> "Job destruction caused by technology is not a futuristic concern. It is something we have been living with for two generations"
If American thought leaders such as Larry Summers think that technology destroys jobs and that it's a relatively recent phenomenon, then America is truly screwed.
I do suspect some industries, such as trucking, will get hit with a severe blow. Many truckers make decent money without many skills to transfer to alternative industries. It will be really rough for them even if it will make shipping safer and cheaper.
In the interim, I imagine that long haul truckers will be decimated - and short haul trucking (last 20 miles) will flourish. That should soften the blow through the transition period; where AI is good enough to drive straight out of a loading facility, down the highway, and straight into another facility, but not quite good enough to back down an ally in a congested city and get the paperwork stamped by the right person.
But the fallacy with that train of thought is that last mile truckers already exist, and are flourishing. More often than not long haul truckers drop loads at regional depots where last mile drivers pick them up and deliver things. You'll see increased competition between last mile drivers due to less trucking jobs overall with a constant demand for work. The one law which is hardest to break is that of supply and demand.
Nonsense. I encourage you to point out a single industry that has cropped up in the last 50 years that generates large numbers of high paying jobs that aren't subject to being automated away. In 1985 people freaking out about computers and networking was luddite behavior. Where are the 3.5 million currently un-filled jobs waiting for the truck drivers who are about to lose their careers en masse?
Demonstrably incorrect. Technology reduces labor force participation. Some portion of that void has been filled with McJobs in the last 15 years but that isn't sustainable.
I don't know. So far unemployment due to more efficient technical advances hasn't lead to overall structural unemployment so I'm not too worried in the long term. For example if we can ship goods much more efficiently it could lead to increase in production of goods, mining of raw materials, even the service industry as people have more disposable income and that's not even counting the jobs running and maintaining the autonomous fleet. I'm not saying the short term might be kinda hard but long term the economy will adjust.
You should actually read up on the Luddites. Their main goal was better treatment of workers; smashing machines was just their preferred means of protest. The image of the backwards anti-tech fetishist was a propaganda smear by the industrialists at the time, which was so successful that people are still buying it now.
I have already been told this many times in the past (firstly when I learned about them originally from my history teacher). I need a new word for people that irrationally fear technology but technophobe just looks weird to me.
Aren't you doing exactly the same thing as the industrialists who slandered the Luddites? You're reducing the real welfare of thousands of workers and their families to "oh, they're scared of technology, just ignore the silly primitives."
I think you miss the point of the article. It's not that technology destroys jobs but that in the next century, technology could potentially destroy jobs at a faster rate than it adds new ones. That would be an unprecedented event in American history.
I think the point of the first graph in the article is that this is not true. Technology is destroying jobs faster than creating them for ~45 years now.
The thing people forget when comparing to past technological advances is that for the largest part of history unemployment was 90%+ at the best of times, ever since a few hundred years into the Roman Empire, if you count subsistence farming as unemployment (and since people didn't do that unless they had to, you should).
I think this is what's really happening. The economy is reverting to it's natural state. Of course for most of us that's not a good description of what's happening. Better would be to say "conditions are returning to what they were in the middle ages".
1) If you are climbing the S-curve, most of the journey looks like exponential growth.
2) It's less of unemployment argument than reduced value argument. Unemployment is result from the lower limit for the living wage. People in India can find work for $1 per day even in automated society. If we are willing to reverse wage increases, remove laws regulating working conditions and remove all kinds of welfare, we can keep people employed for very long time.
3) In the past people could just leave menial jobs and pick a new job that required more intellectual capacity. We are reaching the limit where average Joe has no intellectual capacity that would increase their value in economy.
It's not actually any different; "technical unemployment" has caused many problems that are clearly visible from a cursory examination of the historical record.
The obvious place to start is the horse: the horse population in the US peaked at 26M in 1917 and had declined to 3M by 1960, almost 1/10th of its peak value [0].
When those horses were unemployed by the automobile, we did not retrain them in new lines of work. They just died. It got so bad that conversation societies were established to protect endangered breeds.
Eventually we created a handful of new jobs in the recreational sector for them, so the population of horses is rising now, but it is nowhere close to the peak value, and of course we did not create those jobs within the lifetime of any displaced horse.
In fact what the historical record shows is that massive technological shocks produce long-term unemployment. It doesn't seem to matter if it's a horse, because of course they're just resources to be exploited in the furtherance of human goals. But then again, so are you.
I'm sorry, but the horses example is really terrible.
Technological disruption is not new. It's been around forever. If your theory stands true, then how come that overall, the global economy is growing? Doesn't it mean that we've created more jobs that we've destroyed?
What about the other important element no one seems to care about in this conversation: the jobs created - very often - require a higher level of skills and specialization.
> If your theory stands true, then how come that overall, the global economy is growing? Doesn't it mean that we've created more jobs that we've destroyed?
The number of jobs does not correlate to GDP growth [0]. So whether "the economy is growing" is not terribly related to whether jobs are being created. This is somewhat puzzling under Adam-Smith-Wealth-of-Nations ideas about economics, but it's an empirical fact.
> Technological disruption is not new. It's been around forever.
You seem to be misunderstanding the argument; I'm not arguing for something new. I'm arguing that negative effects of technological shock are well-attested in the historical record: you can look back at historical data and plainly see them.
I don't think someone can argue that technology does not destroy jobs in the short term. There's a reason why Joseph Schumpeter called it Creative Destructions.
It's hard to accept because the people hit are not necessarily those that will benefit from the newly created opportunities. But if History is clear on one thing, it's that the number of winners outweighs the losers.
Every economy that resists creative destructions in favor of short term social peace ends up watching prosperity pass by.
