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Thoughts on Occupy and the State of the Global Economy

Advance Warning: I have no formal background in economics. I have a master’s degree in sociology and a lot of experience working on the topic of knowledge economies, but that’s about the short of it.

Time for my $0.02. 🙂 Comments/criticism encouraged – I’m always interested in improving my understanding of the world.

I’ve been following the Occupy Wall St. movement and the associated #Occupy movement worldwide for a few weeks now with a fair amount of interest. I’m trying to make sense of it, as is everyone else. As anybody who’s been following the mainstream news is undoubtedly aware, we’ve been cycling in and out of economic crisis mode now for the last four or five years, and we seem to be poised at a “make or break” point yet again with regards to global markets and more than a few national economies, with the global economy at stake. It makes sense to me that people would be upset and looking for solutions when the rich are getting exponentially richer at the expense of everyone else, even getting away with outright fraud in multiple instances (robosigning, etc.).

Part of the beauty of the Occupy movement is that it has steadfastly refused to produce any concrete list of demands that would allow it to be easily categorized and then demonized or dismissed. That said, a lot of the discourse is still framed from an approach informed by capitalism and the global economy we’ve worked and lived with for most of the last hundred years (I realize I’m horribly generalizing, but to address this properly is more writing than I can do as a quick first commentary). This bothers me, because I believe that the underlying premises that we derive our systems of resource distribution from have changed fairly abruptly in a way that is not yet appreciated.

In short, there will never be enough jobs again.^

Globally, the stats I can find (ILO’s Global Employment Trends 2011) indicate:
* 3.1 billion workers globally out of a population that has recently crossed 7 billion.
* 660+ million in industry (slightly declining).
* 1.06 billion in agriculture (declining).
* 1.3 billion in services (increasing).
* 220 million unemployed (increasing).

As globalization continues to break down the barriers for access to these labor markets, Western countries have increasingly found themselves competing directly with this global pool of labor, resulting in cries for increased protectionism and spawning anti-globalization movements from people of all political colors. This is an implicit recognition of the fact that there will never be enough jobs again^ – these calls seek to artificially prop up labor markets by limiting the competition to labor pools inside national borders, but the internet has reduced the relevance of national borders to the average citizen in almost every area besides employment and nationalist emotion.

It’s hard to get an exact figure, but the estimates I’ve found (google “how many people can one farmer feed” – I’ll try to find some easy-click sources later) indicate that somewhere between 100 and 1000 people (150-ish being a more common estimate) can be fed per farmer using modern farming techniques. I presume this refers to grain and livestock and probably not to more obscure types of farming (saffron, anyone?:P), but in terms of simply providing a base amount of food, the number of people working in agriculture can only be expected to drop massively as technological improvements and increased education hit the rest of the developing world. By today’s “modern” standard, at a low number of even 75 per farmer (a number more in line with the 1970s), we actually need less than 100 million, or one-tenth, the number of agricultural workers that actually exist. This suggests that, in agriculture alone, approximately 900 million jobs currently only exist due to massive systemic inefficiency (I won’t even go into market factors that result in outright waste, farmers destroying crops because they can’t afford to transport them to markets, etc.).

I haven’t even tried to find numbers for industry, but I’m presuming that at least a couple hundred million people working in modern industry are employed making “widgets,” textiles, etc. These are currently things that are impractical or impossible to produce easily at home – but with home fabrication under intensive development and the price of both open-source and consumer fabrication devices falling rapidly, I don’t think I’m out of line in predicting that the upcoming revolution in personal-scale manufacturing by simply downloading designs and “printing” real objects at home a la RepRap is going to utterly decimate jobs in both manufacturing and service which are related to the design, manufacturing, and delivery of these types of objects.

A conservative guess is that maybe half of the global workforce is currently necessary to maintain current levels of production if obstacles to efficiency were removed (patents, lack of access to capital, etc.). It’s not inconceivable to think that in 20-30 years, we could be facing an extra billion “unemployed” workers from technological improvements in agriculture and industry as well as from simple population growth, and the number of “necessary” workers could drop to a tenth of the available pool. And the truth is, we don’t need everyone to work to produce enough for everyone.

I realize that a lot of people believe in the magical free market fairy that “creates” wealth and jobs out of thin air (yes, improvements in resource use and efficiency do result in improved standards of living, a sort of wealth-by-adding-energy-to-the-system that is still subject to degradation like every other form of order in the universe), but short of utterly useless service jobs like everyone having a personal hairdresser or a maid, I don’t really foresee there being enough jobs ever again. And to further complicate matters, artificial intelligence and robotics are increasingly proving more efficient at a lot of previously service-oriented tasks as well, so I think that even this segment of the global workforce will ultimately see decimation.

