Beyond a Jobless Recovery: A heterodox perspective on 21st century economics

Since my last post here many months ago, I’ve put most of my effort on this topic the here into creating the content that is now in this Google Knol (which integrates some content from this blog as well):
“Beyond a Jobless Recovery: A heterodox perspective on 21st century economics”

This article explores the issue of a “Jobless Recovery” mainly from a heterodox economic perspective. It emphasizes the implications of ideas by Marshall Brain and others that improvements in robotics, automation, design, and voluntary social networks are fundamentally changing the structure of the economic landscape. It outlines towards the end four major alternatives to mainstream economic practice (a basic income, a gift economy, stronger local subsistence economies, and resource-based planning). These alternatives could be used in combination to address what, even as far back as 1964, has been described as a breaking “income-through-jobs link”. This link between jobs and income is breaking because of the declining value of most paid human labor relative to capital investments in automation and better design. Or, as is now the case, the value of paid human labor like at some newspapers or universities is also declining relative to the output of voluntary social networks such as for digital content production (like represented by this document). It is suggested that we will need to fundamentally reevaluate our economic theories and practices to adjust to these new realities emerging from exponential trends in technology and society.

Here is a direct link to the section on “Four long-term heterodox alternatives”.

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Why the Triple Revolution memorandum was ahead of its time

The Triple Revolution memorandum was a document sent to President Johnson in 1964. It focused on how wars was now too horrible to fight, civil rights were leading to broad social equity, and “cybernation” was leading to a need for less work.

These trends only seem to be coming to fruition now.

One may ask why the Triple Revolution memorandum was off in its predictions by several decades. There are a several possible interacting explanations:
* Amara’s law, suggest by Roy Amara and elaborated on by Ray Kurzweil in his Law of Accelerating Returns, suggests “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run”. So, while the people writing the memorandum saw the trends in automation, they did not realize that they were exponential, slow at the start, and the faster at the end.
* Increasing demand (up to a point). Demand for goods and services has increased in the USA. As Professor Juliet Schor points out in her 1993 book, “The Overworked American: The Unexpected Decline of Leisure”, even then, Americans could have been formally working two hour days to achieve a 1940s lifestyle, but instead they were working ten hour days to have more stuff (bigger houses, more cars, more electronics, and so on), both because they wanted it and, unlike in Europe, there were not taxes and regulations to shift wealth from individual pursuits to community pursuits (like support for arts or mass transit or a social safety net) to prevent a social trap related to conspicuous consumption. As suggested above, this trend may have finally run its course for many healthy people in the USA, perhaps even beyond diminishing returns, to the point of negative returns (like big houses with big laws create social distance that diminishes community). Suniya S. Luthar has written about this in “The Culture of Affluence: Psychological Costs of Material Wealth“.
* While the USA had a lot of material abundance in the 1960s and later, the rest of the world did not. Increased global growth has provided many export opportunities in the USA, although that growth trend for the USA has reached its end, given the USA is now importing a lot of stuff and otherwise offshoring jobs now that the global economy has reached parity in many areas. However, continued global growth up to current US levels of consumption will still increase demand for jobs for a time in other countries, until those countries as well hit a law of diminishing returns. Hans Rosling has “Gap Minder” projections for the rest of the world reaching current US levels of consumption in a few decades, and shows how many have already surpassed 1960s levels of US consumption.
* The USA has engaged in numerous wars abroad since the 1960s (the general Cold War with the USSR, and also wars in Vietnam, Iraq, Afghanistan, and also numerous smaller interventions), each of which have served to burn up US abundance (as well as abundance in the other countries). While the Triple Revolution memorandum suggested wars were getting too horrible to fight given nuclear weapons, it seems that countries have, so far, found ways to fight non-nuclear wars at a continuing low level of intensity enough to remove a lot of prosperity and create military jobs. How long that trend to contained wars continues is hard to predict; the Bulletin of Atomic Scientists still keeps up their Doomsday Clock, currently at five minutes to midnight, compared to 12 minutes to midnight when the memorandum was written.
* Incarceration in the United States has increased enormously, to rates far higher that any other industrialized nation, thus creating a lot of jobs and taxing many people off the unemployment roles (at a great social cost); some of this has been driven by the drug war; some is linked to increasing social dysfunction from economic inequality.
* Increasing mental health issues like depression and autism, and increasing physical health issues like obesity and diabetes and cancer, all possibly linked to poor nutrition, stress, lack of exercise, lack of sunlight and other factors in an industrialized USA (including industrial pollution), have meant many new jobs have been created in the health care field. So, for example, coal plants don’t just create jobs for coal miners, construction workers, and plant operators, they also create jobs for doctors treating the results of low-level mercury pollution poisoning people and from smog cutting down sunlight. Television not only creates jobs for media producers, but also for health care workers to treat obesity resulting from sedentary watching behavior (including not enough sunlight and vitamin D) or purchasing unhealthy products that are advertised.
* An aging Baby Boomer population in the USA has increased the need for other services.
* Unions and other groups (including some radical environmentalists) have fought against all forms of automation and other forms of advanced technology, rather than focusing on directing where the fruits of automation go or guiding what sorts of innovations are worked towards.
* The much slower pace of the civil rights movement to spread to other areas of society that expected.
* The movement of women into the work force increasing formal economic needs greatly as the volunteer sector of the economy diminished and other social dysfunctions (like teen pregnancies) increased given less time by individuals for community participation (essentially, women abandoned their unrecognized but essential social roles, but men did not take up the slack).
* Increased schooling expectations (for example jobs that once done by people without even a high school diploma like child care now may require a graduate degree as a qualification) have lead to an increased number of jobs in teaching as well as kept young people out of the labor market. Professor David Goodstein in his “The Big Crunch” essay suggests an exponential growth trend in academia also continued into the 1970s, but has ended now, leading to an oversupply of people with PhDs and other advanced degrees relative to the needs of academia. This has lead to some of the inflation of academic requirements for various jobs given the oversupply of people with degrees, which in turn has lead to even more schooling to get a degree, as a form of academic certification arms race.

