America 3.0 will give us all the answers /sarc. To the extent anyone can. I look forward to your review.
A good read, thank you.
I generally share your optimism on this subject. The world has undergone far more drastic changes (at a time when the population was far less educated and self-aware); not only with the industrial revolution but also the dissolution of monarchism, the rise of agriculture, of animal husbandry… The main difference here is that the change is taking place in less than one generation, which makes it more jarring.
If we want to find the answers quickly — if we want to be the ones to find the answers at all — we’re going to have to reduce the regulations that keep new businesses from forming.
I second this point. Since we don’t know exactly what industries/jobs/skills will be in high demand once automation has revamped our economy, it’s best to ease the burden on new and smaller businesses to help foster their formation. I’m sure many will fail, but one of the priorities should be to create an environment where people feel comfortable starting new ventures without having to spend capital (which they usually will not have) to ensure complete compliance with all regulatory and tax burdens.
@matt–Many will fail. You are spot on. However, we have a society that no longer sees the value in the creative destruction of the marketplace. “Nothing can be allowed to fail” is the new mantra. That must change first.
Funny. I tried to open up a business in California in 2010. It took so long, then the insurances and licenses where just so complicated, I had to hire outside help to meet the requirements.
After two months, I got a job offer and took it. I was running out of money for the business and gave up.
Politicians have no concept of time and money in private business, nor do they care.
The game currently is to hold on until some large company buys you out.
There are professional startup-starters (“upstarts”?) in Silicon Valley who make a good living doing this.
The problem is, these purchases are often motivated more to protect vested interests of large companies than to help consumers. Also, they tend to insulate existing business elites from having their positions challenged by these “upstarts”.
Also, it doesn’t help any business that isn’t fashionable or marketable. America’s future success is going to depend on new ideas beyond what our (failing) elites can conceive. If there are major roadblocks in the path for a new company to go from startup to major corporation without a nod from elite gatekeepers with limited / obsolete vision and huge (if declining) vested interests, America’s economy will stagnate.
That’s what we’re seeing now.
A very good article. Even if this piece is just a little to tidy for my taste, it does represent Professor Mead at his best.
Here is an interesting question. Why not go the way of the Scandinavian countries? They have maintained a strong economy based on private property, and they have globally competitive companies, while providing government programs that guarantee that ordinary people don’t have to face the kind of dire poverty that exists in modern America. Also, these programs haven’t led to bankruptcy; the Scandinavian countries all have a triple a bond rating, something that America doesn’t have. If the people have less to fear from economic change – and i do mess less to fear, not nothing to fear – they will be more likely to embrace the future.
Gosta Espin Andersen, the world’s foremost authority on the welfare state, says that Americans are wrong in thinking that the way to improve the work habits of the people is to make their lives miserable. Rather, people are likely to work hard and take risks if they don’t always feel like they are one misstep away from economic ruin.
Furthermore, what’s the fun of being wealthy if you are surrounded by masses of stressed out formerly middle class people?
Sweden has a population of 9 million people which is a few million less than greater Los Angeles. Comparing a huge diverse country like ours to a tiny cohesive country is and always will be nonsensical.
What’s the alternative to the Scandinavian model, mass unemployment and political instability? The Scandinavian have a combination of stability and prosperity that I find very attractive.
As you note, this has been going on since the invention of the combine. Part of the answer, then as now, is to adjust the length of the work week. Hopefully Obamacare will have this unintended consequence.
Ultimately I think Professor Mead is right; the ride to the promised land will be bumpy. It’s apt to be more like a roller coaster than a stroll in the park; but when we arrive, Mead’s optimism will be borne out. The world will be a more prosperous, and peaceful place. Steven Pinker’s interesting new book, “The Better Angels of our Nature: Why Violence Has Declined,” is worth considering in the context of this essay by Mead. Pinker demostrates that contrary to the popular imagination, violence and poverty are at an all time low in human history and there is every reason to assume that these positive trends will continue.
The tough part is that in the new world we are approaching, entrepreneurialism will be compensated more richly than ever. The ability to adapt quickly and creatively to changing market conditions will be rewarded in an even greater way in the future than it has been in the past. The problem that needs to be figured out is how to deal with the reality that millions of Americans will never be equipped with these skills. How to provide them a reasonable level of economic existence will be a critical question. In all liklihood, this job will fall to Government.
Republicans have it all wrong; in the brave new world we are entering the role of government will be even bigger than it is now, not smaller. The Democrats also have it all wrong; the Government we have now is ill-equipped to carry out what will be its new and more critical mandate; in the future, it will need to operate in a far more efficient, productive and less costly manner.
I think Professor Mead is also entirely correct in his thinking that providing services, perhaps in a botique fashion, will represent the new underpinning of the modern economy. We already see glimpses of this. Professor Mead uses thie example of California; he’s right, family farming in California and elsewhere was savagely wiped out by the creatively destructive impulses of capitalism because those farms were inefficient. Now, in California and elsewhere we see the reemergence of family farms. These new farms grow high value added organic produce and high value added meat that is in great demand; more efficient factory farms can’t provide these items because the people who consume this produce and meat value the fact that it was grown in a botique manner.
