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Why doesn’t increased efficiency create more jobs and cause economic growth?

by Greg Krehbiel on 21 July 2014

In the past, trade and an increase in productive efficiency resulted in economic growth. Now it only seems to result in unemployment and lost wages. Why is that?

Things didn’t use to be this way. Imagine a medieval village that got by making what it needed to survive. Then somebody invented a new plow that made farming much more efficient. With the new plow it only takes 80 farmers rather than 100 to do all the work to feed the village. The other 20 start other sorts of businesses — like making shoes, or brewing beer, or whatever. More efficient production makes the wheat cheaper, and now everybody can buy better shoes and drink beer. The standard of living goes up and everybody is happier.

Then somebody repairs the road to the next village and they can travel back and forth. Village A is really good at making beer and village B is really good at making jam. So they trade. The cost of beer and jam goes down because the market is larger, and now somebody has a job shipping goods back and forth.

This seems to have been the way of things for the last several centuries. The discovery of better methods to get and refine petroleum hurt jobs in the whaling industry, but it was a net gain for the economy, and for workers. The invention of the car cost a lot of jobs in the horse and buggy industry, but again it was a net gain. Families had cheaper ways to light their houses and they could get around farther, faster and cheaper.

There always seemed to be something else that a worker could do to replace the lost job.

Then automation came along. You no longer needed a laborer to do your riveting — a machine could do it. This decreased the cost of production, but … at least for a while … the displaced workers still had someplace better to go. There were new kinds of businesses, some that didn’t require labor, like selling insurance or financial instruments or information.

Some people seem to think this is a permanent law of economics — that increased efficiency will always lower costs and create economic growth. But doesn’t that assume a constant supply of new markets and new, better-paying jobs? If you go from swinging a sickle at $1 a day to driving a tractor at $10 a day, that’s great. But if your $50K job is outsourced to somebody in India for $10K, you need a better job to take the place of the one you lost.

If I can spend $100 on to get the same service I would get from an architect for $1000, that’s better for me, but … what happens to the architect’s business? There’s a balancing act here. A lot more people are willing to hire an architect at $100 than at $1000, so the availability of a cheap alternative could be a boon to business in general … but it might put the architect out of business.

Self-check machines at the grocery store lower the cost of food, which is better for everyone, but when the teller has no paycheck the slightly lower cost of food is poor compensation.

The problem seems to boil down to whether there are new jobs to replace the ones that are being displaced by innovation. If jobs are being lost faster than they’re being created, that doesn’t help the economy.

This makes me think that “efficiency grows the economy” only applies in specific circumstances. That is, it only works when the displaced workers have the opportunity to move on to something better. If there are too many displaced workers, unemployment shoots up, which hurts the entire economy.

That seems to be the problem now. Efficiency and automation is destroying jobs faster than new markets can replace them, and when new opportunities are created, they seem to be at lower wages, or fewer hours.

It may be that the old rules apply, but I continue to suspect that something fundamental has shifted and has messed with the math. Here are some possible causes.

  • We simply have all the stuff we need, so there’s no big, untapped market out there for a new product.
  • Automation is destroying jobs faster than the economy can grow to compensate.
  • Off-shoring is flooding the expensive western market with cheap labor.
  • Regulations and general government busy-bodying are slowing the growth of new businesses.
  • There are fewer jobs for unskilled workers.

The one thing that seems certain is that a rising tide is not lifting all boats. Three solutions are often offered for this problem: (1) a “living” minimum wage, (2) higher taxes on the rich and redistribution of their wealth, and (3) making it easier to create new businesses.

I find all these solutions inadequate.

There are lots of problems with a minimum wage, but for purposes of this discussion it doesn’t do any good to have a living minimum wage if nobody needs you at all. Many companies aren’t replacing workers with cheaper workers, they’re replacing them with computers. That is only going to get worse.

Taxing the rich and redistributing their wealth to the unemployed has lots of problems, and far more than I want to discuss right now. There may be something to it in some form, but … maybe I’ll write more on that later.

Making it easier to create businesses would probably help to some degree, but I don’t think it addresses the fundamental problem, which is that workers are becoming unnecessary.

This, IMO, is the crying need of our time. We need an economic / social theory that works when workers are displaced by computers. This subject has been on my mind for a long time now, and I’m going to be thinking and posting more about it. I look forward to your ideas.

-- 4 comments  ::  What do you think?  ::  2014-07-21  ::  Greg Krehbiel

The immigration mess on the southern border needs a competent administrator

by Greg Krehbiel on 21 July 2014

Too bad we hired a rank amateur to run the country.

