How Technology Is Destroying Jobs | MIT Technology Review

How Technology Is Destroying Jobs | MIT Technology Review: "­Brynjolfsson, a professor at the MIT Sloan School of Management, and his collaborator and coauthor Andrew McAfee have been arguing for the last year and a half that impressive advances in computer technology—from improved industrial robotics to automated translation services—are largely behind the sluggish employment growth of the last 10 to 15 years."

I read Brynjolfsson and McAfee's book in 2011 and remain persuaded they are correct in their analysis. This piece in the MIT Technology Review is highly recommended reading and, of course, the hundreds of comments following in are equally insightful. Read the book if you have the inclination.

I am also convinced that nearly all our policy-makers and politicians are clueless about what to do about the job dislocations in the short term. Meanwhile, government policies are driven not by reality, but by perceived political power and gains. Traditional thinking that the Great Recession will end and things will improve for the U.S. based on past history is likely wrong, particularly so Keynesian economics which drives so much government policy and spending which does not produce the same results as previously. The fundamentals have changed.

Some experts argue (Harvard economist Lawrence Katz in this piece argues that this technological upheaval of the past two decades is merely part of a long term trend that began with the Industrial Revolution.) this is just a continuation of the technological progress of mankind

I think we are in a period of profound change driven primarily by advances in software and extremely capable and fast hardware that can mine and capture the value of 'Big Data.' The combination of technologies is creating capacity and capabilities that supplant the need for more and more human labor to produce goods and services that drive the economy.

"W. Brian Arthur, a visiting researcher at the Xerox Palo Alto Research Center’s intelligence systems lab and a former economics professor at Stanford University, calls it the “autonomous economy.” It’s far more subtle than the idea of robots and automation doing human jobs, he says: it involves “digital processes talking to other digital processes and creating new processes,” enabling us to do many things with fewer people and making yet other human jobs obsolete."

The wild card of course is that the negative effects of technology on jobs is seen mostly in advanced economies and less so in the underdeveloped world where manual processes prevail. The big question is will these countries and peoples grab the advantages of these advances in technology and raise their living standards or will religious, ethnic and cultural factors retard economic gains and better living conditions?

From the Story:

WHY IT MATTERS

Economic theory and government policy will have to be rethought if technology is indeed destroying jobs faster than it is creating new ones.

The November Election is A Clear Choice of Worldviews

Mitt Romney's choice of Paul Ryan as his running mate sharpens the focus in the November elections between competing views of America's future. Obama, Biden and a Democrat Senate vs. Romney, Ryan and a Republican House.

The Democrat view comprises more spending, unsustainable debt and costly entitlements without a fiscal reform plan in association with a Senate that has failed to pass a budget in more than three years.

TeamRomney promises economic reform, job growth, fiscal responsibility,entitlement restraint repeal of ObamaCare and a return more limited government.

While all campaigns are full of promises, I favor TeamRomney as charting a better course for our country. TeamObama has no record of success in creating a better future for our nation.

Most important in this election is to populate Congress with Senators and Representatives that will create a future that is affordable and sustainable. The present dysfuntional Congress has failed its citizens

News Alertfrom The Wall Street Journal

Mitt Romney picked Rep. Paul Ryan as his running mate, a decision that could spark enthusiasm for the Republican ticket among conservatives and all but ensures the election will turn to deep philosophical divisions between the two parties over spending, taxes and entitlements.
In Mr. Ryan, 42 years old, the Romney campaign gets a conservative who has spent recent years at the center of national debates about the size and scope of the federal government. With his proposals to revamp entitlement programs for future retirees and the poor, he has become a hero to conservatives and a target for liberals.

