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How Computers Are Creating a Second Economy Without Workers (theatlantic.com)
63 points by hobbyist 1143 days ago | 98 comments



BS alert. Another "machines are killing jobs/our future" rant. I'm pretty sure people said the same thing when Gutenberg developed the printing press. There's no "Second Economy".

And the whole thing "it's just computers talking to computers" is ridiculous. The phone started with actual operators in every village, and then moved to fully automated systems. It did not void the economy of jobs. All productivity gains bring new opportunities, new business ideas, and new means to make profits.

The biggest misunderstanding of this article is that the goal of business is not to "create jobs", it is to create wealth. Jobs are a means to create more wealth, because you need manpower and brains for many things that cannot be made by machines alone. That won't change for a while. Automation is simply removing a lot of these jobs that had very little value in the first place.

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While I agree, it doesn't mean that there's not a tipping point at which these fears actually become reality in some form. In the past, you would have a single innovation that threatened some particular worker population, and over time people would retrain, future generations would simply train for something else, and there was no enduring problem. As innovation in technology has accelerated, the level of education required to either create new opportunities or to retrain for existing ones has increased. It is possible that successful automation will eventually outpace the ability of the masses to retrain and adapt. Meanwhile the cost of traditional education continues to rise disproportionate to the rest of the economy, although we are seeing some other possible avenues open up on that front. I think it's an open question as to whether large scale, ongoing unemployment could result from technological innovation, given the right circumstances of rapid innovation and out of reach opportunities for education.

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The Australian Bureau of Statistics has been collecting detailed household expenditure statistics every few years since 1984.

Table 1 of Australia_Data_Tables_2009-10 (65300DO001_200910)[1] provides the following overview:

  Proportion (%) of household goods and services
    expenditure per broad expenditure group
  -
                                              84   88-9  93-4  98-9  03-4  09-10
  -
  Current housing costs (selected dwelling)  12.8  14.3  14.2  13.9  16.1  18.0
  Domestic fuel and power                     2.9   2.6   2.8   2.6   2.6   2.6
  Food and non-alcoholic beverages           19.7  19.1  18.4  18.2  17.1  16.5
  Alcoholic beverages                         3.4   3.4   2.9   2.9   2.6   2.6
  Tobacco products                            1.6   1.4   1.5   1.5   1.3   1.0
  Clothing and footwear                       6.5   6.1   5.6   4.6   4.0   3.6
  Household furnishings and equipment         7.7   7.4   6.6   6.0   5.8   4.7
  Household services and operation            4.3   4.8   5.2   5.9   6.1   5.5
  Medical care and health expenses            3.9   4.3   4.5   4.6   5.1   5.3
  Transport                                  16.3  15.1  15.5  16.9  15.6  15.6
  Recreation                                 11.9  11.8  13.2  12.7  12.8  13.1
  Personal care                               1.8   2.0   1.9   2.0   1.9   1.9
  Miscellaneous goods and services            7.2   7.8   7.6   8.2   8.9   9.4
  -
  Total expenditures                          100   100   100   100   100   100
From this table it appears that Australians are spending a greater proportion of their disposable income on housing, recreation, health and miscellaneous goods and services[2]. Australians are spending less on food, clothing and household furnishings.

Do households have more disposable income to spend on luxury and recreational services such as personal travel guides, hot air balloon rides, coaching to ride a horse, etc? Not all of these areas require University-level education.

[1] http://abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6530.02009-1...

[2] 6530.0 HES 2009–10 Detailed tables breaks miscallenous goods and services into luxury items, financing costs (interest), private education, fees, fines and charitable donations, etc.

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Actually the cost of getting an education has crashed (and I do mean crashed) recently: between opencourseware, Khan Academy and Standfords "pay us a little bit of money and you get a certificate" getting an education has become a lot cheaper.

With regards to your other assumption, note how much most programmers (to take a familiar subject) no longer have to care about -- manual memory management, micro optimizations, low level system interoperations to name a few -- because the price of a computer has dropped so much in relative terms.

The masses will simply have to get their asses out of their seats and retrain. In some subjects they will have to specialize even more than we do today, which will enable them to overcome you issue, and in some areas computers will provide greater assistance than they previously have.

Historically the factory represented an all-time low in the required skills of the workers -- many downshifted from farming or carpentry or some other skilled trade because factory work paid way more.

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I would argue that the monetary cost to gaining an education has been, for quite a long time, near zero in much of the established world: You only had to make your way to the public library. It is the opportunity cost of dedicating several years of your life to study that is significant, and that remains unchanged.

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It is the opportunity cost of dedicating several years of your life to study that is significant, and that remains unchanged.

More importantly, at least from an employers' perspective, it's the credential that signals your conscientiousness and other traits that remains unchanged. Online learning needs to leap the signalling hurdle before it becomes a real, mass alternative to conventional schools—despite the many problems of conventional schools.

(Note: I'm not saying online learning won't clear the hurdle; it merely hasn't yet.)

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Agreed, education is cheap. It is credentials that are expensive today.

Years ago when I was in college, I breezed through my business classes solely based on what I had read in magazines and a few books. In retrospect that knowledge was fluff, but that is another story.

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I really radically disagree. You simply can't do cutting-edge scientific research in a public library.

