I don’t intend it to be. I need more clarification of your question before I can formulate an answer. Simply put, I do not understand your question.
Did you read the rest of that page? The jobs it is talking about are mostly Education and health services at about 5.5 million jobs, Professional and business services at about 5 million jobs, Information. at just over 1/2 million jobs. And several other service sectors. This link is a chart detailing which service sectors will grow relative to others. Also, the site says "Employment in the goods-producing industries has been relatively stagnant since the early 1980s. Overall, this sector is expected to grow 3.3 percent over the 2002-12 period. So the trend is nothing new for the last 2 decades!
Besides which, what part of that page does not answer your question. Seriously, you want to know what sort of jobs will be created in the next several years, the BLS site suggests many different sectors. Somehow this is not, however, an answer to your question. That’s why I need more information. If this page is not an answer to your question, I do not understand it at all.
Yea. Sorry, couln’t help it. You’ll notice, however, that I did not rejoin the conspiracy debate.
I guess that I’m not seeing the understanding that you have. I’ve already stated, quite clearly, that lump-sum transfers in wealth may have an effect on the prices in an economy as actors adjust to their new wealth levels; however, that is still not a distortion. The market and its actors are acting on their own without any distortions in the prices from outside the market.
More fundamentally, I am still not seeing the understanding of the more basic result that maximization happens on the margin. You ask what if the islanders only needed one rat to survive and the volcano god still appropriated two rats from one of them. Well, you have critically changed the parameters of the problem without offering any reason to think that this will change the basic result. All you are doing is saying, “Here is a complicating assumption, therefore the result no longer holds!” A non-sequitor at best.
So what happens if instead of being at subsistence, an assumption made to take complicating issues out of the example, we’re at a position where our simple measure of calories no longer suffices to address the question? Should we think that fixed items now become relevant when they weren’t before? I don’t see any compelling reason. Supposing that you only need one rat to survive, and that you get no pleasure from eating a rat, then the marginal utility of the second rat has changed significantly, hasn’t it? Since we have to step back and maximize utility, and if a rat won’t keep until tomorrow, then the second rat is worth nothing. The first rat is worth a lot, the second rat is worth zip. Since the marginal value of the first rat is higher than its cost, we hunt it; since the marginal value of the second rat is zero, we don’t hunt it. We can no longer make our marginal benefits and costs equal because the rats are coming in discrete units to big to deal with in this range; but, the same result holds that if costs or benefits are higher on the margin, then we adjust appropriately.
Now the volcano god appropriates your first two rats. Naively, we say that you get nothing from the first two rats, therefore you will expend no effort to catch them and starve. But since we’ve moved from calories as a measure of well-being to the abstract notion of utility, it becomes obvious that the first rat, even though you don’t get to keep it, does provide you with utility: It gets you that much farther away from certain death by starvation. The second rat brings you even closer. The third rat is the difference between life and death, with the cost being the utility loss of going through the effort to catch it. The fourth rat is still equal to zero in terms of utility gain, so you don’t bother with it.
We’ve expanded the problem, yet we are still with the fundamental notion that if doing a little more of something is worth more than it costs, then one should do that little more, and if doing a little more is worth less than it costs, then one shouldn’t do it. To say that fixed costs affect this is to say that if doing a little more of something is worth less than it costs, then one should do it anyway, and if doing a little more is worth more than it costs, then one shouldn’t do it.
Why would that be? You have to answer that question. You have to explain why taking a couple hundred dollars out of a business woman’s bank account makes it more profitable for her to produce where the cost of making the n[sup]th[/sup] item is more than the price she gets! If you don’t understand that this is what you have to explain, then you don’t understand the point I am trying to make at all.
You’ve stated that this doesn’t apply in the real world. I’m skeptical of that as well. The idea that we optimize on the margin is a pretty basic result. It is a little more complicated for multiple goods, yet it still holds. In fact, Mason & Fabritius have devised an exercise to use as a teaching tool that does a pretty good job confirming this to skeptical students. Before ever discussing this concept, they have students rate the value of the first ten things they do on an arbitrarily chosen day, as well as the value of some neutral activity such as watching uninteresting televison. When these values are crunched through, they find that the utility maximizing rule follows to a pretty good approximation. And this is with undergraduates doing some crappy homework assignment while guesstimating at values that are awfully abstract, all before they have ever come across the concept that they are confirming. And they do all this using real-world data: their very own daily lives.