We see the same thing in other areas of the economy. Amazon has made it possible to read almost anything by making a wireless purchase. Publishers aren’t needed and neither are book stores; the only thing that is needed are authors who want to write, readers who want to read and an intermediary who wants to connect them electronically. But, surprise, surprise; people don’t want to read alone anymore than they want to bowl alone. Walk into a Starbucks and count how many people are reading ebooks on their e-reader or computer. Smart entrepreneurs will figure out how to capitalize on this reality; the less smart will learn how to make a decaf skimmed latte.
Overall, the new world will be better not worse. All of human history has been a march towards a better life; it’s just that there are alot of bumps and bruises along the way.
The problem and reality is the millions of Americans you alluded to as disintermediation affects these millions disproportionately; yet Steven Pinker provides a pathway: Reason (“Believe it or not, we are getting smarter.”). Also, I concur that the brave new world of 21st century requires more government albeit a much more competent (efficient) and honest government. “Government is the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization.” (Franklin D. Roosevelt)
Anthony, it’s remarkable don’t you think, how so many conservatives worship the free market with the fervor with which they worship the deity? Professor Mead doesn’t point it out in this essay, but the cataclysmic disruptions that accompanied the evolution of American capitalism from its first incarnation to its second, was midwifed by the Government. In fact, with the dust bowl, the massive unemployment, and the ubiquitous homelessness (remember the Hoover Towns) that were the result of this evolution in capitalism, the whole system would have imploded under the same type of revolution that occurred elsewhere but for the intervention of Government. Without Government intervention there would have been no capitalist system left to save.
With the massive disruptions coming as we get ready for American capitalism version 3, the role for Government will be just as big or bigger. Without it, social unrest may become so severe that the whole system will become unviable.
WigWag, two thoughts on your observation (mind you this is speculation on my part): 1) regarding deistic like fealty to free enterprise nee free market, the converts – aspiring businessmen, entrepreneurs, beneficiaries of windfall or deal, etc. – discover overwhelming virtue in a system purported (as in a Pauline revelation) to make him/her a million plus if left alone; odd thing is, the Elites and Plutocrats who really benefit never bellow loud about the merits of free enterprise – they promote the ideology through other agents. 2) WRM intimated in essay but you correctly point out that there exist the potential for an explosive situation – what professors are apt to call a “dynamic configuration” – and effective government going forward in a mixed economy has a viable role to play via intervention for benefit of commonwealth.
And there is a deus ex machina in this scenario too. The Affordable Care Act mandates the proliferation of the 29 hour work week and the 49 employee firm. This will encourage small business and put many more people to work. While 29 hours a week might prove hard to live on for some folks, a real go getter could polish off two jobs in just 58 hours and still have plenty of time to rent himself out as a fetching pool boy at the weekends. FDR couldn’t anticipate that his war time price controls would one day bankrupt General Motors. Who would have guessed that the ACA would provide the critical structural changes through labor market reform that give the US a fighting chance to adapt to the post Blue economy of the 21st century.
While 29 hours a week might prove hard to live on for some folks,
But maybe not has hard as you would think at first sight. One of the biggest items in the family budget is the cost of the land on which one’s house or apartment is built. Families bid against each other to live in good neighborhoods with good schools. But if every family’s hours and take home pay decline in tandem it could leave every family more or less where it was before. Landlords would suffer, but that’s another matter.
Also families might spend less on childcare and eating out than when moms are working 40 plus hours a week (and dad too).
Also real hourly wages may rise as a result — at least this would be the result if a 30 hour week were mandated by law, since it would effectively restrict the supply of labor. Not sure if the same argument applies in this case.
Forgot to mention that worker hourly productivity might increase modestly (and pay with it) since people can work harder for shorter periods of time.
But, yeah, families would be pressed. Then they are already pressed.
I don’t think that having Dad and Mom tagging each other out on child care is a good idea. 30 hours + 30 hours + two commutes, and you have two people who never see each other.
Frankly, the modern era has not provided an improvement over the Dad-breadwinner Mom-childcare model.
“…generating a complex mix of political and social pressures that will shake the country to its foundations…. The question, and it is not only a question for Americans, is where do we go from here?…. One doesn’t have to be a Marxist to understand that the way people relate to the economy is critical to the way a whole society works.”
Science and technology simultaneously furthers capitalism’s end and constantly alters the labor market – composition of labor force radically altered by technological change. America’s job crisis reflects a failure in the labor market itself (we need active labor market policies: addressing rise of service economy in global market context; building relevant skills among citizenry; matching workers/skills with appropriate jobs context; and long-term jobs strategy to include Millennials and young people generally who will need certain skills to function next four decades in labor market.) as attempts to address periodic market malfunctionings are condemned as encroachments on freedom.
