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The Next Big Unemployment Crisis

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What everyone in the world wants is a good job. It's not love, shelter, security, money, happiness, or freedom, although all of these things may come from holding a job one can appreciate. That's the conclusion of Jim Clifton's new book, The Coming Jobs War. But what happens when the good jobs disappear? That's what the United States and the world are now discovering.

The cause of this shift -- the growth of technology -- is the same as what was behind earlier transformations. Yet few have devoted serious time or effort to discussing what's happening and where it's headed. This apathy is dangerous, because the stakes are so high and the alternatives so hard to see. A serious discussion of the modern employment picture can't be held without also discussing the technologies that make it possible, and where it's all leading. It's my hope to create such a discussion today.

Jobs in the headlines
Jobs reports have taken on particular significance in this election year, with each micro-statistic torn apart to find shreds of meaning. By most measures, the picture is improving. Jobs are being created. Unemployment is dropping. But many of these jobs are less secure than those lost in the crash. Many are low-paying, part-time jobs. February's jobs report showed gains of 227,000 non-farm jobs, but almost 40% of those jobs were in temporary office work or in restaurants and bars. Since jobs began returning in 2010, fully a fifth of all jobs created were in food services.

Even Apple (Nasdaq: AAPL  ) has jumped into the jobs debate, releasing a report this month on the jobs it's created or supported in the United States. The tally comes to 514,000, a surprisingly large number considering the fact that Apple only directly employs 47,000 people. Some people will say it's an understatement. MIT economics professor David Autor says the entire effort is "disreputable." Is Apple stretching the truth? Using Apple's specious methodology -- which tallies up UPS drivers that deliver iStuff, component manufacturers, and app developers -- Microsoft (Nasdaq: MSFT  ) could take credit for pretty much every job in the country that so much as involves looking at a Windows computer.

Of course, the report makes no mention of the jobs eliminated by Apple's technological advances.

A lost decade       
Until the last few months of job growth kicked in, the United States had seen no net private-sector job growth at all over the course of a decade (despite growing by 30 million people), which has never before occurred on such a long time frame on record. That's not the only measure that lags past levels, and many point toward the decline of the American worker. One statistic, however, has done fabulously: productivity.

Source: U.S. Bureau of Labor Statistics.

Those still on the job are working slightly fewer hours than they did a decade ago and yet are managing to produce more than twice as much economic benefit per person. That benefit, by and large, hasn't flowed back to the ranks of the employed. The average household actually earns less annually in real terms than it did ten years ago. Real median incomes were almost exactly the same in 2010 as they were in 2000. Real national GDP has risen, however, by two trillion dollars. Much of that growth rests on two pillars of the modern economy: corporate profits and consumer credit.

Sources: U.S. Internal Revenue Service and U.S. Bureau of Labor Statistics.

If productivity gains are driving profits, technological progress, as always, is enabling greater productivity. Behind that progress is the specter of permanent labor force displacement, which comes with the convergence of several aspects of technology and the connected global economy. I've made this point before, and it's no less true today despite recent employment gains.

Manufacturing is for machines
There used to be (and there frequently still is) a dismissive term for people who make these claims: Luddite. Isn't the real problem globalization, after all? Apple outsources the assembly of its products to Foxconn, a titanic mass of poorly paid, semi-skilled, and incredibly well-regimented Chinese workers that manufactures nearly half the entire world's consumer electronics. Foxconn employs more than a million workers. We could sure use a million new jobs in the United States.

If we brought every single Foxconn job to the United States, it would still fail to restore manufacturing employment back to its 2008 totals. That's just a slice of a much larger pie that's disappeared in recent years. Since its 1979 peak, the manufacturing sector has lost 7.7 million jobs. Much of that decline occurred more recently; since the turn of the century, the sector has trimmed five and a half million workers from its payrolls.

Foxconn doesn't even want more employees. It plans to add a million robots to its factory floors by 2014, a move that makes perfect business sense when profits are paramount. Robots never eat, never sleep, never ask for raises, never get injured or suffer nervous breakdowns. Robots never jump off buildings and cause public relations headaches. Eventually, all manufacturing will be robotic from beginning to end. Just as cars replaced horses, well-designed machines can and will replace human beings on the assembly line.