Well, the chart at the top of the article suggests that this time, it really is different. Between 1970 and 2016 we really have seen technological unemployment that has yet to be compensated for.
As the Wiki page you linked to says, stopping unemployment depends on "compensation effects ensur[ing] there is never a long term negative impact on jobs". So, by default, technology will put people out of work, and there's no guarantee that some counterbalancing factor will always materialize. The amount of meaningful work that humans can engage in is certainly not infinite.
Of course, it's not a guarantee that technology will continue to improve either, at least not at a faster rate than the counterbalancing factor. As it happens, it's very hard to predict the future. But it's not unreasonable to try. And right now, it looks very much like tech will keep marching forward, and jobs outside of tech will not.
Because this time the physical technology replacing jobs is not really new. It is largely old physical technology with better non-physical technology (e.g., software) added.
A self-driving car, for example, is just a regular car (old technology) with some servos attached (old technology) and a few sensors added (old technology) and a computer (old technology), with self-driving software (new technology).
Put a million drivers out of work with self-driving cars, and you don't open up a million jobs building self-driving cars. The number of cars needed doesn't go up much. The demand for servos and sensors goes up, but making those is largely automated already. Maybe some servo or sensor companies have to add another shift...so they hire a handful of humans to watch the machines on the new shift.
Before, when we replaced a human we were generally replacing him with a new machine. Now we are more just making the old machine that the human was operating operate without the human.
1) Women are graduating from college at a higher rate than men.
2) Women are going to college at a higher rate than men.
3) Women have a higher literacy rate than men.
4) Women graduate from high school at a higher rate than men.
These trends are likely to continue. I don't see any possible scenario where men are not worse off in 20 years than they are today, while the higher educated women continue upwards. This is likely especially the case given that trends in education are pointing drastically in favor of women.
If you examine men-heavy trades such as trucking, they are likely to almost entirely disappear in regards to providing plentiful millions of moderate paying jobs to fairly low skill blue collar workers. Nearly all taxi & Uber type jobs will also disappear, those too are dominated by men. Manufacturing will become even further automated by robotics + AI, those jobs are heavily dominated by men. Even military jobs are likely to be meaningfully reduced by leaps in automation and robotics.
I think it's hardly a problem just for men, it's probably just the statistic they have been able to easily measure or have data for. And especially given that women have an increasing role over time in the work force, that would confound the numbers a bit if you are trying to measure things more stably over the last few decades.
I appreciate a brief article like this which flags a serious issue without feeling obligated to explain the cause of the issue. Would the facts have changed if the author had added debatable speculation as to causes? If he had included speculation, would discussion here have focused on the problem, or would it have focused the easier debate about the causes?
It's okay to file a bug report without pointing out the design defect that caused the issue.
Its probably more of a problem for men because the kinds of jobs advancing technology is most likely to eliminate [0] in the near future tend to be male-dominated, especially the jobs that are better quality in the first place. So, men (of particular demographics and skill/education profiles) are going to be losing more quality opportunities that they would otherwise have than women are.
Also, IIRC, there are some indications that a variety of social problems (including certain types of crime and violence) tend to increase with the proportion of long-term unemployed men but not so much with unemployed women, so even beyond the degree to which it is a problem for men, the problem men experience because of it may be disproportionately a problem for society as a whole.
> I can't help but think that an article this short can't be anything more than fluff.
Well, its mostly a call-out to another article of the author's, which is itself a review of a book by a different author. So, yeah, its not exactly intended as much of a full discussion of the issue it points to.
[0] "replace with jobs with very different entry requirements" may be more accurate in some cases, but the net effect is generally similar.
Possibly part of the reason that it could be seen as a problem that affects men more than women is that women are generally employed in more social roles, which tend to not be automated away so quickly, e.g. hair dressers, baristas, teachers, nurses, human resources.
Baristas are a very good example of this. The whole coffee making process can be pretty much automated, but isn't because people like to see a person making their coffee.
I love this version of Larry Summers effecting an air of concern for the common man. It's almost like he never pushed for the deregulation of the derivatives market. Magic!
"Job destruction caused by technology" kind of begs the question, especially when the US has an immigration policy that results in vast additions to the labor supply that compete with natives.
Summers is talking about hypothetical future job losses in, eg, trucking. I am talking about present unemployment caused by excess labor in sectors like agriculture, food processing, food service, nursing, construction, etc.
Luddite arguments aside, why would anyone care what Larry Summers thinks? This is the same guy that was a principal behind repealing Glass-Steagall. If anything we should just do and think the opposite of whatever he says.
seems easy to deal with, but there is no political capital to do so. invest in public infrastructure (roads, buildings, schools, health) and there will be lots of jobs. no one is automating construction away any time too soon.
I've been saying this for years. It just makes sense, and our infrastructure is in dire need of help. If we wait much longer, we'll start to have problems.
Well, there is a small problem with that. Road projects on the eastern side of North Dakota have been delayed because all the people capable of doing those projects were on the western side making money in the oil fields. Vocational education has for the most part been exiled from our high schools[1], and we lack a lot of that expertise. Public infrastructure projects require people trained to do them.
1) an interesting parallel to the decline of programming classes can be drawn as both have specialized instructor and facility requirements
Disaster is already here. In the 1950's you could raise a family with 2.3 children on a 40 hour work week. Today, families are struggling to make ends meet with 60-70+ hour work weeks. Technology was supposed to have made things more efficient. It seems to have had the opposite effect.
In the 70's, middle-class "comfortable" consisted of a 16-30,000 sqft house with a yard, two cars, and remarkably good job stability (pensions, etc).
Today, it takes nearly 2x the median household income to get something resembling that kind of life. Granted, you're still considered middle class at that level of income...