Although the present system has engendered both lopsided priviledge and inequality, its beneficiaries are not generally aware that they are priviledged systemically (merit and hard work responsible). Most importantly, it is public response that sustains.
“What is happening as the average citizen looks on in disbelief is that an outworn, patched politico-economic system is cracking, while no serious steps are taken to ascertain the causes and remedies. The causes of Ameican insufficiency, at home and abroad, are political, not economic, or at least political before they are economic. Better put, they are cultural. Serious problems cannot be solved on the basis of a consensus of value-disoriented….”
Two problems (at least) with this analysis, another in Via Meadia’s patented series. First, your optimism is founded on a historical perspective and not on a present perspective. The transformations you describe that American and other societies survived occurred over many generations. We today are legitimately concerned with our own individual life chances and trajectories and not, or not only or not primarily, with the shape of society and the economy 100 years from now, when your successor will be able to look back over it all and easily demonstrate how there is no uncertainty how and why things turned out as they did. Second, as merely the latest in a long line of prophets foreseeing our emancipation from labor, Via Meadia would do well to recall this from one Hannah Arendt Blucher (interred in Via Media’s very own corner of the earth) a half century ago: “It is a society of laborers which is about to be liberated from the fetters of labor, and this society does no longer know of those other higher and more meaningful activities for the sake of which this freedom would deserve to be won.” I see no evidence that her assessment is not as valid today as it was then.
[edited to correct egregious grammar]
In short: history is bunk; what’s in it for me; who cares about our descendants; and let’s pontificate about “emancipation from labor,” even though the Professor suggested no such thing.
Via Meadia wrote: “Human energy will be liberated from wringing the bare necessities from a reluctant nature; energy and talent will flow into making life more beautiful, more interesting, more entertaining and easier to use.”
I am assuming you somehow didn’t make it this far into the essay.
Darn it. My lame dictionary failed to define labor as “wringing the bare necessities from a reluctant nature.”
Reporting on Europe and how they are dealing with this development strikes me as erratic. My instinct is the impact has to be much worse there.
Great essay. What does my daughter major in when she starts college next year so that she does not wind up like Tom Joad?
Here would be some suggestions:
1) Anything leading to a job in the health care industry (aging population = rising demand for health care services)
2) Petroleum engineering. The supply of reserves overwhelms the available engineers required to find them and extract the oil and gas.
3) Software engineering. The demand for software is infinite, and there is a severe shortage of people who can develop good software.
If she is smart and talented and wants to be rich, tell her to get an undergraduate degree in software engineering and then an MBA. Then tell her to go to work in Silicon Valley.
Agree. But she should work in Silicon Hills (Austin, TX) where all American chip design is done (IBM AMD Intel, satellite phones), where there is a huge infrastructure of academia-govt-industry, and an enormous talent pool all working under regulatory, legal and tax environments designed to creatjobs & wealth rather than, as in CA, to destroy them. When the CA bill comes due on the $1.2+T of debt, the taxes required to cover it will crater the state for generations. I’m in CA and have been in tech 35 years. The tech startup for which I now work is in Austin.
Agree. Silicon Valley is just an example. Austin and Boston are also great places. I live in Atlanta and do consulting for startups in Silicon Valley, Austin and Boston, so that is proof that if you have the skills you can actually live anywhere and prosper in this industry. But you have to have the skills.
@Maul. The oil and gas field. That will be the fuel for the next 100 years, too. In ways we can barely imagine. The new discoveries are as awesome as they are empowering.
Disagree. While I will admit that there might be too much environmental drum-beating going on, they do have a point. We will definitely manage to get off fossil fuels within 100 years. Probably within 50.
We’ll need to.
Hustling for customers *is* servile and degrading. The business culture has been trying for the last twenty years to deal with the lack of work by turning everyone into an independent contractor who treats everyone they meet as a potential customer or contact. “Networking” is stupid and degrading. I would prefer to treat the people I meet as human beings rather than opportunities.
If you are not willing to work hard and “hustle” to sell and then serve your customers then you have decided to become worthless. Move to Venezuela, Cuba, Iran, or N Korea and live off of a state that is willing to support you.
Networking is degrading only if you don’t deal honestly with people, it is degrading if you do them the disrespect of being dishonest. Any honest exchange, mercantile or otherwise, is uplifting, an opportunity to help, serve, and love someone else. There are people who fail to tell the truth while marketing, but there is a better way.
If the cycle of history hold, there will be a major war by 2025 and that will take care of a lot of problems you fret about, Mr. Mead.
Of course, such a war will create a different set of issues, but that’s a story for another time.
I wish I could be as optimistic as Professor Mead, but he is reckoning without a key difference between now and the early 20th century, our advanced state of cultural rot. From collapsing birthrates to abortion, up to and including infanticide, to the destruction of marriage and the family to drug abuse and addiction to political correctness to the collapse of education to the denial of biological reality, we simply lack the cultural and moral wherewithal to withstand the pain of the transition or find a way forward out of it. That’s why where Professor Mead sees hope, I see imminent (and I believe deserved) collapse.
