Good to see an economist thinks my way

It has struck me for a long time that many formerly labor intensive industries are downsizing not because of economics (need for more efficiency to make profit), but rather due to technology.

Let me illustrate.














Ford assembly line, ca. 1920s



















Modern automobile assembly line

The concept should be clear; technology is allowing a lot more things to be done automatically and/or robotically than decades ago. That means there are less hands-on, traditional employment jobs in the world. So ongoing loss of jobs is only partially due to politics and economic policy; it is also due to what the author calls “fundamental structural change”.

Walker's World: A dying economy

Excerpt:

"There are three important factors at work here, beyond the flawed and over-politicized design of most government stimulus packages."

(Skip the first 2; read the article)

“The third is more worrying: that current and future employment is being depressed not by the economic cycle but by fundamental structural and technological change in the economy.

The success of Amazon in selling books and e-books means the bankruptcy of bookstore chains like Borders, whose final 11,000 employees are being laid off. The U.S. Postal Service, the need for its services eroded by e-mail, is planning to cut 220,000 jobs over the next five years, half of them through layoffs.

Whereas automation began by eroding the need for a large blue-collar workforce, we are starting to see the way computerization is eroding the demand for a white-collar workforce, whether in newspapers, paralegal services or accounting. The education industry is likely to follow, as cheap distant learning starts to erode the demand for traditional college education.

The next victim will be healthcare services, hitherto one of the fastest-growing employment areas. The coming of constant and automated diagnosis through smart phones, followed by the eventual success of electronic health records, is going to reduce the need for human staff.”

(One other thing that occurred to me is that there is also a problem, if it can be called that, of improved quality. Thus, manufactured things last longer. People are driving reliable cars for 9-10 years rather than five, because they still work and they aren't rusting out. Washers, dryers, refrigerators, dishwashers, stoves, ovens, TVs, air conditioners... they last longer. And that means that less of them need to be manufactured. The only thing that is keeping the buy cycle going is improvement, like better computers. But I don't want to trade in my old computer because then I'd have to get all new applications and games! So the overall improvement in quality is another drag on the manufacturing sector.)



So, does the author have an answer to the problem of fundamental structural change?

No.

“But it is starting to become clear that many of the roots of this crisis stem from the reality that we are already entering a completely different technological era in which the traditional tools of job creation and demand stimulus no longer work in the same old ways.

Where this takes us as an economy dependent on mass employment to pay for consumption, taxes and pensions that still unclear.”

Soo… do I have an answer? I’ve got a partial one. User fees for fundamental services. Road use fees to pay for infrastructure maintenance. Park use fees for maintenance of parks and recreational areas. Sidewalks, public buildings, utilities: raise the fees to keep them working, on anyone that uses them. So the new jobs will be paid for by user fees (not takes, the anathemic word), and the new jobs will be maintenance, maintenance, maintenance – the dirty jobs that society needs done but that the higher classes don’t want to get their hands dirty doing.

Anybody got a better idea?

Also read: Economy in the doldrums, and how to get it out