
We’re not going to have a jobless recovery. We’re going to have a jobless future - yarapavan
http://www.buzzmachine.com/2011/08/05/the-jobless-future/
======
pg
"Our new economy is shrinking because technology leads to efficiency over
growth."

Anyone who wants to make the claim that technology is net killing jobs has to
be prepared to answer the question: why now? Technology has been killing (but
not net killing) jobs for centuries. It's possible that technology could start
to net kill jobs. But why now, when it hasn't in the past?

~~~
Eliezer
PG, what probability would you assign to the propositions "This time things
are different" (empirically: the jobs won't come back 5 years from now) vs.
"This time things are not different" (empirically: the jobs will come back 5
years from now)? Warning, if your probabilities are extreme enough, someone
might want to bet you on it.

Presuming things are different, I see five obvious answers to the original
question (and "all of the above" is also an option).

1) The amount of regulation and regulatory burden has increased sufficiently
between then and now, that new business relationships have a much harder time
replacing old destroyed business relationships. I.e., it's now more expensive
to hire a new employee.

2) It's a novel change in the financial side of the economy. Like, capital-
holders now try to make killings by investing in the right HFT funds instead
of trying to go out and invest in new businesses. Implausible? Maybe, but
finance _has_ changed a lot recently, so the difference, if there is one,
might be there.

3) The amount of re-education required to get a new job has increased enough
to be a killer barrier to re-employment, whether because of employers having
imposed an arbitrary demand for bachelors' degrees or because the jobs are
actually more complex.

4) Ricardo's Law does allow individual regions to lose as a result of tech
improvements, because if someone else beats your comparative advantage, people
will want to trade with them instead of you. There's nothing ahistorical about
the Rust Belt having a persistent recession within the US. This is now
happening to the whole US; people no longer want to trade with us, but China
is growing plenty.

5) The Thiel hypothesis: Recent technological developments are intrinsically
more boring than past technological developments; people are trying to build
web apps that will sell to Google for $10 million instead of trying to invent
the next "microchip" or "electricity". It's not that the 21st century poses a
novel obstacle to forming new business relationships to replace old ones;
rather, 21st-century technologies that obsolete jobs are missing a wow factor
or wealth-generating factor that previously increased demand or increased
total wealth at the same time as obsoleting jobs.

~~~
ellyagg
I, too, thought that the job losses were permanent. Until there was an article
posted here the other week with quotes in news outlets from several different
eras since the industrial revolution claiming the same thing. Plenty of
reasonable sounding explanations are offered elsewhere in this thread for why
this time is different, but then lots of reasonable sounding explanations were
offered in the past.

I'd say it's 95% that job losses aren't permanent, although I'm not sure 5
years is enough time to settle it. I'm perfectly willing to believe we could
be in a recession/depression for the next 10-20 years. That has precedent in
our and other economies. However, I'm not prepared to believe that--simply
because I can't imagine what people will do--people won't end up doing
something. Everyone likes to be productive, and humanity has a really
efficient means of organizing labor to trade around everyone's productivity.

I am all for 95% or 100% unemployment, though, if such a fantastical reality
can come to pass!

~~~
pbhjpbhj
> _I, too, thought that the job losses were permanent. Until there was an
> article posted here the other week with quotes in news outlets from several
> different eras since the industrial revolution claiming the same thing._

// It's like peak oil isn't it. We keep getting "we're at [or passed] peak
oil" but then a new oil field or new extraction method makes this seem less
likely. Thing is that oil will run out.

To me technological changes haven't converted in to less jobs because we've
exploited those changes to increase resource use, and hence production. As
natural resources falter then we can no longer have the increased resource use
and so the removal of jobs via technological improvements can't be mitigated
by the addition of jobs in new areas.

There are various resource pressures and financial problems that suggest to me
that we're at the turning point. It would be nice to be wrong about that in
some ways.

~~~
rayiner
Oil doesn't have to run out to drastically change the economy. The new methods
of extraction are more expensive than the old, and the price of oil per barrel
is a lot higher. One can easily imagine a system where the equilibrium
unemployment with oil (ie: energy) at $X+10 per barrel is much higher than one
with oil at $X per barrel.

------
mdasen
Do you have everything you want in life? I don't just mean, "do you have
everything you want of what you could purchase with money today?" I mean
everything you could want.

Articles like this one make me feel like there isn't a lot left to do in the
world - that we're close to stopping our progress toward better living
standards. If we are stopping or slowing our progress toward higher living
standards, then yes efficiencies do kill jobs.

I don't see a jobless future. I see a future with a different mix of jobs. To
be fair, the author does touch upon this a little as s/he is encouraging
investment toward new industries. However, I don't share the author's sense
that these new industries and new economies will definitionally employ fewer
people. Automation and efficiencies have been seen since the industrial
revolution. Two centuries in, all this automation doesn't seem to have driven
unemployment to a skyward trend over the long run.

If we were pursuing a finite goal, greater efficiency would mean that we would
need less labor. However, I don't believe that our quest for better lives is a
finite goal. People are always talking about things they wished existed or
things they wished they had. That sounds shallow, but I don't just mean
commodities; I also mean medical treatments. As labor becomes freed from
current tasks, it can be put toward other uses.