The short of it is, we’ve reached a point where our collective technological advancement has outpaced our ability to know what to do with ourselves as a species. “Liberals” think that “conservatives” are keeping them poor. “Conservatives” believe liberals are lazy hippies who just need to get a job. Communists say that communism will save the world, and the Ayn Rand fans wave the banner of individualism and capitalism as some sort of cure-all. All of them, I think, are wrong.

The debate must be reframed in terms of a world where we no longer need everyone to work and there will never again be enough jobs.^ What sort of world do we want that to be? While I believe that not everyone needs to work, I believe most people are happier if they are being productive members of society in some way, so we need to refashion our economic realities to provide them an opportunity to do so and to have a basic standard of living. I don’t know what this world will look like. I don’t know if we will ever get there. I don’t believe capitalism is the answer, nor do I believe that communism is. Humans have a competitive instinct that must have an outlet, but must also be channeled for the greater good. All I know is that we – all of us, not just the Occupy movement – have to put our thinking caps on now because time is running out, and forgiving student loans, making the rich pay an extra percent in taxes, and/or building more Starbucks for barista jobs will not solve a damn thing.

^ I keep marking this statement because there are a couple of ways that there could actually be more jobs, only one of which is really currently feasible, and that’s simply annihilating large percentages of the working population so that there is suddenly sufficient demand for the remaining labor pool again. I don’t think anyone thinks this is a good solution, but historically humans have resorted to war when resource distribution goes out of whack, and we are naive if we believe that it will not happen again. The other is finding some magical way to colonize the oceans/space/whatever that isn’t outrageously resource-intensive, since that would provide a lot of work for a lot of people. Pure fantasy, at least in the foreseeable future.:)

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7 responses to “Thoughts on Occupy and the State of the Global Economy”

  1. feyMorgaina Avatar
    feyMorgaina

    Ditto, and well written.

    The economics of the future need to be drastically different than what it is now in order for the whole human species to survive.

    Then maybe we can get off this planet and start colonizing the stars. Be once again explorers and adventurers. 😀

    Some other time, I should write on my own blog about what should be considered the basic needs for continued survival and further development of the human species in this second decade of the new millennium.

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  2. Blaise Alleyne Avatar
    Blaise Alleyne

    I take it you don’t buy the Joseph Schumpeter notion of creative destruction?

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  3. Nathan Avatar
    Nathan

    Blaise: I’m skeptical. I’ve always been skeptical of the notion that wealth can be “created” in any form, since what we consider wealth (in economic terms) is primarily a reduction of systemic entropy through the application of work that produces “order.” This fits with the scarcity == value equation, because a more ordered state, physically speaking, requires energy to maintain. So to me, mathematically and physically speaking, wealth can’t really grow infinitely without an infinite amount of energy maintaining it (i.e., ultimately, a violation of the laws of physics as we know them). We’ll certainly run into physical limits (and quite likely ruin the environment) trying to get there.

    To address “creative destruction” directly, this seems to be a variant of the “Luddite fallacy” fallacy, where the assumption is that there will always be something more important for freed-up workers to spend their time on. I think this is by no means proven yet; just because something has always been so is no indication that it will stay that way. It’s much more likely that surplus workers will just be pushed further into poverty and a spiral of wage-competition that drives them to work harder for less, and the destruction of organized labor only really makes it seem like it will happen that much faster. Not that I think that labor is really on the right track – better pay for fewer hours doing mostly-pointless work is not going to solve anything.

    This is turning into a minor blog post, but in short, I think that the “destruction” of jobs happening now is really indicative of a fundamental shift in human evolution where we just have to think about the possibility that the way forward might actually look scary to a world that has grown up equating your right to eat with how much of a workday you put in. If anything is being created, it may be the opportunity (dare I say necessity?) for new approaches to this aspect of the human experience rather than some flavor-of-the-week update that just requires us all to switch jobs.;) I’ve been reading about alternatives – nothing really strikes me as fail-safe, although I am somewhat in favor of the notion of a “basic income guarantee” as a floor for capitalism if we’re going to press ahead with the idea that capitalist societies are “the best.”

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    1. Blaise Alleyne Avatar
      Blaise Alleyne

      I’ve always been skeptical of the notion that wealth can be “created” in any form, since what we consider wealth (in economic terms) is primarily a reduction of systemic entropy through the application of work that produces “order.”