There we have a confirmation of the rule that marginal values are used to maximized; but what about fixed costs? Evil professors are fond of using the dollar auction. This is a first & second price auction for dollar bills. What happens is that the professor auctions off dollar bills, with the dollar bill going to the highest bidder, but the second highest bidder has to pay as well. Imagine: Figuring that you can get $1 for a penny, you bid 1¢. “Fuck that,” I think and I decide to play hard-ball by bidding a nickle. You’re not going to pay a penny to get nothing, so you bid a dime. Here’s my choice: If I bid 15¢, then my marginal cost is 10¢ while my marginal benefit is $1. I bid. Of course this is all well and good, since the total costs are still under a dollar; sunk costs could still figure. However, the bids predictably go over $1! If your current bid is $1.25 and mine is $1.10, my marginal cost for the dollar is now 16¢, but my marginal benefit is $1 (if I get it). It is in my interest to bid for the dollar. If sunk costs were an issue in my decision, then I would see that I’m already in over my head and bail out completely! But I don’t. As reported, profs can often sell dollars for $1.50 to $1.75, and repeatedly so—making $20 profit from auctioning off dollars.
This is clearly a case where sunk costs are so irrelevant that they will be washed out by any possible benefit. Yet, people keep bidding. Have you not seen this in real life? We have a nurses’ strike at an area hospital that has been going on for years. The sunk costs have become outrageous from lost wages, yet they don’t capitulate. Why? If sunk costs figure so heavily into the optimizing decision, why would the nurses strike until those sunk costs are well beyond any possible benefit they could hope to gain?
You don’t have to complicate the problem to get to the objection that you are trying to make. You can leave it with my original island example. The problem is that the example makes your objection obvious and easy to see. If we suppose that the only benefit we get from rats is their caloric intake, and that our only cost is calories expended in catching them, then clearly I hunt until the benefit of the rat equals the cost of the rat. Your objection is that by sticking me with an arbitrary fixed cost, then that rule will change. You don’t need to introduce any complications; you simply need to explain why it becomes beneficial to abandon that rule as a result of some fixed cost.
Yes, I did read the page. I suggest that you go back and review it yourself.
Total employment is expected to increase from 144 million in 2002 to 165 million in 2012, or by 14.8 percent. The 21 million jobs that will be added by 2012 will not be evenly distributed across major industrial and occupational groups. Changes in consumer demand, technology, and many other factors will contribute to the continually changing employment structure in the U.S. economy.
So, a TOTAL of 21 million new jobs are “projected” to be added.
Again, a few paragraphs below:
Service-providing industries are expected to account for approximately 20.8 million of the 21.6 million new wage and salary jobs generated over the 2002-12 period.[
This is very straightforward and clear, particularly from a government agency. If you take the time to sit down and reflect on these statements, I am confident that you will see that the government is saying that 96.3% of ALL NEW JOBS will be in the service industry through 2012. As to what the chart shows, I’m not clear on that. Maybe they attached the wrong one? That is something you need to take up with the BLS.
Well, sure. Just as the mechanization of farming restructured society. I have no doubt that society 100 years from now will look very different than it does today. What I doubt is that it will be *worse.
I have many historical examples to offer. The mechanization of agriculture is a good one - it wiped out something like 40 million jobs between 1900 and 1990. At the start of the 20th century a U.S. farmer fed about 2½ people. Today, that farmer feeds 97 Americans and 32 living abroad. Less than 2% of U.S. workers today work in agriculture, down from 80% in 1800 and 40% in 1900.
The automobile cut huge swaths through the labor force - everyone from stable owners to blacksmiths and buggy whip makers.
The rise of the computer destroyed huge sections of the service industry. Print shops, graphic artists, typesetters, draftsmen, bookkeepers, circuit board designers, telephone operators, receptionists, etc. Probably millions of workers.
The internet is still in the process of decimating old brick and mortar industries. My own company was one of the victims - I started a company that made software for dial-up servers that could retrieve documents. I had copies of my software in every U.S. embassy, Microsoft used it for tech support, etc. The internet came along, and wiped us out within six months. Other industries like magazine publishing, television, music, research books, and libraries are now under huge competitive pressure from the internet.
There is NO fundamental difference between losing jobs to the rise of technology and losing them to outsourcing. In fact, it can help clarify your thinking a lot if you think of all these other countries as black-box technologies - HOW they make what they make is irrelevant. All you have to know is that if you send X amount of resources across the ocean, you’ll get back Y amount of cars, computer programs, and other goods. If I invented a new AI computer language tomorrow that could replace 50% of the programmers in the world, would you say that’s a bad thing? Or is it the glorious march of technology? If the latter, why do you feel differently if Indian programmers do the same work?
The black-box simplication also puts lie to to the claims of the ‘fair traders’ - those people who think that the real problem isn’t trade, but inequality of worker standards, environmental standards, or foreign governments subsidizing their industries. From the black-box perspective, anything these countries do to lower the cost of the goods they send you is a GOOD thing. If they want to tax their citizens and subsidize their food production so that we get cheaper food, fantastic!
Likewise, if they want to erect tariffs to make our products more expensive, that certainly raises the cost of their goods for us - but as long as their goods are still cheaper than domestic production, we still gain. And if they aren’t, we’ll stop buying them. Sure, it’d be even better if there were no tariffs, but it’s not a fundamental problem that needs to be solved before we can trade with people. And note that even if they slap tariffs on our exports, it’s still to our advantage to eliminate tariffs on their imports.