That doesn't mean it will be easy, but I think we're going to continue raising
our standard of living and creating a better world. And that will require
labor.

~~~
dreamdu5t
While I agree with you, history also shows that unemployment and wealth
disparity often do rise high enough to cause massive civil unrest.

Yes, high unemployment isn't permanent or a long-term trend. That isn't really
relevant though when you're talking about the prospect of blood in the streets
prior to returning to decent levels.

The US seems completely arrogant in the sense that they don't seem to think
this can happen to them, or that their military superiority somehow insulates
them from civil unrest.

~~~
CamperBob
I can't think of a single case where wealth disparity alone has been
sufficient to cause civil unrest, massive or otherwise.

~~~
simonsarris
The Yellow Turban Rebellion was pretty much entirely caused by a loss of jobs
-> massive wealth disparity

<http://en.wikipedia.org/wiki/Yellow_Turban_Rebellion>

~~~
CamperBob
Like the French Revolution example, this was caused by exploitation and abuse
rather than the simple fact of someone's bank account being fatter than
someone else's.

------
_delirium
While this is not _necessarily_ untrue, the prediction has been made a few
times before, most notably during the early-20th-century wave of automation.
Even the rather intelligent Bertrand Russell wrote a book in 1923, "The
Prospects of Industrial Civilization", which spent a good deal of time
worrying about that problem (though some of the other stuff he worried about
did come closer to being true, like the prevalence of hyper-regimented work
among the remaining jobs).

~~~
TomOfTTB
I'm in the middle here. I don't think this piece holds much weight because
he's connecting two unrelated phenomenon (a downturn caused by overuse of
credit and automation). Note the retailers he cites (Circuit City, Sharper
Image, KB Toys) were generally killed off by other local retailers (most
notably Walmart but also Best Buy, Toys R Us, etc...)

That said I do believe automation will begin to eat away at jobs when we get
to the point where robotics can duplicate the functions performed by low end
labor. What I mean by that is up until now computers have largely replaced
more cerebral occupations. That allowed the people in those occupations to
move on to higher level thinking.

Think of the growth in economic theory since the computer was invented. That
had a lot to do with the fact that we can now test economic models in minutes
instead of months because a computer can do the calculation.

So in those cases the computer didn't replace the job it just enhanced it. But
dock workers doing heavy lifting aren't going to to turn into robotics
engineers. Meaning the change coming with robotics will be different from
previous technology shifts. So in that sense I think he's correct.

~~~
roc
I'm not convinced.

Auto workers sixty years ago didn't turn into robotics engineers either. And,
largely, they didn't have to. They moved to the niches the robots weren't yet
appropriate for, until they retired.

It was subsequent generations that simply didn't have the same wrench-turning
job the older generation started at. What I've observed, over my years in
Detroit, is that as automation pushes into the process, complexity grows, and
jobs to support that complexity push _out_ to smaller employers. GM doesn't
have a million wrench turners, but a thousand CAD/CAM shops now exist.

Many of those shops are producing parts that didn't exist before automation
made the more-complex, more-specialized, more-numerous designs feasible.
Before the demand for precisely-designed/machined components existed.

Are there net fewer jobs? Not that I've ever seen or read. [1]

Similarly with the journalism example in the article. Thousands of dead-tree
newspaper jobs are definitely going away. But how many thousands of online
news jobs were created? How many people make their living blogging? Is the
overall industry of bringing written information to the masses _contracting_?
That's another argument I'd need to see employment studies on to believe.

Lastly, current unemployment isn't structural. Despite appeals to 'what we all
know', there is no data to suggest that it's caused by job types going away or
job seekers having skills that no-one needs anymore. All the evidence suggests
that employers simply don't need many workers right now. That is: current
unemployment is just a symptom of the lack of demand.

If this time is truly going to be different, it will have to be due to factors
not outlined in the article.

[1] Detroit's overall labor situation might appear a counter-argument, but
that has more to do with the industry decentralizing -- away from Detroit and
away from the Big Three.

------
achompas
_Don’t fill potholes. That won’t fix the economy._

Uh, yes. Yes it will. The workers that fill those potholes will earn wages,
which they can then use to pay for goods. By purchasing those goods, they pay
other workers' wages, and the virtuous cycle continues.

Listen HN, I love your knowledge of technology and entrepreneurship. But the
economics posts on here are deplorable. We've seen disruptive technologies
many times before: the cotton gin, the television, steam power, the car. In
every one of those instances, our work force has adapted and moved into new
jobs.

The Internet is not some all-consuming monster; it cannot universally
substitute for real goods; it will not replace jobs that need to happen in
person.

~~~
JeffL
Don't fall for the broken window fallacy. If the government wasn't taking
money from people via taxation to pay for pothole fillers, then the taxpayers
would have their money to spend on what they really want, which would also
maintain the virtuous cycle. What you see is the pothole fillers spending
money, but what you don't see is all the people who had their money taxed
spending less. (If the taxpayers weren't spending their money, it would be in
banks being loaned out to other people who would be spending it.)

If what you're talking about is Keynesian government stimulating the economy
in bad times by going into debt, that could also be accomplished by cutting
taxes rather than borrowing to pay pothole fillers.