      Are you saying it’s a closed system? I mean, it seems obvious to me that the economy can grow, looking at say the last 5000 years. The question remains as to whether there’s ever a point where it stops growing, but I’m not convinced that this is some utterly unique period in human history.

      For example, why does it look like we’re at a breaking point now? Why is this such an utterly unique period in all of human history? Does the future really look that difference from 2011 than it did during the 1930s, or the medieval period after the collapse of the Roman empire?

      To address “creative destruction” directly, this seems to be a variant of the “Luddite fallacy” fallacy, where the assumption is that there will always be something more important for freed-up workers to spend their time on.

      Yeah, I wouldn’t say variant so much as an attempt at explaining the Luddite fallacy, the how behind the fallacy.

      The notion of creative destruction suggests that innovation and growth happens through a process of creation and destruction. It’s incredibly hard to predict what kinds of new jobs can and do emerge through innovation and technological progress. I mean, the classic 20th century example is manual phone operators. Very few, if anyone, would have been able to predict that the destruction of phone operator jobs and the introduction of automated switching would have laid some important foundations for the Internet and all of the economic activity it has enabled.

      I think that the “destruction” of jobs happening now is really indicative of a fundamental shift in human evolution where we just have to think about the possibility that the way forward might actually look scary to a world that has grown up equating your right to eat with how much of a workday you put in.

      I agree, that just because something was true in the past doesn’t mean it was true in the future, but you also have to look to the past and understand that rarely could anyone imagine, looking forward, what kinds of new jobs, new industries would appear.

      I don’t see how the present time is a special case, just because we can’t foresee the future. That’s been the norm for all the past examples of creative destruction.

      When you say, “short of utterly useless service jobs like everyone having a personal hairdresser or a maid, I don’t really foresee there being enough jobs ever again,” it sounds to me like a variant of “everything has already been invented.”

      I’d say, I can’t foresee what kind of jobs or industries there will be, or how difficult or easy it might be through any number of transitions, but I don’t see any evidence to suggest that this time round is different from the rest.

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      1. Nathan Avatar
        Nathan

        Are you saying it’s a closed system? I mean, it seems obvious to me that the economy can grow, looking at say the last 5000 years. The question remains as to whether there’s ever a point where it stops growing, but I’m not convinced that this is some utterly unique period in human history.

        For example, why does it look like we’re at a breaking point now? Why is this such an utterly unique period in all of human history? Does the future really look that difference from 2011 than it did during the 1930s, or the medieval period after the collapse of the Roman empire?

        I am not really sure what you mean by “the economy can grow.” The point of my article isn’t that I don’t think that we can continue to make productivity gains or that there won’t be new forms of employment. I’m arguing that the necessity (and utility) of human participation in that productivity is going to decrease faster than the rise of new forms of employment.

        Very few, if anyone, would have been able to predict that the destruction of phone operator jobs and the introduction of automated switching would have laid some important foundations for the Internet and all of the economic activity it has enabled.

        Right, but I think that it’s a very difficult argument to make that the internet and the associated economic activity have actually helped in creating jobs. It seems like if that were true, North America would have a glut of jobs; instead, all we have are companies arguing that we “don’t have enough workers” purely for the purposes of depressing wages. Productivity and economic activity have increased, I’m not denying that. But I’m not sure it’s a coincidence that the wealth gap has grown by leaps and bounds since then, or that it’s harder to find jobs for the average person, or that the notion of working the same job for a lifetime is now more or less dead. At the same time the internet broke ground for new jobs, it made the labor market for those jobs effectively global. Try finding web-related or programming jobs online these days (or even art or writing jobs). You’re competing with firms claiming that they can build an entire website for $200, or build an iPhone app for $1000. The going rate for a 500-word blog article is less than a dollar. You might get paid $5/hour to do website graphics or design. Basically, the internet proved that the potential labor market was much bigger than the number of opportunities. And I’m hard-pressed to think of obvious examples offhand where the internet has created new jobs in traditional industries. Instead, I see boosted efficiency trimming off entire industries (content middlemen being the obvious ones) without providing a correspondingly large increase in new job opportunities elsewhere. Fewer people can easily do the same work.

        Fundamentally, I’m saying we’re nearly twenty years into this “new world,” and the trend is not the birth of huge new industries. A trend isn’t factual, and only hindsight will tell the full story on this one, but I’m not optimistic that we’re going to think of some new thing to do that actually requires millions of workers unless it’s simple manual labor.

