Friday, September 9, 2011

Technology Reversal Job Creation Measures

I was thinking about the President's job creation measures this morning.  The composition and scale of the proposals sounds broadly similar to the ARRA stimulus bill of a couple of years back and it seems like the effect might be similar - mitigate the worst of the downturn while being insufficient to create much actual job growth.  However, clearly the bill runs the risk of being perceived to make the deficit worse (and very likely actually would make the deficit worse).

I also take to heart some of the critique in Do Stimulus Dollars Hire the Unemployed? that in a highly technological automated society it's not completely straightforward for stimulus dollars to flow to the people that need it (ie lower skilled and out of work individuals).

Another thing the government could do in principle to create jobs fairly quickly is ban certain labor saving technologies, thus forcing businesses to hire people to do the work instead. This has several advantages: it wouldn't cost the government anything and the results would be more controllable in terms of where the jobs went.

For example, suppose the government declared that over the next 12 months all automated phone answering systems would be banned at businesses with more than, say, a dozen employees.  No more voicemail, no more automated voice recognition systems when you call your bank or utility. Since businesses have to answer the phone, this would force them to hire people to do it instead - lots of people.  Since receptionist jobs historically went to young less-skilled individuals, we could assume that the same thing would happen now.  Since employment is particularly bad amongst the young and the unskilled, this measure would be very targeted to the demographics that need it most.

It might be objected that this would make businesses less efficient and that is undoubtedly true on an individual corporate basis.  However, in an economy where lack of aggregate demand is an issue, it's far less obvious that the overall economy would produce less as a result.

It might also be objected that this would make US corporations suffer at the hands of less constrained foreign competitors.  That is clearly also an issue in the long term.  However, perhaps we could justify such measures in the short term as emergency job responses.  And in the long term, everyone is going to have the same kinds of problems of technological unemployment so evident in the US, and perhaps there will be scope for international agreements around this kind of thing.


Burk Braun said...


Two points. First is your language about deficits being "worse". This has no place in the current debate, however popular. With inflation and interest rates near zero, deficits are not high enough. We need a higher inflation target, for instance. The government is left as the only entity willing to put money to new productive uses. The "goodness" or badness" of deficits and debt are entirely a construction of the role in the present economy.. and they can be very good. You will note that we have never paid our national debt "back". Ever.

Second, the luddite proposal really boggles the mind. Do we not have better things to do with our money than to make construction workers break rocks with their bare hands (to take this to extremes)? The point of having an economy, even beyond putting people to work, is to continue raising our living standards.

Government may be bad, terrible, and "the problem", etc., but surely even the government can come up with brighter ideas than this one. Buying new schools and research comes to mind. Bob Cringely had an interesting post recently on removing the appraisal rule for mortgage refinances, which would be cost-free and a huge boon to the economy, if you want cheap and efficient ideas.

Dan Miller said...

There are some measures like this in place already. For example, in New Jersey and Oregon it's illegal to pump your own gas. I've never seen a justification for this, although I assume it's a jobs measure.

kjmclark said...

Actually, there's a similar job that we could hire unskilled Americans to do - farm work. We could temporarily end the H-2A visa program, which lets foreign nationals do seasonal farm work. That would probably only be about 20,000 jobs per year though, since there are 30,000 H-2A visas issued per year, and a good number of employers would just cheat.

I really don't understand why the Fed and Treasury don't just print 200 billion, hand it out to everyone as a tax credit, then cancel the debt. That's Bernanke proposed in his speech on the topic. (The helicopter was Milton Friedman's idea.) Better yet, they should say they're giving everyone $100 per month per person until core inflation hits 2% or the unemployment rate drops to 8%. Then $50/mo/p until core hits 3% or unemployment drops to 6%.

The Chinese would howl, but there's nothing forcing them to prop up the dollar.

Instead the fed is just fiddling with the money supply, which has no traction. But Bernanke was right: it was the Fed's fault last time. And it's the Fed's fault this time too.

Basil said...

While we're at it, why don't we have construction workers dig with spoons and cut with steak knives? That would sure boost the poor construction sector.


Kamil said...

"ban certain labor saving technologies, thus forcing businesses to hire people to do the work"

What a stupid idea. You want people to work instead of machines. Do you work with pleasure? Banning labor saving technologies is like forcing people to work. Fixing the economy with those ideas is not going to work. Chineese will use whatever they can to produce, and push you off the cliff.

