Why Are There Still So Many Jobs? The History and Future of Workplace Automation [pdf]

http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.29.3.3

by huherto • 11 years ago

77 72 11 years ago

pubs.aeaweb.org

endymi0n• 11 years ago

Why?

That's why.

http://strikemag.org/bullshit-jobs/

hermanmerman• 11 years ago

So bullshit jobs are a tax paid by big corporations? Why are they willing to pay this tax? If most of their workforce is improductive, why not get rid of it altogether? Why do these jobs exist?

ch4s32• 11 years ago

Because corporations aren't monolithic rational actors, but rather large bureaucratic bodies made of people who operate in a broader social and cultural context.

FD3SA• 11 years ago

Because most industries are consolidated by oligopolies. If newly formed, smaller and far more efficient companies begin to seriously threaten these oligopolies, they simply throw their weight around via acquisition, regulation or other quasi-legal means to destroy them.

Doesn't make for an exciting and optimistic story, but it is what it is. Pure capitalism is just as impossible as pure socialism, due to the exact same moral hazards. Human beings tend to use power to leverage their advantages in any way imaginable, regardless of the prevailing laws and ideologies of the day.

danharaj3• 11 years ago

Hierarchy and structure has costs. Maintaining hierarchy requires inertia and increased transaction costs. Capitalism is predicated on hierarchies and market structures. A lot of jobs exist just to prop up the order of things.

justonepost9• 11 years ago

It's not a big tax at these interest rates.

ThrustVectoring• 11 years ago

I can think of one easy reason from a micro-economics perspective. A firm has "organizational rents" from being more productive as an organization than the individuals would be in aggregate on their own. This begs the question of how to divide them. The answer is usually along the lines of having a hell of a lot of political maneuvering to assign as much of the extra value to yourself as possible - salary, prestige, power, and favors.

jdmichal5• 11 years ago

And yet GDP per person has trended upwards in a pretty global fashion. [0, 1] So either those providing "real" value are so productive that they support all that dead weight and yet still continue to grow, or those "bullshit" jobs are actually providing real value and increases in productivity.

[0] http://www.bls.gov/ilc/intl_gdp_capita_gdp_hour.htm#chart03

[1] http://www.bls.gov/ilc/intl_gdp_capita_gdp_hour.htm#table01

danharaj3• 11 years ago

GDP measures GDP, not 'real value' or 'productivity'. Also, just because the mean is increasing does not mean the median is, too.

michaelchisari• 11 years ago

Certainly you can't believe there's only two possibilities.

S4M• 11 years ago

It could be that the best workers have a crazy productivity that accounts for the major part of the GDP while the rest has a low productivity.

logfromblammo• 11 years ago

There is another possibility: per capita GDP is an increasingly unrealistic measure for estimating "real" productivity.

None of the three possibilities preclude the others, so there could be combinations. It could be all three.

justonepost9• 11 years ago

GDP is all inflated meaninglessly by central banks. Inflation rates aren't particularly accurate either so you can't count on real GDP as well.

crdoconnor2• 11 years ago

"The ideal economic or GDP hero is a chain-smoking terminal cancer patient going through an expensive divorce whose car is totalled in a 20-car pileup, while munching on fast-take-out-food and chatting on a cell phone. All add to GDP growth. The GDP villain is non-smoking, eats home-cooked wholesome meals and cycles to work."

-- Mark Anielski

Something to remember when you next start going on about "real value".

justonepost9• 11 years ago

Yes, low interest rates allow for a lot of meaningless labor to be performed .. why not? You can borrow at near 0% to pay for it, so who cares.

The fed is pushing interest rates lower and lower to keep people employed - even if it is in purposeless, pointless jobs. When they stop though, we'll see how many of these jobs remain.

Zirp did the same thing in Japan, by the way. Japanese hate unemployment and with Zirp they were allowed to keep a lot of people employed that otherwise would be laid off in a normal functioning capitalist society.

pdeuchler• 11 years ago

David Graeber is one of those guys who finds a nugget of truth and surrounds it with mountains of convenient and crowd pleasing BS. Everyone loves to hear that their "real jobs" are being cut while the boss that "does nothing" gets to stay, and nobody wants to be told that the "people who make things" are being rapidly replaced by a single "creative" and machines. Of course, all of this "progress" ends up generating a lot of paperwork so we end up with "pointless" corporate lawyers (who, in the article, had a very interesting life and is probably paid quite handsomely) who bitch about not having a philosophically interesting career as if that's some sort of inalienable right.