~~~
clarkevans
Well, yes, instead of having potholes fixed, we'd be repairing the frame of
our cars instead, at much much higher cost (and not doing other things).
Further, pothole fillers end up employing lots of different kinds of people
than a millionaire would. Finally, banks tend to loan to people with money...
they don't typically loan to those who don't have money; it's not a zero-sum
game.

~~~
JeffL
I think you have a good point about filling potholes being cheaper than
repairing cars, but that wasn't really the point I was making. (I'm not
necessarily against filling potholes, just filling potholes excessively as
make-work.) I was just pointing out that saying that government spending to
hire pothole fillers for the express purpose of stimulating the economy is
falling for the broken window fallacy.
<http://en.wikipedia.org/wiki/Broken_window_fallacy>

~~~
achompas
It's actually not--you're misunderstanding the broken window fallacy.

The classic example goes like this: "Let's break windows and hire people to
replace them! That's a stimulus!" OP did not suggest digging holes into the
street and filling them, however--fixing road wear-and-tear is an investment
in public infrastructure.

~~~
JeffL
Maybe I misunderstood, but I got the feeling from the OP I was responding to
that he was suggesting we fill more potholes in order to stimulate the
economy. I'm kind of working off the assumption that we are already filling
the important potholes often enough, so filling more potholes just to spend
money sounds like make-work.

~~~
achompas
That's a good take, but the broken window fallacy assumes the intentional
destruction of previous output. Thanks for clarifying your point.

------
alphaBetaGamma
The lack of pickup in employment numbers is not surprising when viewed in an
historical context.

There is _very_ broad historical overview of sovereign crisis in “This Time Is
Different”, by Reinhart and Rogoff, which also includes banking crisis.
Looking at what I can find on Google books (I don’t have the book here), we
have that historically the unemployment rate rises an average of %7 and that
this lasts 4 years. Output falls more than 9 percent, but that down turn only
lasts 2 years. So yes, a jobless recovery is what we should expect.

From their summary on pp. 224 [1] that on average:

\- Housing prices decline %35 over 6 years. \- Equity collapses %56 over about
3.5 years \- Unemployment rises %7; down phases lasts 4 years \- Output falls
%9, downturn lasts 2 years. \- Government debt rises %86. The main cause is
not the bailout but from the collapse in tax revenues. \- Frequent spike in
government borrowing rates.

So I would say we are not living anything unexpected.

[1]
[http://books.google.com/books?id=Iihe6s0XincC&lpg=PP1...](http://books.google.com/books?id=Iihe6s0XincC&lpg=PP1&dq=this%20time%20is%20different&pg=PA225#v=onepage&q=unemployment%20&f=false)

------
ikarous
Plenty of others have predicted the rise of unemployment in proportion to
increased automation, and they've been wrong before. Maybe this time they'll
be right. I don't know; I'm not economist nor do I possess a crystal ball.

What I do know is that this whole situation is terribly discouraging for young
people fresh out of school. My partner, for instance, recently graduated with
a degree in civil engineering from a very challenging private school. He's
been unable to find work as a starting engineer after a six month search, and
I'm frankly out of ideas on how to keep him optimistic. Add to all this that
his dad, a senior electrical engineer, just got laid off, and any encouraging
words I say start to sound very hollow indeed.

I fear that this high unemployment rate, temporary or not, is going to create
a generation of career setbacks and failures to launch. A lot of people out
there have it much worse, I know, but I still don't know what to say when this
hard working young man can't even get responses back for internships and
unpaid work.

~~~
waterside81
From your other responses, it looks like you're American? If you're willing to
move up to communist Canada (I kid, I kid), we're starving for engineers.
Alberta needs civil engineers for their oil industry, and Ontario & the City
of Toronto are hiring too.

~~~
Nicknameless
Slightly further afield, communist Australia has major skills shortages. I
doubt engineers would have serious visa problems.

------
switch
Here's a different way to look at it.

We will soon be in a leisure economy and 'jobs' will be something completely
different. It'll be about helping people waste time/kill time rather than
producing something of value.

As we advance, we are moving to a scenario where there just isn't that much
work to do. Leisure time is increasing more and more. More and more 'work' is
becoming automated or being done by robots or algorithms. People just aren't
needed in lots of places.

If wealth was distributed equitably or even a little inequitably, then it
would mean that most people could just take time off and spend their money on
entertainment. You could argue this is already a big trend with movies, video
games, devices that aren't necessary, etc. taking up more and more time.

Since wealth is very inequitably distributed - it leads to lots of people
being left in a leisure economy with very little money. These people 'need'
jobs even though the economy itself doesn't have 'jobs'.

 __ __ __ __ __ __ __ __

The net is that we have technology doing this - >

A small percentage are taking up most of the money and lots of people need
jobs for money even though the economy doesn't really have jobs left for them.
They will be forced to adapt to become entertainers/time waste-helpers rather
than productive workers.

instead of this ->

People need to work less and wealth is reasonably distributed and people can
do what they want without worrying about money.

------
hristov
I disagree. Technology does not kill jobs in manufacturing or services. It
does in farming.

