The Lights in the Tunnel

Martin Ford, from the book's introduction: Like most people, I have been giving a lot of thought to the economic situation as the most serious crisis since the Great Depression has continued to unfold. Since I develop software and run a high tech business, I also spend a great deal of time thinking about computer technology, and so I began to focus on how economics and technology intertwine. The current crisis has been perceived as primarily financial in origin, but is it possible that ever advancing technology is an unseen force that has contributed significantly to the severity of the downturn? More importantly, what economic impact will technological acceleration have as we anticipate recovery from the current crisis—and in the years and decades ahead? What will the economy of the future look like?

This is a free book about the future of the economy, and the future of jobs in particular. On FR I occasionally assert the belief that we are in a new era, where technology is taking over jobs faster than it is creating them, so that we need to figure out a new way to keep people employed. Martin Ford examines this proposition in detail, pointing out that the ultimate problem with exponentially accelerating productivity is a dearth of consumers. Without workers getting paid, there are no consumers to buy the flood of products efficiently produced by technology, and the whole system collapses. He has a convincing argument that we need a new design for the economy, and a reasonable suggestion for such a design. I don't see how we get there from here, however.

Total BS.

This has been argued since the industrial revolution and history proves it to be false.

If this country were as free as it was in the 1950’s and ‘60’s, individuals would find a way to create income.

Just look, for instance, at the idiots who are fighting fracking, in spite of the 3% unemployment in SD.

Look at the closing of coal mines and the restrictions on drilling in Alaska and off the coast of the continental US.

Look at the destruction of the timber industry on the west coast.

There are thousands of similar illustrations.

Our problem is not computers or any other technology, it is our idiots in government and the idiots that allow them to stay in government.

I think you both have some of the points correct, perhaps I do too.

I’ve been looking at this for some time and I have come to a conclusion. It might be correct it, might be wrong, it’s probably somewhere in between though.

Human needs generally drive the basic economy, Food, Shelter, clothing that sort of thing.

Then we move on to a higher economy that caters to human wants; Better Clothing, Better Food, Better Shelter and then entertainment and faster transportation.

Eventually I believe you reach a plateau where the majority of humanity has their needs and wants satisfied. It’s probably a Bell Curve too with some not having enough and some have a great surplus.

I think that we are somewhere on the upper slope before that Plateau for more most Americans. Many people are satisfied at where they find themselves now, they just can’t see anything else that they need or currently want.

Now where Business excels is in finding new things or ideas that spur on new “wants” for the majority of the populace that participates in the economy.

Where our government is right now is acting like a brake and trying to hold back the populace participating in the economy. Why? Who really knows for sure, but I bet it’s a whole lot of different “isms” and they each have their own agendas and it just appears that they are working together when they are really working for themselves and it just is synergy with the others at work there.

So like it was in the 50’s and 60’s, there is a lot of potential ahead of us if Government would get out of the way. And there are new business idea just waiting in the wings to come out and fly if that occurs.

Apart from the first point, I agree with what you said. We would be far better off with a free market. One of the book's arguments is that the income tax distorts incentives. Since machines don't pay income tax or FICA, the destruction of jobs is happening faster than it would have otherwise. Machines don't have unions, either.

Although the petroleum industry still creates plenty of jobs, agriculture is increasingly automated as is manufacturing, mining, banking, law, education, you-name-it. Some argue that local service jobs are invulnerable, but even restaurants now outsource food prep to companies that use automation, and you'll soon be able to order your dinner through a tablet at the table.

The biggest cause of the closing of coal mines is the success of fracking. Natural gas is displacing coal at an unprecedented rate.

The timber industry has substantially moved to tree farming, with a high degree of automation that is not possible in "wild" environments. Ditto fishing.

Yes, government is making the making the economic problem worse in every way, including making human labor less competitive than it would otherwise be.

What's the path to getting rid of government, or even significantly reducing it?

Are you married?

My wife is one of those who although very frugal, always sees something of ours that needs replacing.

But that said, even tho there are people like you and I that have few wants, there are millions of younger people coming along who do not have everything they want.

There are many many opportunities if the government will get out of the way.

We do not need some Harvard grad with a computer and a new briefcase to plan our economy.

We need people like that out of our lives.

The reason free capitalism works has never been properly explained to the public.

The reason it works better than socialism, in addition to the fact that it fosters ambition, is that when a central planner guesses wrong, the whole country goes up in flames.

Even when the planning is done by a group, committee or legislature.

But when the public is left free to go their own way, some guess right and some guess wrong and go broke.

Those who go broke then have the opportunity to go to work for those who guessed right.

In a managed economy, you don't have that opportunity.

Even a little bit of tinkering distorts those opportunities.

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