In days gone by, if someone wanted to become a nurse, she would work on the wards, emptying bedpans and dealing with patients as she learned On The Job. Today, she would face years of classroom education before ever seeing a patient.
Germany is – as so often these days – the poster child for foolish government. Unemployment disguised as education means that Germans may be years past the “youth” stage before finally being able to enter the workforce.
Now it seems the same phenomenon is beginning to affect China:
“… the democratization of China’s higher educational system…This ringing success has fallen flat because the job market has not kept up with university expansion.”
Looking to the future, the growth of Artificial Intelligence and automation are likely to make the future employment situation even more difficult.
If we look at the West, the great growth industry of the last half century has been government – where in many cases people are hired to do things which are non-productive or actually damaging to the economy.
The question of how to deal with surplus man-hours is one to which it seems no country has developed a productive answer. And yet failure to deal with this issue may undermine every country. Just another one of those problems that in practice may only be resolved by societal collapse.
Yeah but do they have Gender Studies departments? China has a lot of catching-up to do if it’s going to reach Western levels of depravity in their universities.
The mass eradication of jobs by automation has been predicted since workers threw their sabots into the machines (or not). Every time there’s a technological advance (steam engines, Jacquard loom, cotton gin, ATMs, computers in the workplace), there is going to be a catastrophic unemployment. Sure, there are displacements that hit some people hard but, somehow, the economy is able to absorb the newly-displaced workers in time. Robots were adopted in automobile manufacturing decades ago.
Human wants are limitless; it’s a reality of the dismal science: scarcity. Maybe this time will be different. History is not always a reliable guide but that’s not the way to bet. Scarcity is Lindy.
Arguably, the last time was different. When the Powers That Be found they could boost short-term profitability by offshoring production and firing their workers – what happened? There were not any major great new productive industries springing up to absorb that unwanted labor. Great growth was instead in government employment (both direct and through contractors), with most of those new bureaucrats creating no added value – many of them actually impeding production.
And of course there was also the great expansion of credentialing, which disguised unemployment by taking those students out of the workforce for years.
Yes, we humans have infinite wants. But it is tough to identify likely currently unsatisfied wants which will feasibly create substantial additional demand for well-compensated labor. I would love to be wrong about this.
Offshoring production, i.e., hiring cheaper foreign workers is not the same as replacing them with robots. About the same number of humans are working (maybe even more) but they are paid less. This is not a case of automation reducing the human work force. The same result was accomplished by importing cheap labor to the US via H-1B’s. Either way, a surplus of workers is produced by enlisting new labor that had been less productive (perhaps unproductive) in their home countries. The size of the effective labor force was increased, so that would cause unemployment, at least temporarily.
Taking a historical perspective, consider the unsatisfied wants for AI. These were not specifically foreseen 10 or 20 years ago. People working in this area are well compensated. Consider the unsatisfied wants for social media. Meta, Twitter/X, TikTok employ lots of people and they pay well. None of these jobs existed in 2000. One can argue that these provide no true added value; maybe the value is negative. Nevertheless, they satisfy human wants, whether or not we approve of those wants.
Perhaps, more to the point, what about people on the left-hand side of the IQ distribution function? They won’t be getting those high-paying jobs at Meta or X. There may be a limited role for workers with low cognitive ability. As I recall, this is something that worried Herrnstein & Murray in The Bell Curve.
Here’s a cheerful thought: maybe AI can make those low-IQ individuals more productive in some way that AI can’t do alone. Not sure what that might be but this does seem to work with higher-IQ individuals.
For the most part, one would argue that. It brings us back to the old argument that we can stimulate the economy by hiring one group of people to dig holes and a second group of people to fill those holes back in. But there is no value being created. And some other group of people have to create real value in the form of food, clothing, tools for those digging & filling holes. Effectively, we would be taking from the people who are producing real value and giving to the people who are producing nothing.
This seems to be an aspect that conventional economics does not really capture – the Makers and the Takers. In order to satisfy any human want, some human has to produce the things that are wanted. If it is not the particular human herself, then other humans have to give up part of the real value they produce – either voluntarily (eg parent supporting his student child) or under the threat of legal violence (worker paying taxes to support students he does not know).
As long as someone enjoys having holes dug and filled, economists would argue this is valid economic activity. You or I may not value it but it’s not up to us to judge exclusively. I don’t enjoy watching guys kicking a ball around a field but millions do. At the end of this activity, the ball has been moved from one end of the field to the other — not much different from digging a hole a refilling it. Same goes for a performance of Mozart’s Magic Flute, which I’ve enjoyed several times. Once the echoes of the last notes have died down, everything is back to where it was before. Was any value created?
Yup, same goes for a sportsball game or a Mozart opera. When I bought my ticket to see The Magic Flute, was I taking real value and giving it to people who are producing nothing? Or maybe what I did to earn the ticket price was also of no value: just journal articles and patents — paper and bits. What is culture, anyway?
That depends on who paid for whatever an individual did to earn the ticket price. If other people of their own free will exchanged some of the value they created for what that individual created, then all is fine – the individual created value for other human beings.
On the other hand, if the individual paid using income provided by bureaucrats who directed value that had been taken from productive people by legal threats for non-compliance (eg taxes), then it is much less clear whether that individual actually contributed any value.
The BBC is an interesting case to consider – because it relies on forced contributions from TV set owners, whether or not they watch the BBC. On the other side, they do occasionally produce shows for which some people would willingly pay – and therefore have some value.
And if I can add an example back on the education trail – in the distant days when James Watt worked at the University of Glasgow, professors collected their income in cash directly from the students who chose to attend their lectures. I would surmise that in those far-off days, education was NOT disguised unemployment.