The Shrinking Need for a Workforce: This Time it’s Different

There’s a YouTube video making the rounds of the internet that I highly recommend.  Go ahead and watch.

I’ll wait.

Done?  Good.

For those who will stubbornly refuse to watch the video, this is the synopsis.  Automation over time has made things easier for us since it’s reduced the demand of physical labor, which we’ve benefitted from.  But automation is not only continuing to reduce the number of boring, repetitious jobs, it’s now going after higher end jobs.  An Oxford Study predicted that 47% of US jobs could be lost to automation in 20 years.  Burger flippers and baristas for sure, but also lawyers and doctors are at risk. There is a lot fewer tax preparers now then there were in the days before tax preparation software.  So it’s not just low end drudge jobs that will be going away, it’s upper end jobs that require education that used to provide a lot of middle class and upper middle class incomes.

Previous automation, since the Industrial Age, has often provided a springboard to new industries and new jobs.  In 1870, between 70 and 80 percent of the US workforce was involved in agriculture.  In 2008, it was less than 2%.  But industrialization created vastly more jobs than were lost.  Automation in agriculture didn’t cause widespread unemployment, it freed up millions to work.  Within my lifetime, there has been an explosion of new jobs that just didn’t exist when I graduated high school.  Web Designer anyone?

There are, as a percentage more professional, high paying jobs than there used to be. That’s part (but only part) of the reason for expanding income inequality; more “good jobs” at the upper end. Professional jobs for people with technical BS degrees or graduate level.  But what about the percentage of new unskilled or semiskilled jobs?  Is the economy creating unskilled jobs paying much better than the minimum wage?

So never mind the video and its predictions. We can just look back over the past 50 years and see that the new jobs that are created are for a more highly educated and highly skilled subset. Automation improvements like cash registers becoming easier to operate as they become oversized calculators, are not creating new jobs, they are making already low skilled jobs even more low skilled.  At least until the jobs are automated away all together.

If these trends continue, with more newer jobs being for the more educated class and few new low skilled jobs created, what are we going to do with people who are just not smart enough to get a Phd in Neurolingustics (as an example)? We are improving automation along the lines of Moore’s Law, but there isn’t a Moore’s Law for human intelligence or ability. That is my concern. Not that we hit the Singularity and every human is unemployed and targeted for termination, but that the gradual change in the economy means few jobs for people on left side of the Bell Curve. We’ll have a growing cadre of people permanently unemployable no matter how great the stock market is doing or how much increase in GDP there is.

After watching this video, I had more questions than answers from it.  Frankly I don’t know what to do about the problem of people being rendered permanently unemployable.  Maybe someone should make an app for that…

 

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9 thoughts on “The Shrinking Need for a Workforce: This Time it’s Different

    • I don’t know what to do about the permanent unemployable, and from what I’ve seen from the Social Credit website you’ve linked, Social Credit theorists don’t seem to have much of an idea either. If you think expanded leisure time will result in expanded pursuit of culture and the arts, then I think you’re dreaming. Our experience with the permanently unemployed and unemployable both in North America and Europe isn’t encouraging. Violence, gangs, drug and alcohol abuse…that seems to be what happens when people have nothing meaningful to do.

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      • Actually, it is perfectly possible for expanded leisure time to result in the ‘expanded pursuit of culture and the arts’, and don’t forget the sciences! In the days of Merrie England, a peasant could support his family with only 15 weeks of work per year and he enjoyed 150 official holidays a year. The development of arts and crafts, the flourishing of medieval culture, and the building of the great cathedrals were the mark of the age … not violence, gangs, drugs, and alcohol abuse. Certainly some people may choose to be idle or worse in a SC society, but … as I explain to all of my American friends who bring this up (because they tend to suffer from a curious puritanical obsession with work for its own sake), at least under Social Credit we would not have to pay via taxation to support the permanently unemployed or unemployable as we do at present. The dividend is financed via the creation of a sufficient volume of debt-free money to help bridge the recurring gap between consumer prices and consumer incomes in the modern, industrialized economy and everyone benefits from it. Don’t deny me my dividend because someone else may abuse their inheritance. The alternative, as technology progresses, is to have people dig holes and fill them up again or the equivalent … come to think of it, most jobs already involve witless, useless, redundant, and/or destructive activity in whole or in part … not a very satisfactory state of affairs. You can imagine what the tremendous environmental and social implications of all of this frenetic and misdirected economic activity actually happens to be. This enormous waste only exists because, against all reason, we are insisting on the archaic principle that everything must be earned … or at least everything must be earned where the average Joe is concerned. Never mind that the best things in life and life itself are free gifts. Some further ideas on this subject: http://www.socred.org/blogs/view/the-meaning-of-leisure.

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      • You’re not wrong about the Puritanical obsession with work as a positive good in and of itself. I suffer from that malady myself. I’m sure we could all adapt to more leisure time. But there is a big difference between getting a few extra weeks of vacation a year and getting 52 weeks of it.

