Yesterday, I had a long talk with one of my nephews--the one who’s a computer guru. He’s one of a few people who, at age 55, can actually claim 45 years experience working with computers. Yes, he really did start when he was 10. He’s an interesting case. He lived in Minneapolis when that city was an early hotbed of new digital industries—Control Data, Honeywell, and several others. The parents of some of my nephew’s neighborhood friends were involved in advanced research, and they thought it was cute to have a 10 year old interested in computers, so they supplied him with some old parts and showed him how to get started. By the time he finished high school, he was already involved in cutting edge technology, and he was afraid that if he took 4 years off to get a college degree, he’d just be 4 years behind when he graduated and would never catch up. So today, though he often supervises college trained people, he himself is totally self-trained, except for a few college credits in math. In my family, this is not unusual. We have been autodidacts for at least four generations.
Since I spent 40 years doing industrial wiring, and was in satellite communications before that, my nephew and I have many common interests. Yesterday he read my recent blog post, Does Keynesian Theory Still Work? and we discussed it. The gist of my point is that whenever we try to pump up the global economy to a level with less than 10% unemployment, we are stymied by the fact the amount of oil needed for such a level of global economic activity is slightly greater than the maximum we can now produce. The economy expands till it hits the oil limit, and then rising demand bids oil price up to a point that shuts down the economy.
While my nephew did not really deny this phenomenon, he seemed to feel that the real threats to full employment were certain emerging technologies. He cited three in particular which he thought could play havoc with the future job market: nano-technology, 3D printers, and artificial intelligence. He said that while it is not certain that all three will materialize, any one of the three could replace massive amounts of human labor. And if they all come to pass, they could replace 95% of the labor now used to do the things we now do. So, he worries: Will we have to choose between having 95% of the population on welfare--or 95% unemployment?
Well, I thought about it for a while, and I concluded that if this were to be our future, then we would have a fairly high class of problems. All we would need to do would be to reduce the work week to two days, instead of five. This would create enough new leisure industries to absorb all remaining workers except the 5% still needed to do all that we now do. What’s not to like about that? Unfortunately, our problems will be a little more complicated.
So, let’s take the questions one at a time.
First: Will these technologies really happen in our lifetime? I have spent many decades listening to predictions of radical changes that will change my way of life. But the changes which actually occurred were generally not the ones predicted. Remember how nuclear power was going to provide “power too cheap to meter”? And how we wouldn’t have to worry about waste, because the next generation of reactors would be fusion reactors. (Nuclear fusion was just twenty years away. Guess what—it still is.) And in the 60s, when emerging African nations were replacing the colonial powers, everyone warned that as soon as the Africans overcame their tribal differences and became a solid political unit, they would become the most powerful nation on Earth. And, in the worst case, if they joined the Soviet bloc, we were doomed. Well, the Africans never overcame their differences, and the Soviet Union does not exist. Did anyone predict its demise?
Second: If these technologies were to come about, is this our most important problem?
All my life, I have seen the introduction of new technologies that allow one worker to produce radically more of everything. In fact, that's what I did throughout my entire working lifetime--design, build, install and repair complex systems which displace human labor. But until very recently, none of this did much to change our dependence on fossil fuel. In fact, the more advanced our industry became, the more oil it used. Now, finally, we are beginning to see technologies that may help lift our dependence on oil, but only if we use them. Computer controlled fuel systems allow cars to get better mileage. Computers and lithium batteries make hybrid cars possible. Advanced silicon PV cells make solar power more feasible. Computer controls make wind turbines more efficient and smart grids smarter. But we’ve yet to employ these things on a large enough scale to make much difference. And if we don’t do so fairly soon, no amount of clever digital toys will save us, because we’ll be starving, since our entire food industry is massively dependent on petroleum, the supply of which is already in decline. (Today's Wall Street Journal reports that nearly all major European Oil companies report double digit declines in oil production, compared to just a year ago. See Europe's Big Oil Sees Output Fall, page B3, Aug 1, 2011.)
Third: If some new technology replaces human labor for most of the things we now do, will we run out of things that need doing? I doubt it. At the time of the American Revolution, 9 out of 10 Americans farmed--to feed themselves and the other 10%. Today, the entire food industry uses only 10% of our workers, and farming itself uses only about 1%. So, if in 1790, most people were ploughmen, do we now see large numbers of unemployed ploughmen, standing idle with their teams of oxen along country roads with signs that read: WILL PLOUGH FOR FOOD? No! During the Nineteenth and Twentieth Century, farmers squeezed off the farm moved to town and found jobs in industries that mostly didn’t exist in 1790. And most of them were better off for the change.
Just the changes in energy infra-structure required to get free of our oil dependency could use most of the population for a couple generations. Does this mean that no one will be unemployed? No. In the 1930s, Keynes pointed out that people were unemployed, not because there were no tasks that needed to be done, but because we lacked the political will to spend the public funds needed to do them. Most of the massive projects needed to convert our country to a post petroleum economy are of such a scale that only government can do them. And to pay for this work, only the very rich could be taxed enough to raise this kind of money, because they have nearly all of the wealth. That’s why it doesn’t happen. We have unemployment because of a failure of political will. Or, to put it bluntly, it’s a failure of balls. We have unemployment because we lack the balls to tax the rich--to hire people to do what we already know has to be done.
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