You are currently browsing the tag archive for the ‘productivity’ tag.

inequality-gender_pie_750x278.jpg

There is a fundamental problem with economics.  Well, actually I am sure there are many, many problems with this pseudo-scientific discipline of resource management (which is fetishistically concerned with money instead of value).  However, this particular problem lies at the crux of the discipline’s inability to predict human behavior or bring about valuable outcomes.   We will briefly explore why we should care about economics at the end of the post, but let’s get right to the thesis and baldly state the problem which economics does not appropriately address: humans are more concerned with status than with substance at least when they are not under mortal duress (and if they are in fear of their lives, their behavior will be irrational anyway).

The usual metaphor for rational economic thought involves pie (probably because the round pastry is irresistible and because it resembles pie charts, which economists love).  According to conventional economic theory: if you get an allotted slice of pie, what matters is how big your slice is, not who gets the rest of the pie.  If an economically rational being is faced with a scenario where he gets pie for some reason, he will happily take his pie and worry about how to make the pie bigger (even if a grotesque bully hogs the majority of the pie and then doesn’t even eat it).   From this reductionist fable we can then move on to other scenarios like increasing the participant’s slice relative to other participants (zero-sum pie?), contractual niceties of pie eating, seasonally adjusted pie indexes, or twisted game theory dilemmas…or whatever.

pork-pie-chart-8008352

Yet any parent can tell you that if one sibling gets one small slice of the pie and the other sibling eats the rest, it is going to be a problem.  Children understand that pie allotment is a proxy for social worth (which is worth more than the pie).  Economists get twisted up in unnecessarily complicated numeric models (or in facile metaphors of resource allocation) and tend to overlook the real thing people are after.

Kids innately understand that money is a red herring for status, and status is true currency.  A Hollywood A-lister can wander into a bar and never pay for anything and leave in a limousine with the best-looking person present.  Their status stands above money. Likewise, the pope or some slimy cult leader or the “communist” prime minister of a failed state does not really need to truck in naked dollars and cents.

images (11).jpg

I was arguing about the affairs of the world with one of my college friends (he has an honors degree in economics from the University of Chicago and was managing George Soros’ fortune at the time).  He was worried that populism would vitiate the rewards of globalism.  “People will vote to get a bigger slice of a smaller pie rather than a smaller slice of a bigger pie (even if the latter is a much larger relative slice)!” he exclaimed angrily.

As moneyed interests capture all available levers of power in our troubled democracy and economic productivity drops, his words seem prescient.   I assumed then that he was talking about silly plebs, but I now wonder whether he was really talking about rapacious financiers. I guess it doesn’t matter: both these factions are now backing the current leadership’s agenda of corporate amalgamation, tax-giveaways to the super rich, isolationism, and protectionism—things which ultimately decrease the pie, but make it seem larger for the moment.

download (8).jpg

Oligarchs and reactionaries both would prefer a smaller pie—so long as they have a bigger slice for themselves.  The pie doesn’t matter—it is not a metaphor for goods and services, like economists think, instead it is a metaphor for pecking order.  If someone tells you that you are ranked 300th among the 300 people who matter to you, what does it matter what is happening in China or whether tariffs will undo national prosperity? The fundamental metaphor is not apt, and thus economists are misunderstanding why people make the choices they do. Our fundamental problems: stagnant productivity, inequality, and political deadlock come from the fact that power brokers are busy making castes and setting them in stone…not baking pies.

american-flag-pie-horiz-a2-1200.jpg

Human societies have always been hierarchical and probably always will be, so why should we care if the economists get this metaphor wrong? It matters because the pie actually should matter! The fact that everyone is jockeying for status by betting on short-term stock gains (or even scammier things) is impairing our ability to do important things. We are baking the wrong sort of pies   Our system is not producing medicines it is churning out drugs.  We are not researching, we are marketing.  The “makers” are busy making monopolies and cartels rather than space robots and immortality serums.  We really would be better with a small delicious pie made of summer fruit and real butter than with the monstrosity made of saccharine, corn starch, and cellulose.  This monstrous confection is the result of the fact that our system is some weird & debased celebrity contest (our leader is a conman and a reality tv star!). Economists need to wake up to the fact that we aren’t even baking pies…we are all in a bad reality tv show or a nightmarishly catty high-school clique.

brain-storm

Lately I have been reading a series of science fiction novels which are set thousands (or tens of thousands) of years from now in the fictional world of the far future.  In this imagined future, humankind exists alongside of sentient computers which have stupendous quasi-divine intelligence, vastly greater than that of people.   The artificial minds regard humankind as a combination of parent, pet, and childlike ward–however, at the same time the supercomputers are controlled by (or at least work with) the world’s wealthiest citizens who use this considerable advantage to consolidate their hold on elite positions and rare resources.  The book’s writer was (is?) a lawyer so many of the books’ problems involve lawsuit-style disputes over who controls what property in the face of complex rules and circumstances (some of which are hilarious: for example when two entities merge, they literally integrate together as a hive-mind superorganism).  Many scenes involve the hapless human protagonists standing aside baffled as supercilious machines argue over their fate (in impenetrable jargon, of course)—a tableau instantly familiar to anyone who has ever dealt with lawyers.  The work is tremendously entertaining and already out of print—so you will need an e-reader or a used book store if you want to find out what happens.

