2012 June 17 Sunday
Heartiste On Zero Marginal Productivity Worker Trap

How to avoid a rising number of unemployed who can't make enough useful products and services to be worth the trouble to hire and manage?

1. How is the present automation and productivity conundrum qualitatively different than ones from the past (for example, the classic case of the auto replacing the horse and carriage)? If you do not believe it is qualitatively different, explain how we escape the “zero marginal productivity” worker trap, especially in an era when human capital is shrinking due to a combination of dysgenic birth rate differentials and mass migration of unskilled poor? Note: “Humans are fungible” is not an acceptable cop-out.

2. If, say, most of the profits go to the top 10% in society, while the bottom 90% are unemployed or marginally employed, how is it exactly that those top 10% will be able to extract profits from a customer base that doesn’t have the income stream to afford more than the basic necessities?

I do not think trickle down economics will work to solve this problem because people will end up preferring robots to people. Why have a human maid clean your house if your robot can do it any hour of the day or night, the robot won't steal, the robot won't take vacations, and the robot won't cost as much? I do not see how the menial laborers will be of much use. The convenience of automation will surpass the convenience of lower class servant workers.

Once the upper classes start to look at the lower classes as worthless to them what happens next? What will the upper classes decide to do with the lower classes?

I've written about this previously. See Gregory Clark Expects Unemployable Lower Class, The Rise Of Zero Marginal Product Workers, and Zero Marginal Product Workers A Growing Problem? Also see a Technology Review article about how technological advances are wiping out classes of jobs faster than other classes of jobs are arising to replace them.

Share |      By Randall Parker at 2012 June 17 09:37 PM  Economics Labor


Comments
Abelard Lindsey said at June 18, 2012 8:58 AM:

People who work in automation know that this is not a major problem.

See the following comment:

http://heartiste.wordpress.com/2012/06/13/automation-and-redundant-humans/#comment-346214

ASPIE said at June 18, 2012 10:10 AM:

Even if there will never be total automation, we still have to recognize that a lot of jobs are being obviated by technology, and this trend is only going to accelerate. While the commenter may be right that we can't just hand a computer a job and expect it to get done, nobody questions it still takes many fewer people to shepherd them than the human workers they replaced.

Matt Strictland said at June 18, 2012 10:58 AM:

Lots of options ranging from , civil war and wiping the rich out, social fracturing Socialism, Social Democracy, Walled Cities to technologically assisted mass murder. Its extremely hard to say how this will go down. Its entirely possible that the entire edifice will run out of energy, hit peak resources and we get somewhere from the Witch of Hebron or Mad Max.

My general prediction and its a guess more than anything is that of John Robb, the most successful people will be living in resilient communities and in the not so distant future, we'll have a population shrinkage and move back to city states.. Assuming the hyper fertile populations don't kill us that is.

bbartlog said at June 18, 2012 2:06 PM:

There isn't any strong evidence for the existence of a large segment of *zero* marginal product workers in the US. Zero marginal profit after all of the regulations and the need for minimum wage are figured in? Sure. But drop the minimum wage and eliminate things like worker's comp, while also getting rid of housing regulations so that people can live in shanties, and you would end up with a situation more like you have in Mumbai/Laos/Cairo etc. : lots of people with very low (but positive!) marginal product.
Note that I am not *advocating* this course of action, just pointing out that our society is set up so that unless you have some fairly large (by global standards) marginal product, you're unemployable.

James Bowery said at June 18, 2012 3:31 PM:

Not to worry -- at least not to worry about low skill employment. "The elites" are not uniform -- there are parasites and producers among the elites and the parasites are specialized at winning the confidence of the producers that lack perception and burying the producers that can see with labels like "racist" and "antisemite". The parasites will win. Technological civilization will achieve The Singularity the same way a blackhole does. Labor will be in enormous demand.


Besides, there is lots of demand for flesh and blood "employees" by a large portion of managerial elites. It will be a while before robots can simulate the sweet sensation of having their spirits broken -- at least to the quality required by the discriminating connaisseurs that don't want the cognitive dissonance of actually having to admit to themselves that's what they're "into" while believing themselves to be morally superior. Its just "business" in the true "service economy".

lcs said at June 18, 2012 4:39 PM:

It was always clear that a global economy was going to lower the American standard of living, except for those who profit from the global economy. Corporations only exist to sell their junk to the largest market for the minimum cost, so since the rest of the world outnumber us 10:1, we lose. The related question of what America is ultimately going to do with all of its stupid people has always hung over our heads.

Check it Out said at June 18, 2012 4:47 PM:

"Once the upper classes start to look at the lower classes as worthless to them what happens next? What will the upper classes decide to do with the lower classes?"

I don't think that will be very likely simply because the lower classes hold a lot more people than higher clases. This question is a good one and has a serious answer, but it can also be put the other way around:

"Once the lower classes start to look at the higher classes as worthless to them what happens next? What will the lower classes decide to do with the upper classes?"

Sounds a little like the anger brewing just before the French Revolution?