It’s never a matter of “cultural rot” for everyone. There are subcultures within this country that still remember and practice the kind of admirable virtues the overall culture despise, in its orgy of self-destructiveness.
There’s no reason to despair. At worst, only a small remnant will survive. At best, that remnant can fan the flames into brightness again.
You are assuming that the collapse will be sudden and you will be one of the small remnant left.
That is not how this will play out. You will grow older watching your quality of life slowly diminish even as you struggle to add more hours to your pay week to keep up. Eventually you will grow too old and eventually die, maybe on the job.
You’re kids? You’ll get to watch them suffer because they won’t even get a decent quality of life. They will get to be tax slaves for the minority classes and get to live a least common denominator Government Issue Lifestyle.
America won’t fall, it’ll just be a hellish place to live for anyone without connections to a government job or the welfare state.
I’m not expecting to retire, really, not before 80 or so. No decades of healthy leisure for me, certainly.
As for my kids — I expect they’ll head off to seek their fortune wherever that may turn out to be. I’m hoping that will be in America, but at this point that isn’t necessarily all that likely. Not to pick on southern Ohio, but that’s not the place I’d expect them to find their fortune. Not where I grew up either, or even in Silicon Valley, unless they pursue specifically computer-related career paths.
The “remnant” will escape any potential collapse by being flexible, mobile, and above all having the sort of cultural values that made America great in the first place.
“Our jobs problem won’t be solved by macroeconomic policy shifts or money manipulation by the central bankers.” Oh, but the pols and central bankers can’t stop pretending they will be. And because they are unable to understand all the interrelated global economic factors, never mind somehow deal with them effectively, the self-inflicted pain will continue. Eventually, in spite of the fools and their policies and printing presses, the economy will stabilize into some new sustainable form. But this won’t happen by next week, and it won’t include a nice neat answer for every single one of the struggling millions.
The farming era necessitated that we have large families, and the industrial age driven by mass consumption allowed us to find jobs for most of our people, but nothing appears to drive this undefined set of new jobs Mead talks about. I believe that we should take advantage of today’s DNA research along with our ability to model complex problems to determine the number of people we need then plan to get there. Since introducing hunting seasons to control human population is not feasible, perhaps we should find more civilized ways to arrive at a more sustainable level of humaniods. Seven billion headed for ten billion is not a good plan.
When the farms died, there were strong support structures in place – strong families, strong churches, county-level welfare, an integrated culture. The regulatory burden on industry was modest. The Utopian movements of the 1930s were cowed by their excesses revealed by WWII.
Today, the family structure is greatly weakened, especially in the black community. Large numbers of children are raised without fathers. Marriage is being defined away. Religion is being squeezed at every turn. The federal government is increasingly the fount of means-tested welfare. Taxes must rise to support rising spending. The regulatory burden is massive. The national debt is massive. Our culture is increasingly divided. The Utopian movements are back with a vengeance as environmental extremism.
The future is not as optimistic as Polyanna Mead seems to think.
The history of previous technological revolutions tells us that the transformations are indeed difficult and oftentimes violent.
Governments, regardless of their form, are institutions that exist to preserve the status quo. When they acquire sufficient power to temporarily stand athwart progress, those most adversely affected either die or find relief through emigration or open revolt. Europe has experienced successive waves of resistance, most recently during the first half of the 20th Century and now once again (e.g., France’s youth see better opportunities abroad than at home).
The U.S. has previously benefited handsomely from these death throes; however, our government has now grown to the point where it, too, can temporarily resist change. It is far from obvious that the the path to the future will be easy or without much struggle. But one thing is sure: the future will come, no matter what.
@Circle. Much of what you write is correct, but I would argue we have a government today that is working overtime to OVERTHROW the status quo–not preserve it. And I do not mean in a good way.
@Rick. Absolutely right, Rick. AND, people who came off those farms knew how to work 16-hour days of hard, hard work. I can barely get my teenage son to pull weeds for 20 minutes for $10.00. We are in for a world of hurt/reality. Sooner than we think.
Prof Mead has nailed it again.
As much as I revile Obama’s socialist and redistributionist policies the fact is that decline in labor force participation started becoming a serious problem with the start of the G.W. Bush administration. The Bush tax cuts managed to pull us out of the recession caused by 9/11 but they did not fix the real problem with jobs that was only starting to emerge.
Obama’s polices have only made the problem worse. High spending, high deficits and lots of handout’s to unemployed people may temporarily alleviate the pain of the problem, but they do nothing to address the root causes of the problem. Furthermore Obama’s approach has been proven to come with the cost of low economic growth which is a pre-condition to jobs growth.
To fix this problem we have to get to one core truth. A worker or employee of any type is only worth what an employer is willing to pay that person. Therefore in order to get more people working we have to make more people worth hiring at a wage at which they are willing to work instead of just sit back and collect unemployment benefits.
