This is a key quote, and anecdotally I've seen it playing out with people I know: "[T]he drying up of cognitively demanding jobs is having a cascade effect. College graduates are forced to take jobs beneath their level of educational training, moving into clerical and service positions instead of into finance and high tech. This cascade eliminates opportunities for those without college degrees who would otherwise fill those service and clerical jobs. These displaced workers are then forced to take even less demanding, less well-paying jobs, in a process that pushes everyone down. At the bottom, the unskilled are pushed out of the job market altogether."
It's happened once before with horses. During the industrial revolution horse-employment plummeted to the point that there were very few horses left laboring. IMHO, the most disruptive technical solution in the pipeline is self-driving cars. Once we enter the age of the "driverless carriage", the amount of unemployment that occurs will be unprecedented. People completely under-estimate how many industries are touched by automobiles.
The industry I'm most curious about with respect to the downward ramp is medicine. The hollowing out and automation is likely to happen with doctors more than nurses. With that in mind, will doctors suffer the most or will they push out the nurses underneath them.
I wouldn't say this is necessarily a bad thing, but more like the effects of market correction as our entire workforce transitions to a higher level putting pressure on people to operate at a higher cognitive level. And, I think we would want as much of our population as possible in cognitively demanding positions, and having the ability to outsource labor to other countries helps that happen. Now the next question I see is- 'Is our education system ready for that?' and I don't know a lot about the inner workings of it, but my gut feeling says we're not there yet.
According to the article, the demand for cognitively demanding work peaked in 2000 and has been falling ever since, first sharply then at a slower but steady pace.
"we would want as much of our population as possible in cognitively demanding positions, and having the ability to outsource labor to other countries helps that happen"
1) What if you had a brother with an IQ of 98. Would you rather he had a respectable factory job, or become homeless?
2) Are you aware that many of the least-tradable services are the least "cognitively demanding"? So I guess you want to tailor the bell curve of the population so that everyone is either > 120 so that they can do very highly cognitive work, or < 80 (so that they are content doing extremely menial work). Isn't it a little inconvenient that around 68% of the population is 85-115 IQ?
I would rather that the respectable factory job is done by a robot. I don't think we should force humans to do repetitive work that can be automated just so that they can somehow justify their existence in a society that is obsessed with work. Our goal should be as little employment as necessary paired with a basic income.
Interesting read. It starts off showing a nightmare scenario of capitalism gone wrong ... similar themes with the original Robocop movies (without the violence and gore). It finishes with a dreamy scenario of communism gone well, though it ignores many issues, hand-waves others, and ends rather abruptly.
It was interesting to see where one futurist believes we could go.
Rereading it again. He basically foreshadowed Amazon warehouse workers. Though he may fall short on the leap from Amazon to the rest of the working class.
Ok, where are the money for the basic income coming from?
All the people getting replaced by automation will be less able economically to buy stuff, use services - and pay taxes. Automation removes a lot of costs, frees up a lot of resources and increases profits. But all those positive effects does not compensate for the negative effects unless there is real net gains. For most of the society.
A long term stable basic income would be paid for by an income tax + a wealth tax. Suppose you set those numbers at 5% income tax and a 0.1% wealth tax. Now today that's not going to pay for much of a basic income, however it's better than a farmer in 1800. Keep pushing effecency and your quality of life keeps going up.
Since about 1990 I have been acutely that only a minority of my high school cohort has lives as comfortable and financially secure as their parents. A disturbingly large number of my university cohort have fallen off the upward ramp.
If you graduate from an elite university, and you are sharp enough to find the next wave to surf, America is still a fine place to be. But the cost of that education is crazy now. Your parents have to among the fortunate to afford it. The ladder has been cut off under, and in a few cases, above many of the people reading this.
> If you graduate from an elite university, and you are sharp enough to find the next wave to surf, America is still a fine place to be. But the cost of that education is crazy now. Your parents have to among the fortunate to afford it.
Not really. That's a pernicious myth. The elite universities have amazing financial aid which actually makes it easiest to attend for those who can least afford it. The hurdle is getting in, which by definition is impossible for the vast majority of Americans.
