TCS Daily


"No Poop to Scoop...What Will We Do?"

By Tim Worstall - April 24, 2006 12:00 AM

Globalization has its downside. There is nothing that humans do (or don't do) that doesn't have a downside. But I often find myself amused by how people misidentify precisely which parts of the process it might be that are so awful.

To take just one example there are those who decry the onward march of MacDonald's in bringing the Big Mac to unwary natives across the globe. What the critics seem not to know is that there are places where the patty in a bun is a considerable step up from the indigenous cuisine: Scotland for example, where they are known to batter and deep fry both pizzas and Snickers bars. Even the older delights are questionable in their addition to the must-try lists of gourmets worldwide. Haggis, for example, is the bits of a sheep you can't use any other way stuffed into the animal's stomach along with oatmeal then boiled. For hours. Served with turnips. It should come as only a small surprise that Burns Night, a commemoration of the national poet and an occasion when this gustatory delight is served to all present, is marked by everyone getting thoroughly drunk on the national drink -- something they have got right -- first.

There's a similar disconnect seen by the economist within me (amateur though he is) when we see people discussing the impact upon employment (or add the un- to taste) of globalization. Call it the Lou Dobbs argument if you wish -- i.e. this idea that if all those jobs go overseas then there'll be nothing left for Americans to do. If the Chinese end up making everything and the Indians write all the software, manning the call centers and reading the X-Rays, then what is it that Joe Sixpack will find to do to while away the weary hours? More importantly, what will he do to support himself?

To the economist, the effects upon employment and what Joe Sixpack will or won't do with his time, of changes in trade are exactly the same as the effects of changes in technology. This shouldn't be all that surprising, a factory in China operated by low-paid people just off the paddy fields is indeed a technology just as much as a super sparkling new machine sitting in a factory in Ohio is. If you prefer, 100,000 people flicking at abaci is a machine just as a computer running a spreadsheet is.

Accepting this point in general -- that the effects of trade and technology are the same -- what can we then say about what Joe is actually going to do in the future? If trade displaces the old way of doing things in the same way as technology does (and has), can we look to history for an answer? Actually, yes, via this interesting little paper from the Bureau of Labor Statistics, Occupational Changes During the 20th Century.

The detailed answer is that we have absolutely no idea what people are going to do. We can make some educated guesses about parts of the future: bureaucracies will continue to expand, people will die, taxes continue to be collected, but we're not able to state with any finality what the labor market will be like in 50 or 100 year's time. What we are able to state is that people will be doing something and that if markets are allowed to operate they will be doing the things at which they are least bad. Jobs will migrate from low-productivity activities to higher productivity ones, just as they have for the past century.

Imagine that you were back in 1900. You were somehow aware of some of the technological changes that the new century would bring (and not aware of others). You, via some wormhole in the space-time continuum, were aware of the changes in agriculture that were going to happen:

"The two occupation groups of farmers (including farm managers) and farm laborers (including foremen) combined declined 96 percent as a proportion of total employment between 1910 and 2000, from 33 percent to 1.2 percent. Employment declined from 12,809,000 to 1,598,000 between the 2 years."

Nearly 32 percent of the entire workforce is to be thrown onto the scrapheap of unemployment as a result of the new technologies! (It's worth noting that over the same period farm production more than doubled). Add what happened to domestic servants:

"Private household workers fell 92 percent as a proportion of total employment, from 6.0 percent in 1910 to 0.45 percent in 1990."

No, 37 percent! More than a third of all workers will have nothing to do as the old industries use less labor. Clearly, a massive problem -- one that requires that we put up barriers in the way of new technologies that will cause all this, right? Ban tractors so as to leave jobs for mule skinners; stop Messrs. Spangler and Hoover from putting housemaids out of work; keep that nasty Mr. Ford from putting the horse pooper-scoopers out of business!

The logic of that argument is exactly the same as that of placing barriers in the way of trade so as to stop the labor market from changing now. For what did happen to all of those displaced workers from 1900? Well, leaving aside the obviously true statement that they'll all dead now (Greenpeace is right. Technology Kills!) you can have a look through that paper to see where people are working right now. Computer specialists grew from 0.02 percent of the workforce in 1960 to 1.92 percent now. Teachers from 1.6 percent in 1900 to 3.8 percent now. Whatever my (fairly sulphurous) opinions of the Teacher's Unions I am willing to believe that at least attempting to teach children to read is of more value to society than staring at the south-end-of-a-horse-going-north working as a ploughman.