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Unless you are a mathematician.

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Re: cost of education getting cheaper.

That's only true for some fields. Try to become a doctor or a vet via opencourseware-type programs. Even ignoring the certification aspects, a lot of fields of study still require physical access to equipment that is prohibitively expensive for individuals.

For people interested in fields other than CS, pure math, etc, the cost of education is still a huge problem and one that is getting worse, not better.

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He said education, not certification. University education normally bundles instruction, examination and certification but it's not a necessary feature.

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I already eluded to this in the post you're replying to, but even ignoring the certification angle there's still a bunch of things online/opencourseware can't do.

It can't give you access to a state of the art high-energy physics lab in which to do hands-on learning, or access to real hospitals in which to do residency, etc, etc. These aren't simply aspects of being certified, but are essential bits of education in those fields.

If you're a programmer, who cares about expensive equipment or access, all you need in a compiler and a text editor, but there are plenty of fields of study where you need access to a lot more than that and thus the population of people that want to go into those fields will continue to be at the mercy of the cost of higher education.

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There is a huge bubble in higher education. In CS we battle it harly and more and more people realise that just because you have CS batchalor you cant programm shit.

There are not only IT and CS things in coursera. Sure if you want to study medicin you need lots of stuff but medicin is mostly sitting and studing too one could slash the cost way down.

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Concerning education, as you mentioned we see another revolution happening there. Online education, with almost zero-costs (khanacademy and other initiatives). This means the costs or re-conversion to another activity will be lower as well for anyone who wants to dedicate the right time to learn. There's multiple things going on in parallel, it's just hard to make a simple rationale like this article does.

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I don't think it's a lack of educational opportunities. Not as such. It's several things.

* Machines used to enhance the productivity of a single person. Computers just replace people, and not with another person operating a computer to do what multiple people once could, with no humans at all.

* As you noted, "the masses" can only adapt so much. We simply cannot make a scientist or a fine artist out of someone with an IQ of 85, and that person is only one standard deviation below average. Hell, we have a damned hard enough time trying to make a high-level white-collar worker out of someone with a merely median IQ of 100.

* Our socioeconomic system is structured so that the productivity improvements from computing are captured by capital owners (broadly: businesses who own machines, business owners, and investors). So instead of higher productivity raising output, increased output making the worker more valuable, and the more valuable worker commanding a higher wage (what we used to get: wages rising with productivity), we now use productivity as an excuse to lay off unwanted and "unnecessary" workers, keep output at the same levels (or grow it only slightly), and pocket the difference.

* The "rote bullshit" jobs being replaced by the machines are, in fact, the limiting factor of the economy. Scientists, artists, and philosophers in fact depend completely and utterly on functioning infrastructure and basic industries. To paraphrase Paul-Muad'dib Atreides, he who can destroy a thing has supreme power over it: the businesses that control the basic infrastructure on which the "higher-level" occupations rent-seek upon it. So we can't seem to have a market economy in which we pour all our productivity advancements in "raising the level" of occupations people hold. Today's prices bear this out: housing, health-care, education and energy are the most expensive and quickest-growing components of a common budget.

At some point, we have to accept that many (most?) people are too dumb to work in a mostly-automated economy, that we've given the base of our economy entirely into the control of a narrow class of capitalists, and that these two classes of people hold the remaining productive/"higher-level" citizenry by the balls.

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Just because past industrial developments (Gutenberg, in your example) were ultimately net job creators doesn't mean it will work that way in the future. It might, but it doesn't have to. You haven't justified your assertion, even though you might be right.

"The biggest misunderstanding of this article is that the goal of business is not to "create jobs", it is to create wealth." The article doesn't say that. Business is certainly about creating wealth, but states and societies have legitimate public policy interests in ensuring that there are enough jobs (for some values of 'enough') to ensure that created wealth moves around, to give people something constructive to do, and ultimately to promote social stability.

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Past industrial developments are not just examples, they are models of how an economy can change and still continue to grow nonetheless. Your argument is just like saying "it's not because you throw a rock 10 times and it falls, that the 11th will not go on orbit instead". Fundamentally, there is nothing very different between the past technological revolutions and the current one. All of them brought sudden, massive improvements of productivity suddenly. All of them suddenly rendered a number of the previous workforce redundant. Did it result into mass poverty ? No. Never.

I'd like to see a clear argument why the internet, the mobile revolution and the ongoing automation going around us is going to kill more jobs than it creates.

I urge people to read Bastiat's "That Which is Seen, and That Which is Not Seen". You'll understand that the implications are never THAT simple not predictable. http://bastiat.org/en/twisatwins.html

---> about your second point: The article may not say that directly, but the ending shows that the writer is going to give us a big solution on "how to create jobs in the second economy" or something. It's just going to be his next big thing. He misses the point completely.

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Unlike throwing similar rocks over and over, using historical examples as models has a pretty poor track record. Hence the saying that generals are always fighting the last war!

I do think they have some value, but I don't think the conclusions are necessarily obvious. We really only have two, very widely spaced, examples of mass changes in employment due to technology, the first being the advent of farming, and the second being the industrial revolution (the printing press may have put scribes out of work, but they were never a mass occupation). The industrial revolution had pretty wide-ranging social effects and did pretty much end a previous way of life: it put a lot of farmers and artisans out of work, which resulted in mass migrations to the cities, and employment in the new factories. It also produced new kinds of social challenges, like the tenement slums, urban riots, etc.

