Monday, October 10, 2016

"The Wealth of Humans" – The Latest Work’s New Age Successor Hits and Misses

Ever since I published what was the definitive book on the permanent jobs crisis almost five years ago, I have been possessive about that topic.  I think of it as mine.  That may seem imperious and probably is, but if you have written an award-winning volume based on a clear-cut but truly neglected thesis, you are likely to share that feeling. 

Last month, Ryan Avent, senior editor and columnist at The Economist, released about the third American book since the fall of 2011 on that subject, though he didn’t quite call it a permanent crisis, opting for “labour abundance” instead.  The Wealth of Humans attempted a broader scope, as shown by its subtitle Work, Power, and Status in the Twenty-First Century.  How good a descendant is it?

First, Avent did not cite Work’s New Age, but recapped, and had slightly different views, on the core issues I presented there.  He settled on the phrase “the labour glut” for what I called excess capacity, which he also called “the sheer abundance of labour,” and said that workers’ numbers “hold down wages.”  Indeed, he spent an entire chapter explaining the simple supply and demand truth that “higher wages are so economically elusive.”  He described why we are not going back to “the bygone age of mass employment,” which as I showed was due to new products never needing large amounts of employee time per item to produce.  He explained the breaking of the connection between pay and output through Baumol’s Cost Disease, an American economist’s principle, instead of by invoking scalability, or the production of iterations of goods and services at tiny additional cost, as I did.  He referred to the “digitally disappointing era,” which I specified as the lack of widespread computer-driven productivity improvement before the late 1990s.  He was also skeptical of the ability of further schooling as a solution to economic weakness, being in all fairness more eloquent than I by saying that “the low-hanging educational fruit has been picked.”    

Since The Wealth of Humans was published in 2016 instead of 2012, Avent had access to much newer information, and he covered it well.  He touched on writings by Thomas Piketty and others.  He discussed what he called “hyperglobalization,” and noted that many countries, the “never-developing world,” are not only still not contributing intellectual resources but have bleak prospects to do so soon.  He acknowledged the pooling of masses of money in a small set of companies and individuals by calling it “reserve accumulation,” correctly noted that that phenomenon explains why less of it has trickled down than it would if it were in more needy hands, and said that has led to “secular stagnation.”  He summarized progress up to press time in robotics and driverless cars, and showed its importance to the future of American employment.  He named and interpreted many other news items, including previous Republican presidential nominee Mitt Romney’s infamous comment about 47% of Americans being “victims, who believe the government has a responsibility to care for them” (referring mostly to those collecting Social Security at retirement age after decades of work).  He said, as I have implied but not put as pithily, that “in a way, it would be much easier if the robots were simply taking all the jobs,” meaning that our relatively good times have unduly blunted our awareness of the historical transition we are living through.

On one subject, though, the author fell into traps.  He stated that “car ownership could be obsolete,” which has no chance to happen soon among rural residents.  He cited Uber drivers averaging $19 net per hour as opposed to traditional taxi operators earning $13, which can only be due to poor cost accounting, but followed it up with descriptions of how cab driving is becoming more automated, and thus, according to his other examples, will allow them to be less skilled and in turn to be paid less.  These slip-ups, though, look suspiciously old in this fast-moving field, and may reflect his collecting information a year or more before the book’s publication date, when these issues were not as well understood.

As opposed to these two errors, I flagged four places where I thought Avent’s analysis was especially insightful.  One of his subtheses was that the ways of managing technological growth socially are lagging behind the progress itself.  He advocated more government spending, without which we are most unlikely to adequately deal with the jobs crisis.  He proposed an immigration policy similar to those I saw in Australia, New Zealand, and the European Union, that of allowing people in who can do jobs where there are not enough workers, and, additionally, those who can perform tasks especially valuable to an aging population.  Last, I’m still working out what he meant by saying “software is eating everything,” but I suspect something about which we all should be aware. 

On conclusions, I found his vague.  He said we should be “generous,” but did not define that clearly enough for me to understand.  I did not see any mention of guaranteed basic income, still the most obvious possible jobs-crisis solution and about which there has been a lot of post-2011 commentary and developments.  He stopped short of evaluating or even mentioning other ways out. 

Overall, Ryan Avent would have benefited by reading Work’s New Age.  That he works for a major publication is no excuse.  Information is available from a variety of sources, and this time it was personally clear, to me, that some were not considered.  The Wealth of Humans has a lot to offer, but it missed too much. 

Who will be next on this topic? 

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