Aspects of how all these negative activities can create jobs were parodied in a scene with the character Zorg breaking a glass in the movie The Fifth Element. However, to build an alternative to the world of Zorg built around the Parable of the Broken Window requires thinking differently about economics than mainstream Keynesian economics given all these other trends toward abundance (especially automation).

Taken together, these and other factors help explain why the Triple Revolution memorandum was ahead of its time in predicting the falling employment trend we only now in the table above, decades later than predicted. It has taken decades because many of the trends in the predictions have only recently accelerated in the past decade or two in an exponential way (like improved robotics and improved internet-mediated communications). And it is taking decades for the trends holding back the predictions (like increasing incarceration or increasing health problems) to play out (and many of these negative trends, from increased incarceration, increased pollution, lack of vitamin D, obesity, and so on, are now being actively addressed by society, and so presumably will not continue to grow much, although new issues may arise). So, the reasoning behind the Triple Revolution memorandum about structural unemployment such as reflected in a jobless recovery may now be more relevant that ever, even if some of its specific suggestions for social reform and infrastructure reform may now be out of date.

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University protests by students concerned for their economic future

Universities around the globe are having buildings occupied by students unhappy about their local situations and future job prospects. Related, here, here, here, here, here, here, here, and here.

Here is something trying to do a little to help prevent a possible violent disaster for all involved.

As a US Santa Cruz professor (G. William Domhoff) said years ago, in our society, only non-violent social movements have a chance of success, and non-violence is thus the only moral choice today from that and other reasons:
Social Movements and Strategic Nonviolence

With that said, here are some links to things about the origins of this crisis and possible non-violent solution in the context of education, here, here, here, here, here, here, here, here, here, here, and here.

A more direct rebuttal to some of the student rhetoric is here.

Other key writings:
* “The Kept University”
* “What Makes the Mainstream Media Mainstream
* “The Big Crunch
* “University Secrets

And here is a general link to an earlier post here on the economics of what is going on, posted here:
Why limited demand means joblessness (and what to do about it)

One key thing to think about is getting past the irony of people using the tools of abundance instead to create artificial scarcity — so, many people think about how to use biotech, computers, robots, new materials, atomic science, nanotech, and even bureaucracy or other social organizational forms to hurt people instead of help them. So, any students should please be careful that you don’t become part of that irony. :-( What could be more ironic that a military robot, to fight over scarcity when robots could produce abundance? What could be more ironic than a nuclear missile, when all that engineering expertise could have built space habitats and wind farms so we would not need to fight over land or oil?

There are many non-violent creative things one can do to get those messages out about how our society is changing. Starting with these sorts of ideas to make films not war.

But even simple things, like exploring why Vitamin D research (or on other nutritional issues) has so long not been prioritized by our medical establishment would provide an entry into thinking about what is wrong with our society and how to fix it.

As people have pointed out in other comments on that blog about the occupation, these are global issues, not local ones, even if we are seeing the problems locally. Here’s a question for any student, if you can’t peacefully win over most of your peers at the university to the cause, what hope is there to effect the larger society? And likewise, if you can win over most of your peers to thinking about a new vision of society, then you will bring hope both locally and globally. We need both an understanding of what went wrong as well as some ideas about how to fix it all, as well as people acting in productive ways to make those fixes. Just stopping things doesn’t get very far, because, as Iraq shows, it’s much easier to break a society than to rebuild it. Why not consider, as a first challenge, if you can peacefully get most people at your university aware of these sorts of specific historical issues as well as all the options (like a basic income, peer production, 3D printing, local agriculture, renewable energy, and so on, even abstract ideas like mutual security and intrinsic security) that are ways to envision moving forward positively in dealing with the phase change our society is going through?

One hopeful sci-fi book from 1982 on many of these themes is “Voyage From Yesteryear” by James P. Hogan. It may have even helped bring down the Berlin wall. :-)

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Can unions and strikes still make a difference?

Here is an article about how workers and strikes in a recession:
“Europe’s Strikers More Scarce in the Recession ”,8599,1914328,00.html

In the U.K., the Office for National Statistics says there were just 756,000 working days lost to strikes last year, way down from the million or so days lost in 2007. As of May, the figure stood at just 32,000 days for 2009. Even assuming an upsurge in the summer, that’s a long way from the kind of industrial mayhem Britain saw in 1979, when almost 30 million days were lost to strike action. It’s a simple case of reasoning, experts say. “When workers feel confident in their job security is when they are more likely to strike,” says Gregor Gall, a professor of industrial relations at the University of Hertfordshire.

In general, this is part of the ongoing downward spiral for labor that is just getting started. As automation increases, like through better robots or 3D printers, and as improved designs come along that take less effort to put together or last longer, there will be even less need for paid labor. So, the people who still have jobs will be afraid to strike or in other ways rock the boat. So, they will let themselves be exploited more and more just to keep food on the table. Because worker usually get fringe benefits, and because it takes money to hire and train workers, even as unemployment rises, it makes economic sense for companies (up to a point near collapse) to work the workers they have even harder, for less money, than it does to hire more workers, even at low wages. Increased worker suffering (including by worker’s families and communities) becomes just one more negative externality that business owners can pass on to society, socializing the costs of their business while privatizing the profits.

Possible counters to this trend include:
* government regulation of working conditions including hours (like in France);
* a basic income so that workers have a choice not to work (forcing employers to make jobs better to attract workers); and
* companies realizing that overworked workers produce products with lower quality or less innovation, and so voluntarily limiting hours and improving working conditions.

So, it would seem that strikes will be less and less likely in the future as a general trend, although it is possible that one big national or global strike might happen at some point when people realize that major positive social change is going to be now or never.

Any strike will be pointless in the long term unless it is about structural reform in our economy and society. Just striking to get slightly higher pay (or just to keep what one has) or to get slightly better benefits, which has been useful to many groups in the past, is not going to be very effective in the long term if these other trends continue towards decreasing the value of labor relative to automation and improved design.

