Productivity and Jobs

[Puppycow]

Everyone hates to lose their job, but it seems to me that a lot of jobs are simply destined to become obsolete due to technology. If productivity eventually plateaus, this might not be a problem, but if it keep rising a little bit every year, then eventually won't we reach a point where it only requires a small number of people to produce all the goods and services demanded by society? And then, there will be a shortage of jobs unless there is some new social arrangement.

Would people accept a new kind of socialism where the majority don't work because there is no work for them to do that robots can't do better and cheaper, but society supports them anyway? This may be a problem for the distant future, but we can think of it as a thought experiment. I think that we might discover that it really isn't a problem at all.

 

[Miss_Kitt]

Puppycow -- I think you've missed part of the problem. The cool thing about technology is that it doesn't just replace existing jobs: It creates whole new arenas of activity for jobs to be in. I used to work in EFT (electronic funds transfer), making sure people's debit cards/ ATM cards worked. There are people who put money into the machines; people who repair and service the machines; companies that design and build the machines; companies that make the paper for receipts, the wires and boards and buttons that are used; there are people at the Switches that write, test, install and maintain software that routes the transactions from the cash machine or store to the card issuing bank/credit union; people who receive and balance the reports; people who track down errors in transactions; people who make the plastic cards...NONE of these jobs existed 40 years ago. The cash machine was science fiction, if it had even been thought of.

Look at the whole cellular phone industry, from cellphone tower to software/firmware and hardware in the phones. Look at the competing providers; look at the complex switching that lets a caller on Network A talk to somebody on Network B. Look at the cellphone related gadgets (chargers, headsets, covers, clips, etc.) that are made and sold, many by 3rd parties that don't belong to either the phone manufacturer or the service supplier...

Technology creates jobs, and generally, faster than it replaces them. When you add in all the leisure/luxury things that can spin out of 'work' technology--like lasik procedures, video games (stand-alone or PC, gamestation or MMPOG), digital music players, personal water craft, artificial fabrics...I don't expect there to be a shortage of jobs any time soon. What does happen if a technological shift happens fast is that the kind of skills needed in the new market are different than were needed in the old market: climbing poles and splicing wires doesn't qualify you to set up modems or write packet-switching software. But over time, I think there are more jobs. Especially since technology tends to create wealth, and wealth creates things to spend that wealth on.

I'm not too worried about that aspect of the future. We may well end up with somewhat shorter work weeks than we have at present--most Americans are work-crazy compared to the rest of the developed world--but I don't think that's a bad thing.

Just my thoughts, Miss Kitt

 

[Puppycow]

I know what you are saying, and I agree that new technologies do create new jobs, but I also expect that, to use the same example, that it will gradually require fewer and fewer people to provide all the ATMs and ATM-related services demanded by society. Software once written and debugged doesn't need to be rewritten, and so forth. The plants that produce them will become more and more efficient and need to employ fewer workers. And also, old-fashioned paper cash and coins may become essentially obsolete.

Just as when you go to an all-you-can-eat restaraunt, the amount of food you can consume is still limited by the size of your stomach, the finite number of hours in the day limits how much goods and services you can consume. It will never be profitable to produce goods and services for which there is no demand (or more of them than are demanded). This upper limit probably hasn't come into play yet, but it may in the future. There will never be no jobs of course. There will always be a demand I assume for creative people such as artists and writers, but not everyone can do that well and even if they could, there would not be enough people to consume it all.

 

[Puppycow]

A simple way of restating my thesis is that there will eventually come a point where the limiting factor is no longer how much wealth (goods and services) we can produce, but how much wealth we can consume. Under such a scenario, there will be fewer and fewer jobs.

 

[rjh01]

So far our productivity has increased over time. The average person has a larger income in real terms today than 20+ years ago. This statement would be true over most of the 20th century.

The only limiting factor in full employment is the amount of raw materials (iron, fossil fuels, land) that we can produce. If our income increases we can employ more people to produce services that do not require much limited raw materials. Hence full employment.

Another thing that will in the future ensure near full employment is the fact that many people will not want to work due to age. These people in the past would have died shortly after leaving employment now can live a long time. There may be fewer children, however they will be in education much longer.

