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"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?




One possibility is that we have reached a point where the barriers to entry in what would be the job creating sectors are being held artificially high by a combination of regulatory capture and a global intellectual property regime that is tilted towards incumbent rights owners and against new entrants. Call it the Deadlock Hypothesis. You see it in medicine, where it's clear that there is a 30 year backlog of potential new technologies that cannot be brought to market because the process for clearing patent rights is too expensive for any organization small enough to be truly innovative (automated pathology labs to pick one example).You see it in the payment industry where it's effectively impossible for new entrants to innovate without the permission of the established players (cf. the story of Square). For all the rhetoric and ideology of free markets our regulatory infrastructure is geared towards incumbents in ways that make it insane to invest in industries that would be creating new jobs now and in the future.


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.


>5) The Thiel hypothesis: Recent technological developments are intrinsically more boring than past technological developments;

Shouldn't that be the Cuban hypothesis ?

Cuban in 2006 http://blogmaverick.com/2006/07/12/the-internet-is-old-news-...

Cuban in 2007 http://blogmaverick.com/2007/08/27/the-internet-is-still-dea...

Cuban in 2008 http://blogmaverick.com/2008/02/10/the-internet-is-officiall...

Thiel said it in 2011 ( or late 2010) if I'm not mistaken.


> Shouldn't that be the Cuban hypothesis ?

Stigler's law demands we call it the Thiel hypothesis.

(Stigler, of course, did not invent/discover it: https://secure.wikimedia.org/wikipedia/en/wiki/Stigler%27s_l... )


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!


>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.


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.


Could you please share a link to the article ?


For an example of 100% unemployment watch Idiocracy.


> 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.

What odds would you bet on?

I'll lay you 10:1 that world GDP continues to trend up barring WWIII or other force majeure type event.

Some nations will net lose though. The American currency trades at roughly +25% worldwide due to stability/prestige, and the recent administrations are really doing all they can to undermine both of those. So, American could net lose jobs and net lose GDP (implausible, but possible). But worldwide? Massive increases.

So anyways, what odds on what proposition are you looking for, and what timeline? We're both semi-public figures, I reckon we'd both be good for the money :)

(Rest of the comment is insightful and huge fan of your work, rationality, HPMOR, etc, etc, etc. But I'll lay favorable odds on "this time is not different")

Edit: To clarify, I'm disputing this from the article as I think PG is: "Our new economy is shrinking because technology leads to efficiency over growth." I don't think it is. World GDP continues to massively increase. I also think if America would get out of making financial fuckery the top government and private priority and get back into the entrepreneurship/production/hardwork then the USA will continue to do quite well, too.


I'll take your bet, but you might want to look at this chart before you hand me your money.

http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&#...

And this one.

http://wastedenergy.files.wordpress.com/2010/05/20080301worl...


> I'll take your bet, but you might want to look at this chart before you hand me your money.

Yes, there was a serious recession in 2009. In 2010, world GDP increased by 3.9%, according to preliminary World Bank figures.


Historically, since WWII each rapid spike of oil prices over 2006 100$/barrel for a few months is followed with a recession one year later. If the trend stays true, 2012 will be a recession year.


If you define recovery as a return to the pre-recession peak income less transfer payments, we've never actually recovered.

http://cr4re.com/charts/charts.html?GDP#category=GDP&cha...

I suspect this would resonate with a majority of Americans.


World GDP in a country with fast-growing economies and slow-growing economies, is not that useful a measure.

As an example, Brazil, China, India have actually been growing at rates that would be miraculous in the US, because they have labor-intensive industry and increasing oil supplies.

Old countries like the US, UK, France have barely moved the needle, and are scraping by through money-printing to finance massive deficits.


Why are you bringing up GDP? The discussion is about employment. Okun's Law isn't actually a law, it's a historically observed relationship.


It's hard not to see bringing up GDP as anything other than an attempt to derail the discussion. The author was talking about employment. Implying that the claim was that GDP would go down (which is much less likely), and defeating that claim would have no logical bearing on whether employment will recover.

But it might confuse people into thinking it will.


1. Regulatory burden in which fields? Low-skill trades have suffered the most recently, but I can't think of any new regulations against them.

#4 is inherently untrue, as the lower US dollar entices other countries to buy our stuff. As for "made in the USA" stuff, well, the Tea Party has ignored America's position as the third-largest exporter [0].

#5 is conceptual...I cant really speak to it.

I would put my money on #2, if only bc this fits with the anecdotes I've read from the Beige Book (credit conditions are high even though banks have money to lend). This is such a relatively boring story (relative to "the Internet has consumed everyone's jobs NOM NOM") that I'm not surprised that it isn't espoused more.

[0] https://www.cia.gov/library/publications/the-world-factbook/...


Regarding 3), I would guess that re-education always seems more difficult initially and the hurdles are reduced overtime. It must seem have seemed impossible that a farmer would be able to operate a machine in a factory, initially. Also, there are always new people entering the work force that are being educated under the new paradigm.

These days it appears that a lot of effort and innovation is focused on creating services that encourage the 'democratization of software development' which allows traditionally non-technical people to more easily create software and online services. Think Heroku, dotCloud, Twilio, etc. This innovation will continue to lower the barriers of entry into the new economy and allow normals to build.

When you hear people say 'this time it's different' it almost never is.


To be fair, assuming you are a developer or an entrepreneur, your basic job description could be boiled down to either constant self re-education (coding skills transferred to platforms that did not exist when you started) or adaptability.

I feel, being in this field that requires constant learning (there are some jobs that require only static ability, e.g. COBOL mainframe), that we have a jaded view of what it takes to learn something new. Going from accounting to HR is a big leap, completely different domain (not like picking up iOS after doing server-side Java)


6) The educational level (or mean cognitive ability) of the US population has been decreasing just as the cognitive thresholds for gainful employment are steadily increasing. You'd say education if you were on the left and might say cognition if you were on the right.

Someone should plot the time series of BLS occupational statistics, with the minimum required education/IQ levels for each job. On the one hand the IQ profile of the US is trending down. On the other hand, anecdotally job growth tends to be focused on those areas requiring high IQ, like programming. Squaring this circle may mean job growth outside the US.


Environment plays a huge role in the development and maintenance of IQ. And socioeconomic status (SES) can greatly affect the conduciveness of a child's environment to fostering IQ development. Accordingly, since more and more children are being born into low-SES households, it isn't surprising to see average IQ scores in decline.

Consider the following tidbit from the most recent national census: 50% of all babies born in the country right now are born into low-SES households (as defined as households dependent on governmental assistance, like food stamps). Forty-one percent of all babies born in the country are born to unmarried mothers (single-mother households being highly correlated with low SES).

The conclusion isn't that our generations are getting dumber, per se; it's that our generations are being born into poorer and poorer households. And the deck is pretty significantly stacked against someone born into a low-SES household.

Now, there's debate about causality in all of this, i.e., whether the existing population is actually getting poorer, or whether the poor are simply outbreeding the well-off. Based on census data, it seems to be a little of column A, and perhaps a bit more of column B. Either way, the younger generations are starting off on worse footing. And that leads to lower IQ scores and decreased future prospects.


