Many "bullshit jobs" in finance exist only because of legal quirks, and could be eliminated by minor regulatory changes. Finance has about 5% of US jobs. Manufacturing has 7%. We need to get finance down and manufacturing up.
It would be straightforward to downsize the insurance industry. Insurance is complicated because insurance companies want it complicated so they don't have to compete on price. Much to the annoyance of the insurance industry, Medicare supplement policies are limited to 10 standard options, A through N. (There used to be more). So comparing companies means looking at a table of prices vs standard forms. If that was extended to other types of policies, the insurance industry's marketing operations would be much smaller.
Finance could be downsized by imposing a Tobin tax on financial transactions. One takes effect on January 1, 2016 in the European Union. It's 0.1% on most transactions, and 0.01% on derivatives transactions. That's enough to kill the high frequency trading industry and downsize derivatives trading by 90%, based on Sweden's experience.
The excess labor can be reassigned to more productive jobs in the lower levels.
> The excess labor can be reassigned to more productive jobs in the lower levels.
I know this is going to sound crazy, but can't we just provide housing, cheap renewable-based power, electrified self-driving mobility (those tiny Google self-driving cars), and inexpensive healthy food to those who can't work because jobs don't exist for them anymore? We already do some of this for the elderly with social security; I simply argue for going the "full monty".
I understand this future is still awhile away. When trucks switch over to autopilot, I think that'll be the big experiment. You'll have millions of people and nowhere for them to go in the economy. I also understand this might create a huge "moral hazard" with not enough people wanting to work; how would that be any different than us currently pushing people out in favor of automation with increasing the minimum wage? (Disclaimer: I am in favor of increasing the minimum wage, as it is woefully behind compared to inflation and CPI)
Find jobs, automate, split productivity/wealth/income between automators and society (currently "consumer excess"), repeat.
The US used to have a more generous welfare and housing program. In the 1950s and 1960s, the US built huge housing projects in big cities. The result was a huge population, mostly black, with nothing to do. Riots, concentrated crime, and several generations of welfare kids resulted.
So we cover the basic needs of those people. What are they going to do with their time? My guess is they'll look for ways to entertain themselves, and particularly inexpensive, mass-produced ways because they can't afford much besides their basic needs.
unfortunately we do this already in the USA..remember the 1990s and 2000s high crime rates and subsequent fall of crime? Most of that was economic based crime and those who did it got a free food and bed ride in prisons.
A lot of "bullshit" jobs also exist because of low interest rates. As unemployment due to automation increases, the central banks lower interest rates (lower rates are used to increase employment). So when all this free money floats around it allows companies to invent jobs that really don't need to exist.
As soon as rates are allowed to increase, as has happened a couple times over the last 15 years, unemployment will sky rocket harsh and we will see the results of automation.
For now, however, the tide is in and the naked are hidden.
> It's 0.1% on most transactions, and 0.01% on derivatives transactions. That's enough to kill the high frequency trading industry and downsize derivatives trading by 90%, based on Sweden's experience.
Most HFT transactions already experience this level of fee overhead. This will not cause HFT to go away, it will cause it to pass on more costs to the consumers of HFT. That is, every financial transaction will be more expensive.
This may have the effect of concentrating HFT even more than it already is as the regulatory burden favors bigger players.
There is nothing inherently wrong with that and I think the natural economics of HFT is already well on its way to creating natural monopolies in that industry, but a Tobin style tax will NOT cause HFT to cease to exist (nor do I think that is a desirable outcome).
Interesting read, I love to see contrarian views on automation. I'm really tired of seeing poorly thought out rants from techno-prophets predicting unbounded exponential growth when economic growth is stagnating globally.
There isn't going to be an unbounded exponential growth, and every techno-prophet knows it (as opposed to armchair economists) - if we keep basing our economy on endless growth, everything will go to hell when we hit the natural limits.
Natural resources, Earth's capacity to sustain our growth, and later on, speed of light (unless we break the FTL, there's only so fast we can expand our economy). Every exponential growth in physical world (as opposed to mathematical theory) has a limit at some point.
Be creative: unbounded exponential growth would mean, for instance, that at some point in the future the global yearly energy consumption would be higher than what E=mc^2 suggests for m=mass of the earth.
