Technology causes high unemployment?

[RPfan1992]

This gaming forum that I like to visit has a political sub forum, where this user there said that businesses are doing very well in this economy and that the high unemployment is due to an uneducated workforce and technology replacing jobs. Here is what he said

Oneshot it comes down to this.....you somehow are able to consider a company "crushed" even though they are having record profits.. Please explain what you mean by crushed if not a company's bottom line. Productivity is at an all time high, not in some distressed state. We are on a collision coarse--that much is true. But it's not about instability, productivity, oppressive government or inability to generate profits, its about technology replacing people, and far too many uneducated Americans.

It's hard to sort through the mutual funds where most of our money is....but we're currently about 80% domestic.

Anyway, I want to know what everyone here on rpf think about this. I know that people think that technology doesn't replace jobs but I don't really know the specifics of that argument.

Here is the link to that thread

http://www.mektek.net/forums/topic/2...if-obama-wins/

[torchbearer]

imagine the extreme scenario. you have replicators that make and produce all your food. robot servants to make all your physicals like vehicles, houses, etc.
human effort is no longer required to provide for anyone's needs.
zero employment.
but yet, you have all your time to do what you want, you have home, transportation, food. your wealth is tremendous and you work none.
technology, increases our production which should lead to falling prices in a word of honest money. the falling prices is an increase in bounty for society.

[dannno]

imagine the extreme scenario. you have replicators that make and produce all your food. robot servants to make all your physicals like vehicles, houses, etc.
human effort is no longer required to provide for anyone's needs.
zero employment.
but yet, you have all your time to do what you want, you have home, transportation, food. your wealth is tremendous and you work none.
technology, increases our production which should lead to falling prices in a word of honest money. the falling prices is an increase in bounty for society.

Exactly, and you can use this example in the other direction as well.

We could remove technology from society completely and everybody could have a job plowing fields and harvesting crops. Everybody would have a job, but they wouldn't have much else, even food would be scarce.

[Zippyjuan]

imagine the extreme scenario. you have replicators that make and produce all your food. robot servants to make all your physicals like vehicles, houses, etc.
human effort is no longer required to provide for anyone's needs.
zero employment.
but yet, you have all your time to do what you want, you have home, transportation, food. your wealth is tremendous and you work none.
technology, increases our production which should lead to falling prices in a word of honest money. the falling prices is an increase in bounty for society.

If employment is zero, where do you get the money to purchase things with? The wealth would be with the robot owners and makers and repair men. We have seen a loss of jobs which require low skills and training and those are the people out of work today.

[torchbearer]

If employment is zero, where do you get the money to purchase things with? The wealth would be with the robot owners and makers and repair men. We have seen a loss of jobs which require low skills and training and those are the people out of work today.

if robots produce everything, prices are zero.
how could you charge for replicated pasta when anyone could get their own?

[Neil Desmond]

if robots produce everything, prices are zero.

I agree; the general concept involved is called "post scarcity": http://en.wikipedia.org/wiki/Post_scarcity

[KingNothing]

if robots produce everything, prices are zero.
how could you charge for replicated pasta when anyone could get their own?

Exactly.

The role of an economy is not to produce jobs, it is to meet the wants and needs of the consumer. If the means of production are so cheap and so effortless that robots and replicators can satisfy all human needs, humans will be free to explore all of their wants, on their own time.

[Steven Douglas]

If employment is zero, where do you get the money to purchase things with? The wealth would be with the robot owners and makers and repair men. We have seen a loss of jobs which require low skills and training and those are the people out of work today.

Not in boom times. Only in busts, where labor competition becomes much more fierce, as more educated people start reaching out for jobs formerly occupied by idiots and functional illiterates. It's that same competition and glut of labor that causes a citizen in China to need a four year degree just to get a decent job at a shopping mall.

Malinvestment extends to labor, like any other resource that is mis-allocated in a non-free market economy. In a sound economy, with no booms or busts, supply and demand for labor would simply stabilize, given that it is no longer subject to malinvestment.

[enter`name`here]

If employment is zero, where do you get the money to purchase things with? The wealth would be with the robot owners and makers and repair men. We have seen a loss of jobs which require low skills and training and those are the people out of work today.

if i own a factory that mAkes 10000 widgets and i improve the technology such that i can produce 15,000 widgets then there are now 5,000 more widgets in society. It seems unlikely that i the owner can consume all 5k additional widgets, ergo the number of people who now own widgets must have increased. If my machines made people broke by eliminating jobs how could people buy my widgets? And if people cant buy my additional widgets, why am i producing them?