Have to say something. Using statistics to quantify a change in IQ based SES is similar to using statistics to show that an algae bloom is due to increased sunlight only. The drop in IQ has more to do with limiting educational opportunities and community supports for struggling families. Yes, our government has let us down in many ways but it is a generational problem of trying to give the people what they need to survive and be successful without the people really understanding what it truly is, to be successful. Mass media promotes an idea of success that is NOT successful in terms of true human success and the average Joe buys into such fallacies. It should never be a handout but a hand up to a better life, short term, look for solutions, educate, change, move on. If that is not possible for a "family" to do this, it needs to be discovered specifically why, not just surface appearances of what may truly be stopping appropriate growth and development of the human being. It is never one thing only, there is always a system involved and the system is broken somewhere along the way preventing it from working entirely successfully. Who said it takes a VIllage? It really does, a whole village of people concentrated on the development of each individual within that village to ultimate success and success does not equal money or power unless it is a means to an end for change and a better future for all. 1. topnotch prenatal care for all 2. topnotch education and services from birth, identifying potential problems in development right from the start and providing supports to prevent issues 3. Proper diet and nutrition education and availability, across the board 4. Fewer identifiers of low SES on a daily basis for growing children to prevent the stigma from pushing them into poor decision making. 5. A village for every child

It is all out there, you have to fight for it sometimes and sometimes you are treated with suspicion just because you want to fight for it, but in the end, it will always be worth it, for posterity's sake.


"the IQ profile of the US is trending down."

citation needed.

Last time I looked, the flynn effect was still in full swing.


Citation needed? There's only one response to that:

http://lmgtfy.com/?q=recent+flynn+effect

Right at the top is this excerpt from wikipedia: "Recent research suggests that the Flynn effect may have ended in at least a few developed nations"

This from neuroanthropology.net: "A long-term rise and recent decline in intelligence test performance"

and so on


[deleted]


My disagreement was with the claim that "the Flynn Effect is in full swing". The recent small downwards trend you acknowledge is incompatible with that claim. From everything I've read on the topic, the Flynn Effect ended in the US about 20 years ago. FWIW, I administer Raven's APM tests in the course of my work.

Please speak for yourself about trolling wikipedia. I simply responded to the lazy GP's need for a citation with a google search of a relevant phrase. That said, the very article from which you quoted a sub-section has this in the header:

"Recent research suggests that the Flynn effect may have ended in at least a few developed nations"

This claim carries a citation on wp.

Your link at the bottom about educational attainment is completely irrelevant to the discussion. Intelligence and formal schooling are two different things.


There will always be plenty of jobs:

http://books.google.com/books?id=ErEXMCudMZ4C&lpg=PA77&#...

If we run out of jobs, people will start wearing coats made of auditable solved captchas or something, just to prove that they commanded more human labor than the next guy.


Some people may, but especially in this specific example, there's a large societal force that would positivley squash such behavior. We call it 'fashion' (which is actually quite often linked to inbuilt, brain-hardware based ideas about aesthetics that we can't change)


In the example I linked it is exactly the opposite; aesthetics changing based on the cost/labor to produce rather than anything fundamental to the brain like symmetry, etc.


One answer, and I don't know if this is the right answer, is that unlike in previous revolutions, a new class of jobs has not been created to (fully) replace the jobs that are being displaced. In the industrial revolution, farmers could move to the city and get a job in the factory. In the (first) information revolution, factory workers could become telephone operators. But as Tyler Cowen notes in "The Great Stagnation," jobs in the software industry are relatively few compared to the number of jobs that are being eliminated in other fields. It's unclear what new class of jobs would fully compensate for the loss of, say, many unskilled labor jobs to automation.

A second answer might be that we're only now fully realizing the effects of globalization -- outsourcing, moving factories to China, call centers to India, etc... due to the advances in telecommunications and whatnot. Perhaps there was an underlying structural shift as early as the 90's, but we were coasting on the housing boom. I recognize that that's a rather hand-wavey argument. IANAE.


IAAE, so I'll address this: jobs are not being "displaced" or permanently "eliminated" right now. There's a simple, plausible explanation for all of this:

1. Businesses are hesitant to invest in capital.

2. The housing market is terrible right now--especially housing starts.

3. Jobs related to #2 and #3 generally go to lower-skilled workers. They're the ones who are struggling right now (with something like 16% unemployment for men without a HS diploma).

This isn't the end of the American economy, people. Demand is low for goods produced by low-skilled, American-based labor. Things will improve with time.


It would improve faster if your bosses would engage in QE3 and started to inflate the economy. [Edit: that's an attack on the Board of Governors, certainly not you.]


Well, they're not my bosses anymore. I'm moving into software and applied stats now. :)

I'm torn about QE3. There's little evidence that businesses are waiting on it specifically to make capital expenditure decisions; it seems, from reading the Beige Book and other anecdotes that companies might be waiting for the other shoe to drop. QE3 would just adjust the shoe on the foot a bit.


Well, we could start charging the banks for carrying excess capital. I know, I know, everyone will start screaming about crappy balance sheets and all, but they're just sitting on boatloads of cash.


The problem isn't cash, its capital goods, and flooding the system with cash will just cause damage to companies who are to small to move fast enough to acquire large amounts of the flood.


Elaborate? You're being vague, and from what I've seen we have no problems with the capital we produce.


Whatever its actual economic merit it seems obvious that there will be another QE3 as soon as the derivatives and bad loans still in play cause another liquidity crisis. My personal investment strategy is exactly in line with what you describe businesses doing: stay out of the market until there's another crunch which looks severe enough that the USG will feel forced to intervene. (And stay out of USD in the meantime.)


Isn't a very large proportion of American labor unskilled? Real unemployment is always worse than the figure they give (when you account for people who stopped looking).


I can't say how many workers have less than a HS degree. A trip to bls.gov would help, but I'm on an iPhone.

I imagine the majority of American workers have a HS degree, at least.


<pedantic>There's no such thing as a HS degree. There is such a thing as a high school diploma.</pedantic>


Funny, I even called it a diploma above.


In the industrial revolution, farmers could move to the city and get a job in the factory.

Not true. The Industrial Revolution was preceded (in England) by an Agricultural Revolution that displaced peasants in large numbers to cities where they didn't have nearly enough work. (Many emigrated to the New World.)

Thus the later economic boom was preceded by economic hard times.


So maybe one significant difference is that this time, there isn't a new frontier for people in developed countries to immigrate to.


It's difficult for me to buy Tyler Cowen's thesis that all of the huge gains in marginal productivity have been tapped. If you're a developer, you tend to see incomprehensible inefficiency everywhere, especially if you consult for larger organizations or work on applications that involve human collaboration. I think a more probable explanation for "The Great Stagflation" is the unprecedented level of market intervention and regulation that did not exist during the industrial revolution.


Certainly, that is true. Unemployment would drop a great deal if the price of low wage labor were allowed to decline to where demand would equal supply. But that's illegal.

And its not just wage that must be considered. There are hidden costs of hiring and possibly having to fire an employee, all of which have gone up in recent decades.

People imagine that employers can be made to do all kinds of costly things without effect on employment. Or take home pay. And in good times, it may seem like there are no such effects.

But its in the bad times that consequences are felt, long after the legislation has been passed. If an employer cannot make money hiring a particular worker at the minimum legal wage, the worker isn't going to be hired (legally, anyway).

This has nothing to do with technology adoption.



As a support for your claim that new classes of jobs are not created , see pages 67-68 in http://www.thelightsinthetunnel.com/LIGHTSTUNNEL.PDF

There's a table called "U.S. Occupations with at least one million workers (2006)". Every type of job there has existed since 1948. There are no new job categories created with over a million workers.


But that isn't too surprising. Seventy-five years ago, we had "factory worker", "foreman", and "manager". Compare that to any large company today and see the variety of jobs being done.