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      • C. H. Douglas stressed the importance of understanding a policy by tracing its pedigree. The present financial system is predicated upon a materialist philosophy known as do ut des, meaning “this for that”–essentially “nothing comes from nothing.” It is based soundly on the rigid doctrine of “Salvation through Works”. Hence, the existing financial system issues money only for production and never for consumption, except as debt which must be settled by future work. This policy of issuing money only for work might have had some basis in equity in the primitive economy where production was primarily due to human effort. It makes no rational or moral sense whatever in the modern highly technological economy where non-human factors of production predominate and human intervention is becoming increasingly little more that a catalyst.

        Social Credit rests on a philosophy of Salvation through Unearned Grace–Grace being an outright gift from God. Spiritual Grace has, or should have, a physical counterpart in the economic or material realm. Thus from a philosophical standpoint access to consumer goods and services should increasingly be justified not by work alone but evermore by a share in an inalienable inheritance in the accumulated communal capital which has developed over the ages as a result of the historic Cultural Heritage which has provided a means of producing with decreasing need for human effort. In Christian philosophy it is a major sin to make an end of a means. The rational purpose and end of production is consumption and not to create work. An economic system should provide goods and services for mankind as efficiently as possible with minimal trouble and effort for all concerned.

        Life is more than bread alone and man must be released from unnecessary material concerns to make time for matters of the Mind and Spirit. Jesus was quite explicit in counselling us to “toil not”–that God who provides for the fish and birds and the beasts knows our needs and will provide for us even more. This is why we have been given secrets to natural laws which have provided an endless extension of “mechanical advantage”–which Social Crediters call the Unearned Increment of Association from which has emerged our amazing modern technology with its outflow of Abundance. By learning to associate properly, we can accomplish vastly more than we can as isolated individuals.

        Social Credit has been called “practical Christianity”. Douglas did not set out to design it as such and made his discovery about the non- self -liquidating nature of the existing price-system through purely inductive investigation of the accounts at the Royal Aircraft Works in Farnborough, England, and subsequent analyses of the accounts of numerous other British firms. Continuing study of Social Credit, however, has revealed it to be consonant with Christian principles..

        One might ask how it is possible for a nation such as the United States of America, professedly predicated upon Christian principles to base its entire economy and social structure upon a financial system which is a total inversion of those principles. A clue to this strange contradiction may be found in Douglas’s observation that Finance and the Established Media are concentric. Society, he said, is hypnotized and only a drastic de-hypnotization can save it.

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  1. Your article of September 1, 2014 on “The Shrinking Need for a Workforce”, with accompanying excellent video (https://mikestreetstation.wordpress.com), focuses on the central issue of our amazing age. How blessed we are in having a marvellous technology enabling us to produce more and more of our desired and/or needed goods and services with decreasing human effort, with an ever-growing opportunity for expanding leisure in a cultured society. The so-called “problem” of growing “unemployment” is not a problem at all if we divorce the right to consumption from earned incomes. What constitutes the problem is an insufficiency of total incomes. The core problem is an insufficiency of total incomes relative to total costs and prices as the need for paid work is reduced. In the days of Merry England the people enjoyed approximately 150 holidays per year and yet, at a much lower level of technology, still provided for their living needs. That we should attempt to maintain “full-employment” in the present age of super-production is a complete anachronism.

    Nearly a century ago the progressive displacement of labour by technology was observed and accurately predicted to increase exponentially by the late British engineer, Major Clifford Hugh Douglas, whose ideas became known as Social Credit. Douglas explained the necessity to devise a method of distribution independent of paid labour. While Assistant Director of the Royal Aircraft Factory at Farnborough in England, and through study of the accounts of approximately one-hundred other British firms he confirmed that every factory, except any facing bankruptcy, created financial costs and prices in greater volume than it distributed effective incomes. In the normal operation of the economy an increasing “gap” is created between final prices and effective consumer income.

    This deficiency of effective purchasing-power increases with the intensified use of technology where “machine charges” increase relative to labour charges. The more we modernize our economy the more the the financial system becomes unbalanced or non- self-liquidating and sabotages the real gains we make in actual physical efficiency. Paradoxically, this phenomenon occurs because of increasing allocated capital charges which must be added to the income-generating costs of wages, salaries and dividends in each cycle of industrial cost-accountancy. We attempt to compensate this growing chasm between financial costs and incomes by contracting ever-larger debts to banking institutions which create loans as new credit owing as a debt to themselves. This does not actually liquidate production costs but passes them on as an inflationary charge against future production cycles. We also engage in vast new capital expenditures such as superfluous capital works and war production so to generate incomes which can claim not current but past production. We also engage in irrational and internationally provocative attempts to export more goods than we import.

    Douglas proposed what should be the obvious solution: Establish a National Credit Account as an actuarial estimate of the nation’s potentially productive assets, i.e., its Real Credit–everything which if used for production could create prices. Ensure that all new production is financed by new credits issued by banks in the customary manner. Draw down the costs of all such new production in progress from the National Credit Account but credit this Account with all new finished production. Draw down from the National Credit Account, as items of consumption, funds to pay to each citizen a National Dividend and to each retailer a sum determined by the decreasing ratio of national consumption to production, enabling such retailers to reduce final retail prices at point of sale, i.e., to establish Compensated Prices which will be much lower relative to conventionally accounted prices. Because the National Credit Account will be credited with all new capital production it will always be growing regardless of “debt-free” money being withdrawn from it for financing of National Dividends and Compensated Prices. The physical costs of production, i.e., the human and non-human energy and materials required, have all been provided when a good is completed for use. The is no attached physical debt to such items and the financial system should accurately reflect this fact. There should be no need on a macro-economic level for any consumer debt whatsoever.