But in manufacturing, and services more technology merely means that people
get more stuff. People buy more clothes more gadgets, more of everything. Or
if they buy the same amount of gadgets their gadgets are more complex, etc.
Thus, when technology results in higher production it is usually matched with
higher consumption.

There are two things that are killing jobs in the US right now: the export of
jobs offshore, and poverty. The US economy is actually creating shitloads of
jobs, the problem is that we are creating them in China. China is still doing
monetary tightening to slow down its growth.

<http://www.bbc.co.uk/news/business-14117778>

The other thing is poverty. Since the new deal the US has usually had some
kind of mechanism to ensure that the middle and lower middle class is
relatively protected and relatively well off. This included unions, minimum
wage legislation, and various government programs. Nowadays most of these
things are being eroded. This means that people cannot buy more stuff, which
means that there are fewer jobs, which means people buy even fewer stuff,
which results in even fewer jobs, etc.

To determine whether technology is killing jobs, you can ask yourself the
following hypothetical question: Does everybody in the world have every
manufactured good or service they could possibly want? If the answer is true,
then technology has killed all hope of future economic growth. But the answer
is sooo far away from being true, that the question itself sounds ridiculous.

So no it is not technology. It is something else in the way our society is
ordered and run that is doing it.

------
rweba
Perhaps this will prompt a substantial reorganization of society. Ideas like
the <http://en.wikipedia.org/wiki/Basic_income_guarantee> might actually gain
traction.

Marshall Brain's novel <http://www.marshallbrain.com/manna1.htm> is one recent
exploration of similar ideas.

But personally I'm sceptical if this will actually happen in the near future.
As long as we don't have "Strong-AI" there are many jobs only humans can do
well and a lot of those jobs don't require extensive education (nanny, nursing
home attendant, customer service etc.)

------
dpatru
The reason why America doesn't have more good jobs is that America is no
longer the preferred place to run capital-intensive businesses that can employ
large numbers of semi-skilled workers at high wages. For a large part of the
20th century, America was the best place to locate high-tech factories.
Cadillacs were built in Detroit. Now Apple iphones are built in Shenzhen.

The Americans that 40 years ago would be engaged in building and running
factories employing hundreds and thousands of semi-skilled workers (requiring
millions of dollars of capital), are now employing tens of high-skilled
workers (requiring thousands of dollars of capital.)

In short, the capital per entrepreneur ratio in America has dropped. As a
result, entrepreneurs are employing fewer people.

------
jgmmo
This is a classic economic fallacy. Invention of the plow improved efficiency
and killed jobs, invention of the sewing machine improved efficiency and
killed jobs, invention of the computer improved efficiency and killed jobs.

They killed jobs in the short run but they made everyone in society better off
on the whole. Sure, some workers had to be retrained -- and some workers could
never find a job again. However such is progress. We are better off now
because the next generation doesn't have to all be farmers, some can do this
or that. It is a good thing when we require less humans to do the same amount
of work than before. It means we free up human capital for more valuable uses.

Because of the advancements in technology their children will have jobs that
never could have existed if we still needed 90% of our population to farm just
so that we would not starve. Now like 1% of our population is farmers. It's
progress.

Read: 'The Choice' by Russell Roberts

Read: 'Economic Facts and Fallacies' by Thomas Sowell

Read: 'Economics in One Lesson' by Henry Hazlitt

~~~
prodigal_erik
I agree it's a long-term improvement, but if "some workers could never find a
job again" happens to the majority all at once, they aren't going to quietly
starve.

~~~
jgmmo
Anyone who is willing and able to transition to another way of earning a
living, will. The majority of workers being replaced are not unwilling to find
a new way earn a living, it's only the very old and the very stubborn that
will have a difficult time finding their career 2.0

~~~
prodigal_erik
But earning a living doing what? I think that's why we're all having this
conversation. If I got laid off today because someone finally wrote the
ultimate software development AI, I have no idea what I would do instead. This
seems to be one of the only career paths left with substantial unmet demand
momentarily sheltering me from the Iron Law of Wages, and I lucked out in
being obsessed with it.

------
rberger
Is this a bug or a feature? Shouldn't we be figuring out how to embrace this?
Isn't this an symptom that the abundent future is arriving, but not evenly
distributed? Is it not time to start figuring out how to create the vocabulary
and institutions of modulating abundance instead of maintaining 19th Century
institutions whose main purpose was to modulate scarcity?

The fact that "Finance" is now over 30% of the US GDP shows a major bug in the
current set of institutions. That is where abundance is being dampened into
wasted wealth for 0.1% of the population who are using it to maintain
artificial scarcity. It needs to flow to help fund creativity, R&D,
experiments that will blow the doors off of scarcity and allow abundance to be
well, abundant.

And most people don't want JOBS, they want to live. But most of us have
forgotten that and thus we keep trying for 100% employment when we should be
working towards 100% UNemployment aka Living Life.

------
dstein
Fixing the economy will require more than entrepreneurs. I think it will
ultimately require major socio-economic reform, possibly a conversion to
Technocracy. Technology isn't just eliminating jobs, it's eliminating trade
altogether.

I can replace my watch with a smartphone app. That means the watchmaker,
supply chain, retail store, and clocksmith are all out of business. And 3D
printers could be the next mega-disruptive technology. What happens to
manufacturing of all kinds when we have Star Trek style repicators in our
basements?

I'm just not convinced that entrepreneurship alone can combat the major
macroeconomic changes that are coming.

