

The real problem with the economy is that it doesn't need you anymore - alexwg
http://www.businessinsider.com/the-real-problem-with-the-economy-is-that-it-doesnt-need-you-anymore-2009-9

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netsp
I think that it's impossible to rationally ignore the fact that economies seem
to contort to absorb however many workers are available to it. I have yet to
hear a totally convincing explanation for this, but it seems to happen.

~~~
Eliezer
That's what's _supposed_ to happen. It's called Ricardo's Law of Comparative
Advantage. For as long as people's labor has any value _whatsoever_ , they
ought to be employed.

The real puzzle is why anyone is ever _un_ employed.

~~~
radu_floricica
Minimum wages.

~~~
gort
Unemployment existed before those; and whether minimum wages increase
unemployment should be open to empirical study - anyone got any data?

~~~
gloob
Empirical study is a tad tricky in a field where experimentation would
probably be considered wildly unethical and you wouldn't be able to set up a
control anyway.

~~~
gort
While presence of controls is admirable, it's still reasonable to simply look
at countries that implemented a minimum wage and ask, what happened to the
unemployment rate?

~~~
netsp
At the very least one would note that the effects don't seem to be predictable
via the basic supply & demand theories.

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jsm386
interesting essay, but you could have made the exact same argument in the
early years of the industrial revolution...as one example. 'The real problem
with the economy is that it doesn't need you anymore' could have been said,
and probably was said, many, many times throughout history, every time big
technological changes appeared on the horizon.

agriculture? sorry hunter gatherer, the economy doesn't need you anymore :)

~~~
Perceval
>but you could have made the exact same argument in the early years of the
industrial revolution...as one example

Someone did make that argument, and his name was Marx. He argued that
machinery could be thought of as 'disembodied labor.'

------
roundsquare
I'm not sure why we need to assume that we'll ride the curve all the way down
before coming back up.

Its true that manufacturing jobs are going to poorer countries because wages
are lowered there. For now, it seems like in richer countries the jobs are
being (imperfectly) replaced by services. If this can't continue (and I'm not
sure if it can or can't) than wouldn't we expect wages in (currently) richer
countries to start dropping and manufacturing jobs to move back?

The above may sound like I'm assuming a frictionless economy and maybe some
other pseudo-idealistic assumptions... but I don't think I am. I realize that
the process will not be instantaneous, but that doesn't mean it won't happen
(albeit with some pain along the way).

~~~
antipaganda
Aha! You, sir, have hit upon the greatest reason to be optimistic about
globalisation; even though the evil soulless multinationals <warning, satire>
are currently destroying good, well-paying jobs in developed nations and
creating nasty, hellish, unsafe, penurrific jobs in the concrete slum-
nightmares of the Third World, they have to move on to new concrete slum-
nightmares every so often when the locals get too rich to endure slavery!

The key fact is this: There are a limited number of slum-nightmares to move on
to! One day, the t-shirt manufacturers will find that Darfur has become too
well-heeled, and look around, and curse the skies, because there's nowhere
left to exploit!

And the world will be doomed to become more homogenous, more wealthy, and more
high-standard-of-livingy every single day.

Mwahahahaha!

------
mlinsey
Wealth is stuff people want, not what people need. True, if there's shortages
of something people really need people will focus on spending their wealth on
those things first as there are painful price hikes in basic necessities. But
if it's really true that a few numbers of limited people can, using
technology, produce everything "really needed" by all of society, the
remaining people are then freed to work on whatever else people might want.
The fact that people don't "really need" those things doesn't stop anyone from
paying for them.

By this article's logic, at the point agriculture was developed and not
everyone needed to hunt for food all day, a big chunk of the population should
have sat idle and impoverished.

------
camccann
The other side of this, that I rarely hear discussed, is "What happens when
automation renders some people _permanently_ redundant?"

It's an easy platitude to say that technology obviates some jobs whilst
creating others, but the new jobs tend progressively to more complex and/or
creative work, that use the leverage of technology to do work that would have
once needed many people (if possible at all).

Currently, the issue is cloaked in arguments over protectionism and trade,
because Chinese workers are (for now) cheaper than robots for many things.
What happens when automation is cheap and sophisticated enough that starting a
manufacturing business is only slightly more difficult than a web startup is
today? (Exhibit A: Projects such as Fab@Home and RepRap) It is, I suspect, not
reasonable to expect even a significant percentage of people to handle the
kinds of career that will remain.