I think it's not entirely obvious what that tells us about what a mass transition from the factories will look like. Industrial technology both put one mass occupation out of work (agriculture/craft) and produced a new mass occupation to replace it (factory work). The main question people are asking, I suppose, is what is the new mass occupation that will replace factory work? It's also not clear what kinds of analogous demographic shifts or challenges it might produce.

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I think you're one step behind. Many economies have already transitioned from factory work to clerical work (and customer service). The question now is what happens when those jobs are done better by machines.

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"Did it result into mass poverty ? No. Never."

I live in the North West of England. Pretty much ground zero for the industrial revolution. There was horrific poverty as the "previous workforce" (agricultural workers) was made redundant and moved off the land into the cities. This extended well into the early twentieth century - you might want to check out the first part of Orwell's The Road to Wigan Pier for ordinary life in the late stages of an economic transition.

Those were different times: before organised state welfare and health provision, and with very different economic structures. But as others here have said, using the past as an historic or economic model for the future is going to lead to disappointment.

(I have spent a lot of my career writing software that automates skilled human processes, and links business processes across organisations. Exactly the kind of things described in the article. I think I'll do okay. But I've had a lot of time to think about this, and my personally not being on the loosing side is not comforting to me.)

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Didn't the industrial revolution actually help with that pre-existing poverty?

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Did it result into mass poverty ? No. Never.

For humans, not yet. It did, however, result in the wage of horses and oxen dropping below subsistence.

Why do you feel that technology cannot do to humans what it did to horses?

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During the past industrial revolutions manual jobs were replaced by automation so workforce kept on moving to industries requiring basic brain power.This was the best fit as most people can function and use their brain at basic level.

This time it may be different as most of such jobs will be eliminated so only a very small percentage of people may remain employable.

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To your last point, at the same time, the amount of power people have on their HANDS is now larger than ever. In the future, I imagine that you may not need to look for an employer, rather find a way to employ yourself with all the tools available to you.

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This is true, but how many project management tools are we going to see? how many code-hosting companies out there? how many "collaboration tools" we're going to see?

Suddenly we're in this economy of people fighting for attention because everybody is doing the same thing. It's definitely getting harder to find ideas.

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In addition to this how many people are creative,capable, and motivated enough to take on such creative projects.

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And how many creative projects are viable business propositions?

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Past industrial revolutions did result in some forms of mass poverty to some in society.

Horses is a class of worker that after the industrial revolution found itself without a job.

And many workers , after the industrial revolution found themselves working many hours a day(sometimes 16), for subsistence level,with little power, in unsafe workplaces and without any economical stability, and with no land/home they own.

As a response the union and labor movements came about, giving workers more bargaining power, labor laws and some sort of safety net.

Without all of those, many in society would have probably been much poorer.

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From your link: "The third is the shoemaker (or some other tradesman), whose labour suffers proportionably by the same cause. It is this third person who is always kept in the shade, and who, personating that which is not seen, is a necessary element of the problem. It is he who shows us how absurd it is to think we see a profit in an act of destruction. It is he who will soon teach us that it is not less absurd to see a profit in a restriction, which is, after all, nothing else than a partial destruction."

I note that the absurdity of profiting through restriction sounds a lot like today's implementation of copyright and patent laws, which can be seen as a partial destruction in its not-seen effect on the economy. Also, the section on Algeria seems applicable to most of the enormous spending done by the US abroad. I like reading works from more than a hundred years ago, especially when the authors seem to be speaking now.

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I fail to see how you're deriding the article as B.S. when you apparently agree with the main premise.

| Automation is simply removing a lot of these jobs that had very little value in the first place.

That's exactly what the author is saying. They just coined a term 'Second Economy' to describe businesses that have unusually high productivity due to computing.

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Nope, I do not agree with the main premise. The article's point is that there are going to be less and less jobs because of productivity and innovation in the world of machines and computing. I do not believe it's that simple and straightforward. Rather, there will be more opportunities to exploit in a more connected world, and therefore more chances to make a living. The people who were operating phones before it was fully automated went on to do other jobs after. There are lot of conversions going around, and people learning skills on their own, trying to get to better jobs, to better situations. Nothing is static !

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Here's a counterpoint: The traditional secretarial position has pretty much vanished in the workplace. A lot of offices had a TON of low-level administrative filing and assistant positions even in the 80's. But they've almost completely vanished now for mid to low-level managers or office grunts.

The main reason? Outlook and email. A lot of the traditional roles of a secretary(dealing with mail, scheduling meetings, replying to people) are handled almost entirely by the application. Since almost everything is now handled through email, there isn't any reason to have gigantic mail rooms.

None of those unskilled jobs have been replaced by anything other than technology. This is actually a new paradigm in history-traditionally, new technology has reduced the need for highly skilled jobs, for example, scribes were replaced by teams of less-skilled workers after Guntenburg's press. Now, technology is reducing the need for unskilled positions. The end result is that a lot of jobs that needed manpower simply don't anymore.

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Just a little bit of nitpicking... my mother was one of those secretaries in the 70's and 80's, So I can speak with some degree of confidence about this subject.

