The key thing to understand about the economy in the next few decades is that it will increasingly resemble a post scarcity economy. In the past, things like food, housing, medical care, ect were scarce. There is no real scarcity of these things anymore in a technologically advanced Western society, and only a quite small minority of the workforce is actually engaged in producing them. However most people have a scarcity mentality and that clouds their economic thinking.
For example it is well known that our government will require a lot of money to pay for the coming surge or retirees we are supposed to be getting soon. Libertarian/conservative types worry that the government simply won’t be able to afford to pay for the old people. But it will afford to. That’s because there will be farmers who want to sell food, doctors who want to provide medical care, property owners who want to provide housing, ect. These things will be provided to the old people. It might take the form of higher taxes on the wealthy, or of simply printing money, but it will get done. We’re not going to “run out” of food, medical care or housing.
They also worry about the “worker to retiree ratio.” In a scarcity economy most of the workers are engaged in value creation work, thus if you have less workers you will have less production. But in a post scarcity economy such as our own many of the workers work in value transference jobs. Value transference jobs are things like banker, car salesman, realtor, or many forms government employment. When people lose value transference jobs, little value is lost. In any case automation will more than compensate for the declining worker to retiree ratio.
That’s the good news, the bad news is that I don’t think it will get much better either. You are not going to have 15 hour workweeks, or flying cars, or even much longer lives due to superior medical care. Technological development has been stagnating since the 1970s. Just ask yourself if there was more technological advances between 1905 and 1960 then there were between 1960 and 2015. IPhones are neat, but they don’t really compare to the development of practical and affordable cars, air conditioning, or air travel. No medical advancement in our modern era can compare to antibiotics, the polio vaccine, or the eradication of smallpox and malaria from the United States. I see no reason why I should assume the stagnation will not continue.
Automation and the Rise of Value Transference Employment
Automation is likely to replace a significant amount of human labor, without in and of itself “creating more jobs.” Libertarians think that automation can never increase unemployment. If you ask them for evidence of this idea, they won’t give you any, because it’s something they just think is obvious. C. G. P. Grey made a great refutation of such nonsense:
They say that the technology will create new jobs which will replace the ones it eliminates. Ask yourself what new types of jobs will be created by this “technology.” As John Derbyshire wrote:
The assumption here is that like the buggy-whip makers you hear about from economic geeks, like dirt farmers migrating to factory jobs, like the middle-class engineer of 1960, the cube people of today will go do something else, creating a new middle class from some heretofore-despised category of drudges. But… what? Which category of despised drudges will be the middle class of tomorrow? Do you have any ideas? I don’t. What comes after office work? What are we all going to do? The same thing Bartleby the Scrivener did, perhaps, but collectively and generationally.
What is the next term in the series: farm, factory, office…? There isn`t one. The evolution of work has come to an end point, and the human race knows this in its bones. Actually in its reproductive organs: the farmer of 1800 had six or seven kids, the factory worker of 1900 three or four, the cube jockey of 2000 one or two. The superfluous humans of 2100, if there are any, will hold at zero. What would be the point of doing otherwise?(Derbyshire, 2009)
Automation itself isn’t always good in all environments. If you read economic theory about why Automation is Always Good you’ll notice it’s based on the assumption that there is no government redistribution or value transference. Suppose you have a worker who is paid 12$ is replaced by a machine which costs 10$ to buy and operate. The company, and thus the economy, saves 2$. But if the worker responds by collecting 10$ worth of unemployment at taxpayer expense, or gets a government value transference job which pays him 10$, the “economy” loses 8$. I’m not saying automation is a bad thing, but it is possible to imagine situations in which it is.
But I don’t expect that logic to be recognized. Economists would be allergic, and for most public intellectuals “Luddite” is like “racist,” something that they see as so obviously false it doesn’t need to be debated. Plus, restrictions on innovation would truly would be “un-American.”
If technology replaces a worker’s job the employer’s response might not be to lay off the worker. That’s not nice! Especially at middle class jobs where the bosses are selected from the same group of people as those who they oversee, and especially in large corporations where those who oversee the workers have no direct interest in the financial well-being of the company. Instead they will try to find the worker other work to do. There is a lot of truth to “Parkinson’s Law” which states that “work expands so as to fill the time available for its completion.” If there are more workers, there will be more work. Libertarians often act like the “free market,” through competition, always prevents inefficiency, it doesn’t. If a company is making 10 million dollars, but could be making 20 million dollars if not for inefficiency and corruption, that company does not go out of business. This is one explanation for the productivity paradox, the observation that “you can see the computer age everywhere but in the productivity statistics.”
People have an expectation that if a company is making money it shouldn’t be laying off workers. Many people assume that a company should have a duty to serve the interests of both the employees and the shareholders. That’s why they didn’t respond the way libertarians did when they heard about Mitt Romney’s “creative destruction.”
So if you have 35% of the work being done by computers, don’t expect to see 35% of the workers laid off immediately.