Health care workers went from 1.2 percent to 7.0 percent of the workforce. Service workers (which may or may not include the Spearmint Rhino operatives) grew from 3.5 percent to 13 percent. Bartenders, to my surprise, stayed fairly static at 0.25 percent or so for the 1900 and 2000 dates, although there was a well-publicized drop to 0.06 percent around 1920. Of possibly less value is the rise in lawyers and judges from 0.29 percent to 0.71 percent although that figure seems very low to me. I thought it was actually mandatory to have at least three lawyers chasing each and every ambulance?

But I think you can see the basic point. If people stop pushing horses they don't then do nothing, they go and do something different. Yes, it might very well be true that they should be aided during that transition but that is very different from stating that we prevent someone from inventing something to replace the horse. Just as with technology, so also with the trade. We might well (and most economists from Milton Friedman to Paul Krugman would replace might with should) aid in that transition period, perhaps with training or other help, but trying to prevent the changes from happening by placing protectionist barriers in the way won't help. The changes will eventually happen anyway and we will have lost the wealth that the trade would have given us in the interim.

Can this process go on forever though? Will it really be true that new industries, occupations and jobs will keep on cropping up fortuitously to absorb the labor available? Well, forever is a long time and I certainly won't be around to see how it plays out but here's at least part of an answer. There're currently some 6 billion people on the planet and we expect it to rise to 8 billion odd and then decline gently. There's a lot more than 8 billion things that need to be done, for it is a simple truism that human desires and wants are unlimited while the resources to satiate them are not. As long as such remains true, there will be work to be done by anyone ready to do it.

Tim Worstall is a TCS contributing writer.

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16 Comments

short on specifics

Tom Worstall's article seem to be written from a perspective of economic optimism, which isn't necessarily invalid.

BUT - he like all other proponents of offshoring can't even begin to imagine what our former factory workers will do for a living. Instead of dodging the issue, it would be helpful if they at least tried to offer and educated guess. Don't the supporters of offshoring have any professional judgement?

If we lose our tech industry leadership, and become more of a third world economy, I am not so sure that the egalatism of the U.S. will accept the idea that more people in our country should be domestic servants and chauffers. India has a lot of domestic servants and chauffers for the wealth class, but I am not so sure that America is ready to accept the lower class misery of China and India.

If the children of formers blue collar workers have to become servants of the Americans who have prospered in the face of offshoring, I have a feeling there will be a political backlash that will undo U.S. involvement in "free trade" (actually, unilateral free trade that benefits primarily the economies of India and China.)

We have so far only begun to understand what "free trade" is and will be doing to our lesser-skilled neighbors.

Workers Ill served by unions
GM and Ford are closing plants.
They even have rooms for workers to go and do nothing.
Unions typically restrict the jobs any one individual can do ostensibly creating more union jobs.
But this also stifles the workers who could be trained to do multiple jobs, increasing their value to the company and to the industry.
No one, including unions, will look out for your best interests better than you will.

free trade
We aren't losing our high tech leadership. Or at least what we are losing is the result of our abysmal public education system, not the fact that a number of low tech jobs are being done overseas instead of in the US.

As to your desire to know all of the affects of a change before allowing the change to occur. None of us are Gods, we don't have perfect information, we can't see the future.

However, we can see the past. Free trade has always resulted in everyone getting richer. BLocking free trade has sometimes been good for the politically well connected. It's always been a disaster for everyone else.

Workers who do nothing.
I've thought that maybe the best way for Ford and GM to save money is to give away free donuts and Coke in those rooms where the workers sit around not working.

you are mistaken
"We have so far only begun to understand what 'free trade' is and will be doing to our lesser-skilled neighbors."

I beg your pardon but you are absolutely wrong. David Ricardo in the 19th century clearly demonstrated the benefits of free trade by developing the theory of comparative advantage. Adam Smith in his treatise The Wealth of Nations, published in 1776 among other achievments demolished the traditional philosophy of merchantilism. His work rested on foundations laid over the previous 100 years--mostly by British political economists and philosophers.
Merchantilism is epitomized by its key tenet: protectionism. What you, and others who think as you do, are promulgating with your anti free trade ranting is simply a revival of the bankrupt policies of an antiquated philosophy.
The great Frederic Bastiat also argued the case for free trade. His great work Economic Sophisms is a classic in free trade and like Smith destroys the anti-free trade argument. See this:www.econlib.org/LIBRARY/Bastiat/basSoph3.html#S.1,%20Ch.7,%20A%20Petition
You may not understand free trade but many do.