Unbounded exponential growth is possible, but we have to redefine the rules of capitalism. For example, rewarding those who actually advance our economies versus those who just play with numbers in stock markets.
Bounded theoretically, yes. But the boundary can be so far away that it doesn't matter. Take energy. Oil & coal are certainly bounded, either by available deposits to mine or the environmental effects of burning them. But energy can come from solar, wind, nuclear and other sources. It's possible that 200 years from now, we'll have hit a wall on energy, but it's also possible that we'll have increased our energy consumption by orders of magnitude.
Other than that, I think it's hard to think of economic growth for periods longer than a few generations.
When economists say that a dollar in 2015 is worth $X in 1066 and we are Y% richer, that's a very leaky metaphor. It's basically saying that a sheep or a loaf of bread cost x in 1066 and people made z every day and if we take our daily salary and divide it by loaves of bread and sheep then we don't really have to consider that we buy ipods and toothpaste and they bought slaves and mutton. It's just nonsensical to try and represent it quantitatively.
So economic growth in the long term is hard to think about in numbers. Say a vaccine for cancer, alzheimer's & diabetes was invented tomorrow. You would be willing to pay money for that and glad of the opportunity. That's economic growth. The researchers uses lithium in their laptops and fossil fuel to keep the lights on, but still I don't think natural resources will bound this kind of thing.
Keep in mind that we're talking about exponential growth which by definition means that in every step you consume more than in all of history combined. So today the boundary can be very far away, and it will stay so until suddenly you hit it and then act surprised. "Increasing our energy consumption by orders of magnitude" means that in 200 years we'll eat the sun, and in the next 200 years we'll swallow the galaxy (actually we won't, thanks to the speed of light limit, but I guess we'd be indistinguishable from a universe-destroying ever-expanding shockwave). We really do have to slow down at some point, exponential growth is not sustainable.
Also, the primary problem is not really the growth itself, but the need for it that is built into the basic assumptions of economy - because if and when we'll eventually hit a speedbump, everything will collapse.
If we're talking so literally I can only go back to the definition of economic growth, with is squishy enough to avoid pesky physics.
Economic growth is a very theoretical concept. Something doubles our economic growth if we make it and people value it as much as the stuff we are already making. If we invented new Japanese cartoon cat pens so cute and desirable that every person on the planet pays $1000 for it, bam! 7.1 trillion dollar growth. Just remove 7 billion regular pens to make room in the universe, and we're at 7.0999. (assuming no resources were diverted from other things)
Economic growth is kind of meaningless to think about at this scale. But at any two points on a more human scale, it means something.
That said, an exponentially growing (shoe) economy that eats the universe sounds like a Douglas Adams story so maybe you're right.
I always think of the somewhat recent tech development. The things are getting more advanced (worth more?) compared to before, but do not need the same increase in ressources to produce. Most of what is added is one-off research.
Exponential growth can be much smaller than that. For instance, 1% growth is exponential (as is 0.01% growth, and so on).
In the case of 1% growth the second interval is larger than the first, but the third is not larger than the first and second combined (it's still roughly 1/2 that).
In a finite universe, yes, it is clearly nonsense. Exponential growth cannot continue forever in a finite universe, no matter how small the growth constant.
Your comment is unrelated to what I was discussing in the quoted section.
I was saying you can't have growth for which f(n + k) = 2 f(n) for all k > 0 (I believe the only solution to that is f(n) = 0, which isn't what anyone is talking about when they talk about "exponential growth"...). This point was intended, in contrast with what I'd just said about there existing some k - to stress the notion of when the interval is picked.
I didn't think you were disagreeing with me - I think you were agreeing with something I didn't say. I was just speaking to definitions.
Whether unbounded exponential "economic growth" is possible in a finite universe is actually a significantly more involved question. It's obviously not possible if "economic value" is bounded, but in principle could be "possible" with finite stuff in continuous space (obviously, economic value depends significantly on configurations of stuff and not just amounts).
All of this is interesting, but I honestly don't expect any reasoning involving hard theoretic bounds to be of any use in determining what's likely over my lifetime, or those of my children.
