one thing about technological advances, it has always increased the productivity of workers, untill recently, now robotic arms replace workers they do not increase worker productivity, so unemployment no longer follows the old rules, increasing productivity leads to more jobs, it now leads to more robots companies become more productive by replacing jobs...
so any comparision with the past is comparing apples and oranges, as they say
When one tractor replaced ten* farm laborers in the 20th Century that was also the case of a machine replacing workers. Just because you still need one guy to drive the tractor doesn't change the fact that a net 9 laborers lost their jobs to a machine. It's exactly the same thing with modern robots, which also need to be built, programmed and repaired by human beings. Not to mention all the research that goes in developing new and better robots.
Japan, which has more industrial robots than the rest of the world combined, has an unemployment rate of 4%. So how does that leave your theory?
*I'm making up this number, obviously, but you get the point.
The key point is that it makes the farmer more money which he can spend on things he wants, so there's then more jobs in making those things, and the total amount of wealth in the system actually goes up marginally.
The key point is that it makes the farmer more money which he can spend on things he wants, so there's then more jobs in making those things, and the total amount of wealth in the system actually goes up marginally.
-The farmer has more money which he spends on more products and services, generating jobs;
-The price of the goods the farmer sells goes down, which means the general public has now more spare money which they can spend in additional goods and services, generating jobs.
It's exactly the same thing with modern robots, which also need to be built, programmed and repaired by human beings. Not to mention all the research that goes in developing new and better robots.
Japan, which has more industrial robots than the rest of the world combined, has an unemployment rate of 4%. So how does that leave your theory?
*I'm making up this number, obviously, but you get the point.
why would you just accept that people will build robots, robots will build more productive robots,that is the shift, tractors made people more productive,allowing people to leave the farm and make tractors, just because it happened in the past does not mean it will happen that way again,it like an article of faith that you know the future...
you also imply, all the production workers will have to become research assistants going from making cars to designing robots, or maybe work part time at Macca's. I'm not a Luddite, but since the 70's it has been widely mooted that a shift of what work is, is coming, the haves and have nots, fortune telling? who knows...
as you noted in japan
Even part-time workers with extremely low hours are classified as employed.
In July 2006, the unemployment rate in Japan was 4.1%, according to the OECD. At the end of February 2009, it stood at 4.4% [155] This seemingly modest rate however understates the situation. According to The Economist, the ratio of job offers to number of applicants has declined to just 0.59, from almost 1 at the start of 2008, while average work hours also declined. Average wages also went down by 2.9% over the 12 months ending in February. In 2008, Japan's labor force consisted of some 66 million workers40% of whom were womenand was rapidly shrinking.[156]
so lower real pay, lack of security, loss of hours, is the solution, and a shrinking population creating the biggest employment gain(health/aged care) in taking care of the aging baby boomers... that sure has along term future
In the 1950s and 60s, the workers replaced by machines were absorbed by the burgeoning service industries. It was that time. Now, let's just look at the situation in the past decade. Let's see how the service (and manufacturing) industries are doing now.
Aelf, is the point of that graph to show that manufacturing sector job losses aren't balanced out by service sector job gains over the past decade? I.e. we've lost more manufacturing jobs than the service sector could absorb? Because if so, it doesn't really help. The y-axis is percentage growth/loss, not absolute. So a 1% growth in service sector jobs translates to far more actual jobs than a 1% loss in manufacturing jobs. According to this link, 81% of jobs are in services, vs 9% in manufacturing, meaning that a 9% loss in manufacturing jobs is counterbalanced by just a 1% growth in service sector jobs.
Fortunately, there is data that backs up your point, even if that graph doesn't. The OECD has the full statistics necessary to back you up (annoyingly I can't link to it, but it's at stats.oecd.org, navigate to Labour Force Statistics and filter as required). I've indexed it back to 2000's total labour force so that it flushes out growth in the overall labour market (i.e. if the total labour force grows by 1% because the population has increased then each sector should grow by 1% naturally; I've removed such growth from the data so that the net figures are showing "real" job losses and growth per sector). I've charted it here:
Key takeaways:
- Net employment change for most years is approximately Zero. I.e. service sector gains balanced out industry losses
- Three big outliers: 2001 (big net gain), 2006 (net loss that wiped out previous gains), and 2009 (massive net loss which took us well into negative territory)
- Last 3 years is back to normal: service sector gains continue to balance out industry losses - Overall net loss of 720,000, entirely due to 2008/09 Great Recession.