I agree that the work was grunt... but it was far from being "unskilled". Companies' needs have not changed that much over time, but the means to achieve those ends have. Low-level office clerks would basically tasked with executing the "organizational software" that kept the business running. They had to follow complex procedures in a very precise way, if the opaque data contained in paper was ever to be used as information. And remember, we are talking about the entry level positions here.

Now, there was a career path for those white collar workers as well. I.e. my mother, she never got a high school diploma, or even a junior high "traditional" education. But, she had responsibilities that would be now require a college education, and paid accordingly. For the conversations, I take that she would basically execute algorithms by hand and process information in the same way a RDBMS would in the present, even if she does not have the technical vocabulary to describe it that way.

So, the fact that you think those jobs are "unskilled" reflects a lot of how, as a society, we have come to trivialize a whole economic activity that was rendered obsolete by technology. What happened to those people is the equivalent of what would happen to the medical profession if nanotechnology advanced to a point when a semi-literate technician could listen to a patient for 5 minutes and choose from a handful of flasks which mix of nano-robots to inject her.

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>So, the fact that you think those jobs are "unskilled" reflects a lot of how, as a society, we have come to trivialize a whole economic activity that was rendered obsolete by technology.

Not really. By "unskilled" labor, I mean the entry level positions that traditionally didn't require much schooling, and could learn and become proficient at their jobs rather quickly. In other words, the traditional low-level secretary or clerk positions that a lot of people had as their first jobs out of college or high school.

Now, if you were competent, they would promote you, which is what happened with your mother, I'm sure. Unfortunately, the loss of those entry level positions also means that career path, which defined a LOT of people's lives, is removed. Honestly, I think that's the bigger issue here, because it was possible for an entry-level employee with an unskilled position to learn the craft and get promoted to a position that would now only be given to a skilled employee with an education. That simply isn't the case anymore, and that's what really is hurting certain segments of the job market.

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You may be right in the long term (and I agree with this), but there will be a transition period that may be painful for many people.

The value created by most companies is very concentrated amongst employees -- that is, there are relatively few people who create the most value in companies. As technology gives these high productivity people more leverage and displaces low productivity workers (the majority), many people will be (and are) losing jobs.

I don't know how long this transition period will last, but let's not pretend it's not happening.

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You still have to show that the same amount of opportunities for people are created as are lost by removing low-value jobs. I cannot see the brunt of the people that find themselves out off a job now transitioning into the high-tech sector.

I agree with you on the basic principles. Most of those job losses do not hurt the greater picture, aside from the harm inflicted on the individual. But I think there should be planning for a world where most individuals don't have means or opportunity to make an income. I see nothing of that yet and if you still can publish an article in a McKinsey journal on something that is so blatantly obvious, I doubt the world is prepared.

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No, you don't.

If the amount of wealth increased (or even stayed the same) with less man-power required. We as 'humans' have lost nothing. (But rather gained some free time to pursue other interests).

Only possible problem is that this might lead to higher inequality, which is a whole different problem that needs solving already (look at afrika)

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Or to put the problem of inequality another way:

Some people have lots of money and thereby the ability to manipulate lawmakers and media to control me. I no longer have the ability to make any money. I do not have the ability to make those people give me their money. I am screwed.

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Reform your democracy when lobbying is such a big problem. The more power in one place the more worth you get on lobbying. Change to a more democratic system and maybe smaller countries.

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But we're not talking about the democracy problem. We're talking about the capitalism problem.

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No you talk about Corporatism. One of the way to fight that is to give it less points of power to hook into.

- Federalism

- Direct Democracy

- Small Staate

- Strong Constitution

- Strong Mechanism to insure new laws dont violate constitution

- Transparency

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No you talk about Corporatism.

Very, very wrong. Turning corporatism into "true" capitalism (no TRUE capitalism puts sugar in its porridge, by the way) would not halt the march of computationally-driven productivity advances and subsequent disemployment.

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Because of the big data revolution the situation is actually worse than everyone simply becoming programmers. Those who have more capital can collect/buy more data and a winner takes all situation is developing (you can already see this with google and facebook). In the next few years programmers and engineer will start becoming jobless.

Some kind of redistribution wealth definitely needs to occur. This needs to occur worldwide with international cooperation.

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Yes, but what are the unskilled masses to do? Unless we start shovelling them money, are they to starve? What made America great was that an average person could have a house and car working 40 hours a week, what is going to happen to that?

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The costs of living have been going down for the past 50 years at an incredible pace. And please refrain from using words such as "starving" - have you ever known anyone around you starving to death ? On the contrary, there seems to be more and more people who have plenty (and maybe too much) to eat. While productivity gains have been skyrocketing in the meantime. I didn't see people losing jobs by the truckload. And now even a person at the brink of the level of poverty in America has access to clean water, toilet, TV, mobile phone and for most of them, internet as well. We are not living in the 18th century anymore.

Nobody knows what the future is made of, but obviously the world is moving toward a higher need for skilled labor. And the fact that more and more people are going to be connected to the very same network, everywhere with mobile devices, will create new potentials for exchanges, commerce and so on. I am not too worried.