It is always easier to believe the worst.
In my short life I witnessed the following trade scares:
1. Britain taking all the jobs.
2. France, Sweden and Germany and their stupid socialists policies taking all the jobs.
3. Japan selling all the cars and Britain buying all the stuff left over.
4. Japan buying everything and the tigers of Korea, Hong Kong, Malaysia, Singapore, etc building everything.

The only common thread here is that the US has stayed on top despite the misleading statistics. And now the new threats:
1. China building everything selling it cheaply and buying nothing.
2. India taking jobs suited to English speakers that the Chinese can't do.

Well guess what? these two "threats" will fall off as well. Freedom and Free Markets beat socialism and its partner’s coercion and violence every time.

I knew about computer programmers in 1985. I had no idea about the position of "web designer". Folks knew about cat scans and x-rays. How many of them knew there would be MRIs? Folks knew about cedar shingles, how many knew about vinyl shingles? People knew you could sell things on line, how many knew you could run entire securities exchanges on line? There are literally millions of these examples.

Have some faith in the Freedom that makes all this go.

What we will do? we will work.otherwise we will die.
No man can live without work. If he stop to work, he will die soon,work is not important so much for money but for our health, our joy, to avoid boredom, work must remain there.

Not a McDonalds competitor
The deep fried Mars bar is almost a myth. The only place I have seen it advertised is in a shop in Edinburgh's Royal Mile, an architypal tourist site. It may be available elsewhere but not in quantity.

Fair Enough
Neil, I'm aware the deep fried mars bar is near a myth ....but that still doesn't explain haggis.

That was the point
The whole point of the article was that no one knows what the new jobs will be because they don’t exist as such right now. Thought-out history man has lost jobs and invented new ones.

The fact that our unemployment rate is about 4% and falling right now seems show that these jobs are out there. Now as to what will be the next “Blue Collar” job mainstay? It could be the new emergence of the modern cottage industry. More and more people are making small niche products and selling them on the internet.

Imagine you have a neat little widget that you can make. Now you could not sell enough to stay afloat in your little town. But WOW you start a web page and start selling them around the world. But wait; you don’t know/want to setup /maintain a webpage. You go to a guy that use to work at the big computer helpdesk that got moved to India. He sets up a small company to handle your webpage and a few other people like you. Both of you work at home now and think it would be nice to have someplace you can meet to go over things. Another guy finds out about this and open a small coffee shop with web access and tells both of you to come on down and use a table. ETC.ETC

I know about this from watching a friend do this very same thing. He was the help desk guy and now owns/runs his own little company. No; he does not make the same amount of money, but he does have more time on his hands and likes the life much more.

The issue s that none of these people would have started doing what they do now if they had not “lost” there jobs. With change comes opportunity. You can grab it and run or sit and worry about the “good OL days”.

It would not surprise me if the US turned into the cottage industry that was left behind in years past. Each little company making niche items that large companies would pass up.

Murphy's Law
I don't know if you guys have heard of "The Singularity" (Kurzweil), but it portends a future where several technologies converge to a point at which mankind will be radically transformed beyond its capacity to deal with the rapidity of that change. I don't want to spend time on the subject of technological convergence, except to the extent that it contributes to the point I'm trying to make about this article. Just one anecdote though...."The Singularity" includes things like bionics, thinking robots (that far exceed current human brains' capabilities), genetically engineering new human species, etc..

The Singularity rests essentially upon Murphy's Law. If it can happen, it will happen. That brings me to my point.

I believe that the Singularity portends not only a new age in human evolution, societal organization, and technological progress....I believe it is the point at which the absolute power of the State and/or Corporations will potentially coallesce into a super totalitarian state.

What I notice about the evolution of human societal organization, is a tendency towards ever larger nation states and evermore concentration of wealth and power. Technology will only make this concentration of wealth and power total, absolute, and inescapable. Especially with the advent of omniscient, total, and instantaneous information that will be available to the State and Corporations in the near future.

Stuff beyond our wildest imaginations....really. For instance, if its possible to understand the functions of the human brain, then it may literally be Scientifically possible to read human thought at some point. Murphy's Law: If its possible, it will happen. Having a scientific mind and a background in computer science, I am almost positive that we will be able to understand and simulate a human mind within the next 50 years (if not sooner)....and moreover, IMPROVE that mechanism.

Now, how is all of this related to this article? Well, what we are really talking about are events within the larger context of the global economy, transparent borders, and "free" trade. Part of this includes the subject of this and other articles: huge transfers of professional jobs from the First World to the Second and Third Worlds.

