In his weekly column for the New York Times, Paul Krugman talks about a problem that is likely (or at least should be) on the minds of many technologists: Companies are making more money today on the back of fewer laborers, and it’s not just low-skilled workers who are being displaced:
...some of the victims of disruption will be workers who are currently considered highly skilled, and who invested a lot of time and money in acquiring those skills. For example, the report suggests that we’re going to be seeing a lot of “automation of knowledge work,” with software doing things that used to require college graduates.
More alarmingly, unlike in the past, displaced workers aren’t finding new jobs. In fact, given America’s prolonged unemployment problem, it now seems likely that those jobs will never come back. They’ve been replaced: Sometimes by cheaper workforces overseas, but increasingly by technology.
So what do we do about it? Krugman’s solution is to create a new kind of welfare that guarantees a basic level of income for everyone, paid for by taxing corporate profits that are increasingly being driven by automated workforces. That might make sense in the short term, but it’s incredibly myopic.
A more interesting suggestion for temporarily mitigating the problem is to decrease the length of the workweek from 40 to 30 hours, which was successfully implemented by Kellogg’s, the cereal-maker, in the middle of last century. In 2000, France reduced its workweek from 39 to 35 hours with few ill effects, and President Nicolas Sarkozy’s reinstatement of the 39-hour week did nothing to help the French economy when it tanked during the 2009 fiscal crisis.
Reducing the length of the workweek has two effects: it brings more people into the workforce by creating new jobs to replace the lost hours, but it also incentivizes workers to choose not participating in the economy over consumption, which is exactly the opposite of what most people choose today. In fact, the Orion article argues that working long hours is actually less efficient, and driven by the need to consume excess production:
By 1991 the amount of goods and services produced for each hour of labor was double what it had been in 1948. By 2006 that figure had risen another 30 percent. In other words, if as a society we made a collective decision to get by on the amount we produced and consumed seventeen years ago, we could cut back from the standard forty-hour week to 5.3 hours per day—or 2.7 hours if we were willing to return to the 1948 level.
If more people start to choose leisure, it could help wean the country off of the notion that everyone needs to be maximally employed for the economy to function. Getting used to that idea is the remedy that most economists worried about the issue suggest as a long-term fix:
(Columbia University Economist Jeffrey) Sachs and (Harvard Labor Economist Lawrence) Katz are somewhat more hopeful, but their optimism is based on the politically problematic proposition that the United States can adopt wage and income policies similar to those in Scandinavian countries.
But those solutions still don’t address the root of the problem: we simply don’t need as many people to work anymore. Why? Mostly, because jobs and profit are not inherently connected. Humans have traditionally been the most efficient way to produce goods, but with increased automation, that’s starting to change, and that’s what Krugman is really writing about.
What happens when humans no longer need to work for the economy to function? That depends on whether or not you believe scarcity is inevitable. Most economists who do propose solutions similar to Katz and Sachs’ aggressive wage policies, and argue for a best-case scenario where we are all partially employed. But there are a rising number of people who believe scarcity might not be permanent.
Izabella Kaminska of FT’s Alphaville argues that, eventually, technology will advance to the point that we will be able to produce goods virtually for free. Labor will be removed from the system altogether, and everyone will be provided with a baseline of goods and services to keep them alive and allow them to pursue what makes them happy. In his book Makers, Cory Doctorow envisions a society where small teams of hackers invent new economic systems as they go, using new accessible production tools like 3D printers and easy-to-assemble microprocessors.
In these scenarios (Makers' rough parts notwithstanding), the future is literally up to us to invent, and for technologists, that idea ought to be the most intriguing of them all.[Photo by Flickr User Alden Jewell]