What good is it to get more money and more benefits for fewer and fewer remaining workers while they wait for their own jobs to be lost to automation and improved design? Yet, this has been the strategy of most unions for many years. The failure of the US American automakers in Detroit shows how, in the long run, unions creating private welfare states within individual corporations does not work well anymore for union members or anyone else in society these days. The companies become less competitive relative to other companies that pay less and embrace automation and better design, and so they fail, taking all the union jobs with them.

We are possibly past the point where union actions related to single companies make much sense. If unions are to have any major role in the future, it may likely be as part of larger efforts to rethink the underlying basis of our economy and society, like by somehow being part of a national effort for a basic income, or comprehensive single-payer health care reform, or reforming education, or things like that.

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U.S. blue collar army chases few vacancies

According to this report, jobless recovery is disproportionately hurting people relying on blue collar jobs: “Research by Andrew Sum, a labor economist at Boston’s Northeastern University, shows that the ratio of unemployed persons to job openings has widened in America to 5.7 to 1 in August of this year from 1.2 to 1 in December of 2000. For construction workers the ratio is an eye-popping 22.1 to one, while for manufacturing it is 13 to 1. In December of 2000 these same ratios were 3.5 and 1.7 respectively. … Sum, using Department of Labor statistics, said the mismatch between labor supply and demand probably had not been this wide since the Great Depression of the 1930s.”

All this while the US public infrastructure decays. This is one more reason for a basic income. If more people felt confident in their free time, and had access to materials, they could make their own communities into better places with their time and energy, rather than risk falling into personal despair through frustration and inaction.

Even without a paying job, and with one’s personal economic world crashing around one, it is still possible to reach out and help others. As is quoted here: “You cannot always have happiness, but you can always give happiness. (Author Unknown)

It may not bring in cash income, but one can still bring in psychic income with blue collar skills by doing volunteer work, which many non-profits and other places desperately need. For those with time on their hands, and who know how to use their hands to build and fix things, here is a place to look for volunteer opportunities that at least will help one preserve one’s sense of making a caring contribution to the world.

From: “CARING: a sermon by The Reverend Diana Jordan Allende; Auburn Unitarian Universalist Fellowship“:
Here’s what Mayeroff says of caring as a way of life: “In the context of a person’s life, caring has a way ordering other values and activities around it. When this ordering is comprehensive, because of the inclusiveness of one’s carings, there is a basic stability in one’s life; one is ‘in-place’ in the world, instead of being out of place. Through caring for certain others, by serving them through caring, a person lives the meaning of his or her own life. In the sense in which a person can ever be said to be at home in the world, he or she is at home not through dominating, or explaining, or appreciating, but through caring and being cared for.”

Rather than sit around at home in front of the TV or even the internet, volunteerism at least gets somebody good with their hands out in the world doing positive things.

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Obama looking at all options for creating jobs

The AP has this article saying: “President Barack Obama is considering all options to create jobs, including another stimulus package, while trying to pull the economy out of a deep recession and deal with a record deficit, White House advisers said Sunday. … Unemployment stands at 9.8 percent, with more than 4 million jobs lost this year. The deficit has reached $1.4 trillion and the national debt $11.9 trillion.”

The USA now has approaching ten million unemployed people by official counts, and probably at least another ten million underemployed. Even the Wall Street Journal thinks this is significant: “And today real unemployment is at historic levels. The headline jobless figure tells only part of the story. When you add in the millions working part time because they can’t find a full-time job, and those who have simply given up looking, the unemployed and underemployed account for one in six workers.”

It is a good thing the government is looking at creating jobs through a “stimulus package”, compared to letting people starve (even as over a million US children are now homeless now). But it will not be enough unless it is on the order of a trillion dollars a year (20 million unemployed and underemployed times fifty thousand dollars a year per job). And with increasing automation and so on, one can expect this problem to just get worse, not better. Even devaluating the dollar might not help as much as one might think to create good jobs in manufacturing, given an oversupply of workers given rising productivity per worker and limited demand means a race to the bottom for wages (both locally and globally).

The question is, at what point will we get structural reform, like a basic income for all? At what point will people come to accept that business as usual is an illusion?

The deepest issue is that the US economy has essentially created no net new “good” jobs for decades. Sure, some good jobs have been created, but far more have been lost. By 1950s standards of “good”, think about jobs that are not too hazardous to physical or mental health, pay enough to raise a family on just one income while owning a house, and have health benefits and retirement benefits. Or, essentially, pay enough to be solidly middle class on one job. By those standards, there are very few “good jobs” in the USA. Granted, some of this is also about rising consumer expectations in the USA. But not all.

The US economy has been unable to create any net increase in good jobs for decades, and instead has been overall shedding “good jobs”, like through offshoring, through increased automation, and through better designs that are longer lasting or easier to produce. So, what is different about now that we should suddenly see lots of good jobs created?

Still, there are a few “good jobs” out there even now, since: As Layoffs Persist, Good Jobs Go Unfilled: “In a brutal job market, here’s a task that might sound easy: Fill jobs in nursing, engineering and energy research that pay $55,000 to $60,000, plus benefits. Yet even with 15 million people hunting for work, even with the unemployment rate nearing 10 percent, some employers can’t find enough qualified people for good-paying career jobs. … But as more jobs vanish for good, the gap between the unemployed and the requirements of today’s job openings is widening. Throughout the economy, an average of six people now compete for each job opening – the highest ratio on government records dating to 2000.”

But, it’s already been said that there is, say, a glut of PhDs in general, so more education in the USA may not really help all that much for everyone, even if it might help some specific individuals with the right aptitudes and interests who get exactly the right training. Part of the problem is also that, as in the above article, employers are less and less willing to invest in “on the job” training that might take many months to a year or longer; in our vastly competitive economy, nobody wants to invest in people who are harder to own than robots and other machinery. This will be another issue driving increased automation and increased joblessness — that spending money on technology may seem a more reliable investment for a firm than spending money on people who may change jobs. Thus, we may see more and more investment in machines that deskill complex tasks but less in people, creating a skill gap for the few jobs that remain. Still, as long as wages are low, and there is a lot of competition, and technology changes quickly, investing in one’s own education by taking on undischargeable student loan debt is itself pretty risky.