> Today, it takes nearly 2x the median household income to get something resembling that kind of life.
In some cities. In other cities, that's just not true. Example: in Atlanta, GA, the median income is right over $55k. According to Zillow, that will get you a house in the $227k range. There are tons of single-family houses with yards in that price range (or even half that) in the city.
I ran similar math for Dallas, TX. I'd bet there are a lot of markets where this is true.
Housing is only expensive in the expensive housing markets.
If you buy a house in the $227k range on a $55k income (With NO insurance and NO property taxes, the monthly payment would be ~$1,736.53), you will have to live very carefully to get by comfortably (considering $55k after federal/georgia taxes would net about $41,013.75, your monthly takehome would be $3,7k leaving you <$2k after mortgage, ignoring again insurance, property taxes, and other bills).
Zillow and other home pushers are interested in selling houses, not in the consequences for the buyers thereafter.
I kind of figured that would be a pushback, but I wanted to use a reproducible source (nerdwallet is more aggressive than Zillow and comes up with a higher number). And per realtor.com ~$1800/mo is about right for all-in (insurance, tax, etc.) in the Atlanta area in that price range.
All that said, in Atlanta, 3 BR/2 BA houses are abundant in the under-$150k range. Or under $100k. It's really not approaching necessary to earn 2x the median income in cities like Atlanta to buy a house with a yard.
The point is the OP's math assumes one lives in a high-cost area, which is not the reality where most Americans live.
Not really, once you include the other costs of living (and having children).
$1.8k housing, plus $500 for property taxes and insurance, $1,000 for two vehicles (payments, insurance (damned teenage drivers), gas, maintenance), $500 into savings for household emergencies, $800 to feed four, $100 per person for clothing, the occasional ice cream, paying off medical deductables... and you're quickly looking at needing over $5,000 a month gross just to get by.
5,000 / 0.7 * 12 = $85,000
Toss in 10% savings and 10% retirement, and you're well over $100,000.
Sure, you can cut corners and live off a lot less than that, but I'm comparing it to the standard of living had by people 40 years ago.
Right -- the $1,800 was inclusive of property taxes and insurance ("all-in"). And again -- there are great houses available for under half that ($900/mo all-in).
(Random nitpick: if you're earning the median income, paying a mortgage while contributing to retirement; and have 2 kids, you are not paying anything close to 30% of your income in income taxes.)
Also you are right that if you save ~30% of your median income ($500 + 10% savings + 10% retirement), the month-to-month gets a little tighter. But then you can retire early. :-)
I'm not arguing that everything is roses, just that tens of millions of people live at the median income and own houses, cars, etc.
You'd have done much better here arguing about the costs of childcare or higher education. Those are a bloodbath, no matter where you are.
Where do your numbers come from? I bought a condo for $225,000 and the mortgage is $1,000 including property taxes and insurance. Even with Condo fees its still less than $1,300.
> In the 70's, middle-class "comfortable" consisted of a 16-30,000 sqft house with a yard, two cars, and remarkably good job stability (pensions, etc).
I think you are off of what you intended by an order of magnitude on that house size. (And a bit high for reality even after correcting for that error.)
I don't think it's too high, though. My parents built something on the order of 5,000 sqft in the early 70's for around $15,000 (including the 5 acres of land), adjusted for inflation that's under $150,000. My Mom was able to put herself through 4 years of college by waiting tables part time.
Yeah, we had it good. Why? My dad's blue collar job burying and splicing telephone lines for Ma'Bell.
It really was a different time. That same job today comes with no job security and remarkably similar wages as it was 40 years ago, even as the cost of living and inflation has increased tenfold.
I'm sure you feel very smug saying that but most people reading your comment are likely aware of this argument and don't agree with it. So you'd need to provide some evidence, rather than just a naked claim that we've all heard before.
I think it did make things easier, but then the fruits of that betterness were captured by the oligarch class. Our rapid progression toward a society of renters goes along with this.
Well possibly. I'm British so my experience may differ but I happen to have read my great grandfather's diary, he was a carpenter during the Great War, spent a lot of time with my grandfather, he was in the RAF. My father was an immigrant, kicked out of Egypt by Nasser.
My life, for all the hours I work and the stress, is a bed of roses compared to anything they went through. In fact, I feel slightly guilty even comparing. My children, who I believe are entering a more difficult world than the one I was born to, can't really comprehend my upbringing let alone their immediate ancestors.
Feudalism 2.0? Maybe. But I'll take it Thank you. Sometimes you just have to take a step back and appreciate what you've got.
The average home size in the 1950s was just 953 square feet. Now it's 2500 square feet. You likely would have a single car. Your utility bill would be a lot lower (no internet, no cable, no air conditioning). You'd eat a lot of home-cooked meals, have a serious vegetable garden, would sew and mend your own clothes, etc. You wouldn't need to pay for your own clothes.
I suspect it's quite possible to raise a family on a single income if you're willing to live like it was the 1950s.
talking about the home size is disingenuous, you might want to look at the lot size, not the home size, for example. Or do you think you would be able to have a 'serious vegetable garden' on today's postage stamp lots?
Schooling costs are also way, way, way higher than they were in the 50s, and there are no well paying manufacturing jobs to do if you aren't inclined to go to college.
I really doubt that you would be able to raise a family on a single income these days with the same standard of living you could have back then.
Basically the definition of 'comfort' underwent a huge upgrade without a equivalent upgrade in the perception of costs that would go to afford them. This is largely happening because people are using the term 'working-class' and 'middle-class' to measure to make different measurements in different times.
You know what, We'd get by without most of those things (obviously no Internet would be painful).