I do not claim to have the answers, but here are some things that might help:
1) We need Federal fiscal policies that promote private sector growth. That means restrained spending, low deficits, low simple and fair tax rates, restrained regulation, and predictable monetary policy.
2) We need to stop paying people not to work. The expansion of people on welfare, unemployment, food stamps, and disability needs to be rolled back to pre-Obama levels.
3) We need to stop subsidizing higher education. This drives up the cost of tuition, and fools people into thinking that no matter what degree they borrow to get, it will all work out. College needs to be treated as an investment that needs to generate a return large enough to pay for the loan if money is borrowed to fund the investment.
4) Unionization by government employees needs to be banned at all levels of government. Government employees are the servants of us taxpayers, and should not have the right to hold us hostage for higher salaries or benefits. If they do not want to work for what the government is willing to pay, they can go find a job in the private sector.
5) We need to completely re-invent our educational system. The focus needs to shift to producing people who have the skills that employers are willing to pay for. When I went to high school you could take a class in how to repair a car engine or take a an advanced class in Economics or Physics. By the way, given the computer technology that is now in a modern car and the computer technology that is used to diagnose a car, repairing a car could be considered a high tech job today.
6) We need a robust system of adult education and skill building which can retrain those left behind by continuing shifts in the economy to do productive things that earn a good wage or salary. Believe it or not there are many unfilled jobs even with unemployment as high as it is. The unemployed simply to do not have the skills required to fill those open jobs. But they can be trained.
Yet… Yet … What kind of education best serves a high-value, person-to-person economy? A classical liberal arts education. And what has happened to this field? Complete corruption of classical liberalism, turning it on its head to become the statism of progressivism, the antithesis of classical liberalism. And where have we been pushing our best & brightest for generations? STEM & Law.
The SINGLE MOST FUNDAMENTAL CHANGE required to ensure the competitiveness of our youth in the global market, ensure the growth & success of (and happiness in) a high-value service economy is to utterly overturn our Schools of Education, now home to the students with the LOWEST SATs of ALL college students, get Dewey OUT of these schools to foster a return to the much-needed classical liberalism (if any people remain to teach it) and drastically raise the pay – and outlaw the unionization and tenure of – teachers to attract & keep the best and brightest.
Further to my below, serious consideration – very serious – needs to be given to drastically changing the school calendar. The best & brightest that we need in K-12 are not going to be challenged by working only 9 months a year. To keep them in the classroom, the school year must be altered from the agrarian model we still have long after we have left an agrarian economy. Yet kids still need a break and families still need the enrichment of vacation travel. Many alternative school years have been proposed over the decades. One needs to be decided upon. These changes to the delivery of, especially, K-12 must precede our ascent into Dr Mead’s future, or we will instead be descending into Joad’s past.
When the government’s agenda changes from self aggrandizement to macro economics America will experience an epiphany…
I have to say that flooding the country with more and more cheap labor every few years is not a way to create a “jobs ladder” for citizens.
It seems in California we almost protect the jobless from jobs by supporting them financially, and at the same time under cutting the wages they could command should the try to reenter the workforce. We seem to be working at cross purposes, because there seems to be no “we” anymore.
I’m not in favor of 33 million new people competing with my kids for jobs next year.
We can’t control automation but we can control a lot of the causes of unemployment and excess labor.
Good point. Just how does importing millions of more foreign workers (low skilled, and high skilled) help? But now you and I have labeled ourselves as hopeless nativists, racists and xenophobes who should be excluded from polite society.
He makes no mention of how things changed when LBJ waged war on poverty in 1965. Since that time the government opened up the coffers to poor women willing to have children prior to becoming useful to society, that is to say LBJ subsidized the reproductive habits of poor women. Many of these children have no place in our modern economy and if they do obtain the education they need they will be deeply indebted to the banksters.
And those banksters are getting their pay off for their role with the daily-never-ending-never-to-big-to-stop-the-welfare-transfers in exchange for filling Oblamo’s campaign coffers.
“Cast your bread upon the waters.” That obscure verse is more than 2500 years old, in the Old Testament, and can, to me at least, mean : ” Life is dangerous. Give it your all.” It’s still valid. One idea I have is that the laws which were put in place to manage the past, need to be relegated to the past. Repeal the farm support laws. Repeal the industrial worker protection laws. Let the land-rich become cash-poor and then sell their land to some hungry others who can do something productive with it.
Technology is not the only factor in declining wages and increasing inequality. You cannot talk about the labor market without talking about the mass entrance of women into the workforce, combined with mass immigration, legal and illegal.
It is an employer’s market due to the vast number of people competing for jobs. We keep being told we need amnesty and MORE immigration, even with millions of people unemployed. That policy exists only to serve the interests of the elite, both corporations looking for the upper hand on pay and politicians (Democrats) looking for voters and welfare clients.
Women are pushed to pursue careers for the sake of “independence” and “self-actualization”, while men fall farther and farther behind. Now there are roughly twice as many people seeking the same jobs, and women are given the advantage at every turn thanks to affirmative action and an educational system focused solely on their success. Feminism is not a “win-win” ideology. It exalts women at the expense of men, and in the end leaves everyone worse off.