Convergence toward singularity
Manufacturing employees have historically been cannon fodder for technological progress. However, the new battleground isn't on factory floors and forges. The war for work is now taking place in cubicles, malls, and offices. Robots have always been great at outmuscling and outlasting human bodies, and now a host of advancements are coming after human minds.

A fully human simulation is hardly necessary to automate most jobs, which are often routinized and reliant on specific, narrow skill sets. For every job you can imagine that relies on specific knowledge applied in a routinized way, there is an example of automation that either has or soon could replace the person now performing that job. The range of positions already under threat of automation runs the gamut from cab drivers and waiters to lawyers and doctors, with plenty of mid-level white collar wage slaves at risk as well. The few jobs resistant to digital encroachment are those requiring high-level abstract thought, and those positions will never be feasible or necessary for the majority of the population for two reasons that go beyond the accelerating pace of technological change.

The broken bridges
First, the American education system is completely inadequate to meet the needs of a broadly and highly skilled and technologically connected workforce. American universities still maintain top global prestige, but only 28% of Americans have college degrees. The path to that degree is costly (placing 12th out of 15 developed countries in final post-subsidized costs), and thus not as popular as it might otherwise appear (ranking 9th out of 14 countries in peak-age participation rates).

To make things worse, American primary education does an abysmal job preparing its students for college. A 2009 OECD study ranked the United States 25th of 34 countries in math achievement, 14th in reading, and 17th in science. A more recent World Economic Forum study of 142 countries ranked American early education 37th and high school math and science education 50th. Is it any wonder, then, that a quarter of American college freshmen require remedial coursework, and at least half are unprepared for the increased difficulty?

I could offer damning statistics on the inadequacy of American education for days, but in the long run a concerted push for a better system may not even matter, because of the second reason preventing widespread gain from the high-level digital economy: A connected world encourages public interest and financial rewards to flow toward an ever-smaller group of elite individuals and businesses. This is in spite of the greater variety encouraged by connectivity and accessibility.

For example, the top five films in 1980 earned a quarter of all box office receipts, and three decades later, the top five films earned only 16% of all box office receipts. However, that's not really a fair comparison because almost five times as many films were released in 2010 as opened in 1980. In terms of the top five percent of all films released in each year, 2010's top grossers pulled in fully half of all receipts, while 1980's biggest hits earned only 27% of the total take.

The technology industry is no different. Activision Blizzard's (Nasdaq: ATVI  ) Modern Warfare 3 accounted for 8% of all Xbox games sold last year (out of over 800 possible games available). The Angry Birds franchise, despite representing less than a dozen of over 800,000 apps available on the major mobile platforms, is still responsible for at least 1.5% of all downloads ever recorded in the combined history of the App Store and the Android Market.

Apple earned $700,000 in profit for each of its 47,000 employees last year, and much of that was the result of the work of a much smaller group of engineers, programmers, and designers in Cupertino. By comparison, IBM (NYSE: IBM  ) , the world's largest technology company three decades ago, profited by only $25,800 per employee at that time, in real terms. These are just some of the numerous examples.

The pieces come together
We live in undeniably better times than those Luddites who first smashed the looms, but we also operate in an economic system that rewards production and marginalizes those unable to find work. Combine that reality with exponentially improving technology, and you have all you need to put capital on top of labor for good. When protests erupt over income disparity and studies reveal that the top 1% accounted for 93% of all income growth in 2010, the root cause isn't that the rich are greedy or that the poor don't work hard enough. In many cases, it's simply that those with capital can and will make use of labor-saving technology, and those whose labor is "saved" lose out.

For years investors have cheered streamlining and cost-cutting measures that trimmed payrolls and eliminated redundant jobs. But workers -- consumers, really -- are the economy. Henry Ford offered incomparable wages in Ford's (NYSE: F  ) early days, which both attracted top talent to out-innovate his competitors and also allowed more people to afford his cars. Many years later, his son allegedly had the following exchange with a union boss while touring a newly automated plant:

    "Walter, how are you going to get these robots to pay your union dues?"

