What hides behind unemployment; what should we fight for in the 21st century

For the past few weeks, I have been playing with the following argument. Tell me what you think:

In the past year, fuelled by Trump’s fiery rhetoric as well as the left, a lot has been said against trade, especially framing it as the cause for the decrease of manufacturing jobs in the United States or Canada. But the truth is, trade played a much lesser role than decades of efficiency gains due to automation and information technologies. Although most of us do not realize that fact, the US has never produced as much industrial goods as they do now, with the big difference being that they produce all of it with less workers than before.

Let us consider the following abstract case:

  • 20 years ago, 200 workers built 200 tractors.
  • Now, because of efficiency gains, 150 workers are able to build 210 tractors, while the other 50 workers are fired.

On one hand, we should be happy that we can produce more with less work, it really is a progress. But of course, this leaves behind 50 people into unemployment and poverty. These people and their families will be left in dreadful conditions until they find other jobs, which despite the recurrent promises of future growth and retraining, will not happen for many of them.

However, instead of fighting job losses, I would suggest that maybe the most important thing we could do would be to raise taxes on the rich. What does taxes have to do with unemployed workers? Well, in our example, the gain of producing slightly more tractors with less expenses is clearly not received by the 50 who have lost their jobs, nor the 150 workers left (the real income for most workers have stagnated over the last decades despite significant growth). Instead, it goes to the owners (whether a single person or multiple stock-holders). But here is the thing: the owners are not necessarily working longer than before, having better marketing strategies or more genius insights. They have simply been allowed to capture all the benefits from our society’s efficiency gains.

This is why taxes and redistribution are essential, and now more than ever. We must make sure that the owners still get a share of the efficiency gains, but the same goes for the workers who continue to work, and perhaps more importantly, we must make sure that those who are displaced from the workforce are not left with nothing for their sacrifice. For they are, in a very real way, sacrificing themselves for the benefit of the whole by no longer working.

Politicians on the right have long argued that redistribution toward the unemployed promotes laziness and weakens the country, but actually, more and more, our gains in efficiency in the industrial sector force people out of work in a way that has nothing to do with their will to work or their talents—and the same was true in past centuries in the farming sector. Full employment might not be a coherent goal after all. We probably should not have everybody producing goods and services on the market, since there is a point at which the consumers do not need 2 more tractors each, or a new phone every week. In other words, our efficiency is so great that it must now manifest as less work rather than evermore output. And thus, unemployment, if handled correctly, could be a good sign for all of us, rather than an indicator of economic, political and ethical failure.

And this issue is particularly significant, since all signs point to a 21st century in which unemployment will be quite high despite maximal production. In such a context, using taxation to compensate those who are kept out of work actually makes a lot of sense, for the sake of growing a better economy, of attaining social justice and of preventing crime, instability and riots—which are likely to happen as we leave more and more people without any access to our society’s wealth (we must never forget that most countries are getting richer every years, even though many of us are being cut off from this wealth).

Therefore, the right should recognize the sacrifice of the unemployed, instead of further alienating them, and the left should focus on making unemployment bearable for the millions it will unavoidably affect, instead of vainly fighting solely to create or keep unneeded jobs.

It is time to take the pulse of our times, and to fight for massive wealth redistribution and against the idea that anyone who does not work is lazy and undeserving. Right now, too many of us blind ourselves into blaming China or trade for unemployment in the industrial sector, thus demonizing an external enemy while chasing the mirage of full employment, without realising all the good our efficiency gains could mean for all of us if, and only if, wealth redistribution was keeping up with our economy.


Comments

What hides behind unemployment; what should we fight for in the 21st century — 8 Comments

  1. I agree with most of what is said here, but not all. For a few decades I worked for half a dozen multi-national companies, most of which were US based. In the 80s and 90s the business strategy was Grow-Grow-Grow the business, the sky was the limit. Even then, it was pretty obvious to me that this was a flawed strategy. More and more salesmen were hired, but then more production people and related groups (QC, maintenance, front-line and middle management) were decreased to pay for the salesmen, who eventually had no stock to fill orders with. Clearly a flawed strategy.
    Production efficiencies are important and needed. However, playing Robin Hood and taking from the rich to give to the poor is not much of a solution and not new. Just throwing money at the jobless seems like a nice thing to do, but it is not. They just get angry, resentful and they feel even worse for needing a hand out. Everyone needs to work at SOMETHING to feel worthwhile. And as people start to realize that grow-grow-grow and endlessly producing stuff, whether anyone is going to buy it or not, are not winning strategies, we really need to be creative and develop jobs that DO NOT produce stuff. Recycle, fix crumbling infrastructure, replant and cultivate….these are the kinds of jobs that need to be developed to employ the jobless.