We won’t have eternal depression level unemployment in thirty years if automation replaces 35% of human labor. That wouldn’t be politically desirable, so they will have to create jobs. “Creating Jobs” is political cliche widely used by both the right and the left, the subtext is always that these jobs are productive jobs that benefit both the employer, the employee, and the ‘customer.’ But in reality an employer “creates a job” if he pays someone to dig a hole and fill it in over and over. Most of these jobs will be created by the government either directly or indirectly.
Education as a Job Creator
Education helps the situation because every year someone spends being Educated is a year they don’t spend competing with other workers. More education will mean more jobs as teachers and in “administration.” The percentage of young people with college degrees is higher than ever and likely will continue to grow. The Democrats are united in favoring giving more money to higher education, which will allow them to Create even more Jobs in education.(The money won’t be used to reduce tuition, as naive liberals believe. The cost of higher education has risen faster than anything else, including healthcare. Liberals should ask themselves why.)
Jobs Created by Diversity
The rising proportion of the population that is Diverse will create a lot more work that will need to be done. They need medical care, schooling, housing, policing, after school programs, ect and ect. Many more White people in the future will work jobs providing these things to them.
This isn’t an argument for mass immigration. The Diverse population won’t be able to pay for these things itself. The government, and the mostly White tax base, will pick up the tab.
“Green jobs” is a phrase widely used by Democrat politicians. Indeed there are a lot of green jobs, and a lot more potential green jobs. There are twice as many people who work in the solar industry as there are coal miners.(Fortune Magazine, 2015) All these jobs having been created is considered a Great Thing, but it also explains why solar energy is so expensive compared to traditional forms of electricity generation. You have to employ a lot more people to get the same amount of electricity.
We will not be moving to a “zero carbon economy,” nor will the rest of the world. But SWPLs want to feel like they are Doing Something and the people need jobs, so you will see more people employed in the “Green Energy” sector and will pay more for energy, both directly through higher prices for electricity and indirectly through government subsidizes of the Green Energy sector.
More middle class people will work as Green Commissars in companies and for the government. Just think of how many jobs the environmental movement has created that simply didn’t exist 40 years ago. Green ideology is pretty popular with SWPL youth, so expect to see more of it in the next thirty years.
SWPLs love things that are made the Old Fashioned Way or are which supposedly created by “small business” instead of “corporations.” “Organic” food, micro-brewed beer, food made in fancy restaurants, ect. When the burger flipping robots arrive I’m sure you will hear SWPLs go on about how much better the food tastes when it is made by an actual human cook.
One might have thought that television would have eliminated theater, or made it very rare. Just because technology creates a more efficient alternative to something doesn’t mean that alternative will displace it.
Part Time Work as a Working Class Job Creator
During the Great Recession the percentage of total employment that was part time shot up and is still higher than it was during from 2000-2008.(Mislinski, 2015)
More generous welfare policies will allow the poor to work less hours in their part time jobs. Obamacare incentivizes employers to hire part time workers rather than full time workers. Part time jobs are Jobs in the Obama administration’s employment numbers. An employer who hires two workers to work 20 hours a week Creates twice as many jobs as he would if he were to hire one worker to work full time. I’m not saying the writers of Obamacare intentionally did that in order to have that effect.
No politician and few economists will state that they want the workers to work fewer hours. Leftist politicians will deny that the policies they favor such as Obamacare and more generous welfare will have that effect. I’m sure many will even believe that. In the scarcity mentality of most people, working less hours means more scarcity. Jeb Bush gave an good example of the mentality:
My aspiration for the country and I believe we can achieve it, is 4% growth as far as the eye can see. Which means we have to be a lot more productive, workforce participation has to rise from its all-time modern lows. It means that people need to work longer hours and, through their productivity, gain more income for their families. That’s the only way we’re going to get out of this rut that we’re in.(Bush, 2015)
A simple solution to the problem of a large amount of the work being automated if for workers to do less work. Seems like a much better solution than creating more work which doesn’t involve producing anything. And wouldn’t it to be great to work less? But while the lower classes might, you, if you are a young person reading this in 2015, will not work less.
The Old and Mostly Forgotten Promise of a 15 Hour Workweek
John Maynard Keynes once predicted a 15 hour workweek. Larry Elliott Writes in the Guardian:
Nobody ever dies saying “I wish I’d spent more time at the office”, or so the saying goes. We deeply regret those times the business trip or polishing off the report for the boss has meant missing the school play or cancelling the anniversary dinner.
But if we would rather be spending more time with our loved ones than in making money, why don’t we do so? If we believe that our priorities are all wrong, why don’t we change them? That’s certainly what John Maynard Keynes thought would happen. Back in 1930, Keynes predicted that the working week would be drastically cut, to perhaps 15 hours a week, with people choosing to have far more leisure as their material needs were satisfied. The world was then gripped by a dreadful slump but in the long run Keynes was sure mankind was solving its economic problems. Within a hundred years, Keynes predicted, living standards in “progressive countries” would be between four and eight times higher and this would leave people far more time to enjoy the good things in life.
