Probably wrong musings
I was looking at this chart:
It shows unemployment (high), participation (low) and the ratio of employment to population (low).
I have long wondered in all the discussions of the decline of manufacturing about what happens when automation finally overtakes human participation. There are certainly areas where it is not yet cheap enough to be cheaper than humans (like Amazon's packing department), but it is unclear to me that competing with robots for jobs is a long-term winning strategy for humans.
Most serious thinkers believe this is bunk and that it just means we'll invest in new and exciting things that people will be able to be employed in. I am less optimistic in the continued employment of humans in providing nearly universal subsistence-supporting labor. Which runs directly into the problem that capitalism has been notoriously bad at rewarding creative or individualistic professions, where humans (at the moment) still have a competitive advantage, and society has been loathed to provide support for luxury time except by over-compensating already performed labor.
However, like my belief that America is too large to effectively govern and ought, at some point, to fall apart, I wasn't expecting to see it ever actually happen. It was more that when I read The Diamond Age my thoughts were, "hmm, I could see us getting here". The only place I've seen someone consider this perspective was linked on a left-wing economist's blog, and compared the fate of horses after the rise of the internal combustion engine to humans post-automation (http://blogs.law.harvard.edu/philg/2010/08/08/unemployed-21st-century-draft-horse/).
I look at this chart, though, and I wonder if it will return or if we've already hit this point. It is extremely notable that employment fell and productivity and profits went up. GDP continues to grow without employing additional labor. It is, of course, possible that sufficient capital growth with lead to rising employment eventually. In fact, it is likely as long as demand keeps up (unclear, given that those unemployed workers aren't contributing to demand).
It isn't like we couldn't deal with rising luxury among the general population. While we don't have the resources yet to pay everyone a stress-free wage in perfect distribution (only Luxembourg could manage that) we certainly have the resources to feed and cloth and house everyone, to invest in childrearing, to encourage creativity and knowledge cross-referencing and social production. We could support demand by more equitably distributing the benefits of automation. People want to be industrious and there are industrious crafts that have been ignored as non-capitalistically-rewarded for a long time. I believe that this is something economists need to be thinking about.
Right now, though, our government is primarily influenced by those people already benefiting from automation. The capitalist classes are reaping the benefits of increased automation and don't seem to grasp that superior social support is necessary for demand. Companies ought to be advocating for more re-distributive policies. The multiplier on the Obama payroll tax cut was 130% for the bottom third of earners; they spent more extra money than they received. On the other hand, the top third had a multiplier of 73% and the middle third spent 53% of the money they got.
There is also the problem that we've eliminated welfare-as-it-is-generally-envisioned. All that is left is support for families with children for brief periods of time if you fulfill a bunch of other requirements and well-nigh impossible-to-get SSDI that takes at least 6 months to get on in the first place and discourages people from attempting industrious leisure lest they loose what was so hard to obtain. So clearly if we've now hit the automation tipping point we are going to need to reconsider the structure of our social support mechanisms. I'd focus on reducing the cost of failed entrepreneurship, strengthening guaranteed minimum income, providing nationalized health care and offering greater support for the arts (combined with the slashing of copyright terms; we can't benefit from the ease of information cross-referencing and redistribution without a public domain. While we're at it, patents are currently inhibiting innovation; unless we can fix them they need to go.)
We must stop considering leisure time a weakness of spirit or enthusiasm; it's a sign of the future. We can continue to reward people above and beyond for industry, but we probably don't need to and it might be counter-productive. Psychology has interesting insight into internal vs. external motivation; the former is destroyed by the latter. If we attempt to force people to be industrious with either carrots or sticks, they won't then choose to be when the carrots or sticks aren't there. If instead we simply make sure that everyone has the opportunity to be industrious most people will choose to, and chances are very good that the rest wouldn't be usefully industrious anyway thanks to automation.
Instead, we should reduce the barriers to industry, encouraging informal employment and focusing on social norms. I'm not done thinking about the best ways to work on this; so far the best model I've seen is Etsy, which can't possibly be the best we've done. I hope that when some serious economists move into this area that they have some interesting ideas.
Short form: the all-volunteer army seems to be considered by nearly everyone to be a good thing. I think it will soon be time to have an all-volunteer economy.