In the past a man earned an income and was happy to support his wife and children. The reverse does not happen in reality. The number of women will support a “house husband” is extremely small. That’s how you end up with mass illegitimacy, which only further disadvantages everyone not born with a silver spoon in their mouth.
In short, the elite have been attacking the social and economic foundations of society for at least 50 years, and the effects are becoming impossible to ignore. Even if they were able to bail themselves out this time, the economic consequences will eventually hit them as well.
Destroy the family, flood the country with immigrants, drive down wages. Everyone from corporations to welfare-peddling politicians to social liberals can agree on at least two out of three of those ideas. That’s why it’s happened.
You forgot to mention off-shoring labor-intensive manufacturing processes to low-wage areas like China.
A triple whammy.
Move on to what jobs?
The old days are over, there are no private sector jobs being created in the US.
Just what does this author think people are tangibly going to do to earn a living?
The answer is, he doesn’t know either.
Wrong. Go find the post by ‘maulerman’.
Maybe we could just increase taxes some more and add another 10,000 pages or so of regulations…..surely we can regulate joblessness, maybe have background checks for cots at the shelter, I’m certain that will help.
Actually we should fine the unemployed. The administration is going to fine those without health insurance to get them to buy it. Fine those without jobs to get them back to work. If they can’t afford the fine, throw them in jail. 🙂
Mead has it wrong. This recession isn’t cyclical, it’s systemic. And that’s why all of the cyclical recession remedies haven’t worked with this recession.
You don’t think the policies of Obama and the Democrats have nothing to do with it ? Swimming upstream is hard and sometimes people give up. Of course, 20,000 pages of regulations need a lot trees cut down.
I most certainly believe Obama policy is to blame for the lack of a recovery. More on that later…
My comments about cyclical vs systemic can summed up this way. Cyclical recessions are a result of the business cycle consisting of trough, recovery, prosperity and contraction. I used the term systemic recession but more accurately should have stated “structural” recession. A structural recession comes to be when a part of the economic system is structurally impaired. The 2007 recession didn’t come about cyclically but structurally as the banking system was and is broken.
Cyclical recessions respond to accommodative monetary policy. Usually in the form of low interest rates. Which we have on steroids and have had since the recession started. Yet there has been no recovery in response to the accommodative policy.
That is because cyclical recession remedies won’t work with structural recessions. To deal with a structural recession, the damaged infrastructure must be identified and repaired. The structural break down is in the banking sector. Nothing substantive has been done to address this.
What was done to deal with the banking sector has been flawed from the get go. They are no more solvent today than they were in 2007. The only reason why they appear solvent is due to the crony FASB changes that allow banks to claim any value they please for assets they hold.
Furthermore, the poisoned banks haven’t been purged from the system as they should and would be in “natural” capitalism (natural being capitalism without crony rule changes, trillions in bailouts and the fed’s artificially low interest rates). These all reflect obama’s flawed policies.
What should have happened and still needs to happen is for banks to go back to mark to market with only the strong surviving. The one’s that don’t survive should be allowed to fail without consequence to the taxpayer in the form of bailout like costs. Bankruptcy works and is an integral part of capitalism. But in order for it to work, capitalism cannot be perverted with crony rule changes, bailouts and artificial interest rate levels.
Iceland did this. They let their banks fail and put bankers in jail for bringing down the system. Something we should have done. Iceland is the only economy in the world in a bonafide recovery. The reason is they let capitalism work naturally and unfettered.
@Michael. That is was Sal is saying. These policies being put in place by the Obama administration are creating and perpetuating systemic failures.
What has really driven jobs from America are the govt alphabet soup of regulatory goons and their Democrat cohorts in the legal system, the trial lawyers. One court case made John Edwards and multimillionaire…and a cad. Add to that the corporate hating, class warfare drumbeat of the liberals and who in their right mind would want to run a business in America?!
@Don. “who in their right mind would want to run a business in America?!” That would be . . . me. I do it for my own selfish interests. And I love it, hire people, create wealth for people, produce knowledge that people read and enjoy–and I love it–in spite of the obstacles they throw in my path. Still, John Galt will be appearing sooner than I had hoped.
Great insight! Too bad the “gang of 8” doesn’t spend as much time helping Americans find good jobs as they are spending on helping 11 million illegals who suppress American wages and use American resources.
You gotta ask “why?”
And the answer is “Because they vote the way we want them to.”
Wow. Most of this article is a heaping, steaming pile of B.S.
The answer to our economy is clear. The government can lead us out of this mess. We need stronger government regulations to assure evereyone pays their FAIR SHARE ! We also need millions more unskilled and uneducated citizens to take part in our welfare system. We have enough wealth in this country for all. We just need to distribute it correctly. Like the constitution says “to all according to their need, from all according to their ability”.