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While its probably true that very few people in the developed world starve due to poverty, lack of access to food is a serious problem. I'm not American, but you might want to check this [1] article in the Washington Post that links to a USDA report [2] on the links between unemployment and lack of access to food. Its from 2008 but still pertinent I think.

"And now even a person at the brink of the level of poverty in America has access to clean water, toilet, TV, mobile phone and for most of them, internet as well"

This is so far from reality that its hard to know where to start.

[1] http://www.washingtonpost.com/wp-dyn/content/article/2009/11... [2] http://www.washingtonpost.com/wp-srv/nation/documents/usda_r...

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I didn't invent anything. Those are national statistics:

WHAT POOR OWN Although people often equate poverty with material hardship, studies have shown that people in poverty often have a variety of major appliances and entertainment and informational equipment.

The chart shows the percentage of people in poverty who own major consumer goods and appliances.

Goods; Percentage Homes, 46 Car or truck, 72.8 Two or more cars or trucks, 30.2 Refrigerator, 98.9 Clothes washer, 64.7 Clothes dryer, 55.6 Dishwasher, 33.9 Garbage disposal, 29.7 Microwave, 73.3 Color television, 97.3 Two or more color TVs, 55.3 Cable or satellite TV, 62.6 Large screen TV, 25.3 VCR or DVD, 78.0 Two or more VCRs or DVDs, 25.3 Stereo, 58.6 Telephone answering machine, 35.3 Cell phone, 26.8 Computer, 24.6 Internet access, 18

Source: U.S. Department of Commerce, American Housing Survey

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this is from 2006 so you should expect the mobile phone and internet access ratio to be on the significant rise.

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"have you ever known anyone around you starving to death?"

Sample bias. Just because you do not perceive it, does not mean the thing does not exist. LMGTFY: http://ukpmc.ac.uk/abstract/MED/10064320

Sure, it's not very recent, but nothing that happened during the 00s would leave me to believe the problem has somehow been solved.

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I'd like to read the article to better understand the observations, but the full text and pdf links return "not found", so I won't trust an abstract without reading the whole thing. Please let me know if you have the article somewhere else.

About the sample bias, I agree with you, but if noone around you has ever heard or anyone dying of starvation in their lifetime (including your grandparents), the "sample" becomes more significant. Now, when people die of starvation, it's so extraordinary that they make movies about it ("Into the Wild" by Sean Penn - excellent movie, by the way).

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Food insecurity != starvation. Food insecurity doesn't even attempt to measure starvation. Scroll to page 3:

http://www.washingtonpost.com/wp-srv/nation/documents/usda_r...

Food insecurity merely measures the subjective feelings of humans. If an obese person fails to consume his normal 4500 cals/day because he ran out of cash, this is counted as food insecurity.

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People aren't "starving" in the sense that they are dying. But they are being fattened up on a diet of cheap carbohydrates and salty pre-prepared meals. In my small city, folks living in the poorest areas are a 30-minute bus trip away from a market with fresh produce.

In inner-city communities, the unemployment rate is over 30% in many cities. 30% of the able-bodied population does not have a job of any kind. 40 years ago, those same communities in my city were filled with people working in various industrial facilities, one of a dozen local financial institutions, small retailers, etc.

Have fun in the upper middle class ivory tower. But when the market for whatever you produce implodes due to an infusion of some low-cost commodity-type competitor, be happy. You may be 50 then and unemployable, but you can take pride in the fact that you'll be able to live out your retirement in a room somewhere, and that you'll no doubt have a color television, microwave and maybe internet access.

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"have you ever known anyone around you starving to death?"

No, I do not know anyone immediately around me starving to death. However, that is partly because my friends, family, community, and I will spend our resources preventing that. I do hope that we come together as a community and do what we can so that people can earn resources more effectively, even if what they're doing is not what is traditionally defined as "work".

I do worry that it is in the interests of certain members of our society that poverty should exist as a moral incentive to others.

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The costs of living have been going down for the past 50 years at an incredible pace.

No it has not: http://www.youtube.com/watch?v=akVL7QY0S8A

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If America keeps getting wealthier but there are no longer any jobs for normal people we can always just tax the rich and give the money to normal people. That might not be the world we live in, but if it is then growing the pie but redistributing it more equitably is the right way to go about things.

In contrast "create more jobs" often ends up shrinking the overall pie in the course of making the distribution more equitable.

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So America wasn't great before Ford made the skilled craftsmen who made the cars of the day obsolete?

Well then this will be a much greater improvement then.

(in case I fucked the sarcasm up: America was the greatest country because it gave each person the freedom to do with their lives and produce what they wanted, which is why it produced the greatest wealth the world has ever seen).

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> America was the greatest country because it gave each person the freedom to do with their lives and produce what they wanted, which is why it produced the greatest wealth the world has ever seen).

No, America was the greatest person since it had a stable path for people to make it into comfortable middle class lives. The America the rest of the world admires(admired?) is the America of the post-war boom. Subdivisions, cars, and factory jobs for everyone. That's America's greatness.

The freedom to fail and end up destitute with no safety net is something only the perverse admire.

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So why did millions of poor people come to America before the postwar boom? In some cases generations before?

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> what is going to happen to that?

I don't believe this was ever true. A huge amount of mainly white middle class people were able to own a small home and vehicles in the past, but it certainly wasn't true of the "average person", unless you define average to be something so narrow as to be a self-fulfilling description.