(I'll be honest, I was ready to say "gotcha!" and disprove your point, but the data shows otherwise. Gotta respect the data.)
why would you just accept that people will build robots, robots will build more productive robots,that is the shift, tractors made people more productive,allowing people to leave the farm and make tractors, just because it happened in the past does not mean it will happen that way again,it like an article of faith that you know the future...
you also imply, all the production workers will have to become research assistants going from making cars to designing robots, or maybe work part time at Macca's. I'm not a Luddite, but since the 70's it has been widely mooted that a shift of what work is, is coming, the haves and have nots, fortune telling? who knows...
as you noted in japan
You didn't understand my point at all. It's not that the farmers who lost their jobs to tractors went out to become tractor builders, or that the industrial workers being replaced by robots will become robot builders or programmers. That was just the simplest example of jobs being create by automation, but obviously by themselves they don't even out the job losses.
What happens, as I explained in a post above, is that automation achieves two things:
-The producer increases his profit, meaning he has more money to invest in additional business (+jobs) or just buy more goods and services (+jobs).
-The price of the goods fall, meaning the general public now has spare money to spend in additional goods and services (+jobs).
The Luddite fallacy would only hold if demand was constant. But that's a ridiculous proposition; the increased prosperity brought about by automation leads to higher demand and thus more jobs are actually created than lost. Whole new industries and services are created. How many web designers were there in the 1960's?
so lower real pay, lack of security, loss of hours, is the solution, and a shrinking population creating the biggest employment gain(health/aged care) in taking care of the aging baby boomers... that sure has along term future
You're conflating Japan's demographic problems with automation. They are not related. I pointed out that Japan is the most automated country in the world, by far, and still has a very low unemployment. The rise of industrial robots in Japan in the 1980's did not lead to massive unemployment, au contraire, it was a highly prosperous time for that country. Now they do have some significant economic and demographic problems, but they don't derive at all from their use of robots.
Key takeaways:
- Net employment change for most years is approximately Zero. I.e. service sector gains balanced out industry losses
- Three big outliers: 2001 (big net gain), 2006 (net loss that wiped out previous gains), and 2009 (massive net loss which took us well into negative territory)
- Last 3 years is back to normal: service sector gains continue to balance out industry losses - Overall net loss of 720,000, entirely due to 2008/09 Great Recession.
(I'll be honest, I was ready to say "gotcha!" and disprove your point, but the data shows otherwise. Gotta respect the data.)
What happens, as I explained in a post above, is that automation achieves two things:
-The producer increases his profit, meaning he has more money to invest in additional business (+jobs) or just buy more goods and services (+jobs).
-The price of the goods fall, meaning the general public now has spare money to spend in additional goods and services (+jobs).
The Luddite fallacy would only hold if demand was constant. But that's a ridiculous proposition; the increased prosperity brought about by automation leads to higher demand and thus more jobs are actually created than lost. Whole new industries and services are created. How many web designers were there in the 1960's?
I understand your point, web designers are a new job catergory, while printers, secretaries, have been mostly eliminated, in fact a recent report says 45% of All US jobs are vunerable to replacement from computers within the next 20 years...
I guess we will all be making apps then.
Spoiler:
31 comments
Aviva Hope Rutkin
September 12, 2013
Report Suggests Nearly Half of U.S. Jobs Are Vulnerable to Computerization
Oxford researchers say that 45 percent of America’s occupations will be automated within the next 20 years.
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Rapid advances in technology have long represented a serious potential threat to many jobs ordinarily performed by people.
A recent report (which is not online, but summarized here) from the Oxford Martin School’s Programme on the Impacts of Future Technology attempts to quantify the extent of that threat. It concludes that 45 percent of American jobs are at high risk of being taken by computers within the next two decades.
The authors believe this takeover will happen in two stages. First, computers will start replacing people in especially vulnerable fields like transportation/logistics, production labor, and administrative support. Jobs in services, sales, and construction may also be lost in this first stage. Then, the rate of replacement will slow down due to bottlenecks in harder-to-automate fields such engineering. This “technological plateau” will be followed by a second wave of computerization, dependent upon the development of good artificial intelligence. This could next put jobs in management, science and engineering, and the arts at risk.
The authors note that the rate of computerization depends on several other factors, including regulation of new technology and access to cheap labor.
These results were calculated with a common statistical modeling method. More than 700 jobs on O*Net, an online career network, were considered, as well as the skills and education required for each. These features were weighted according to how automatable they were, and according to the engineering obstacles currently preventing computerization.