This thing is a mess on so many levels. I think Obama wanted to create an immigration mess to put pressure on Republicans to pass “comprehensive” immigration reform.

How much do you want to bet there will be a surge in violent crime from all these people coming over the border? I’m not saying they are all criminals. I’m sure the majority are not. The problem is we have no way of knowing who they are. Some percentage of them will be gang members. Some percentage will be people running from the law in their own country. And we’re just letting them in.

As they melt into the U.S. population, there’s going to be trouble.

Also, I heard on the news last night that the border Nazis are not allowing priests and pastors to minister to these people. They haven’t been letting the media interview them. Gee, I wonder why? Maybe because they’d find out the administration’s story is a bunch of nonsense.

--  ::  What do you think?  ::  2014-07-21  ::  Greg Krehbiel

The surveillance state and parenting

by Greg Krehbiel on 21 July 2014

The combination of the nanny state and the surveillance state is going to lead to all kinds of trouble.

States have started to criminalize perfectly reasonable decisions by parents. See this: And now: The criminalization of parenthood

There’s going to have to be some serious push-back against this.

--  ::  What do you think?  ::  2014-07-21  ::  Greg Krehbiel

Sex roles and Anglican bishops

by Greg Krehbiel on 18 July 2014

As mentioned in a thread below, the Church of England seems to have placed itself in the ugly position of changing a pretty basic theological position, and then going on about the business of teaching theology. I say people will (and should) be less likely to believe them now.

But there may be a way out. They might be able to spin this so that it doesn’t do damage to their credibility. They won’t do it, but … please follow along, because I think the broad concept has relevance beyond this story.

Let’s say you lived in a town that had a psychologist who was famous for being able to understand the female perspective on any issue, but unable to understand the male perspective. No man would want to go to that psychologist, and certainly not for help with his marriage.

In a comment on the thread below, Dave raises the possibility that there’s a difference in women’s and men’s ability to understand both sexes — that men are better able to understand both sides.

Whether or not that’s true, it is certainly true that women in general have different abilities than men in general, and it is at least possible that some of these differences affect men’s and women’s abilities to perform the duties of a priest or bishop.

However, modern people in the western world don’t approve of applying group characteristics to individuals. To a modern person, even if it could be proven that men in general are better or worse than women in general at doing X, it wouldn’t be right to hold that against an individual applicant for the job.

Given all this, here’s the way the CofE can make their change without undermining their credibility. (It will quickly become obvious that they would never do the things I recommend, but … I’m just trying to be helpful.)

First, they would have to say that the Bible actually does prohibit women priests.

Second, they would have to say that the prohibition is based on the generalized characteristics of women and men. IOW, they would have to affirm that women in general are not suited to the role. (For whatever reason. It doesn’t really matter what that reason is.)

Third, they would have to say that a general prohibition on women priests made sense in earlier times for some reason. Maybe, for example, that less advanced people weren’t able to pick the rare woman who beat the odds and was good at being a priest, but because of modern whatsit, we can do that now.

(Of course this is all laughable, especially when you consider how lame modern theological programs are, but … at least it’s something they could claim.)

Fourth, they would say that the old prohibition no longer applies because the need for it is gone.

There’s a helpful analogy between this issue and the public health rules on the consumption of salt. From what I’ve heard, consuming salt isn’t a problem for most people, but it’s a problem for enough people that there’s a net benefit to telling everybody to consume less, even though it’s not a big deal for most.

If we all had little health bands on our wrists that monitored our bodies and told us whether something was good for us as individuals, such a generalized rule wouldn’t apply any more. You wouldn’t need the general guidelines.

The path forward for the CofE is to come up with a reason why a prohibition on women priests made sense in the old days because of generalized characteristics, but isn’t necessary any more (because we’re so darned clever now).

Before I get howls of protest I would like to make two things clear.

First, I don’t think the prohibition on women priests has anything to do with the abilities of men and women. It has to do with the incarnation and the role of the priest. That is, Jesus was a man, and the priest acts in the person of Christ in certain cases. Therefore the priest has to be a man, and ordaining a woman as a priest is a denial either (1) of the maleness of Christ, (2) of the sacramental role of the priest, or (3) that the sex of the priest has anything to do with the priest’s ability to act in the person of Christ.

(I suspect #3 is why the CofE did what it did, but as I point out elsewhere, that is the same as saying “the church has been stupid for 2,000 years.”)