However, due to both me and my wife working, we can't afford to properly raise our own kids, grow a veggie garden (plot size is too small) or sew/mend our clothes.
We have 1400 sqft, don't have air conditioning, don't have cable, and if only one of us had to work, heck, we could do with only one car (bikes were a thing back then and we aimed for a good wike/balk score when purchasing).
I think a lot of the "upgrades to life" are simply the consequence of busier lives, not exactly better ones.
The reason people buy clothes is because clothes are significantly cheaper than they used to be. By the time you've purchased fabric, a pattern, and put in the labor the cost to make clothes far exceeds the cost to buy clothes.
Technology is making things more efficient; things are produced cheaper and more efficiently and with less humans.
The problem is that policy hasn't evolved with technology. Technology has caused two things: 1) increase income disparity & 2) increase unemployment. The problem is that what worked for American til WW2, a laissez faire economic policy, doesn't handle these two things well. We need to encourage our policy makers to figure out a society that has better wealth distribution and can handle a large % of the population not working.
Although this may be true for US and other Western nations, in 1950 billions of people outside the Western world live in dire poverty and many starved to death. Since then, over a billion people in India and China alone have been lifted out of poverty, life expectancies have been increased dramatically, several diseases have been eradicated and contained, food security have been expanded. Yes, some of it has come at the expense of populations in developed countries, but if you put a global lens on it, 2016 is a much better time than 1950s
The decline happened when the rich realised that expropriation was no longer a risk. The aftermath of the Great War (the rise of communism and the Great Depression) scared the owners of capital into giving a much larger share of production to labor (the split went from 50-50 to 70-30). By the late 1960s the risk of expropriation had gone and so capital owners started taking back their share until we are now back to 50-50 and heading lower.
The masses know that something is very wrong, but they don't know what to do and hence the thrashing around for alternatives. As long as the rich keep the door to upper middle class open to the cognitive elite they are safe.
Of course they can do this. Nothing like facing a revolution to concentrate the mind. The rich handled this whole risk very well once they realised revolution was a real possibility.
The only thing that amazes me is how strategic they were in handling the situation and how they were willing to sacrifice income and power for generations to win the class war. They are certainly being advised by the best minds available.
"Second, the gains in average education and health of the workforce over the last 50 years are unlikely to be repeated"
I'm cautious about arguments that rely on a pessimistic expectation that progress will reverse because it's just never continued in the past. If the argument identified some fundamental reasons why progress will slow instead of drawing historical correlations then it would have merit. Then again if we knew those principles then we could correct our society and avoid disaster. Because this argument is flawed and human knowledge and understanding is the only thing that solves human problems, the validity of the argument is lost.
I take pause when I see anything from Larry Summers. From his wikipedia page:
Summers's role in the deregulation of derivatives contracts
On May 7, 1998, the Commodity Futures Trading Commission (CFTC) issued a Concept Release soliciting input from regulators, academics, and practitioners to determine "how best to maintain adequate regulatory safeguards without impairing the ability of the OTC (over-the-counter) derivatives market to grow and the ability of U.S. entities to remain competitive in the global financial marketplace."[21] On July 30, 1998, then-Deputy Secretary of the Treasury Summers testified before the U.S. Congress that "the parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies." At the time Summers stated that "to date there has been no clear evidence of a need for additional regulation of the institutional OTC derivatives market, and we would submit that proponents of such regulation must bear the burden of demonstrating that need."[22] In 1999 Summers endorsed the Gramm–Leach–Bliley Act which removed the separation between investment and commercial banks, saying "With this bill, the American financial system takes a major step forward towards the 21st Century."[23]
When George Stephanopoulos asked Summers about the financial crisis in an ABC interview on March 15, 2009, Summers replied that "there are a lot of terrible things that have happened in the last eighteen months, but what's happened at A.I.G. ... the way it was not regulated, the way no one was watching ... is outrageous."
At the 2005 Federal Reserve conference in Jackson Hole, Raghuram Rajan presented a paper called "Has Financial Development Made the World Riskier?". Rajan pointed to a number of potential problems with the financial developments of the past thirty years.[24] The problems that Rajan considered include skewed incentives of managers, herding behavior among traders, investment bankers, and hedge fund operators who suffer withdrawals if they under-perform the market. Rajan also discussed the problems associated with firms that "goose up returns" by taking risky positions that yield a "positive carry."[25] Justin Lahart, writing in the Wall Street Journal in January 2009 about the response to Rajan's paper at the conference recounts that "former Treasury Secretary Lawrence Summers, famous among economists for his blistering attacks, told the audience he found 'the basic, slightly lead-eyed premise of [Mr. Rajan's] paper to be largely misguided.'"[26]
In February 2009, Summers quoted John Maynard Keynes, saying "When circumstances change, I change my opinion", reflecting both on the failures of Wall Street deregulation and his new leadership role in the government bailout.[27] On April 18, 2010, in an interview on ABC's "This Week" program, Clinton said Summers was wrong in the advice he gave him not to regulate derivatives.
You would think by this logic that removing these jobs would have caused a MASSIVE unemployment issue in the USA. Which it did to some degree. I mean farmers were pushed off their land by bigger farmers, and other groups and they went out to find other jobs.
If you look at the Great Depression there were a lot of similar things going on to what is going on now. The wealth is sitting at the top 1%, people end up working crazy hours to make it. Skyrocketing property costs.
The recession was an indicator of this and my question is, where we able to divert disaster or did we just kick the disaster down to the next decade? What political movement will help turn around the disaster that we are currently facing (if we are facing a disaster)? I don't know the answer to this but I personally see that there are a few economic bubbles we're sitting on tech, real estate, government employment. Any one could pop and cause a massive problem.