“Our findings thus imply that as technology races ahead, low-skill workers will reallocate to tasks that are non-susceptible to computerization—i.e., tasks that required creative and social intelligence,” the authors write. “For workers to win the race, however, they will have to acquire creative and social skills.”
You're conflating Japan's demographic problems with automation. They are not related. I pointed out that Japan is the most automated country in the world, by far, and still has a very low unemployment. The rise of industrial robots in Japan in the 1980's did not lead to massive unemployment, au contraire, it was a highly prosperous time for that country. Now they do have some significant economic and demographic problems, but they don't derive at all from their use of robots.
yet, an another thread just showed how robots will replaced health and aged care workers in japan, their fastest growing jobs sector...
the rise of robots in japan in the 1980's did lead to massive job losses in countries around the world tho, starting in the car industry, and continuing to this day, when you look at the service sector, the new job market, web design is great, but most of the jobs are burger flippers and barristos, jobs that will easily become automated, apart from the fact they are low paid, short term, mostly casaul jobs to start with...
someone born today will enter a job market vastly diiferent from today, where web design will most likely be done yourself using an app...
already Australian mining companies are tyring to automate mines (mining and transport of ore) from a central office 100's k from the mine site, high street shops will probally just employ a security guard against shop lifters. like my local supermarket, tho they are employing lots of people to stack shelves, a job easily automated...
it is a coming problem, we can trust to the ecconomists that jobs paying a livable wage will appear, or society can examine what it actually means to work (and not work)
edit# it just occured to me when I started in business I used to go into the bank once or twice aweek, now I don't even use the ATM, and have not even gone to see a person at the bank for several years...
If we don't have as strong job creating right now as we had in the 50's and 60's it's because we don't have as much economic growth, plain and simple. And that's for a number of reasons, including a lower pace of productivity growth (the late 1990's, with strong productivity growth, saw very low unemployment even as manufacturing jobs were lost by the millions).
There's nothing "technical" about current unemployment, that is, it's nothing that won't be solved when the economy gains momentum (and it already is being solved, albeit slower than we would hope).
Aelf, is the point of that graph to show that manufacturing sector job losses aren't balanced out by service sector job gains over the past decade? I.e. we've lost more manufacturing jobs than the service sector could absorb? Because if so, it doesn't really help. The y-axis is percentage growth/loss, not absolute. So a 1% growth in service sector jobs translates to far more actual jobs than a 1% loss in manufacturing jobs. According to this link, 81% of jobs are in services, vs 9% in manufacturing, meaning that a 9% loss in manufacturing jobs is counterbalanced by just a 1% growth in service sector jobs.
I was actually using real wage growth in the service industries as a proxy for both how well they can absorb surplus labour from manufacturing and what kind of living they can afford new entrants. My point is I believe the overwhelming shift in the proportion of service jobs vs manufacturing jobs began in the 1950s and 60s. I don't think this and the associated trends have continued at that pace since then. I believe it is not at all a stretch to say that skilled or semi-skilled labour exiting the manufacturing industries and entering the service industries as low or semi-skilled labour have as good a transition today as they did during the 1950s and 60s. The likelihood is they will experience more underemployment and a greater decline in living standards.
The problem with assuming that technological change will spur economic growth that will in turn keep unemployment low and living standards up is that there are many other factors that affect these trends. As the past decade or so (and Mise's graphs) seems to show, growth trends may haveirrevocably changed, and productivity growth alone may not be able to fuel enough economic growth and create good enough jobs to keep living standards on the rise in an economy. Perhaps we could still say that global standards of living will continue to rise sharply due to economic growth in emerging markets, but this may not be the experience in particular countries' economies.
Another reason why I'm not convinced that the productivity growth purchasing power growth mechanism is watertight is that, properly speaking, productivity growth measures growth in output and not income growth. Although, they tend to be correlated, the latter does not necessarily follow the former. The breakdown of the mechanism quite evident in journalism, where social media has undoubtedly resulted in an increase in output per worker but has not been accompanied by growth in the income and purchasing power of those in the industry. I think as we can expect leaner times in the future, this will increasingly be the norm in other industries as well.
You have self-described as Marxist, or at least that was my long-held impression. Being a Marxist necessarily means holding fringe (and discredited and stupid) economic view. If those are not your views, state so and I won't make the mistake again.