Not that any of this matters. The continued success of the elite is irrelevant to the continued struggles of the 99.5%.
Elite universities can offer a hand up to those extraordinary cases of highly intelligent kids coming up from poverty. But they are MUCH less affordable for and admit far fewer kids from ordinary educational backgrounds with middle class parents. I doubt my own trajectory is repeatable without an added couple $100k in debt.
> But they are MUCH less affordable for and admit far fewer kids from ordinary educational backgrounds with middle class parents.
That's just false. Huge numbers of middle class students enroll in elite institutions.
My family is decidedly middle class and, in line with their standard financial aid policies, every elite university I applied to offered an aid package which would make it affordable. The total debt required would have been around $5k over 4 years (just books).
Obviously this is just anecdotal, but I do elite education's unaffordability is a pernicious myth which keeps great students from applying.
"Beaudry, Green and Sand make the case that the technology bubble that burst in 2000 was far more significant than generally recognized."
As I see it, there have been two milestones in corporate IT history.
The first was around getting things into databases that could be shared by multiple users. A good example of this is stuff that used to run on the VAX.
Then there was a desktop revolution triggered by the combination of the internet, and Windows NT/2000. You could now push a computer around without being a hobbyist, and microsoft office brought various kinds of productivity.
The mindsets created by the previous revolutions are holding us back now.
* IT departments suffer from the architectural mistake of creating vast databases with multiple dependent systems on them, making maintenance and quality very hard. How many times have you asked your gas company to make one change that has resulted in some bizarre side-effect on your account?
* The dominance of single-user document-centric systems like Microsoft Office hampers effective collaboration.
This narrative explains why we're bogged at the moment. It's similar to much of what was written in the 90s - at the time, writers complained that that return on investment in IT was very low, and wealth was shifting to Japan not China.
"the upscale Democratic elite – a constituency historically more concerned with social and cultural issues than economic ones. [...] If their children begin to face hurdles similar to those confronting manual and semi-skilled workers, interest in a more activist government may grow"
Yeah, right. This flies in the face of everything we have learned about human nature. When faced with economic shortages and crises the first to be thrown overboard are the poor.
If you read the sentence you quoted, you'll see that you agree with it : It says that Democratic elites (even those that are more concerned with social and cultural issues) don't really care about an issue until it affects their own children. Assuming the elites aren't poor, then the poor (by that stage) have already gone by the way-side.
If you read my answerer you've replied to, you'll see that I disagree: the economic game of musical chairs will always corrode social progress and cohesion, see the Depression, neoclasical reforms of the 80s etc. Poor people (and their parents) can't afford to be anything but individualistic.
I hate when journalists lump all college graduates together. Going to college can be detrimental or highly advantageous to your future employment prospects compared to entering labor force immediately after high school.
If fewer people got philosophy degrees or other majors of questionable utility in the work force and instead focused on getting an education in marketable skills with job openings maybe the story might be different. This trajectory of being an undecided major and then just kind of getting some degree or other with the hopes just having that paper will land you a job somewhere never struck me as realistic.
For the United States, there is even a site where you can help plan your next ten years, find something that's high growth:
Because, yeah, it's individuals making dumb choices that is the problem -- it could never be the social systems around us that is the problem.
Maybe I don't care if my degree (philosophy) has questionable utility in the work force. Maybe I don't want to be "employable". Maybe I chose to study philosophy and didn't fall into into because I was undecided.
For you realism is adapting to the world. For me realism is making sense of the world, figuring out if perhaps there could be a better world, and constructing the world that I would like to live in and that I would like my kids to live in.
You don't get to decide for me what I should study in the same way I don't get to decide for you what you should study. If you'd studied philosophy you'd be able to see stuff like that easily.
Maybe you have a responsibility to your society to the same degree that society has a responsibility to take care of you. How's that fit in with your philosophy? Maybe the best way to live your life isn't what you might want for yourself.