[Zippyjuan]

if i own a factory that mAkes 10000 widgets and i improve the technology such that i can produce 15,000 widgets then there are now 5,000 more widgets in society. It seems unlikely that i the owner can consume all 5k additional widgets, ergo the number of people who now own widgets must have increased. If my machines made people broke by eliminating jobs how could people buy my widgets? And if people cant buy my additional widgets, why am i producing them?

That assumes additional demand existed for your widgets. Say the demand for your widgets did not change but technology still improved your productivity by 50%. That means you need fewer people to produce them so you lay off workers- you could get rid of one third of them and still maintain current production. But those workers were buying your widgets. Now they aren't because they don't have a job. Now you are selling fewer so you again need fewer workers. More layoffs.

We have seen that happening with our economy in recent years. Companies started laying off workers (a lot of the early cutbacks were not because companies were themselves actually losing revenue but because they EXPECTED lower sales due to the recession hitting which actually made it worse and self- fulfilling). Now there are more people not working. They have less to spend on buying stuff so sales of goods and services go down. These same companies see the sales declines and trim the workforce further. It is very hard to get the cycle to reverse itself and get business to hire and give people more money to spend again which increased demand for goods and services which encourages more hiring.

[tttppp]

That assumes additional demand existed for your widgets. Say the demand for your widgets did not change but technology still improved your productivity by 50%. That means you need fewer people to produce them so you lay off workers- you could get rid of one third of them and still maintain current production. But those workers were buying your widgets. Now they aren't because they don't have a job. Now you are selling fewer so you again need fewer workers. More layoffs.

We have seen that happening with our economy in recent years. Companies started laying off workers (a lot of the early cutbacks were not because companies were themselves actually losing revenue but because they EXPECTED lower sales due to the recession hitting). Now there are more people not working. They have less to spend on buying stuff so sales of goods and services go down. These same companies see the sales declines and trim the workforce further. It is very hard to get the cycle to reverse itself and get business to hire and give people more money to spend again which increased demand for goods and services which encourages more hiring.

This isn't complex. Make it easier for people to start their own businesses and create jobs that way. Big corporations are not obligated to give away free jobs.

[Steven Douglas]

That assumes additional demand existed for your widgets. Say the demand for your widgets did not change but technology still improved your productivity by 50%. That means you need fewer people to produce them so you lay off workers- you could get rid of one third of them and still maintain current production. But those workers were buying your widgets. Now they aren't because they don't have a job. Now you are selling fewer so you again need fewer workers. More layoffs.

That assumes that the workers are indeed buying their own widgets, and that it's a closed-loop economy. Conversely, would the key be to success be to hire more employees, so that they can buy more widgets, and you can then use those profits to hire even more workers?

The lay-off of workers due to solely to efficiency or technological improvements is at the very CORE of the concept of division of labor and efficient allocation of resources. You see those workers as simply out of jobs due to technological improvements. I see them as "free" to be allocated more wisely, now that labor is not being WASTED by the amount indicated by the prior inefficiency.

[enter`name`here]

That assumes additional demand existed for your widgets. Say the demand for your widgets did not change but technology still improved your productivity by 50%. That means you need fewer people to produce them so you lay off workers- you could get rid of one third of them and still maintain current production. But those workers were buying your widgets. Now they aren't because they don't have a job. Now you are selling fewer so you again need fewer workers. More layoffs.

We have seen that happening with our economy in recent years. Companies started laying off workers (a lot of the early cutbacks were not because companies were themselves actually losing revenue but because they EXPECTED lower sales due to the recession hitting which actually made it worse and self- fulfilling). Now there are more people not working. They have less to spend on buying stuff so sales of goods and services go down. These same companies see the sales declines and trim the workforce further. It is very hard to get the cycle to reverse itself and get business to hire and give people more money to spend again which increased demand for goods and services which encourages more hiring.

If we assume the demand curve remains constant (as per your second sentence), and we assume a lower maginal cost, Should not the profit maximizing decision be to increase production? MC=MR.

[Bohner]

That assumes additional demand existed for your widgets. Say the demand for your widgets did not change but technology still improved your productivity by 50%. That means you need fewer people to produce them so you lay off workers- you could get rid of one third of them and still maintain current production. But those workers were buying your widgets. Now they aren't because they don't have a job. Now you are selling fewer so you again need fewer workers. More layoffs.

If you are producing 50% more widgets for the same cost, then you could afford to lower your prices for widgets significantly. Sure, the laid off people are now temporarily unemployed but the rest of society now benefits from the cheaper widgets.

