Let's Not Forget: A Stronger Economy Will Also Destroy Jobs, but It’s Necessary; Better Jobs are Created

[SirLinksALot]

SOURCE: REASON

URL: http://reason.com/archives/2017/01/02/a-stronger-economy-will-also-destroy-job

by: Steve Chapman


In South Africa, people who speak Afrikaans use the word "robot" to mean the same thing it means in English. But it is also the word for "traffic light." Why? Before automated signals, motorists on busy streets were directed by police officers standing on platforms. Those cops were automated out of a job.

This bit of trivia comes from the dazzling new book Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World, by University of Illinois at Chicago economist and historian Deirdre McCloskey. She points out that automation and robots are nothing new, that they are crucial to raising living standards and that the jobs they destroy are always replaced by better ones.

Today, cars are built partly by robots, which reduce the need for human workers. Notes McCloskey, "Compared with horses, cars themselves are 'robots.' Yet the advent of cars did not produce mass unemployment because of insufficient demand for the output of blacksmiths and horse traders."

Cars had many beneficial effects—expanding the choices and improving the comfort of humans, who once had to rely on other types of transportation. The spread of the horseless carriage also created jobs for traffic cops, at least for a while. Maybe some of them later went to work in factories making traffic lights.

In the near future, Republicans plan to implement policies to unleash economic growth that allegedly has been hobbled by Barack Obama. They believe a simpler tax code, lower tax rates, fewer regulations, stern immigration enforcement and the repeal of Obamacare will lift the economy to dizzying heights. In the ensuing boom, Donald Trump would have us believe, unemployed coal miners, factory workers and other blue-collar Americans will find themselves in great demand.

They shouldn't get their hopes too high. To raise economic growth, not to mention wages, you have to make workers more productive. You don't make employees more productive by forcing them to work harder or demanding that they be smarter. You do it by providing them with advanced machinery, which lets each employee produce more in less time.

When you do that, though, the immediate effect is to destroy jobs, not create them. This process raises fears, illustrated by the late business consultant Warren Bennis' droll prediction. "The factory of the future," he said, "will only have two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment."

But pessimistic forecasts have been around a long time and have never come true. The process of change eliminates positions in one sector but creates them in others. In 1950, 20 million Americans lived on more than 5 million farms. Today, we have 2.1 million farms with just 3.2 million people.

Yet U.S. farms feed far more people than they did before. And millions of Americans whose parents or grandparents toiled in the fields now work at other jobs that didn't exist back then, making more money than their ancestors could have dreamed of.

Computers have had a similar effect on secretarial jobs, eliminating more than 3 million of them since 2001. But who would trade their laptops and smartphones in order to put people back to work typing, filing and answering phones?

American manufacturing has produced more and more with fewer and fewer workers. Since 2001, the number of manufacturing jobs has fallen by nearly one-third, while total output has risen by more than a quarter.

Conservative policymakers celebrate the vigorous growth of the Reagan years, which they intend to replicate. What they don't mention is that in the 1980s, manufacturing employment fell by 7 percent, and workers with no more than a high-school education suffered a decline in real earnings—even as those with more education saw their pay increase.

The simple truth is that faster economic growth means more rapid change in the workplace, rendering old jobs and skills obsolete. For most people, over the long term, this process is clearly beneficial, but a significant number suffer. The answer is not to stop progress but to facilitate the movement of the displaced into new occupations or places where jobs abound.

The next administration may or may not succeed in speeding up economic growth or restoring jobs in old industries. But it can't succeed in both. To pretend otherwise is to write a check that can't be cashed.

[thackney]

[Smokin Joe]

What good is all that productivity if people are unemployed and can't afford to buy it?

American industry needs to take a look back at Henry Ford.

Manufacturing employment fell during the Reagan years, but the "Service Economy" grew.

(I recall looking at a friend and saying "We aren't going to get rich scrubbing each others toilets".) Wealth must be created, but at the same time, in order to convert it into something other than a warehousing expense, others have to be able to purchase those value-added products. 

[Frank Cannon]

American industry needs to take a look back at Henry Ford.