It's interesting to see my views kind of in parallel in this instance with polar ideological opposites. One the one hand you have libertarians who don't want to pick up the tab for your life, and on the other you got social justice warriors like me who think that with social security comes social responsibility.
I disagree that with social security comes social responsibility.
If a person wants to get as much from the state as they can and put nothing back in then big deal I say.
Why?
1) Because there are very few people like that anyway. This group of people, so-called welfare scroungers, are always trotted out in these arguments. I've never met one of them in all my days, I'd like to see actual proper percentages regarding this. I'm betting these people are < 1% of the population.
2) Besides there are all sorts of consumption taxes and what have you that funnel the money back into the state anyway.
3) Most people want meaningful work. What you find meaningful may not be what I find meaningful of course. And failing being able to find meaningful work most people choose to work at _anything_ at all rather than be idle. The one thing that never ceases to amaze me is how many people work at jobs they don't like because that's the only work they could get.
4) Society didn't wake up one morning and decide to take care of me. Social security has been and continues to be a continual struggle to redistribute the wealth from the have-a-lots to the have-very-littles and it's a struggle I identify with. Vigilance is needed as we have seen because all the gains are slowly rolled back when we're not paying attention.
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This is all beside the original bone of contention I had with you. It was with your questionable statement "If fewer people got philosophy degrees or other majors of questionable utility in the work force and instead focused on getting an education in marketable skills with job openings maybe the story might be different." Did you ever stop to think why someone would want to study philosophy before you came out with that? You're full of what people ought to do, may I suggest you ought not think like that.
>The one thing that never ceases to amaze me is how many people work at jobs they don't like because that's the only work they could get.
People paying their bills amazes you?
There are very few 'career transition' positions that are entry level and only require a positive attitude and a willingness to show up. Those were 'upgraded' to require a degree and a few years of experience for complete strangers.
Also, some people try to avoid gaps of unemployment, and that means slinging pizzas with a couple of katanas for the Mafia when there's nothing else.
I read Snow Crash ages ago but didn't get the reference.
I've been thinking about how to respond to you. I realize how it must sound for me to say that it amazes me that people will take on whatever is available to them at a particular stage in their life to pay their bills. I didn't mean it in a disparaging way. I meant it more in a, "wow, I would find it very hard, I don't think I'd be cut out for that". I'm not suggesting I'm better or worse. I've had plenty of jobs that didn't inspire me at all but they were still decent jobs by anybody's standards: software testing, software development ... though many people I'm sure couldn't imagine being stuck in front of a monitor 8+ hours a day.
> Maybe I don't care if my degree (philosophy) has questionable utility in the work force. Maybe I don't want to be "employable".
This is a perfectly valid position and stands in no contradiction to the parent post. I think the parent post was tacitly referring to people who want to have the cake and eat it too: study subjects of questionable market utility and be employable at the same time.
I would argue a bunch of people who don't care about being "employable" create a social system of people who want to live a life of leisure and have someone else pay for it. Just as you don't get to decide what I study, you don't get to decide what society owes you for being born. Which is another way of saying: you don't get to decide what I do with my money.
> a social system of people who want to live a life of leisure and have someone else pay for it.
Good! That's the utopia we should all be aspiring to. In the foreseeable future (perhaps 100-200 years), increases in automation and efficiency should allow us to support most of humanity in at least passable comfort with minimal labor.
I don't think our society could handle BI. And everything I see makes me think it's getting worse.
I used to be a big fan of BI, but lately I've come to think that human desires will always make BI irrelevant. No matter how much you pay every citizen, it won't be enough to sate human greed and envy. Combine that with a society that can't stand being bored, I think most people would entertain/eat/act risky themselves to death. Very few Mozart's will arise, and very many dangerously over/underweight selfie-taking alcoholics will.
Look at modern college, which when compared to any other point in life objectively requires the least work: and it's the time filled with the most hedonism and immaturity of most human's lives.
I'd rather people learn to treat work as a noble thing now, and learn to better themselves in the remaining time before we try to pull off the training wheels. I don't disagree that most work now is absolutely terrible, but I'm not sure just paying everyone to live would fix that. As things currently are, we would just pay so much that people would be willing to tolerate the terrible work. Why not try to make jobs better now?