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      2. Blaise Alleyne Avatar
        Blaise Alleyne

        I think that it’s a very difficult argument to make that the internet and the associated economic activity have actually helped in creating jobs. It seems like if that were true, North America would have a glut of jobs […]

        Well, creative destruction implies that innovation both creates and destroys jobs — so not having a glut of jobs is expected. I guess the real question would be net jobs — is the total number going up or down?

        (Though could be more complex too, e.g. the standard job of the 1950s might have been lifelong and enough to provide for the wife and kids, whereas a more temporary job in today’s world where it’s harder for many families to survive on a single income is quite different.)

        Basically, the internet proved that the potential labor market was much bigger than the number of opportunities. And I’m hard-pressed to think of obvious examples offhand where the internet has created new jobs in traditional industries. Instead, I see boosted efficiency trimming off entire industries (content middlemen being the obvious ones) without providing a correspondingly large increase in new job opportunities elsewhere. Fewer people can easily do the same work.

        New jobs in traditional industries isn’t really the point, so much as new industries is the point. Take the all-too-often-used example of entertainment… from live theatre to movies to home video to the internet, you have a constant process of competition, of creative destruction, of the emergence of new industries and transformation or destruction of old ones… musicians aren’t necessarily needed to play music live in the theatres anymore, but all sorts of new opportunities for music have emerged through 20th and 21st century media… entire massive industries, like the video game industry, didn’t even exist half a century ago… etc., etc.

        The notion of efficiency reducing the total number of jobs suggests a kind of static world or closed system, that new industries or new jobs — beyond our present imagination — might not be enabled by improvements in efficiency elsewhere. Another perspective is that efficiency allows us to move on, to automate certain things so that we can focus on other things, and that’s part of what makes the economy “grow” or quality of life improve…

        (Re: globalization, I agree with the difficulties in competition, but not sure if it’s necessarily a problem in the long-term… lots of jobs are being creating through globalization, though not really in North America, so depends what the scope is we’re talking about… and with outsourcing reducing costs, goods becoming cheaper, that can enable other growth and development (e.g. if computers cost two or three times more to make, that’d affect their affordability for business, costs for those businesses, efficiency all around)… lots of ripple effects with globalization, not sure that’s a clear case of jobs being destroyed.)

        Fundamentally, I’m saying we’re nearly twenty years into this “new world,” and the trend is not the birth of huge new industries. A trend isn’t factual, and only hindsight will tell the full story on this one, but I’m not optimistic that we’re going to think of some new thing to do that actually requires millions of workers unless it’s simple manual labor.

        I guess I’m just not convinced it’s a fundamentally new world. I see the accelerating technological progress accelerating other processes, like that of innovation or creative destruction. What might have taken centuries in the time of the printing press may take several years or less nowadays, but I’m skeptical that things are fundamentally different in the sense that we’ve reached some sort of a ceiling. But it’s interesting to consider that possibility.

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      3. Nathan Avatar
        Nathan

        New jobs in traditional industries isn’t really the point, so much as new industries is the point.

        This is exactly my point though – the “new industries” we are seeing do not seem to come anywhere close to replacing the jobs they’ve destroyed, much less creating enough to deal with the numbers of new jobs that are needed every due to simple population growth. I.e., the jobs are being destroyed much faster than they are being created, new industries or not . I can’t think of a new industry in the last 10-20 years that even comes close to filling this category. The video game industry isn’t even coming close – 2010 stats indicate that the entire US industry (which is the lion’s share) only employs about 120,000 workers directly or indirectly. From what I understand, the US adds at least that many new workers to the workforce every month due to simple population growth, so this isn’t going to dent job loss, much less the inflation in the workforce from population pressure. Video games are massively profitable – but that simply backs up my assertions that we just don’t need all the workers we have anymore.

        …lots of jobs are being creating through globalization, though not really in North America…

        This, I think, is conjecture. The research I’ve done indicates that the jobs being “created” are primarily the jobs of expensive “first world” workers suddenly opening up to be done by workers elsewhere. I’m just not seeing that globalization is requiring anywhere near the millions of new workers that are available now every month due to global population growth. There is some amount of work being created simply to take care of the population as it grows, but there simply aren’t massive new industries anywhere that require millions of workers, which goes back to the original point of my article. Maybe we’ll see it in fifty years or something, but I’d bet on war or natural forces reducing the population pressures long before we see any industries form that somehow suddenly need human intelligence (rapidly becoming inferior to artificial intelligence for most productive, non-creative purposes) or strength (our advantage now is solely in finesse, but we are losing that to robots by the month). I could be wrong, but so far I don’t see a huge risk of it.;)

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