Russell said at June 18, 2012 7:49 PM:

"Technological civilization will achieve The Singularity the same way a blackhole does. Labor will be in enormous demand."

What does this mean? How will it be like a blackhole? And why will labor be in great demand?

A Gentle,Bearded Left-Winger. said at June 19, 2012 6:25 AM:

Let's frame it the other way round:

Why do you think the lower classes (who outnumber the upper classes 9 to 1), will put up with it?
What use are the upper classes to them except as shark chum?

America has the makings of a revolution that would make the French or Russian revolutions look like the proverbial vicarage tea parties.

A Gentle,Bearded Left-Winger. said at June 19, 2012 6:30 AM:

Anyway, Malthus said all this over 200 years ago - it's old hat, nothing new under the sun etc.

The most likely outcome, for the USA at least, is a race war.

Check it Out said at June 19, 2012 3:48 PM:

The problem with the Tea Baggers and the Occupy Post-testers is that they are peaceful. What kind of a brainless gutless herd of oxen go peaceful before the kind of violence perpetrated by the filthy elites against the people?? What kind of cowards lick the hand of he who has unjustly slapped them??

"When somebody slaps you on the cheek turn the other one"?? Really?? That principle would solve the problems of the world if only EVERYBODY folowed it. Such beautiful words -though they sound great- have not worked for the last 2000 years, and that only shows a great lack of knowledge regarding human nature on behalf of the one who spoke them. To me those words sound like just an attempt to disguise fear in the name of prudence.

A much better phrase would be: "When somebody slaps you on the cheek for no reason, beat the shit out of him and bring justice to the world" Sounds a little more realistic, doesn't it? At least there's honesty in them.

"Once the upper classes start to look at the lower classes as worthless to them what happens next? What will the upper classes decide to do with the lower classes?" What are you fucken kidding me?? Sounds like the medieval privileges of the elites and priests. Hey Randall, how about establishing the PRIMA NOCTA again, for those rich assholes??

Among human vices, the worst of all them is COWARDICE.

Pfoten said at June 19, 2012 7:46 PM:

"The most likely outcome, for the USA at least, is a race war."

Good times a comin'! If the darkies want the cities, they can have them. The famine and internecine fighting will save whites ammo.

Peter A said at June 20, 2012 12:17 AM:

"America has the makings of a revolution that would make the French or Russian revolutions look like the proverbial vicarage tea parties."

Hah! The American lower classes have cheap weed and beer, HD TV, free internet porn and video games. They aren't going to anything but grumble on internet forums. Why do you think the elites have invested so heavily in "entertainment" over the past few decades?

Peter A said at June 20, 2012 12:19 AM:

"Once the upper classes start to look at the lower classes as worthless to them what happens next? What will the upper classes decide to do with the lower classes?"

Soylent Green.

Glabrocrat said at June 24, 2012 5:57 PM:

YES to "cheap weed and beer, HD TV, free internet porn and video games" and great sites like Parapundit & Chateau Heartiste!

I'm deliberately unemployed, in a nice safe socialist euro country, sitting on a pile of PM's and calmly awaiting the fiat money collapse. Happier than I've ever been.

If the so-called "upper classes" ever decide to "do anything" about my lifestyle, I'm gonna burn their fracking houses down, OK?

Glabrocrat said at June 25, 2012 9:17 AM:

Like most of my generation, I was brought up on the saying: 'Satan finds some mischief for idle hands to do.' Being a highly virtuous child, I believed all that I was told, and acquired a conscience which has kept me working hard down to the present moment. But although my conscience has controlled my actions, my opinions have undergone a revolution. I think that there is far too much work done in the world, that immense harm is caused by the belief that work is virtuous, and that what needs to be preached in modern industrial countries is quite different from what always has been preached. Everyone knows the story of the traveler in Naples who saw twelve beggars lying in the sun (it was before the days of Mussolini), and offered a lira to the laziest of them. Eleven of them jumped up to claim it, so he gave it to the twelfth. this traveler was on the right lines. But in countries which do not enjoy Mediterranean sunshine idleness is more difficult, and a great public propaganda will be required to inaugurate it. I hope that, after reading the following pages, the leaders of the YMCA will start a campaign to induce good young men to do nothing. If so, I shall not have lived in vain.

Bertie "The Bomb" Russell

Check it out said at June 25, 2012 4:36 PM:

"If the so-called "upper classes" ever decide to "do anything" about my lifestyle, I'm gonna burn their fracking houses down, OK? "

Hey, that's a good idea. Maybe we should really burn their fracking houses down. The sooner the better.

Check it out said at June 25, 2012 4:41 PM:

"I think that there is far too much work done in the world, that immense harm is caused by the belief that work is virtuous, and that what needs to be preached in modern industrial countries is quite different from what always has been preached."

Great words, I'll second that all the way. If I be allowed to adopt a grandfather figure for me it would always be Bertrand Russell. That man was way ahead of his time.


http://www.zpub.com/notes/idle.html

ve said at August 6, 2012 12:14 PM:

The government will tax the machines and create meaningless make-work jobs for the masses of unemployable workers. This is already happening to some extent.


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