Faith has nothing to do with it. We’ve seen huge increases of our productive efficiency over the past 400 years, and each increase of efficiency has created more jobs than it destroyed. If you think there is something fundamentally different about today’s situation, the burden of proof is on you to show what’s different.
Belief in market mechanisms is not ‘faith’. Anti-market zealots believe that since we cannot predict future trends or how markets will cope with new or existing problems, then the result is chaotic and needs to be ‘managed’, usually by a central government. But a deep understanding of how markets work will give you a new appreciation for just how much regulatory force market mechanisms really have, and how spontaneous order is guaranteed to arise out of a chaotic system with solid rules. Allow prices to work, allow capital to move freely, and you will wind up with a maximally-efficient system that is optimized for meeting the needs of consumers AND workers.
This is not to say that the market is perfect. For it to function well, the price system has to work, costs have to be visible and accounted for, etc. Market failures can and do happen - pollution is the best example of this, where the costs of pollution are very diffuse and there is no good mechanism for charging the cost back to the polluter. Material monopoly is another - airwaves, key real estate (the only road out of a canyon, for example), or minerals. There is a definite need for some amount of government in ensuring that markets continue to work efficiently. But note that the emphasis should be on making markets work - today’s governments tend to want to override the functioning of the market for social reasons, not because the market itself is broken.
Again, you’re ignoring the fact that unemployment is below the historical average today, even though we’re just coming out of a recession, a major terrorist attack, and there is still a lot of risk aversion in the job market. For you to claim that we’re about to lose 20% of the work force requires that you explain why you’re only sitting at 5.6% unemployment today, despite adding 80 million new citizens to the country since 1980, and despite the rapid rise in productivity since then. If you can’t explain what’s different, perhaps it’s time to re-examine your assumptions.
Actually, no. And this is a perfect example of what I’m talking about. Since 1990, about 50,000 new jobs have been created in the U.S. in automobile assembly, despite the fact that the number of people it takes to make a new car has gone down significantly due to automation, and despite the fact that the domestic auto industry has been cut into deeply by foreign competition. How could the industry create jobs? Simple - because our rising standard of living and lowering cost of cars has greatly increased the number of cars being made. It used to be fairly rare for families to have two cars - now it’s the norm. Upper middle class families often have 3 cars or more.
And this has created jobs in related industries. For example, the auto parts industry has gone from about 400,000 workers to about 550,000 over the same period. More cars, more parts. As we get wealthier we’re also spending more money on our vehicles, outfitting them with everything from fancy wheels and roof racks to DVD entertainment systems.
Actually, it’s your reasoning that’s specious. NO industry is full of ‘all the labor it needs’. Industry is full of all the labor it can afford. There’s that supply and demand again. Increase wealth, and industries will be able to afford more labor.
But if you want me to name some industries in which there is a shortage, I’d be happy to: doctors, nurses, school teachers, police officers, park rangers, professors… Around here, there are severe shortages of skilled trades, too. It’s almost impossible to get landscaping or home renovations done, because the housing construction industry has employed all the trades. Some of them are now turning away work because they don’t have enough people to do it.
Ask yourself - if our wealth doubled tomorrow, how many more families do you think might want to send their kids to college? What would that do for the demand for professors, assistants, administrators, etc? If our tax base doubled due to wealth, how many more teachers would we want to hire? If we had twice as much money to spend on health care, how many more doctors and nurses would we need? How much bigger would the leisure industry be? How many more people would be employed making sporting equipment, boats, running ski lodges, or teaching classes in night schools? How much bigger would the home entertainment industry be?
But the future IS unpredictable. The rise of the automobile created a huge new restaraunt industry. Remember Drive-in theaters? Who in 1915 would have predicted those? We don’t know what the future holds, but the history of capitalism AND the theory of capitalism both tell us that it will work out just fine.
First of all, there aren’t many unemployed. 5.6%. Of which some are in the process of retraining, taking a break between jobs, etc. That’s why ‘full’ employment is not zero. It used to be considered to be around 6%. The boom of the 90’s caused economists to think (perhaps mistakenly) that ‘full employment’ was more like 4%. So we’re only talking about 1.5% above that level - not very much.
But even so, what I was talking about is jobs that would be created if we attain new heights of productive efficiency. Asking why they aren’t there now is putting the cart before the horse.
No. A recession is a reduction in productive capacity and wealth. The GDP shrinks. You don’t have a recession because you lose jobs - you lose jobs because you have a recession.
I use ‘capitalists’ as shorthand for those who work in the infrastructure of a capitalist society. That includes small business owners, venture capitalists, wall street traders, financial analysts, banks, etc. This is the most misunderstood aspect of a capitalist society. I can’t count the number of times I’ve had someone tell me that stock traders and venture capitalists and investors are parasites and worse. They simply don’t understand.