Greg said...

in a highly technological automated society it's not completely straightforward for stimulus dollars to flow to the people that need it (ie lower skilled and out of work individuals).

I'm sorry, Stuart, but this is nonsense. Technology makes it very straightforward to increase the amounts transferred in the Supplementary Nutrition Assistance Program (or whatever food stamps are called these days), and similar programs. Technology makes it very easy for the stimulus to go exactly where it will do most good.

The problem is not technology but ideology, the ideas that somehow it is morally wrong to just give struggling people money, and that it is even more wrong to tax billionaires in order to do so.

I'm not making any value judgements here; I'm just pointing out where the problem really is. Technology makes stimulus trivial to carry out, once society chooses it.

Jimmy said...

I agree that banning certain technologies is going to be EXTREMELY counter-productive. This will merely increase the cost of producing said goods, raising the costs of the already more expensive american-made goods, thus increasing our dependency on imports and ensuring our own demise in GDP gains.

A major problem with high costs is unions driving up the costs. So many jobs have already left the country, and more are going to follow if the answer is to continually tax, regulate, and restrict businesses. If I am told I have to pay someone $30/hr to put together a car, that can be done for $10/hr or less in another country, or even cheaper with machines, then why wouldn't I.

The first thing we need to do is restrict unions bargaining rights.. so that the US can become competitive in the global market. Secondly, we need to increase import taxes, so that it isn't cheaper for US companies to produce goods elsewhere, then ship them back.

Carrington Ward said...

I just got a new phone number, that used to be Audrina Brim's. Evidently Ms. Brim was in a demographic particularly targeted by credit-card and 'reduce your debt' companies, most of whom use robocallers.

Which, of course, impels me to screen the calls or send them to voice mail.

Given this experience, as well as the 'press 9 to get to a menu where you can press 1-4' that characterized communicating with corporate America, I can't say I'm convinced we'd be losing much by bringing back switchboard operators and phone centers.

Mr. Sunshine said...

Judging by the comments, a life post-peak-oil really is going to be a bitch for your readers, Stuart :)

Susan Kraemer said...

Interesting. I guess I'm alone in thinking the voicemailjail ban is a great idea. If it doesn't get the construction workers back to work, at least their girlfriends would have some milk money in the family kitty.

And the benefits are more than just economic stimulus. The advent of voicemailjail also marked the beginning of when corporations essentially said we don't give a damn about our employees OR our customers.

it is a real evil wall between companies and customers and I'd be glad to see it ended.

pmcc said...

Burk, I don't understand your reasoning. As I see it, governments are under pressure to reduce deficits because private investors in government bonds are now worried that they may not be repaid. Without growth interest payments will comprise an increasing fraction of revenues, leading eventually to default.

Past government debt demonstrably has been paid off. It's just that by the time it was repaid the economy was so much bigger that it seemed insignificant, and even greater levels of debt had been incurred based on expectations of continued growth.

Arbitrarily creating money for consumption must eventually result in inflation, unless used directly or indirectly for extraction of natural resources. But in a low to no growth system where further extraction is increasingly expensive the inflation will eventually render the currency worthless; default by stealth.

So unless we can resume growth then the financial system will have to reset, destroying a huge amount of nominal wealth in the process. Meantime the key question is what happens to the poorest and least skilled sections of society. If they are abandoned to destitution on a large scale then there will be social unrest which could prevent an orderly transition to a financial system designed for a steady state economy. Stuart's idea could perhaps have been expressed better, but the basic idea that low-tech local commerce could be stimulated in a variety of ways is perhaps the best approach to preserve social cohesion. The example of farm labour is good.

Of course, if you believe that economic growth can resume if only the right levers are pulled in the current financial system, and that this will trickle down to large-scale re-employment of the less skilled, then this argument will look absurd.

Burk Braun said...

Hi, pmcc:

I am not sure that you are seeing things correctly. If you follow interest rates, you see absolutely no pressure whatsoever on the US government to reduce deficits. Greece is a different matter, because they are trapped in the Euro which they don't control, and borrowed in that currency excessively.

The fact is that rates on US debt are at an all-time low, and inflation is low as well. No pressure at all. Quite the opposite, really- investors are begging the government to borrow more, since they want the safe haven.

About debt "being paid off". If we incur new debt over and above the level of past debt, how can that past debt be deemed "paid off"? In fact, the government's debt constitutes the private sector's net wealth- the two are the same thing, and we should be quite wary of being overly focussed on the one side of the ledger.

