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Digital revolution has yet to fulfil its promise of productivity and better jobs (economist.com)
100 points by e15ctr0n on Oct 3, 2014 | hide | past | web | favorite | 101 comments

The article doesn't really examine productivity, it is examining wages.

To wit: industrial automation has grown 6% YOY since 2003[1]. Manufacturing is up worldwide and robotic integration is exploding, not to mention software automation.

The reality is that these increases are not labor productivity, but capital productivity. You also won't see these productivity numbers easily on a balance sheet because they currently take longer to find return on value when doing replacement work than scaling human labor. This is largely because it takes time to transition labor force into a new role within a company or out of the company altogether.

At the end of the day though, from a labor productivity perspective, there is no raison detre to pay workers more for doing less unless they are providing more value per time period.

While history has shown show that technology does not eliminate jobs, merely creates new ones, the pace at which this is occurring is increasing [2] and is arguably faster than workers can adapt.

This is also not to even mention where finance is putting investments, being far from what I would consider proportional with respect to consumer goods and industrial technology base.

In the end, there is every reason to believe that as capital takes more share of the work, there will be less work and thus less pay for labor. That is unless the market for labor, in places which are not yet ready for automation, grows in such a way that it can absorb transitioning workers and new entrants. I don't really see that happening without some major changes in the ethos of how we allocate "value" to labor and define "work."


[2] http://www.technologyreview.com/featuredstory/515926/how-tec...

That's like arguing that workers who plough a field with their bare hands are less productive than workers who use a plough because someone else owns the plough.

How much 'capital productivity' would be left if all workers downed tools and stopped producing?

As for [2] - if you bother to read Katz, you'll see that even he admits there's a serious issue with wage polarization, and that in fact his own argument is incorrect - there has been no bonanza of well-paid jobs created by technology, and currently there is no prospect for same.

What has actually happened - and he says as much [1] - is that wealth capture through productivity gains has polarized the market into a few well-paying jobs and a much larger number of poverty-line menial jobs, which a majority of formerly middle class workers have been forced into.

Where are these jobs workers have 'failed to adapt' to? What are they, exactly? If they exist, where can they get the capital to retrain for them?

A lot of unemployed and underpaid people would love to know.

[1] https://www.aeaweb.org/econwhitepapers/white_papers/David_Au...

- You're citing a document from 2010, when IBM Watson hadn't beaten humans on Jeopardy, Google driverless car wasn't demonstrated, Boston Dynamics big-dog, atlas hadn't happened, DARPA robotics competition hadn't happened, quadrocopters weren't doing crazy things, Amazon kiva systems, Baxter, etc, etc. Things are picking up pace. (EDIT: hadn't happened or not widely known).

- Since then, Paul Krugman himself has covered tech-unemployment in at least one of his blog posts, in which he has expressed surprise at how things are changing but has concluded the post in humor and essentially dismissing the idea (not very wise!).

- Politicians lag behind economists in staying up to date, who themselves lag behind technologists. "This time" it would really help if economists try to wake up.

- CGPGrey's youtube video 'Humans need not apply' is a must watch for anyone serious about staying aware of upcoming technology.

- The accusation of lump-of-labor fallacy is itself a strawman fallacy. Tech-unemployment doesn't require labor to be fixed. It can happen even if labor lump is increasing but not as fast as humans are becoming obsolete, i.e., "this time".

- Side-comment: Adaptation almost always happens because of new-entrants (youth learning new trades) so it's a generational thing. Those thrown out of the job market are more likely to retire early or something like that. And "this time", even youth are not going to adapt.

- Side-comment 2: Recessions cause quite a bit of damage to social structures which intentionally or unintentionally doesn't get media coverage, or at least doesn't register in public's minds. Just the recent European recession caused suicide in the millions (I came across this article recently but can't find it ATM).

- I've put "this time" multiple times. I have to admit it's a claim without scientific evidence, but circumstantial evidence combined with conversation with technologists who agree what is possible in principle, really is a strong indication. Brain emulation has nowhere to go but in the direction of "a solved problem". The estimated time frame is 10 to 15 years.

>You're citing a document from 2010... Things are picking up pace

That's only 4 years ago. Thing's haven't changed much, it's a human perception problem.

Its a misconception that we believe that the time they are living in, right now, is the most important time of all time. Why? Because it's the present and we cannot see the future, and we do not care about the past.

The thing to remember is that we have always thought this! In the 1970's they thought that we were living in the most important time ever, and that things were picking up pace. In 1980s we thought the same, in the 1990's we said the exact same thing. pick any year and humans would say the same, "we are living in special times".

>In the 1970's they thought that we were living in the most important time ever, and that things were picking up pace. In 1980s we thought the same, in the 1990's we said the exact same thing. pick any year and humans would say the same, "we are living in special times".

Actually no. Most of the millenia of human history have been repeatitive and slow moving. Most people in history lived in exactly the same material conditions, and general culture, as their parents and grandparents.

This is something quantifiable, in productivity, in number of inventions, in being able to do extremely important things for the first time in human history (electricity and artificial light, urbanization, nuclear power, flying, space exploration, tele-communications, computing, medicine and biology, etc). All those things are totally unlike the 16th or the 9th century, and they have been picking up pace since the industrial revolution.