A little story: There was a research group that was trying to come up with new algorithms for optimizing the use of computer network bandwidth between a whole bunch of client applications that wanted it all. They tried all sorts of increasingly complex schemes to centrally manage scarce network bandwidth among many consumers. Someone realized that this was exactly the problem that the market solves through prices. So they said, “Let’s set up a market in network bandwidth! We’ll give the consumers ‘money’, and allow them to set prices based on how scarce bandwidth is and how badly they need it.”
This turned out to be a very good solution. But as they developed the model, they started discovering that they needed intermediaries. A ‘futures market’ in bandwidth cropped up so that machines that could predict bandwidth requirements could buy it in advance. Other machines that already had that allocation saw prices rise, and decided to sell that allocation for tomorrow for more ‘money’, which they could use to buy more bandwidth today. Etc. Eventually, broker objects made their way into the model - programs that accepted transactions between all these different clients and made optimal recommendations. Eventually, the team ‘rediscovered’ a whole host of capitalist intermediaries like brokers, interest bearing accounts (if I really need bandwidth, I can ‘borrow’ it from someone who’s using it now, so long as I give them a bit more than I borrowed to make up for the time value of their work), etc. As it evolved, the system looked more and more like a capitalist economy, just starting from a few basic rules of supply and demand and a price system.
Capitalism has evolved over hundreds of years. Believe it or not, it is a highly optimized system. “Capitalists” are very necessary for it to function well.
Well, now we get into the area of opinion, sprinkled with some empirical data. Where are the jobs? Why aren’t people hiring? A lot of people are trying to figure that out right now, but one thing we know is NOT causing the problem is ‘outsourcing’, for the simple fact that outsourcing so far only accounts for something like 300,000 technology jobs. Given an economy that’s supposed to be creating millions of jobs a year, this is not the problem.
I personally think there are several issues here. The first is that many of the layoffs from the tech bubble burst were in high-paying jobs, and those people are less willing to move into lower-paying jobs. So they are less ‘job mobile’. If you lose a minimum-wage job, then just about any other job will do. If you’re a programmer and lose a $70,000 job, it’s pretty hard to convince yourself to go work for Radio Shack.
So a lot of people that show up in the unemployment numbers (or who fall off the radar) are going back to school. College enrollment numbers are up substantially this year, after several years of decline.
Another factor is increased family wealth, which is allowing a lot of young people to stay at home and out of the work force.
Another factor is the rise of the underground economy. The internet is facilitating a lot of this. Go have a look at how many people are making a living selling on eBay. Internet jobs in general (web designer, ISP, blogger, whatever) have a much lower barrier to entry than traditional business does, which allows a lot of people to dabble in it.
Finally, uncertainty. And I think this is the biggest factor. Companies are loathe to hire people that they may have to fire soon, so they tend to look for long-range stability before embarking on large-scale permanent hiring. The war on terror complicates this. Everyone knows that another major attack could send us back into recession. That puts a ‘risk premium’ on hiring.
Add all this together, and you get slow job creation. But productivity is rising, and that creates job pressure. So the jobs will be coming. It’s just taking longer than we’d like.
So has the modern welfare-state government which you somehow don’t seem to have the same affinity for! And, bureaucracy…whether within government or within corporations, which neither of us has much affinity for.
No, it is the right one. You are making some sort of assumption about what a service job is. you are attaching some sort of value judegement that they are bad. If you read what kinds of jobs the site means when it talks about service jobs, however, you will notice that it is not talking about 21 million burger flipper jobs. It is talking about a whole host of jobs all of which the BLS considers service jobs.
Also, you will note that the trend is not new. This is the same thing that has been happening for some time now. Notice, for instance that “information” is one of the job sectors. I am not sure, but it seems that the BLS considers many of the IT jobs which were created in the last decade service jobs. Hardly worth the scorn you seem to be heaping on them.
Here’s something interesting - while I was searching the net for some background material, I came across this Usenet Thread. People there are making the same arguments you guys are making. Some samples:
and…
and…
So, it looks like you guys have a lot of company for your fears. They’re all here - outsourcing, technological advance destroying jobs, greedy corporations choosing profit over employers. Even the claim that the unemployment rate is artificially low because it doesn’t count workers who have stopped looking for a job.
The only difference is that this thread was written in 1992, when unemployment was 7.4%. I remember this time well, and if anything the fears you guys have were much worse then. George Bush I lost his job in part because of the hysteria around the ‘horrible economy’.
This of course was right before a decade which saw historical levels of GDP growth AND job creation. And the economic situation we’re facing now isn’t nearly as bad. And even the deficit is only about half the size of the one that followed the 1990 recession, in terms of % of GDP.