Does anyone have a place I can go to learn more about this? Specific books, blogs, podcasts or sites that talk about these issues?
“The Western States nervous under the beginning change.
Texas and Oklahoma, Kansas and Arkansas, New Mexico,
Arizona, California. A single family moved from the land.
Pa borrowed money from the bank, and now the bank wants
the land. The land company--that's the bank when it has land
--wants tractors, not families on the land. Is a tractor bad? Is
the power that turns the long furrows wrong? If this tractor
were ours it would be good--not mine, but ours. If our tractor
turned the long furrows of our land, it would be good.
Not my land, but ours. We could love that tractor then as
we have loved this land when it was ours. But the tractor
does two things--it turns the land and turns us off the land.
There is little difference between this tractor and a tank.
The people are driven, intimidated, hurt by both. We must think
about this.
One man, one family driven from the land; this rusty car
creaking along the highway to the west. I lost my land, a
single tractor took my land. I am alone and bewildered.
And in the night one family camps in a ditch and another
family pulls in and the tents come out. The two men squat
on their hams and the women and children listen. Here is the
node, you who hate change and fear revolution. Keep these
two squatting men apart; make them hate, fear, suspect each
other. Here is the anlarge of the thing you fear. This is the
zygote. For here "I lost my land" is changed; a cell is split
and from its splitting grows the thing you hate--"We lost our
land." The danger is here, for two men are not as lonely and
perplexed as one. And from this first "we" there grows a still
more dangerous thing: "I have a little food" plus "I have
none." If from this problem the sum is "We have a little
food," the thing is on its way, the movement has direction.
Only a little multiplication now, and this land, this tractor are
ours. The two men squatting in a ditch, the little fire, the side-
meat stewing in a single pot, the silent, stone-eyed women;
behind, the children listening with their souls to words their
minds do not understand. The night draws down. The baby
has a cold. Here, take this blanket. It's wool. It was my mother's
blanket--take it for the baby. This is the thing to bomb.
This is the beginning--from "I" to "we."
If you who own the things people must have could understand
this, you might preserve yourself. If you could separate
causes from results, if you could know Paine, Marx,
Jefferson, Lenin, were results, not causes, you might survive.
But that you cannot know. For the quality of owning freezes
you forever into "I," and cuts you off forever from the "we."
The Western States are nervous under the begining
change. Need is the stimulus to concept, concept to action.
A half-million people moving over the country; a million
more restive, ready to move; ten million more feeling the
first nervousness.
And tractors turning the multiple furrows in the vacant land.”
This is part of why I was able to pull my question together the way I did. I read that book and I feel like it changed my perspective. It shows the damage that happened to individuals but it doesn't stick with how people responded after the depression.
This will rise for a few more years and then will start to slowly fall off as the old professions start to die, and more and more young people choose professions still in demand. We are now simply in a transition period, both in regard to the technology and the effects of the globalization.
Without any evidence whatsoever, Larry Summers posits that the four-decade long trend of an increasing share of young men not working implies "job destruction caused by technology".
Instead, I think this trend is far more likely to be caused by an increasing share of young women entering the workforce over the same timeframe.
This article is built on sand. First off, Summers doesn't provide any evidence that his linear trend is a valid predictor. Coupled with his history of predictions, that should be a red flag to anyone reading this. If you're interested, you should read about his suggestion that California deregulate its energy market during the rolling blackouts caused by Enron's manipulation of the energy supply. Similarly, he supported the rapid privatization of former Soviet bloc countries in the 1990s without considering that former party members would consolidate resources and wealth among themselves. Lo and behold, Russia is now ruled by an oligarchy.
Second, not even the links he provides support his points. The one to the BLS shows the number of cashiers is expected to grow by 2%, not decline as he states.
Third, "to the extent that non-work is contagious, it is likely to grow exponentially rather than at a linear rate." No citation given. Nothing to substantiate this claim. Again, given Larry's history, I'd advise against taking him at his word. He also cites falling marriage rates as contributors, but only links to evidence of the rates falling, NOT to evidence of a causal effect of declining marriage rates on employment.
Finally, seeing as this [1] was posted on HN today, Larry seems to be living in a world where he doesn't read the news. Companies still need workers.
It's drivel like this written by people like Larry that erode my trust in the media.
92 comments
[ 5.6 ms ] story [ 172 ms ] threadIf American thought leaders such as Larry Summers think that technology destroys jobs and that it's a relatively recent phenomenon, then America is truly screwed.
Space colonies? That or war.
Aren't you doing exactly the same thing as the industrialists who slandered the Luddites? You're reducing the real welfare of thousands of workers and their families to "oh, they're scared of technology, just ignore the silly primitives."
The thing people forget when comparing to past technological advances is that for the largest part of history unemployment was 90%+ at the best of times, ever since a few hundred years into the Roman Empire, if you count subsistence farming as unemployment (and since people didn't do that unless they had to, you should).
I think this is what's really happening. The economy is reverting to it's natural state. Of course for most of us that's not a good description of what's happening. Better would be to say "conditions are returning to what they were in the middle ages".
After hundreds of years of virtually the same argument being made, I think the burden is on you to say why this time is different.
https://en.wikipedia.org/wiki/Technological_unemployment#Pre...
2) It's less of unemployment argument than reduced value argument. Unemployment is result from the lower limit for the living wage. People in India can find work for $1 per day even in automated society. If we are willing to reverse wage increases, remove laws regulating working conditions and remove all kinds of welfare, we can keep people employed for very long time.
3) In the past people could just leave menial jobs and pick a new job that required more intellectual capacity. We are reaching the limit where average Joe has no intellectual capacity that would increase their value in economy.
You'd have more rested people being more productive and have more people employed while giving an opportunity for improved work-life balance.