And the 70's to today (50 years) is not that much in the course of human history. Not even the whole 20th century is. So it's not like those were district periods that "got it wrong", all those decades belong to the same historical period, and were indeed "special times".

you are comparing the past with the present. Which is exactly my point. If you were in the past, you would think that you were in the most exciting times. You wouldn't know about the future. You would never say "oh, in 30 years time will be the most important time". It's a human failing, we always think that right now is the most important.

We can compare now with the past. But whenever you are in a now, you will always think it's the most important time.

So. We have to remember that everyone always thinks that their now is the most important, and we have to remember this when we think about what the future will be like.

Basically what I am saying is that we need perspective, but that humans are naturally biased to whatever moment they are living in.

I found 'Humans need not apply' utterly unconvincing. For instance, the example cited regarding computer-generated music that was supposed to prove that computers could write great music. But the computer-generated music that was featured in the video sounded obviously like computer-generated music, and not something that I would ever listen to.

You don't have to buy each point in the video (I agree about the computer music) to agree with the larger trend: human brain labor is being phased out. Some already has (aspects of car manufacturing), other large swaths are coming soon (car driving), and the laws of economics will ensure that nothing will stop it. A job is something wealthy people begrudgingly pay you to do until they can figure out how to replace you with a machine.

When I watched "Humans need not apply" the first time, it was a near-religious experience for me. It framed some of the observations and frustrations I see and feel every day and helped clarify the core trend: capitalism has worked really, really well during the labor-based phase of human civilization. Will it work well when human labor is no longer required? What happens then?

The obvious extension of 'Humans need not apply' is that the financial rewards of the march of technology have been concentrated in the hands of the few. The 100+ workers it used to take to work a farm aren't now chilling on a beach somewhere. The founders and stockholders of John Deere are (or their grandkids are). The workers are struggling to find work driving cabs or what-have-you, only to be crossed-out by Google in a few years. There's nowhere to hide. I applaud the entrepreneurs at John Deere and Google and they deserve every penny they made, but the concentration of liquid wealth (excluding homes and cars) into the hands of just a few is fostering profound opportunity inequality. While some folks are becoming wealthy on a scale that's hard to even wrap your brain around, what chance does an Appalachian or inner-city kid have to make it in today's world? Almost none, especially when computers can do things like drive cars.

As the video states, the trend is everywhere. Take Canva, for instance. For some portion of small companies and startups, guess what? They don't need a full time graphic designer anymore. Web frameworks and cloud services have lead to the rise of the "full stack" engineer when there used to be a dedicated database person, app tier person, frontend person, etc. Everywhere

A major, major inflection point of human history is coming in the next couple of decades, and there is no clear solution yet. European-style socialism doesn't work very well and obviously Russian-style oligarchy sucks. So what will we do?

> European-style socialism doesn't work very well

Citation? Because even though Americans are working themselves to death with no vacation, healthcare, or retirement guarantee, the French are more productive and enjoy (what I would argue) is a much higher quality of life:


We should not judge quality of life by how many SUVs are in the driveway, and how many big screen TVs are in the 3K sq ft home.

We should not judge quality of life by how many SUVs are in the driveway, and how many big screen TVs are in the 3K sq ft home.

But what about my own goals in life? Would you look down at me for wanting huge TVs and a large home? Those are things that I actually would like to have someday. When I earn enough money to get that stuff, would you advocate taking it away from me?

>Would you look down at me for wanting huge TVs and a large home?

Yes. Especially if there are huge sacrifices in your overall quality of life for such meagre rewards.

The idea behind culture and civilization is that not all ways of life and aspirations are equally valid and good.

It might be debatable who is right and who is wrong, but people can and should "look down" on other people for wanting certain stuff.

No, he won't. He will advocate making you pay taxes on the relevant income, but nobody cares if you want to sink post-tax money into pleasures we all consider vain and stupid. We have lives to be getting on with too, you know.

The irony there is that music is going downhill anyways, without needing to be automatized, because now you buy songs instead of albums/discs or just listen to them using youtube or some free streaming service.

Plus there may be a finite number of songs -distinguishable by the human hear- than can be created.

Plus, single examples are low-hanging fruit, you need to attack the main reasoning or just assert plausibility.

It's more great music produced now than ever in history, and it is cheap and accessible for everyone.

We are many orders of magnitude before we are even starting to approach the limitations of what humans can distinguish.

Really, "more great than ever in history"? Tell me one single group that is better than Queen, one single singer better than Syd Barrett, one single song better than Stairway to Heaven.

I believe there is good music out there, but saying "more great than ever in history" is just plain false.

And most people are stuck in the same music they listened to during their formative years and will always consider everything done after that garbage.

Consequently, for you there will never be anything better than those groups, and if I suggested anything made today you would find it incomprehensible that anyone could think that music better than your icons.

Not sure about you but my experience is that my life is full of more amazing music than it ever has been before.

I don't think it's really automation that's hurting US workers so much as outsourcing. Globally there are significantly more factory workers doing low to moderately skilled tasks now than at any point in history. We just don't pay them much because there is currently a massive oversupply globally and transportation is cheap.