While it's fun to imagine a world where one person can create enough wealth to
support hundreds of people... what do you do with those hundreds, who can no
longer create _any_ wealth a machine can't do better?

~~~
tomjen2
The guy who started how stuff works had small book on the subject
<http://www.marshallbrain.com/manna1.htm>.

But what really happens is that stuff finally becomes so cheap that people
will stop buying more than they need of it and will presumably spend the rest
of the money on things that are hard to make by robots: books, movies,
professional services.

The they the robots can do _that_? Well then we will finally have obliterated
the concept of scarcity, at which point the entire concept of economies are
obsolete.

~~~
cousin_it
That's a seriously great story. When I first read it, I wasn't sure whether to
be afraid of Manna or to start a startup to create Manna. It seems so very
real.

------
yannis
Consider the following EU definition of a free economy:

The freedom of movement for workers is a policy chapter of the acquis
communautaire of the European Union. It is part of the free movement of
persons and one of the four economic freedoms: free movement of goods,
services, labour and capital.

But of course is only applied within the European Union. Foreign workers can
actually expand an economy - not contract it (See US, Austalia, Canada). By
restricting immigration, the jobs get exported rather than stay home. Would a
more permissive immigration policy by the US have kept these jobs home? I
believe it would. The world now has reached a stage where goods, services and
capital almost move freely but not the last resource the labour. By slowly
opening the gates the world will slowly adjust to a new Global Economy.

------
dkokelley
I'm not sure about the proper etiquette here, but the original article is
posted at [http://whydoeseverythingsuck.com/2009/09/problem-with-
econom...](http://whydoeseverythingsuck.com/2009/09/problem-with-economy-you-
arent-needed.html)

------
cousin_it
> _When we create devices that individuals will be able to own that will be
> able to produce everything that we need, the solution will be at hand. This
> is not science fiction. We are starting to see that happen with energy with
> things like rooftop solar panels and less expensive wind turbines. We are
> nowhere near where we need to be, but it is obvious that eventually everyone
> will be able to produce his or her own energy._

I don't think that's going to happen. Technological progress does make small-
scale production cheaper, but it makes large-scale production cheaper
_faster_.

~~~
antipaganda
Yeah, fine. But at a certain point, I can buy a replicator, print out some
solar paint, and disconnect from the grid. All I need now is small amounts of
raw materials to top up the inevitable losses from my recycling loop.

Your large-scale production will certainly be cheaper, but it will be possible
for an individual to build, say, a fully automated chip-fab given enough raw
materials. So large-scale production will be instantiated ad-hoc on a needs
basis.

I'm assuming that the last bastion of human labour will be creative work,
since that'll have sentimental value even when the robots get better at it.

~~~
cousin_it
It's entirely possible to bake your own bread or grow your own vegetables
today, do you do that? Food independence!

I just don't see why division of labor would decrease. In the past it's pretty
much always increased with growth of technology. As Robin Hanson said in
"Dreams of Autarky" <http://hanson.gmu.edu/dreamautarky.html> :