Jobs, and therefore people, have specialized more, that's all.


>But why now, when it hasn't in the past?

One might well ask, why not now ?

Given a(t)t, where a(t) = rate of new jobs created per year

-b(t)t, where -b(t) = jobs lost due to technology per year

Problem is, the function a(t) is stable and predictable over time, because human populations are generally sigmoids ( http://en.wikipedia.org/wiki/Logistic_growth )

Whereas the function b(t) feeds on itself ( http://en.wikipedia.org/wiki/Autoregression ) If you deploy technology, and said technology is successful, you then deploy more of that technology, which is then more successful, and so on...At each step, b(t+1)>b(t).

Take a decent time window...say going back 50 years, for which we have reliable data for a(t) and b(t). Run the simulation. You will posit that '-b(t)t' beats 'a(t)t' at some point in time 't'. Why should t be 2011 ? Well, why not ? The curves have to meet up someplace. Might as well be 2011 :) However you slice it, they will intersect and from then on you will get net negative jobs at some point of time. Whether that's 2011 or whenever is immaterial.


The corollary here is quite interesting: if we imagine this extending quite a ways into the future, we might ask what sort of society we'd like to live in far in the future, where more and more jobs are lost because technology makes them pointless for humans to do.

Say only 10% of humans had any skill whatsoever that would provide value that could not be more cheaply obtained by deploying technology. Say it got further, to 1%.

Imagine a world where only a handful of the most incredibly skilled humans can do anything better (i.e. more cost effectively) than a computer, and the rest are rightfully unemployed, because they have nothing to offer. A world where your 20 years of hard earned programming expertise is utterly worthless in the marketplace because an open source program exists that will read a plain language spec and spit out a good approximation of the same code you would have written, except without buffer overrun bugs and it'll be done in 20 seconds instead of three weeks. Where "lawyer" and "doctor" are professions-that-were because humans aren't fit to compete, and where one by one all the other careers considered unassailable today are swallowed up by increasingly sophisticated automation. Sure, we might be left with a few professions that require physical humanity (people will still want to see people in entertainment, for instance), but in the end, most of the wealth in the world will not be created by humans in any direct way.

You might start to understand why it's not such a terrible idea to move closer towards a socialist society as time goes on - eventually we're all going to be unskilled labor, possibly even unemployable, and we're close enough to that point (I'd say within a couple generations, at the outside, barring some major disruptions that hold back further technological progress) that we should probably start thinking about the consequences.


"an open source program exists that will read a plain language spec and spit out a good approximation of the same code you would have written"

And who will write the spec? And why will it be any easier to write the spec than the program? "Plain language" is a misnomer. Idealistic people try to write legal contracts in plain language, but it doesn't work.


And who will write the spec? And why will it be any easier to write the spec than the program?

Sure, there will be people at the top of the command hierarchy dictating what needs are being met. That doesn't mean that spec-writing jobs will provide gainful employment for as many people as are employed fulfilling specs these days.

As for why it will be any easier to write the spec than the program, it already is. "Plain language" is exactly how people spec things out all the time these days, it serves me quite well when I'm getting work assignments ("The Fizzle button is making the back end Furble on Tuesday nights, fix it!", or "Add a coupon code field to our order page and an administration tab to add codes to the database - just make sure the same code can't be used more than once").

Idealistic people try to write legal contracts in plain language, but it doesn't work.

People tell their lawyers in plain everyday language what they care about achieving with a legal contract, and the lawyers fill in the blanks based on what they know. Similarly, normal people tell their programmers what they care about achieving, the programmers fill in the blanks. Sure, we can't automate that filling-in-the-blanks super well yet, and yes, there often has to be some back and forth to figure out what the person really wants (this is, IMO, on of the most important things missing in a lot of machine learning approaches, as human thought - especially language processing - involves a lot of feedback between systems and backtracking), but to me it's not hard at all to imagine all of that being extremely successfully automated once we have thirty years more NLP research under our belts and laptop computers that would put the most expensive Hadoop cluster you could construct today to shame...

Then again, I'm one of the weirdos that thinks that the "problem" of intelligence can be solved by a much less sophisticated algorithm than the one that our brains implement, under the theory that typically evolution only ever seems to do one thing well: create highly complex solutions to medium difficulty problems.


Is this an argument claiming something can't ever happen, not because its impossible, but because its -bloody hard-?

That's a ridiculous argument...and remember, the example was ridiculous, talking about a world where only 10% of people had jobs: People would build -very difficult- things to find employment. (incidentally, we're all of us doing harder(cognitively) things than our ancestors to find employment today.)


read "beggars in spain"


So far in the 20min discussion, I like this answer best as it tries to outline the factors for even a crude estimation. I do have another variable to add that nobody has mentioned.

I think the sentiment, not explicitly conveyed in the article, is that "there are less jobs for the number of employable people". And there lies the rub. Perhaps net total jobs is still on the rise, but the rate of population growth is that much faster than the rate of jobs created. And it's not flat rates, but changing rates as well. When technology provides efficiency (I'm thinking scale, atm), it would probably push rate of jobs create slightly lower. With more people on the planet, instead of competing with 1 other person for 1 spot, a person might be competing with 10 other people for 2 spots, hence the sense of joblessness, and a culprit to blame.


> Perhaps net total jobs is still on the rise, but the rate of population growth is that much faster than the rate of jobs created.

The rate of population growth is declining, especially in developed nations. The UN estimates that the world population will peak at ~9B in the 2050s and then begin falling. Also, the demographic balance is changing because there will be fewer young people in the job market.

So perhaps the jobs/people ratio will improve, but these same demographic changes (and increasing life expectancy) pose big questions about fewer workers supporting healthcare and government services for more older people.


Interesting point. In addition to population growth, you could say that this comes with progress in technology and policy, too.

Countries like China and India a good place to export our jobs, at a minimum, because they're stable enough. Even if we could trade with China in the late 1950's, the Great Leap Forward would've made such trade very unattractive. Why would I want to export my jobs to a country where the average citizen isn't even fed properly, assuming I could?

I posit that as countries such as North Korea and Libya stabilize, the global job growth rate will have to increase in order to main the job-to-employable-people ratio. A positive, but stable, job growth rate would not be enough.

I could be totally wrong about this in that there will always be some minimum political chaos in the world, but I'm an optimist :)


Well, population growth has also been the case all along (for centuries), so the "why now?" question would be the same. Increased population is also an increase in consumers.


Your question ("why not now?") dodges pg's main point: we've been through this many times before, and the catalysts behind this recession (especially poor financial liquidity) do not suggest a material, structural shift in the type of work available in our economy. The housing market is poor and businesses are hesitant to invest, but robots have not replaced the pimply kid at McDonald's just yet.


> we've been through this many times before

'past predicts future' is not exactly commensurate with a point of inflection. perhaps a real-life example can help - a medical transcription firm in India hires 25 Indians to transcribe medical records. I then sell the CEO a copy of voice recognition software. He is so happy with the results, he fires 24 and keeps 1 Indian to fix the occasional transcription typos! After one month, he finds the transcription error rate is unacceptably high, so he hires one more Indian to fix typos. For the past 1 year, these 2 Indians & that software has chugged along, making money. Now that CEO is happy, making money, and has opened his second office in India, with another copy of the software & just 2 more Indians to babysit and bugfix! True story. Any way you cut it, that's net job loss. First, a bunch of housewives in Atlanta who transcribed for a living lost their livelihood, but you can rationalize that by saying, hey atleast 25 Indians got hired. But 23 out of those 25 Indians lost jobs & 1 piece of software ended up doing the job! Now unless the Atlanta housewives and the 23 Indians end up working for the voice recognition software company ( a very remote possibility ) or end up in a brand new job ( even more remote possibility ) given their limited skills, there is definitely a block of time when there is net job loss. Ofcourse eventually some of these people will learn new skills and/or are absorbed into new jobs etc...atleast, that's the hope. But the intervening reality can't be wished away. I still think this story will have a happy ending, but so far I don't see it.