They did and they are doing what he did. The Rouge plant had over 100K employees in the 20's and 30's. A third of those jobs were cut by the 40's and 50's through streamlining and innovation. It's their biggest plant now and only employ around 6K.

[Smokin Joe]

They did and they are doing what he did. The Rouge plant had over 100K employees in the 20's and 30's. A third of those jobs were cut by the 40's and 50's through streamlining and innovation. It's their biggest plant now and only employ around 6K.

Which means that instead of 100K people who can afford the product, Ford only employs 6K people who can, there. No matter how productive you are, you have to have customers. If everyone rids themselves of 94% of their workforce, who is going to buy that stuff?

[thackney]

Which means that instead of 100K people who can afford the product, Ford only employs 6K people who can, there. No matter how productive you are, you have to have customers. If everyone rids themselves of 94% of their workforce, who is going to buy that stuff?

I see that as an Apples to Oranges comparison.  The modern assembly line is dependent upon many, many sub-vendors making parts, supplying the assembly plant.  There are many more jobs outside the assembly plant compared to those inside it for the same product.

Many industries have gone this way.  Refining and chemical for example.  50 years ago, most of the work was done by direct employees.  Now, maybe 5~10% of the jobs are direct employees.

Jobs have become more portable as well as the customers to the ones working those jobs.

[Frank Cannon]

Which means that instead of 100K people who can afford the product, Ford only employs 6K people who can, there. No matter how productive you are, you have to have customers. If everyone rids themselves of 94% of their workforce, who is going to buy that stuff?

Which means we should all be rolling around in Model T's?

BTW, none of those employees could buy the product they made. Henry Ford was a first class bleep and made sure of it. As a matter of fact you had to get his personal approval to by a Model T if you worked at Rouge.

http://www.thetruthaboutcars.com/2014/10/henry-ford-paid-workers-5-day-wouldnt-quit-afford-model-ts/

Henry Ford also had a "Social Department" that spied on workers personal lives with it's own secret police.

http://jalopnik.com/when-henry-fords-benevolent-secret-police-ruled-his-wo-1549625731

[InHeavenThereIsNoBeer]

"...University of Illinois at Chicago economist and historian Deirdre McCloskey. She points out that ..."

Sorry, but I went to school with this guy's kid and I'm not buying this.  He may have mutilated his body, but he's still a dude.

[Smokin Joe]

I see that as an Apples to Oranges comparison.  The modern assembly line is dependent upon many, many sub-vendors making parts, supplying the assembly plant.  There are many more jobs outside the assembly plant compared to those inside it for the same product.

Many industries have gone this way.  Refining and chemical for example.  50 years ago, most of the work was done by direct employees.  Now, maybe 5~10% of the jobs are direct employees.

Jobs have become more portable as well as the customers to the ones working those jobs.

But so were the older assembly lines. Radiators, fan assemblies, carburetors, wheels, tires and tubes, hoses, brake parts, generators, etc. were supplied by sub-vendors. Farming out specialized work is nothing new, but now those plants are elsewhere. If you buy a brake drum, now, it is going to come from Mexico or China, for instance.

[Frank Cannon]

But so were the older assembly lines. Radiators, fan assemblies, carburetors, wheels, tires and tubes, hoses, brake parts, generators, etc. were supplied by sub-vendors.

Not in Henry Fords day. Rouge was a full service everything plant from steel making to glass making. A boat brought rocks and sand in one end and a car rolled out the other.

[Smokin Joe]

Which means we should all be rolling around in Model T's?

BTW, none of those employees could buy the product they made. Henry Ford was a first class bleep and made sure of it. As a matter of fact you had to get his personal approval to by a Model T if you worked at Rouge.

http://www.thetruthaboutcars.com/2014/10/henry-ford-paid-workers-5-day-wouldnt-quit-afford-model-ts/

Henry Ford also had a "Social Department" that spied on workers personal lives with it's own secret police.

http://jalopnik.com/when-henry-fords-benevolent-secret-police-ruled-his-wo-1549625731

And companies today have pre-hire drug and background checks Ford would have been envious of, with the 'right' to run random tests. Some will even dismiss an employee for tobacco use (off premises). Then there is the HR department making sure you didn't offend the latest brand of snowflake, or "harass" someone...If anything, there is more to be terminated for then ever.