We have seen that happening with our economy in recent years. Companies started laying off workers (a lot of the early cutbacks were not because companies were themselves actually losing revenue but because they EXPECTED lower sales due to the recession hitting which actually made it worse and self- fulfilling). Now there are more people not working. They have less to spend on buying stuff so sales of goods and services go down. These same companies see the sales declines and trim the workforce further. It is very hard to get the cycle to reverse itself and get business to hire and give people more money to spend again which increased demand for goods and services which encourages more hiring.

What you are talking about here is the result of the GFC not the rise in productivity. This argument of technology leading to mass unemployment has gone on pver a hundred years and has no factual basis behind it.

[dannno]

^I'm going to create a new theory to tackle this problem for people and I'm going to call it the Massage Therapy Theory.

Wouldn't you like to get a really good massage once a week or more?

What if you could give two 30 minute massages a week and live in a mansion, have a sports car and all the food you need? All for working 1 hour a week!! Would you take 20 or 40 hours of training to become a good massage therapist and be willing to live this lifestyle? I think most people who aren't already very wealthy would have no issue trading their 40 hour/week schedule for a 1 hour/week schedule, even if it means giving a couple of massages.

Pretend that soon in the future we have all the technology in the world, but no technology yet has been able to replicate a massage from a real human. As all of the other jobs disappear, people who don't own the means of production and were once laborers move into the massage therapy field. They give massages to the people who own the means of production, who basically just sit back and do nothing and have everything they want because they own machines that produce things for people. They are willing to pay $5,000 for a massage because they all have millions and millions of dollars flowing in. A massage therapist can then make $10k/week by giving two massages, then they can go out and buy all of the things being produced by those who own the means of production. Now those people have the money again and they can spend it on more massages. The reason the basket of goods that the massage therapist can now buy has grown so much is because the basket of goods the producer has produced vs. the amount of effort they have had to put in has grown exponentially. They don't mind paying extra because they create so much with so little effort.

Now you have a massage therapist who decides they want to give 8 massages a week for a few months, save up some money and buy their own means of production so they don't have to give massages anymore. Eventually more massage therapists begin to own their own means of production and they leave the field. Now there is a high demand for massages and few massage therapists left. Now a massage costs $10,000 and at some point some rich people decide they don't really need massages, they can take the next best alternative of a jacuzzi or massage chair. Yet others still want their massage at the higher price.

The fact is, humans will always want services performed on them, people love being pampered, served, etc.. The people who pamper will get paid a lot if there is a lot of stuff being produced by the people who they are pampering.

[John F Kennedy III]

^I'm going to create a new theory to tackle this problem for people and I'm going to call it the Massage Therapy Theory.

Wouldn't you like to get a really good massage once a week or more?

What if you could give two 30 minute massages a week and live in a mansion, have a sports car and all the food you need? All for working 1 hour a week!! Would you take 20 or 40 hours of training to become a good massage therapist and be willing to live this lifestyle? I think most people who aren't already very wealthy would have no issue trading their 40 hour/week schedule for a 1 hour/week schedule, even if it means giving a couple of massages.

Pretend that soon in the future we have all the technology in the world, but no technology yet has been able to replicate a massage from a real human. As all of the other jobs disappear, people who don't own the means of production and were once laborers move into the massage therapy field. They give massages to the people who own the means of production, who basically just sit back and do nothing and have everything they want because they own machines that produce things for people. They are willing to pay $5,000 for a massage because they all have millions and millions of dollars flowing in. A massage therapist can then make $10k/week by giving two massages, then they can go out and buy all of the things being produced by those who own the means of production. Now those people have the money again and they can spend it on more massages. The reason the basket of goods that the massage therapist can now buy has grown so much is because the basket of goods the producer has produced vs. the amount of effort they have had to put in has grown exponentially. They don't mind paying extra because they create so much with so little effort.

Now you have a massage therapist who decides they want to give 8 massages a week for a few months, save up some money and buy their own means of production so they don't have to give massages anymore. Eventually more massage therapists begin to own their own means of production and they leave the field. Now there is a high demand for massages and few massage therapists left. Now a massage costs $10,000 and at some point some rich people decide they don't really need massages, they can take the next best alternative of a jacuzzi or massage chair. Yet others still want their massage at the higher price.

The fact is, humans will always want services performed on them, people love being pampered, served, etc.. The people who pamper will get paid a lot if there is a lot of stuff being produced by the people who they are pampering.

Great theory, IMO.

[BlackTerrel]

I think it's true in part. As we become more and more efficient mass armies of workers become less and less important and genius and cunning rise to the top. It's bad from a macro standpoint and will lead to more polarization. Not going anywhere.

imagine the extreme scenario. you have replicators that make and produce all your food. robot servants to make all your physicals like vehicles, houses, etc.
human effort is no longer required to provide for anyone's needs.
zero employment.
but yet, you have all your time to do what you want, you have home, transportation, food. your wealth is tremendous and you work none.
technology, increases our production which should lead to falling prices in a word of honest money. the falling prices is an increase in bounty for society.