That and on-the-job training seems to have gone the way of the dinosaur.
The obvious place to start is the horse: the horse population in the US peaked at 26M in 1917 and had declined to 3M by 1960, almost 1/10th of its peak value [0].
When those horses were unemployed by the automobile, we did not retrain them in new lines of work. They just died. It got so bad that conversation societies were established to protect endangered breeds.
Eventually we created a handful of new jobs in the recreational sector for them, so the population of horses is rising now, but it is nowhere close to the peak value, and of course we did not create those jobs within the lifetime of any displaced horse.
In fact what the historical record shows is that massive technological shocks produce long-term unemployment. It doesn't seem to matter if it's a horse, because of course they're just resources to be exploited in the furtherance of human goals. But then again, so are you.
[0] http://www.humanesociety.org/assets/pdfs/hsp/soaiv_07_ch10.p...
Technological disruption is not new. It's been around forever. If your theory stands true, then how come that overall, the global economy is growing? Doesn't it mean that we've created more jobs that we've destroyed?
What about the other important element no one seems to care about in this conversation: the jobs created - very often - require a higher level of skills and specialization.
The number of jobs does not correlate to GDP growth [0]. So whether "the economy is growing" is not terribly related to whether jobs are being created. This is somewhat puzzling under Adam-Smith-Wealth-of-Nations ideas about economics, but it's an empirical fact.
> Technological disruption is not new. It's been around forever.
You seem to be misunderstanding the argument; I'm not arguing for something new. I'm arguing that negative effects of technological shock are well-attested in the historical record: you can look back at historical data and plainly see them.
[0] http://www.nytimes.com/2016/01/18/business/economy/us-growth...
It's hard to accept because the people hit are not necessarily those that will benefit from the newly created opportunities. But if History is clear on one thing, it's that the number of winners outweighs the losers.
Every economy that resists creative destructions in favor of short term social peace ends up watching prosperity pass by.
As the Wiki page you linked to says, stopping unemployment depends on "compensation effects ensur[ing] there is never a long term negative impact on jobs". So, by default, technology will put people out of work, and there's no guarantee that some counterbalancing factor will always materialize. The amount of meaningful work that humans can engage in is certainly not infinite.
Of course, it's not a guarantee that technology will continue to improve either, at least not at a faster rate than the counterbalancing factor. As it happens, it's very hard to predict the future. But it's not unreasonable to try. And right now, it looks very much like tech will keep marching forward, and jobs outside of tech will not.
A self-driving car, for example, is just a regular car (old technology) with some servos attached (old technology) and a few sensors added (old technology) and a computer (old technology), with self-driving software (new technology).
Put a million drivers out of work with self-driving cars, and you don't open up a million jobs building self-driving cars. The number of cars needed doesn't go up much. The demand for servos and sensors goes up, but making those is largely automated already. Maybe some servo or sensor companies have to add another shift...so they hire a handful of humans to watch the machines on the new shift.
Before, when we replaced a human we were generally replacing him with a new machine. Now we are more just making the old machine that the human was operating operate without the human.
I can't help but think that an article this short can't be anything more than fluff.
1) Women are graduating from college at a higher rate than men.
2) Women are going to college at a higher rate than men.
3) Women have a higher literacy rate than men.
4) Women graduate from high school at a higher rate than men.
These trends are likely to continue. I don't see any possible scenario where men are not worse off in 20 years than they are today, while the higher educated women continue upwards. This is likely especially the case given that trends in education are pointing drastically in favor of women.
If you examine men-heavy trades such as trucking, they are likely to almost entirely disappear in regards to providing plentiful millions of moderate paying jobs to fairly low skill blue collar workers. Nearly all taxi & Uber type jobs will also disappear, those too are dominated by men. Manufacturing will become even further automated by robotics + AI, those jobs are heavily dominated by men. Even military jobs are likely to be meaningfully reduced by leaps in automation and robotics.
It's okay to file a bug report without pointing out the design defect that caused the issue.
Its probably more of a problem for men because the kinds of jobs advancing technology is most likely to eliminate [0] in the near future tend to be male-dominated, especially the jobs that are better quality in the first place. So, men (of particular demographics and skill/education profiles) are going to be losing more quality opportunities that they would otherwise have than women are.
Also, IIRC, there are some indications that a variety of social problems (including certain types of crime and violence) tend to increase with the proportion of long-term unemployed men but not so much with unemployed women, so even beyond the degree to which it is a problem for men, the problem men experience because of it may be disproportionately a problem for society as a whole.
> I can't help but think that an article this short can't be anything more than fluff.
Well, its mostly a call-out to another article of the author's, which is itself a review of a book by a different author. So, yeah, its not exactly intended as much of a full discussion of the issue it points to.
[0] "replace with jobs with very different entry requirements" may be more accurate in some cases, but the net effect is generally similar.
Baristas are a very good example of this. The whole coffee making process can be pretty much automated, but isn't because people like to see a person making their coffee.
But hourly rates, particularly at the low end, would be lower than now and probably below a livable amount.
1) an interesting parallel to the decline of programming classes can be drawn as both have specialized instructor and facility requirements
Today, it takes nearly 2x the median household income to get something resembling that kind of life. Granted, you're still considered middle class at that level of income...
In some cities. In other cities, that's just not true. Example: in Atlanta, GA, the median income is right over $55k. According to Zillow, that will get you a house in the $227k range. There are tons of single-family houses with yards in that price range (or even half that) in the city.
I ran similar math for Dallas, TX. I'd bet there are a lot of markets where this is true.
Housing is only expensive in the expensive housing markets.
Zillow and other home pushers are interested in selling houses, not in the consequences for the buyers thereafter.