However, wages in India and China are rising rapidly so that may change fairly quickly.

Yes, but those wages are rising only to the level below which robots can do the jobs cheaper.

The days when working in a factory was enough for a good middle class life are dead and will never come back. Manufacturing, long term, is likely to look like agriculture does today: employing only a relative handful of people.

This leaves the question of what everyone else does. Computer programming? I'd really like the answer to be "not much because we're all so rich we don't have to work", but it seems our societies are nowhere near rich enough to pull that one off.

>This leaves the question of what everyone else does. Computer programming? I'd really like the answer to be "not much because we're all so rich we don't have to work", but it seems our societies are nowhere near rich enough to pull that one off.

In the First World, we are that rich (in terms of per-capita GDP/national income/mean income), but people have an irritating tendency to hold that not-working-for-a-living is a capital-V Vice and that working-for-a-lot-of-money is a capital-V Virtue. It can go to such extreme lengths that people often believe (sometimes against their own class interest) that (high productivity) white-collar jobs are less virtuous than (low productivity) blue-collar ones, and often believe low-salary jobs (like teaching, factory work, manual labor, service-sector positions, and trades) are less virtuous than high-salary jobs (like banking, corporate law, programming, and management).

I dunno.

I like work. I like going into work, I like solving the problems that get presented to me at work, I like the challenge of working with other people to get shit done.

A lot of people hate their jobs. I think it's these people that are hoping one day that the technological wonderland comes where nobody has to work, but the real answer is to manage human labor better. I think that even if we implement basic income, I think after a little while we'll all be back to work.

Reason is people have this deep need to feel useful to each other. They want to feel like they matter. Most people don't at their jobs, but like I said, I think it's because management hasn't evolved to that point.

I don't think we'll ever get a world where no one has to work, at least not until we find the world where nobody wants to not work.

> I think that even if we implement basic income, I think after a little while we'll all be back to work.

The point of a basic income is that people will go back to work on things they're truly passionate about, without fear of becoming homeless.

e.g. a mailroom worker might be really passionate about woodworking, but isn't skilled enough (or confident enough) to make it his profession. With a basic income, he might decide that he can make a go at woodworking without starving to death.

I get that's the point, I just don't see it being politically feasible until after the other thing does.

>I think it's these people that are hoping one day that the technological wonderland comes where nobody has to work

Frankly, I consider it a very strong statement to say that your job is the best possible thing that you would enjoy the most of all to do with your time.

>I don't think we'll ever get a world where no one has to work,

You think nothing can replace human labor economically? Then what do you think human labor is, and where do you think it comes from?

> Frankly, I consider it a very strong statement to say that your job is the best possible thing that you would enjoy the most of all to do with your time.

I spent much of my twenties doing whatever I could to avoid work. Once I realized that all those things boiled down to 'working', and that programming was the most fun thing I'd ever learned in the cause of not working, I figured I'd just get a job doing it.

Could I have better jobs? Sure. But I'd need to have the skills in order to do the job. How do I get these skills? By working on them.

We seem to be performing a lot of mental gymnastics to convince ourselves that certain things are and aren't work. Economics is the study of how to get people the things they want. The things they want don't necessarily exist yet, so we have to work to make them exist. Then we have to work to get them to each other.

Whether it's by making machines that do the physical work or by fixing the machines or by programming the machines, we're still doing work. We will always have to do work. Even if we completely automate the supply chain, we will still have to think of new things to want and then add them to the supply chain.

Even if we realize that all these physical things are a lie and we just want mental / digital things, we'll still have to build / create them. Work. It might feel like play, but there's always going to be things about the building and creating that we like and things we don't like.

To paraphrase Voltaire, if work didn't already exist, we would find it necessary to create it.

>The days when working in a factory was enough for a good middle class life are dead and will never come back. Manufacturing, long term, is likely to look like agriculture does today: employing only a relative handful of people.

I'd modify that somewhat. The days when working in a factory as an unskilled labourer paid a middle class income are over, but someone still needs to install, maintain, and program the robots. Those jobs are likely to pay better than the unskilled labour the robots made redundant, but there will be fewer of them.

Our societies as a whole are rich enough that we all could work much less than we do. That would of course require quite a different distribution of the wealth that we produce.

> This leaves the question of what everyone else does.

I have full confidence in humanity's unquenchable appetite for consumer goods. People with extra money tend to spend that money on something (hand-woven organic angora sweaters). People will all their needs met tend to make up new needs (car seats that are 100.000001% safer).

How is the vast majority going to buy those goods if they don't have jobs to pay for them?

This line of reasoning still works even if it's only a few people buying things (think excessively rich people buying ever increasing numbers of luxury goods).

In reality the marginal propensity to consume is greater the less money you make, so there's an argument to be made that increases in wealth disparity might in and of themselves cause a decrease in consumption. It gets complicated though, as when people don't consume with dollars they invest them, and invested dollars are ultimately spent on something too.