Those housewives and Indians will not be out of work for long. They are experiencing frictional unemployment right now; they'll retrain and take on a new role soon enough.

You don't see the happy ending yet because this was the worst financial crisis since the Great Depression. We love to trash finance types, but banks facilitate a lot of transactions--including home purchases and capital expenditures. When they hurt, our economy hurts in some non-obvious ways.


Frictional unemployment is a good way to handwave away the discovery, or not, of new jobs. You just wiped out that whole -type- of job, replaced it with (much lower employment) error checking.

If you assume that for a portion of the people in the transcribing job, that the transcribing job was the best marginal fit, then some of them don't re-enter the job market. Others have to take a worse job. If they could have been in a better job, they likely would have been. So their employment has gotten worse. May be quality, may be compensation, may be available time. Something's worse for them.


If they could have been in a better job, they likely would have been.

There are a number of reasons this is not the case. I'd wager that a main reason is "re-training takes too much time." If a worker gets laid off, gets his Associate's, and starts something new, well, that's a net positive scenario. He or she produces output in a new field, while the transcription software replaces their old output. Net positive outcome.

You call it "handwaving," but the above happens to many people. This is not some accounting trick economists have developed.


Don't mind the downvote but an explanation would be nice...


Jarvis here.... (that's my quote)....

I'm not sure; that's what I want to explore.

But I think the scale enabled by the net creates such profound efficiency and disintermediation. craig newmark sees himself as a philanthropist of classifieds; his (estimated) $100m business helped disrupt more than $13b in classified revenue. The funds are a dividend for the transactors so the value is not gone, but jobs are.

Look, too, to Clay Shirky's cognitive surplus. In the comments on this post at Google+, Eric Reasons brought up entertainment as an example. They get a double whammy. The people formerly known as the audience (TM Jay Rosen) now have more ways to entertain/distract themselves and can "consume" less entertainment. They also can make more entertainment, ending the scarcity and providing no end of free competition to the industry. There will be much more entertainment, but fewer jobs from it.

Look at retail. Practical necessity required there to be brick-and-mortar stores with much inventory and sales staff across the country as a channel of fulfillment. No more. RIP Borders. Now it is much more efficient, of course, to consolidate and fulfill commodity goods at a distance. Thank you, Amazon. Again, fewer jobs, which won't be replaced.

Transparent pricing in the market will lower prices and reduce the ability of retailers to benefit from pricing opacity. More efficiency. Less profit. Fewer jobs.

Even in my "trade," education, we know what's coming: open courseware will replace third-rate lectures.

Yes, I'm well aware that say, in the shift from agrarian to industrial economies, efficiency shifted jobs from farms (greater efficiency) to factories (greater wealth). The factory equivalents today -- startups -- create great wealth but with fewer jobs.

I say none of this to criticize technology. It's just reality. I will argue as I explore this topic that we must look at policy alternatives for more investment in entrepreneurial ventures and education (of both youth and displaced workers).


You reminded me of an interesting thought. The industrial revolution involved advances in information only incrementally; we went from letter-writing to (eventually) phone and television. The new mediums were very unambiguously new platforms each time.

But now we have a set of platforms(computers themselves, the operating systems, the networks, etc.) for all digitally encodable forms of information. We keep building new platforms on top of these systems; and the rate at which the platforms appear is increasing; 10 years ago you could not do the kinds of trivially focused apps that have become today's cliche.

This is a point of fundamental difference from productivity advancements in the industrial era; better machines meant more resources mined, more goods finished and delivered. And communication remained expensive throughout that period; I can recall long-distance calls still being relatively costly in my childhood(80s, early 90s).

In contrast, better information implies doing more with less, in the physical sense of time and effort. Taken to its literal extreme we have Twitter as an example - a broadcasting medium without the formality and overhead of TV or radio.

And if our advancements from here on out are mostly based on doing "less" and not "more" physically, the whole way in which our economy is measured today is going to become increasingly wrong.


I think it would be interesting to read up on what people thought about the speed and impact of the past transistions.


One possibility is that previous technological advancements facilitated dispersion of labor, while the current crop facilitates the concentration of it.

Advances in ocean-faring ships led to colonialism. Train travel led to a rapid westward expansion of the United States. New farms get established, and new towns crop up to serve them, needing homes and markets to be built, a local newspaper, a local grocer, a local bank, eventually local radio and television stations. Similar basic economic structures get replicated in many diverse geographic locations. Once one place gets saturated, people move and start up another franchise of the town model.

Skipping ahead fifty years or so, the web means I don't have as great a need for the local bookstore, the local newspaper, the local television or radio station, the local bank, etc. There are plenty of businesses that I still need locally, but they in turn don't have as great a need for the local advertising agency, the local newspaper's classifieds section, the local accountant, the local lawyer, the local travel agent - assuming there's still a local owner, with a local HR department, local management structure, etc.

Of the startups you see, how many are going to end up with a business whose operations need to be replicated in many geographic locations? How many are ever going to be more than an office in the Valley or NYC and maybe a few sales outposts? How many pitches are you getting that require large marginal outlays on labor in order to scale, and how would that requirement affect your investment decision?


I think a better way of putting would be "technology is killing old jobs, and people aren't stepping into the new jobs fast enough". The author is exactly right that the gov't and mainstream are trying to hold onto the old ways.

I think the mainstream is surprised by this technology shift, because technology is finally replacing non-tech industries that didn't expect to be replaced. Nobody was surprised when blacksmiths were replaced, because they were "old tech" being replaced with "new tech". When brick&mortar retail or law get replaced, there's a lot of gnashing of teeth.


I bet there was a lot of gnashing going on in the 19th and early 20th centuries, too. People don't like to change, yet technology forces them to.


In the early 19th century, the Luddites protested (and destroyed) automated looms that could be operated by cheap, relatively unskilled labor.


The Great Stagnation - http://www.amazon.com/Great-Stagnation-Low-Hanging-Eventuall...

We've picked all the low hanging fruit - in technology and resources.

Our cars haven't really change much in 100 years. Same basic engine, just added computers (we did that in the _1970'_).

We're only incrementally improving technology (cars with navigation).

Our current innovations (Twitter, FB, Google) don't produce many jobs and in fact reduce number of jobs. People will spend the night on FB vs going out to dinner, a movie, etc. You don't need to go out to cure boredom/socialize.

Also, Social websites don't produce much commercial activity (compared to say the automakers building Detroit into a first tier city in the last century).

We're patenting one click check outs, but we haven't found a good (economical at scale) replacement for the major components of our economy - e.g. the internal combustion engine and fossil fuels.

The US has has an abundance of cheap land an resources PLUS the country was lucky enough to grow up in the industrial revolution when technical innovation was relatively easy and world changing (compared to now where it's much more incremental).

We're going to stagnate until someone (US,Chinese,Indian,other) makes some big leaps in alternative energy and other advanced technology.

Web apps aren't going fix our economic problems (however useful they are).