    Douglas’s proposals would give us increasing abundance with falling retail prices and an opportunity for increasing leisure. “Unemployment” would been appreciated as the blessing it is in actuality. We would no longer be required to finance purchases of current production by incomes derived from additional increasingly irrelevant, wasteful and destructive so-called “economic” activity. The primary cause of international friction and war would be eliminated as nations would be able to engage in genuine balanced trade rather than attempting to force exports in excess of imports in order to capture external credits in an attempt to compensate for internal insufficiency of consumer purchasing-power. We could emerge into a secure, leisured and cultured Civilization–something that is quite impossible under the existing defective financial system.

    Refer: http://www.socred.org/
    Youtube: Social Credit Table Talk
    Youtube: Social Credit, Unemployment and Leisure
    Wikipedia: Social Credit

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    • I can see the attractiveness of social credit. We get subsidized for the efforts of those who’ve gone before us, but I the real ”surplus” that society provides is the fact that we have a pre-provided infrastructure, culture, capital, and standard of living just waiting for us when we are born into our societies. That is our surplus. Since any cash distribution to citizens still has to come from somewhere, I don’t see it as a viable alternative. Or at least it hasn’t been demonstrated as a viable alternative.

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  2. The whole purpose of technology is to make it easier to obtain the things we need or desire with diminishing human effort. It is natural to the healthy human intellect to explore and to improve their minds and capabilities by employing discovered laws of nature and raw resources which supply the means for such progress. We should encourage the trend with all our resolve and energy. Of course, automation and artificial intelligence are displacing people at various levels of the economy and increasingly across the whole field of economic activity. You probably saw the recent Chicago Tribune article which predicted that within twenty years these factors can be expected to eliminate the need for fifty per cent of the American work force. This is wonderful news insofar as it demonstrates how abundant are the real physical and psychological resources available to mankind to realize a marvellous life experience.

    Unfortunately, we operate under a defective and entirely man-made financial cost-accountancy system which places a financial obstruction in our ability to take delivery of the products of industry with our earned incomes, which latter become smaller relative to total costs and prices as we intensify the use of real capital in the production system. This unfortunate situation is the inverse of what should occur and is due to the fact that with modernization allocated charges in respect of capital, which add to prices but do not in the same accountancy cycle provide equivalent new purchasing-power for the consuming public. Consequently, the more productive we become physically the more deficient are our financial incomes. This means that from somewhere additional income must come if we are to carry on as a functioning society. Under present circumstances the only source of such income is the banking system which does provide us, on their terms, additional bogus purchasing-power in the form of increasing credit or repayable loans. I say “bogus” because these loans do not confer genuine income inasmuch as they are debts charged against future production having nothing to do with current production. Although they allow consumers to access much of our produced goods they do not cancel the financial costs of production but transfer these as an inflationary debt claim against future production. The problem is that modernization introduces “machine” charges into prices and the existing system of financial accountancy has no mechanism to meet these non-human charges. Briefly, the consuming public should be paid what have been called “the wages of the machine”, supplementary to any earned incomes received by workers and directly to the growing numbers of people whose services are no longer required in the production system. The modern economic problem is not production but rather a growing defect in the mechanism of distribution. Unsold stocks are a liability to the seller who must return or destroy them—and they are obviously of no benefit to consumers who have insufficient income to claim them.

    The foregoing problems are of a financial nature. Questions of taxation and administration lie in separate fields—taxation being a fiscal matter which would be a minor consideration in a Social Credit economy.

    Social Credit is not concerned with equality of income so much as with overall macroeconomic sufficiency of income and abundance of production. Attempts to enforce equality impair creativity and historically have led to the flowing of rivers of blood. The only time when incomes would be equal is when technology, hypothetically, has totally replaced the need for human involvement in production and everyone is receiving their income via National Dividends and Compensated retail prices. When consumers are supplied with adequate purchasing power they become final arbiters of production policy and producers who do not serve the needs of consumption will obviously have a short business career as will the executives of such failed enterprises. Of course, shareholders themselves will retain the right to replace company directors who are not performing to the advantage of any business. Essentially, however, Social Crediters want to establish decentralized consumer sovereignty as the only true and meaningful form of “economic democracy” capable of determining production policy.

    The “revenue” required to finance Consumer Dividends and Compensated Prices is already existing in the form of actual but unsold goods and services. Abstract financial accountancy should reflect this physical reality. Money in the modern world is just accountancy and is not some “commodity” limited in amount. To speak of not having sufficient “money” is just as ridiculous and meaningless as saying that we do not have enough pounds, kilograms, miles, kilometres or inches, etc. It is vitally important to realize that money spent by consumers is on its way back to extinction as purchasing-power when used to repay a business bank loan or replaced to capital reserve.

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