Industrial-Robot-Hyundai-Heavy-installed-at-Kia-Motors-Slovakian-plant1

As with most science fiction, the series of novels reminds me not so much of the world of the far future (concerning which… who knows?) but rather of the present.  We are currently living through a great revolution: every year our machines become substantially more powerful and more intelligent.  Thanks to devices of all sorts, today’s world is ever more efficient which, in turn, makes the price of goods and services cheaper.   Although it sometimes seems otherwise, production costs for just about everything keep going down (even though many industries are coming under the influence of cartels and monopolies).  At first the growing utility of machines  was only evident in industry where machines and industrial robots started performing the tasks of assembly line workers (to make textiles, refrigerators, automobiles, airplanes or such), but now computer programs are taking over for accountants, librarians, stock-brokers, and bookkeepers.  Inhumanly precise robots can now even do the work of surgeons, sculptors, and pastry chefs.

robot-factory

Ostensibly we are all beneficiaries of this revolution.  Economic and moral philosophers have talked about a “post-scarcity” society where all essentials are cheaply provided to everyone and the only premium is on luxury goods and services.  It is reasonable to argue that citizens of the first world (and even in parts of the developing world) are entering such an economic paradigm:  everyone has a pleather couch, a big screen TV, and all the corn-based junk food they can cram in their pantry.   Yet somehow Netflix and Doritos lose their savor when nobody has a worthwhile job. Technological change and attendant globalization are causing tremendous inequality as labor becomes irrelevant and capital becomes more important.   It is more than just a political canard that the middle class is disappearing.

(Source: Forbes.com)

(Source: Forbes.com)

Secretaries, factory drudges, and travel agents are beginning to seem archaic–like scribes and icemen.  If such trends continue oncologists, soldiers, writers, radiologists, and actuaries will begin to disappear as well.  Carefully combing the daily news, one increasingly reads about breakthroughs which allow computer programs and elaborate machinery to efficiently do white collar jobs.  Here is an example article about how stock traders are being replaced by cold inhuman computers (which, strangely, still contrive to be more likeable than the traders). Soon the only people who will be productive will be the super-elites who own robotic factories, proprietary software, and energy production facilities (and consequently everything else).

Billionairebot from Futurama

Billionairebot from Futurama

Of course the hollowing out of the American middle class and the rise of the super billionaires is not only due to more effective technology.  Globalization of world labor markets and the afore-mentioned cartels (and rent-seeking) are also factors.   Expensive machines do not have all the jobs:  it is cheaper to outsource light manufacturing overseas where inexpensive labor and minimal regulation ensure maximum profits.   Yet, it seems the day is coming when society becomes so stratified that there will be few ways to enter the top echelon of society.  Capital & equity will have meaning.  Labor and innovation will be worthless.

Of course maybe I am being paranoid.  Perhaps the machines will also usurp the leaders who stand at the pinnacle of social power/wealth (or the elites will otherwise be deposed) and we can all work two day workweeks and spend the rest of the time going to petting zoos and having online conversations with friends.  Maybe the supercomputers will just kill us all off like we did with earlier hominids.

892_max

Again, who knows?  We are talking about the future.  But right now society is not keeping up with the pace of machine innovation.  As a consequence we face all sorts of alarming class ossification, wage stagnation, unemployment, and political gridlock.  Those of us who still have jobs should start to think about the ramifications of obsolescence in the face of ever-better machines–for that fate is coming.  In the near future, travel agents won’t be the only ones who have lost their jobs to the march of progress.  Unless you are the richest person in Venezuela or the Duke of Windsor, you will soon not have a meaningful job. Will you enjoy a life of empty leisure and fey entertainment like my housecat or will you be stuck working 65 hours a week doing some task which the economy deems to be beneath the dignity of machines?

Our glorious mechanized future?

Our glorious mechanized future?

Ye Olde Ferrebeekeeper Archives

August 2020
M T W T F S S
 12
3456789
10111213141516
17181920212223
24252627282930
31