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Computers, Unemployment and Wealth Creation
Andy Oram writes "Anyone who writes programs or plans system deployment should start
thinking, "What can I do to bring average people back into the process
of wealth creation?"
A few suggestions."
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This seems like a ridiculous suggestion. This is essentially backwards capitalism, which quite simply, doesn't work. I could create plenty of jobs... I could throw out my business' computers and instead hire a few people to track inventory by hand and place orders by manually counting inventory. Sure, I'd create more jobs, but those jobs would be very short lived, ebcause I'd quickly go out of business. Efficiency, in the long run, *does* produce wealth. That's how capitalism works. We may not see "wealth" growing in the US, but in the economy (which is now a world economy), wealth is most definitely being created. Standards of living are rising exponentially around the globe, even as they slip in the US. Nothing's broken. Nothing to see here. Go back to work.
Make as much money as you can*, and then use it to do some of:
(a) Buy stuff. Other folks are employed making it or serving it.
(b) Invest. This results in capital for businesses to hire more people employed making or serving stuff.
This method works. Simple, really.
* Within ethical and/or legal standards, of course.
Support a few technologists in Washington.
As the wealth of nations increases, those who have lost jobs or had to accept menial ones over the past three years are left with only a wealth of culprits to blame: financial scandals, wars, tax cuts, stagnation, etc.
For a start, a 3-year sample isn't big enough to draw any meaningful conclusions. We're just in the down phase of the economic cycle, that's all. Smart people salted away some of the high salaries and bonuses that were easy to come by in the recent boom years, when shortness of staff drove up the price of labour. Now, some people look for blame - but it's hard to see how some of these can be blamed. Wars and conflict drive up employment in the engineering and aerospace sectors. Tax cuts can't increase unemployment except amongst government workers, and there have been no reports of government layoffs - if anything, the government is busily hiring.
Let me make this clear: wealth is not created by governments. It's created by risk-taking entrepreneurs. Right now, the markets need to recover from excessive risk-taking in the late 90s. This is perfectly natural. When sufficient capital has become amassed, the cycle will begin again and there will be another boom.
But capitalism is atrocious at distributing the fruits of innovation
I was in a store the other day, I saw a 3-megapixel digital camera for GBP 99, a DVD players for GBP 49. 5 years ago, these products cost hundreds of pounds. That's what capitalism delivers: more and better for everyone. The "poor" in a capitalist society are far better off than the "poor" in any other system - and capitalism generates the surpluses that fund the entire welfare system.
Each labor-saving device means the idling of thousands of people, wasting their years of experience, rigorous training, and practical insights.
Yawn, they said exactly the same things when the car started to replace the horse drawn carriage, when mechanical looms replaced hand-operated looms, when automation was introduced to farming, in fact whenever any technology has revolutionized an industry. Getting laid off is always a little disconcerting (yes, it has happened to me so I know what I'm talking about) but unemployment is what you make of it.
And meanwhile governments, businesses, venture capitalists (what are you doing with all that money your pets in Congress and the White House brought you, tails all awagging?),
Ah, now we see the author's real agenda - I should have realized when I saw the words "tax cuts". I will merely point out that the dotcom bubble economy was created under a Democrat president and began declining in mid 2000 - there is nothing Bush or Greenspan could have done to prevent it bursting.
It is just me, or is that article rubbish?
It is not my goal to place restrictions on investment or innovation; it is only to present a new way of thinking that some people may find stimulating.
Here's looking forward to some creative new thinking...
Write free software for individual industries
What the f***? How is that supposed to help reverse falling unemployment?
Slashdot - if you're going to post links to economics related subjects, can you please make sure it is written by someone with a clue about economics?
It's a plea to socialize the software industry. Don't work on what you want to work on, work on what society NEEDS you to work on. But do it for SOCIETY, that is, do it for FREE. This will allegedly help a struggling 'cutting-edge' business grow. Give them free software, and all will work out.
This is hogwash. And the article goes all over the place. It starts off with blaming "financial scandals, wars, tax cuts, stagnation" on why people have lost jobs "or had to accept menial ones". But then concludes "there is little doubt that a large contributor to rising unemployment is rising productivity". We see this every new age. This guy is bordering on a Luddite. He's also overly dramatic which makes me dislike him even more "I can no longer avert my eyes from the consequences of the field I have chosen" so noble. "... and no one else who programs, administers, or promotes the use of computers can morally avert their eyes either" oh jeez.