[Weird Tolkienish Figure]

But then home users could buy the same fixing robots and repair costs would disappear, eliminating much of the need for working in the first place.


And same robots would probably do everything else.

[thackney]

Not in Henry Fords day. Rouge was a full service everything plant from steel making to glass making. A boat brought rocks and sand in one end and a car rolled out the other.

Also the earlier Highland Park Ford Plant.  Foundry, power plant, etc.  If they needed it to build the car, they did nearly everything except the mining of the raw materials.

[thackney]

...eliminating much of the need for working in the first place

Food and shelter are the primary reason for most people working. 

[Weird Tolkienish Figure]

Food and shelter are the primary reason for most people working.

And we' have robots doing that too? Food-gathering and house building robots wouldn't be impossible if we could program robot-repairing robots would they?

[thackney]

And we' have robots doing that too? Food-gathering and house building robots wouldn't be impossible if we could program robot-repairing robots would they?

And how do you acquire such robots without working to earn their cost?

[Weird Tolkienish Figure]

And how do you acquire such robots without working to earn their cost?

Well they'll be assembled by robots too. So their price will be cheap.


Look at how cheap a simple solar powered calculator is today compared to back in the 70's.

[thackney]

Well they'll be assembled by robots too. So their price will be cheap.

Cheap isn't free.  Primary reason for working is food and shelter, not "repair costs".  Robots are not going to eliminate the need for people to work.

But then home users could buy the same fixing robots and repair costs would disappear, eliminating much of the need for working in the first place.

[Weird Tolkienish Figure]

Cheap isn't free.  Primary reason for working is food and shelter, not "repair costs".  Robots are not going to eliminate the need for people to work.

Really? You seem to be implying that humans will be unnecessary in the future? I thought that was your whole point?

[Frank Cannon]

And companies today have pre-hire drug and background checks Ford would have been envious of, with the 'right' to run random tests. Some will even dismiss an employee for tobacco use (off premises). Then there is the HR department making sure you didn't offend the latest brand of snowflake, or "harass" someone...If anything, there is more to be terminated for then ever.

So you are equating random home visits at Ford employee homes to piss tests? These visits were not to make the workplace safer like the elimination of drugs on the job. These visits were spicificaly to make sure the lifestyle Ford employees were living were in the mold of Henry Ford.

When you cited the awesome way Henry Ford operated, did you have any idea what you were talking about or were you just peddling some Pollyanna bullshit about the Good Ol' Days?

BTW, if you've ever driven a Model T you would know that they are cheap hard to drive garbage in comparison to other vehicles of the day. Edsel Ford had to drag Henry kicking and screaming to develop the Model A to stay in business.

[InHeavenThereIsNoBeer]

And how do you acquire such robots without working to earn their cost?

From the government, where all things come from.  Duh.

[Sanguine]

From the government, where all things come from.  Duh.

Exactly!

But, that is a good question.  Are we creating a permanent unemployed/unemployable underclass?

[guitar4jesus]

Exactly!

But, that is a good question.  Are we creating a permanent unemployed/unemployable underclass?

It'll be easier to justify killing them off. 

[mirraflake]

And companies today have pre-hire drug and background checks Ford would have been envious of, with the 'right' to run random tests. Some will even dismiss an employee for tobacco use (off premises).

As an employer I don't want to hire druggies or people with criminal past or convicted of sex crimes.   My wife has a business that dispenses legal drugs/r/x  and she does the pre hire drug test.

I have an company that has client financial and health history and I do credit checks, background/drug etc. on new hires

Darn if I will get sued by some employee who decides to smoke a joint for breakfast and wrecks the company truck into a crowd of little kids at the bus stop and my company gets sued into oblivion.

I also own a apartment complex and do extensive credit and background checks.The other tenants love it especially the older and female tenants because they know some guy with prior sexual assaults won't be living next door to them.


@Smokin Joe

[InHeavenThereIsNoBeer]

Exactly!