Speaking only to the car comments -- although they put in question the rest.

Bull. There have been significant improvements to cars in just the last several years, and the 1970s (and before) were a complete disaster for cars. There has been great progress. Today's cars are way better than anything preceding them, beginning with build quality, through handling and braking, and ending with emissions. Not perfect, but vast improvements.

Is there more to do? Sure.

These things take time, and the progress may seem slow to many of us, but massive infrastructure changes cannot be accomplished quickly. Hey ... who is going to deny a poor person the desire for transportation, even if it is with a crappy old car. As much as we might want it to be faster, societal change is slow.


Don't forget the incredible advances in safety in modern cars.


My answer would be that there is a time delay inherent to being human between wanting to do something and being skilled enough to do it.

If humans were required to learn, say, programming in a week, they would completely fail. Learning an industrial job in more than a decade to transition away from farming is much easier.

It could be that the skills needed to be employable are too difficult for people to learn in the time available. I think this learning time is fluid. It could be a function of cultural expectation of self reliance, for example.

What is funny is that plenty of roboticists point to an inflection point in the future when service jobs become displaced, which will dwarf these problems. The change will be bigger and the time to adjust will be smaller.


I came here to post the same.. Which entry level tasks does the most recent wave of new technology require which may be performed by, say, a 45 year old factory worker of 25 years? How do you go about "spreading the load"?


Probably it is not happening now, but it should happen in a few years.

Historically technology has displaced humans, but there has always been something that is cheaper to retrain humans for than it is to build machines for. For one thing you can explain to humans what to do, and they could turn an incredible amount of computing power to figuring out, following, and filling out your instructions. Computers simply have not had anything close to a human brain.

However as the complexity of our machines goes up, and the costs of automation go down, eventually we'll come to a point where it is cheaper to design and build a machine for a new job than it is to train someone to do it. At that point humans will be displaced and new jobs won't show up for it.

By a back of the envelope estimate, we're perhaps 10-15 years away from having computers with the raw computational power of a human brain. Software will follow, and the successes of things like Watson suggest that it won't take that long for software to catch up enough to be economically useful.

Once it is possible to train a machine faster than a human, the cost of buying and running that machine puts a cap on what that human can expect to be paid. Given Moore's law, that cap will descend painfully quickly after it first becomes an issue.


And to think that 50 years ago, everyone expected to be living in luxury as robots did all the work. <:\


"Our new economy is shrinking because technology leads to efficiency over growth."

I disagree with this premise. IMHO, it is much simpler: we as individuals lived beyond our means for 20+ years by borrowing money against our houses and against our personal word (e.g. credit cards). We as governments lived beyond our means in terms of direct spending as well future spending promises (e.g. promising retirement/pension/medical benefits that are funded by borrowing or not funded at all). Big companies also promised retirement (pension) benefits that assumed a continuing growth of the investments that backed the pensions - that didn't work out so well.

"But why now, when it hasn't in the past?"

In the past, we relied on general growth exceeding our indebtedness, "growing" our way out of our debt. This is a game that cannot go on forever... and the longer it goes on, the worse the crash will be at the end. Right now, it is looking pretty tough.

In short, we lived beyond our means for 20+ years. We will have to live "below our means" for a substantial number of years to balance our past spending against our current and future incomes... and that assumes we have the will to make the hard decisions to truly reduce our spending rather than claiming to reduce spending, but the "reductions" are 2/5/10 years in the future.

A big part of living "below our means" is buying less, paying down our debt, which means lower demand and thus lower job levels.


This is absolutely right. Average personal savings rates in India and China: 30% and 50% (and that's of their gross income). Average personal savings in the USofA: -2%. We've lived so far beyond our means that it had to catch up to us.

The real scare for me is the potential for another, larger bubble: the "Credit Bubble". A bubble exists when asset price inflation rises beyond what incomes can sustain. A bubble represents people abandoning reason and prudence for hope and greed. (http://www.chrismartenson.com/crashcourse/chapter-15-bubbles)

The Credit Bubble will pop when the sum total of all of our society's debt prices (read: interest) exceeds our ability to pay. Experts think this could happen anywhere between 2015 and 2020. When that pops, the housing bubble will look minuscule.

The prudent should prepare now. Buy food storage. Become self reliant. And get out of debt!


> Average personal savings rates in India and China was: 30% and 50%

Yes, but if you take into account the 9% inflation in India, the savings might be a net loss.

As was pointed out to me earlier in another HN discussion, the only reason why the Indian government guarantees a seemingly too good to believe interest rate of 9% for the savings accounts of their senior citizens is because that rate cancels out inflation.


Wouldn't the rational decision for this scenario be to participate in the credit bubble and use the money to buy food storage and become more self-reliant?


There is a net increase in jobs, but that's mostly in developing countries. Technology (the internet, container shipping) has actually enabled an explosion of job growth in those countries. Unfortunately, these trends destroy jobs in developed countries.

So I think you are correct that there will be a net increase in jobs, but it may take quite a while for developed countries to experience this. In the meantime, they are on the look-out for explanations.


Haven't we finally reached the point where all the discoveries of the Industrial Age and Information Age are coming together to enable companies to produce goods as efficiently as humanly possible? And won't advances in AI and robotics enable us to push beyond those human limits?

I'd say that it hasn't in the past because up until 60 years ago, humans were the decision makers doing everything.


So what's the big technological difference between this year and, say, four years ago? Why was unemployment below 5% then?


There was a speculative bubble in the world real estate market. This led to a lot of real cash circulating (e.g. people refinancing to pay for kitchen remodels so that they can flip their home). That popped, and all the excess economic activity disappeared with it.

The article posits a broad trend. Short term boom and bust fluctuations will always happen.


The article posits a broad trend for which it provides no evidence, and indeed nobody has been able to provide evidence. This is the broad trend people have been positing since the ludites were smashing those newfangled automated looms.


I suppose my argument wouldn't hold if you look at just 4 years, but I think it would if you look over a few centuries, as pg noted.


I am not sure I agree with the author, but it seems to me that previous progress have chiefly made things faster (travel), cheaper (e.g mass production), lighter (computers), more accurate (measurement instruments) and more durable (steel versus iron versus stone).

Right now the IT industry is mostly making things cheaper and to some degree faster (you no longer have to wait until the next days paper to get to know what happened yesterday) however most of what is produced are final goods and there is only so much of the which can be consumed; whereas the amount of steel you might use if it were free is likely to be many thousands of times higher than today (since manufactures would use it everywhere they could) you aren't going to read even 50 newspapers a day if they were free -- you don't have that much time.

The same is the case with games and television -- you don't have the time to play more than a few hours a day at most so it doesn't matter whether Farmville is much cheaper than going to the chinema.

So the only way it seems different to me this time around is that today most of what is produced falls under my self created economy of final goods whereas previously much of the innovation and improvement has happened earlier in the value chain.

One notable exception to this seems to be open source server software (and computers in general, although they now seem to be much faster than the average person needs) which makes it much cheaper and easier to start a tech company (indeed patio11 famously spend $60 on bingocardcreator.com) but at the same time these companies also typically makes a lot less money than the companies they disrupt.


I'm a little late to this party, but:

Short answer: technology destroys jobs for dumb people and creates jobs for smart people. Until now this has been okay, because there have still been enough dumb jobs for all the dumb people. But as technology continues to progress, we (without genetic engineering or eugenics) run into the point where we have more dumb people than useful things for them to do. There are no jobs doing manual labour, and the dumber members of society aren't smart enough to perform the new jobs of maintaining the robots which do the manual labour for us. What, then, is the use of these people, and what do we do with them?