There are some employers who are exceptions, Drawing on the strength of people: “For the past 20 years stamper ITW Drawform, Zeeland, Mich., has been building a strong training program and a thriving corporate culture. The company’s commitment to training is apparent through its ability to retain quality employees and produce complicated deep-drawn stampings that many shops can’t. … The company has taken a complete opposite stance of many manufacturers that have adopted the attitude that they can’t afford to train their press operators because they will then leave for a higher-paying job. “By investing in training, we don’t usually lose people because they respect and understand what we do,” Meengs said. In 2002 the stamper invested in 4,000 hours of in-house training together with 8,000 hours of outside training. “Our employees are the future of the company. We encourage them to learn new skills by attending seminars and adult education courses, such as a basic machine shop class held at the local college. The more our operators know, the more valuable they become,” Meengs said.” Despite what many managers may believe, money is not the main motivator that keeps talent from leaving. A key way to retain good employees is to establish a corporate culture that internally drives them to do their best. Everyone is more productive, creative, and committed when they work in an environment that serves basic human needs. This is more than providing a clean and safe environment. Meengs recommends thinking in terms of a corporate culture that fosters individual recognition, praise, project ownership, challenges, opportunity, fair wages, and a part in the decision-making process.”

Now, that is the kind of initiative that should be rewarded by a stimulus package, if there was any fairness in the world. Perhaps money given to a stimulus package should have strings attached to it to only go to firms that are similar in outlook about training and corporate culture to ITW Drawform? It might help a lot, at least in the short term.

Still, even US$55,000 a year can be difficult to live on in an urban area or other place with a high real estate cost and other rising costs. People can and do manage it, but often with many sacrifices or help from parents or other relatives. That’s about the median family income in the USA (though it varies widely by state), and in round numbers about $4000 a month in take-home pay. But the median house in the US is still about US$170K, or approaching $1500 a month in mortgage interest plus taxes (varies), plus another $500 or so a month in upkeep, plus utilities of maybe $400 or so between heat, electric, and phone/internet. Add in the upkeep and gas for a car to go to work ($300 a month or more), and that leaves about $1300 a month to live on (food, clothes, toys, medical copayments, medicines, pets, presents, charities) even without a second car or travel to relatives. That’s a big stretch for a family with children, assuming nothing big ever goes wrong (like catastrophic illness or disability of a non-outside-employed non-insured spouse); it turns out most families are worse off, given typical insurance, when the spouse who does not work outside the home becomes ill or dies then when the “working” spouse is disabled or dies. So, $55K a year is still life on the edge for most US families.

Granted, one can rent a small apartment or buy a cheap trailer, walk to work (for the right job), eat rice and beans, buy second-hand clothes, and so on. It is possible. Some families living in areas with cheap rent and who are frugal and like to garden and be creative and gregarious may do quite well on $55K a year and build up savings. Maybe it is even healthier.

There just is a structural problem there relative to the expectations of many people in the USA — shaped in part by the media. And the more people who downsize to fit a sustainable reality in terms of current finances, the less need for jobs given less consumption. And this optimist ballpark analysis (like, no student loans) suggests US house prices will not rise much anytime soon (and may continue to slide, at least relative to inflation) simply because most US families are already stretched at current housing prices. A related historic graph of house prices divided by median family income .

Median means in the middle, some people are doing very much better than that, but many are doing much worse. This is basically what happened to cause a disappering middle class. Now it takes two “good jobs” in a family to live what is depicted in the media as a comfortable middle class life (nice house in a nice school district with money in the bank and a retirement nest egg and occasional travel and frivolity), but then you have twice the risk of illness or job loss of making family finances fall apart. And, the fact is that many of those “good jobs” are in places where housing is fairly expensive, precisely because it is bid up by two-income families with “good jobs”. For those two parent families who want to only have one main income, homeschooling is a good option, because it allows you to live in a place without what are called “good schools” and thus have cheaper rent.

Of course, rethinking what work means might be even better than creating “good jobs”.

Somewhat unrelated, but here are five reasons to stop saying “Good Job!” Now that parents can spend more time with their children (a good part of joblessness), many parents may finally have more time to read about the latest thinking on good parenting, accepting that sometimes what is latest is not always best.

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Vitamin D and a jobless recovery

There is increasing evidence that Vitamin D deficiency contributes to a variety of medical problems from mental illness, to cancer, to tooth decay, to susceptibility to influenza.

Apparently, according to John Cannell, MD, the US RDA for Vitamin D may be about ten times too low for most people. And with more people spending more time indoors at screens, driving more instead of walking and bicycling, and avoiding the sun from (increasingly controversial) advice from dermatologists, Vitamin D Deficiency Syndrome is becoming a global epidemic in industrialized societies (especially ones very far north or south). The darker your skin, and the further north or south of the equator you live, the greater chance you will be Vitamin D deficient. For example, consider, for October, National Breast Cancer Awareness Month in the USA this blog post by Curtis Duncan: Why Michelle Obama is More Likely to Die From Breast Cancer than Hilary Clinton

When someone in the USA loses their job, they often fairly quickly lose their health insurance too, even with COBRA. Taking vitamin D3 supplements (cheap) or getting enough sunlight (free) is no substitute for comprehensive medical care, but every little bit helps. It certainly seems a cost-effective investment in your health.

Another aspect of this is that if everyone got enough Vitamin D, then it is possible that global health care costs might drop significantly, which would of course mean less jobs in health care, thus making the jobless recovery situation worse. Should people then get cancer to do their part to remedy a jobless recovery? Of course not. We need other approaches, like a basic income, a transition back to a gift economy, more government spending on infrastructure and research and the arts, and/or increased local subsistence. Unfortunately, much of mainstream economic measurement is some variant of the “broken window fallacy” where everyone who gets cancer or schizophrenia is seen as contributing to the GDP. We need other ways of measuring genuine progress for encouraging people to get enough Vitamin D to make mainstream economic sense. Also, we need to somehow remedy the fact that in US society a wonder drug like Vitamin D is not promoted very much because it is not very profitable to do so, given sunlight is free. Thankfully, other countries are beginning to see the light.