We need a _theory_ of society that is as good model of society the way quantum mechanics is of nanoscopic physical phenomena.
We need to be able to twiddle the variables in our model and be able to see what would happen if we did X or Y.
If it is not possible to come up with this theory, construct this model, and build these simulations I want to know _why_.
Where I can debate people is if, all other things being equal, they tell me how I ought to live my life with no data other than their own opinion which I'm going to take as being a shorthand for their own ego and ideology.
Fair enough. I'm definitely just drawing from personal anecdotes and logic for what I think society would do. Just like everyone. Even though studies are done on societies, I personally think it's hard to factor in every important variable. And since most studies these days just skew their data to try and prove a point, it's hard to trust in those either.
I'd be fascinated to see such a model of society, it'd be incredibly helpful in economics, finance, social policy, education, fitness, law, etc, etc.
I suspect if you could make a machine that could predict human behavior that accurately, you'd want to keep it to yourself, while you became unfathomably rich and powerful.
That is why I pointed out colleges as a case study. The thing is, colleges weren't always that way. Sure students have always played pranks or messed around (I think of John Quincy Adams at Harvard getting caught streaking on the lawn drunk), but it's clear that sort of thing was uncommon. Compare that to today, when the only thing that changed is the way society treats college. I'm not sure how we can predict and change things in people's lives enough to make society as a whole take college seriously.
Compare how simple that is to the problem BI is trying to solve: some people can't find work. It boggles the mind contemplating how big an issue that is, and how much we'd have to change people for it to work.
The problem is opportunity has fled this generation of students. We have boomer managers with non-relevant degrees posting entry level jobs expecting 4 year degrees and five years of highly specialized relevant work experience.
The thing about a capitalist economy is that people need to create opportunities. If more people optimized their career better we'd have better ratio of matching opportunities with workers which will mean less unemployed people which means economic growth which would could lead to more growth.
Looking to the government to enact keysnian economics didn't work so well for Japan. And anyway policy matters and is important, but people at the same time need to take their lives in their own hands and make changes. Hard changes.
Just like we're always trying to get everyone to give up their gas guzzling carbon emitters, we should also be trying to get everyone to adopt a little bit more of a responsibility of managing their own lives. For the social good. The more people earn, the more wealth we have to lift all boats.
Undergraduate education is not synonymous with vocational training. There is value in degrees like philosophy and other "questionable" majors not directly related to their utility in the job market.
Don't get me wrong: many undergrads would be better off for paying greater attention to the job market and their coming role in it, but education can also be a step towards less tangible goals or an end in itself.
> There is value in degrees like philosophy and other "questionable" majors
Yes, there is value in philosophy etc, but it is value for you. It is selfish. In a fair and free market society you need to give in order to receive. Once you render yourself unable to deliver value to others, you shouldn't expect others to deliver value to you.
Right, I wasn't tying it to undergraduate education. There's nothing wrong at all with vocational training, in fact, I'm pro on that. You can pick up 19th century Russian literature later in life (and you should as it's pretty great).
>>There is value in degrees like philosophy and other "questionable" majors not directly related to their utility in the job market.
The problem is that this value is intangible and cannot help with more worldly problems such as paying the bills. Until we have social policies that take care of those worldly problems (such as basic income), people are better off treating undergraduate education as vocational training.
I tried to understand the original paper but it's way over my head. So the decrease in demand of cognitively demanding jobs is an temporal economic situation or a long-term trend?
It seems the theory was always that less cognitively demanding jobs would be replaced by automation/robots but more demanding ones would be safe. How to place this article in that perspective?
John F. Kennedy - January 20, 1961 - November 22, 1963
Lyndon Johnson - November 22, 1963 - January 20, 1969
Jimmy Carter - January 20, 1977 - January 20, 1981
Bill Clinton - January 20, 1993 - January 20, 2001
As a non-American, I have no allegience to either party... but couldn't you be mixing up cause and effect here? Perhaps instead of one party creating the economic effects, perhaps that party is voted in when the country is doing economically well?