The pick was officially announced on Mr. Romney’s phone app just after 7 a.m. Mr. Romney plans to hold an event at 9 a.m. on the USS Wisconsin, which carries the name of Rep. Ryan's home state.

http://online.wsj.com/article/

SB1000087239639044340400457758
2112521141598.html?mod=djemalertNEWS

April 2012 Employment Information - Grim News

[Hat tip to John Mauldin/Barry Ritholz for this information quoting yet another source,  Philippa Dunne & Doug Henwood of The Liscio Report (www.theliscioreport.com)]

Jobs, the fodder for much political rhetoric in this campaign season, are not growing and we have little evidence of a sustained economic recovery.  Too many people are not in the labor force.

I believe that we are a long way from creating enough good paying jobs with a supply of people qualified to take them. Capital investments in technology will continue to substitute for labor for the foreseeable future, IMHO.

"* The longer-term picture of labor force withdrawal is kind of shocking. Total household employment is down by 4.4 million since the Great Recession began in December 2007, and the number of unemployed is up by 4.9 million. The civilian population is up 9.6 million – but the labor force is up just 447,000. The number classed as not in the labor force is up by 9.2 million – and those not in the labor force and wanting a job is up 1.7 million. In other words, just 5% of the increase in the adult population over the last 4 1/3 years has found its way into employment; the other 95% are not in the labor force.

* The unemployment rate fell by 0.1 point to 8.1%, its lowest level in more than three years. The number of unemployed fell by 173,000 – but the labor force shrank by almost the same amount, 169,000.

Without the labor force shrinkage, the unemployment rate probably would have been unchanged. Within the unemployed, the number of job losers fell – but so did the number of re-entrants and voluntary leavers, suggesting that the increased confidence we saw through those indicators in recent months may be dissipating. With the quit rate down, and the long-term unemployed dropping out of the labor force, the mid-ranges of unemployment duration (from 5-26 weeks) saw an increase, as the extreme short- and long-term durations fell."

Labor Efficiency: The Next Great Internet Disruption | TechCrunch

Disclaimer:  I view this story as partially a sales pitch for his company by the author, but the underlying thesis and facts clearly signal a growing trend that cannot be ignored.

The story is geared to private sector service businesses, but the technological revolution, what I call RDP (Rapid Digital Productivity), also affects America's factory floors. And, in due time, this trend may well affect government functions, too, which will dissolve the expected job security of public employees.

The benefits to business are obvious and are well described in the story. This revolution cannot be stopped and political rhetoric notwithstanding, we will need fewer people at less cost to continue to grow the economy for many years.

We need a broad national discussion about this reality because the social implications are enormous for the United States and all advanced societies and the expectations of their people.

We have government and institutions that remain based fundamentally on an industrial model, yet technology has enabled a digitally enhanced work that is not fully understood by policy-makers and politicians. Or, if it is, public discourse has not embraced it. The "Create Jobs" and "Grow the Economy" mantras are a simplistic attempt to garner votes. but the reality is that far fewer employees with different skills can grow the economy. A more realistic and substantive discussion must evolve that recognizes the RDP reality.

"The Rise of the Independent Worker

...Over the past couple of years, there has been a huge increase in the number of workers who operate as some sort of independent, free-agent contractor or consultant. Though the numbers vary greatly, the consensus seems to be around 20 percent of the U.S. workforce, and growing (with some estimates up to 50 percent by 2020). Think about that, one in every five workers are currently unattached to any one company!


Expert explanations for this rise vary as much as the number itself, but I believe the two most important factors, by far, are: Technology and the Economy..."

A Gloomy New Year and Beyond

Much of my current reading promotes little optimism for the future of the United States economy, at least as it is defined by job creation and employment. The viability of our present political system, long term, is doubtful. We seem to be dysfunctional in many domains including economic, political, and cultural aggravated by a leadership vacuum that portends little positive change for the foreseeable future.

Some of my reading:

http://econintersect.com/b2evolution/blog2.php/2011/12/20/usa-in-2012-2016-an-insolvent-and-ungovernable-country

Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy

...and of course the daily slurp from the Times, the Journal, the TV talking heads and other online sources.