    "Henry, how are you going to get them to buy your cars?"

Displacing the worker-consumer from any job, whether it's in a factory or at a desk, reduces their ability to contribute to the economy. Sitting back and glibly saying that they can become computer programmers and app designers and secondhand salesmen on eBay or ignores the trend that draws reward and prestige toward a smaller group of top talents, and the incredible pace of advancement that allows this shrinking group to control ever-larger portions of the economy through automation.

The computer industry, as measured by the Bureau of Labor Statistics, accounts for between 2% and 3% of all employment in the United States. Let's use Apple's methodology and expand the jobs that industry supports by ten times, to a full 30% of the workforce. That's a hair under 40 million people, which is about same as the number of iPads Apple sold last year. How will the rest of the country support itself? Where will the new frontier of jobs appear, and how can it possibly absorb the displaced? In the 18th century, factories took on displaced farmers. In the 1900's we had offices. This is the third great displacement, and it needs a solution of equal scope. Where is it going to come from?

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights. The Motley Fool owns shares of Apple, Ford Motor, Microsoft, and The Fool owns shares of and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Ford Motor, eBay, Microsoft, Apple, Activision Blizzard, and Motley Fool newsletter services have also recommended creating synthetic long positions in Activision Blizzard and Ford Motor, as well as creating bull call spread positions in Microsoft and Apple. And finally, Motley Fool newsletter services have also recommended writing puts on eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has an outstanding disclosure policy.

Read/Post Comments (46) | Recommend This Article (96)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 28, 2012, at 3:28 PM, prginww wrote:

    Well, I guess we should all get in our bunkers with our supplies and wait for the world to end, huh?

  • Report this Comment On March 28, 2012, at 4:24 PM, prginww wrote:

    Since you all are so good at gathering meaningful stats, could you look into changes in reported income by age group? Also, someone needs to look at the number of folks who were unemployed ('collecting'), are not longer able to (beyond the mutli-year extensions) and are reporting little-to-no income. The gov. considers them 'no longer looking' or retired. It isn't accurate.

    -- many folks, 20's and 50's is my guess, are coddling together bits of jobs at MUCH lower rates than they'd been earning for years (not by desire)

    -- those who can't find work but want work (a lot of white collar workers incl. engineers) are not in the stats anymore.

    As population of US changes, this would be interesting to analyze.

  • Report this Comment On March 28, 2012, at 4:26 PM, prginww wrote:

    Have you heard the one that goes:

    Milton Friedman was once traveling in Asia, and he observed a canal being built. And he didn’t see any heavy equipment making the canal. Instead, he saw workers with shovels — lots of them. And he asked the government official who was with him, “why don’t these people have heavy machinery?” And the official said, “you don’t understand. This is a jobs program.” Milton supposedly replied, “well, then you should take away their shovels and give them all spoons.”

  • Report this Comment On March 28, 2012, at 5:00 PM, prginww wrote:

    Please forward your article to our 'leaders' in Washington. They will definitely have an answer. It will only take until the next election for them to talk about it.

  • Report this Comment On March 28, 2012, at 5:45 PM, prginww wrote:

    The complacency eluded to is a perfect complement to your ignorant and arrogant bunker comment.

    For the working stiff, up to and including manufacturing engineers like me, there's little opportunity to change field, skillsets open as many doors as they close as the selection pool grows ever larger, and with implementation of automation (one of my primary job functions) I've seen this in action, frontline throughout my career. How do the people displaced survive? Some don't, some show how to cinch a belt tighter than ever seen - generally to the demise of their own health, the miniscule remainder are a tribute to human ingenuity.

    Instead of sarcasm we could bless each generation with the opportunity to be as resourceful and succesful as their predecessors - 100% death tax, and no trusts. Jr. it's time for you to fly and be free and make your own mark without daddy's empire behind you. Ever wonder what it's like to inherit nothing but funeral bills? Here's your chance.

  • Report this Comment On March 28, 2012, at 6:21 PM, prginww wrote:


    An excellent, if scary, piece.