All that said, in Atlanta, 3 BR/2 BA houses are abundant in the under-$150k range. Or under $100k. It's really not approaching necessary to earn 2x the median income in cities like Atlanta to buy a house with a yard.
The point is the OP's math assumes one lives in a high-cost area, which is not the reality where most Americans live.
$1.8k housing, plus $500 for property taxes and insurance, $1,000 for two vehicles (payments, insurance (damned teenage drivers), gas, maintenance), $500 into savings for household emergencies, $800 to feed four, $100 per person for clothing, the occasional ice cream, paying off medical deductables... and you're quickly looking at needing over $5,000 a month gross just to get by.
5,000 / 0.7 * 12 = $85,000
Toss in 10% savings and 10% retirement, and you're well over $100,000.
Sure, you can cut corners and live off a lot less than that, but I'm comparing it to the standard of living had by people 40 years ago.
(Random nitpick: if you're earning the median income, paying a mortgage while contributing to retirement; and have 2 kids, you are not paying anything close to 30% of your income in income taxes.)
Also you are right that if you save ~30% of your median income ($500 + 10% savings + 10% retirement), the month-to-month gets a little tighter. But then you can retire early. :-)
I'm not arguing that everything is roses, just that tens of millions of people live at the median income and own houses, cars, etc.
You'd have done much better here arguing about the costs of childcare or higher education. Those are a bloodbath, no matter where you are.
I think you are off of what you intended by an order of magnitude on that house size. (And a bit high for reality even after correcting for that error.)
Tangentially related: https://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf
I don't think it's too high, though. My parents built something on the order of 5,000 sqft in the early 70's for around $15,000 (including the 5 acres of land), adjusted for inflation that's under $150,000. My Mom was able to put herself through 4 years of college by waiting tables part time.
Yeah, we had it good. Why? My dad's blue collar job burying and splicing telephone lines for Ma'Bell.
It really was a different time. That same job today comes with no job security and remarkably similar wages as it was 40 years ago, even as the cost of living and inflation has increased tenfold.
Well possibly. I'm British so my experience may differ but I happen to have read my great grandfather's diary, he was a carpenter during the Great War, spent a lot of time with my grandfather, he was in the RAF. My father was an immigrant, kicked out of Egypt by Nasser.
My life, for all the hours I work and the stress, is a bed of roses compared to anything they went through. In fact, I feel slightly guilty even comparing. My children, who I believe are entering a more difficult world than the one I was born to, can't really comprehend my upbringing let alone their immediate ancestors.
Feudalism 2.0? Maybe. But I'll take it Thank you. Sometimes you just have to take a step back and appreciate what you've got.
Families? In some cities, singles are struggling to keep a crappy one-bedroom apartment roof over their head.
I suspect it's quite possible to raise a family on a single income if you're willing to live like it was the 1950s.
Schooling costs are also way, way, way higher than they were in the 50s, and there are no well paying manufacturing jobs to do if you aren't inclined to go to college.
I really doubt that you would be able to raise a family on a single income these days with the same standard of living you could have back then.
Basically the definition of 'comfort' underwent a huge upgrade without a equivalent upgrade in the perception of costs that would go to afford them. This is largely happening because people are using the term 'working-class' and 'middle-class' to measure to make different measurements in different times.
Yes, we should still be able to afford raising a family of five with one wage earner.
However, due to both me and my wife working, we can't afford to properly raise our own kids, grow a veggie garden (plot size is too small) or sew/mend our clothes.
We have 1400 sqft, don't have air conditioning, don't have cable, and if only one of us had to work, heck, we could do with only one car (bikes were a thing back then and we aimed for a good wike/balk score when purchasing).
I think a lot of the "upgrades to life" are simply the consequence of busier lives, not exactly better ones.
https://www.youtube.com/watch?v=akVL7QY0S8A
The problem is that policy hasn't evolved with technology. Technology has caused two things: 1) increase income disparity & 2) increase unemployment. The problem is that what worked for American til WW2, a laissez faire economic policy, doesn't handle these two things well. We need to encourage our policy makers to figure out a society that has better wealth distribution and can handle a large % of the population not working.
The masses know that something is very wrong, but they don't know what to do and hence the thrashing around for alternatives. As long as the rich keep the door to upper middle class open to the cognitive elite they are safe.
Not sure that is possible.
The only thing that amazes me is how strategic they were in handling the situation and how they were willing to sacrifice income and power for generations to win the class war. They are certainly being advised by the best minds available.
I'm cautious about arguments that rely on a pessimistic expectation that progress will reverse because it's just never continued in the past. If the argument identified some fundamental reasons why progress will slow instead of drawing historical correlations then it would have merit. Then again if we knew those principles then we could correct our society and avoid disaster. Because this argument is flawed and human knowledge and understanding is the only thing that solves human problems, the validity of the argument is lost.
Summers's role in the deregulation of derivatives contracts
On May 7, 1998, the Commodity Futures Trading Commission (CFTC) issued a Concept Release soliciting input from regulators, academics, and practitioners to determine "how best to maintain adequate regulatory safeguards without impairing the ability of the OTC (over-the-counter) derivatives market to grow and the ability of U.S. entities to remain competitive in the global financial marketplace."[21] On July 30, 1998, then-Deputy Secretary of the Treasury Summers testified before the U.S. Congress that "the parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies." At the time Summers stated that "to date there has been no clear evidence of a need for additional regulation of the institutional OTC derivatives market, and we would submit that proponents of such regulation must bear the burden of demonstrating that need."[22] In 1999 Summers endorsed the Gramm–Leach–Bliley Act which removed the separation between investment and commercial banks, saying "With this bill, the American financial system takes a major step forward towards the 21st Century."[23]
When George Stephanopoulos asked Summers about the financial crisis in an ABC interview on March 15, 2009, Summers replied that "there are a lot of terrible things that have happened in the last eighteen months, but what's happened at A.I.G. ... the way it was not regulated, the way no one was watching ... is outrageous."