Life is constantly ending as we know it. Don’t be naive: things were pretty peachy in Europe in 1914, until a little war broke out–for no reason in particular. Things were going grand around the world in 1929–then the world economy went down the jakes for reasons that still cannot adequately be explained. Shall we talk about another war that began in 1939 for no good reason? I think you get the point. Your faith that things are going to be OK is just that–faith. We never know when another depression, war, or market crash is going to strike.
Yeah, and there were also hideous depressions in the 19th century too. One of them occurred in 1873.
Childish rhetoric. Tell someone just entering his prime in 1930 that he will be hard for work for the next 11 years followed by a chance to die in WWII–see how happy he is. The fact is that problems don’t always get solved in short order.
Hardly. No one here is claiming that we are definitely headed for a long-term recession or horrendous job market. People here are merely claiming the obvious: the job market currently sucks large, there is no reason to believe that things will change soon, and the national/world economy itself is in danger of tanking. YOU are claiming that soon everything will be A-O-K. You are free to prove said claim if you choose, or you can keep tap-dancing and getting hit with rotten tomatoes.
I suppose I am not really trying to object exactly, nor really am I trying to overly complicate things. I am not claiming that we abandon the rule, only that it will change. I am not claiming that you or I will suddenly start catching more rats than will sustain us, or that we will forgo rats that could save us. I am simply trying to draw attention to the fact that in this example, you need to choose your starting values carefully if you want to suggest that adding an additional fixed cost will not change anything. I am not suggesting that it will change everything.
For instance, in the hypothetical as you’ve reformulated it, you have not said what the caloric costs of the first 2 rats is. If it is greater than the caloric content of the third rat, then you will not stop at 3, you will have to stop at 4 or more perhaps. The marginal costs is no longer the only influencer of behavior.
If you have ever run the dollar auction experiment, can you tell me if the number of bidders changes for the second dollar? Does the number of willing bidders not get lower with each successive dollar? Doesn’t this indicate to you a little that fixed costs are not completely irrelevant? Also, have you ever heard of the price going over $2.00? If not, why not? Presumably, the marginal costs do not get smaller than a penny. The only thing which continues to increase is the “fixed” costs. Why would the bidding stop at $2.00? May I suggest that the bidding stops before $2.00 because the total benifit is being considered by the students. That is the fixed costs and the marginal costs.
Again, I am not trying to say that marginal costs are irrelevant. Not at all. I am merely trying to suggest that they may not be the whole story. And that taxation may not be merely an added fixed cost which is irrelevant to economic activity.
But the adjustment of spending habits will in and of itself be a market distortion (unless I completely misunderstand what you mean by that term). By moving wealth from one participant in the market to another, you will have changed the rewards of the first and the second. That is, you will have reduced the reward for trade and increased it for “trade failures” for want of a better term. Specifically, the money kept by the first participant will be valued higher than it would have been. After all, he not only had to earn that money, he had to earn the money taken from him. Meanwhile, the money transfered to the second particpant will be valued lower than it would have. After all, he did not have to do anything to earn it. The spending decisions made by both participants will be “distorted”.
Perhaps this is not what you mean by a distortion. If so, then perhaps that is where I have misunderstood you.
Odds that some economic badness will happen at some time in the indeterminate future? Certainty.
Odds that empirical data available to us today indicates a looming disaster? Zero.
Do you see the difference? Pointing out that random bad things have happened in the past, and that it would have sucked to in them, is irrelevant to the discussion.
The future is unknowable. If I would have told you in 1980 that within ten years everyone would have computers, the Soviet Union would be gone, and we’d be talking about a ‘peace dividend’, you would have laughed.
If I had then told you in 1990 that within 15 years we would be fighting another war, with thousands of dead civilians in America, military spending would be climbing rapidly, and the internet would be a ubiquitous part of everyone’s lives, you might have had a hard time with that, too.
And I’m sure that 10 years from now there will be new opportunities and challenges we can’t even see on the horizon right now.
This is not an indictment of the market, because you have not made the case that your alternative is better. Make the economic case for tariffs. Explain how it works out. Account for things like trade retaliation by other countries, just like what was about to happen because of the steel tariffs. Explain how a new source of inexpensive labor available to Americans is not good for America.
Quite so. I think everyone here has agreed at one post or another that losing a job hurts. And that there are many people out ther hurting.
Am I the only one who noticed the juxtaposition of these?
Also, this one.
Further, I think it is the isolationists (that’s not really the right word either) who are claiming that even if the current situation is not as bad as “the national/world economy itself is in danger of tanking”, it certainly is bad enough that we need new massive government intervention to correct whatever is going on.
I think you may have left one thing off of your list. The effect of hysteria. I’m not talking about the uncertainty you mentioned, I’m refering to the unreasoned fear that “this is the worse economy since…”. Its the kind of thing that gets bandied about by the party which is trying to take back some portion of Washington. We hear about it more during presidential races, but it happens during congressional races as well.
The need to make the economy look worse than it is by the party out of power is intense. And it leads IMHO to a lot of unfounded hysteria.