Invested money is spent on something but only if someone wants to borrow the money. Now the financial system has got very good at recycling the savings of the rich into more borrowing of the poor (subprime loans), but it is hard to see this continuing at that rate. The rich largely want risk free savings (in aggregate), so the banks turned high risk loans into risk free savings, with the government backstopping them. This has not been working too well. The vast majority of wealth is looking for safe assets (except the Elon Musks) which effectively means people need to have jobs to pay the rentiers.

That, and invested money is not cyclical in the economy. Yes, the invested spend it on something, but only on the pretense that future returns of theirs will go back to the original investor with interest. The only exchange of resources there is the time between having money now and giving more money back later.

Compared to more equitable economics where the baker gives the mechanist bread to fix the milkmans car who gives the baker milk, and each of them is using cash received from the other to provide goods for their wants and needs, is much more tantamount of a functioning economy than loans, especially when investment money seeks the safest of avenues for returns, thus the vast majority of potential entrepreneurs are out of scope of getting the money anyway.

Because you're making it out to be some sort of binarized chicken/egg problem, where I'd say it's more of a grey-mush of chicken and egg mixed into one. They feed off of eachother, whether up or down the spiral of wealth.

That point about manufacturing looking like agriculture hit me hard - it's brilliant - thank you.

Worrying too, but insightful.

We go explore space because that opens up a wide realm of new possibilities and problems to solve.

I sincerely hope we grow as a society in this regard. And not allow ourselves to be held back by the constant drain of propping up the unproductive, instead of letting them stumble and reach for their dreams.

> The article doesn't really examine productivity, it is examining wages. To wit: industrial automation has grown 6% YOY since 2003[1]. Manufacturing is up worldwide and robotic integration is exploding, not to mention software automation.

Which doesn't seem to have led to huge productivity gains on the order of 6% annually:

> Yet the timing does not seem to support Mr Gordon’s argument. The big leap in American economic growth took place between 1939 and 2000, when average output per person grew at 2.7% a year. Both before and after that period the rate was a lot lower: 1.5% from 1891 to 1939 and 0.9% from 2000 to 2013. And the dramatic dip in productivity growth after 2000 seems to have coincided with an apparent acceleration in technological advances as the web and smartphones spread everywhere and machine intelligence and robotics made rapid progress.

6% industrial automation hasn't been resulting in 6% productivity gains because most work is not industrial.

Indeed. And so it is a little disingenuous to point to narrow gains in one area in a discussion of broad gains, is it not?

A 6% growth in the industrial automation market does not, by itself guarantee any set increase in productivity. All it guarantees is that companies are buying more robots.

While true, we can't really say that there's a causative relationship or even a particularly solid negative correlation between automation and productivity. In fact, it would be extremely counterintuitive (low prior) to find that there is.

Very well said, and the last sentence is key for the future of society in my opinion.

Given your statement regarding wages and productivity - typically the two are used interchangeably in economic conversations / calculations. I wonder if we will start to see those split more to account for the contributions of technology / capital to "productivity". Direct wages would be divided by a combination of societal value + economic value to calculate actual productivity. Perhaps somebody should create the indicator and take home a Nobel or something hehe.

>there is no raison detre to pay workers more

Pedantic comment: it's "raison d'être", and it's used wrongly here. It means "reason for existance".

It's because the baby boomers don't know how to use technology, and they're still holding positions they should have retired from 5 years ago. This has many widespread effects, one of which is the 'if it ain't broke, don't fix'. People are still using Windows XP in their day-to-day jobs for christ-sake.

The digital revolution hasn't happened because it's being held back by dinosaurs.

The baby boomers should be renamed "The Thievinest Generation". Between ballooning entitlements, unnecessary wars, financial crises and the "oh man, I need to hold my job until I'm 80 to afford this house/car/etc", they have been like a plague of locusts.

Edit: Ooh. "The Locust Generation" has a nice ring to it.

This. And I'm always having to clean up dinosaur shit!

(rotting corpses of processes and management hierarchies)

And the productivity difference between Windows XP and Windows 8 is...? 0.01%?

I bet is more than 10%; Windows XP comes with a lot of bad baggage.. such as IE7.

And anyway, the OS was an example, it just goes downhill from there.

Cut that 10% in half because known baggage will trump unknown valuable capabilities.

The problem is that we are talking about the kind of people that doesn't even know half the valuable capabilities of Windows XP.

True, but that won't change the fact that anything better but different from that old XP will throw most users so off they won't even care.

The goal of technology is to eliminate labor, not to create the need for more of it. If everyone is fishing with their bare hands and catching just enough to feed themselves (edit: say one fish), then when nets are invented and people can catch 100 fish a day, 99% of the fishing industry jobs disappear. That's a wonderful thing. That means 99% of the population can devote themselves to less urgent priorities, like building shelters, making clothes, etc. Sure, those crackerjack fish catchers who could catch 2 or 3 fish a day have lost their jobs, and might become less affluent than they were...but the few losers in every industry when technology changes the employment structure are outweighed by the vast majority who benefit greatly. And lest this seem unfair, consider that if everyone's current job were obsolete, everyone would be astoundingly better off despite losing the comparative advantage they had built in their career.

The same thing has been happening since the first inventions. It's been one long history of job loss and rising standard of living, and no short term variance should obscure this fact.

