Ruth Sutherland wrote in The Daily Mail a couple of days ago:
Here is how Keynes “ignored” those “workaholic tendencies”:
Yet there is no country and no people, I think, who can look forward to the age of leisure and of abundance without a dread. For we have been trained too long to strive and not to enjoy. It is a fearful problem for the ordinary person, with no special talents, to occupy himself, especially if he no longer has roots in the soil or in custom or in the beloved conventions of a traditional society. …
For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented.
To be fair to Sutherland, Keynes didn’t use the exact words “workaholic tendencies” so if she actually read the Keynes essay, she might have not comprehended the passages dealing with the training of “old Adam”… “too long to strive and not to enjoy.” On the other hand, it is entirely possible Sutherland didn’t read the essay but just assumed Keynes ignored the point she wanted to raise.
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Fast food ordering kiosks shouldn’t cause loss of jobs overall.
Say kiosks allow my local McDonald’s to lay off five, thirty thousand dollar a year ($15/hr) workers. Assuming the consumer prices are held the same that comes to one hundred thousand dollars a year for the owner and the workers who are still working there to split (the latter much more likely if they have a union).
Newly flush employer and employees in turn spend that money causing in turn (the equivalent of) employing five thirty thousand dollar a year workers somewhere else. Money never stops moving.
But, you say, labor advocates are forever emphasizing that wages are only a fraction of the price of products – ergo, you always claim a small price increase can feed a large wage increase (more dollars for fewer hours even happens). So, how many jobs can that hundred fifty thousand worth of purchases really create?
Let’s take a kid’s lemonade stand. One kid spends all his time hawking his wares; he buys his drink from another kid who spends all his time making lemonade with lemons he buys from a kid who raises and delivers lemons. Most purchase dollars ultimately funnel their way into wages. Think of a pin factory. 🙂
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As productivity grows so does the amount of money (the consumer) can pay labor. If (consumers of) McDonald’s with 33% labor costs can pay $15/hr — then — Walgreen’s and Target (customers) can pay $20/hr — and — Walmart (consumers) can pay $25/hr.
Need to wake up and realize that sea-to-sea de-unionization is a bigger social injustice and economic earthquake than racial segregation ever was. Reason Chicago has (virtually walled-off) ghettos is because American workers wont show up of $10/hr (slavery).
No. If we did manage to de-couple “making a living” from working, those who find it intolerable to be idle will never need to be idle. There is always much to be done. It is just that in a profit driven world, these things that need to be done simply don’t pay. If you take “making a living” out of the equation, there would be fulfillment and pride in doing many of these things for those who are industrious. Keeping neighborhoods clean and in good repair. Looking after the elderly and the sick. There are a multitude of needs that go unmet because there is no money in performing these tasks and people need a basic income in order to survive.
Re: “Newly flush employer and employees in turn spend that money causing in turn (the equivalent of) employing five thirty thousand dollar a year workers somewhere else. Money never stops moving.”
In the current economy, the employees will be lucky to see a few pennies, so we can ignore that. The “newly flush employer” will probably buy securities, real estate, debt or symbolic goods driving up their prices. The additional labor involved will be minimal. Even real estate prices are primarily about the location, not the effort of construction.
The money never does stop moving, but it doesn’t necessarily create a demand for labor hours. I’m not denigrating the work of stockbrokers, bond traders, real estate agents or art dealers here, but it just doesn’t take a million dollars of labor to buy or sell a million dollars worth of something that a newly flush employer might buy. In fact, the movement of the money will likely drive up prices further cutting the labor content f the assets involved.
In the 1930s, automation was a major factor in the Great Depression. The solution was to raise wages at the lower end and get the government to tax and borrow, then hire lots of people to do things. In the 1920s, the newly flush employers demonstrated that they were not going to do that. The money went into first a real estate bubble, then a stock market bubble, then it sat in treasury debt paying 0.8% for years on end. It’s a familiar situation with a familiar solution, but we have lacked the political will to try it.
Kaleberg,
Completely agree with you on where the dollars will really travel to after automation saves labor pay. But, it’s hard to get across two unknown — wage inequality virtually unknown in this country — concepts at the same time — so I just assumed a bright labor future to keep the automation example straight forward.
Economic mechanics are very confusing — cannot just learn how the gears work together like in engine mechanics because all the gears in the economic drive train are trying to take everyone in the direction they (the gears) want to go (have a mind of their own). 🙂
As a manufacturing engineer I worked to make robots more productive at producing inkjet cartridges. When the price came down far enough, everyone wanted a printer in the home. My own experience is that automation can create more jobs, but I am still skeptical that Sunderland’s blanket statement is generally true. I think that if automation does not lead to a large increase in demand, it will not create jobs. I don’t see how automating burger orders will have an appreciable impact on demand.
Sunderland also points to vacuum cleaners and washing machines as automation that changed the workplace. But they created consumer demand both by being new products and by freeing homemakers time to go to work and earn money with which they could buy more stuff. In the complicated feedback of consumer economics, which comes first? Perhaps the economy has slowed its growth because (nearly) all the women who want to work are already getting a wage, so there is no room to increase demand by increasing the portion of independent consumers.
They are shrinking the sphere of costs to garner more profit and have ceded the permanent demand increase. Labor cost sans the legislated burden associated with it is much smaller and it is subsidized by government in the form of credits, food stamps, healthcare (ACA), etc. outside of the burden within the business. The process flow is relatively efficient with a well planned process flow of manufacture and it minimizes Labor input for each product. . The cost of more capital to replace the Labor more than likely exceeds the cost of Labor otherwise they would have done it.
I do not remember whether it was Shantou, Beijing, or Tianjin at a WalMart. A person at every product display and no masses of people walking around the store except for some crazy Americans being shown the store by the guides they work with at the plant.
“Perhaps the economy has slowed its growth because …”
In addition to the obvious fact that in the same time frame workers have lost much of the ability to negotiate for more money with which to increase demand and grow the economy.
Growth is relative to the angle of the view.
If the view if national, then growth is not so great as it is dependent on labor’s share of the income they create.
If the view is corporate, then growth is great as it is dependent on capital moving into emerging markets. Labor share is not an issue. Capital is raised on stock rise which is raised on sales increase do to new markets.
The national view is no longer the top of the mountain.
I see human intelligence as a combination of memory, deductive reasoning and inductive reasoning. Computers have proven to be superior to humans in memory and deductive reasoning. They are currently incapable of performing inductive reasoning and, to date, I’ve seen no credible approach to endowing them with that. Such a breakthrough MAY come from current neural research, but so far it hasn’t — not even the beginnings of an understanding of inductive reasoning in the human brain.
That’s not to say that the current efforts in machine learning will not have revolutionary impact on society. Most paid work requires little inductive reasoning — and what little is required can be provided by one human in cooperation with multiple robotic entities. So it’s virtually certain we’re facing an irreversibly shrinking job market. A counter-argument is that the technology will produce new kinds of paid work (as it has in the past) — but in that case, the basic kinds of such work should be describable — and, most importantly, an explanation offered as to why this new work isn’t as susceptible to automation as was the old work. And to date, I’ve seen no one attempt that.
We probably only need to work 15 hours to have what Keynes contemporaries had when they were growing up. What Keynes ignored it that technology comes up with stuff to use to fill all the extra leisure hours. So we all work more to have enough money to buy more stuff.