You have much faith, my son. But life ain’t just economics–it’s also politics and sociology.
I also think technology and efficiency are great. But society itself must adapt to new economic realities. You don’t seem to acknowledge this. In the 1930s the US made an adaptation called “The New Deal.” Since then, nearly all developed countries have adopted a semi-socialistic or rather completely socialistic economic system, as was necessary.
Sure there is, as people have stated over and over: the former is is reaction to an absoulte benefit (new and better technology), the latter is labor arbitrage, pure and simple. The Indians and Chinese sell themselves cheaper.
NOT irrelevant. If they use slave labor? Relevent. If the people work in poverty? Relevent. If they are dumping chemicals into the ocean or rivers? Relevent. If workplace safety is compromised? Relevent.
You seem to believe in an US-THEM dichotomy. What happens to the Indians and Chinese (and their/our environment) doesn’t matter–so long as we are willing to pay their price. In point of fact, the only separation between us and them is arbitrary and political. They deserve just as much as we do.
. Yes, if you are a callous right-winger, that’s all you have to know. How telling.
Yes, the former is a technical advance. I have no problem with the latter so long as the Indians are treated as well as their US counterparts. Also, as has been pointed out more than once in this thread, the US dollar is currently being suppressed artificially, leading to labor arbitrage occurring at its current scale.
Yes, you’re right: if you ignore numerous things that matter, then suddenly they don’t matter–brilliant!
Sure it is. We even have a locution to describe it: “market fundamentalism.” You’re a libertarian market fundamentalist.
Yeah, the people arguing against you are “anti-market zealots” wishing to return to Soviet-era-style central planning.
Man you don’t know how close this sounds to appeals to pray to Jesus so he will enter your heart. You are talking to us as though we are idiots. We’ve studied economics and have come to the conclusion that things today are not copasetic. I have not seen anyone here argue for Marxism or any other extreme.
Nor is history on your side. The past 100 years have been filled with war and economic chaos. Your hymns to the power of the market don’t even seem to take reality into consideration.
Garbage. I’d like to know, for instance, how the market is going to provide health care for every American, seeing as how this has failed to occur in the last 50 years. For most people, a system that is “maximal” anything will relieve them of worrying about illness and paying for treatment. Realizing this, just about every country in the world has a national health care system, many of which are recognized as excellent, that relieves the common man of this worry. The market has not, and CANNOT, take care of this need.
Agreed.
Again, those “social reasons” are often essential. The medical care example pertains here.
Here we go again. The statistics suck and don’t take into consideration standard of living.
Re the auto example: glad that things aren’t so bad, which leaves me confused why you used the example to begin with.
No, wrong again. Certain industries are already producing more product than the market can consume (take fiction publishing, for example), and they can therefore be thought of having a surplus of labor. I’m not trying to say anything new or controversial here. If you have two barbers on the street who barely have enough work to stay in business, and if then a new barber cluelessly sets up shop on the same street, then you have a surplus of barber labor in that area.
As to how prices then react to this–well, you could argue that all three shops could lower haircut prices, and the public would thereby benefit. But it doesn’t work that way, namely because a barber can’t charge below a certain rate without starving, and he would move into another line of work before he did so.
Haven’t you heard of this service work problem? There’s a name for it, which I forget. Basically the problem is this: productivity has increased dramatically in manufacturing, etc., but pretty much not at all in many services. That is, restaurants and barbers are not much more productive today than they were in 1900. Yet people can choose whether to enter such professions or manufacturing work. Unless the service jobs pay as well as the manufacturing jobs, people simply won’t do them. Hence, services are proportionately much more expensive than they were 50 or 100 years ago, leading to permanent dissatisfaction with those price levels.
Try accomodating such phenomena in your formulae, Samuel.
Or try working in Japan. I have worked for two companies in a row that I firmly believe could cut their workforces by 1/3 or so and not have business suffer a bit. But the employees are kept on for social reasons (whereas their heads would probably be rolling in the US). There are millions of youth here who cannot find jobs and have basically given up (the “freeters”). It’s a fricking dysfunctional mess. There is simply not enough work for the people in this country to do. Now, according to your theory, new industries should be popping up right and left, but it ain’t so. Ten years of economic and social malaise. But that could never happen in the States, could it?
Now we’re talking about market failures again. Everyone bitches about how few teachers there are, yet their wages never seem to rise high enough to attract good people. Explain that. Another biggie is child care. Lots of people need child care. There is a big shortage of child care–everywhere. Yet child care only pays a poverty-level wage–it is absolutely scandalous. Why doesn’t the market fix this?
Nursing home care is another disaster area. Often those workers make only minimum wage. It is a total market failure. Old people need care, but they simply can’t afford to pay for it. As I heard on NPR a year or so ago, there are not many hotels that give you 3 meals a day, provide medical care, and charge only $100. It’s a great deal, but old people can’t afford to pay $40k a year for that. Help us, O Market!