Or the few who created the robots will benefit. The vast majority of our 300 million populace who created nothing will not benefit and there will be no jobs for them. Unless you redistribute wealth.

[torchbearer]

I think it's true in part. As we become more and more efficient mass armies of workers become less and less important and genius and cunning rise to the top. It's bad from a macro standpoint and will lead to more polarization. Not going anywhere.



Or the few who created the robots will benefit. The vast majority of our 300 million populace who created nothing will not benefit and there will be no jobs for them. Unless you redistribute wealth.

why would someone build millions of robots if no one could buy them?
once people had one robot, their needs are met.
robot is a replacement for human effort required in meeting life needs.

[BlackTerrel]

why would someone build millions of robots if no one could buy them?
once people had one robot, their needs are met.
robot is a replacement for human effort required in meeting life needs.

I didn't say no one. But you have to create value to get value. I think creating value is going to become more and more difficult. Don't think 300 million Americans will.

[Neil Desmond]

imagine the extreme scenario. you have replicators that make and produce all your food. robot servants to make all your physicals like vehicles, houses, etc.
human effort is no longer required to provide for anyone's needs.
zero employment.
but yet, you have all your time to do what you want, you have home, transportation, food. your wealth is tremendous and you work none.
technology, increases our production which should lead to falling prices in a word of honest money. the falling prices is an increase in bounty for society.

I agree, except I don't like to call them "replicators" if you're talking about this kind of thing: http://en.wikipedia.org/wiki/Self-Re...dular_Robotics

Basically, we might be be nearing completion of a "robotic" system that's universal and utility oriented:

Here's a version that I'm working on (a geometric "mock-up"):

[MelissaWV]

Not to mention that technology creates its own series of new niches.

You have people involved in the development and upkeep and marketing of the new technology, and if we get to the extreme that things are super efficient (like torch's example), you bet your butt that someone will come up with some new gadget or experience that everyone just HAS to have now that they have time for it.

[Ninja Homer]

Compare the entertainment industry before & after the Industrial Revolution, and you'll have the answer. When people have more time, they find other things to do with their time, and this creates jobs to replace the ones that were taken up by technology.

[MelissaWV]

To add to what I said, it's failure to adapt that causes high unemployment. If generations, or even individuals within their own lifetime, do not adapt to changing job markets... it's all going to go to hell very quickly.

[LibForestPaul]

He is parroting the propaganda from school.
Steam shovels.
Looms.
etc...

If unemployement is so high, and technology is the cause, then how do H1B visas come into play, especially regarding the high unemployement of white collar workers.? Ask him this.

[thoughtomator]

Yes, the technology that allows the government to allow in millions of foreign workers to displace American ones

[Zippyjuan]

It would still cost to make the robot and service it, transport goods, produce energy, and to provide the materials for the task the robots perform. Everything free? If the robots were free why would they be produced? No incentive.

[torchbearer]

It would still cost to make the robot and service it, transport goods, produce energy, and to provide the materials for the task the robots perform. Everything free? If the robots were free why would they be produced? No incentive.

i put out the extreme future star trek reality(plus the A.i. type robots who could self repair. people could tend to those task- but the fewer people require the almost zero you get in price.
where do other people come in? what will people do when they don't have to work? entertain. create themed outings. whatever.
people will always find a way to serve one another in even the extreme scenario. there would always be a basis of trade in a sense, but it wouldn't be a fight for survival as much as a fight for how much you can do with your life.

[dannno]

where do other people come in? what will people do when they don't have to work? entertain. create themed outings. whatever.

Bill Gates went to Burning Man.

[Neil Desmond]

It would still cost to make the robot and service it, transport goods, produce energy, and to provide the materials for the task the robots perform. Everything free? If the robots were free why would they be produced? No incentive.

Not necessarily; consider:

http://www.i-to-i.com/why-do-people-volunteer.html

http://economix.blogs.nytimes.com/20...you-volunteer/

http://tribaltruth.org/2010/11/harri...nteering-more/


This presentation is insightful on the issue:

A few things I've written related to this subject/issue:

http://neiltalk.blogspot.com/2012/04...apitalism.html

http://neiltalk.blogspot.com/2012/04...demand-is.html

http://neiltalk.blogspot.com/2012/04...-scarcity.html

http://neiltalk.blogspot.com/2012/05...y-society.html


This guy's ideas are a bit dated or obsolete, but he makes some good points (not just models or drawings):

Reminds me of The Jetsons:

[Zippyjuan]

There has never been an extended period without booms and busts.