> Short answer: technology destroys jobs for dumb people and creates jobs for smart people.

It sounds like you're only considering high-tech jobs, like computer programmers or engineers. Those aren't all the jobs that technology creates, not by a long shot. Think about pizza deliverers, call center workers, fast food workers, etc.


Put aside service jobs like pizza delivery or baristas and think about manufacturing jobs or “dirty” jobs. Regarding manufacturing jobs I tend to think that technology didn’t replace those kind of jobs instead we opted to buy goods made in other countries. I can't find any current examples but the article below states that in 2007 the USA exported $4.6 billion in raw cotton and imported $52.4 billion in processed cotton goods. That’s a lot of money leaving our economy. We really need to start manufacturing again and as a nation get in to the mindset that it’s better to save and buy quality than to buy quantity. http://www.suite101.com/content/us-cotton-trade-statistics-a...


I think the difference is that technology, now, allows for far better distribution of effort around the globe. Previously, as you mention, technology was uplifting silo'd productivity - but was not allowing for whole industries to be either globally distributed (information based industries) or remotely centralized (agriculture exports).

We now have sufficient technology in all areas to allow for both; the global distribution of knowledge working, sufficient advancements in production technology to increase output efficiencies in specific areas that centralization of output for the global economy can occur (e.g. agri output from say brazil supporting a large % of global soybean consumption - and manifacturing in China supporting a large % of global doohickey consumption)

We are reaching a change in the overall model of economies, where previously each nation was duplicating a large portion of the industries as their production was only enough for internal consumption.

If you look at the entire planet as a single resource zone, then naturally you will have uneven distribution of resources, production, knowledge, etc... thus uneven distribution of labor to support this.

If we could see a heat map of the globe's resources to people to markets to [name a factor]... etc. but weighted by their pull in each direction, then maybe we could better model how the global economy really looks.

Extra Credit: weight the flow of this map to energy dependence and you'll really see how fragile this little world is.


Technology does not necessarily lead to efficiency. In the immediate, it leads to greater productivity. The same people, the same place, doing more, in the same period of time.

True efficiency emerges from high productivity when the technologies employed are thoroughly understood and applied properly. And that takes time.

Disruptive technologies increase productivity too, but stunt the emergence of efficiency by hindering the thorough understanding needed.

The last significant disruptive technology affecting jobs was the adoption of the internet -- circa 1997. Since then, organizations have had a lot of time to understand their technologies and improve upon them. I believe the layoffs we have seen in recent years, both in the office and on the shop floor, reflect that.


You'd think people were born 10 years ago sometimes. I'm old enough to remember the last two recessions (just), and both times these same ideas were propagated in articles and books and pub talk.

Don't confuse a contraction of investment with "the end of human labour", and then find a correlation with changes in technology. It's fallacious reasoning.


I agree with pg - but for a different reason.

In the past, one of the most significant limiting factors on business growth has been the cost of human labour, and technological development has focused on working around this limitation, eliminating manual jobs and creating jobs improving the technology.

However, as the world population grows and certain very important finite resources, such as fossil fuels, become severely depleted (especially fossil fuel reserves that can be extracted with less energy than the fossil fuel contains), these resources become a more important limiting factor than human time.

I therefore predict that in the future, far more work on technological development will go towards sustainability, and less will go towards minimising human labour. Employment will rise, while the price of anything which is not sustainably produced will rise in real terms relative to the cost of labour.

Due to the relatively higher costs of energy intensive transportation, I expect that there will be some degree of reversal of globalisation with respect to physical goods (but not other industries). Technology will probably play a role in allowing one family or small local community to do locally what currently takes a global network of large companies.

I think inequality will still be a real risk long term - if we ever reach the point where the food production system can be completely automated, and everyone had at least enough technology / capital to produce what they needed to survive and be healthy, poverty would be eliminated - but if only a few people owned all the capital, and squandered most of it on luxuries while others starved, that would be a significantly worse outcome.


I wonder if Jevons paradox applies here: http://en.wikipedia.org/wiki/Jevons_paradox

Jevons paradox is that "technological progress that increases the efficiency with which a resource is used tends to increase (rather than decrease) the rate of consumption of that resource". Watt's more efficient steam engine increased the consumption of coal, the cotton gin increased the consumption of slave labor, and virtualization has increased the consumption of servers. If technology can increase the efficiency of human labor, won't it increase the demand for labor as well?


It's probably not going to be "now" or any time soon but, barring a global-scale disaster, it's hard to imagine how the future may not be jobless, given enough time. There are only so many levels "higher up the stack" humans can go before most of theirs skills are rendered redundant by the machine. Even if The Singularity doesn't happen and humans continue being exclusively in charge of the thinking, decision making, strategizing, etc., will there be enough demand for multi-millions or billions of such jobs? I doubt it.


But will it matter? The more automated the production of essentials become, the less expensive they become. As a result, we may get to a point that the world economy is all about trading natural resources that go to providing people with their essentials. People can then build their own wants beyond that in a way similar to bartering.

The problem, of course, is the 10-20 years between "there are too few jobs" and "everything we need is available" and governments need to actively work to support populations through it. Unfortunately, very, very few governments seem to be able to look to the future.


Computer chess improved regularly for decades before becoming a true threat to master players. Why did it start toppling them in the 90s when it hadn't before? More recently, financial programs have carved out a huge niche of the market that was once dominated by human traders.

Why now? Because the technology is finally competitive with humans across a wide range of tasks. Yes newer, some new jobs opportunities do open up, but they're often jobs that those displaced are simply incapable of doing.


Technology has been improving our production capacities over the centuries. It also brought new needs that in turn created more jobs.

I think that the widespread criticism of consumerism is the sign of an important event : now that we have a car, a fridge, a computer, a TV, more clothes we need, hot water, and a fully equipped bathroom, we just don' have any more demands.

If the population had the same demands as in 1700, it would be trivial to fulfill them. It would require maybe one day of labor per month per individual. Our demands grew faster than our production capacities, making the working week just a bit shorter, but now the demands do not increasing at the same pace as our productivity.

We have just reached the point where our material needs are fulfilled and we demand immaterial things : free time, healthcare, etc...

Could this be the point of inflexion toward a post-scarcity economy. I really wish.


I don't know the answer, but I can see it as being something like:

In 1100's europe, there was land that was cleared for cultivation and forest. Most land holdings had areas of wilderness. They cleared it as the population increased. If the landholder could have instantly increased the population, he would have put the new people to work clearing land and planting crops (probably via leasing it to them as a landlord, or some kind of serfdom, but the mechanics of that don't matter here). So, the number of 'jobs' available on a given landholders property might have been 5000, while the population at the time was 400. There were more job openings than there were people.

Later, factories pulled population away from farms and improved farming allowed the land to feed more people than actually lived on it. This reduced the number of farmers needed as a proportion of the population, so if the population were the same as in 1100, the 5000 jobs we had before might have dropped, perhaps to 2000 jobs, or rather, food prices would have dropped so that lots of people no longer saw farming as the best idea. However, the population had increased greatly. My hypothesis here is that the number of jobs that could have been productively filled was still higher than the population.