Keynes had been working on Economic Possibilities for our Grandchildren before the Wall Street Crash of 1929 but finally published it a year into the crisis. Given that the world was part of the way through a downturn unparalleled before or since, it was a brave call to say it was “only a temporary period of adjustment”, but as it turned out absolutely correct. Living standards in developed western economies have seen rapid growth; by 2030 it is likely that they will have risen at least eightfold.(Elliott, 2008)
Productivity is certainly far higher today than it was in the 1930s. The trend then was a declining workweek, workweeks in the nineteenth century regularly exceeded 60 hours. It is even more notable when you account for the widespread female entrance into the workforce:
Gary Becker says Keynes based his predictions on the behaviour of the rich gentry of Britain, who tended to hold their wealth in the form of land, property or financial assets. When the value of these assets rose, they could earn the same income by working less hard. Wealth creation in the modern world, by contrast, has more to do with the use of human capital, and there is a price – lower earnings – when that human capital is left idle. Becker says that rich individuals in the Gulf states, who live off revenues from oil, are the only group that conforms to Keynes’s ideal of a 15-hour working week. Imported labourers, who do not share in the oil wealth, work much longer hours. For the most part, though, it is a case of the workaholic rich rather than the idle rich.
There is another reason, the idea of self actualization. Lion writes:
As I’ve written many times before, the ultimate life goal for today’s upper-class is to have self-actualization from one’s career. I use the term “self-actualization” that was popularized by Abraham Maslow. I think that most people who buy into the philosophy don’t actually use that term, but clearly the influence of Abraham Maslow is what’s behind the whole philosophy.
Why do people seek this from their job? Why can’t they just work at a boring and meaningless job and then seek self-actualization in their non-working hours? Or save up enough money so they can retire early and pursue self-actualization full-time? Or if their parents are rich, why do they have to have a job at all? Why not just pursue self-actualization and forget about having a job? In fact, that’s what rich people used to do. In Downton Abbey, no one is working at a job. In Edith Wharton’s book, the House of Mirth, none of the women were interested in working at a job (but that was before Betty Friedan wrote The Feminine Mystique), and the man that the protagonist, Lily Bart, liked most as a person, Lawrence Selden, she didn’t consider to be an acceptable spouse because he worked at a real job (as a lawyer).
Today, it’s just not considered socially acceptable to not work. Not working is for poor people (who collect welfare). Upper-class people have to demonstrate their superiority over the lower classes by having a career. Class stuff doesn’t always have to make any sense.(Lion, 2015)
For the upper class, work is not merely a means to an end as it is for proles. Work(and advanced education) is an end in and of itself. For Americans “class” is not just measured by how much money someone makes, it’s rude to tell or ask that, it’s also measured by where you went to school and what kind of job you have. Work is also very important in feminist ideology. Much of feminism is based on convincing women to transfer their efforts from raising children to advancing their careers.
The Limits of Wealth and the Limits of Capitalism
In a scarcity economy, the rich enjoy a lot of stuff they can lord over the poor. The rich gentry in 19th century Britain enjoyed much better housing, food, and medical care than did their servants. In a post scarcity economy the rich can enjoy only slightly better food and medical care than can upper middle class people. They can buy a mansion, but does having a house with eight empty rooms really increase your happiness compared to a house with only two empty rooms?
Material goods which have higher intrinsic value are not what separates someone with a yearly income of 4,000,000$ from someone who has a yearly income of “only” 250,000$. After a certain point it stops being about material goods and starts being about status. A Rolex doesn’t tell time any better than your phone, people buy it to display their high status. It is a Veblen good.
The fact that status, not having more material goods with higher intrinsic value, is what defines our current elite explains their willingness to pay high taxes. Lion writes(link in original):
I have been saying for a while that the moderately well off are Republican but the rich are Democratic. People didn’t believe me, but a new CNBC poll of Americans with a net worth of at least $1 million (which represents approximately the top 5% of the population) shows that 53% would vote for Hillary and 47% would vote for Jeb Bush, if they ran against each other.
Among millionaires 48 and younger, there is MASSIVE support for Hillary over Jeb with 70% supporting Hillary, while Jeb leads among millionaires 70 and older. You should note that millionaires tend to be older than the general population because it takes time to accumulate a million dollars, unless you are lucky enough to inherit it. The old guard still votes Republican, but the people who will be the rich of the future are very strongly Democratic.(Lion, 2015)
Lion, in an unrelated blog post:
People have a very difficult time understanding post-scarcity concepts because the human brain evolved to deal with scarcity. For example, people have a very emotional reaction to having their taxes increased, although if the money is just used to buy positional goods (like the cost of living in a “better” neighborhood), and if everyone else competing for those same positional goods has their taxes raised by the same proportionate amount, then there is actually no real loss involved from paying higher taxes.(Lion, 2015)
High levels of taxation on the very wealthy neither reduces their standard of living nor reduces their status. In the peer group of the ultra wealthy Democrats what would reduce their social status would be voting for a Republican.
To fund all the Left’s favored new government programs, as well as to take care of the old people, taxes will have to be considerably raised. And they will be raised, the growing amount of power exercised by the ultra wealthy will not prevent it. Government spending as a percentage of GDP will rise to European norms, and then continue to rise. Whether or not the system is called “capitalist” or “socialist” will be a matter of semantics.