 _I suspect that future software, manufacturing plants, and colonies will
typically be much more dependent on everyone else than dreams of autonomy
imagine. Yes, small isolated entities are getting more capable, but so are
small non-isolated entities, and the later remain far more capable than the
former. The riches that come from a worldwide division of labor have rightly
seduced us away from many of our dreams of autarky. We may fantasize about
dropping out of the rat race and living a life of ease on some tropical
island. But very few of us ever do._

~~~
antipaganda
Grow your own vegetables? Bake bread? That takes HOURS. But with a
replicator/food printer/reprap, it's a push-button process. No work involved.
Makes a difference, eh?

Ever lived in the third world? You don't have washing machines, you get your
clothes washed down the street. In the first world, you just chuck them in
your washer/dryer, push a few buttons, wait an hour.

See the difference we're talking here?

One way requires someone to swoosh clothes around with a stick all day. The
other requires a designer, a few supervisors at the factory, an assembly line,
and a washing machine repairman, all of whom ADDED TOGETHER still don't work
as many hours per washed knicker as the laundry people do in the third world.

Of course we'll still be dependent on others. Do you think the average schlub
will be designing his own printer templates? Nah, he'll download them from the
Internet like everyone else.

------
lionhearted
Interesting, thought provoking, and most likely correct general premise -
followed by a bunch of incorrect correlations and details.

> Clearly, more and more jobs will move from more developed nations to
> countries like China, and it is difficult to see how, as this process
> continues, the United States retains its leadership position. In fact, it
> seems entirely possible that the U.S. will exchange places with less well-
> developed nations.

The United States has _never_ been good at continuing dominance in a field
they invent. Basically, it gets invented in the USA, and another part of the
world gets better at it and takes over within 30-70 years. Historically, the
US economy would've collapsed many times over had we not kept "inventing our
way out of it". If it keeps up, USA keeps going. If not, starts to fall apart.
Of course, the following isn't true:

> And the labor that _is_ needed can’t be done in more developed nations
> because there are people elsewhere who will happily provide that labor less
> expensively.

"Can't" isn't the right word. There's certainly enough people that would be
happy to work for the ever-increasing buying power of a modern day $5 to $20
per hour, and people would pay a premium to not have to ship things across
seas and to be closer to their factories. The problem is that the labor laws
in the USA has changed it from an economy with very many $15-per-hour jobs
into one with a few $40 to $70 per hour jobs due to our laws.

> When we create devices that individuals will be able to own that will be
> able to produce everything that we need, the solution will be at hand. This
> is _not_ science fiction. We are starting to see that happen with energy
> with things like rooftop solar panels and less expensive wind turbines. We
> are nowhere near where we need to be, but it is obvious that eventually
> everyone will be able to produce his or her own energy.

This is, of course, very false. It ignores economies of scale. Energy will
eventually get closer to free, but it will most likely be because of giant
nuclear fusion or hydrogen plants or something like that. The trend is towards
even fewer institutions providing our basic needs, not spreading it out. What
will happen is people will turn to more "intangible" sorts of work - sciences,
philosophy, aesthetics, design, communication, and so on. There'll be lots
more people working on things that would have been frilly or an unnecessary
luxury in years past.

> This means that a small number of people, the people in control of the
> creation of goods, get the benefit of the increased productivity.

False! The quality of life across everywhere has increased a lot faster than
the quality of life has improved for the rich. Now, the barriers to entry into
industry as all but disappeared, and the "American Dream" of rags to riches is
more possible than ever. You can get the benefits of economy of scale without
a lot of money by having Amazon host it for you or some such. I had dedicated
warehouse and automated shipping for orders at a company I ran for $200 per
month + $2.50 per package shipped at my small company. It's going to be
possible to get wealthier than ever.

Now, the wages for unskilled labor will fall off a bit, even as the prices of
things get cheaper. I don't know which will fall faster going forwards, but so
far, prices of essential goods and luxuries have fallen faster than unskilled
wages. But also, there's been a shift to skilled labor in the developed
countries, and what Peter Drucker called "knowledge work". Yeah, gradually
there will be less people needed to tar roofs and roof-tarring wages will
fall, but nobody _really_ wants to do that anyway. As cheap, easily installed
roofings improves more and more, there will be less roof tarrers, but kids
that would've become roof tarrers will become computer programmers or writers
or systems engineers or biochemists or whatever.

> Unfortunately, that wealth will be held by a very small number of people.
> And their operations will need to employ very few people.

This is such old world thinking. Yes, there will be less traditional,
unskilled jobs. No, those people won't die in the streets. People are
resilient. They'll move into other, more necessary positions that fill the new
needs, as the old needs get cheaper than ever to buy.

> In short you will have a few very wealthy folks, and a much larger majority
> that will just not be needed for the most important things that the country
> needs to do.

Author could've written this about cars too, and how it's going to kill all
those horseshoeing and horsebreeding and carriage driving and carriagemaking
operations, and how the world is going to be a mess, and it would've looked
correct.

Again, interesting premise, hadn't thought about it, probably correct. The
follow-on conclusions are way off base.

~~~
BillGoates
When robots are making robots that make our stuff, noone will be able to buy
any of the cheap stuff, except the people that controls the goods.

Labor is the only good most people have, and it's worth is declining. The
previous generation could maintain the same lifestyle, doing less work. For
years the rich are getting richer and the poor get poorer, but the last years
the middle class is shifting to poor as well.