I believe we are in the midst of a substantial economic dislocation driven by the rapid and pervasive creation and adoption of technology by businesses, large and small. This accelerating trend means that fewer workers are required to deliver higher productivity in our economy. The resulting systemic upheaval means that not only ours, but the world's economy can produce goods and services with far less human capital than has been required historically. The result of a declining need for workers and increases in output creates societal and political strains that may lead to massive changes that we are ill-prepared to cope with. Government aid and backstops may be insufficient to deal with the magnitude of this change.

I hope to write more on this topic before the start of the new year.

Wall Street Shrinkage - WSJ.com

Is this good news or bad for the Occupy Wall Street protesters?

"New York City's securities industry could lose nearly 10,000 jobs by the end of 2012, New York state's comptroller predicted, a painful blow to the area's economy and government budgets.

In a report set to be released Tuesday, Comptroller Thomas P. DiNapoli also said bonuses are likely to shrink this year, reflecting lower profits on Wall Street.

Since January 2008, the securities industry in New York has seen 22,000 jobs evaporate. If Mr. DiNapoli's prediction of 10,000 more jobs losses between August 2011 and year-end 2012 comes true, that would represent a decline of 17%. About 4,100 jobs have been eliminated since April, and deeper cuts are widely seen as inevitable given a recent flurry of corporate expense-trimming announcements."

'via Blog this'

Employers Testify Against Vermont Healthcare Reform Plan

    Dealer.com and IBM testify against the rush to single payer in Vermont to VT Senate Committee on Health Care. (Credits: TrueNorthReports for the video clip.)


    Vermont's Democrat-controlled Legislature and Gov. Shumlin are hell-bent on rushing to health care reform that runs a very high risk of failure to meet cost containment goals. Multi-state companies who self insure health care for employees will not pay twice nor will employees stand for reduced (yet-to-be-defined) benefits. Who knows if they will pass these extra costs on to their employees? They certainly will not choose to pay twice for Vermont employees.


    The state will be downright stupid to take an action that at great risk of driving multi-state employers and jobs from Vermont.


    If Vermont chooses to eventually exempt companies in this category, that will further reduce the number of people who will be enrolled, because Medicare eligible folks will apparently not participate. ShummyCare as presently envisaged in H.202 is a mirage with no guarantee of success in reducing costs or providing any significant quality improvement. Wat we can expect if this plan comes to reality is RATIONING of services.

At G-20 Summit Talks, Obama Lacks Strong Hand on Stimulus - NYTimes.com

At G-20 Summit Talks, Obama Lacks Strong Hand on Stimulus - NYTimes.com

The upshot of this G-20 meeting seems to be disagreement by the participants on the issue of stimulus spending vs. deficit reduction.

All seem to agree that economic growth is the goal in order for countries to prosper, but their dilemma is process and timing.

I'm persuaded that underlying all of the talk is a very real crisis of confidence by the people on 'Main Street.' They are deeply affected by the Great Recession and the lingering fear that it could even be a double dip recession.

Meanwhile, sovereign debt continues to pile up and deficits must be reduced to protect the integrity of many countries' bond ratings.

In the U.S. the mighty promises of TeamObama that the $787 billion stimulus spending would create or save 3.6 million U.S. jobs is a distant, unrealized projection. Below from the WSJ in February 2009:

"...Overall, the stimulus plan would create or save about 3.6 million jobs by the end of 2010, according to projections last month by Christina Romer and Jared Bernstein, economists in the Obama administration, based on early versions of the plan. They say a stimulus bill would mean an unemployment rate of 7% in 2010, versus 8.8% otherwise. The estimate doesn't detail how many jobs are saved, as opposed to created..."