How come there was a housing bubble and subsequent economic collapse? It wasn't because all those subprime average people already owned nice houses and cars. Were they all just upgrading their houses to bigger houses? Maybe. Or were many of them overreaching during a time of unprecedented economic froth, trying to upgrade to suburban life from their small apartments and shared tenements and public transit?

I think this sort of nostalgic argument always goes along the lines of, "everyone could own a home... except for the huge portion of the population that couldn't, but they don't count."

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For future reference: http://en.wikipedia.org/wiki/Technological_unemployment#Earl...

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The Luddites were skilled laborers who protested technological change that made it possible for their work to be done by a larger subset of the population, spreading the wealth formerly concentrated within the Luddites.

Today's technological change is making it possible for many people's work to be done by an ever-smaller number of people, concentrating the formerly distributed wealth in their hands.

It seems to me that the technological change during the time of the Luddites was helpful for most people, while the technological changes occurring today is nearing a point where it is no longer helpful for most people, with respect to employment/unemployment. Sure, there will be 'new forms of commerce' etc. etc. but if the unskilled labor does not have the training/hardware/human-network-access to participate, what does it matter?

rollypolly has a good point below that birth rates dropping can counteract this shrinking of the number of 'jobs' available. It's a perverse situation - can we die fast enough so that our jobs/roles are released to the few new people being born?

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The makers of the machines that the Luddites protested must be assumed to have been an even higher skilled, smaller subset than the Luddites, thus equivalent to todays engineers/software developers etc.

It's obviously hard to be deterministic about but I would think it is safe to assume that having the unemployed Luddites 200 years distant helps a lot in deeming the technological developments then more "helpful" than the development today.

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The machines that replaced the Luddites made it possible for a fashion industry to come into existence. That in turn created a couple orders of magnitude more jobs than were displaced by the jobs lost by the Luddites

Similarly, the number jobs in existence around cars dwarfs the number of jobs lost from no longer using horses.

I'm sure there are other examples.

The problem is most articles complaining about the loss of one type of job only compare them to the direct effects (loss of cloth maker jobs vs maintenance of cloth making machine jobs). It's never that simple.

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Similarly, the number jobs in existence around cars dwarfs the number of jobs lost from no longer using horses.

Some 90% of the population worked on farms before the horse was displaced. The automotive industry is significant, but not anywhere near that significant.

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Yes, the true benefit of automating and scaling agriculture was the freeing up of vast swathes of the population for being factory workers, thus enabling the industrial revolution. Which was that significant.

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The birth rate argument doesn't hold water -- the folks with low birthrates are the same middle class people who are losing their livelihoods. A third child means that a middle class family loses the second car and cable sports package.

Poor people have high birthrates. The marginal cost of another kid doesn't really leave them any worse off. The average woman in Afghanistan has like 6 kids, for example.

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Thanks for that. Honestly, I sometimes wonder how such articles make it to the top of HN. Is it because people believe the ideas are "worth spreading", or simply to show how badly written pieces they are? This baffles me.

And journalists who have never dealt with business whatsoever should seriously think twice before writing about new great theories of theirs. I don't think everyone necessarily needs to be an expert at something to have an opinion, but this kind of argument has been so over-used in the past that even a 5 minutes research should convince them it's nothing worth writing about.

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From wikipedia:

"The Luddite events of 1811 were the beginning of humankind's analysis of whether it is possible for technological unemployment to be other than temporary and confined to particular industries and firms. Contrary to the Luddites' fears, technological advancement did not ruin Britain's economy or systemically lower standards of living throughout the following decades of the 19th century. In fact, during the 19th and 20th centuries, the opposite happened, as technology helped Britain to become much less impoverished than before. For this reason, most economists think that the general Luddite premise is fundamentally fallacious, and thus they apply the term Luddite fallacy to it. Economist Alex Tabarrok summarises the neoclassical presentation of the possible fallacy as such:

If the Luddite fallacy were true we would all be out of work because productivity has been increasing for two centuries."

But the Luddites then, and their modern equivalents, are making an emotional argument not a rational one. Their emotion is very real, they do not see how their particular job goes forward, and in a society where one's job is an often integral to one's identity, that is a very threatening thing indeed.

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Certainly you agree that productivity increases lower the amount of labor or labor-time necessary to produce the same output, right?

Then let's follow how society has treated technology recently. We've kept improving our technology, while never shortening work-hours. This means outputs should be up. Indeed, outputs are up, but the demand for those outputs is not very far up at all. Why? Because the profits from the productivity increase didn't get divided in their original proportion, or evenly, between business owners and employees, they went almost entirely to the owners. Without more money in their pockets, workers mostly aren't demanding the increased output (and when they have, they've bought it on debt and damaged themselves in the long-term).

So for the demand levels we've maintained, all we've accomplished with technology is obsoleting vast amounts of labor. That means businesses need to either shorten working hours, or lay people off. Shortening hours is a tragedy-of-the-commons, because then your competitors can always produce more output and capture more of the market than you by working longer. So businesses have pocketed the productivity as layoffs.

We could fix this pretty easily by strengthening labor's interests in higher wages and shorter hours. We only refrain from doing so for ideological reasons, actually, not business ones.