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Shamus Cook: A Jobless Recovery

Shamus Cooke writes: “… Many workers are starting to realize they’ve been lied to about the recession ending; patience is wearing thin. … Therefore, unions and community organizations must also demand that a plan be worked out to address the debt issue; wars and bank bailouts must stop, and taxes for the super-wealthy must be raised to pre-Reagan levels. …”

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U.S. Suffering Permanent Destruction of Jobs

Someone on another blog mentions three economists saying that many US jobs are not coming back. From one comment someone made there: “Most citizens are not aware that the jobs aren’t ever coming back. I suspect when it becomes apparent that this is so, there is going to a very angry populace.”

As Mr. Fred Rogers sings in “What Do You Do With The Mad That You Feel?”, it’s OK to be angry. What matters is what you do with that anger. And as he says, when you’re mad, you don’t have to hurt yourself or anybody else.

What should we do with the mad that we feel about Congress and mainstream economists doing little about the permanent destruction of US jobs?

Well, we can ask Congress for a basic income. We can increase our local subsistence production. We can participate more in the gift economy. We can learn to live more simply. We can paint, draw, dance, sculpt, write, and sing about how we feel. We can spend more time with friends, family, and neighbors. We can take time to laugh together.

We can try to learn all we can about alternative visions of economics, society, and technology, even ones that have moved beyond work entirely.

Those are some of the things we can do with the mad that we feel.

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Why limited demand means joblessness (and what to do about it)

Summary: Mainstream economics assumes demand for almost anything is infinite. Thus, the theory goes, when human workers get replaced by robots, or better design means less human labor is needed, then there will soon be new jobs making new things; the only issue might be retraining. But, if demand is limited (because the best things in life are free or cheap, and everything you own also owns you), then when people get laid off, the jobs are gone for good, because there is nothing more that anybody wants then is already produced. And people having more time outside of compulsory work would be a good thing, if we more evenly shared the wealth from automation and better design, but we don’t — yet.

The best things in life are free or cheap. Everything you own, also owns you. There is a law of diminishing returns on more of the same. Much of human happiness comes from time spent with other people, like family, friends, neighbors, colleagues, or even pen pals. Another source of human happiness comes from experiencing nature or contemplating the infinite. Those things generally don’t require that much “stuff” to do, even as there are some things people want to do that do currently take a lot of resources (like space travel). Our best spiritual traditions tell us that healthy people in a healthy communities don’t need that much to be happy. Mahatma Gandhi, along with many other people, showed us another way was possible to have a good life rather than endless consumption of material items.

Given all that, it might seem surprising that mainstream economics assumes demand for most things is essentially infinite. Thus, the theory goes, when human workers get replaced by robots, or when better design means less work is needed to make things, or when voluntary simplicity or an ecological ethic leads people to buy less stuff of a certain sort, even if there are layoffs, the theory is that there will soon be new jobs making new things to satisfy that unlimited demand; the only issue might be retraining of workers. But, if demand for most things is limited for healthy people in healthy communities, then when people get laid off due to increasing efficiency, it seem more likely that the jobs are gone for good. It is more than the unemployed do not have money to buy things, as bad as that may be for a consumer-driven economy. It is also that even if the unemployed wanted to buy things, the workers who still have jobs could make all anybody could possibly want already, given they are augmented by robots, computer networks, and other forms of automation and access to better designs that may be easier to produce or last longer.

And once people are laid off, they compete with other laid off workers for jobs, so wages plummet, and working conditions decline. So, the few people still with jobs get less happy, and those who don’t have jobs will starve (unless they live off of some sort of needs-based charity or off of relatives that still have jobs or pensions or monetary wealth).

So, the robots and the better design that should make life better for everyone instead makes life worse for most people — because our economic system was designed around an assumption of scarcity, not an assumption of abundance. So, there is a strong moral imperative in our current economic system to connect the right to consume with the amount of labor a person does, in order to motivate people to work and produce even more abundance; thus there is a widespread sentiment that those who do not work should not eat (or, at least, they should not eat well) — even though science tells us reward is actually often no motivator, and competition is problematical. Of course, there are exceptions — those who are disabled in some formal way are considered worthy of charity, those who are in schools or prisons are often given a free pass from work for a time they are being schooled or punished/rehabilitated; and those who are involved in killing people and breaking things in war zones are also deemed as productive and so worthy of being fed.

This issue of a breakdown between labor and productive value has been known about for a long time. It was mentioned in a letter to President Johnson in 1964 called the Triple Revolution memorandum. This website could be seen as an attempt to update those ideas for the 21st century.

From the text of that memorandum from almost a half-century ago, perhaps a little ahead of its time, but none-the-less more and more true as the years go by:

The Nature of the Cybernation Revolution

Cybernation is manifesting the characteristics of a revolution in production. These include the development of radically different techniques and the subsequent appearance of novel principles of the organization of production; a basic reordering of man’s relationship to his environment; and a dramatic increase in total available and potential energy.

The major difference between the agricultural, industrial and cybernation revolutions is the speed at which they developed. The agricultural revolution began several thousand years ago in the Middle East. Centuries passed in the shift from a subsistence base of hunting and food-gathering to settled agriculture.

In contrast, it has been less than 200 years since the emergence of the industrial revolution, and direct and accurate knowledge of the new productive techniques has reached most of mankind This swift dissemination of information is generally held to be the main factor leading to widespread industrialization.

While the major aspects of the cybernation revolution are for the moment restricted to the U.S., its effects are observable almost at once throughout the industrial world and large parts of the non-industrial world. Observation is rapidly followed by analysis and criticism. The problems posed by the cybernation revolution are part of a new era in the history of all mankind but they are first being faced by the people of the U.S. The way Americans cope with cybernation will influence the course of this phenomenon everywhere. This country is the stage on which the machines-and-man drama will first be played for the world to witness.