The more jobs made obsolete, the better. People will simply shift to less important work, and increasingly people will simply work fewer hours, as technology makes the economy so productive that prices fall to such a degree that people can live on an hour of labor a week.

> The goal of technology is to eliminate labor,

Technology extends our capabilities. Technology does not have an ideology or teleological function, that is merely something humans might use it for. I would doubt even that, because inventing & spreading technology is not something that is easily controlled or planned.

You are forgeting that corporations are "controlling" technology nowadays, in our current model of society, and corps are managed to have the biggest profit margins they can; So in the end technology are being advanced specially in areas it can help the corps to have higher margins

That's how the previous comment makes perfect sense

I believe that control is limited. Even with copious amounts of money, not all technology is possible, or possible right now; e.g., flying cars, nuclear fusion, quantum computing. Corporations have some leeway in choosing what to invest in but they are predominantly driven by short-term considerations of profitability. I think that in the longer term, technology is something that happens to us while we're busy making other plans (paraphrasing Woody Allen).

> technology makes the economy so productive that prices fall to such a degree that people can live on an hour of labor a week.

I would say that prediction can hold true only in a world with infinite resources, infinite space for expansion (to make population growth a negligible issue), and effectively free energy.

Everywhere else population, food and energy production will compete with one another one way or the other - and there will always be a lower bound in energy needs for transporting goods from where they are economically produced, to the points of consumption or use.

Now if we could cover most of Sahara with efficient solar panels and transport the energy over superconducting wires anywhere in the world...

I liked your post.

The issue is that with modern technology,tech is not just replacing ONE job like fish catching.

Tech is replacing ALL jobs..... fish catching, clothes making, accounting, medicine, programming, etc.

Sufficiently advanced tech can replace just about ANY job. And do it better than a person can.

So the issue is where does everyone go?

And I don't think 7 billion people can all be inventors.

Actually, I think they can (also be entrepreneurs and artists) They just can't all be successful ones. However, due to the non-linearity of success, the winners would offset the losers, which is also why incubators like y combinator can make a profit.

So what it boils down to really is a social issue, where you have to find a way to ensure a fair treatment of the losers. Theoretically they were just as likely to be huge successes (I think this is especially true for artists) as those who actually turned out to be. If that wasn't true one could easily run a successful incubator on their own.

However, culturally, the idea of compensating the losers seems alien (and even outrageous in some places) as we used to live in a economy with a much more linear relationship between effort and return. I guess this is why ideas like 'basic income' have such a hard time being even discussed, although they would address the issue, maybe even solve it.

My friend owns http://www.potterusa.com/ which sells tools for Jewelry making and his customers are 95% hobbyists and 5% professionals who actually make a living. The 95% make stuff, sell it at a profit and get to feel like a business. But it really isn't when they spend 10 hours making something and the end results is they earned a $1 per hour. They don't care, they are middle to upper class. They are just having fun.

I think that is more the future. I think it will be a nice enjoyable future.

You have to be blind not to see the tremendous productivity and lifestyle improve improvements wrought by technology.

--sent from my handheld multi-gigaflop communication device/sensorium/access point to the sum of all human knowledge, which cost less than what most people in my country of residence make in a week and was not available to even the richest billionaires ten years ago.

My wife, who is a graphic designer and has moved to latest tech all the way from photo-typesetters, now does the work of: typesetter, typist (people used to re-type the copy), pasteup artist, courier, several people at the printer (making plates, printing, packing, labelling, sending), postman and post sorting. They distribute PDF files mostly, via email marketing and a web site. Stock photography workers that would send slides, and I am probably missing some roles in there.

This was indeed a productivity improvement, and a lifestyle improvement for her. But it is not clear that it was for all the others involved previously. It is correct that the expectations are higher than they used to be for the same amount of money paid (colour print, quality of design etc.), but I am not sure this makes up for the loss of jobs for those that aren't involved anymore.

I know some of these roles have moved on to do other things, but as far as I can see it seems like we have what they call a "jobb-less recovery" where technology provides efficiency and productivity improvements for the few, but leaves a lot of people behind.

Where I live, Sweden, people are well educated, the economy is doing well, and we have a substantial youth unemployment. I know it is a fairly complex problem as I have a hard time finding skilled developers for example, ie there are jobs to be had, but the courier and the guy working at the printer previously can probably not retrain to those jobs easily.

This was indeed a productivity improvement, and a lifestyle improvement for her.

If that's the state of affairs, good for her. But talk to my previous boss, who recently elebrated his 80th birthday. He knows the times when he would write a manuscript, hand it to his secretary, who would type a fair copy, and then it would go off to the publisher, where it would go to the typesetter (a union man), and then the plates would go to the printer (printing press operated by a union man, too).

A couple of years back he was invited to write a review, and he was absolutely livid for several days. The publisher had requested camera-ready copy; they gave him formatting instructions, he had to deal with the minutiae, and what he handed in did not conform to specifications, so he had to do more formatting. At the end of the day, all the labour-saving devices did not save him time, although they certainly made Springer/Elsevier/Pergamon/whatnot plenty extra bucks. Some progress.