~~~
patrickk
_"I can replace my watch with a smartphone app. That means the watchmaker,
supply chain, retail store, and clocksmith are all out of business."_

I work as an iOS app developer, a role which didn't exist just three years
ago. There are millions of developers out there on the various smartphone
platforms, a market that Apple spawned after seeing what hackers could do by
jailbreaking iDevices and loading apps on the iPhone without "permission".

I wouldn't have a job now if I weren't for the iPhone (I live over 5000 miles
from Cupertino) and there are many like me all around the world. Meanwhile, I
can't think of a single watchmaker that has gone out of business.

~~~
wallflower
> I work as an iOS app developer, a role which didn't exist just three years
> ago.

I respectably counter your statement with the idea that the job category
existed, just not the platform specialization.

> I wouldn't have a job now if I weren't for the iPhone

You could have been able to find a job. What was your background before iOS
development? (or was iOS development your first job)

I'm not trying to disprove the fact that your source of income is iOS
specialization. If you are indeed making the majority of your revenue from
your _own_ apps, big congratulations! My point is even though Apple created a
tremendous ecosystem for independent developers, it may be a less than net
zero gain (e.g. jobs in Visual Basic programming were lost and either there
are much less new jobs in the new ecosystem and/or previously gainfully
employed developers are unable to develop iOS competency and proficiency (no
mean feat).

~~~
patrickk
Well ok, _technically_ the job category (smartphone app developer) existed,
but it was insignificant compared to how important the role has become. Apple
basically showed everyone else how to do it[1]. I've read that trying to
launch an app on a platform like Symbian in the "old" days was an utter
nightmare. You would have to deal with carriers and try to convince them to
approve your app in some cases.

iPhone development was my first "proper" job after finishing a masters degree.
I'm not currently making money from iOS apps, although I hope to once I gain a
better understanding of iOS development. The company I work for is doing some
pretty cool stuff with apps, I hope to be able to talk about a project we've
going on here on HN in a few months.

I hear what you're saying about net zero gain from a few technology displacing
old jobs. I think that's just a short-term phenomenon. If apps displace some
jobs in more traditional industries (e.g. the apps in my company aim to
replace paper-based product catalogs with iOS/Android apps that do the same
thing, except faster, better, cheaper) then I think:

a) more jobs will be created in the app development space

b) the productivity gains, cost savings and perhaps new market opportunities
offered by apps will allow the beneficiary company to become more profitable,
leading to job growth in that company. This has a knock-on effect also for
those who deal with the beneficiary company (e.g. suppliers getting more
business, customers getting better prices, better service etc.)

I believe a and b will lead to net jobs gain in the longer term, rather than
jobs lost overall by the printing company and related companies.

[1] They stumbled on the model of an app store by accident. Steve Jobs thought
that all iPhone apps would be web-based rather than native apps when the
iPhone launched in 2007. Luckily, Apple was smart enough to recognise the
opportunity, creating a river of cash for Apple.

------
bsaunder
If government wants to create jobs, they need to encourage businesses to
create new value (by paying them to create that value). Employers will then
hire people to create the value (and pay them (after skimming enough profit
off the top to make it worth the effort)). The problem is, of course this
requires the government to spend more (not less) which seems strongly against
the current momentum.

I'd suggest the modern version of the Depression era work programs and/or the
60s space race. Perhaps something launching a major technological leap in
robotics (which ironically would exacerbate our job "problem").

~~~
michaeldhopkins
Well, it's against the momentum because to okay such expenses, a culture must
be created which okays many, many other expenses, and right now they are a bit
of a threat to our being able to maintain current value-encouragement
programs, let alone add new ones.

I don't think that centralizing the value creation incentive engine was good
anyway, but now it's barely possible.

------
rmason
I am an optimist. It helps that I have seen this cycle before in the late
seventies. People spoke then of the new normal and that's a phrase that is
trending once again.

I spent my early youth in the newsroom and the tools I used everyday have
become a trip back in a time machine for todays students:
<http://journoterrorist.com/2011/08/02/paperball2/>

Technology and entrepreneurs will bail us out once again. Lots of fortunes
have been wagered and lost betting against America.

------
MarkMc
Warren Buffett knows a thing or two about the outlook for jobs. Here's what he
said on July 8, 2011: “We will come back big time on employment when
residential construction comes back...it's not going to be 5 years from
now...you will be surprised in my view how fast employment changes when that
happens...I think in a few years we'll see unemployment at 6%"

Full interview here: <http://www.bloomberg.com/video/72140684/>

------
caffeine5150
Three things stand out in my mind as to what's making job recovery so
challenging in the wake of the 2008 crisis:

1\. Unlike e.g. the tech crash of 2000, 2008 was a crisis of credit, the
lifeblood of all other industries. Their cautiousness in beginning to lend
again will make recovery and therefore jobs growth extra long.

2\. The 2008 crisis forced companies to find new efficiencies. Whole layers of
middle management were eliminated in many cases without any downside and
remaining employees were fine working harder to keep their jobs. Those
'unnecessary' excess positions take a long time to come back. It will require
companies to feel flush and to get lax on this again.

3\. I think most importantly, our economy largely comes down to consumer
spending and the housing bubble didn't just drive inflated housing prices; it
also enabled home equity lines of credit to buy boats, etc. Coupled with loose
credit card lending standards, our economy was built upon unsustainable growth
in consumer credit. I don't know when such a consumer credit environment will
come back, but again, it will have to be preceded by a sort of boom in the
economy.

I agree that 'technology efficiency' etc. are not helping, but the heart of it
are 1, 2 & 3 above.

------
sshumaker
The middle class is going away. And not coming back. All of those factory and
middle management jobs are being replaced by cheaper labor in the one case
(offshore or robotics) or by technological and communication efficiencies on
the other.

A prediction: Twenty years from now, there will only be two types of jobs in
the United States: Creatives and those in the Service Industry.

Creatives - anyone who creates things with their mind. Artists, yes, but also
programmers, designers (graphic/web/product), musicians, directors, etc. The
US won't necessarily have a monopoly in this department, but there's enough
cultural barriers in many of these fields that it's likely we'll still have a
very healthy presence there, at least for selling to the Western world.

Everyone else will be in the service industry - and I'm referring to service
jobs that cannot be outsourced, because they require someone local. Waiters,
barbers, chefs, trainers, couriers. Nurses and caregivers. And lots of service
jobs that don't exist today. Need someone to help assemble the product you
just downloaded and 3d printed?

The only jobs that will remain are the ones that we can't outsource to robots
or cheap labor.