Of course there will be periods of large scale unemployment like the 1930s due to the economy collapsing, however they will be temporary.

 

[Francesca R]

Everyone hates to lose their job

Not true, plenty of people like it

a lot of jobs are simply destined to become obsolete due to technology

Yes but this has been happening for approximately two and a half centuries (in England, at least)

If productivity eventually plateaus, this might not be a problem

This is an odd statement. If productivity plateaus (total productivity) then there will be no further improvement in real income or living standards per person. Fortunately, productivity hasn't plateaued, mostly thanks to a ratchet mechanism called "non-zero sumness".

but if it keep rising a little bit every year, then eventually won't we reach a point where it only requires a small number of people to produce all the goods and services demanded by society?

That assumes that the "goods and services demanded by society" is stationary or somehow not affected by the march of progress, which is false.

And then, there will be a shortage of jobs unless there is some new social arrangement.

No (see above)

 

[Francesca R]

The only limiting factor in full employment is the amount of raw materials (iron, fossil fuels, land) that we can produce.

Why do you think that is a limiting factor? (It isn't)

Another thing that will in the future ensure near full employment is the fact that many people will not want to work due to age.

Evidence is that this is going the other way--greater longevity is resulting in longer working years. The US is the best example of this. Europe less so.

 

[Francesca R]

A simple way of restating my thesis is that there will eventually come a point where the limiting factor is no longer how much wealth (goods and services) we can produce, but how much wealth we can consume. Under such a scenario, there will be fewer and fewer jobs.

I don't see why there would be any upper limit on consumption, and I think it's more sensible to assume there is none.

 

[YoPopa]

Why do you think that is a limiting factor? (It isn't)

Evidence is that this is going the other way--greater longevity is resulting in longer working years. The US is the best example of this. Europe less so.

Francesca,
I'm curious why you say "Europe less so." Is there data that suggests older Europeans work less than their US counterparts? If so, is it by choice, mandatory retirement laws, age discrimination or other?

 

[drkitten]

eventually won't we reach a point where it only requires a small number of people to produce all the goods and services demanded by society? And then, there will be a shortage of jobs unless there is some new social arrangement.

No, any more than there was a shortage of jobs when it required only a small number of people to produce all the food demanded by society. Or when it required only a small number of people to produce all the goods (but not services) demanded by society.

Economists talk about "agricultural societies" and "industrial societies"; they similarly talk about "industrial societies" and "information societies" (or sometimes "post-industrial societies") where the focus on hard goods manufacture has been replaced by a focus on service industries and information. The US, [Western] Europe and Canada are good examples of post-industrial societies.

The next step is predicted by many to be a "creativity" society; with people no longer needing to do boring, menial tasks for other people, they can do creative tasks --- write books, paint pictures, compose and perform music, as well as other forms of creative expression (Flash animation?) that haven't yet been invented.

If we get to a stage where one can get all the goods and services one needs without having to work at a boring job for it, people will simply flock to interesting jobs that they do because they want to. Most studio musicians aren't in it for the money....

 

[drkitten]

A simple way of restating my thesis is that there will eventually come a point where the limiting factor is no longer how much wealth (goods and services) we can produce, but how much wealth we can consume. Under such a scenario, there will be fewer and fewer jobs.

There's no limit to the amount of wealth anyone can consume. Simply improve the quality, if not the quantity, of goods you consume.

 

[Francesca R]

I'm curious why you say "Europe less so." Is there data that suggests older Europeans work less than their US counterparts? If so, is it by choice, mandatory retirement laws, age discrimination or other?

Yes there is a lot of evidence of that, although I don't have any to hand. Output per person in most European economies is significantly less than in the US, but output per hour is much more similar. Weekly hours worked tend to be shorter in Europe and retirement seems to happen earlier.

So of it is mandatory, some isn't (France has a 35 hour week, though it can be got around if desired; Americans are not required to work into their 70s but a larger fraction of them do). It could be (has been) suggested that differences which are coded into laws nonetheless substantially reflect the preferences of the respective societies,

 

[drkitten]

Yes there is a lot of evidence of that, although I don't have any to hand. Output per person in most European economies is significantly less than in the US, but output per hour is much more similar. Weekly hours worked tend to be shorter in Europe and retirement seems to happen earlier.

