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Interesting Keith,
Three points.
1. the problem of lump of labor is the lump of
imagination in those who create value in jobs. There is no limit to
jobs but there is a limit to jobs that are considered valuable under the current
economic philosophies. For example, cultural jobs are less valuable
than factory jobs. The lack of imagination limits the number of jobs
that people will take or consider worthy of a life endeavor thus creating a
"lump of labor" situation.
2. I think you are wrong about the Soviet
Union. It was the information revolution and the image of affluence
that permeated the airways that convinced the public of the Soviet Union that
their distribution system was faulty and couldn't deliver. They did
deliver on such things as education, cultural products, health care, and
national defense. In seventy years they moved from almost the bottom
of the West to the second greatest super power but the people wouldn't sustain
it when they believed they were getting a raw deal on distribution and so they
cashed it in. Today even with a terrible life expectancy and poor
healthcare and an almost mafia atmosphere, the distribution is improved and the
average people feel hopeful even though things are considerably worse for the
average citizen than they were under communism. That is different
from what you described, although I think your description about the aging
infrastructure is accurate I don't believe it was the reason for the
collapse. Many European countries have been just as
protectionist as well as Japan and what they have preserved is 1. quality of
local craftsman and 2. retention of many national heritage treasures which the
market usually trashes. But they do not have the distribution
problems found in the old Soviet tyrannical structure. I would also
note that the Oriental countries are sending many of their best and brightest to
study in the old Soviet Schools in preference to the US Universities which is
putting a strain on America. The issue here is not cost but
quality. My daughter had a scholarship to the Moscow Art
Theater but opted for here not for the quality but because she chose another
career.
3. Finally the issue of poor pedagogy and
with a rising "productivity story" and economy of scale
lowering the overall quality of societal educational ideals there is no training
to develop the kind of brain hardwiring that produce the goods you
lament. If the ideal is the three Rs and the "least
expensive" as well as the "least effort" then there is little initiative for
calculus much less Milton Babbitt. Just because some of us enjoy
such things does not mean that those who are not trained can even imagine
them. Language and all complex activities demand exceptional
pedagogy and the current market ideals of productivity and "efficiency"
contribute to a consistent lowering of expectations and quality. We
accept recordings as equal to live performance, movies as the equal to
great theater, McDonalds as equal to Cafe Luxemburg and end up with what
one Viennese tourist told me was the culture of "cheap." I
agree. If you are willing to give up your good English Ale for
Miller High Life then that is your business but it speaks volumes about
your ability to perceive taste and eventually when your stomach turns against
you, you are likely to find other reasons for that ulcer or gastritis than the
cheap junk you have accepted all of your life. Of course I'm
speaking rhetorically when I say "you" and certainly do not mean a person of
your good taste of quality. One must after all be gentlemanly about
it.
Ray Evans Harrell
----- Original Message -----
Sent: Tuesday, October 07, 2003 2:43
PM
Subject: [Futurework] Lumps of unskilled
labour
It is good to read America's premier
left-of-centre economist, Paul Krugman, writing in today's New York Times
about the "lump of labour" fallacy and trying once again to put it to
rest. This is the delusion that re-emerges periodically when trade unions, or
even white-collar groups, start to panic at what seems to be a surge in the
number of jobs leaving their own country and going abroad where labour is
cheaper. At the present time, this mainly concerns manufacturing jobs leaving
for China and some sorts of middle-skill white collar jobs leaving for
India.
If you believe that there is a fixed number of jobs in a country
then it is logical to deduce that if some of them are out-sourced to other
countries then unemployment at home is bound to rise. However, the premise is
wrong because it implies that no new jobs ever get created. Presumably, the
number of jobs was divinely created once and for all, and must therefore be
protected. The problem with this is that, without competition, the
protected businesses inevitably become more inefficient as time goes by and
the goods they produce become more costly than they needed to have been if
they had been made abroad. A country that protects its jobs and begins to cut
itself off from the rest of the world inevitably spirals downwards, with an
increasingly lower standard of living. This something that happened for
decades in the Soviet Union before the system finally gave way under the
strain in1992 despite Gorbachev's valiant attempts to forestall it.
To
remain in the game, each country must be continuously creating new products
and new jobs. However, there are two problems with this scenario. The first
has been considered by only a few economists; the second, to my knowledge, has
never been considered by any economist at all so far .
The first is
problem was first raised by the Prof Fred Hirsch, an economics professor at
Warwick University in his book, The Social Limits to Growth (1976) that
was published not long before he died while in his 30s. He was mainly thinking
of goods, services and facilities that would be so much in demand by consumers
that their very supply would cause congestion and a deterioration in the
environment for all. My own elaboration of this is a slightly narrower one
but, with the beneift of hindsight, a more powerful one, I think. This is that
the main congestion that will strangle economic growth is that of lack of time
and attention by the prime consumer group -- the middle-class -- the class
with enough disposable income that always initiates new consumer items that
are profitable enough to drive the whole system. Increasingly, this class --
what I call the initiatory class -- are now so time-starved and
stressed in normal daily and weekly life that they can barely cope with the
consumer goods that they already use in their limited spare time, never mind
buying more.