The true "pointless jobs" are the thought leaders who try to warp political and economic philosophy to their own solipsistic psychological needs by pandering to the baser wants and desires of their audience. Most else is a circumstance of market inefficiencies or people not actually being worth the salary they used to be paid.

Animats3• 11 years ago

The American Economic Association site:

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In black and red lettering on a dark purple background.

A summary is available here. It's the usual economist hand-waving.[1]

[1] http://conversableeconomist.blogspot.com/2015/08/since-1986-...

wcummings• 11 years ago

Interesting read, I love to see contrarian views on automation. I'm really tired of seeing poorly thought out rants from techno-prophets predicting unbounded exponential growth when economic growth is stagnating globally.

justonepost9• 11 years ago

Unbounded exponential growth is possible, but we have to redefine the rules of capitalism. For example, rewarding those who actually advance our economies versus those who just play with numbers in stock markets.

hebdo3• 11 years ago

Given that any resouce you can think of is bounded, no, it is impossible.

TeMPOraL7• 11 years ago

There isn't going to be an unbounded exponential growth, and every techno-prophet knows it (as opposed to armchair economists) - if we keep basing our economy on endless growth, everything will go to hell when we hit the natural limits.

netcan4• 11 years ago

What are the natural limits? Do you mean natural resources?

georgeecollins• 11 years ago

That's a very old idea (1798) https://en.wikipedia.org/wiki/Malthusian_catastrophe

(1972) https://en.wikipedia.org/wiki/The_Limits_to_Growth

refurb• 11 years ago

when economic growth is stagnating globally

Huh?

The world's economy has grown by over 50% since 2000.[1]

[1]https://en.wikipedia.org/wiki/Gross_world_product

skadamat• 11 years ago

Really good in depth dive into the problem, love it

Animats3• 11 years ago

Many "bullshit jobs" in finance exist only because of legal quirks, and could be eliminated by minor regulatory changes. Finance has about 5% of US jobs. Manufacturing has 7%. We need to get finance down and manufacturing up.

It would be straightforward to downsize the insurance industry. Insurance is complicated because insurance companies want it complicated so they don't have to compete on price. Much to the annoyance of the insurance industry, Medicare supplement policies are limited to 10 standard options, A through N. (There used to be more). So comparing companies means looking at a table of prices vs standard forms. If that was extended to other types of policies, the insurance industry's marketing operations would be much smaller.

Finance could be downsized by imposing a Tobin tax on financial transactions. One takes effect on January 1, 2016 in the European Union. It's 0.1% on most transactions, and 0.01% on derivatives transactions. That's enough to kill the high frequency trading industry and downsize derivatives trading by 90%, based on Sweden's experience.

The excess labor can be reassigned to more productive jobs in the lower levels.

justonepost9• 11 years ago

A lot of "bullshit" jobs also exist because of low interest rates. As unemployment due to automation increases, the central banks lower interest rates (lower rates are used to increase employment). So when all this free money floats around it allows companies to invent jobs that really don't need to exist.

As soon as rates are allowed to increase, as has happened a couple times over the last 15 years, unemployment will sky rocket harsh and we will see the results of automation.

For now, however, the tide is in and the naked are hidden.

justonepost9• 11 years ago

Check this out: Watch what happens whenever they try to raise interest rates: https://www.stlouisfed.org/Publications/Regional-Economist/A...

tmrgn• 11 years ago

Shouldn't we rather expect a lot of "bullshit investment" and automation first in a situation of "free money"?

knodi123• 11 years ago

The excess labor can be reassigned to more productive jobs in the lower levels.

I'll be interested in how you go about transitioning this excess labor to "lower level jobs" without lethal levels of culture shock.

toomuchtodo2• 11 years ago

The excess labor can be reassigned to more productive jobs in the lower levels.

I know this is going to sound crazy, but can't we just provide housing, cheap renewable-based power, electrified self-driving mobility (those tiny Google self-driving cars), and inexpensive healthy food to those who can't work because jobs don't exist for them anymore? We already do some of this for the elderly with social security; I simply argue for going the "full monty".

