[This is the full length piece the first part of which was published today in the 12sep09 Union print edition. The full length version also appears in the newspaper’s online edition. gjr]
George Rebane
In this recession over six million jobs have disappeared so far in the last year or so. Out of approximately 150 million American jobs that were available in early 2008, that represents about a 4% annual loss. Because of globalization and accelerating technology, not all of these jobs are coming back when the economy recovers. Some will go overseas, and some will disappear because smarter and more capable machines will be doing them cheaper. At the same time a smaller number of new and different jobs will appear. This is present day reality.
The bottom line is that fewer jobs will return, and on balance, these jobs will require smarter workers trained in new skills. This “creative destruction” of jobs will continue into the indefinite future. So what happens to the workers in developed countries, specifically in America? To attempt an answer, we have to review some Econ 101 stuff.
People work to garner wealth, which is something that they conserve and also trade for things they want/need to support a given quality of life (QoL). How is such wealth created? In any economy (or system) like a community, country, or even Earth itself, creating wealth requires some input from outside the system. A little bit of thought will quickly convince you that this input for all of Earth’s economies comes originally from our Sun, either in real time or delayed over variable time intervals. Think of photovoltaic energy that arrives about eight minutes late, to wind that takes a little longer, to planted crops, to forests, to minerals and fossil fuels, to geo-thermal. Each of these started with the original fusion burn that resulted in the sun and our solar system, and took longer intervals to become available to us.
Throughout history to the present day, wealth creation always began with tapping into such solar energy conduits and storage processes. Somewhere along the line, those who knew how to do it and do things with it got the early and big bundles of wealth. Those who didn’t tried then to get it by force, or worked in the lower parts of this energy chain as wealth ‘trickled’ down. Yes, trickle down works – always has, always will.
If this concept is hard to swallow, just try to imagine a closed community that attempts to satisfy its needs by imposing “buy local”. There’s only so far you can go with serving each other food, fixing the other guy’s plumbing, and changing the old folks’ diapers. With nothing coming in from the outside, precious little of this work will be done. And then what?
Over the centuries human progress has been measured by how readily (read cheaply) we could tap into this river of energy. Hello innovation and taking risk! The smarter among us figured out better ways to tap, and then bet their or someone else’s farm on doing it for fun and profit. The fun part was optional, the profit part was not.
At every such juncture, more wealth poured into the economies, trickled down, and life got better for all. Even the un- or mis-educated benefited from this, and began to live lives that a few generations before were only enjoyed by the very wealthy. But in the process jobs were constantly eliminated and new ones created. And at the same time a lot of the wealth began to accumulate with the smart risk takers, and also clever thieves who skimmed, as the wealth trickled through the economy. Result, the more successful innovation occurred, the more we saw wealth/income disparity. But remember, all during this time the pie was not fixed and kept growing.
Now enter the smart machines. During the last couple of generations machines have started displacing humans as well as working with them in new ways. And these machines have been crucial to tapping into the river of wealth from the Sun. Those who could build, operate, and manage these man/machine partnerships kept cutting costs to society and getting richer in the (natural) process.
At this point humans started being squeezed into a tighter corner of well paying jobs, and then along came what is known as the Great Doubling. You see, some years back, the people who didn’t believe in all this innovation and inequality decided to go in another direction that they claimed would create workers’ paradises with none of this risk and trickle down. And when they thought they had things just about right, the whole damn thing collapsed on them. The result was that in the early 1990s the 1.5 billion workers in the ‘free world’ were suddenly joined by another 1.5 billion workers who were ready to leave paradise and sell their labor in the markets opening up around the world – the Great Doubling.
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