It gets worse, "The gigantic combine of capitalism has always obsessively pursued effiencey..." yeah, that's the point. That's why it works. No, Capitalism is atrocious at GIVING AWAY the fruits of innovation. It doesn't reward people who don't partake in it. That is why it's so efficient. Add _YOUR_ efficiency to the overall efficiency and you will be paid for its value.
This really frightens me: Great, lets all make inefficient processes and software to run those processes so that costs will skyrockets, and we'll be beat by someone with a more efficient process. You can't do that in a free market. It's the whole point of the free market. The market balances between efficiency, cost, and quality. If you artificially try to create more jobs by making it take 5x as many more people to assemble a car, you will collapse that business.
gut instinct huh? Thanks for sharing that. I'm sure we can all base decisions on your gut instincts.
So his solution boils down to three ideas:
1. Write free software for individual industries (ie, give custom built small business software away for free). His thinking is this will help the small business get started and they will in turn hire more people. But damn the person who wrote the software, he's SOL. But it was for the 'good' of the 'people'.
2. "Make devices more responsive and easy to customize", he request: "I would like a computer to plan ahead for me, track things that are too much trouble for me to remember, and combine inputs to suggest efficient courses of action" OK so he wants smart agents. What this has to do with this article is beyond me. I think he just threw it in there because he wanted to.
3. "Create a truly public key infrastructure" I don't understand why he feels the need for a 'truly PKI is so important. It seems to go along with his socialist viewpoint. I guess it would make on line filing of unemployment that much easier when he plans leads to the failing of a nations economy.
He ends it with more FUD: "We don't have all the time in the world. And meanwhile governments, businesses, venture capitalists (what are you doing with all that money your pets in Congress and the White House brought you, tails all awagging?), universities, and NGOs seem paralyzed in the face of this economic disaster"
-Malakai
A Dragon Lives in my Garage
a) Participate in the IPO
b) Buy bonds directly from the company during its offering
Trading stocks with other stockholders doesn't give any money to the company. It's like trading baseball cards. Sure there are some side effects of having stock prices go up for a company, but usually a high stock price doesn't give any financial benefit to a company (except for subsequent stock issues, which don't happen that often).
If you really want to invest in a company, buy bonds when they are issued (don't trade bonds, because trading them just gives money to the bond holder - not the company whose bond it is!).
That said, the best form of investing in a company is to purchase their product.
"There are a dozen opinions on a matter until you know the truth. Then there is only one." - CS Lewis (paraprhase)
Actually, printing money is the only way that the suggestions in the article are going to work. Given that you accept all of the premises, the suggested solutions are likely to prove counter-productive:
... People have been trying to get corporate communications and negotiations online for years, and probably the biggest beneficiaries of such a move would be small businesses and individual contractors. After all, who finds it hardest to pay travel costs and conference room fees for expensive legal help?
Write free software for individual industries
The increased productivity caused by computers is one of the reasons cited for rising unemployment rates. Isn't this new software likely to replace efforts now being done by hand and make the situation worse, not better?
Create a truly public key infrastructure
Assuming that we did manage to get corporate communications online, what happens to the current infrastructure that grew up to support widespread business travel? Airlines, hotels, etc.
The argument is that increased productivity causes unemployment, therefore we need to increase productivity so that small businesses can function more efficiently and cut costs, thus paving the way for more small businesses. I don't think you can have it both ways. Increased productivity can't be both our bane and our salvation.
"The legitimate powers of government extend only to such acts as are injurious to others." Thomas Jefferson.
wealth does not equal jobs, and good jobs is what the world lacks.
There's alot of wealth, but at present the western system is optimised to cause wealth to drift up and get locked-up in the economic upper-crust.
There's tons of work that needs to be done! Examples - teaching arts and music, daycare, senior care, cleaning and renovating neighbourhoods, rehabilitation of ecological damage... but the powers refuse to see these as priorities or raise the minimum wage so that a person can actually make a living at one of these jobs.
The author first slams us for being clever and writing efficient stuff, then tells us the answer is to just run out and program more/ charge less. Oh, and let's run everything on scripting languages too. That'll help...
How sad is it when people are encouraged to take other people's wealth instead of create their own?