But, that is a good question.  Are we creating a permanent unemployed/unemployable underclass?

In the long term, I think so.  With adequate prosperity, some will choose not to work while those of us that do will hardly notice the effort to keep them in beer and pizza.

And yes, I am saying that one day they won't run out of other people's money.

[XenaLee]

What good is all that productivity if people are unemployed and can't afford to buy it?

American industry needs to take a look back at Henry Ford.

Manufacturing employment fell during the Reagan years, but the "Service Economy" grew.

(I recall looking at a friend and saying "We aren't going to get rich scrubbing each others toilets".) Wealth must be created, but at the same time, in order to convert it into something other than a warehousing expense, others have to be able to purchase those value-added products.

And not just that (to be able to purchase products)....  but folks have to be willing to purchase products.  The uncertainty that the Obama administration and the Democrats have brought to America over the past decade has curtailed and hampered folks' willingness to purchase items they wanted but didn't necessarily need to live. 

Many folks (including myself) have held onto their money (what little there was) over the past eight years vs. spending it... due to the fear and worry that that money would be needed later for necessities. 

If nothing else, hopefully Trump's presidency will eliminate much, if not most, of that fear and uncertainty the Democrats caused.  A positive outlook is required in order for business and America to prosper.  The malaise that Obama created is lifting, albeit slowly.  I just hope the Democrats don't manage to sabotage that recovery....the only 'real' recovery we will have seen in the past decade.  You can bet they're working on that effort as we speak.... tirelessly.

[Free Vulcan]

You all are assuming the globalists want you around in a completely automated world. They won't need you at that point. Only the very best and brightest will be allowed to survive.

In other words, they expect you to die Mr. Bond.

[geronl]

Which means that instead of 100K people who can afford the product, Ford only employs 6K people who can, there. No matter how productive you are, you have to have customers. If everyone rids themselves of 94% of their workforce, who is going to buy that stuff?

If the only people who can afford your product is your employees, you won't stay in business very long

[Smokin Joe]

As an employer I don't want to hire druggies or people with criminal past or convicted of sex crimes.   My wife has a business that dispenses legal drugs/r/x  and she does the pre hire drug test.

I have an company that has client financial and health history and I do credit checks, background/drug etc. on new hires

Darn if I will get sued by some employee who decides to smoke a joint for breakfast and wrecks the company truck into a crowd of little kids at the bus stop and my company gets sued into oblivion.

I also own a apartment complex and do extensive credit and background checks.The other tenants love it especially the older and female tenants because they know some guy with prior sexual assaults won't be living next door to them.


@Smokin Joe

As is your right as an employer. Between background checks and drug tests, a guy can pretty much get an idea of how his employee lives. It may not be the same as showing up on their doorstep, but it can tell almost as much.

[Smokin Joe]

If the only people who can afford your product is your employees, you won't stay in business very long

If your employees aren't employed, who is spending the money that keeps other employees employed? Sooner or later, the interchange breaks down.
Wealth is created by extracting raw materials, refining them, converting them to a usable form, and selling them. People make money along the way performing those acts, others make money providing services to the ones who do the extraction, etc.

If wealth is created without anyone making money, or very few, then those who can afford services will be few, those who can afford the products will be few, and the economy won't grow, it will contract.

The old example in the patch is the oil company that got rid of stripper wells, just too expensive for the amount of production. Then they got rid of all those wells only making 50 bbls of oil a day, because they were the most expensive. Then they got rid of the 100 bbl/day wells, just not cost effective enough, etc. until they achieved the ultimate savings.
But they no longer produced oil.

There is a point where cutting workforce cuts the economy's throat.

[Smokin Joe]

If the only people who can afford your product is your employees, you won't stay in business very long

If everyone rids themselves of 94% of their workforce, who is going to buy their stuff.

Look at how many people are 'not in the workforce', which doesn't mean they are that way willingly, it just means they have no unemployment benefits to draw and haven't gone for SSDI.

The Obama Administration has waged war on entire industries, while promoting expensive boondoggles with our tax money. The results? A lot of people have lost their jobs, and not many have been created outside of government (taxpayer) funded positions.