    • DC, fulfillment does not come only from paid employment. Paying the newly jobless would enable them to engage in the volunteer sector, for example, which would produce all sorts of benefits for them, their community and, more broadly, all of society.

    • I have mostly the same comment to make, but would suggest a different/additionnal way to think of the solution : the gain in efficiency, instead of being “burdened” by a subset of the workers (the 50 laid-off), should be distributed amongst the whole workforce (so 200 workers getting paid the same, but with less hours each). It’s probably pie-in-the-sky right now, but the idea is that, as DC said, the social (and personnal) value of being employed (or working) is high, and we should, as a society (and as progressives), take into account this fact. Handouts are still a necessity, but should be mostly a way to help people who can’t work; investing in solutions to help people work (and get adequately paid) is also of prime importance.

    • I think this is a good point though I think you overgeneralize a bit regarding the psychology of “handouts.”

      re: original post, though, it’s true that not all work has to be making stuff – redistribution could involve paying people to build/improve societal goods that are otherwise neglected, right?

      • You guys are good. The second step of the argument was indeed to raise the 3 solutions I see:

        -Big voluntarism programs, a 21st century peace corps (but the problem is that there might not be full time things to do even in such a structure)
        -Alternating workforce with lower hours (but the problem is the high training costs and the fact that some jobs cannot be divided as such easily (neurosurgeon argument))
        -Basic income (but this cost a lot and some say it is a handout)

        But overall, each of those as well as a combination of the three require high taxes to get started :)

  2. Interesting post – a few thoughts.

    “But of course, this leaves behind 50 people into unemployment and poverty. These people and their families will be left in dreadful conditions until they find other jobs, which despite the recurrent promises of future growth and retraining, will not happen for many of them.”

    You could run the same story for the decline of agriculture as a share of labour. Once most people worked on farms; now far fewer farmers can produce much more. As a result non-farmers have more money in their pockets to buy other stuff. A generation down the road, the children of former farmers are living in cities doing jobs their parents didn’t dream would exist. (I’m parroting a recent podcast by Russ Roberts at Econtalks… I forget which one, maybe the one with David Autor about trade with China).

    “the owners are not necessarily working longer than before, having better marketing strategies or more genius insights. They have simply been allowed to capture all the benefits from our society’s efficiency gains.”

    That’s probably not true, not 100%, I mean. Non-farm workers would get some of the gains because the food they buy is cheaper. There has apparently been a decline in the share of GDP going to labor, though, since the 1980s.

    “Politicians on the right have long argued that redistribution toward the unemployed promotes laziness and weakens the country, but actually, more and more, our gains in efficiency in the industrial sector force people out of work in a way that has nothing to do with their will to work or their talents”

    Both could be true, though. Changes in technology and consumer preferences are hard / impossible to predict, so when they throw people out of work, workers can hardly be blamed. But that doesn’t resolve the question about the incentive effects of income support.

  3. Discussions of basic income schemes and other social support systems inevitably raise concerns about the allegedly corrosive effect on the poor from receiving passive, unearned income. But should we not also worry about what the receipt of other income types which are also unconnected with labour – rents, investment income, capital gains – does to the moral fibre of the rich?

    More here: https://www.jacobinmag.com/2017/01/rich-universal-basic-income-piketty-passive-income-capital-income/

  4. Re: “But here is the thing: the owners are not necessarily working longer than before, having better marketing strategies or more genius insights. They have simply been allowed to capture all the benefits from our society’s efficiency gains.”

    Please clarify the claim that the owners are capturing the efficiency benefits from _society_.

    I may be mistaken, but my understanding is the owners made the capital investments to purchase efficiency-increasing machines for the companies they own using some/all of their own profits (instead of taking the profits out of the company to spend personally or invest elsewhere). These machines become increasingly efficient (and increasingly unemployment-causing) due to the competition between machine-making companies, which again doesn’t include public resources or funding (other than the ones used to ensure efficient markets). The role of capitalists is to deploy capital, not labour. Working longer/harder hours has little correlation with the wealth of capitalists (e.g. Warren Buffett doesn’t work 2 trillion or whatever times harder than a coal miner, for example).

    There’s clearly a social cost (unemployment–both for the unemployed and for society at large) that is happening at the same time as increasing personal benefit for the owners, but that correlation does not mean a causation through the same mechanism.

    Re: paragraph 6 about unemployment as a good thing. I’m getting shades of the mid-century techno-Utopianism (that fueled the Star Trek mythos) about a future where robots do all the work and take care of our material needs (replicators), and humans get to spend our time improving ourselves in the Romantic ideals of art, music, philosophy, etc. :p

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