The author seems very flippant and nonchalant about this "inevitable" transfer of the middle class from the First to the Second/Third Worlds. He is confident those professionals in the First World will find something else to do. Perhaps, but not in the shortrun....and what needs to examined more closely are the things that CAN happen in this "period of transition"...namely, how long is this "period" and what are the RISKS of this "period."

What COULD be happening is a continuing concentration of power and wealth at the expense of the First World...a trans-national concentration of power by a cabal of super-rich and super-powerful elites. Things like global taxation, one world currency, one world government, total technological surveillance and control of individuals in society by a super transnationalist corporate/socialist "State"...THESE are what may ACTUALLY result from the "Singularity"...because they are POSSIBLE. And again, as Murphy said, "If it CAN happen, it WILL happen".

The "Equilibrium State" of this new global economy may result in a dilution of the American standard of living (definitely in the short run) and a mild increase in the standard of living of the Second and Third worlds. The equlibrium state could be one in which the vast majority have "just enough" to survive, but must work their butts off to maintain it....i.e. slavery. Meanwhile, you have a super powerful, super wealthy elite controlling the entire world via technocratic totalitarianism....both through the State AND the Corporation....really, a synthesis thereof.

I'm not optimistic about the virtue of "comparitive advantage" and "free" trade. They are theoretical ideals and abstractions. POWER is the norm in the real world. Ultimately, this is not an argument of economics, it is political. I believe the libertarians, Ayn Randians, laize-faire capitalists, comparitive advantagists, and all the others have developed and/or adopted their respective economic theories as RATIONALIZATIONS for their political worldviews.

These guys are the apologists and apparatchiks for the super rich and super powerful. They are just as blindly faithful to their libertarian "religion" as the Marxists are to their communistic ideology....and both are rationalizations for particular political points of view...both of which push ultimately for the unrestrained power of the Corporation or the STate (respectively).

My politics are simple. I am a middle class working IT professional. I don't want to lose my job. There is not a lot I can do at my age to maintain my current standard of living in a new career if my job is shipped overseas. Your economic religion and its theoretical abstractions are not worth my livelyhood. THAT is the political reality.

Ultimately, the First World middle class needs to STAND UP to the Corporations AND the State and TAKE BACK POWER from these assholes. What we need is a good ole revolution. What is REALLY at work here is POWER, not abstract political or economic theories.

The fundamental laws of politics are:

1. Power exists...always has, always will.
2. All power is wielded by syndicates.
3. The only thing that matters about power is: WHO HAS IT.

My syndicate has not yet coallesced....it will. And we will fight the powers of corporate transnational globalization and technocratic totalitarianism as well as the totalitarian Socialist State.

Greed for wealth and greed for power, untempered, will result in totalitarianism...it MUST be checked. The American middle class is the only hope against unrestrained power in the world. We must fight it.

Offshoring, outsourcing, moving the First World's capital to the Second and Third World in order for a few to get rich off that transfer in the First World is all part of the continuing human saga of POWER.

...fight the power...lol.

virtual corporations
I read an interesting paper a few years ago. Somebody was postulating that in the future, most companies would be small companies, and that these small companies would band together to create bigger projects.

To follow your point.

Instead of having an in house IT department, they hire IT specialists to develop a web site, then sign a contract for maintenance.
Let's say the company develops widgets. When they have a new idea, they hire a mechanical company to develop a proto-type, a testing company to test it, a marketing company to develop the ad campaign, etc.

The concept of the virtual company allows each company to specialize in what they do best. It allows the parent company to grow and shrink the headcount in the various functional areas as the demand is needed. It allows the parent company to hire the best team for developing the particular product that they have in mind, rather than limiting them to use the people who already work for them. It allows the specialized companies to have relationships with more than one parent company.

In other words, it maximizes flexibility, which reduces cost, and often produces a better product in the end.

I think that the common thread here
is fear of the unknown.
There are some people who honestly believe that security comes from an agency in the govt making decisions for everyone. They don't trust the market precisely because nobody controls it. They don't trust the market because nobody can tell them at the beginning of the day, how the day will end.

computer technology
distributes power, it doesn't concentrate it

MarkTheSmall
Thought I'd try one of your one-liners. Technology has resulted in the concentration of power...I will not debate facts.

you can't debate what you don't have
COmputers have empowered individuals to do what only corporations could do years ago.

Computers have resulted in power being more widely dispursed than has ever happened in human history.

The fact that you are totally clueless on this subject, only fits in with your overall pattern.

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