If you want to define our economy and GDP in terms of consuming, yeah, we're screwed. I think there are more enlightened ways of looking at things. Like security, free time, good health, educated and artistic people, etc.
David Graeber is one of those guys who finds a nugget of truth and surrounds it with mountains of convenient and crowd pleasing BS. Everyone loves to hear that their "real jobs" are being cut while the boss that "does nothing" gets to stay, and nobody wants to be told that the "people who make things" are being rapidly replaced by a single "creative" and machines. Of course, all of this "progress" ends up generating a lot of paperwork so we end up with "pointless" corporate lawyers (who, in the article, had a very interesting life and is probably paid quite handsomely) who bitch about not having a philosophically interesting career as if that's some sort of inalienable right.
The true "pointless jobs" are the thought leaders who try to warp political and economic philosophy to their own solipsistic psychological needs by pandering to the baser wants and desires of their audience. Most else is a circumstance of market inefficiencies or people not actually being worth the salary they used to be paid.
And yet GDP per person has trended upwards in a pretty global fashion. [0, 1] So either those providing "real" value are so productive that they support all that dead weight and yet still continue to grow, or those "bullshit" jobs are actually providing real value and increases in productivity.
GDP is a (attempted) measurement of economic value-add. I cannot think of a better definition of productivity in the context of this conversation. The value-add per person has been increasing despite the claimed existence of "bullshit" jobs, with that being roughly defined (by me) as a zero-value-add position. My proposal is simply that if they are zero-value-add, then the value-add demonstrated by the rest of the population must be enough to completely cover those losses and then some. I'll let the audience decide if they consider that viable.
Feel free to provide a better measurement if you have one.
What about "GDP is detached from the production of hard physical goods and services that satisfy human needs."???
I won't go as far as to claim that Economy is a pseudo science, but like many other disciplines it uses words that are already in use by the general population and redefines them to mean technical concepts. The end result is that economist can make statements that are technically true but that end up conveying a completely different message when listened by a lay person.
In this case, when an economist talks about "productivity", it has a very specific concept in mind. One that has more to do with ROI than with the manufacturing of any thing of value at all. Of course, both concepts are not completely detached from each other (it would be useless to grab a concept to mean something random instead), but they are not 100% aligned either, and this results in misunderstanding, if not actual misleading. By example, when some troubled company talks about "increasing employee productivity", naive employees expect some sort of training program to help them be more effective at their jobs. What they get is a pink slip instead; if productivity is ROI, you can lay off half of your people and use the company's momentum to keep turning 80% of the income, so on paper it will look like you are having better ROI (even if the cuts get too deep and are damaging the long term viability of the business).
We'd like GDP to track what we would consider value, but it need not. It's not hard to find people who will complain that some contribution to GDP is unhelpful, detrimental. It wouldn't be hard to find sour words speaking out against financialization, for example. Economic rents in general can contribute to GDP but intuitively are not 'real value' because otherwise we wouldn't call it rent. Governments can create a lot of worthless work that contributes GDP, but unsustainably. It would be debasing to the word 'value' or 'productivity' to ignore that.
We'd like at least for 'real value' or 'productivity' as intuitively understood to contribute to GDP. That is, from an increase in value one may infer an increase in GDP (usually). I can accept that. I take issue with an inference in the other direction. If I knew how much 'real value' contributed to GDP and how much was in excess of that contribution, I would be an incredibly accomplished economist.
Maybe you and GP think about different concepts of "productivity". Economic value-add has only a loose correlation with work benefiting individuals and societies. That's the point of "bullshit jobs" concept - we're inventing occupations that feed on one another, wasting people's time and resources but making the numbers go up.
It's like in this story of soldiers who dig up latrines one day, and fill them up on another day. Yes, a lot of people were busy, but in the end, nothing useful got done and lots of man-hours were wasted.
>GDP is a (attempted) measurement of economic value-add. I cannot think of a better definition of productivity in the context of this conversation
>Feel free to provide a better measurement if you have one.
"The ideal economic or GDP hero is a chain-smoking terminal cancer patient going through an expensive divorce whose car is totalled in a 20-car pileup, while munching on fast-take-out-food and chatting on a cell phone. All add to GDP growth. The GDP villain is non-smoking, eats home-cooked wholesome meals and cycles to work."