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Ah, so maybe it's bad to have a system where if a person doesn't have a job they die?

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Increasing productivity is ultimately good. There are always more unmet human needs and wants that can absorb all that new productive capacity. So there's no reason to believe that underemployment is a permanent situation.

To the extent that anyone can master the new digital tools, there will be profitable work to employ them. There's no cap on the number of possible jobs. A sudden increase in the number of people with technical skill would cause entirely new industries to become possible.

So it all comes down to skills and education. The education system we have is nearly the exact opposite of what we need. I fear that it has permanently damaged large swaths of the population by conditioning them for rote factory labor (the purpose for which it was designed) in a world that doesn't need it anymore. The pain of this transition is going to lead to nasty political problems.

Most people do have the raw potential to do the kind of challenging work that pays handsomely in the digital world. They just get it beaten out of them at a young age.

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Much of what you have said here I would label as articles of faith. I think that there are limits to the powers of human consumption, which are at least bounded by the finite quantity of time available to each of us. I think then that it would follow that there is probably a cap on the number of possible jobs. I think that it is possible that the work of a small proportion of the total population could provide for the whole, with the right degree of automation. I don't disagree with any of the second half of your post, though!

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Well, there are some pretty good reasons beyond faith to think that there's no practical upper limit on human wants.

First, there's the drive for status. No matter how rich everyone is, demonstrating that you're slightly richer (usually to obtain a mate) is deeply ingrained in our psyches.

Second, there's the historical precedent that people have been wrong about the "problem of overproduction" since the start of the industrial revolution. They continually fail to appreciate how wealth creates new demand, which creates new wealth, which creates new demand.

Third, we rich westerners are walking existence proofs that at least X level of per capita consumption is possible. While this doesn't prove an unlimited cap, is proves a cap much higher than what the world has today.

> I think that it is possible that the work of a small proportion of the total population could provide for the whole, with the right degree of automation.

I'm not disagreeing with that statement. In fact, we've already achieved what you're describing. If you told a farmer in 1850 how productive the farmers of 2012 would be, he would assume that most of us are unemployed, because we have in fact reached the point where a tiny fraction of the population can use automation to "provide for" the whole. But of course we've invented entirely new forms of economic activity to keep the rest of us busy now that we don't need to all farm.

I'm arguing that the same process is happening to wide swaths of our present economy.

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There are always more unmet human needs and wants that can absorb all that new productive capacity.

When the largest unmet need, the limiting factor for everything else, is income, how do you make a profit selling it to people?

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I think we need to shift our mindset. Everyone gasps in horror when jobs get eliminated by tech - yes, that will mean that many won't have a paycheck for food tomorrow - I understand the sentiment. But eliminating a job where someone sits at a station and does the same mindless thing for 8 hours is a bad thing?? The bad thing is that society is failing to provide pathways to giving that person a more meaningful and fulfilling duty. That is what we should be gasping in horror at.

And no I'm not suggesting we should be trying to put an out of work cashier/factory worker/etc onto a track to be a programmer/engineer/etc. We have all sorts of problems. We have swaths of elderly folks who need the most basic care, parents who barely have time to raise their kids, a seeming lack of reward/appreciation for cultural diversity and arts... I could go on and on. There are lots of things that people doing mind numbing jobs could do instead that would probably be better for society and better for them. The unfortunate part is that our system fails to make the connection in many instances.

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That is a completely unfair rant.

This process creates jobs. Good jobs too -- the kind that you need to go to college for -- system administrators, programmers, database admins, etc, etc.

Sure it kills no-skills jobs, but that leaves those people free to get better jobs elsewhere (once they have upgraded their skills).

The only people with reason to complain are those unwilling, or in a few cases unable, to change.

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This process creates jobs. Good jobs too -- the kind that you need to go to college for -- system administrators, programmers, database admins, etc, etc.

Correction - you don't need college for these jobs.

The most one needs for any of the listed jobs is a vo-tech course and continuing training.

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Link to source article in the McKinsey Quarterly (free, but requires registration)

https://www.mckinseyquarterly.com/The_second_economy_2853

Also, see this piece from Jaron Lanier for a much more tech-oriented and cerebral treatment of much of the same subject matter

http://edge.org/conversation/the-local-global-flip

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"One of its main byproducts is the replacement of low-productivity workers with computers."

This is the main fallacy of this article.

It's actually "high-productivity workers", who build technology, which replaces "low-productivity workers". For that to happen, more "high-productivity workers" are required. Do they realize how hard it is to find talent in tech these days? The economy is ever evolving and becoming more efficient. There is really nothing new here, this has been happening for decades and centuries. With some adjustments, this article could be published 100 years ago and probably 100 years into the future.

One problem is that it's hard for people, especially at a certain age to adapt their skill set. So while some sectors are struggling to find employees, others have too many. It's the friction that is created by economy's evolution. But we have to look beyond the cold numbers. This is a social problem. With 8% unemployment rate, an unemployed person is not 8% unemployed, he is 100% unemployed. That's a person like you and me, with family and dreams.

However, I believe that in the future this friction will actually become lower. With technology and internet becoming prevalent, high quality, relevant education will become accessible and affordable. In other words, when education finally becomes part of that "second economy" (and it will), things will get better, not worse.