The original stimulus jobs saved/created projection is here. These days we hear next to nothing on the present status of jobs created/saved despite the lofty pronouncements about tracking and transparency. TeamObama's stimulus spending has not fulfilled it's promise

I'm disappointed that the media has allowed this failure to fade into the background. A WSJ editorial on Friday concludes:

"What the world has now reached instead is a Keynesian dead end. We are told to let Congress continue to spend and borrow until the precise moment when Mr. Summers and Mark Zandi and the other architects of our current policy say it is time to raise taxes to reduce the huge deficits and debt that their spending has produced. Meanwhile, individuals and businesses are supposed to be unaffected by the prospect of future tax increases, higher interest rates, and more government control over nearly every area of the economy. Even the CEOs of the Business Roundtable now see the damage this is doing.

A better economic policy will have to await a new Congress, which we hope at a minimum can prevent punishing tax increases. But for now the good news is that voters and markets are telling politicians to stop doing what hasn't worked."

Obama Stimulus Plan Could Create 8,000+ Jobs

Preseident-elect Obama announced that his stimulus plan could create as many as 3.6 million jobs in the U.S. during the next two years. If Congress approves and his plan is implemented, Vermont could gain more than 8,000 jobs on the assumption that our state would share proportionately in the national job growth.

Again, assuming we gain non-farm jobs in all the primary employment sectors in the same proportion that Obama proposes to create them nationally, the Vermont gains could be:

Mining - 29
Construction - 1632
Manufacturing - 1082
Wholesale Trade - 274
Retail Trade - 1595
Information - 99
Financial Activities - 342
Professional and Business Services - 442
Education and Health Services - 738
Leisure and Hospitality - 1187
Utilities - 34
Transportation and Warehousing - 156
Government Total - 615

My data is here.

Of course, this estimate reflects the best of circumstances and certainly does not take into account jobs that will be lost during these two years.

New Jobs in Vermont - All Government

This simple table published by the Vermont group Public Assets, should reveal to any observer, assuming they're not Socialists, what's wrong with Vermont's economy. Negative job growth in the private sector during the last 7 years. All new job growth (4,500) is in the government sector (state, federal and local).

Wonder why your taxes continue to rise? It's no secret.

The Cognitive Age - New York Times

David Brooks continues to display the keen insights that many other commentators miss. As he points out, the free flow of capital and information worldwide is inherently responsible for the phenomenon we call 'globalization,' Sure, countries like China and India have an advantage of cheaper labor, but more importantly, they are absorbing and capitalizing on the notion that education and creativity lead to economic growth.

They struggle, too, with the cultural and political upheavals that the new wealth creates. I believe they will continue to do so. But the U.S. must embrace the reality that if we squander our young people or ourselves by embracing the Hollywood or TV entertainment beast or allow our education system to founder on the shoals of bureaucracy we will quickly become second rate among the world's nations.

"The central process driving this is not globalization. It’s the skills revolution. We’re moving into a more demanding cognitive age. In order to thrive, people are compelled to become better at absorbing, processing and combining information. This is happening in localized and globalized sectors, and it would be happening even if you tore up every free trade deal ever inked.

The globalization paradigm emphasizes the fact that information can now travel 15,000 miles in an instant. But the most important part of information’s journey is the last few inches — the space between a person’s eyes or ears and the various regions of the brain. Does the individual have the capacity to understand the information? Does he or she have the training to exploit it? Are there cultural assumptions that distort the way it is perceived?

...If you understand that you are living at the beginning of a cognitive age, you’re focusing on the real source of prosperity and understand that your anxiety is not being caused by a foreigner."

The Cognitive Age - New York Times

Culture, Character & Jobs

Two news items in the same week spoke volumes about our culture, education system and the values that are shaped in our young people. The first was a story that quoted William Stenger, Chair of the Next Generation Commission, the group charged with recommending how we can keep our young people in Vermont rather than seeking jobs elsewhere. Stenger said that one third of our Vermont kids during or after secondary education become "drifters," another third obtain solid jobs, while the remainder go on to more education.