Also, vacations are longer and more frequently taken. Two weeks of annual vacation in the US is typical, perhaps even generous. Two weeks of annual holiday in the UK would be considered the treatment of a galley slave. I think I got six weeks paid holiday when I worked there, plus the scattered bank holidays. As someone trained to the American galley slave model, I think I ended up not using three-quarters of my vacation.

So of it is mandatory, some isn't (France has a 35 hour week, though it can be got around if desired; Americans are not required to work into their 70s but a larger fraction of them do).

Other way around --- as an academic in the States, I am allowed to work into my 70s. Most UK universities (and companies?) have mandatory (statutory) retirement at 65; I know that was a condition of my work at my specific contract.

That's why Dawkins is stepping down from his professorship. It's not 'cause he doesn't want to continue to participate in scholarly discourse --- indeed, I suspect he's going to participate more without the bother of committee work. But he hit 65, so out he goes.

 

[Francesca R]

Other way around --- as an academic in the States, I am allowed to work into my 70s. Most UK universities (and companies?) have mandatory (statutory) retirement at 65

I meant the other side of the same coin, though it may be worded clumsily. A bigger fraction of American 70 year olds are in work, and it's not because they are not allowed to retire.

 

[Smackety]

I think the real loss of jobs will occur when we invent the sentient, self-repairing robot. Until then, we only lose jobs because 3 offshore workers at $2/hour each are just about as productive as one onshore worker at $30/hour.

 

[quarky]

More litigation should help.

 

[YoPopa]

I think the real loss of jobs will occur when we invent the sentient, self-repairing robot. Until then, we only lose jobs because 3 offshore workers at $2/hour each are just about as productive as one onshore worker at $30/hour.

You are only talking about menial labor jobs. See drkittens post #10 above.

There will always be another job to do for anyone with 1/2 a brain or more.

 

[drkitten]

I think the real loss of jobs will occur when we invent the sentient, self-repairing robot. Until then, we only lose jobs because 3 offshore workers at $2/hour each are just about as productive as one onshore worker at $30/hour.

Er,....

No, actually, most job loss historically has been from automation, not outsourcing. Did you know that "calculator" used to be a job description, not a piece of equipment? Any big, number-intensive company had rooms full of nerds that would just sit and add, subtract, multiply, all day long to give the supervisory types the numbers they need.

Similarly, there use to be all these people called "operators" that would (wo)man switchboards and make electrical connections so you could talk to people.

Heck, long before that there were people called "secretaries" or "scribes" whose job it was to read and write things for their illiterate employer.

Now we have calculators you can buy at Wal-Mart and phones are self-switching. And people instead have jobs designing, building, and selling self-switching phones.

 

[macdoc]

There's no limit to the amount of wealth anyone can consume. Simply improve the quality, if not the quantity, of goods you consume.

That's exactly it- better not more.

In moving to a more sustainable model jobs will/are being created in waste management and recycling - compare the old rusty car lot in the field with the computerized system now in place for dealing with crashed, wrecked and just plain old vehicles.

Something like 3% of the population now feeds the rest.

That might actually go up as disintermediation is allowed by way of slow food and local, intensive markets.

This is food as luxury not necessity.

One key is vital muncipalities not dependent on one industry. Very tricky.

 

[Smackety]

Er,....

No, actually, most job loss historically has been from automation, not outsourcing. Did you know that "calculator" used to be a job description, not a piece of equipment? Any big, number-intensive company had rooms full of nerds that would just sit and add, subtract, multiply, all day long to give the supervisory types the numbers they need.

Similarly, there use to be all these people called "operators" that would (wo)man switchboards and make electrical connections so you could talk to people.

Heck, long before that there were people called "secretaries" or "scribes" whose job it was to read and write things for their illiterate employer.

Now we have calculators you can buy at Wal-Mart and phones are self-switching. And people instead have jobs designing, building, and selling self-switching phones.

Welcome to the new millenium...you can keep the sales team, but design is going to India, and 'building' is going to Taiwan. And no, the 30,000 production and engineering staff we displaced are not going to be absorbed into sales. Actually, sales is not our core competency, we outsourced that too...