CoryMathews2• 16 years ago

I meant smaller things then houses or and eduction. Things such as TVs, PCs, Ovens, ect. Items that are not as expensive as college or a house but are in the under $3k range.

I agree that some debt it unavoidable and did not mean to come across that ALL debt is bad and should be avoided because well some of it cannot (ie the house). However buying many of these sub 3k items that are not needed then paying them off over 3 years is crazy. Thats more what I was getting at.

coolnewtoy• 16 years ago

There's an arugment in favor of elite brand-name degrees, presumeably over state universities, or vocational degrees:

"The research of Till Von Wachter, the economist at Columbia University, suggests that not all people graduating into a recession see their life chances dimmed: those with degrees from elite universities catch up fairly quickly to where they otherwise would have been if they’d graduated in better times; it’s the masses beneath them that are left behind. Princeton’s 2009 graduating class found more jobs in financial services than in any other industry. According to Princeton’s career-services director, Beverly Hamilton-Chandler, campus visits and hiring by the big investment banks have been down, but that decline has been partly offset by an uptick in recruiting by hedge funds and boutique financial firms."

va_coder• 16 years ago

I read the book "New Ideas from Dead Economists" when I was in college. It's a great read. One of the recurring themes is how economists seem to always predict gloom and doom.

0wned• 16 years ago

100 years ago they were predicting that the world would starve to death because of the industrial revolution. "All the people are moving off the farms, who will grow food to feed us? We will all starve to death. More and more babies are being born. The sky is falling!!!" They did not count on technology increasing food production and making it more efficient. Today, food is so plentiful and convenient that we're all too fat.

To hell with economists and meteorologists too. Both groups attempt to predict the unpredictable. Why believe anything they say... ever?

ciupicri• 16 years ago

I think that we should also have a look at the quality of food. While the quantity of available food has increased and you can find cheap food, it's quality has decreased dramatically.

kowen3• 16 years ago

It seems to me that we have the resources and technology to solve a lot of problems for good, but a permanent (or even just "better") solution would get in the way of profit. (I saw the documentary "who killed the electric car" recently, which describes one instance of this.)

There was a discussion here on HN a few weeks back about automating and simplifying taxes http://news.ycombinator.com/item?id=1072955

Automating and simplifying certainly seems like the right thing to do - but lots of people would lose jobs. On the other hand, they would be free to do something more productive (in the larger sense, producing value instead of papering over the cracks) and certainly more interesting!

Why can't we just automate away the boring stuff, and just work less? I'd be interested to see if it were possible to open source more than software. (Open source organic farming, anyone?) I know, I know, this is utopian and unrealistic and probably plain silly.

I'm not trying to suggest that we should all go create a hippie commune and get rid of money, but not solving a problem right because of some legalese or pure profit just seems wrong to me!

Another thing that I find perplexing is that the depression doesn't only put people with automatable jobs out of work. My father is an extremely talented craftsman. He builds traditional log cabins, wooden boats, furniture, beautiful houses... Right now he is living in a van, and not-quite eeking out a living picking fruit. He sells a couple hundred lbs of fruit a few days a week. He also shoots deer every once in a while which provides protein.

He's this great resource, but hasn't had a job for well over 2 years. If he didn't have to worry about food, he'd work for the sheer pleasure of creating something useful and beautiful. The thing that confuses and frustrates me is that my father would be delighted to work for free provided that his needs were met (seriously! Food, a beautiful view, a sauna, and some poetry. Seems simple enough, right?)

He loves to build beautiful things, and certainly there are people who need houses (even small log cabins would be an upgrade for many). I don't know what the solution is (obviously). It just seems strange that legal tender or lack thereof could get in the way of creating real value.

marshallp• 16 years ago

There's a carpenter shortage in canada, why doesn't he work there

kowen3• 16 years ago

Excellent question, and thanks for the suggestion. I'm going to look into it!

jwhitlark• 16 years ago

It's not about legal tender; that's just a way to exchange value. It's a brutal truth, but worth is defined by what resources people are willing to give up for something. If they are not willing to trade their resources for yours, you have NOT created real value, but destroyed it, by consuming resources that people would pay for and creating something they won't.

In the same vein, railing against profit is ridiculous; Profit is the difference between your inputs and your outputs. If you don't create a profit doing something, you are again destroying value. (It's perfectly legitimate to have a profit in non-monetary terms, though. In that case it's you who is making the decision to trade more resources for less, because the process or result has value to you; You decide on its worth, and pay the price.)

kowen3• 16 years ago

I'm not railing against profit in itself, I just find that sabotaging a good solution that would profit many people (but not you in the short term) is illogical.

ippisl2• 16 years ago

Another scenario of the automation vs jobs is, very unstable economy job-wise, for long terms. many many people would experience large periods of unemployment , a constant need to shift jobs and professions , and all the psycho-social negatives that come with this.

This might become a basic nature of the economy as automation becomes more rapid. some might even say it's already happening.

I think we would need to optimize economies for well being , instead of GDP to solve this.

fnid2• 16 years ago

I think it's really tragic what is happening to the youth in america. they have no power, no wealth, no experience, no education, no skills, no credit... nothing. People who are older have worked and gathered all the above and still, congress gives them more. More drugs to keep them living longer and sapping the system. Free health care. Social Security, reduced taxes in the form of mortgage credits, dividend and capital gains discounts...

It's really pathetic.

Until the younger generation combines their voting power (if they'll start voting at all), they will not be listened to and will continue to suffer. With even 10% pooled voting power, they can control the outcome of nearly every election in the nation, local and national.

If all people aged 18 to 35 vote for the same person, that person will win. If a person caters to that demographic and listens to them and makes the future of America and the world better for them then it will be better also for the older generation.

But the older generation votes and the younger generation does not.

sabat3• 16 years ago

Ultimately, innovation is what allows an economy to grow quickly and create new jobs as old ones obsolesce and disappear. Typically, one salutary side effect of recessions is that they eventually spur booms in innovation. Some laid-off employees become entrepreneurs, working on ideas that have been ignored by corporate bureaucracies, while sclerotic firms in declining industries fail, making way for nimbler enterprises. But according to the economist Edmund Phelps, the innovative potential of the U.S. economy looks limited today.

He had me until the end, where Edmund Phelps declares innovation in America is "limited". HAH. Watch our smoke, Ed!

Groxx3• 16 years ago

He's probably pulling from the brain-drain problem we've been having since schools started to go down the creek. Arguably, our environment is also hostile to newcomers many times, due to patently absurd patent laws and higher business taxes than many places (not all, mind you, just many).

sabat3• 16 years ago

Brain drain problem? What, all the entrepreneurs are moving to India and I didn't hear about it? ;-)

The US may be "hostile" to newcomers -- you're right, we do have stupid patent laws and some of the business taxes can seem ridiculous -- but then again, most countries have stupid patent laws (see the WIPO) and many many countries tax business at much more aggressive rates.

Even more importantly, if we're talking about technology: Silicon Valley has never been replicated full-scale. Yes, there are pockets. But what draws people to Northern California -- aside from the unique culture, natural beauty, and the weather -- is that there has been an innovation pow-wow going on since Hewlett and Packard took to the garage. People want in on that, especially if they're into innovation themselves.

There are more startups starting up right now, especially here in CA, than I've seen in years. Not all will innovate, but many will, and at least some of that innovation will stick and maybe even change the world.

No innovation? Really? Has this guy seen the frickin' iPod? Oh, and heard of Twitter? (Just to name some easy examples.)

America's Jobless Future?

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