The second item was a story about how the Japanese auto company, Toyota, provides skill-building for its employees to make the Lexus, an automobile with a world-class reputation for quality. However, Toyota spends even more time and resources fostering the development of solid character in the individuals to help them become effective team workers. Toyota believes that an individual's motivation and character create the culture of quality pivotal to their business success.

Almost immediately, William Mathis, a Rutland school superintendent and UVM instructor issued a rebuke to Stenger's drifter characterization as 'mean, 'harsh,' and 'factually incorrect.' Mathis suggests that Vermont employers don't provide enough high quality, good paying jobs as the reason graduates leave the state, despite the state's low unemployment rate (under 4% for years). Data shows that net new private sector job growth has averaged below 2,000 jobs annually since year 2000. We graduate about 7,000 people each year from high school and approximately 1,000 drop out of school annually. But the job outlook is improving.

Vermont's Department of Labor predicts that for the next few years, we will add about 3,600 new jobs and replace about 8,100 annually. This means that about 11,700 jobs will be available each year with only 8,000 new Vermont workers available to take them. Mathis is probably wrong in one respect given these data. If graduates were well-skilled and motivated, the jobs should be available for them. Stenger is surely correct in that a large number of graduates are either not motivated or not educated/skilled for these jobs, or both.

Of course many people will move to Vermont for some jobs, but only if the state is an affordable place to live and the jobs pay enough. Otherwise many jobs will be filled elsewhere as businesses choose to move or grow outside of Vermont. Affordability for both employers and workers is the real problem that Governor Douglas articulates so frequently.

However, I find a more disturbing fact from the U.S. Bureau of Labor Statistics. From 2001-2005, Vermont, at 4.5%, had by far the highest growth in government (state and local) jobs among the six New England states. In fact, three states substantially reduced the number of government jobs while we had double the growth rate in Maine and triple that in New Hampshire! These jobs are funded by our taxes and we wonder why Vermonters complain about the high cost of government!

But statistics fail to fully describe the problem.

In thinking about the values and attitudes of our young people in Vermont and elsewhere, 'the group' is the thing, rather than personal excellence at whatever level of capability an individual may possess. A person who is not motivated to achieve his/her personal best risks the 'drifter' label. Certainly, many youngsters strive to excel and understand that competition is a valuable spur to achieving one's best. But the dominant theme appears to be group harmony, social success and teaming over and above individual excellence. Is this why the valedictory and salutatory honors have been eliminated in some high schools...to achieve harmony?

Certainly, success for most people includes doing well in groups and teams. However, many people excel when they are driven by their competitive inner self rather than group acceptance. And true leadership is most certainly spurred from within, not based on social acceptance. A leader usually has a single-minded purpose that requires stimulating others to give their best to an effort, not merely 'fitting in' with the crowd.

It seems our schools, by immersion in the broader culture, sometime foster community 'group-think' on life's issues rather than personal achievement balanced with contributing to the common good. All too often, we are encouraged to believe that we are disadvantaged because of our gender or gender preference or race or family condition, etc.,which cause our personal and societal problems.

Our school leaders and teachers should avoid the trap of believing and inculcating values that do not encourage clear thinking for young people. Adults must be diligent to describe and model a high standard, not one that produces expectations that society or government or 'they' owe 'us' something. Achieving group harmony, blaming 'discrimination,' and entitlement thinking instead of working hard to attain individual achievement, are debilitating messages. They help produce the 'drifters' that Stenger describes.

This entitlement culture has been reinforced for a generation as we have migrated away from achieving personal excellence in favor of group harmony and community. A vibrant culture and economy is built upon individuals working hard to be all they can be and doing their utmost to achieve success and happiness while giving back to the community at the same time. Our educators and other adults shortchange the next generation if they model or inculcate values that may subliminally promote or sanction drifting rather than personal achievement for the common good.

Toyota has it right, inner motivation and character matter most for a quality job.