    Brian Stoffel

  • Report this Comment On March 28, 2012, at 7:22 PM, prginww wrote:

    Far from losing US jobs, the robotization (wow, a new word) of manufacturing has the potential of increasing that number. The reason is that the more robots you use, the less wages are an issue. You get a lot more productivity out of the workers you do have. Wages become much less of an issue. At the same time, shipping costs are going up with the price of oil. There are also all the issues with the physical distance between design and manufacturing. I see a movement to bring jobs back to the US.

    The other thing we have going for us is that we (USA) are, in my estimation, the most innovative country in the world. Our workers are much more likely to find ways to make their factories more efficient. Most of them are willing to learn new things. They need some education, but not a college education. They are not engineers, they are technicians. Community colleges are starting to recognize this and provide education specific to an industry, or even a company.

    I see bright prospects for the future of our workers. They will not have to do the repetitive, mind-numbing tasks that a robot can do. Their jobs will be more important and more fulfilling.

  • Report this Comment On March 28, 2012, at 8:02 PM, prginww wrote:

    You could legislate jobs by requiring a 32 hour work week. That would increase employment by 20% (in theory). Of course they would also cut wages by 20% to compensate. Which would upset the majority (the employed). So that won't happen.

    I can't decide which would be more fun, "class warfare" or "zombie apocalypse". I guess they are basically the same thing, just from different perspectives.

  • Report this Comment On March 28, 2012, at 8:03 PM, prginww wrote:

    A well-developed essay outlining serious economic dislocations that affect all of us. Thoughtful analysis

    encourages us to ponder possible outcomes and possible solutions to some of these problems. Thank you, Alex

  • Report this Comment On March 28, 2012, at 8:20 PM, prginww wrote:

    A good article. How does society deal with the people displaced by robots? There are three solutions:

    1. (one child per family as in China)

    2. Stop Technological progress

    3. Start Mars colonization for our excess population

  • Report this Comment On March 28, 2012, at 9:02 PM, prginww wrote:

    Thanks for the compliments, folks. Here's a few responses...

    @ bfiner -

    Digging up age-based earnings data would take a bit of drilling. Some of what you asked for can be found as a general statistic (part-timers who want full-time work instead), but the last time I glanced at those numbers there was no age breakdown. Broadly, I believe IRS collections are down this year as opposed to last year, despite more people working. There are a lot of numbers that hint at greater specificity, but not many that get into the specifics you're after.

    @ hbofbyu -

    Good one! I'll file that away for the next article I write on this subject.

    @ colleran -

    I'm pretty sure that a few of the article's points refute your statement, especially the one about the manufacturing jobs lost over the next decade. Manufacturing is done as a driver of job growth. Fulfilling work, as you put it, is also tough to quantify. As the article says, almost half of the jobs gained last month were in low-paying jobs with no security. I wouldn't call waiting tables and serving drinks particularly fulfilling (but I have known a few exceptions to the rule).

    @ vidar -

    Your suggestion is actually a key component of Jeremy Rifkin's book, The End of Work. I highly recommend it as a companion piece to this article.

    @ Merton123 -

    The shorter workweek is one option. I personally believe that we need to fundamentally reimagine the connection between people and work as time goes on. This is also covered in The End of Work, as mentioned above. Unfortunately, the current political climate is not going to allow it to happen.

    - Alex

  • Report this Comment On March 28, 2012, at 9:36 PM, prginww wrote:

    What if Technology starts declining and products sales are waning? Will this cost a drastic drop in the employment rate? I strong believe so. The inclusion of part time jobs in the overall employment rate paints a "not true" picture to the people. Hope that technology will continue to improve and we are blessed with great jobs.

  • Report this Comment On March 28, 2012, at 10:52 PM, prginww wrote:

    The solution is to transition from the market economy to a "natural law" or "resource-based" economy! Scarcity is an obtuse assumption. We are one planet with finite resources. However, sustained renewable abundance is possible. Competitive growth is inadvertently self-destructing via waste and planned obsolescence. Localized self-reliance can develop under a cooperative economy. Open-sourced technological progress is accelerating, allowing for synergistic innovation. Emerging further into the future, understanding our fragility, we must strive not for jobs and money but, life and longevity. Let us transcend our primitive "monopoly game" perpetuated by a "gang" mentality; recognizing that a world at war with itself is doomed.

