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What has happened in agriculture over the past century is remarkable. The share of American workers employed in agriculture has declined from over a third a century ago to between 1% and 2% today. Why? Because agricultural productivity has risen spectacularly, with mechanization reducing the demand for agricultural workers even as food is more abundant than ever. All of this has had far-reaching implications. Tens of millions of people have moved from rural to urban areas to take jobs in manufacturing and services. Supporting those left behind has led the federal government to spend well over $100 billion in the past decade. Though global issues surely remain, the problems in American agriculture today no longer involve ensuring that food is available, but ensuring livelihoods for those who once worked in agriculture. 'Software Is Eating the World' What has happened in agriculture is happening to much of the rest of the economy. In Marc Andreessen's phrase, "Software is eating the world." Already the number of Americans doing production work in manufacturing and the number on disability are comparable. There are good reasons to expect an uptick in the next few years in manufacturing employment. But the long-term trend is inexorable and nearly universal. As in agriculture, technology is allowing the production of far more output with far fewer people. No country can aspire to more of an increase in competitiveness than China, yet even it has suffered a decline in manufacturing employment over the past two decades. And the robotics and 3-D printing revolutions are still in their second innings. |
Agriculture to manufacturing. Manufacturing to service-oriented.
I don't know, except through state employment, where the service surplus escapes to.
I still cannot believe I am avoiding potholes and its July.
So there's significant evidence that this process is well underway and has been for a couple of decades.
Is the Employment Situation Really Improving? - ( New Window )
"Not so long ago it was explained that the VCR might be bad for the movie-theater industry but Blockbuster was a major job creator."
Agriculture to manufacturing. Manufacturing to service-oriented.
I don't know, except through state employment, where the service surplus escapes to.
I think we end up with an overwhelmingly service-dominated economy.
You see in my earlier post that there's evidence that new absorbers of workers haven't been emerging in recent decades, forming a secular trend.
This is what I keep wondering, too. If so few people have income, who the hell is paying for all those machines to keep making things?
Which is called deflation. Hmmm...
(For precision, income in the sentence above refers to nominal income.)
My first thought was Lawrence Summers is trying to justify his past policy prescriptions which have had limited success.
I wouldn't worry as much about a simple S/D diagram, since there are many markets with many moving parts. But if you start segmenting the labor force into different skills, those that augment (complement) machines and those that don't, you start to see some of the trends.
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places for the surplus workers to go to.
Agriculture to manufacturing. Manufacturing to service-oriented.
I don't know, except through state employment, where the service surplus escapes to.
I think we end up with an overwhelmingly service-dominated economy.
We have 70% (or so) service economy. Again, the very long-run outcome, which is one of a few (if increased mechanization starts to eliminate these jobs) means that we will see large scale movements out of here, as we have in the past.
I'm not sure where they would end up.
I wouldn't worry as much about a simple S/D diagram, since there are many markets with many moving parts. But if you start segmenting the labor force into different skills, those that augment (complement) machines and those that don't, you start to see some of the trends.
I can understand that there are trends, but there has to be a point at which you simply don't have enough consumers anymore because so few people have income to allow them to spend money.
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Capitalists. Literally, those who own capital.
I wouldn't worry as much about a simple S/D diagram, since there are many markets with many moving parts. But if you start segmenting the labor force into different skills, those that augment (complement) machines and those that don't, you start to see some of the trends.
I can understand that there are trends, but there has to be a point at which you simply don't have enough consumers anymore because so few people have income to allow them to spend money.
If the prognosis is correct, and true mechanization takes hold (assuming multiple passes of the Turing test are accomplished), then the marginal costs of assembly (where pricing occurs) go quickly towards 0.
A common theory that we see prices moving higher than average is because it is labor-intensive.
Many capital-intensive tools have upfront costs but much lower variable costs. Meaning that they can be priced much more cheaply.
Incomes have grown because humans are still the dominant force in production.
Technically, this explanation is incorrect in the true pricing scheme, but let's go with it for simplicity.
The cost to a consumer is:
Fixed cost/# of consumers + Variable costs (additional cost of energy per hour or worker per hour).
So, what happens with mechanization?
Fixed costs go up, but # of consumers increases as well. Variable costs plummet.
Since variable costs tend to dominate the pricing scheme, we can see a decrease in prices.
We have seen shades of it in the hollowing out of the middle class, which has partially been explained due to technology (these skills are easily mechanized).
It's also on a time scale that is inherently unpredictable. We are following an exponential growth path, but one that isn't perfect.
There may be other, simultaneous changes (i.e., massive improvements in life span and health care) that mitigate the need for large incomes.
Centuries ago, on the lower part of the growth path, 40 hour work weeks would have been unthinkable.
It's one of many possibilities, but a strong one.
Productivity is increasing much faster than is being measured, and all of the benefits are accruing to owners. Rifkin thinks this is going to reverse, but he is neither a technologist nor an economist. He is just really good at headlines.
The NFL didn't exist when food was scarce
It may be more of a transition away from suburbia.
Urban enclaves have always been tenable with significant unemployment, as have rural areas.
True suburbia never really has.
Absolutely. Though water scarcity will also play a role in both rural and urban viability. Some of the traditional breadbaskets will wilter, while other areas while fluorish.