And YET we have a high unemployement rate. Why don’t people “retrain” as bricklayers and plasterers? There must be a reason for this dysfunction.
The hypothetical and the ones that follow are cracked, since the creation of wealth is directly dependent on the structure that supports it. You can’t just suppose a raw doubling of wealth and ask how other things would change in relation to that.
Your self-parody relieves me of the burden of sarcasm. You said it all right here.
Must I repeat again? Productive efficiency is a necessary, but NOT sufficient, condition for new jobs creation! There is not a fairy that shows up, notices new efficiencies, waves her wand, and creates new jobs!
You may be literally correct here according to some government-ordained definition, but obviously no one would be complaining about a recession if there were plenty of good-paying jobs. Another counter-example is one in which the GDP shrinks because the population shrinks–people would not necessarily be feeling pain.
Your personal definition here is going to sound strange/stupid to the majority of non-right-wing, educated readers.
Again, I am relieved of a burden.
Er, make that “asset bubbles.”
Yeah, I started looking for a job in late 1929, but finding good employment “took longer than I liked.”
And how does that make it different than the technology, again? Economically speaking, that is. Unless you can articulate exactly what different effect outsourcing has over technology, you’re just blowing smoke.
Well, now you’re changing the argument. I was talking about economic theory. Moral questions are an entirely different matter. But I don’t think you wanted to go there, because you are on the wrong side of the moral equation.
On the contrary, it’s the protectionists who are erecting barriers between countries and trying to stop THEM from taking OUR jobs. Free traders recognize the right of all people to freely trade their goods and services, and they recognize that free trade is the primary mechanism that will lift up the third world. South Korea didn’t become wealthy because we refused to trade with them because their factories had poor conditions and they polluted. South Korea became wealthy as the result of trade and foreign investment. South Korea used to be the ‘sweat shop’ of the world. Now it owns the world’s largest shipping manufacturer, has a 1st world economy, and they’re bitching about losing manufacturing jobs to other countries.
If you want to help the third world, let them sell you their damned goods. They can take the profit, reinvest it, and build their countries. And when they become wealthier, they will be able to afford better worker protection, higher wages, and better environmental controls. Forcing them to do those things now when they cannot afford it prices them out of the marketplace and dooms them to poverty.
I’m going to ignore the rest of your post because most of it seems aimed at my moral choice, when in fact I believe that free trade is the only moral position to take.
pervert: *Look back a little farther than 20 years, and you will find innumerable examples of downturns which wer far worse than what we suffered a few years ago. As you go back in history, you’ll also notice that each and every time the market corrected for them. *
Um, coming out of past downturns generally involved a lot of government intervention in addition to “market corrections”. It doesn’t make sense to pretend that markets take care of these problems all by themselves—at least, within the time frame that democratic societies are willing to put up with.
I think a lot of the misunderstandings here involve people talking past one another’s perceptions of the central issue. There seem to be at least two different propositions that different people are debating in the mistaken belief that that’s what their opponents are talking about:
**Proposition 1. Perhaps modern productivity increases have permanently distorted markets to the point where market mechanisms will never again be able to produce adequate employment, so we are doomed to permanently increasing immiseration and a feudally stratified society.
Proposition 2. Perhaps modern productivity increases have permanently distorted markets to the point where market mechanisms cannot produce adequate employment quickly enough and abundantly enough to avoid harsh social consequences, so we should consider supplementing them with direct stimulus via government.**
I think that I, Aeschines, iamme, jshore etc. are basically arguing for Proposition 2, whereas pervert and Sam etc. are arguing against Proposition 1. But they don’t necessarily contradict each other.
Surely we all agree that the natural tendency of market forces is indeed to respond to the availability of excess labor by creating new employment opportunities, and that tendency is never going to change as long as markets exist. IMO, the important question here, though, is: will that tendency overcome existing market distortions fast enough and strongly enough to create sufficient new high-quality jobs so that the standard of living of average workers doesn’t take a serious long-term hit?
Sam:This is not an indictment of the market, because you have not made the case that your alternative is better. Make the economic case for tariffs.
Is anybody here actually arguing that the best form of government intervention in this case would be imposing tariffs? Not that I’m aware of. Again, I think you’re talking past your opponents rather than to them.
*They’re all here - outsourcing, technological advance destroying jobs, greedy corporations choosing profit over employers. […] The only difference is that this thread was written in 1992, when unemployment was 7.4%. […]
This of course was right before a decade which saw historical levels of GDP growth AND job creation. *
Doesn’t sound to me as though those fears were unfounded in 1992; rather, it sounds as though the problems we’re seeing were already in place, but were temporarily counterbalanced by a bubble economy and ballooning consumer debt. From where we’re sitting now, it is hard to argue that the mid- to late-90s boom really constituted a permanent advance in the average worker’s prosperity.