Good article, but somethings are missing. Despite all of the innovation the author cites, things still need to be grown from the ground, or dug out of the earth, refined, and put together. Mechanization does a lot of this work for us these days, but it is still work and there is lots of it out there and always will be.
Much of what is happening is a fundamental shift, but not entirely in the way the author imagines. What is happening is that the old developed world is stagnating and the ‘developing world’ has seized the momentum of growth. Consider that in much of Africa and Asia, economic growth rates, even during this recent global recession, have been higher then 5% per annum. That’s huge. Yes they are poor, but they are also dynamic, have lots of children, cheap labor, and abundant natural resources. In short, they are in many ways what we were.
When Rome fell — which it didn’t ‘officially’ until Napoleon mercifully put the Holy Roman Empire out of its misery — the world did not collapse, despite popular imagination to that effect. Rome collapsed, but life went on every where else — more dynamic in some ways than it had been there.
The developed West has had a good run but is running out of steam, though it may be another 300 years before it is obvious.
I don’t understand how your first paragraph relates. Within 30 years, robots will be able to plant, harvest, refine, and assemble just about anything, including other robots. Yes, it’s true that all of these things are still “work” but humans won’t be the ones performing the work.
This fear of automation is right out of the Marxist playbook. He fails to mention the societies that are the least productive are also among the poorest. The workforce is going to shrink as the boomers retire, jobs will be available for the young as long as we can get government off the back of the private sector. The true threat is the unaffordable entitlement programs.
I disagree and I’m no Marxist. We are only scratching the surface of what automation can do. I say this as someone with a graduate degree in Computer Science.
The job losses will be substantial. The private sector will look for ways to reduce costs, and find them increasingly in automation. We might see the day that the city folk return to being farmboys for subsistence. I’m teaching myself and my children how to garden.
I am a software developer by trade. Automation has allowed companies to grow and expand their market. As a result they hire more people. Not to mention supporting all of us.
Obama made a similar argument regarding ATM’s. The problem is there are more bank tellers now than there were before ATM’s came on the scene. There is also more banking activity.
Textile workers made the same claim in the 1800’s. Automation would destroy their jobs they said. 15 years later there were 10 times as many people employed in the textile business as before. The reason is costs were reduced, that savings was passed on to the consumer which drove sales volume through the roof.
By the reasoning put forth in this article we never should have invented the wheel. The anti-automation crowd is never able to see the next growth area. Admittedly there is a transition period where wages and employment is depressed temporarily. Government is foolishly trying to cling to the 19th century industrial model which is slowing progress.
I think it’s different this time around. It’s one thing to talk about looms in the garment industry. This time we’re talking about automation that is all-encompassing and touches almost every industry. There are just so many jobs that are replaceable. I think about an auto assembly line, and it’s difficult for me to imagine what jobs a robot WON’T do in 20 years. Are consumers going to start buying a few cars a year because of the savings?
Calling it “anti automation” betrays a bit of bias. I love computers and have owned many since 1981. Those of us who work in this field are at an advantage, of course, and I’ll encourage my kids to follow in my footsteps. And I don’t sense that the author of this article has any animosity either. He’s just trying to express the reality he sees coming.
I think the question is how to feed and entertain hordes of unemployed people. The issue not whether the wheel should have been invented–we all see the advantages it brings–but rather how to keep the wheel from causing mass chaos.
If we can re-energize the economy there will be jobs opening up that we can’t even imagine today. My job didn’t exist 20 years ago, now there are millions like me.
We do have challenges but they can be met with the correct policies. We need to demolish the government monopoly on education as soon as possible. This 19th century Prussian model is not serving us well.
Auto jobs have been lost to automation, and sometimes the names changed on the factories. GM lost dominance but Toyota and Honda now build cars in the US. To encourage more of that we need to stop government from being at war with the private sector.
There are also emerging markets with millions of new consumers who will be able to afford to buy consumer goods they couldn’t afford previously. Again, we need to be competitive.
One thing we do have is the largest reserves of hydrocarbons in the world and we shouldn’t be shy about exploiting that. Decline is a choice, not an inevitability.
You have to remember the western nations are in demographic decline. When the boomers retire we might end up with a worker shortage. We won’t have shortages in the low skill market however.
Automation may not replace everyone, but it will replace boatloads of people. What do you do with all those unemployed people? Half the population has an IQ at, or below, 100. Folks, 100 is not very smart. You cannot train them to be programmers or engineers. Robots will be doing their work. So what do you do with this large group of people?
Considering that we currently give these people trophies and tell them how special they are, there will be a lot of very angry people and smeared police cars. At least they’ll each have a blog.
Unleash the private economy starting with the energy sector. Plenty of good paying muscle jobs there that will create huge revenues for business and government alike. Broom the Socialists out of Washington and above all stop allowing millions of under-educated, low skilled workers into the country through illegal immigration. Will we do any of this? No, because the idiots in Wash think they know better. These low information types will keep voting for them too.