Why beat around the bush and just come out and suggest that everyone forks their paycheck over to the government so that they can give everyone an equal share (minus whatever government believes it is entitled to)? That's really what you're advocating, so why not come out and say it?
"Ask not what your country can do for you." --John F. Kennedy
As if you don't live in an economic ecology. It is unfortunely a product of the ME generation, I belive,
that you only need to think of yourself. That you make money in a vacumn. That is the central problem with the current conservative movement. You can see how they are taking the money and running. From the head of the New York Stock Exchange to World Com, to Enron. Its all part of the same irresponsible attitude. And its killing us.
The latest, I'll take my money and run" trend is to move all the jobs offshore. Good for them but not good for us. Where are those Republican patriots? I guess they figure why not ME why can't I just pull the plug on all the jobs in a town. Let them find another job somewhere else, I'm going to make a bundle shipping computer work to India. So what if you worked for me for 20 years, and have a house and children to take care of. So what if you can't find a job because all my other CEO buddies at the country club are doing the same thing. We laugh about how much we are making over golf. So what if you end up on welfare and homeless. And Oh Yes I'm going to work real hard to market the idea to you that we should get rid of welfare and social security. Why should I pay for that. Thats your problem.
exhale...
Having worked for several family run business I know there is another way to run a company. Another way to make money with a community of people working together. This cras objectifiction of business has got to stop before our whole economy colapses under the weight of the weathy company owners. Let start teaching real ethics and morality in the schools again. We may have to start it in the kindegartens and work forward, because I think most of those comming out of business school today are a lost cause when it comes to community responsibility. (some notable exceptions)
The carrying capacity of the Earth changes with technology. However, I remeber a few years back reading that based on the technology then the world could support 25 billion people. Anybody who says we are going to run out of room in the US needs to leave the city for a weekend and go for a long drive.
To encourage more employment in the US we should cut our extremely high payroll taxes (taxes that employers pay when they hire/pay someone) and replace them with taxes on resource use, for example, petroleum and other raw materials. This would not only help correct the "negative externality" of pollution, it would encourage the development and use of labor intensive rather than capital intensive technologies.
foldplay your photos won't know what hit them.
Problem is, they don't replace you. Instead, they give your job to someone else who now has two jobs to do. I saw the prefect example this weekend. A friend of mine works as an engineer for Clear Channel. Three months ago, his assistant quit. He was forbidden to replace him, even though he's already doing two jobs (He's doing his regular job and being project engineer for a big build out). Now he has three jobs to do. Last weekend he visited a transmitter site for the first time in a month and found some equipment badly damaged. The pattern of the AM radio station was far out of FCC tolerances. Problem is, his logging system broke last month and he hasn't had the time to fix it yet. He doesn't even know how long ago this happened. He planned to hire a contractor to help, but his bookkeeper told him NO CONTRACTORS. So, he struggles to do three jobs, none of them well. At the same time, his bosses get HUGE bonuses for cutting expenses so well. THIS is the rebublican economy at work! It ain't 'trickle down' it's TINKLE DOWN...and we all know what they're tinkling...all over us!
In the last recession, we had high unemployment, yadda, yadda, yadda...
What no one seems to remember was that very quickly there was a surge in self-employment (duh, what else are you gonna do with all that spare time?). Naturally, all those fledgeling companies grew and started hiring (well, some did and some died). The unemployment rate slowly fell and people stopped complaining.
My pet theory is that this is all a normal swing of the economic pendulum. High employment leads to low productivity (how many cumulative hours did you spend doing watering-hole-like things at the office, last time you were employed?). High unemployment just wakes people up and starts getting them motivated and productive again ("Oh, that's why I needed that 'paycheck' thingie [that was auto-deposited, out of sight and out of mind] to pay these 'bill' thingies [also auto-withdrawn].")
Bottom line: Get a job! Can't *get* a job? Make one up! We did, and we haven't missed a financial beat, yet. My spouse is also "unemployed", but works FT for our startup business. Recently we started outsourcing work to a couple of out-of-state freelance developers, part time. Soon we'll have more work for them than they can handle. If you're still employed, start a business anyway. You're just fooling yourself if you think it's "permanent" employment.
When I lost my cushy day job, three months ago, we had no spare cash reserve, either, no nest-egg (how completely American employee is that). What we did was just to scramble as fast as we could to get business. You really would be shocked at how much business there is in the SMB sector. Just dress up a bit business-like, read a good book on how to sell things (e.g. Socratic Selling by Kevin Daley comes to mind) and get out there and do what you used to do for "The Man", just do it for yourself, now.