Second, the CofE would never follow my prescription because it would require them to admit there are fundamental differences between men and women.

Finally, why do I care? What the CofE does isn’t really much of a concern to me.

I care because I think there really has been a change in the way we view individual rights and group characteristics, and this story was a convenient way to talk about it. ISTM that in the past people were far more willing to say something like “men in general are this way, therefore every man should ….”

We’ve tipped very far the other way. Now we reject any rule based on averages, or general characteristics. For example, the obvious fact that men are better equipped for war is no longer considered a reasonable justification for keeping women out of combat.

--  ::  What do you think?  ::  2014-07-18  ::  Greg Krehbiel

Waiting for Governor No

by Greg Krehbiel on 18 July 2014

Some time this week I heard a discussion on CSPAN about a proposed federal law to deal with the sexual exploitation of minors, which is something every decent person would like to stop. Part of the proposed law would require the states to do various record-keeping and reporting and hand it over to the federal government.

My chief reaction to the story was to hope for the swift demise of the cretins who do this sort of thing, but my second reaction was to wonder why the federal government can tell the states what to do.

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

I don’t know the specifics of this law, but I know the federal government is always pushing things onto the states, and I would bet the vast majority of them do not pass constitutional muster. That is, they do not deal with a power “delegated to the United States by the Constitution, nor prohibited by it to the States.”

I’ve been waiting for a governor to come along and tell the feds where to put their mandates.

-- 3 comments  ::  What do you think?  ::  2014-07-18  ::  Greg Krehbiel

Has racism finally jumped the shark?

by Greg Krehbiel on 16 July 2014

It’s really funny when a self-parody doesn’t even realize it’s a self-parody.

Don’t call me ginger: Jokes about redheads are not only stupid but conceal our inability to address American racism

I think this song puts it in the proper light.

--  ::  What do you think?  ::  2014-07-16  ::  Greg Krehbiel

Yes, NPR, it’s scary to be a man

by Greg Krehbiel on 15 July 2014

The geldings at NPR have a new series called “Men in America.” Here’s one of the recent offerings: The 3 Scariest Words A Boy Can Hear. And those three scary words are (according to NPR) “be a man.”

The NPR article advocates “the power of hugs.” No, I’m not kidding.

It’s scary to be a man because being a man means being expendable. It means you might be called up to go die in the mud on foreign soil. It means women and children come first — at the cost of your safety, if necessary. It means you have a choice between working, working, and working. It means you shackle yourself to providing for a family for your whole life. It means a lot of scary things.

Being a woman is also scary. It means some other person might invade your body and essentially feed off of you until you can painfully squeeze its big head to the outside. It means you are (most likely) smaller and weaker than the men you run into, who are desperately trying to bend you to their will. It means that (to varying degrees) you are dependent on these larger, stronger, odd creatures.

Yes, NPR, being an adult is scary, and it’s something that every human person is called to. Boys are supposed to “be a man,” and girls are supposed to “act like a lady.” We are all socialized out of the warm hugs of our mother into the cold, sometimes cruel world. Deal with it.

-- 8 comments  ::  What do you think?  ::  2014-07-15  ::  Greg Krehbiel

Give me your huddled masses

by Greg Krehbiel on 15 July 2014

The situation on the southern border is complicated and awful. I realize that many of these people are fleeing violence, and it seems heartless to send them away.

I would rather not send them away. I would rather send them all to Detroit as homesteaders. Half the city is empty anyway, right? But … of course there are no jobs and that would destroy Detroit because they’d have to provide for all these people.

We can’t just open our borders to everybody because each additional body is a cost. Every time government decides that people have a right to something — housing or education or health care — we make that “give me your huddled masses” thing less true because we can’t afford to keep accepting all these huddled masses.

In the past we could. We’d say “come in, go out west and build a farm.” People could come in because they had to fend for themselves.

Now we have a problem with jobs in this country. The attitude is that each new person who comes in takes a job from an American. It’s a zero sum game attitude.

That shouldn’t be true. New people should be creating jobs. More mouths to feed and more bodies to clothe means we’ll be selling more food and clothing, right? And some of them will be creating new jobs by opening their own shops and businesses.

But something has gone wrong with that equation. There are lots of possible explanations, but at least one of them can be summarized in three words: the welfare state. Or maybe another three words: an entitlement mentality.

I certainly don’t mean to pin that attitude on these immigrants / refugees. For all I know they are hard-working people who are eager to get to work and earn their keep. But the entitlement mentality is part of the air we breathe here in America, and it will soon infect them.

