I
guess it all depends on whose "ox is gored." If it is your job that is
threatened, then panic. If we are sitting back on looking at the "big
picture" then in the long run things will work out. And just because
things have worked out in the past doesn't mean that they will work out in the
future. And even if they do are all costs being
considered?
Dislocation costs, uncertainty, worker anxiety, etc., all add up to
something. Usually these costs are not figured into the economic
calculus.
arthur
A few comments in
blue.
Ed Weick
----- 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.
I think one has to figure time
into this. In the short-run, declines in particular industrial sectors
or the outsourcing of jobs will leave people stranded. In the
medium to long run, the economy and the labour force may adjust, but it
should not be taken for granted that it will. During the past century
or so, Canada has seen a large scale movement from primary industries to
secondary manufacturing to services. This movement has left many
communities and many workers stranded.
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.
Or maybe they are just tired of
the glut of stuff and don't want any 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.
What you may have is something
one might call a "betrayal factor". A few years ago, high tech was in
full flight in the Ottawa area, then known as "Silicon Vally North".
Ever so many bright young people bought into the industry, learned the
necessary skills, got high paying jobs, etc. Then the whole thing
began to crash. People got very badly burned. They had skills
but little to transfer them to. The next wave of young people would
likely be more cautious in what they committed themselves to learn.
They would likely opt for a broader, more universally transferable set of
skills.
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.
Ah, yes, but I do think we
learn from our experience. If new nuclear plants are built, they will
be less prone to failure. I guess what I'm saying is that it is not
really the capacity of the brain that is important here. It is
the accumulation of knowledge that the collective brain has to
work with. We now know, or should know, far more than we did
in the fifties, sixties and seventies when the nuclear plants and power
grids that we still work with were put in place. There is good reason
to believe that it would be done better now and will probably be done even
better thirty years from now.
Ed
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