This is a theory I've often heard, and personally suspect to have a good deal of validity (although obviously it's an oversimplification). In good economic times, people don't mind the government spending a lot - after all, the economy is doing well, what can go wrong? In bad economic times, people think the government ought to be more stingy.
Of course, this is pretty much the opposite of what you really want. When the economy is doing well is the time to reel in spending and raise taxes. When the economy is doing badly is the time for stimulus spending and a larger deficit.
The mistake is associating one party or another with spending. While American conservatives speak of cutting spending rarely does this happen in practice. Think of the Iraq war under Bush, or my favorite, in 2003 Republicans extending Medicare's prescription drug coverage to essentially pander to elderly voters [1]. Not to mention most voters are poorly informed. Most elections are won by charismatic candidates and campaigns that can weave a coherent narrative rather than by the population's calculations on what spending policy is best for the country. I worked in politics for years, including for Obama for America in 2008 and wow undecided voters are scary. And those are the people who decide elections, people who are largely poorly informed & making gut decisions about who has the power to start wars for the next four years.
"As a non-American, I have no allegiance to either party." - this does not follow. Just because you are not the citizen of a country does not mean you do not have political biases that lead you to look on certain politicians/parties with favor.
Or did you mean - "I have no knowledge of US politics and have no opinion of these politicians"
I take "political bias" to mean "how will this affect me". Even someone with some understanding of US politics will typically not be able to immediately understand the worldwide implications of a certain leader over another. For example, take a platform of cutting taxes: How is that going to affect a random guy who lives in Australia?
I suppose some people can say "I'm a democrat and will always vote democrat", but don't I follow that kind of thinking. I think I've voted for almost every party in my country at one time or another, depending on who I feel is best suited for representation at that time.
I have knowledge, and opinions, but like I said: no allegiance. I feel partisanship is pointless, and because I have zero influence on US politics, I remain on the sidelines observing rather than leaning one way or another.
I'm not sure that means much. Sometimes the effects of previous policies are inherited. And more importantly, the president of the US, contrary to popular opinion, doesn't control everything in the universe.
There's a Mathematica worksheet which demonstrates that stock market returns (DJIA) are highly sensitive to start date / policy effect delay assumptions:
It's not proof that you would observe a similar effect in this data, but it's enough for me to put no stock in any speculation of this sort that doesn't come with a sensitivity analysis :)
Bill Clinton rewrote the Community Reinvestment Act, which many believe played a central role in the housing bubble[1]. Political policies do not take effect over night - Often their effects take decades to surface.
The meme of the CRA causing the housing bubble holds little water.
A simple example of why this idea has very little validity: the housing bubble was a global phenomenon.
As a second example: most of the questionable sub-prime lending during the housing bubble was done by private institutions not under the CRA regulation.
Now if you want to talk about repealing Glass-Steagall or the lack of regulation of the derivatives market via the Commodity Futures Modernization Act (both mentioned in the article you link to), then I'm all ears.
Is there a link that shows the foreclosure data in different countries?
I find it hard to take at face value as some large real estate markets (e.g. China) don't even have the same structure (mortgages, underwriters, loan originator, loan repackager) as US does.
I don't know about foreclosure data, but I also wouldn't look at just that, because regulations are different in other countries. I live in the Netherlands and a lot of people now (about 30%) have a mortgage that is worth more than the house. That is not a huge problem as long as they are able to pay the mortgage each month and do not have a pressing reason to move, do not get divorced, etc. but if they do need/want to move they end up with a debt for the difference of the value of the house and the mortgage (In this country, you cannot just walk away from your house and debt, you always remain responsible for the debt).
I think the fact that 30% of all houses here are "underwater" is a better sign of a housing bubble than the amount of foreclosures because at least where I live in many cases banks prefer not to foreclose but put the house on the regular market and hope to sell it for a reasonable prices.