Now if only I could figure out how to profit off this transition ;-)
It shows unemployment (high), participation (low) and the ratio of employment to population (low).
I have long wondered in all the discussions of the decline of manufacturing about what happens when automation finally overtakes human participation. There are certainly areas where it is not yet cheap enough to be cheaper than humans (like Amazon's packing department), but it is unclear to me that competing with robots for jobs is a long-term winning strategy for humans.
Most serious thinkers believe this is bunk and that it just means we'll invest in new and exciting things that people will be able to be employed in. I am less optimistic in the continued employment of humans in providing nearly universal subsistence-supporting labor. Which runs directly into the problem that capitalism has been notoriously bad at rewarding creative or individualistic professions, where humans (at the moment) still have a competitive advantage, and society has been loathed to provide support for luxury time except by over-compensating already performed labor.
However, like my belief that America is too large to effectively govern and ought, at some point, to fall apart, I wasn't expecting to see it ever actually happen. It was more that when I read The Diamond Age my thoughts were, "hmm, I could see us getting here". The only place I've seen someone consider this perspective was linked on a left-wing economist's blog, and compared the fate of horses after the rise of the internal combustion engine to humans post-automation (http://blogs.law.harvard.edu/philg/2010/08/08/unemployed-21st-century-draft-horse/).
I look at this chart, though, and I wonder if it will return or if we've already hit this point. It is extremely notable that employment fell and productivity and profits went up. GDP continues to grow without employing additional labor. It is, of course, possible that sufficient capital growth with lead to rising employment eventually. In fact, it is likely as long as demand keeps up (unclear, given that those unemployed workers aren't contributing to demand).
It isn't like we couldn't deal with rising luxury among the general population. While we don't have the resources yet to pay everyone a stress-free wage in perfect distribution (only Luxembourg could manage that) we certainly have the resources to feed and cloth and house everyone, to invest in childrearing, to encourage creativity and knowledge cross-referencing and social production. We could support demand by more equitably distributing the benefits of automation. People want to be industrious and there are industrious crafts that have been ignored as non-capitalistically-rewarded for a long time. I believe that this is something economists need to be thinking about.
Right now, though, our government is primarily influenced by those people already benefiting from automation. The capitalist classes are reaping the benefits of increased automation and don't seem to grasp that superior social support is necessary for demand. Companies ought to be advocating for more re-distributive policies. The multiplier on the Obama payroll tax cut was 130% for the bottom third of earners; they spent more extra money than they received. On the other hand, the top third had a multiplier of 73% and the middle third spent 53% of the money they got.
There is also the problem that we've eliminated welfare-as-it-is-generally-envisioned. All that is left is support for families with children for brief periods of time if you fulfill a bunch of other requirements and well-nigh impossible-to-get SSDI that takes at least 6 months to get on in the first place and discourages people from attempting industrious leisure lest they loose what was so hard to obtain. So clearly if we've now hit the automation tipping point we are going to need to reconsider the structure of our social support mechanisms. I'd focus on reducing the cost of failed entrepreneurship, strengthening guaranteed minimum income, providing nationalized health care and offering greater support for the arts (combined with the slashing of copyright terms; we can't benefit from the ease of information cross-referencing and redistribution without a public domain. While we're at it, patents are currently inhibiting innovation; unless we can fix them they need to go.)
We must stop considering leisure time a weakness of spirit or enthusiasm; it's a sign of the future. We can continue to reward people above and beyond for industry, but we probably don't need to and it might be counter-productive. Psychology has interesting insight into internal vs. external motivation; the former is destroyed by the latter. If we attempt to force people to be industrious with either carrots or sticks, they won't then choose to be when the carrots or sticks aren't there. If instead we simply make sure that everyone has the opportunity to be industrious most people will choose to, and chances are very good that the rest wouldn't be usefully industrious anyway thanks to automation.
Instead, we should reduce the barriers to industry, encouraging informal employment and focusing on social norms. I'm not done thinking about the best ways to work on this; so far the best model I've seen is Etsy, which can't possibly be the best we've done. I hope that when some serious economists move into this area that they have some interesting ideas.
Short form: the all-volunteer army seems to be considered by nearly everyone to be a good thing. I think it will soon be time to have an all-volunteer economy.
Now if only I could figure out how to profit off this transition ;-)