The fundamental problem posed by the cybernation revolution in the U.S. is that it invalidates the general mechanism so far employed to undergird people’s rights as consumers. Up to this time economic resources have been distributed on the basis of contributions to production, with machines and men competing for employment on somewhat equal terms. In the developing cybernated system, potentially unlimited output can be achieved by systems of machines which will require little cooperation from human beings. As machines take over production from men, they absorb an increasing proportion of resources while the men who are displaced become dependent on minimal and unrelated government measures — unemployment insurance, social security, welfare payments. These measures are less and less able to disguise a historic paradox: That a substantial proportion of the population is subsisting on minimal incomes, often below the poverty line, at a time when sufficient productive potential is available to supply the needs of everyone in the U.S.

The existence of this paradox is denied or ignored by conventional economic analysis. The general economic approach argues that potential demand, which if filled would raise the number of jobs and provide incomes to those holding them, is underestimated. Most contemporary economic analysis states that all of the available labor force and industrial capacity is required to meet the needs of consumers and industry and to provide adequate public services: Schools, parks, roads, homes, decent cities, and clean water and air. It is further argued that demand could be increased, by a variety of standard techniques, to any desired extent by providing money and machines to improve the conditions of the billions of impoverished people elsewhere in the world, who need food and shelter, clothes and machinery and everything else the industrial nations take for granted.

There is no question that cybernation does increase the potential for the provision of funds to neglected public sectors. Nor is there any question that cybernation would make possible the abolition of poverty at home and abroad. But the industrial system does not possess any adequate mechanisms to permit these potentials to become realities. The industrial system was designed to produce an ever-increasing quantity of goods as efficiently as possible, and it was assumed that the distribution of the power to purchase these goods would occur almost automatically. The continuance of the income-through-jobs link as the only major mechanism for distributing effective demand — for granting the right to consume — now acts as the main brake on the almost unlimited capacity of a cybernated productive system.

Recent administrations have proposed measures aimed at achieving a better distribution of resources, and at reducing unemployment and underemployment. A few of these proposals have been enacted. More often they have failed to secure congressional support. In every case, many members of Congress have criticized the proposed measures as departing from traditional principles for the allocation of resources and the encouragement of production. Abetted by budget-balancing economists and interest groups they have argued for the maintenance of an economic machine based on ideas of scarcity to deal with the facts of abundance produced by cybernation. This time-consuming criticism has slowed the workings of Congress and has thrown out of focus for that body the inter-related effects of the triple revolution.

An adequate distribution of the potential abundance of goods and services will be achieved only when it is understood that the major economic problem is not how to increase production but how to distribute the abundance that is the great potential of cybernation. There is an urgent need for a fundamental change in the mechanisms employed to insure consumer rights.

Marshall Brain talks about similar ideas in his online fiction called Manna.
Jacque Fresco and Roxanne Meadows talk about related ideas in the Venus Project. Buckminster Fuller talked about related ideas in his Comprehensive Anticipatory Design Science. And many others have commented on related issues.

This website will explore the causes of joblessness in a modern industrial economy with ever increasing automation and better design. It will also look at new ways to try to solve the issue of the breaking link between having a job and having a right to consume the fruits of our shared commons of technology and biosphere.

Here is a list of some ways to deal with increasing joblessness, even if our economy recovers for those who still have jobs or money, which will be explored in more depth over time. This list is intended to be comprehensive, not prescriptive, as some of the items here are socially harmful even if they create jobs.