~~~
pessimizer
The US imports a lot of its creatives, and a majority of its creatives when it
comes to math and science. If capital moves somewhere else, creatives will
move somewhere else.

------
ChristianMarks
The OP's post could use some context.

Ricardo’s concept of comparative advantage was forged in a world where labor
and capital were essentially fixed. England could weave cloth more efficiently
than Spain, but Spain could make wine more efficiently than England.
Therefore, they would both benefit from trade given that each of these
countries had a comparative benefit or efficiency to offer. The assumption
under comparative advantage is, while the composition of employment would
change under trade (more weavers employed in England and more wine makers in
Spain), the level of employment would stay virtually the same. Meanwhile the
citizens of England would get cheaper wine and the Spanish cheaper cloth.

In today’s world, labor and capital are not fixed. Capital flows wherever the
input costs are the cheapest, such as labor and materials. Companies can set
up operations in many places around the world. For instance, an American
multinational no longer has to produce in the country where it sells, given
existing trade treaties that lower tariffs. They can shift production to China
or Mexico where the labor costs are a fraction of what it is in the U.S. and
not be penalized by tariffs or quotas. In effect workers get fired in the
U.S.; this leads to a loss of income for the working and middle classes. The
workers in Mexico and China benefit because they have jobs, albeit at low wage
rates and substandard conditions in many cases. Contrary to received wisdom,
prices for some products might be lower, but not significantly so. The
difference in wages (from those in the developed world versus the developing
world) goes to investors, or more accurately these days, management. This is
trade by absolute advantage, not comparative advantage.

For a while GDP growth seems to be fine. But with production set up abroad,
the U.S. runs trade deficits and Americans by definition incur more debt to
buy these goods. NAFTA encourages this. As a member of the WTO, China benefits
from this trade agreement in that its goods are levied with lower tariffs than
would otherwise be the case. Moreover, China manipulates its currency to keep
it artificially low. Under a reciprocal trade regimen, the currency of a
country that exports more than it imports should rise. A rising currency would
act as a braking system to bring trade flows back into equilibrium. But the
U.S. and China do not want that. China needs to keep selling goods to the
world to continue growing fast enough to generate enough jobs. Despite its
protests from time to time, the U.S. government does not want this because it
is captured by the multinationals, which make much more money not employing
Americans (or Europeans for that matter). So when media pundits and approved
economists say they are puzzled by the lack of employment growth, it is
theatre, a necessary piece of kabuki to keep their jobs as propagandists.

Free trade under a truly Ricardian model of comparative advantage is
theoretically beneficial to the world because at its heart lies the assumption
of full employment. Instead what is touted as free trade is not Ricardian; it
is a model of absolute advantage that ensures that the wages of labor are
depressed, thereby enabling the rise in income for the top 1%.

The problem for the elites is that these are not sustainable political or
economic policies because eventually unemployment will reach unacceptable
levels and the right leader will come along and tell the real story to the
American people.

 __ __

As long as the political power of the middle and working classes has been
undermined and blunted, U.S. multinationals will not hire Americans if they
can offshore production. Therefore, people need to be organized to buy goods
and services from small businesses whose interests are more aligned with that
of the nation. Also, Wall Street should be boycotted. Do not do business with
big banks. (I belong to a credit union.) Invest in regional financial
institutions. Wall Street, because of its power over Washington, has been able
to push through unfair trade bills in exchange for the right to set up shop in
those foreign countries that benefit from access to American markets. But it
is a one-sided deal in practice. U.S. access to foreign markets translates to
this: multinationals offshore production and export to the U.S. at low or
nonexistent tariffs.