-- Mark Anielski
Something to remember when you next start going on about "real value".
... The options presented are either "bullshit" jobs provide value or they don't. So yes, there actually are only two possibilities. Which other ones would you propose to exist?
There's a third one, in which I believe - that bullshit jobs provide negative value by using up natural resources and man hours that could be put to a better use.
A typical example would be political campaigns and/or advertising in highly competitive sectors - all work done there serves only to cancel out the work done by other people, thus creating a negative feedback loop that can consume infinite amount of resources for little marginal gain. Think about how much time, paper, paint and fuel is wasted printing leaflets and billboards and notice that if everyone collectively agreed not to do this, the results would be the same.
> bullshit jobs provide negative value by using up natural resources and man hours that could be put to a better use.
Touché. See, this is why we should all unit test with a fuzzer...
I suppose I would need to amend it to zero-or-less-value-add. This thought intertwines with the other line of discussion, in that these proposed "negative" items would likely be seen as GDP-positive. After all, someone needs to print all those pamphlets, and that's a value-add over paper and ink.
Interesting aside: São Paulo, Brasil has a ban on all outdoor advertising. Of course, that's only a limited subset of possible advertising, but it seems to have gone over well with the general populous.
I think that would still fit pretty well with "those providing 'real' value are so productive that they support all that dead weight and yet still continue to grow".
So bullshit jobs are a tax paid by big corporations? Why are they willing to pay this tax? If most of their workforce is improductive, why not get rid of it altogether? Why do these jobs exist?
Because corporations aren't monolithic rational actors, but rather large bureaucratic bodies made of people who operate in a broader social and cultural context.
One example is efficiency. "Why," say the optimists, "would corporations continue to employ more people than they strictly need to?" Implicit in the question is a characterization of the corporation as a rational, singular entity.
And I say that 'optimists' ask this question because one of the large questions that some smart people ask is "where's the massive productivity increase that (one supposes) would accompany a surge in jobs-reducing automation?"
But if we just move down the chain a bit, and re-ask the question in terms of the actual top-down management of these companies, conclusions present themselves. And it's basically that hierarchical, traditional organizations may be bad at reaping these benefits, and they may need to be killed off/severely threatened by newcomers to change their ways.
There are a lot of unnecessary jobs hanging around, for totally rational reasons. Ask yourself:
"Why would any particular manager prefer to have more people working under him, rather than fewer?"
"Why would a Department Head with many direct reports not be eager to work with another Department head to closely co-operate in a way that reduces both headcount and duplication of management effort?"
"If a certain corporate fiefdom is becoming more efficient due to automation in certain areas of its operations, could there be any motivation for the manager of that fiefdom to expand other areas of his operations instead of passing on the full benefits of that efficiency in the form of a possibly-reduced budget?"
It should be clear to everyone that we are being limited by the structure of the organizations themselves. And we are seeing increasing activity in self-organized companies, cooperatives, etc, at the fringes (and also of extremely-integrated larger companies like Apple under Jobs, which is an old-model solution to the problem of the inefficiencies inherent in very hierarchical organizations).
The newer-model organizations may be better able to reap the benefits of automation.
TL;DR: humans used to be increasingly necessary as wet robots for manufacturing, and then largely moved up the food chain to bureaucracy when real robots made the wet ones inconvenient. Mostly-unnecessary jobs have more-or-less stuck around because of the limitations of organizations, not technology.
Because most industries are consolidated by oligopolies. If newly formed, smaller and far more efficient companies begin to seriously threaten these oligopolies, they simply throw their weight around via acquisition, regulation or other quasi-legal means to destroy them.
Doesn't make for an exciting and optimistic story, but it is what it is. Pure capitalism is just as impossible as pure socialism, due to the exact same moral hazards. Human beings tend to use power to leverage their advantages in any way imaginable, regardless of the prevailing laws and ideologies of the day.
Hierarchy and structure has costs. Maintaining hierarchy requires inertia and increased transaction costs. Capitalism is predicated on hierarchies and market structures. A lot of jobs exist just to prop up the order of things.