This process can't continue forever. Sooner or later, the number of jobs simply crosses over the number of people looking for work. In history, I can imagine a leader, seeing lots of able bodied, desperate, and incredibly cheap manpower seeing an opportunity to raise an army and attempting to expand their own wealth by expanding their lands. That was a natural brake on the population line. Today, thankfully, we don't have any mechanisms that drastically reduce the population whenever people get desperate, there isn't wide areas of undeveloped land that can absorb as many people as we have over above the jobs line, and technology continues to increase productivity at a respectable rate.

So that is how I explain why the jobs line can cross over the population line now, and why we may now be in a situation where we might expect to have less jobs than people who want jobs for a long time.


Exactly. How about all the unemployed horseshoe manufacturers (blacksmiths)? Technology doesn't kill jobs, it improves efficiency so capital can be deployed elsewhere. The problem today are the hurtles government places in the way in the form of regulations and taxes that inhibit the efficient deployment of capital.

The divergence is that to form a single job a knowledge worker requires far less capital compared to a manufacturing job. A developer needs 10k in equipment to be productive compared to 100k's for a manufacturing job. When you actually adjust for the US regulatory and tax environment the gap increases even more, making overseas manufacturing a no-brainer.


Exactly. Whenever I see someone make the "technology destroys jobs" argument, I always think of Kurt Vonnegut's first (and worst) novel, Player Piano. The disruptive change in 1952 looked just as scary to those being disrupted as it does today.


>"It's possible that technology could start to net kill jobs. But why now, when it hasn't in the past?"

Two hundred years ago, most people worked in agriculture.

Then came technologies such as the McCormick Reaper, Whitney's Gin and Newcomen's engine - away went the vast majority of that work.

Yes much of it was replaced with something else and much of what replaced it was more pleasant, but the conclusion that the jobs which replaced agriculture are permanent is not forgone.

[edit] The technology upon which jobs depend in the modern era is finance, and that has been largely diverted to purposes other than creating jobs in the US over the past several decades.


Thank you for bringing up the cotton gin, etc. I was thinking that when I read the article.


The thing that's different today is that we've transitioned the economy increasingly to one where we provide services to each other rather than produce wealth.

In discussing potential Medicaid cuts in New York, advocates claim that over 12% of employed people in NYC are in healthcare. I have no idea whether that's true or not, but if so, it has real negative implications.

So its not technology that's the problem, it's the fact that we're going nothing to produce new wealth, and are exporting our wealth overseas via the importing of most manufactured goods.


I think it comes down to logistics.

Up till now, you couldn't really outsource the job cheaply enough. Now, it's cheaper to build something on the other side of the world and ship it here.


The only transformation comparable to the present phenomenon would be the migration from rural (farming) to urban factory settings that accumulated full force about a century ago. And it was a period that was marked with great tribulations and social and culture shattering apart -- immigrant labor, worker rights, great depression, altering of government social contract (i.e., New Deal), etc.…

The current technology revolution is even more overarching -- yes, there are new jobs being created, but at a fraction of the existing job base. This is not just a "claim" -- it's verifiable fact that can be easily concluded by perusing corporate employment ranks (GM used to employ nearly 1M workers -- contrast that to a modern internet company or even modern corporation which have been diminishing in employment ranks since the 90s). Review the government Labor department jobs reports -- most of the jobs created (outside of health care) are the kinds of jobs easily replaced by robotics / automation. The only damper that prevents a greater rate of transformation is the inexhaustible supply of cheap labor -- the presence of a humans willing to work at fraction of another, a seemingly bottomless pool. Might not be relevant for skilled jobs (though it is, at a lesser degree -- non immigrant visa workers supplanting American programmers for instance -- note that I am not making a case against immigration, just that immigration does have an economic effect on native workers).

See [Robotic Nation](http://www.marshallbrain.com/robotic-nation.htm) for a good summation of this -- yes, productivity and efficiency rise at an aggregate level, but the benefits do not accrue equally to all.


I wouldn't bet that technology should net kill jobs now. There's still a lot that must be done by humans to get to the next technological plateau. If jobs don't come back now it will be because of economic reasons. It's possible that our education and economic systems are weakened and can't keep up with the moderate tech advance we're experiencing.

But there should be a point in the foreseeable future at which technology will progress too quickly for mortals to keep up, despite the best education and economy. It wouldn't be the first paradigm shift of this magnitude. At one point in our past human population increased dramatically from farming, so even if people wanted to go back to hunting they could not. Then towns sprung up because farmers learned to produce a surplus. Then there wasn't enough land for everyone who wanted to farm.

Similarly today, we can have some people "farm" or do the essential work and produce such a large surplus of food, raw materials, technology, etc., that others will be freed from jobs, just as ancient towns were freed from farming.

Frankly we could make such changes with today's technology, but the economy and culture may not be ready. Instead we create contrived jobs.


Software as a service renders the manual organization of information obsolete.

A great deal of human labor in general is spent organizing information. Every industry from construction to tourism. Every scale, from villages to corporations.

It is fundamental to the very concept of "work", and it is being rendered obsolete very quickly thanks to high internet penetration rates and mobile computing.


To assume that humans are basically fungible when it comes to competing in an agrarian society makes sense. To make the same assumption in an industrial society is questionable. To assert so in a technologically complex, automated, digitalized, globally competitive post-industrial society is - being willfully blind. And that is why now is different.


To talk about jobs lost, there were 4 million farm horses in Briton before the industrial revolution, and then over a period of 25 years in the nineteenth century, that population dropped to under a million.

Ford, and every other company, ran a 48 hour work week in the united states until Ford decided his factories were efficient enough that he could hire more people, pay everyone the same for 8 hours less labor, and thus sell more cars. Most every industry followed.

Now we've nearly a tenth of the workforce unemployed, but the story people tend to ignore is the actual hours of employment demanded per capita. The far scarier story than the United states unemployment is its underemployment, where people are willing to work but only get a few hours. Employers want to employ more people...but they can't fill more labor-hours. They can split those hours up, and because of that, a lot of the job loss is hidden.

Does anyone know of any other animals losing their jobs to robots?


Technology is improving at a higher rate than humans -- our wetware/body have fundamental limits than hardware/software. Hence, at some point -- sooner or later -- we start to run out of jobs that we are willing to pay humans to do instead of machines. (Lowering minimum wages could delay but not stop that.)


You could argue that in the skill level required to transition from destroyed jobs to created has changed. When the economy transitioned from farming to manufacturing a farmer could begin working in a factory with little training. Now automation is beginning to eliminate jobs at some skill levels. For these displaced workers to find new jobs years of training could be required. If the rate that jobs are being eliminated is greater than the rate that workers can train for newly created jobs and reenter the workforce then there could be a larger percentage of unemployed workers than has been seen historically.


> For these displaced workers to find new jobs years of training could be required.

I think we vastly overstate the importance of training.

Being a farmer, I enjoy following farm-related discussions. Farmers spend just as much time talking about the shortage of talent as tech companies do, if not more. What is interesting about farms is that the job needs to be done in a timely manner no matter what, so you have to hire the best you can, and hope they become good at the job eventually.

Being a software developer, I also enjoy following tech-related discussions. We read story after story of people going from absolutely no experience to profitable software company in weeks, yet we still believe that years and years of training are required to work on even the simplest of projects.

Tech companies come with the luxury of artificial timelines. A tech company can leave a position unfilled for months or even years without any significant impact to the bottom line. Your software codebase isn't going to shrivel up and die or your warehouse of stock isn't going to expire if it takes an additional month or two to complete a feature.

There is no reason why anyone with a few days of studying software development cannot join the team. We just don't need them. We can wait and hire the guy who scaled out Facebook and developed Watson while working on iOS on the side. That is the shift in employment we are seeing and no amount of training is going to resolve the underlying problem.