Oh, and find the best attorney and accountant your money can buy, first! And by all means write those miles down (I still have a hard time with that, but they do add up so fast).
Under the tutelage of presumably "good conservatives," we have spent hundreds of billions of dollars subsidizing the "defense" industry and using it to conquer a major Third World petroleum producer. The latter not only also a multi-hundred billion dollar subsidy for the energy trading industry, but also one of blood. Nearly 200 American soldiers dead, and over 1500 wounded, to say nothing of the thousands of dead Iraqis and tens of thousands of wounded. How you see this as being against big government eludes me completely.
You are right, but for the wrong reasons. You, like most, have fallen into the trap. It is not about liberals or conservatives, Republicans vs. Democrats, Hawks vs. Doves, Right to Life vs. Freedom of Choice, etc. It is about the actual day to day mechanisms of political action. Who do politicians pay attention to? To whom are they beholden? What segment of society drives political action in our country? Do they represent your interests, or do they consider you an expendable "Human Resource"? Is your employment status of any significance to them, or is it at best figured into some large-scale economic indicator? Wake up, my friend, we are all in the same boat.
Today's stolen sig:
The first thing to do when you find yourself in a hole is stop digging.
My dad got a quote from our family dentist for a couple of crowns and it was like $4000. Many of his friends had been to Mexico for dental work and urged him to do the same. He went there, and the same work ended up costing like $1500 or something -- a dramatic price difference. Other than the relatively cramped offices, Dad said it was just like the dentist in the US -- same level of infection control, the treatments were the same, etc.
I think reality of medical care in the US is that outside of the realm of exotic disease treatment (oncology, hemotology, rheumatology, immunology, cardiology), your run of the mill medical care in most developed and many developing countries is about as good as it is here.
Also, I think that US doctors (dentists and other oral pros included) run the largest, best-financed protection scheme anywhere. You can't get most lab tests or medicines without seeing a doctor, who often has nothing to do with the lab work or the medicine.
Most of this could be done by a nurse or even self-done with the use of intelligent computer diagnoses, but these cost-saving advances are routinely blocked by doctors when they're not busy blocking liability or taking kickbacks from the pharmaceutical industry.
A remarkably blindered view. Wealth is only zero-sum at a given instant.
Wealth is properly measured by value - what is the value of a great medical system, a great transportation system, varied and efficient communications systems? What is the value of having the time to attend your daughter's soccer games? What is the value of a multitude of research efforts into extending life and making it healthier, or of a US infant mortality rate of 6 per 1000 compared to say Angola's 200 per 1000? Did the US somehow "steal" Angola's ability to produce healthy babies or did the people of the US slowly build their wealth to one that allowed the "purchase" of a society that could provide the lower rate?
Wealth is (to some degree) exponential and viral - it is used to create more wealth for others if applied in a free market system - one in which those who offer a service or product are free to charge what they can and the buyer is free to choose WWWWW to buy. When wealth is stolen by those-that-know-how-to-spend-your-money-better (that is, tax used for social purposes) then it takes longer for wealth to grow and spread - those who had wealth now have less of it to spread through their own acquisition of products and services, and there is tremendous waste and fraud because of a lack of personal interest in seeing that value is obtained for the expenditure.
The kid next door charges more every year to cut my grass - I could look for another grasscutter or I could make some lawnmower manufacturer happy by buying their product and using it instead of allowing this young fellow to practice capitalism, but I've chosen how I want to spend my wealth (my cash) and the kid's chosen how he want's to spend his (his time). I have the luxury and wealth (and gray hair) to be lazy, and the kid trades his time and effort for my cash. This is not a zero-sum game - the world had to invent the lawnmower for the kid and the plasma TV with Angelina Jolie on screen to interest me for this transaction to have occured - else I'd have more inclination to cut my own damn grass.
This kid is using his saved wealth to buy a car, so that he can get to "a real job", so that he can save money and go to school, so that he can invent bigger plasma screens or extend the average lifespan even more or eventually bring sanitation and sane government and decent health care to Angola, or free-market education to the masses, etc.
The ability to pursue happiness mean the number of people enjoying longer, healthier lives with more free-time increases continuously, as it has. That is not zero-sum - it is the growth of wealth.