  • Report this Comment On March 28, 2012, at 11:08 PM, prginww wrote:

    A good thought-provoking article. Here's a thought...companies used to have a "Personnell" department, now it is "Human Resources". So where I work I am no longer a "Person", but instead a "Resource" to be used up and discarded when done with me.

    Another thought; hiring managers complain that they have job openings but cannot find people that already have the required skill set. Ask those managers what training they have in place to give people that skill set? You are sure to get a stupid empty stare back. See, they just want to hire someone who already has that skill, but they will not spend one penny to train people for that. Sounds like a hypocrite to me. By the way, when that job with specific skills is done, they return the "Resource" to the unemployed pool.

    Young people understand these concepts. That is why cheating is acceptable and they have zero company loyalty. Why should they when the company has no loyalty to any employee?

    The only loyalty most companies have is to the dollar. Cheating (your customers) is greatly rewarded on Wall Street. I refer to the recent op-ed article from the insider who quit.

    - - -

    I currently run my own IRA investments. I owned Pepco shares (POM) and a prior Fool article told me that POM was "the American company with the worst customer service" so I sold my stock. I do have a heart. Thanks for listening Fools.

  • Report this Comment On March 28, 2012, at 11:25 PM, prginww wrote:

    I imagine if you were born in 1890, you'd instead be writing an article about the jobs holocaust incoming as the horse-buggy industry was taking it's last dying breaths.

    Does this website even bother trying to give stock advice anymore, or is it all progressively agenda? I mean there even a take-away from this article? For crying out loud, you ended the freaking article with a question, asking me to answer it for you?

    I don't need to read your article to think about the jobs problem. In theory, you're supposed to be an expert, aren't you supposed to provide "answers"? Or is ending on a non-defined low point your way of shirking responsibility for giving a wrong answer?

  • Report this Comment On March 29, 2012, at 12:03 AM, prginww wrote:

    I don't think it's a dearth of jobs that's the big problem, I think it's more of a skills mismatch. Go search "software" on monster - you'll get over 1000 jobs in the US, many of them starting at over $100k. Yes, you probably won't be able to make $80K with a high school diploma building minivans anymore. But that doesn't mean there are no good jobs. They just require the right set of skills. You might need a masters, and you might have to do it part-time while you work to support yourself.

    It'll still be a while before we have robots that can design and build robots, and when that happens they'll take over and kill us anyway. In the meantime, learn to weld and move to North Dakota, or learn to code and move to California. Sorry if you're still underwater on your mortgage!

  • Report this Comment On March 29, 2012, at 1:36 AM, prginww wrote:

    Robot maintenance is the future.

  • Report this Comment On March 29, 2012, at 2:22 AM, prginww wrote:

    Great article MF, it is nice to have articles that make people think about their fellowman.

    We all understand we cannot stop innovation or advances made in technology but we should at least being able to acknowledge the negative affects some in society feel because of these changes and discuss ideas that could improve their lives.


    I believe your #3 is the answer. I have no idea why we stopped going to moon, should have been building outpost on moon and then Mars as you stated. This was a program that had kids excited about science, math and engineering.

    I would go one step beyond your #1, I would end all tax breaks for having children, possibly even giving tax break to people who do not have kids. It’s not like were in danger of going extinct. I am sure this is probably a little too radical for most people.


    Nicely stated, where I worked we became resources about 10 years ago, 5 years ago many of us with over 25 years experience were sent to the unemployed pool. After we were off 1 year we were sent letters from the Human Resource Dept. explaining that since we were laid off for over a year our status with the company had changed, if we are recalled by the company, we would need to re-apply as a new employee. Many of us found out loyalty only went one way.

    Corporations don't want to pay taxes, and then complain there aren’t enough skilled workers. How about on the job training quit looking for a handout from the government to train your work force.