When this happens, then ironically this "second economy" could actually solve the problem the article says it creates.

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Do they realize how hard it is to find talent in tech these days?

It's not that hard if you look somewhere other than Silicon Valley.

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I've never even been in silicon valley, actually.

It's hard to find talents in many regions, though maybe not all of them.

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If Technology ever really kills jobs. We should be happy because we are getting pretty close to utopia where nobody has to work anymore.

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The problem is that we do not have a system in place to handle this. All of our wealth allocation and therefore resource allocation are based around the concept of working. If people don't work, how will they get money? Without money how will they eat? We can move to a socialist system, but for many in Amereica that idea won't fly.

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1. There will be enougth jobs

2. I don't know about america, soon or late a revolution has to happen there and other places too. I think Basic Income is a nice solution (http://en.wikipedia.org/wiki/Basic_income_guarantee). In Germany the Pirate Party supports this and in Switzerland a Initiative just lunched (a way for "normal" people to create laws) that wonts this too. I don't think it will pass the vote but it will rase awairness.

Its an almost optimal social system. Garantie minimal for everybody and then just let them be as free as possible. Talkes away the stigma of poor people leeching on the system.

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Standard issue average humans power down and self destruct almost immediately without gainful employment. Idle hands are the devils workshop. Go visit a government projects area with a high rise of people on welfare, none of them work, it is a cesspool of drugs, guns, and destruction.

If you do not threaten people with slavery and death, your average human will not work a day in their lives. Instead of making a utopia, no jobs destroys all hope for it.

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If you do not threaten people with slavery and death, your average human will not work a day in their lives.

I never knew there was someone as unspeakably, impossibly evil as you. You would enslave everyone simply to keep them from having free time!

Go visit a government projects area with a high rise of people on welfare, none of them work, it is a cesspool of drugs, guns, and destruction.

According to your hypothesis, the idle rich should be a cesspool of drugs, guns, and destruction.

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To a first approximation all material progress comes from eliminating jobs. People were able to go to having indoor plumbing and cars because of a huge elimination of jobs in the agricultural sector brought on by the tractor. We have more material goods now because we need less factory workers to produce the subset of material goods we used to have. We have more Yoga instructors and teachers and health workers because they aren't needed to work in factories.

The thing is, there are always more things that could be done. People in 1900 didn't know that they would want social media or video games, but we're employing people making them. Losing one's job is traumatic and its good to have a social safety net to make it less unpleasant, but its also the engine of progress.

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Well yes. The ultimate goal can and should be to work less. But then we have to get our culture and our socioeconomic system on board with the idea of reducing work instead of venerating it as we currently do.

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My firm policy is to program myself out of a job. I do it all the time, and you know what happens? Even more work lands in my lap. Funny that.

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On the other hand, most developed countries have declining birthrates, so is there cause for alarm?

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The question is what do we do with all these people that were doing "unskilled labor"?

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"...As sobering as the Second Economy scenario is I believe the trend is reversible..."

Ugh. Here I was thinking that the writer had at least a partial understanding of reality and then we get to that nonsense.

I'm not going get into this creative destruction, why-are-there-no-more-buggy-whip-manufacturers argument. It's been done to death, and if you don't understand it after hearing it a dozen times, there's not much I can do to help you with it.

But what interests me is the terms of the political discussion. Not politics -- that's mostly picking a team -- but the language that is being used to discuss employment and job creation.

Frankly I don't think politicians and economists have a clue to what they are doing when it comes to the technological and digital revolution. Not only are there less jobs, they are scattered all over the world. It's increasingly impossible to make some kind of political change, say putting in a highway, and have it directly bring in jobs of a certain industry. Jobs just aren't centralized like they used to be. There are a lot of industrial and technology parks across the U.S. that are going to remain mostly empty.

We see SV and the other startup hubs and think that all the action is there, but I remain convinced that those guys are just the tip of the iceberg. For every Instagram there are ten thousand tiny companies with a thousandth of their users. They don't appear on TV, they don't join the chamber of commerce, many of them don't even incorporate. They are invisible.

I don't see how we can have a discussion about jobs and such when all the terms and models we use don't match up to what's really happening. Watching the language of the debate evolve over the next decade or two should be very interesting.

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Technology doesn't kill jobs.

Over last two hundred years, the number of people on Earth exploded off the chart. We went from 1 billion to 7 billion. If anything, overall improvement in technology always create more jobs than it destroyed them. Most dramatic example comes from going from 6 billion to 7 billion in just 10 years or so. We still don't have dramatic increase in unemployment that reflect this whopping 1 billion increase.

Technology always generated new problems people have to figure out that demands skills and human creativity. It creates jobs in areas that once weren't even thought of before.

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> Most dramatic example comes from going from 6 billion to 7 billion in just 10 years or so. We still don't have dramatic increase in unemployment that reflect this whopping 1 billion increase.

I'm not necessarily disagreeing with you, but please realise that most of those 1 billion new people were born to China, India, and developing nations, where there is, indeed, massive unemployment.

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Technology hasn't killed jobs YET.

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Let's hope it does kill jobs before I'm at the current expected retirement age.

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If that happens, how do you intend to get money?

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I wouldn't need much money, since the cost of things will be very low.

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But you'd need some.

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