At the 2005 Federal Reserve conference in Jackson Hole, Raghuram Rajan presented a paper called "Has Financial Development Made the World Riskier?". Rajan pointed to a number of potential problems with the financial developments of the past thirty years.[24] The problems that Rajan considered include skewed incentives of managers, herding behavior among traders, investment bankers, and hedge fund operators who suffer withdrawals if they under-perform the market. Rajan also discussed the problems associated with firms that "goose up returns" by taking risky positions that yield a "positive carry."[25] Justin Lahart, writing in the Wall Street Journal in January 2009 about the response to Rajan's paper at the conference recounts that "former Treasury Secretary Lawrence Summers, famous among economists for his blistering attacks, told the audience he found 'the basic, slightly lead-eyed premise of [Mr. Rajan's] paper to be largely misguided.'"[26]
In February 2009, Summers quoted John Maynard Keynes, saying "When circumstances change, I change my opinion", reflecting both on the failures of Wall Street deregulation and his new leadership role in the government bailout.[27] On April 18, 2010, in an interview on ABC's "This Week" program, Clinton said Summers was wrong in the advice he gave him not to regulate derivatives.
https://ourworldindata.org/agricultural-employment/
You would think by this logic that removing these jobs would have caused a MASSIVE unemployment issue in the USA. Which it did to some degree. I mean farmers were pushed off their land by bigger farmers, and other groups and they went out to find other jobs.
If you look at the Great Depression there were a lot of similar things going on to what is going on now. The wealth is sitting at the top 1%, people end up working crazy hours to make it. Skyrocketing property costs.
The recession was an indicator of this and my question is, where we able to divert disaster or did we just kick the disaster down to the next decade? What political movement will help turn around the disaster that we are currently facing (if we are facing a disaster)? I don't know the answer to this but I personally see that there are a few economic bubbles we're sitting on tech, real estate, government employment. Any one could pop and cause a massive problem.
Does anyone have a place I can go to learn more about this? Specific books, blogs, podcasts or sites that talk about these issues?
https://www.amazon.com/Grapes-Wrath-John-Steinbeck/dp/014303...
“The Western States nervous under the beginning change. Texas and Oklahoma, Kansas and Arkansas, New Mexico, Arizona, California. A single family moved from the land. Pa borrowed money from the bank, and now the bank wants the land. The land company--that's the bank when it has land --wants tractors, not families on the land. Is a tractor bad? Is the power that turns the long furrows wrong? If this tractor were ours it would be good--not mine, but ours. If our tractor turned the long furrows of our land, it would be good. Not my land, but ours. We could love that tractor then as we have loved this land when it was ours. But the tractor does two things--it turns the land and turns us off the land. There is little difference between this tractor and a tank. The people are driven, intimidated, hurt by both. We must think about this.
One man, one family driven from the land; this rusty car creaking along the highway to the west. I lost my land, a single tractor took my land. I am alone and bewildered. And in the night one family camps in a ditch and another family pulls in and the tents come out. The two men squat on their hams and the women and children listen. Here is the node, you who hate change and fear revolution. Keep these two squatting men apart; make them hate, fear, suspect each other. Here is the anlarge of the thing you fear. This is the zygote. For here "I lost my land" is changed; a cell is split and from its splitting grows the thing you hate--"We lost our land." The danger is here, for two men are not as lonely and perplexed as one. And from this first "we" there grows a still more dangerous thing: "I have a little food" plus "I have none." If from this problem the sum is "We have a little food," the thing is on its way, the movement has direction. Only a little multiplication now, and this land, this tractor are ours. The two men squatting in a ditch, the little fire, the side- meat stewing in a single pot, the silent, stone-eyed women; behind, the children listening with their souls to words their minds do not understand. The night draws down. The baby has a cold. Here, take this blanket. It's wool. It was my mother's blanket--take it for the baby. This is the thing to bomb. This is the beginning--from "I" to "we."
If you who own the things people must have could understand this, you might preserve yourself. If you could separate causes from results, if you could know Paine, Marx, Jefferson, Lenin, were results, not causes, you might survive. But that you cannot know. For the quality of owning freezes you forever into "I," and cuts you off forever from the "we."
The Western States are nervous under the begining change. Need is the stimulus to concept, concept to action. A half-million people moving over the country; a million more restive, ready to move; ten million more feeling the first nervousness.
And tractors turning the multiple furrows in the vacant land.”
Instead, I think this trend is far more likely to be caused by an increasing share of young women entering the workforce over the same timeframe.
Second, not even the links he provides support his points. The one to the BLS shows the number of cashiers is expected to grow by 2%, not decline as he states.
Third, "to the extent that non-work is contagious, it is likely to grow exponentially rather than at a linear rate." No citation given. Nothing to substantiate this claim. Again, given Larry's history, I'd advise against taking him at his word. He also cites falling marriage rates as contributors, but only links to evidence of the rates falling, NOT to evidence of a causal effect of declining marriage rates on employment.
Finally, seeing as this [1] was posted on HN today, Larry seems to be living in a world where he doesn't read the news. Companies still need workers.
It's drivel like this written by people like Larry that erode my trust in the media.
[1]U.S. Companies Turn to German Vocational Training Model to Fill Jobs Gap: https://news.ycombinator.com/item?id=12584606
https://www.washingtonpost.com/local/education/the-gender-fa...
The disaster is here, fam.