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It doesn't look like this made it to the list. If it did, forgive the
repitition.
Ed Weick
----- Original Message -----
Sent: Sunday, October 12, 2003 9:43 AM
Subject: Re: [Futurework] The new solar phase of mankind's survival
system
In blue, in response to
Keith.
Ed Weick
----- Original Message -----
Sent: Sunday, October 12, 2003 7:12
AM
Subject: [Futurework] The new solar phase
of mankind's survival system
The attached article is an analysis of the jobless situation
in the American economy at the present time -- with its obvious implications
concerning Bush's prospects in the next presidential elections in November
2004. The anonymous Economist staffer writes that unemployment is due
to two factors. One is cyclical -- caused by the normal rise and fall in
consumer demand for various reasons -- and the other is structural -- due to
the actual make-up of the businesses (and direct government employment) that
employ workers within a country.
Both causes of employment are
wave-like. The consumer demand factor is fairly short-term -- of the order of
5 to10 years -- as the mass of consumers fall into step as regards changing
fashions of demand for goods, and/or how much to invest, and/or how deeply to
get into debt, and/or what size families to have. These, in turn are due to
other factors such as the rate of interest, and also what is the overall
consensus as regards the future. Most of the decisions that result are
entirely rational but some are irrational, or rather, a-rational, such as the
investment boom of the late 90s when everybody was taken in by the prospects
for the IT revolution, so that all those who invested in equities thought they
were going to be rich. Some of the factors and fashions and decisions are
mutually-cancelling in their effect, but there is usually one predominant
short-wave trend within the while and it is this that has the major effect on
employment.
Keith, you
seem to have much more faith in human rationality than I have. As a true
economist, you see consumer demand and even how many children people have
changing in response to "the rate of interest, and also what is the overall
consensus as regards the future". Perhaps, but I think there deeper
forces at work, so deep that they may in fact be structural. 9/11, Al
Qada, Afghanistan, Iraq, pre-emptive strikes, the inability to resolve the
Israeli-Palastinian situation, the growing differences among NATO countries
and a long list of other things have cast a huge pall over the western
world. It makes most people want to hunker down, keep what they have and
not stick their necks out. It can, I recognize, also lead to economic
hedonism, inducing some to spend like crazy and consume for the sake
on consuming.
The structural cause of consumer demand, and
hence overall employment, is due to the succession of innovations that find
their way to the showroom or shopping mall. At any one time these are usually
components of a much larger technological or scientific breakthrough and the
latter don't come around very often. And when they do, it may take as long as
50 or 60 years or even longer for their full effects to become apparent. At
the present time -- and for the last 30 or 40 years or so -- we are into a
period in which computerisation is working its way through the whole economic
system. As far as the production of goods is concerned, though not so much in
the case of services, this takes the form of distinct ratchet-like steps in
which one particular production method becomes uneconomic and suddenly ceases.
The apparent cause of most of these are supposed to be cheaper labour -- and
there's no doubt that this is an important trigger-cause, particularly when a
particular production process leaves one country and goes to another -- but it
also enables the producer to change the whole culture of the process, enabling
a whole new constellation of cost factors to bear on the final price of the
product when it reaches the consumer.
During the industrial revolution of the past 200 years or so there
have been three main structural changes -- the steam age, the electrification
age and, today, the computer age. Once each of those got under way, then a
rapid succession of new products and new methods of production took off. The
problem is that when we are in the middle of one of these main phases, we
certainly experience the ratchet-like effects of more efficient production on
employment -- which can be painful for many -- but we don't have any idea of
how much longer the phase is going to last. For any one production process
there has to be a limit to gains in efficiency. At the present time, for
example, there seems to be an unceasing flow of jobs from the developed
countries to the developing ones, particularly those of south-east Asia and,
more latterly, India. In response, the only thing that a developed country can
do is to make the existing production processes even more efficient and
attract jobs back to the home country. This happened very effectively in the
90s, for example, when the dsign and production of computer chips, which had
largely fled to Asia, came back again to America. However, this particular
segment of the industry seems to be flowing back again to Asia.
You may be confusing
innovation and structure here. I would suggest that structure has a lot
to do with the basic make up of an economy - is it essentially industrial or
agricultural, does it rely heavily on a single sector or is it diversified, is
it essentially urban or rural, etc.? Whatever the structure, innovations
should help make it more productive - e.g. replacing horses with tractors on
the farm. However, they can also cause problems. The mechanization
of agriculture, for example, has converted rural societies to urban ones, a
structural change requiring a whole new set of economic and social
decisions.
I would also suggest
that your three major innovations are only three of many. What about the
internal combustion engine and the ability to harness nuclear energy?
What about major innovations in transportation, such as the airplane?
And what about innovations in business organization and government? I
would suggest that there are two processes at work here. One is
inventing something or proving that something is possible, like the Wright
brothers at Kittyhawk. The other is the step by step process which takes
something like the Wright's primitive aircraft and converts it to the modern
jetliner. There is also a third process, and that is societal
accommodation to innovations - e.g. what to do with growing urbanization due
to the displacement of the agricultural population. That too requires
innovative thinking.
The writer of the Economist article makes a good
point in saying that it would help all employers in the developed world if the
health costs of employing labour could be made much cheaper. So it would, but
this doesn't meet the main problem -- that we don't really know how much
longer the computer age will last until pretty well everything we do is as
efficient as it can possibly be.
However, when we consider that all
three main phases of the industrial revolution -- steam, electrification and
computerisation -- have all depended on cheap energy, the evidence is that
this is going to be extremely expensive in the coming decades. This, by
itself, isn't going to alter the character of what we produce and what
services we need, but it may limit the overall world production that is
possible and strongly suggests that, maybe, the industrial revolution is
coming to an end. Perhaps it is time to consider that an entirely new
revolution is going to be needed if the whole of mankind is not going to enter
a period of prolonged statis and, maybe, steady collapse.
Given the
need for energy in large quantities -- whatever the nature of the historical
period, or the important production phases within them -- then any country
that is looking towards a much longer term future ought really to be placing
the utmost emphasis on an entirely new energy technology. This can only be
solar power. Indirectly, it has always been the source of our energy from
huner-gatherer times right up till the present so-called high-tech era --
whether natural living resources, fossilised fuels or radioactivity -- but
there is no reason in principle why we should not tap into solar power much
more directly and on a daily basis and, more importantly, a local
basis, say by solar cells or biological methods. The potential is enormous,
and what is more, it has the possibility of being able to restore social and
political organisation to much smaller community-sized economices -- something
in which our genetic behaviours can act much more safely than in the huge
hierarchical systems we have today and the fearful weapons with which they
protect themselves.
You may well be right.
The next round of major innovations may be about alternative forms of energy,
or learning to live with less energy.
Ed
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