Yeah, the new way of doing that is actually just publishing in craiglist/facebook/sponsors/etc

A smooth transition for society would take the cooperation of a government, the business leaders, and the labor force. That just doesn't seem like it will ever really happen in America, but I'd be hopeful of some other countries (smaller the better chance I'd guess).

Business will just keep seeking profit until the social issues start affecting them directly. That's just what they do best.

>I know it is a fairly complex problem as I have a hard time finding skilled developers for example

Start picking up some of those junior developer applications that you get. Obviously that's not the courier and printer guy, so maybe I'm missing your point, but a lot of the difficulty of matching employers to employees is the high (sometimes ridiculous) demands on the applicants because the employers believe they have the upper hand in the market. Appraising developer skill can be tricky business anyway, so you may have passed up the guy who can fill the spot if you're only checking to see if they have a few years of experience.

Believe me, we are not getting those junior applications. And when we do we try.

Consider welding. It is a blue collar job that can pay pretty well, if you are fast on piecework or have in demand skills like tig welding titanium. I employ two guys welding manually, and I also have a 7 axis Panasonic PA 102S welding cell.

I have one high volume product that we sell, that I calculated the labor cost per part to be about 6 cents if we ran the robot at normal speed for 40 hours per week. When that part was manually welded the labor cost per part was about 50 cents per part. Incidentally, the guys were happy when that part went automated, since doing a high volume part is boring, mind numbing work. (1)

In the case of this little part, because the labor cost went down, and as a factory owner I know the part is more precise and can be made in an easily calculable window (it yields 8 parts per minute now), then I was able to cut the retail price by 50% and sales tripled. We can now bid on jobs that would have overwhelmed our capacity before.

So who won? I made more money, the workers job got better because some drudgery was removed, the workers income went up because we have a profit sharing program, the consumer pays less, and because the price was lower more consumers get to enjoy the product.

I am no economist, and I have no well researched and linked rebuttal to the article. In my little microcosm of the world everybody wanted the automation. Me, the guys, the customer. Everybody has won. Nobody involved would prefer to go back to the old way.

1. personally I find it annoying when academics talk about labor vs automation. Some jobs suck to do (dull, dirty, dangerous), and often the worker is the happiest when it no longer has to be done by a human. The worker is usually pretty happy to have extra time to do that other thing they have been wanting to do for long time. Who on this forum misses setting up a blog the way you had to before Fantastico came along?

>the workers income went up because we have a profit sharing program

So in this case, labor won because they also have a stake in the capital.

Unfortunately, that's the exception rather than the rule.

Last I checked, the 1%ers captured decades of industrial efficiency gains, and sent us workers a bill when they lost it in 2008.

I do not know the stats, but within my circle of friends that have businesses most of us have profit sharing plans of some sort. I try to share the profits as often as possible. We have had bonuses for weekly output for 10 years and now I am trying to change to more of a Nucor style pay system. See http://www.nucor.com/story/prologue/ . In comparison I have a friend who has a 401K profit sharing program and all the bonus goes to that. He has had a couple of guys retire (mechanics who serviced the trucks) and they had over $100,000 each in their retirement accounts. It was the only savings they had, beyond the value of their tools and 10 year old trucks.

I disagree with my friend a little - I want my people to see the efforts of their work immediately. So they get the bonus immediately, even if I don't get paid for 60 days. Someone should disrupt the setting up of 401K for small business, make it a 5 minute sign up. At this point I have not taken the time or effort to set one up for my team. That is in the plan for 2015.

Our business is in a war for talent, just like Silicon Valley, it is just that the stakes are smaller. My fastest welder easily puts out more than triple what my slowest welder (former) ever did. The robot is three times faster than the fast guy. So I need to find someone talented enough to program a 7-axis robot, as well as a talented enough welder to understand jigging, metal expansion, automated clamps, can make a nice appearing weld (much harder than you think, #weldporn), and this has not been easy. In fact it has not been possible, so I use an in-house fabricator for the jigs, and an outside consultant to program the robot ($75 an hour). In order to interst a person with that much talent (they always have MANY job options) I have to have a program that they can see how they can earn an outsize salary. This is the motivation to go Nucor.

Nucor pay is 66% team incentive and 33% salary. I am going to a $320 per week base, with a percentage of total weekly sales of all parts of the company (some people work on all products, some on half). Half of the net profit at the year end will be split, and we already have a health benefit for all employees full and part time. We also offer up to 12 weeks vacation a year, but nobody has gone over 4 weeks ever. I hope that my people who make $600 a week now will be earning $1000 a week next year. The way the pay is structured, if we can increase output without increasing head count then this will occur. We have invested in automation, and I am currently working on a way to use cheap Arduino/Beaglebone CNC on our manual equipment. Most of our competitors manufacture in low wage countries, while I would like to stay in the US.