There is one fatal flaw in your argument. This time we are trying to factor humans out of the employment equation. Farmboys went to the city to find work, and , many times found it. Now the farmboys are not needed because the humans are not needed.
Companies would like to hire more people, but the government does nothing but punish them when they do so. We need a government that can learn not to.
I’ve heard this argument many times before—that technology is destroying the old jobs people once had. However, I’ve become skeptical of it. If technology allows some process to be done more efficiently/cheaply, this means there is more capital (e.g., money, time, etc.) freed up to pursue ventures where one may have more of a competitive advantage. Early factories in this country were able to increase the wages of their workers precisely because with the power of machines one man could now do the work that it formerly took five to do. Wages don’t magically increase; higher productivity is the driver of this phenomenon.
So what could be the culprit? I think you have to lay the blame at the foot of government intervention in the economy, which has increased substantially over the decades. Minimum wage, OSHA, Obamacare, building codes, laws dictating the firing of employees, Fed malinvestment and boom and bust, etc. have all served to drive the costs of hiring people up. Further, unemployment benefits have become even more generous, which is further incentive for people to half-heartedly search for work (especially if the benefits are more generous than actually working).
It makes sense why producers and employers would try to hire as few people as possible. If nothing else, get rid of the minimum wage and let people garner experience, a paycheck, and some self-respect by being allowed to work at a rate that they agree to with an employer. People don’t usually stay low wage for the rest of their lives; they need a chance to start somewhere and learn skills they can leverage for more money.
All this being said, I believe the biggest issue is that the Bismarckian/Progressive public education system is a total and complete disaster and must be dismantled through privatization. You need to have schools (in whatever form they may take) apprenticing kids and teaching them skills for the economy. Rockefeller started working when he was like 12 and owned his first refinery by age 25! Young people should put their ambition, talent, and energy toward something more fruitful than being babysat for 8 hours a day by union employees who likely have no real-world experience or skills to impart (just look around you at the people who became teachers; is this the best we can do for the young generation?).
Boom. Well put.
Human progress is forever forward. But that progress often comes at a cost – it is never a hockey stick going up without fail. Instead, transitions come with danger and tragedy. Luckily, the danger and tragedy of the past has always been overcome (the industrial revolution also helped usher in WWI and II) relatively rapidly. However, each time the cost to overcome becomes greater and greater. Is it possible that, at some point, the cost is too great and humanity falls backward for a long period of time?
One irony this piece misses, is that manufacturing in the U.S. is clamoring desperately for skilled workers while students stumble blindly into the colleges for degrees where no demand exists.
Reading “technology is taking away jobs” is like a flashback to 30 years ago.
Listen: Owing to increasing efficiencies, it takes very few people to produce the goods and services that everyone needs. Once those people have their jobs, all the other people who are not them will have nothing to do. And that is the defining concept of the future. There are just not enough things for people to do. There are no jobs because there is nothing that needs to be done.
Our economy hasn’t been about what “needs to be done” for centuries.
Trying to logically work out all the unnecessary things people want done so much that they will pay for it is just not possible. It’s too dependent on whims and fashion. Even if it does turn out have some rationality behind it, we only know after the fact.
That’s why we have to have a free market. Its trial-and-error is messy and baffling, but it is simply the only way to figure out how the economy can work itself out.
“…it takes very few people to produce the goods and services that everyone needs.”
Are you serious? *Every* paid job in the world produces “goods and services that everyone needs”…every single one. Or are you semantically approaching this differently and saying that most jobs are superfluous, when you account for the simple *needs* of everybody, compared to their *wants*?
“Now as then the new era, while different and in some ways more challenging, will be more prosperous than anything ever seen.”
This is a statement of blind faith. It is the echo of the NAFTA debate, now ringing hollow by its very repetition. The problem with envisioning a prosperous service economy is that too many of the skill sets required for those jobs are held in common by most people. Therefore an overabundance of supply suppresses prices for it. “Protectionism” brings reactionary responses as an article of faith, also. I predict we will be revisiting that word when mere blind faith in the new service economy becomes too much to bear. Soon, I presume.
Automation isn’t the job killer many think it. I know. BTDt. Somebody has to design, engineer, build, maintain and service the automation. If we were inclined to protect jobs, those jobs building new, specialized automation would be very lucrative, indeed. It won’t replace old mfg. one to one but it would make a serious dent.
This is a big deal that isn’t at all like past migrations from one industry (e.g. farming) to another.
The change here is that all but very highly skilled labor, defined as that which cannot be economically automated for whatever reason, cannot command wages much beyond modern subsistence. This isn’t a shift from one form of labor into another. There simply isn’t anything in history indicating so large a part of humanity being suited to highly skilled labor.
As an Jew who believes in the redemption of humanity through the coming messianic King, and in that only “by the sweat of your brow, shall you eat bread” being but a passing curse rather than an inherent property of the human condition — this — less and less need for human economical input — is good news.
I’m not wealthy, and thus I too participate in the general malaise, but I can and do live staring at the light at the end of this tunnel.