It’s another symptom of that old problem of balancing the hard reality of consequences with the desire to show mercy. It seems heartless to let someone go hungry, but “a man’s hunger works for him.” It seems cruel to look down on people who have made bad choices, but social stigma is part of what keeps people from making bad choices.

In this case, if you create a social safety net, some people will just take a nap on it. And the nicer you make it, the more loafers you’ll get.

Imagine how differently we’d treat these refugee / immigrants if we could send them to some unclaimed land and get them started with a horse and a plow? Or send them to a city where factories were eager for more workers.

That’s simply not the world we live in these days.

-- 4 comments  ::  What do you think?  ::  2014-07-15  ::  Greg Krehbiel

“Allowing women to serve” as bishop

by Greg Krehbiel on 14 July 2014

I found NPR’s headline amusing. (What a shock.)

Church Of England Will Allow Women To Serve As Bishops

It plants the mental image of a bunch of women who are trying to serve, but the evil patriarchy is holding them back because of their medieval attitudes. The beasts.

In the first sentence of the story the reader might possibly get the idea there’s another perspective.

The Church of England voted Monday to ordain women as bishops.

Wait a minute. What’s that weird word? “Ordain”? (Quick google search.) Ah. So we’re not talking about allowing women to “serve” by, for example, selling tickets at Bingo. We’re talking about some weird ritual that makes someone a priest or minister — that is, it confers “holy orders” on them. (Another quick google search.)

Remind me … Why does somebody need holy orders, anyway? Can’t anybody stand up front and say the blessing, consecrate the Eucharist, hear confessions and grant absolution and all that weird church stuff?

Oh … they can’t? You mean only certain people can do that — and they’re doing it not simply because they want to “serve,” but because they’re acting in Christ’s place, doing the things he told them to do? And being able to do all this priestly stuff requires some weird ceremony where the church takes Person A and “ordains” that person into a different function in this complicated sacramental dance the church is doing all the time.

I see. So if this “ordained” person is acting in Christ’s place, maybe Christ had an opinion on the question. So maybe — just maybe — the church didn’t refuse to “let them serve,” it believed it didn’t have the mandate to make priests out of women.

Hmm. Interesting. So maybe it’s not that the Anglicans are “allowing women to serve,” it’s that they’ve now decided either (1) that Christ has changed the rules, and now they have the power to confer holy orders on women, or (2) they’ve been misinterpreting those rules for (depending on how you count it) about 2000 years.

The question then would be whether they’ve received some new revelation, or whether they’ve been very wrong for centuries. If I was reporting on this story I would want to ask that.

“Did Jesus give you guys a new rulebook, or have you been misinterpreting the rulebook for 2000 years? Oh, yes, I see. So you’ve been wrong about who can be a priest all this time, but we’re supposed to believe you about baptism and all that other stuff, huh?”

My headline would have been something like “Church of England decides it’s been wrong about ordination for 2,000 years; still expects you to believe all the other stuff.”

-- 25 comments  ::  What do you think?  ::  2014-07-14  ::  Greg Krehbiel

What would you call somebody who doesn’t want to eat mammals?

by Greg Krehbiel on 14 July 2014

The number of my friends and acquaintances who are going vegan seems to increase. Or maybe people are just more vocal about their food choices. In any event, veganism seems to be on the rise.

It’s easy to understand the pull towards veganism. Killing animals to eat — when there are other alternatives — can seem cruel. It’s also easy to understand people being disgusted at the way we treat the animals we raise for food, so I get the whole “free range” thing.

Except in an emergency I wouldn’t want to kill a dog for food, or an elephant, or a dolphin. I don’t feel the same about a chicken, but I can understand people who do.

I’ve mentioned before that veganism is strongly counter-factual. Farming those soybeans kills a lot of moles, voles, foxes, ground-nesting birds, etc., to say nothing of insects. I have yet to meet the vegan who has a sensible response to that, but I suppose some of them deal with it … in some way.

What I don’t understand is why they make it an all or none proposition. Why don’t you meet more people who will only eat fish and crustaceans? (And maybe insects.)

-- 7 comments  ::  What do you think?  ::  2014-07-14  ::  Greg Krehbiel

2014-07-10 :: Greg Krehbiel // General
A brain sucker, starving to death
2014-07-09 :: Greg Krehbiel // General
But can they blame it on the car?
2014-07-08 :: Greg Krehbiel // General for business?
+ 1 comment
2014-07-08 :: Greg Krehbiel // General
The 97% and those 77 cents