    I am sure Henry Ford had to train many workers. People at NASA did not wake-up one morning knowing how to send a man into space and safely bring him home. People can learn and be taught on the job. I know many young people that have computer skills and are ambitions but are told they don’t have the experience needed. How do gain experiences if no one will give them a chance? This countries industry was built with on the job training. It is only recently that employers expect others to pay to train their work force.

  • Report this Comment On March 29, 2012, at 7:13 AM, prginww wrote:

    Very thought provoking article Alex. As you pointed out, there is no economy without consumers. Although I strongly believe in productivity, I've always been amazed at the blatant sarcasm of those who want to squeeze every last drop out of their work force, but in the end cannot see that a strong middle class is an ally of the wealthy. It is just that simple, Robots will not be buying cars.

  • Report this Comment On March 29, 2012, at 8:34 AM, prginww wrote:

    Great Article. Being 23, and seeing the mess that lays ahead for myself, and the rest of Young America is depressing to really think about. Unfortunately there is not enough talk about the UNEMPLOYMENT RATE, between the ones who are not qualified for Unemployment, and the Self Employed, or the ones of who decided to go back to school, and cannot be considered it is easily over 20-25%. This is not going to change over night, and that is the biggest worry. Not only do I live in Connecticut, but a highly wealthy county in America of which there is No WORK. I have spoken with close to 100 or more people all age groups, and all backgrounds. Many have 4 year degrees with 20k-50k debt some have Masters and beyond. To hear stories and see friends bust there butt in College, and than get out have major debt on there head, and see them unable to find work is horrific. I will be surprised to see the actual numbers of people that have either already left America, or who are going to get out of here in the next 2-3 years. A part of me says only way for Young America to have a successful life is to leave here, and instead of living in America which immigrants flock to, us be the immigrants and leave America.

  • Report this Comment On March 29, 2012, at 9:07 AM, prginww wrote:

    You just said it very well. Alvin Toffler took 300 pages 30 years ago, in the book The Third Wave. Thank You,

  • Report this Comment On March 29, 2012, at 10:57 AM, prginww wrote:

    This "Automation and Employment" doesn't show anything that necessarily has to do with automation or robots. I haven't seen much of a rise in automated work. What field is this supposedly taking place in? Have you considered other factors that jobs could be dropping off? Could it be related to the stock market crash, the housing crash, the bail-outs, the wars, etc.? I am more inclined to blame a cost of living increase than R2D2 for the decline of things.

  • Report this Comment On March 29, 2012, at 11:26 AM, prginww wrote:

    @ TerryHogan -

    I mentioned the skills vs. availability issue in the article several times. A few thousand jobs is barely a blip in a jobs market of over 100 million people.

    @ rookie2009 -

    Thanks! I could quite easily write a book on the subject. There are a number of questions being raised in the comments that I wanted to answer and probably could have, given more time and length.

    @ Lyrik007 -

    The automation is implied, not explicit. There's no standard measurement for automation. In my prior article on the subject I mentioned that capital spending (on machinery, computers, etc.) shot up after the recession, but employment barely budged.

    If the graph shows nothing related to automation, what would you call the doubling of productivity in a decade that's paired with shrinking work hours? Do you feel twice as productive as you were a decade ago? Do you think that workers across the board have somehow doubled their capabilities with no outside inputs?

    - Alex

  • Report this Comment On March 29, 2012, at 1:12 PM, prginww wrote:

    Productivity is more important than jobs because creating a job does not create wealth. Increased productivity = increased wealth. If productivity skyrockets at Henry Fords plant, the cost of the car (theoretically) becomes cheaper and cheaper so that the market is still in play for people with meager incomes to enjoy the benefits of a fine automobile. Isn't our goal to increase quality of life and standard of living? Occupying everyone's time with a 9-5 job is secondary.

  • Report this Comment On March 29, 2012, at 4:22 PM, prginww wrote:

    Here is a review of Ben Bernanke's jobs report and its not pretty:

  • Report this Comment On March 29, 2012, at 5:47 PM, prginww wrote:

    "Destroyed a thousand times, [this argument] has arisen a thousand time out of its own ashes"

    "The Curse of Machinery" by Henry Hazlitt, 1964

  • Report this Comment On March 29, 2012, at 6:24 PM, prginww wrote:

    Two points; a small one, and a bigger one.