If you want access to Chinese markets you must manufacture and hire people in
China. Also, you must share your intellectual property with local firms.
Multinationals accept this as the cost of doing business in China, although
the real cost is being borne by the working and middle classes in this
country.

Unless there is a substantial reversal in these policies, expect many years of
sub par economic growth and high unemployment in the U.S. So why should anyone
be surprised when the U.S. GDP growth rate for the second quarter is dismal?
Unless of course, they are paid to be surprised.

~~~
cjy
You don't understand comparative advantage. As long as there is scarcity,
comparative advantage matters. There were 24 hours in a day when Ricardo was
around and there still are today.

There are theoretical cases under which trade can make a country worse off,
but they are rare situations and cannot be simplified down to "inputs flow
around today but didn't during Ricardo's days". That doesn't even make sense.

But what bugs me most about your post is your belief that we should work to
keep wages high for overpaid middle class American by prohibiting poor Chinese
and Indians from having access to world markets where they might actually earn
their marginal product. People are all for drinking fair trade coffee and
supporting AID's programs in Africa. But when it comes to having to compete on
a level playing field with foreign workers all that altruism goes out the
window.

~~~
defen
> But what bugs me most about your post is your belief that we should work to
> keep wages high for overpaid middle class American by prohibiting poor
> Chinese and Indians from having access to world markets where they might
> actually earn their marginal product.

Rather than ascribe sinister motives to a person (a desire to oppress
Chinese/Indian workers in order to keep American salaries high), maybe you
could consider the structural problems that make it difficult for American
workers to compete with foreign ones. OSHA regulations, Social Security,
Medicare, health insurance, unions, and many other factors go into the cost of
an American worker. I don't know much about China or India but I doubt they
have any of these things. So, are they important? If they are, why are we ok
with importing goods made by people without the same protections, in order to
save a few bucks? If they're not important, maybe we should eliminate them, so
we can compete in the global marketplace.

~~~
bd_at_rivenhill
Sinister motives are not necessary to produce a negative outcome and making a
decision to save these worker protections for Americans also amounts to making
a decision to deprive workers from poorer nations of access to markets that
will allow their standard of living to rise.

------
scythe
The argument, then, is that our ability to produce will outstrip our desire to
consume, and so a fraction of people will be able to produce enough things for
everyone to consume, which will lead to the rest not having jobs.

The problem with the argument is that it does not really appear to me that our
ability to produce has outstripped our desire to consume. The buying of things
is currently rather high, and product shortages are not entirely uncommon.
Rather, people cannot get paid a first-world living wage to produce the things
we desire to consume, or they do not have the skills required to produce those
things, etc.

Somewhat related: are most other countries currently suffering high
unemployment, or just America? If the answer is 'no', that seems to contradict
the thesis of the article.

~~~
Someone
The US is somewhat of an outlier; it moved from 'top of class' to 'comparable
to the EU as a whole' in a few years
([http://epp.eurostat.ec.europa.eu/statistics_explained/index....](http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Unemployment_statistics),
figure 3)

------
jcslzr
Yes, why? because NOBODY has enough money anymore.

Think about the Ford Mustang, as my understanding it was the first sports car
and is relatively new. What does it mean? it means before the mustang it did
not matter how much money you had, you drive the same car as everybody else.

Warren Buffet partner, dont recall his name now, has it right:"People will do
a lot of things to be loved but will do Anything so other envy them"

In other words marketing has achieved a society that is on an envy war, when
everybody is looking for ways to save money, so they can spend it in more
shinny things, that means jobs are going to be just enough to produce whatever
is going to be sold.

I live in Mexico, and from here what I see is that the USA is becoming Mexico,
when I was hoping for the other way around.

------
viandante
I think you guys are missing the point. The point is not that people are
jobless, the point is that what they would get paid if they worked is just too
low for a decent life.

At the correct price (even 1 cent per hr), everybody gets a job fast.

Given that, the real problem is for the jobless to learn something of more
value to the economy or accept lower salaries, it is not technology. If there
was no technology development, things will be more expensive and the poor
would be even more poor.

------
stretchwithme
Technology is essential to economic growth. When you accomplish a task with
fewer resources and less labor, you have extra resources.

You can take those extra resources and spend it on something else or lend it
to someone else to spend on something else. There is no loss of jobs over all.
The jobs have just moved.

This is a process that has been going on forever. And its responsible for the
high standard of living enjoyed by industrialized societies.

Its only because of technology and the capital it has created that enable
workers to get high wages. If wages didn't rise, workers would have a strong
incentive to compete with their employers. They can borrow money and buy the
same technology. This is exactly what goes on in Silicon Valley. And
everywhere else in the world.

The current dearth of jobs in many fields is the result of the collapse of the
housing bubble and government policies that impair recovery, not being able to
do more with less.

------
lukifer
I've noticed this trend, and it's greatly concerning. There are plenty of
downsides to wage slavery, but overall there has been a historical improvement
to human dignity and quality of life due to people being useful as units of
production.

As technology diminishes this and there are fewer roles that need to be
fulfilled by actual humans, people will be forced to viciously compete over
fewer and fewer jobs to stay out of abject poverty. So-called "knowledge work"
isn't safe either, as these jobs gradually get gobbled up by software and
specialized AI algorithms.