> But why now, when it hasn't in the past?

Maybe now, unlike ever before, computers and robots can do most of the tasks that (relatively) unskilled humans are capable of, for less than minimum wage.


It make sense on the long run, think about it, technology introduced new jobs to offset the ones it killed

But as we get better doing what we do, as we become more efficient we need less people to do a particular job.

Now without new types of Jobs being created by new technology, efficiency can net kill jobs

Another point to consider is that other factors are surely at play that accelerated the net killing of job, such as outsourcing and so on (outsourcing of course, is make available because of advancement in IT and communication)


Why now?

Well we are living in exponential era, everything that happened in the past has been fast forwarded exponentially. Fast Fast Fast forward, the rate is exponential.

Look at last 10yrs & compare the growth 20-30yrs ago, or rate of global warming, or how fast you travel today or efficiency in communication, or how much time did google take to become threat to Microsoft, or facebook to google, or even youngest billion air!

You name it! This rate can be catastrophic for us.


> Why now?

Because increases in consumption are no longer able to keep pace with increased productivity?


Perhaps it's not because of technological change per se, but an increasing rate of technological change. There are new jobs, but it is becoming more and more difficult for regular people to learn the skills necessary to fill those positions.


"Economics in One Lesson", chapter 7. Everyone should read that book

http://www.fee.org/pdf/books/Economics_in_one_lesson.pdf


It says that jobs lost because of intoduction of labour saving machine are regained at later time thanks to increased demand caused by more efficient supply.

But what if we reached a point where one labour saving machine is replaced with even better labour saving machine before it had a chance to redeem lost jobs?

I anticipate transition of jobs and money toward trivial things. In 10 years John will cut hair of James for 1000$ and James will groom dog of John for 1000$. In the meantime theyll both enjoy nearly magical devices they bought for 10$ because they were made by robots.


Technology has been killing jobs for a long time. Why do you think it hasn't before? Do you find your self blacksmithing, or does a machine do that for you?


You're confusing job killers with net job killers, a distinction pg clearly makes in his post.


The efficiency of our production is rising for centuries indeed. Once, a peon on a field could hardly produce for his own family, a modern day farmer can supply food for thousands of people.

Same can be seen in almost all industries.

For centuries this trend was offset with appearance of new kinds of production. New fields opened new markets and new places for work.

Lets ignore the current situation and ponder where does it lead us. It is inevitable that in the future most of day-to-day stuff we use will be produced by robots with minimal up to none human oversight.

There is only that much that we can consume. There is only that much of different kinds of produciton we can require. And we can not all be working in a creative capacity, inventing new stuff and inventing new markets. Inavitably a day will come when it will be technologically possible to supply all day-to-day the needs of world's population with stuff and services supplied mostly by robots.

What will happen then?

From several hundreds years ago, when people produced mostly for themselves, to the distant future when we all be serviced by robots and efficient production chains we see a definite trend. Somewhere along the path there should be disruptive events for this to happen, when a 'tension' produced by efficiency leads to massive losses of jobs.

For most of the time during the whole history the argument "it is not different then the previous time it happen" will be valid, but there will be definitely times it wont be the case. And it is possible that now is one of those times. Rise in effeciency must lead to loss of jobs eventurally. May be the time is now.

Oh, and this future is not necesserily a very dark one. After all, having most stuff produced effectively only means that most of the population will not have to work. Mey be it will lead to large portion of the population being a "dead weight", burning their life in leasure, and small energetic minority engaging in moving us forward, I don't know. May be it will lead to a large production 'surplus' that we will use to colonize the solar system and beyond? May be something else...

But I think we need to start thinking of what the society will look like when most people will not have to work to lead a decent life? What incentives will we need to invent to still have enough people to move forward? How to prevent degradation? I don't think artificial limits on automation and technology is the answer, but we might eventually come to this. I can see a politician introducing a SaveTheJobsBill to outlaw massively automated factories. We need to start thinking about it now, before it actually happens.


Read "lights in the tunnel" by Martin Ford.


why now?

Because technology != technology.


I don't believe that technology has suddenly killed millions of jobs.

No, it's fear. Banks are afraid to lend, and so SMBs can't expand. Corporations, sitting on trillions of dollars, are afraid to hire because they think it's too risky.

Catch-22.


I think the difference between today, and the past is the rate of change, and the barrier of entry for a displaced worker to move. The industrial revolution happened over decades, but the digital revolution happened in just a few years. People are being displaced first by 3rd world countries, and second by machines which is faster than they may be prepared to deal with. Additionally they may not be capable of making the jump. Its easy to take a farmer and place him in a factory. However it is slightly more difficult to take a factory worker, and put him in a web development shop.


> but the digital revolution happened in just a few years

Going to have to disagree on that one. I recall twenty-some years ago, the death of manufacturing due to robotics was a hot debate and something discussed all over mainstream media. The warnings were sent loud and clear.

Which always leaves me with concern. Why did the people in manufacturing not take the time to retool their skills over the past two decades when the fate was clear? When the technology industry ultimately suffers the same fate, will I see the signs and move on, or will I be left struggling to find work too?


fair enough


Technology does not kill jobs: instead it allows the new jobs to be created elsewhere.

50,000 BC: your "job" (finding food) so dominated your life that your entire community followed it around.

20,000 BC: farming began. Your "job" is in the field by your house.

1700 AD: agricultural revolution. Technology allows smaller number to produce food. This allows industrial revolution. More specifically, this creates surplus food which means people can move. And so jobs can move. But it also means that areas that cannot produce food competitively no longer have to. Surplus food allows jobs to move to where the water wheels and resources are to commence industrialization.

1800 AD: The invention of the steam engine frees jobs from the need to be near flowing water: i.e. to move to where the resources are, or where the need to be. For much of the UK this was near ports as raw materials (e.g. cotton) came by ship. Bonus if the port is near a coal field. Again, areas that do not have cheap access to transport and coal, no longer have jobs.

1970 AD: Oil, giant ships, containerization and "free" trade allows jobs to move where wages are cheaper. Entire nations are uncompetitive at manufacturing.

2005 AD: Communications revolution. International calls are free. Service industry jobs move to where wages are cheaper. Entire nations are uncompetitive for service industry.

2008 AD: Computer Vision revolution: computers can now do picking and sorting that previously required a human.

201X AD: Robot Dexterity revolution: computers can now do fine motor skills, such as stitching shoes. Nike finally stops using child labor.

What is left for humans?

Technology has been killing (but not net killing) jobs for centuries.

Is this true? Or is it the case that as technology kills jobs, the unemployed find make work? That is, even if the unemployment level in a country has stayed the same, does it mean that the new jobs that the displaced workers perform are useful, or just a drain on society? Sure in the 19th century there were new non-make-work jobs. But today? Example: people working at Hallmark stores. Example: layer upon layer of middle and upper management. Perhaps it doesn't matter: if society can support make-work jobs, because of efficiencies elsewhere, then as long as people are employed it doesn't matter how. The problem would be if those make-work jobs could no longer be supported. This is what is happening: it is not in China's interest any more to support the vast inefficiencies of the US economic system. Make-work jobs are going away.

Finally, WWII: we destroyed most of the world economy to the point where the US was the world economy (ok, 75% of it). Does this have anything to do with the US having full employment (i.e. hiding technology's job kill) - and if so, now that the rest of the world has caught up, might we now see that the US economy cant support the make-work jobs?




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