  • temporary measures like unemployment insurance and retraining funds, and when those fail, letting people live with relatives who still have jobs or be homeless (the USA now has one million homeless schoolchildren, an amount that has doubled in the last two years);
  • government public works like in the 1930s (infrastructure, arts, research, medicine, etc.);
  • government subsidies to the private sector for new job creation (for example, a direct wage subsidy for new hires or a tax credit for new jobs created);
  • an adoption of “Buddhist Economics” social policy as suggested by E.F. Schumacher (this would be where full employment of everyone who needs a job with a job suited to their talents, interests, and personal growth is a stated societal goal, and other economic goals are subordinate to it; countries with more centrally planned economies like the old USSR had aspects of this as a stated goal, as a right to a job, but may have lacked other aspects of Schumacher’s idea about the quality of the jobs or other values);
  • a “basic income” for everyone, essentially Social Security and Medicaid for all with no means testing;
  • improved local subsistence like with 3D printing and organic gardening;
  • a p2p gift economy (like Wikipedia and Debian GNU/Linux);
  • a shorter work week (like tried in France);
  • mandatory retirement at earlier ages (this would probably need to be combined with some form of retirement package so the retiree could survive);
  • rethinking work to be more fun so it is done as play;
  • alternative currencies, Local Exchange Trading Systems, or other forms of exchange like barter;
  • more formal rationing not necessarily connected to money (like the rationing of food in the UK during WWII or in North Korea more recently, to cite what are generally regarded as good and bad examples of rationing, where UK citizens became healthier and North Korean citizens starved);
  • frugality along the lines of “Use it Up, Wear it Out, Make it Do, or Do Without!“;
  • the opening of new frontiers (creates jobs dealing with new resources and new processes, whether they are newly discovered vacant lands, new seasteads in the ocean, new habitats in outer space, or new frontiers in cyberspace, nanotech, psychological innerspace, spirituality, or something else);
  • lowering the minimum wage to encourage employment (a minimum wage would no longer be needed to assure a living wage if there was a basic income that already supplied a guaranteed minimum income, and so any minimum wage laws might be removed entirely, possibly along with some other employment protections like in the USA the Family and Medical Leave Act of 1993, affirmative action laws, and/or the Occupational Safety and Health Act, that would no longer be as important if people had more choices through a basic income, including the choice not to work or to start their own business, and so had more power to negotiate good terms or walk away from bad ones; without a basic income, reducing or removing the minimum wage may just lead to a race to the bottom in wages and working conditions as workers fight over fewer and fewer remaining jobs if the alternative economic explanations like by Marshall Brain are correct)
  • introducing social benefits like health insurance in countries where they are otherwise provided by as fringe benefits of employment (so there will not be an extra economic incentive to get more out of fewer workers given otherwise fixed fringe benefits cost per employee, and thus the extra management costs of more employees working less hours will more easily be outweighed by the increased productivity of workers who have more leisure time; in general, countries in Western Europe have taken more of this approach as part of their choice of welfare state model than in the USA where social benefits are more needs based)
  • migration to an area with jobs (this can be within a country or even to another country; for example, illegal immigration of Mexicans to the USA or “guest worker” programs like in Germany for people from Turkey and other countries have often provided employment for individuals born in smaller economies; someday emigration to ocean seasteads or space habitats may even be possible in search of employment, just like many people left Europe to move to the Americas and Australia in search of work);
  • increasing the money supply in various ways through banks (in theory, banks with more money will lend it out to create more economic activity, subject to long term problems related to debt bubbles, although in practice banks may just hoard money for perceived future security);
  • increasing bankruptcy or other renegotiation of debts (individuals may see bankruptcy as a chance to start over with borrowing and spending; lenient bankruptcy laws take away some of the fears about borrowing money by borrowers which promotes purchases and new businesses; bankruptcies serve also as part of a transfer of money from those who have it and have saved it to those who spend it; a Jubilee is a year of general forgiveness of debts that could help reset a stalled economy with an excessive rich/poor divide; aspects of the US current recovery plan and bank bailouts connect to this, either by giving money to banks to cover bad loans and sometimes by asking banks to renegotiate old debts like mortgages; hyperinflation can have a similar effect by making old debts easier to pay);
  • accommodating the homeless in tent cities or with other makeshift housing (cities in good weather areas can house homeless people outdoors all year long; this becomes more problematical in cold weather areas where the homeless freeze to death unless kept warm; special technologies like the paraSITE, a cheap inflatable shelter for the homeless, can help with that; such areas can then become engines for job creation for police and social workers);
  • increasing advertising to entice people into more debt (one cause of the current economic crisis as the debt bubble burst);
  • intentionally producing shoddy merchandise or things with planned obsolescence, perhaps encouraged by promoting faddism in the culture;
  • more prisons and even tougher laws on common activities (employs guards and keeps people out of the labor pool);
  • more compulsory schooling and otherwise raising academic degree requirements for jobs (employs guards/teachers and keeps people out of the labor pool, while suppressing true education);
  • more war (employs guards/soldiers, blows up and wastes abundance, and kills or disables workers to keep them out of the labor pool);
  • internment and genocide of those deemed unpersons or non-persons (similar to war, genocide against a minority employs guards/soldiers, kills or disables workers to keep them out of the labor pool, and it also creates a spoils of conquest that can be used to reward soldiers and other workers with land and goods; the genocide against the Native Americans, the genocide against the Jews during WWII, and the internment of Japanese-American US citizens during WWII are all examples of this process; all had employment benefits to the rest of the country as unpersons needed to be guarded or otherwise processed and killed, and those deemed unpersons are also then not part of official unemployment statistics; Marshall Brain also develops a theme related to this in Manna, with the unemployed interned in Terrafoam dorms and speculating about being executed);
  • more bureaucracy as well as more excessive regulation (employs guards/bureaucrats, creates endless paperwork and make-work between bureaucrats that wastes abundance; the US health insurance industry is one example here, with one of every three health care dollars being wasted, but creating a lot of jobs in the process);
  • reducing the informal volunteer sector (many things that can be done by volunteers, including raising young children, caring for the sick or dying, or engaging in civic duties, would take a lot more time if done formally as part of a for-profit enterprise; when formalized, these volunteer tasks may also be done at a lower quality of care which creates jobs related to other spawned dysfunctions, like more psychologists to deal with increased child unhappiness; this is one reason the well-meant movement of women into the workforce may actually have been a net negative as far as societal well being, even ignoring the general decrease in women’s happiness as women transitioned from hard-working volunteer roles with a lot of autonomy to paid labor in authoritarian settings and our society fell into what Harvard Law Professor Elizabeth Warren calls “The Two Income Trap” — ideally, for every woman into the formal workforce, a man would have come out and gone into the informal volunteer workforce including child-care and unpaid civic responsibilities like watching streets to keep them safe, but that did not happen, and thus the net result may have been more total paid work that needed to be done in society, and thus more jobs);
  • increasing competition in a society (as Alfie Kohn and others have pointed out, direct competition in a society is overall a reducer of abundance; while there is a lot of value in a diversity of services and products, once people agree on the value of a service or product, cooperation by people in producing the good or service is almost always more efficient than directly competing with each other, because competition creates wasted duplicate efforts, incompatible standards, confusion among potential consumers, excessive advertising, and even direct sabotage — all of which create more work for everyone though; while it may make sense to have a variety of, say, cameras, whether the groups producing those cameras cooperate or compete in discussing new innovations is the issue; the free software movement, with groups working on different software products but sharing code and ideas under free licenses shows an alternative to commercial product groups working in secrecy and isolation and defending their finished proprietary products with patents and copyrights from those who would copy them or improve them independently; Law Professor James Boyle talks about aspects of this in his free book “The Public Domain“);
  • increased confusion in society (historically, the story of the Tower of Babel relates to this, with a unified cooperative humanity creating a huge tower to the heavens until humanity is scattered across the earth with a confusion of languages leading to misunderstanding and fighting; a current example related to confusion is how commercial spam had damaged the ability of people to cooperate through email, newsgroups, and other online services, but spam still creates many jobs related to filtering email; computer viruses have a similar effect in creating many jobs and destroying much abundance or otherwise decreasing productivity through creating confused computer systems; another aspect of confusion is creating new for-profit products like Vioxx that may be no better than other solutions (or even worse) but using enough advertising dollars to confuse everyone the new products are needed as opposed to cheaper or safer existing solutions; Caltech Professor David Goodstein talks in his “The Big Crunch” essay how scientific integrity can break down under increased competition for funds — but ultimately, lack of integrity creates more jobs dealing with the mess)
  • increased disability and ill health from pollution, advertising, harmful products, or plague (creates jobs for medical workers, and keeps disabled people out of the labor pool; increasing obesity, diabetes, cancer, and autism connected to something like nutritional deficiencies from processed food or lack of outdoor activity in the sun getting vitamin D may contribute to this unintentionally, but whether this gets researched or talked about in depth is intentional; in general the time of the Black Plague was a huge time of opportunity for the survivors);
  • increasing escapism, whether mild and adaptive like watching a bit more funny media or exercising more, or more serious and dysfunctional like alcoholism, drug addiction, internet addiction, or other problems (may keep the individual out of the work force and create jobs tending to them)
  • increasing suicide rates by the unemployed or others affected by societal stress (individuals who have completed suicide but were unemployed are no longer in the official statistics; dead individuals who had jobs now have created an available job, or suicides who also in the process murder others with jobs will increase available jobs by the number of murders; some suicides are forms of insurance fraud; increases employment for police forensics teams and insurance adjustors, as well as social workers and ministers to deal with grieving families and grieving communities; botched suicides may leave someone paralyzed and thus create jobs tending to the disabled person for decades; increases the need for suicide prevention counselors to help suicidal people see other alternatives and to rebuild healthy roots that keep suicidal individuals growing and helping others as they move through what Thomas Moore calls “Dark Nights of the Soul” as times calling for self-renewal and transformation; as an indirect form of suicide, evolutionary psychologists and biologists suggest that increasing heart attacks or strokes in times of stress may be one way that older members of the species unconsciously make way for younger family members in times of perceived resource scarcity, despite the lost wisdom and lost stories);
  • more abortion or birth control (temporarily employs medical staff even if it may reduce future medical jobs caring for children, reduces current costs of child care for unemployed households, and kills or otherwise prevents the birth of potential workers to keep them out of the future labor pool, thus reducing future abundance by having less people around to make things as Julian Simon suggests in “The Ultimate Resource“; sadly, in general, abortions go up in difficult economic times; in Marshall Brain’s Manna story, contraceptives were introduced into the water supply of the unemployed);
  • an aging population resulting directly from small-family policies or even indirectly from anti-family aspects of other social policies (creates jobs for medical workers, social workers, and other assistants to fill roles previously filled informally by children; most industrialized countries are facing aging populations as an indirect consequence of aspects of those societies; social policies in relation to directly discouraging or encouraging large families come into play with a dialog between those who fear overpopulation and resource constraints like is the basis of China’s one-child policy versus those who believe that people can reduce their ecological footprint voluntary or through better technology and that people can expand long-term resource availability through seasteading or space habitats or other means); and
  • increased crime including theft, murder, fraud, smuggling, arson, kidnapping, and tax evasion (individuals sometimes turn to crime as a last resort to feed their families, or support an addiction emerging out of stress, or get back at perceived injustices; eventually the individual usually is either killed during a crime or caught and arrested, which brings them out of the official unemployment figures and creates jobs for police and prison guards; murdered individuals or traumatized victims may also create more jobs dealing with the aftermath as well as remove other individuals from being able to work)
  • social unrest including luddism, machine breaking, vandalism, and rioting (employs guards, police, lawyers, judges, social workers, and others and keeps convicted troublemakers out of the labor pool, while destroying abundance).