Maybe the unemployed will be able to invent new jobs for themselves to create
more wealth; maybe technology advances will make a welfare state trivially
cheap to maintain. But I think the prospects for mass poverty are very real.

------
antidaily
I can't help but wonder what our unemployment numbers would look like without
housing crisis and the two wars. Would we be investing in things like energy,
healthcare, and tech? People are sitting on cash because of uncertainties in
the markets, not because tech killed all the jobs.

------
JDulin
Although the world population has more than doubled from the middle of the
twentieth century, technology has doubled many times more, and continues to at
a much faster rate than our rate of consumption and reproduction. This
exponential increase means that is only a matter of time until the efficiency
of technology overtakes the amount of jobs that a society needs to produce
more than it needs.

Technology will net kill jobs someday if it isn't already. It remains to be
seen whether that is happening now, or if this unemployment is just the
symptom of a country that has borrowed too much.

------
scotty79
Are inmates counted as unemployed?

I think technology slowly obsoletes economy. Pushes it towards more and more
superficial exchanges and dissassociates price and value.

Since society is built on economy it finds out clever ways to no longer valid
equation work = wealth

Young black people are missing jobs? Criminalise the thing they do and put
them in jail. They are no longrt missing jobs an a handful of people might be
hired to build and upkeep facilties where they are held.

There are a lot of such mechanisms that suck excess of available human work.

------
chefsurfing
In my opinion John Michael Greer's "The Long Descent" is the most realistic
and most hopeful take on this vein of thinking and writing. It is also a well-
written and easy to read book. The main takeaway is that our situation is not
a problem with a solution, but rather a predicament or situation with various
coping mechanisms.

<http://www.newsociety.com/Books/L/The-Long-Descent>

~~~
chefsurfing
However I should point out that JMG points to different root causes of
"decline". His core thesis is that Peak Oil and net-energy / net-resource
growth not meeting demand are the main determining factors in our shrinking
economy. His hopeful response to this scenario is that although there will be
far fewer jobs, there will be much more work.

------
antoinehersen
"The Great Stagnation" from Tyler Cowen of Marginal Revolution, is a long
essay that address this issues from an economist point of view. A wonderful
read.
[http://marginalrevolution.com/marginalrevolution/2011/01/the...](http://marginalrevolution.com/marginalrevolution/2011/01/the-
great-stagnation.html)

------
MarkMc
It will be interesting to revisit this article in 5 years...let me get out my
Google Calendar...

------
mvs
How Technology is Recreating the 21st-century Economy
[http://www.parc.com/event/1499/how-technology-is-
recreating-...](http://www.parc.com/event/1499/how-technology-is-recreating-
the-21st-century-economy.html)

------
ecounysis
The onus is on individuals to add value to society. Don't sit around and wait
for a job. Create your own job. There is not a shortage of jobs there is a
shortage of entrepreneurs and go-getters.

~~~
exit
aw shucks

------
robkinyon
I replied to this at
[https://plus.google.com/116040034931930295896/posts/cwbtbquK...](https://plus.google.com/116040034931930295896/posts/cwbtbquKRNY)

------
dreamdu5t
LoL Don't fill the potholes? Who the fuck fills them then!?

~~~
dreamdu5t
Downvoted because my post is snarky?

My point is factually valid.

Public works DO create jobs, it's an empirical fact. Just because the OP hates
the idea doesn't mean public works don't create jobs. Maybe he thinks UPS
should fill the potholes, but either way, the only way to fill them is to hire
people to fill them, whether the government or private business does it
doesn't change the fact that someone was hired to do it.

~~~
ken_railey
Public works also destroy jobs, since the wealth to fund them has to first be
extracted from the public.

~~~
thisuser
There is no evidence that lowering tax rates creates jobs.

------
InclinedPlane
Is Meta: let me provide some reasons why this bubble/downturn unlike all
previous ones and will last forever.

------
rimmjob
everyone should just become a computer scientist. problem solved

------
georgieporgie
"Don’t fill potholes. That won’t fix the economy."

I'm not certain of the author's intent, but the one and only way that
government can actually create jobs is to improve infrastructure. A better
transportation network built today will have payoffs 20 years down the line.
Unfortunately, it's hard to build a political career on such long-term goals.

One of my favorite Planet Money episodes deals with this:
[http://www.npr.org/blogs/money/2011/04/05/135151990/the-
tues...](http://www.npr.org/blogs/money/2011/04/05/135151990/the-tuesday-
podcast-how-do-you-create-a-job)

~~~
frankus
Not only that, but with strongly negative real interest rates, it can borrow
money to pay people to fill potholes today for less than it would cost to
wait.

In fact, it's better than that:

\- That calculation doesn't include the savings in reduced wear and lack of
deferred maintenance. \- Construction labor is now much cheaper than it would
be at full employment. \- Growing consumption now would more than pay for
itself in taxes from an averted "lost decade."

Unfortunately the folks in Washington are still worried about 3% inflation and
how interest rates are going to spike any day now. So we end up with spending
cuts that will almost certainly worsen the deficit over a do-nothing approach.