The second problem is that there must be natural limits to
the abilities of a population to respond to higher job-skill requirements. In
the prevalent political philosophy of the last 30 or 40 years or so, the
supply of skills was never seen to be a problem because a government could
simply pour more resources into education. However, today, we need a growing
proportion of very high-skill people to keep the system going. Unlike 'New
Age' thinkers who believe that there are no limits to the abilities of the
brain, those who are more practically involved with this problem --
educationalists and neuroscientists -- know that our brains are as finite in
their processing abilities as they are in size.
The first problem
above is already being recognised as such and is usually termed the 'work-life
balance' problem -- and it is growing. We are not entering the life of leisure
and abundance that many futurologists foretold a generation ago despite the
fact that we have more energy, technology and automation than ever before.
Life is becoming more stressful, particularly for those with professional
responibilities. The second problem doesn't register at all in the public
consciousness yet. However, in events such as the Chernobyl and Half Mile
Island nuclear accidents, the increasing number of electricity grid blackouts,
the rapid spread of antibiotic-resistant staphylococci and new varieties of
influenza, and so on, we have the first hints that we are beginning to live
right on the edge of our expertise.
Keith
Hudson
<<<<
LUMPS OF LABOUR
Paul
Krugrman
Economists call it the "lump of labor fallacy." It's the idea
that there is a fixed amount of work to be done in the world, so any increase
in the amount each worker can produce reduces the number of available jobs. (A
famous example those dire warnings in the 1950s that automation would lead to
mass unemployment.) As the derisive name suggests, it's an idea economists
view with contempt, yet the fallacy makes a comeback whenever the economy is
sluggish.
Sure enough, the lump-of-labor fallacy has resurfaced in the
United States but with a twist. Traditionally, it is a fallacy of the
economically naïve left -- for example, four years ago France's Socialist
government tried to create more jobs by reducing the length of the workweek.
But in America today you're more likely to hear lump-of-labor arguments from
the right, as an excuse for the Bush administration's policy failures.
The latest lump-of-labor revival came to my attention when I realized
how eagerly certain commentators were picking up on a new study by economists
at the Federal Reserve Bank of New York. In it, Erica Groshen and Simon Potter
argue that the pattern of laying off workers during recessions and rehiring
them during recoveries has changed since 1990 employers have become much less
likely to rehire former workers. It's an interesting study, and it might
repeat, might shed some light on why businesses have added so few jobs during
our so-called recovery.
But I was puzzled at first by the enthusiasm
with which a relatively academic paper was seized upon by usually bullish,
supposedly hardheaded business commentators. The puzzle vanished, however,
when I read these remarks more carefully they were mainly trying to make
excuses for the administration's dismal job record. You see, they say, it's
not that an economic policy consisting largely of tax cuts for the rich has
failed to deliver. No, it's a structural problem with the economy, which just
happens to have arisen now, and nobody could have done better.
Oh,
well. But partisan politics aside, the growing lumpishness of American
thinking about jobs is dangerous, in two ways.
First, it encourages
fatalism if politicians and the public believe that new jobs can't be created,
they will stop pressuring our leaders to find more effective policies. And
that would be a shame, since the Bush administration has resolutely refused to
try the policies most likely to improve the employment picture.
Since
2001, sensible economists have been pleading for federal aid to state and
local governments so schoolteachers and police officers needn't be laid off
because of a temporary fall in revenues. They've also urged the administration
to stop dragging its heels on much-needed homeland security spending, not just
because such spending is needed to make the country safer, but also because it
would create jobs and put more income into the hands of Americans likely to
spend it. (And if you're worried about spending's leading to increased
deficits, why not cancel some of those long-run tax breaks for upper
brackets?) Until we've done the obvious things, there's no reason to despair
about job creation.
Second, lump-of-labor thinking -- and the policy
paralysis it encourages -- feeds protectionism. If the public no longer
believes that the economy can create new jobs, it will demand that we protect
old jobs from new competitors in China and elsewhere. Economists can explain
until they are blue in the face -- why limiting exports from developing
countries would be a bad idea why keeping our markets open to new producers is
in America's interest both economically and diplomatically. But theoretical
arguments for free trade will count for little if the real-world experience of
jobs lost to Chinese competition can't be offset by a credible promise that
new jobs will be created to replace them.
History seems to be repeating
itself a similar rush to blame foreigners for U.S. problems happened during
Bush I's jobless recovery (which looked like a hiring boom compared with
recent experience). Remember the president's literally nauseating trip to
Japan in the company of auto executives? But if the early 1990's flirtation
with protectionism had the feeling of farce, today's employment stagnation --
and the protectionist talk now emanating from both parties -- has the makings
of tragedy. If we don't get some real job creation soon, the politics of jobs
may become dangerously self-destructive.
>>>>
New York
Times -- 7 October 2003
Keith Hudson, Bath,
England, <www.evolutionary-economics.org>, <www.handlo.com>, <www.property-portraits.co.uk>
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