Wages are low in Tucson and if I could offer blue collar jobs for $50K per year then I would have a thousand applicants for every job. My little company is no different than any other. There is lots of talk of the 10X developer on HN, but really I think the discussion should be more about 10X PEOPLE. I need the 10X people too. I have had 20+ people over the years work in my office for me and three of them were 10X people. I only have one like her now, with a 21 year old who looks promising as the other. These are the kind of people that you can throw a new hairy problem to with no explanation and they can get it done. The Valve Handbook would call them T shaped people. Paul Graham would call them relentlessly resourceful. To me they are the "I got this" people. I tell them the problem, the tell me that they got it, and I can go on to the next issue with faith that the problem will be resolved come hell or high water. These people are rare in every discipline and the difference they can make is transformative. Your world changes as soon as you hire them. When they leave, your business just seems to run less smooth. Talent matters in every business.

I also realized that I would not work at my place. There was no possibility of a large enough upside to be interesting to me. There is as an owner of course, but I did not have a defined clearly explained program for my people telling them how to get to a 6 figure payday. So that is on the agenda. To create a job that I would want to apply for in the sense of future upside in pay, personal growth or something. It seems a silly thing to have overlooked for 10 years but that is the way things happen in business.

Like I said, I don't know the stats. I don't know if I am an exception or fairly common in my thinking. It doesn't matter though, I am merely trying to solve the pain of finding good people. Share the upside and the talented ones want to work with you. Keep it to yourself and watch them leave to your competition or to become your competitor themselves and take your best staff.

The article is full of inaccuracies.

E.g They put a graph of Spain and salaries growing more than 10% in the real state bubble period.

What they don't add is the cost of living going up as well, specially renting a house or buying it, that went up 400% in lots of places.

Now those salaries have gone down to their previous level(the graph does not include the last two years), but house prices had been sustained as much as they could with interventions like creating "bad banks" so free market could not do his job. Real state prices had gone down probably 30%, far from pre bubble plus real inflation levels.

It does not matter if your salary goes up if inflation goes up higher.

Productivity has increased dramatically over time, but taxes, debt and overspending by the government has grown more.

About the top earners, this is what happens when you give free money to people in Wall Street. Stock goes up, and the percentage of wealth they have is enormous. But this is "paper money", and will last until stock goes down, and it will go down when interest rates go up, and this will happen soon, in one or two years.

Wat? The premise has always been fewer jobs. What our entrenched societal institutions end up doing with this change is a different matter.

Let me count what is wrong with this article in brief.

1. The title "Technology is not working" is true in general for "X is not working" if your are going cherry pick the only group for which it is not working. By that sort of logic nothing really works.

2. The term productivity is not at all defined in the whole article. What we should care about is the productivity of the whole society and not some isolated group.

3. Wage growth has nothing to do with productivity in general. For example wage rates going down could also mean more is being achieved with fewer humans of the same skill which basically is productivity improvement.

Productivity, yes. Better jobs, no. Machines should think. People should work. Watch this Kiva Robotics training session:


That's how orders are picked at Amazon now. (Also Staples, Pets.com, and many others.) All the thinking and planning is done by computers. Humans just pick up items where the light pointer tells them to reach, and put them where another light tells them. There's no possibility of promotion. They don't program the robots. They don't fix the robots.

The company that makes the robots employs only a few hundred people.

The inventor of this system was involved with Webvan fifteen years ago. He saw that customers wanted instant delivery, but Webvan cost too much to run, because it had too many people. If they could get rid of the people, instant delivery would work. Now, that's been done.

Isn't it really productivity OR jobs? A smaller number of productive workers can accomplish the same finite amount of "work" as a greater number of less-productive workers.

Welcome to the Industrial Revolution.

The HN title is

"The digital revolution has yet to fulfil its promise of productivity and jobs",

but the economist title seems more realistic:

"The digital revolution has yet to fulfil its promise of higher productivity and better jobs".

The problem seems to be that we haven't figured out what to do with people that are no longer relevant once their jobs are automated (e.g. factory workers). That sort of thing is only going to accelerate - take a look at this video: https://www.youtube.com/watch?v=7Pq-S557XQU (Humans Need Not Apply)

I guess that is a case of the 80 character HN limit making it a little difficult to write a useful but accurate title.

I'd get rid of "its" and "and" before getting rid of better

Good idea. Thanks. Edit: come to think of it, we can just get rid of "the".

We need more technology, not less; specifically: more robots. Robots designed to relentlessly shop for items online, and to sleeplessly hail ride-share cars. With enough such robots, all us people will find full time employment shipping products to those robots from our Amazon warehouses, and driving those robots around in our Uber cars.

Coming soon: Kickstarter for "Entroboty".

A bipedal robot that goes around creating a giant mess by randomly breaking and tossing objects around wherever it travels.

Just think of all the janitorial and repair work this invention will create!

This may sound oversimplified but I think people will have to become more creative and create their own jobs in the future (ie self employed entrepreneurs). Simply hoping to gain income from a job via the traditional route of applying to companies is becoming more difficult. I think the large growth in "startup culture" over the past 5 years is proof of this.

90% of startups fail. These are well funded startups.

There has to be an actual need for a product in the market and need is not easy to predict.

Even the successful startups are succesful because of a little luck and being in the right place at the right time.

Luck is not the best financial planning strategy for feeding your children.

I dont know, but i think software kind of replace, at least in part, people's labor;

Technology and productivity is against labor and wages; unless you are part of the very few people needed to create the machines or softwares; probably with the advance of AI, even taht can be replaced..

