The end of the
age of consumption and the decreasing need for labor are more related than you think
Robots have come to destroy our way of life, just as we saw in Terminator 2: Judgment Day, though not as we expected. They're taking our jobs, and are forcing us to reexamine how we value ourselves.
Here's a variation of a chart that has made its way around a lot lately -
wages and salaries as a percentage of GDP (green line). We see that
it's been falling consistently for five decades. But at the same time,
as we see in the blue line, wages/salaries and profits as a percentage
of GDP have been pretty consistent. The record profit margins we see in 2012 have been corporations gaining ground at the
expense of labor. It's only unsustainable if you see labor clawing back
its share of the pie - not likely in the near-term with 8% unemployment.
One can easily make the case that the only thing "wrong" with the economy in 2012 is that growth is below-trend due to the financial crisis and subdued public/private sector response, and capital has
gained an outsized share of income gains relative to labor since the
year 2000.
The role of the duel forces of capital and technology is to make us more productive,
to allow us to do things that labor alone can't do, or to do them more
efficiently. And they've done a good job. Since 1975, in the US
manufacturing sector, hours worked have fallen by 30% (blue line, left
axis) while output has risen by 170% (red line, right axis).
The issue, if you're labor anyway, is those productivity gains accrue to consumers and the owners of the factors of production, not labor.
And while until now these job-destroying forces have mostly been
confined to the goods-producing and information sectors, it looks like
the next wave is going to hit much broader in the service sector. As
nascent technologies like IBM's
Watson show, everyone from bankers to retail workers to health-care and
education workers are at risk. "Long IBM, short labor" is a trade that should work for years barring government policy changes.
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It's a bit perverse that we cheer the gains in health-care employment
while we decry the rise in health-care costs - the two are related.
Presumably, technology will cause health-care productivity to soar,
reducing the need for health-care workers. Again, great for consumers
and capital, bad for displaced workers.
The debate that's currently one-sided in policy circles but increasingly
will become mainstream out of necessity, is about the balance of power
between labor and capital. We've seen it in pro sports - owners and
players haggle over what percentage of sports-related income players get
to take home. And the debate was a lot more common in America's past -
men like Samuel Gompers were champions of the cause in the late 1800s
and early 1900s, trust-busting was popular, and government in general
took a more muscular role in the economy with increased regulation,
labor laws, and safety nets.
But there's another long-term issue in play than simply who gets what
percentage of the national income pie. It's that Americans continue to
define themselves by work when technology continues to reduce the demand
for labor. A couple recent articles have probed this phenomenon. A New York Times piece talks about our addiction to busyness:
"Busyness serves as a kind of existential reassurance, a hedge against
emptiness; obviously your life cannot possibly be silly or trivial or
meaningless if you are so busy, completely booked, in demand every hour
of the day."
And last week the Financial Times posted a piece about the end of the age of consumption, with what would currently be considered radical proposals;
"[government] should institute an unconditional basic income for all
citizens. This would aim to improve the choice between work and leisure.
Critics say this would be a disincentive to work. That is precisely its
merit in a society which should be working less and enjoying life
more."
Maybe this sounds extreme, but in the past democracies passed laws to
restrict child labor and limit the length of the workday, and instituted
unconditional basic income for all [senior] citizens. The end of the
age of consumption and the decreasing need for labor are intertwined,
and we have just begun to come to grips with this.