As for The Road to Serfdom... I already clarified I don't follow Austrian economics, if you want to call me a "free market fundamentalist" than that's the term you use for standard mainstream economics, which I broadly adhere to. Several of Hayek's conclusions in that book were wrong, even if they made sense when he wrote it in 1940. While he was very much correct in arguing that fascism and socialism shared a common anti-liberal root, and that a planned economy will necessarily lead to authoritarianism (because in the absence of market mechanisms to incentivize people to work well and hard you're only left with coercion), he was wrong in arguing that economic interventionism in general constitutes a step in that road. See, people who don't belong to cults have no problem pointing out mistakes and failed predictions even in the authors they like (and I do like Hayek, even if I don't follow his economic school).
Oh, so adherents of "mainstream economics" (which is much more varied than you are implying here and as you indicated in an earlier post) are allowed some degree of nuance but Marxists are not?
I think that Marx has more insights to offer on microeconomics than macroeconomics. This means that while I believe Capital contains very relevant critique on production, I'm not in a hurry to make the same macroeconomic prescriptions that Marxist-Leninists and other classical Marxists typically make.
It's also worth pointing out that Hayek's claims about the lack of market mechanisms was and remains purely speculative, because the Soviet economy was market-based. The "planned economy" was a myth, and not a particularly convincing one, enduring only because it was endlessly repeated by both Communists and anti-Communists. Hayek may be right, for all we know, but there's no empirical basis for his argument.
This kind of off-topic but I found it amusing. As this site proves, you can make a graph correspond to many things that have absolutely no relationship to a particular situation:
This kind of off-topic but I found it amusing. As this site proves, you can make a graph correspond to many things that have absolutely no relationship to a particular situation:
So what does CFC think? Should businesses be obligated to add jobs to the economy, or should that decision be left completely up to the business owner? For example, lets say there is a small town in which the majority of the residents are employed by Factory X. Now some awesome new technology comes out that would allow Factory X to completely automate all of its processes, requiring little to no human supervision. Should the owner of Factory X be allowed to lay off all his/her employees and automate, or should he/she be "forced" (for lack of a better word) to preserve the town's jobs?
I'm not aware of legal incentives, beyond tax code. It's basically a political issue.
Formerly employed people are generally unhappy voters, who will vote out incumbents, regardless of party affiliation.
Chronically unemployed people might turn to criminal organizations as a means to survive, which is another problem.
Idealistically, I agree that no company has a legal responsibility to create jobs, i.e. they don't have to expand their share of the economy by hiring more workers, but it is implied somewhat. But somewhere along the lines, the politicians are going to want to keep unemployment down, and the economy growing. I think it's more complicated than what Judge Judy peeves about. Pure Laissez-Faire Capitalism is a total fantasy, regardless. Political forces necessitate that more.
I'm not aware of legal incentives, beyond tax code. It's basically a political issue.
Formerly employed people are generally unhappy voters, who will vote out incumbents, regardless of party affiliation.
Chronically unemployed people might turn to criminal organizations as a means to survive, which is another problem.
Idealistically, I agree that no company has a legal responsibility to create jobs, i.e. they don't have to expand their share of the economy by hiring more workers, but it is implied somewhat. But somewhere along the lines, the politicians are going to want to keep unemployment down, and the economy growing. I think it's more complicated than what Judge Judy peeves about. Pure Laissez-Faire Capitalism is a total fantasy, regardless. Political forces necessitate that more.
See I am truly torn on the issue. As a soon-to-be business owner I don't want to be told how to run my business, but on the other hand where else are people supposed to go to make the money they need to survive if businesses are allowed to stop hiring people?
So I guess my current stance on the issue is that small businesses should be unregulated by the government while medium, large, and multinational businesses should be regulated.
It's also worth pointing out that Hayek's claims about the lack of market mechanisms was and remains purely speculative, because the Soviet economy was market-based. The "planned economy" was a myth, and not a particularly convincing one, enduring only because it was endlessly repeated by both Communists and anti-Communists. Hayek may be right, for all we know, but there's no empirical basis for his argument.
What is also important to Hayek's argument is the free entry of competition. The USSR was a market economy, albeit a rigidly monopolised one. Basically, to put in his terms: The Soviet economy was a highly inefficient business that just failed to get outcompeted because it actively prevented competitors from rising.
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purchasing power growth mechanism is watertight is that, properly speaking, productivity growth measures growth in output and not income growth. Although, they tend to be correlated, the latter does not necessarily follow the former. The breakdown of the mechanism quite evident in journalism, where social media has undoubtedly resulted in an increase in output per worker but 