I wonder why people tought that keeping replacing people with robots, and creating profit fetichism on corporations could lead to something else?

This is the old Marx profecy going on; That only creative and talented type of labor could survive; anything out of this will probably be replaced by automatization

Technological society didnt come to save the majority of people's lifestyle, its comming to kill the rest of it;

Of course some new value, and blue oceans will come to the surface; but then the automatization and profit circle will rule again, until little to none people are needed

But than, who really want to pick up the phone, deliver the sandwiches, or do repetitive and low demanding jobs?

This is good, only that humanity need to adapt, have more knowledge and go for the creative types of labor

Problem is 7 billion people maybe would be too much for this , so i dont think is sustainable to everyone on earth to live like that.. and people with low levels of inteligence will have a hard time living in a society like this

See also: http://www.nytimes.com/2012/11/04/business/a-capitalists-dil...

In particular the part about "efficiency innovations" vs "empowering innovations"

It has. People just didn't realize the efficiency of online retailers would crush so many middlemen and individual brick and mortar stores (mom and pop shops and mail-order houses), as well as entire existing companies (Best Buy, etc)

E-commerce makes up ~6.40% of US retail sales. Its certainly shaken up the landscape, but 'crush' is overstating the case...

Its going to entirely depend on the segment, Wal-Mart gets 55% of revenue from groceries apparently (I took some time to look at what fraction of groceries would be of overall retail sales, but couldn't find it). So I think a reasonable assumption is that a large chunk of retail sales are groceries. Another large chunk is going to be automobiles, which in some metrics get excluded; which are another large part of retail sales.

If you keep chopping away big parts that aren't conducive to e-commerce; the 6.40% is going to be a pretty big percentage. Small specialty stores are probably hit especially hard, to the point of being crushed; going out of business and making the e-commerce players a larger percentage of the market and thus more efficient, driving even more e-commerce in a positive feedback loop.

If you want to see just how irrelevant E-Commerce is, just look at your neighborhood Apple Store. Their products are the sort that could easily be purchased online -- commodity technology products aimed at the supposedly tech savvy.

The only visible effect of e-commerce has been the thinning of margins. The ability to check prices online leveled the playing field between retailers and customers. This has brought us closer to a real market -- one where perfect information is available to all parties.

Your analysis is flawed: Apple stores aren't selling Apple products to tech savvy individuals.

They're selling Apple products to mall goers, which are a known diminishing supply, and is selling access to same-day accessories and acting as a front point for talking to Apple techs and dealing with warranty claims.

In that sense, Apple stores are actually in the business of selling services, rather than products.

E-commerce has more or less killed my local bookstores, travel agents, music (CD) stores, music instrument stores, video rental, bank branches, tobacconist (selling magazines and newspapers) and post office. Not sure I would call that irrelevant.

And that's...good. Shops are only good to have in your town insofar as they let you buy stuff more easily and cheaply. As soon as they no longer served that purpose, the labor and real estate was being wasted. Now that those businesses have shut down, the real estate is available for more productive uses and the workers are free to do something that is more useful to society. Your locality is that much better off for it, especially the poorest people, since they can obtain goods and services more cheaply.

I disagree. My locality is not better off. The centre of my town now nearly consist of fashion and coffee shops. And people working there are not more useful to society. They are selling nothing I need. I'd like to actually be able to purchase things that I use locally. The local society looses skills and functions. No service on broken parts, no local knowledge, well, except for fashion knowledge and his to package a latte.

Bluntly, I guess there are smart jobs and dumb jobs. The demand for smart jobs should be practically infinite - where now you have a doctor, a lawyer, a childminder and an accountant, in the future you might also have a geneticist, a landscape gardener, tutors, designers, trainers, dieticians, researchers, risk managers, handymen... There will probably also always be a need for dumb jobs, but perhaps the difference will be that they cannot be the backbone of an entire economy.

The entire thing is bottlenecked. Automate the education system.

The article basically mentions this.

"That may be the wrong place to look for improvements in productivity. The service sector might be more promising. In higher education, for example, the development of online courses could yield a productivity bonanza, allowing one professor to do the work previously done by legions of lecturers. Once an online course has been developed, it can be offered to unlimited numbers of extra students at little extra cost."

Yes, let's blame the bad economy on technology. I mean, it couldn't have been Wall-street's fault or Washington's fault.

Wall Street was Wall Street and Washington was Washington in the 1990s and the 1950s when there were plenty of jobs. It's hard to blame the constant thing for problems that are different between then and now.

No, they were not.

Society was different, laws were different, both Wall Street and Washington did eat a much smaller share of the US GDP.

You can't even extent your observation to the rest of the world, because almost the entire world passed through the same transformation at about the same time.

Not really. 1950-1960 was thoroughly the modern world: http://peakwatch.typepad.com/.a/6a00d83452403c69e2017d40f40b.... Federal sending was 16-18% of GDP from 1952-1967. From 1995 to 2008 it was 18-22%. So a little smaller, but not "much" smaller. It spiked above that in 2008 because of the recession, but you can hardly blame federal spending that happened after the recession for having caused it.

But the financial industry as a percentage of GDP is much higher now than in the 1950-1960 era.

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