While I don't believe the CRA was the root cause, I do believe it influenced the invention of MBS to relieve banks of the debt they deemed too risky for their own balance sheets
JFK and LBJ both had tax cuts as major economic policy decisions, Jimmy Carter deregulated every industry he could get his hands on, and Bill Clinton created the largest and most important Free Trade agreement in our country's history. It is almost as if good economic policy requires a bit of ignorance about party lines.
JFK's supply side tax cuts are well known by Republican policy wonks, after all they were a concrete inspiration and justification for Reagan's.
Again, wonks know Jimmy Carter set trucking (and railroad???) and airline deregulation in motion (there's a cute picture of Teddy Kennedy in the background of the signing of one of those laws), but infamously didn't deregulate energy (initially, as I recall, part of Nixon's wage and price controls, but not ended like other sectors). It's one of the biggest things that wrecked his presidency.
And for obvious reasons (if you read the link) JFK is given credit for that tax cut.
While I'm sure LJB's legendary ability to work the Congress played a part in it actually getting passed, this was clearly part of JFK's legacy, especially after his assassination three months earlier.
Adding brewing to the list of 2-3 transportation deregulations does not satisfy my interpretation of "every industry he could get his hands on". There's a reason Malcolm Wallop's 1976 advertisement of a cowboy strapping a port-a-potty to a donkey behind his horse resonated long after.
In retrospect it's possible Carter was a deregulator at net, certainly the regulatory things he's infamous for were, to my memory, inherited, but it would be a hard case to make. Remember the 95% complete Tellico dam and the snail darter? He also put an awful person in charge of the NHTSA, and I believe it was their insane air bag decisions that resulted in the deaths of hundreds or more short people and children.
If you like reading charts, check out some of the detail in this article [1]. In particular, the second of the market graphs (with the red lines) that goes much further back than this story. It concurs with the flatness since 2000, but rather than predicting a downward ramp, is suggesting the timing is right for a new period of growth to commence.
It seems like every other article I see talks about squeezing of the middle class, inequality, etc.
At least in my area, I don't really see it happening. The majority of the people I know went to a public state school, aren't abnormally intelligent, didn't work abnormally hard, or do particularly well in school (2.5-3.5 GPAs), and all have little problems getting jobs paying 75k+ (only 25% are in software). In fact, most of us have little problems finding jobs paying 125+ in the midwest.
Companies can't find enough qualified talent. People who are always learning and adapting. It's a supply and demand problem. If you get a degree with no demand, you shouldn't expect to find employment.
In the past, the limit to economic growth was knowledge workers and a simple college degree guaranteed a middle class lifestyle. Today, the limit is entrepreneurs and companies creating value. We need to hold up guys like Elon Musk as heroes. They're the ones creating the jobs and industries of tomorrow. The government needs to stimulate entrepreneurship - not necessarily provide more grants for college educations in useless degrees.
I think the "Four Turnings" model of Strauss and Howe might be accurate. Their hypothesis is that American society (actually, Anglo-American) experiences crises about every 80-90 years (Armada, Glorious Revolution, American Revolution, Civil War, World War II). The First Turning is the post-crisis high (for the past 500 years, we've emerged successfully from each, although that's not guaranteed to continue. The Second is the peak, the Third Turning is a cynical, chaotic unraveling period, and the Fourth is the crisis. (For the past 100 years, most of the world has been on the Anglo-American cycle.)
In the recent First Turning (1945-65) we saw broad-based improvements for all social classes, and progress on civil rights. In the Second (1965-85) Turning, technological progress continued but the working class was thrown under the bus, while the middle class continued to do well. The Third Turning (1985-2007) saw the middle class get hit as well, but the upper-middle-class did OK. In the first half of the Fourth Turning (2008-) the upper-middle class ("the 9 percent") is getting smashed and, later on, it will start to affect the upper class.
It seems to be a pattern whereby the rot travels up the social ladder. The disintegration is finally recognized as a problem only when it starts taking out the elite (as it did, last, in 1929). It's not clear what our "crisis" looks like or even whether we're in one, but I think that will be more clear in a few years.