I understand this future is still awhile away. When trucks switch over to autopilot, I think that'll be the big experiment. You'll have millions of people and nowhere for them to go in the economy. I also understand this might create a huge "moral hazard" with not enough people wanting to work; how would that be any different than us currently pushing people out in favor of automation with increasing the minimum wage? (Disclaimer: I am in favor of increasing the minimum wage, as it is woefully behind compared to inflation and CPI)

Find jobs, automate, split productivity/wealth/income between automators and society (currently "consumer excess"), repeat.

TeMPOraL7• 11 years ago

We need a society-wide change of mentality here. People need to stop thinking about "having a job" as a source of dignity.

fredgrott• 11 years ago

unfortunately we do this already in the USA..remember the 1990s and 2000s high crime rates and subsequent fall of crime? Most of that was economic based crime and those who did it got a free food and bed ride in prisons.

Animats3• 11 years ago

The US used to have a more generous welfare and housing program. In the 1950s and 1960s, the US built huge housing projects in big cities. The result was a huge population, mostly black, with nothing to do. Riots, concentrated crime, and several generations of welfare kids resulted.

Background: [1]

[1] https://nextcity.org/daily/entry/better-public-housing-lesso...

BerislavLopac• 11 years ago

So we cover the basic needs of those people. What are they going to do with their time? My guess is they'll look for ways to entertain themselves, and particularly inexpensive, mass-produced ways because they can't afford much besides their basic needs.

Sounds like a great recipe for Idiocracy.

kasey_junk• 11 years ago

It's 0.1% on most transactions, and 0.01% on derivatives transactions. That's enough to kill the high frequency trading industry and downsize derivatives trading by 90%, based on Sweden's experience.

Most HFT transactions already experience this level of fee overhead. This will not cause HFT to go away, it will cause it to pass on more costs to the consumers of HFT. That is, every financial transaction will be more expensive.

This may have the effect of concentrating HFT even more than it already is as the regulatory burden favors bigger players.

There is nothing inherently wrong with that and I think the natural economics of HFT is already well on its way to creating natural monopolies in that industry, but a Tobin style tax will NOT cause HFT to cease to exist (nor do I think that is a desirable outcome).

netcan4• 11 years ago

Automation and labour is a question we have a history of being repetitively wrong about. So, its worth treading lightly.

First of all, we use the word “automation” which already implies replicating people. We could just as easily use “tools.” There is a lot of grey area between automation and tools and economically the two are fungible anyway. If we think of new tools being invented, we think of people’s productive capacities being enhanced rather than replaced. Is a combine harvester a tool or automation?

“There is no fundamental economic law that guarantees every adult will be able to earn a living solely on the basis of sound mind and good character.”

I think this is a good thing to be pondering. Our modern economy, our political philosophies and I think most of our ideas of how society works kind of assume that every adult with decent character is be able to earn a living. This is why living wage debates get people so fired up. The rug gets pulled out from under all our political ideas if this doesn’t hold more or less true.

Overall, I think this paper goes down the right track. Historically, demand for stuff has been remarkably elastic. We can consume a lot of stuff. Automation is essentially tools for producing more. We have good historical examples of the workforce becoming more sophisticated to take advantage of these tools and continue being useful.

I do think it could be dangerous relying on the historical analogy, because as the quote above suggests the is no rule in economics that makes this necessary.

I do see a couple of avenues to worry about.

(1) One is the vaguely Marxist one: labour & capital. Automation is capital. It accumulates in ways that concentrate wealth. If the 99% thing we are seeing now is indicative of a long term trend dictated by technological progress… Marxist conflict dynamics may well play out in some way. Growing wealth gaps create social-political instability that’s hard to avoid.

(2) The pace of change. Technological progression’s effect on everyday life is moving very fast. The digital divide thing is real, way more than it was ten years ago. I recently spoke to a woman (about 40) who has never really had a computer that couldn’t get up to speed in hospitality work because she couldn’t leaner the software and its quirks fast enough. Workforce skills keeping up with technological progress is part of the process. But historically, this has been something schools could lead because the pace of change was generational. These days the rate of change is revolutionizing occupations much quicker. That could leave a lot of people behind.

I think demand elasticity will hold We can keep consuming more. I think the problem is in the workforce’s ability to keep up. There are plenty of potential jobs today, if the skills were available. I think if we got a 100% increase in the number of skilled programmers of the caliber that Google and FB are fighting over, the economy would absorb them pretty easily. Same for a lot of professions. The problem is that the skill sets required keep getting more sophisticated. That means inflexible labour markets.

Why Are There Still So Many Jobs? The History and Future of Workplace Automation [pdf]

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