I may try to respond to the other stuff, but this got me thinking. What the heck are you talking about. By what measure is anyone worse off than they were in the early nineties? More importantly, what the heck do you want? Will you be unsatisfied until every one makes the same income? What exactly do you want?
The socio-economic structure in the United States is dysfunctional, and this must be corrected on a structural level (yes, through new laws and regulations).
Even if the economy were doing fine right now, we would have 40M+ people without insurance and many other socio-economic problems to fix (wealth imbalances, etc.).
To Sam: Yes, we totally disagree, and it looks as though we are arguing at cross purposes. I hope your market will be kind to you.
ell, no it didn’t. I think a very good argument can be made that very few of the government programs of the last 100 years was substantially responsible for turning the economy around. I agree that government intervention occured. I also agree that in some cases it helped. I simply disagree that government intervention was necessary or even preferable to other choices.
That’s ok, but you really need to define and be ready to back up “harsh social consequences”. Lots of bitching doesn’t count. Also, you will need to be prepared to compare the “harsh social consequences” with the same sorts of measurements of the past. That is, if you want to say that automation has caused a large number of people to be without health insurance, you need to be willing to suggest how they would have insurance without such automation.
Basically, what I am saying is that there is another possibility.
Proposition 3:Perhaps modern productivity increases have permanently increased the capacity to create wealth. In doing so they have also changed the way wealth is created. It is possible those unwilling to change their expected source of wealth may complain about this.
What distortion are we talking about? I’m sory, but I can’t get my head around the idea that higher productivity is a distortion. Perhaps there is a better word?
Not in so many words. But there are often veiled references to “protecting american workers”. And even if the only intervention you are talking about is some form of welfare, how is that not a tarrif? Will Chinese companies pay taxes to support these programs?
Ok, but now we are getting to the unsinkableness of these predictions. They did not happen in 91, or 92, but they are happening now. They did not happen in 79, 80, or 81, but they are happening now. How many times do you have to see predictions fail before you start to question the sincerity of those making them?
Aeschines replied to Sam: *“There is NO fundamental difference between losing jobs to the rise of technology and losing them to outsourcing.”
Sure there is, as people have stated over and over: the former is is reaction to an absoulte benefit (new and better technology), the latter is labor arbitrage, pure and simple. The Indians and Chinese sell themselves cheaper.*
Another point to note here is that there can be further distortions due to trade asymmetries: most Indian markets, for example, are more protected than ours, which means that their cheap labor market isn’t balanced by a cheap export market, contrary to standard free-trade assumptions.
Sam replied to me: A lot of people are trying to figure that out right now, but one thing we know is NOT causing the problem is ‘outsourcing’, for the simple fact that outsourcing so far only accounts for something like 300,000 technology jobs.
Argh! For the third or fourth time, Sam: I am not arguing that outsourcing is a major cause of the current jobs deficit. How many times am I going to have to tell you that before you stop responding to my posts with this same damn argument? If you want to argue the point with EC, go ahead, but leave me out of it, hmm?
Aeschines: *Now we’re talking about market failures again. Everyone bitches about how few teachers there are, yet their wages never seem to rise high enough to attract good people. Explain that. Another biggie is child care. Lots of people need child care. There is a big shortage of child care–everywhere. Yet child care only pays a poverty-level wage–it is absolutely scandalous. Why doesn’t the market fix this?
Nursing home care is another disaster area. Often those workers make only minimum wage. It is a total market failure. […] Help us, O Market! […] Why don’t people “retrain” as bricklayers and plasterers? There must be a reason for this dysfunction.*
Given a long enough period of stagnant labor markets, market forces will correct these shortages. But if the available labor pool remains large—which is what productivity increases tend to foster—they won’t correct the low-wage problem.
And in the long run, that will impact the trends of rising consumption that Sam is talking about. If more people are moving from high-paid tech jobs to low-wage service jobs, the average number of, say, cars per household is not going to keep increasing. Continued downward pressure on wages will put downward pressure on major spending, and thus on prices; and eventually we’d end up in a deflationary economy.
Now, taking a broad view, I’m not sure that this would be altogether a bad thing. There is a case to be made, in terms of long-term sustainability, for contracting consumption somewhat and reducing the average material standard of living (i.e., stuff ownership) of the developed nations. I mean, we can’t go on indefinitely increasing our numbers of cars or computers or TVs per household, and even if we could it would put unprecedented pressure on the environment. Nor could we go on significantly increasing number of hours worked per household (which boomed as women entered the workforce in large numbers over the past few decades) to offset wage deflation. Nor could we go on indefinitely increasing household debt levels in order to sustain high consumption on low incomes.
If high productivity does end up producing a significant decrease in median real income (which has already been nearly stagnant for decades), lower living costs and a somewhat contracted consumption economy, it may actually end up being healthier for us in the long run. But in the short term, unless we adjust to that trend wisely, it could be really painful for lots of people.