I can think of one easy reason from a micro-economics perspective. A firm has "organizational rents" from being more productive as an organization than the individuals would be in aggregate on their own. This begs the question of how to divide them. The answer is usually along the lines of having a hell of a lot of political maneuvering to assign as much of the extra value to yourself as possible - salary, prestige, power, and favors.
Yes, low interest rates allow for a lot of meaningless labor to be performed .. why not? You can borrow at near 0% to pay for it, so who cares.
The fed is pushing interest rates lower and lower to keep people employed - even if it is in purposeless, pointless jobs. When they stop though, we'll see how many of these jobs remain.
Zirp did the same thing in Japan, by the way. Japanese hate unemployment and with Zirp they were allowed to keep a lot of people employed that otherwise would be laid off in a normal functioning capitalist society.
An Error Occurred Setting Your User Cookie
This site uses cookies to improve performance.
If your browser does not accept cookies, you cannot view
this site.
In black and red lettering on a dark purple background.
A summary is available here. It's the usual economist hand-waving.[1]
Automation and labour is a question we have a history of being repetitively wrong about. So, its worth treading lightly.
First of all, we use the word “automation” which already implies replicating people. We could just as easily use “tools.” There is a lot of grey area between automation and tools and economically the two are fungible anyway. If we think of new tools being invented, we think of people’s productive capacities being enhanced rather than replaced. Is a combine harvester a tool or automation?
“There is no fundamental economic law that guarantees every adult will be able to earn a living solely on the basis of sound mind and good character.”
I think this is a good thing to be pondering. Our modern economy, our political philosophies and I think most of our ideas of how society works kind of assume that every adult with decent character is be able to earn a living. This is why living wage debates get people so fired up. The rug gets pulled out from under all our political ideas if this doesn’t hold more or less true.
Overall, I think this paper goes down the right track. Historically, demand for stuff has been remarkably elastic. We can consume a lot of stuff. Automation is essentially tools for producing more. We have good historical examples of the workforce becoming more sophisticated to take advantage of these tools and continue being useful.
I do think it could be dangerous relying on the historical analogy, because as the quote above suggests the is no rule in economics that makes this necessary.
I do see a couple of avenues to worry about.
(1) One is the vaguely Marxist one: labour & capital. Automation is capital. It accumulates in ways that concentrate wealth. If the 99% thing we are seeing now is indicative of a long term trend dictated by technological progress… Marxist conflict dynamics may well play out in some way. Growing wealth gaps create social-political instability that’s hard to avoid.
(2) The pace of change. Technological progression’s effect on everyday life is moving very fast. The digital divide thing is real, way more than it was ten years ago. I recently spoke to a woman (about 40) who has never really had a computer that couldn’t get up to speed in hospitality work because she couldn’t leaner the software and its quirks fast enough. Workforce skills keeping up with technological progress is part of the process. But historically, this has been something schools could lead because the pace of change was generational. These days the rate of change is revolutionizing occupations much quicker. That could leave a lot of people behind.
I think demand elasticity will hold We can keep consuming more. I think the problem is in the workforce’s ability to keep up. There are plenty of potential jobs today, if the skills were available. I think if we got a 100% increase in the number of skilled programmers of the caliber that Google and FB are fighting over, the economy would absorb them pretty easily. Same for a lot of professions. The problem is that the skill sets required keep getting more sophisticated. That means inflexible labour markets.
It would be straightforward to downsize the insurance industry. Insurance is complicated because insurance companies want it complicated so they don't have to compete on price. Much to the annoyance of the insurance industry, Medicare supplement policies are limited to 10 standard options, A through N. (There used to be more). So comparing companies means looking at a table of prices vs standard forms. If that was extended to other types of policies, the insurance industry's marketing operations would be much smaller.
Finance could be downsized by imposing a Tobin tax on financial transactions. One takes effect on January 1, 2016 in the European Union. It's 0.1% on most transactions, and 0.01% on derivatives transactions. That's enough to kill the high frequency trading industry and downsize derivatives trading by 90%, based on Sweden's experience.
The excess labor can be reassigned to more productive jobs in the lower levels.