Booglie wrote: ↑Thu May 12, 2022 11:43 am
Valuethinker wrote: ↑Thu May 12, 2022 9:16 am
Booglie wrote: ↑Wed May 11, 2022 5:03 am
If anything, today has the potential to be worse due to an aging population and world economy deceleration.
Also, weak unionizing works both ways. Because workers are in a scenario where their jobs are being automated, this pressures against wage adjustments. If wages don't rise but inflation does, it means that people's purchasing power will diminish, and consumption will decelerate further.
In other words, if no one can afford anything because everyone's unemployed, who will support the economy?
On the top of THAT, we have COVID (which has not totally gone away) and war.
The hypothesis of high unemployment does not seem to be validated, at least at the moment?
Rather, the developed countries have had low birth rates for decades. The US was substantially ahead but I believe it has faded back in recent years.
While unemployment rates in the US are at record lows, the rest of the world is not experiencing the same fate. Eventually, if the world as a whole slows down, it's very likely this will pressure the US too.
Recoveries are more muted in some parts of the world - Europe in particular. Partly that's just timing - when the Covid lockdowns ended, how bad they were, & how much money the government was prepared to distribute into the economy. Those economies will in time catch up - the new news is the Ukraine war, which will have unpredictable effects - bad for European energy (and thus heavy industry & consumer spending), good for armaments makers, etc. If several million Ukrainians are going to be long term resident in western states, that takes them from a low GDP per capita economy into more prosperous ones - which will improve GDP overall.
The US has an unusually insulated economy when it comes to the Rest of the World. Or rather, it matters what the ROW sells to the US: the US imports a lot of raw materials & manufactured goods. Exports matter less to the US economy -- that's substantially a function of size (in the way the volume of a balloon grows faster than the surface area). Germany (not taking into account the rest of Eurozone) and Japan are anomalously large exporters.
So the US (and has, in the past) grown faster than the world as a whole.
China it is trickier. The size of China's boom since 2008 has made it critical in a number of areas in terms of demand for raw materials, as well as capital goods, luxury goods etc. And a Chinese slowdown which is around Covid hits supply chains all over the world.
As for automation, it is being seen as a response to an aging population. But the core problem with automation is that its main goal is to do more with less. At first, this only eliminated low-paying jobs; but now, with neural technologies, we have AIs that can write, paint, draw, and even translate audio (Google is releasing such a feature today).
In order for unemployment to rise, machines don't have to do everything better than us. All it takes is they do most jobs more efficiently and cheaply than we do. Our economy was designed by people, for people.
Someone still has to clean the toilets though, or look after us in our nursing homes. Their relative wages may rise compared to knowledge workers - but those jobs are still likely to be done by human beings (consider the earnings of a good plumber against your average university graduate, these days; electrical contracting costs have c. 2x since 2018 - ask me how I know
What happens when robots can produce all our wealth for "free", but no one can afford it? This is a question without a good answer. In such a system, our current capitalistic system would have to fall. It wouldn't necessarily give room to socialism, but what we could see is a system that is artificially stimulated.
If it is free, it will cost us nothing to buy it.
In practice if labour costs fall, over time so will the prices of the end products. There is a very famous paper (by William Nordhaus) of the cost of a Lumen of light v workers wages. With the LED lightbulb it has fallen by something on the order of 1/10,000 of what it was in 1600, say.
We saw a taste of that artificially stimulated system, if only for different reasons, when COVID struck. But if eventually there are no jobs, this may be a new normal.
The challenge with the next decades is that this automation won't be gone; it'll be evermore efficient.
I agree the dislocational effects could be large. As any industrial worker in the American "rustbelt" has known since the 1970s. If that happens sufficiently fast then you get the northern England scenario - the coal, steel and textiles goes, and nothing replaces them for a generation. They were crushed in the 1980s and it was into the 2000s before employment anywhere near full employment was reached. I can also see that if, for example, someone perfected self-driving cars (AVs) that would cost a lot of jobs (all those cab & uber drivers). Or if Amazon managed to fully automate its distribution centres - that's been a big growth area of employment.
However, and particularly in light of birth rates & lower levels of immigration, I suspect the problem for the employer of the future is finding workers. There are already fewer 18 year olds, and most western countries seem to be hardening against immigration -- regardless of who is in political office.
On the short and medium term, we are reaping the consequences of cutting costs: because companies are always trying to reduce wages and moving their productions to other countries, not only industrial production is concentrated at a few countries, but this also threatens specialized labor. Why would one invest on specializing if their profession is seen more and more like a commodity? Why study for several years and acquire a huge debt in education if companies are willing to pay less and less for it?
This is one of the reason some fields lack qualified people.
But that's things like truck drivers-- the big shortages. The problem is those jobs didn't pay well enough for the tough conditions that driving a long distance truck entail.
Large education debt burdens are primarily an American thing (the UK system of student loans is really a graduate tax, that cannot be called by that name).
University education has always been tangential to the job market. Lots of jobs now "require" a university degree but did not 50-60 years ago. The skills "taught" in university (I've spent enough time around universities to know that not everyone is imbued with them) are often not particularly applicable to the world of work.
I certainly know of several kids who have chosen to go the pilot route rather than the conventional university one - but that's because there is a shortage of airline pilots, as an older generation retires (and, post Cold War, there are fewer ex military pilots leaving the armed services).
I suspect the globalization of supply chains is going to pause, and even reverse. Covid, and now this war, have taught some ugly lessons regarding supply chain vulnerability. A war in Asia would do even more so.
I think companies are going to make even greater efforts to improve productivity because they will find it difficult to cut costs at the expense of their employees.