About inflation, the issue is the velocity of money. If the Fed is creating trillions and it sits idle as bank reserves, then where is the inflation danger? Nowhere. Nor it is helpful to the economy in any other way. It is inert. That is why fiscal spending is needed right now- direct spending, not trickle-down via the animal spirits of the bankers.

If all this sounds novel, it isn't- it is Keynesian and MMT economics.

Greg T. Jeffers said...

Omcc and Burk:

it seems each of you has this about half right... and each of you leaves out an issue or 2 that deserves the light of day:

Why is it that our system is creating so many uneducated and unproductive (non?)workers? What actions might the government, in its totality, take that might improve this... or make it worse?

For instance,the U.S. has one of the world's highest budget's for law enforcement and justice, the highest prison population vs general population... is there something in the totality of fiscal/monetary policy that is bringing this about?

And yes, the government's debt does constitute the private sector's net wealth... any chance that the disparity in wealth distribution is due to too much aggregate debt?

Disparate wealth concentration is clearly an issue that might effect social stability as does a demographic of a permanent and entrenched underclass. It is axiomatic that an economy is there to "improve living standards"... or course, that term needs definition, and once defined, is the economy expected to improve living standards indefinitely?

As for Stuart's anti-tech solution, I am agnostic.

Greg T. Jeffers said...

And Burk is absolutely correct that the Fed has done little but create idle bank reserves... but I don't think that is in our long term best interest's to offset the private de-leveraging with long term government leveraging...

buck smith said...

Best way the government can create jobs is lease more federal land for oil & gas drilling.

Stephen B. said...

@Dan Miller,

It's kind of a minor point, but I think the main reason some places ban self-serve gas pumping is for safety.

I know of a couple of cities and towns in Massachusetts that banned self-serve stations way back in the 1980s as the trend got started. Fire chiefs and fire marshalls were saying that people would drive off with the nozzle still in the car, forget to but the gas cap back, etc., etc.

Well, actually some people *do* forget to do that stuff.

I HATE having a pump jock pump my gas as it seems that sooner or later they miss the hole, stab the side of the car, and scratch the paint.

Greg T. Jeffers said...

Given Keynes most famous quote... it should not be surprising that the Keynesian argument seems to overlooks the longer term in favor of doing something, anything, to avoid any correction in the economy. Firstly, there seems to be present a fallacy of misplaced concreteness... our budget deficit and its mirror image of "wealth" very much rely on the US$ as the reserve currency... and while that is more likely than not over the next decade or so, that circumstance is by no means a natural law...

As for a way to increase "employment"... instead of regulating technology or sending every home a monthly stipend of $100 cash... neither of which do anything to improve the people's ability to work, earn, save, and invest... why not give each household $100 per month in materials that they might then use in some artisan fashion. Creating clothing, making cheese, beekeeping, furniture building, leather working, carpentry... whatever. Along with some sort of local instruction on how to make something of this stuff.

In our home county of Wilson in Tennessee we have a MASSIVE inmate garden for the county jail...I have written the authorities to ask why the local "projects" don't have a resident garden, a dairy, a poultry run, etc... they have the land, the grass, and the labor. Let the residents keep the profits they make from the excess tax free for a period of years...

Perhaps what we need are not "jobs" but artisans and small business people. 25% of our rural county are on food assistance from the Federal Government. These people have been here for generations... did the generations before require food assistance? NAFC. There is a great deal of learned helplessness going on.

Hal said...

Wow, Stuart. This one seems to have brought out a bunch who don't have a clue as to at least one of the central themes of your blog as far as I can see. Yes, folks, life as we know it is probably not going to be sustained.

It is only because resources have been staggeringly plentiful that labor has been such a surplus commodity. In the future, these quantities will balance out. The question is whether we begin placing, as I believe Stuart is suggesting, voluntary and conscious limitations on the use of energy and other resources in order to alleviate at least one externality of the current unsustainable industrial system, namely, unemployment.

For my part, I nominate leaf blowers.

All of the objections to some form of voluntary or conscious limitation on the trend of automation, I would assert, are missing the same point as those who object to limitations in the energy or other resource sectors. The current trend is unsustainable; better start thinking of new ones.

Now, maybe Stuart's idea can be criticized: most ideas can. But so far, I haven't read one that doesn't assume some sort of version of business as usual.

If this group can't do better than that, we're in trouble.

We're not going to train up workers in any fantasy scenario, even ignoring the inherent bell-curve of human potential, for jobs that don't exist because the resources aren't there.