Likely we will see a mix of all those in the future, and in fact, a mix of all those is what we have now. The last options of homelessness, advertising, faddism, schooling, prison, war, genocide, bureaucracy, formalization, ill-health, suicide, abortion, aging, crime, and rioting are not recommended, even as our society currently relies on them heavily to destroy abundance and create guarding jobs. Jane Jacobs has called some of these sorts of things “transactions of decline”. It is important to distinguish between creating jobs of various sorts and the overall affect on societal happiness (see “The Broken Window Fallacy“). That’s why, even though all these things increase the GDP, it’s important to have other measures of societal health like a Genuine Progress Indicator.

For example, to elaborate on “The Parable of the Broken Window”, consider a riot about unemployment and hunger where rioters break windows and are arrested for it. Normally, our society might not do anything to create jobs or deal with hunger directly, but faced with this obvious problem, our society needs to act. First, the rioters are taken off the unemployment roles, because they are now prisoners. This reduces official unemployment. Beyond repairing the broken window, all sorts of jobs have been created here, many funded by fiat dollars that now can be justified to be taxed, printed, or borrowed — for police on overtime to respond to the riot, for bureaucrats to institute new security checks, for lawyers and judges to prosecute, defend, and judge the rioters, for prison construction to house the rioters, for guards to guard the rioters, for social workers and psychologists to talk to the imprisoned rioters as well as the ones they harmed, for the media to report on all this, and so on. The GDP soars, and official unemployment goes down a lot. Everyone might have been happier with more free time resulting from abundance that they could spend being good neighbors and good parents given society really did have the resources to provide incomes and food to all these people (even the prisoners now get regular meals), but the only way to make the system work according to its current mythological rules is to justify the spending based on the management of scarcity and violence along the lines of Keynesian economics.

This web site will go into the details of all this over time. That list is defining the landscape of a jobless recovery, showing connections between things that don’t usually seem connected. Like for example, why President Obama just suggested the school year should be longer while our best educators say compulsory school as we know it should disappear entirely.

The important thing to remember is that joblessness is not necessarily a bad thing. It means people have more time for family, friends, hobbies, and volunteerism. What is bad about formal unemployment is mainly not having a right to draw from the fruits of our technosphere and biosphere; otherwise, given a basic income, with the internet, there are endless ways to connect directly to other people to do worthwhile projects, and raising children well is something that by itself can absorb about as much energy as the community can put in to that.

As a society, we need to think hard about how to move beyond our current conceptions of jobs and work, perhaps along the lines of that memorandum from 1964. This rethinking has even been started in various ways by some of those of mainstream faiths.

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