Have we reached the end of class mobility?


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http://www.washingtonpost.com/wp-dyn/content/article/2009/08/07/AR2009080702043.html

Tax and Spend, or Face The Consequences
By Gregory Clark
Sunday, August 9, 2009

At some point, the Great Recession will end. Newsweek even says it's already over. Whenever it happens, we will see that the downturn was but a minor blip in the long story of the economy.

In the next chapter, abundance beckons -- for some. Advances in technology drive economic growth, and there is no sign that they are slackening. The American economy is likely to continue unabated on the upward path that began with the Industrial Revolution.

No, the economic problems of the future will not be about growth but about something more nettlesome: the ineluctable increase in the number of people with no marketable skills, and technology's role not as the antidote to social conflict, but as its instigator.

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For much of the past 200 years, unskilled workers benefited greatly from capitalism. Before the Industrial Revolution, for example, skilled construction workers earned 50 to 100 percent more than unskilled laborers; today, that premium has fallen to 33 percent in the United States. The era of the two world wars, 1914 to 1945, was one of particularly sharp gains for the wages of unskilled workers, relative to the rest.

Why have the unskilled fared so well? After all, machines -- whether steam engines, internal combustion engines or electric motors -- have replaced people as deliverers of brute force. But even today they cannot replace many of people's manipulative abilities, language skills and social awareness. The hamburger you eat at McDonald's is still put together and delivered to you by human hands; even a fast-food "associate" deploys an astonishing repertoire of spatial and language skills.

But in more recent decades, when average U.S. incomes roughly doubled, there has been little gain in the real earnings of the unskilled. And, more darkly, computer advances suggest these redoubts of human skill will sooner or later fall to machines. We may have already reached the historical peak in the earning power of low-skilled workers, and may look back on the mid-20th century as the great era of the common man.

I recently carried out a complicated phone transaction with United Airlines but never once spoke to a human; my mechanical interlocutor seemed no less capable than the Indian call-center operatives it replaced. Outsourcing to India and China may be only a brief historical interlude before the great outsourcing yet to come -- to machines. And as machines expand their domain, basic wages could easily fall so low that families cannot support themselves without public assistance.

With the march of technology, the size of a future American underclass dependent on public support for part of its livelihood is hard to predict: 10 million, 20 million, 100 million? We could imagine cities where entire neighborhoods are populated by people on state support. In France, generous welfare has already produced huge suburban housing estates, les banlieues, populated with a substantially unemployed and immigrant population, parts of which have periodically burst into violent protest.

So, how do we operate a society in which a large share of the population is socially needy but economically redundant? There is only one answer. You tax the winners -- those with the still uniquely human skills, and those owning the capital and land -- to provide for the losers.

<snip>

this sounds like a problem that giving everyone free health care would solve.

This is an age-old economic argument (look up Malthus)... that in my humble opinion, is complete shit. It's been proven over and over again that an increase in population (even if it is a poor population) doesn't correlate with a decline in GDP per capita. Why? Technology, and the fact that a boost in population boosts demand.

Also, what exactly is a "skill-less" individual? Is it someone who can't obtain "skills" or someone who doesn't try to obtain "skills"?

I think his argument is completely sound. New technology = less work for people to do. If you don't believe me just look what the cotton gin did to slavery.

...which translates to more time for leisure activities, simply changing the nature - not the quantity - of the work to be done.

technology is about getting more from less. i'm hard pressed to find a circumstance in which this is an undesirable tradeoff.


this is not an implicit problem of technology. that there was less work for slaves after the invention of the cotton gin speaks to the legal, cultural, and socio-economic constraints of slavery, not any inherent labor obviating characteristics of the machine.

Aw, c'mon I expect more from you. I didn't think I needed to put the sarcasm arrow in there; I'm a fan of implied sarcasm. FTR the cotton gin is usually "credited" with reigniting the growth of slavery. So in actuality the new technology of the cotton gin led to a need for not less labor, but significantly more.

it's monday and what not. my sarcasm meter doesn't get warm until sometime mid-day tuesday.

Don't let it happen again.

And what if the labor needed, need not be performed by local workers or even human beings at all?

The cases you are talking about where pre-computer era examples. Thing have changed.

why is this a bad thing per se? where the work is done is secondary to increased productivity, falling costs, and rising living standards. it's not zero-sum.

and while i'm not an expert on the technological and economic integration of the developing world (and its workers), the tendency of certain countries to fall behind technologically/economically is largely the fault of legal, cultural, and political obstacles, not machines.


the same thing was said during the industrial revolution.

It started with cheap luddism and ended with some Atlas Shrugged

When someone's job is "automated" away, someone is saving money on labor costs. That money saved will be spent or invested in something else. This is really just the broken window fallacy, nothing more.

this thread is solid!

Alright, now that I have some I'll give some actual input.



No need to talk about anything else. This paragraph will suffice to make my point. And quite frankly I'm shocked the author put everything into the same paragraph because he puts the answer right in front for everyone to see.

The problem is not that technology will instigate a glut of unemployment due to people lacking marketable skills. A glut of unemployment will exist because people have no marketable skills period. Ironically enough, even in this economic downturn demand has remained high for people with technical skills. And when I say technical, I pretty much mean anybody that's highly skilled. We don't have enough doctors, chemists, engineers, lab techs, programmers, etc, etc.

Technology is hardly the impetus for people not having work. It's their lack of desire to do the work necessary to have a marketable skill or start their own business.



LOL!!! Minumum wage laws!

Does that not assume that the person whose job is gone is able to find another job with the skill set they have?

We talk about historical examples, but they are mute in a globalized, reasource constrained, world. You could retrain a blacksmith to work on an assembly line. It's an entirely differently animal to retrain an assembly line worker to be a microchip enigineer in China.

The assembly line worker should never let his/her skill set stop growing. This is the worker's responsibility. It's easier to do than ever. Night courses, distant learning opportunities, volunteer opportunities.

It's nearly impossible for any government to help take care of someone who takes no responsibility for their own life.

who says he has to be an engineer? if the microchip brings down costs by eliminating the labor heretofore necessary to perform the task, then it follows that the consumers who buy the product will pay less for it and/or firms who use the microchip-produced product as an input will see their costs fall (cost savings which eventually manifest themselves in lower prices, all things equal).

the upshot? consumers will be paying less for the product. their disposable income increases, meaning they can now consume products they wouldn't have been able to prior to innovation. demand for these new goods and services create new employment opportunities, opportunities for which it isn't necessary to necessarily be an engineer. OR...consumers can save the additional money, which reduces interest rates and encourages businesses to expand and drive new employment therein. again, it's not immediately obvious that this new employment MUST take the form of engineering or other high-skilled work.

You are assuming that the demand for these new goods and services can only be met by increasing human labor. Maybe even suggesting local human labor. I don't think that's the case anymore.

You are also assuming that consumers will not lose the added utility from the price decrease on product x to tax increases to pay for unemployment or reeducation of the downsized worker.