The more "intangible" sorts of work are only getting paid, after the basics
needs are paid, and thanks to the internet people are sharing those skills for
free.

~~~
lionhearted
> When robots are making robots that make our stuff, noone will be able to buy
> any of the cheap stuff, except the people that controls the goods.

I'm not sure if you're joking or not, but the rest of the comment looks
serious. Here's the standard answer:

As long as any human needs or wants are unfilled, there's a capacity for an
unlimited amount of work and labor. As robotics gets less expensive, it will
progressively replace unskilled, repeatable, monotonous labor.

As of yet, we're nowhere near having quality enough robotics to do abstract,
creative work. Thus, more (human) work will become abstract and creative. The
more mechanical, automatic, less skilled work will gradually become
streamlined, mechanized, and replaced as that becomes safer and more efficient
than paying people to do that kind of work.

> Labor is the only good most people have, and it's worth is declining.

Completely unskilled labor - working at Taco Bell, pressing a button every 17
seconds, unloading crates from a truck - the worth of those is declining.
Skilled labor - including servicing robotics or operating a complex crane -
the worth of those is slightly increasing. Knowledge work - research,
biochemistry, computer programming, genetics, engineering - the worth of those
is greatly increasing.

There has been and will continue to be a general shift from completely
unskilled labor to skilled labor, and skilled labor to knowledge work.

> The previous generation could maintain the same lifestyle, doing less work.
> For years the rich are getting richer and the poor get poorer, but the last
> years the middle class is shifting to poor as well.

This is patently false. The average person today has twice as many possessions
as the person of forty years ago. The resources, necessities, and luxuries
available to people has greatly increased on the low end and slightly
increased on the high end. Look at technology - what do wealthy people use
online? Google for search, Gmail for email, Facebook for networking, Amazon
for books, Ebay for auctions. Those are all available to anyone of any social
class in the developed world. Think about computers in general - you can get a
totally functional computer for web browsing and word processing for dirt
cheap, almost free. This is an incredible thing. You can get a Personal
Transportation Device (aka a "car") for very cheap! My 1995 Infiniti J30 was
$1900, and that was a luxury car 15 years ago. It still totally gets the job
done. Even the poorest people in America can buy a nice enough car, outright,
in cash, for less than a month's work in a bad job.

That's amazingly marvelous. The quality of life gap is closing tremendously.
The difference in goods, services, availability, and access is getting closer
all the time. The wealthier are getting slightly wealthier because it's
possible to leverage your good works to more people to help the world. The
poor and middle class are getting much wealthier because they can transact
with the people doing the best job globally at everything. Google is the best
in the business, and it's available to everyone that can get online.

> The more "intangible" sorts of work are only getting paid, after the basics
> needs are paid, and thanks to the internet people are sharing those skills
> for free.

Actually, that's a good point that people are grappling with. How can we
convert our skills that other people want to money? I don't have the answers
on that, but I'd feel confident wagering a lot of money that there's where
there's going to be a lot of growth in those areas. Creative people will find
creative solutions to monetizing their work.

We're going to be seeing more writers, artists, programmers, researchers,
designers (yes, the demise of design has been greatly exaggerated), and so on.
Short of a brutal WWIII, I feel pretty good that my children are going to live
in a much more pleasant, clean, stimulating, enjoyable world, with meaningful
and interesting work to do, inexpensive necessities, and ever improving
design, experience, and aesthetics of the everyday world.

~~~
BillGoates
We have more stuff than 40 years ago, but less than 20. What also changed is
that many single income households are double incomes now. Or that people are
working 60-80 hours a week.

15 years ago you also could buy a second hand car for cheap, but since then
the gas price quadrupled. You can have a DVD player for the same price as a
VCR 20 years ago, but does it really mean the quality of life has improved?
Over time we also lost quite a few things, like real food or personal service.

But still you are looking at now, and more specifically to your personal
situation at the moment, and not on what's happening and what the future will
bring.

If cheap labor disappears a part of that group will become competitors in an
already overcrowded market. And as I mentioned before, the global marktplace
and internet is going to work against us. We will end up fighting over
breadcrumbs, and only a very few, those with a truly unique skillset, will
manage to have a somewhat decent lifestyle.

What you also forget, a big part of our current wealth is based on air. On big
loans we used to pay for cheap labor in far away countries. And one day those
loans will have to be paid back.

But try to imagine what would happen to your life when the dollar would become
complete worthless overnight. Do you have enough goods to buy your way around,
or do you still have the right skills to make a decent earning?

------
ilyak
Well! You can force everyone your economy doesn't need to go to military! This
way, it's a win-win: you still retain your dominance and don't suffer from
having no real jobs!

Sad.

------
tybris
No, that's not it. Back to economics class.