    First, the small point. If you think that the work done by doctors, lawyers, or even waiters "are often routinized and reliant on specific, narrow skill sets," then you don't know much about what these people do for a living. In each case, their jobs depend on judgment (i.e., knowing which of two or more options, superficially equivalent, is preferred in the specific case) and on interpersonal skills. These are areas that are difficult to automate (although, sadly, they may be subject to offshoring).

    My larger point, though, relates to your observation that "the American education system is completely inadequate to meet the needs of a broadly and highly skilled and technologically connected workforce." I think this is certainly true. You go on, however, to lament poor performance as measured by metrics which, I believe, are far better at measuring one's ability to perform narrow, routine tasks than at measuring high-level abstract thinking.

    I have a degree in English (and another in law). I hear all the time how pointless it is for America's universities to focus so many resources on education in the humanities, when we are falling so far behind in fields such as engineering. I think this way of thinking is actually counterproductive. Recently, I met a successful international investment banker whose degree (a Ph.D., in fact) was in philosophy. He believes - and I'm inclined to agree - that his educational background helped him develop the very critical reasoning skills he relies upon today in his profession.

    In the end, I think, it's about becoming competent consumers of information. Isn't that all education is - learning how to consume information in a useful and productive way? Furthermore, people whose critical thinking skills have been shaped by a broad, rigorous liberal arts education beginning at the earliest levels make better citizens and neighbors, as well as being better employees (or employers, for that matter). That ought to be the long term focus of our educational system, but I fear that success in that regard will not necessarily lead to higher test scores in the short term.

  • Report this Comment On March 29, 2012, at 6:48 PM, prginww wrote:

    The future:

    1) An automated military serving the elite will inevitably adjust population numbers to maximize efficiency in the elite's cause of pursuing maximum accumulation.

    2) Self aware automation will further adjust population numbers to maximize efficiency of resource allocation. By logic, this number is zero human beings.

  • Report this Comment On March 29, 2012, at 7:20 PM, prginww wrote:

    Seattle1115: Employers do not want employees who think independently. They pursue employees who fit a certain prescribed profile (code) perceived to maximize quarterly profits. I agree that a workforce possessing a broad rigorous liberal arts education will benefit organizations and society in the long run. Executives, however, are only concerned about their run and their parachute. Executives generally regard independently thinking employees as competition.

  • Report this Comment On March 29, 2012, at 8:37 PM, prginww wrote:


    Agree with your post.

    My nephew sent his patents a very interesting article, after they had expressed concern about some of the classes he was taking. It was from the Yale Alumni Magazine, titled “What would Plato do?”

    They interviewed Yale graduates who’ve had success careers in the business world. All of them recommended the liberal arts for those concerned with prospering in the business world.

    Please keep spreading the message.

  • Report this Comment On March 30, 2012, at 1:50 PM, prginww wrote:

    But I've been told "job creators" increased employment :)

    Good article, only wish everyone knew consumers drive most of economy. Gov. spending can drive some of the economy but the spending has to be the right amount to either add fuel to the fire or take some away.

  • Report this Comment On March 30, 2012, at 2:41 PM, prginww wrote:

    @ seattle1115 -

    Your counterpoint is interesting, but by describing the jobs I painted as routinized as "depend[ing] on judgment (i.e., knowing which of two or more options, superficially equivalent, is preferred in the specific case)", I feel like you somewhat made my point for me.

    Picking the best of several options based on amassed knowledge and probability factors is something algorithms are very well-suited to. I'll grant you that interpersonal skills are harder, but I've been to plenty of doctors who had no interpersonal skills at all and whose treatment was functionally indistinguishable from a robot's.

    Robotics and algorithms are being deployed towards both of these ends. Diagnosticians have competition, as do lawyers doing discovery and other basic functions. Some doctors and some lawyers will be resistant, but not all of them. The same is true in nearly every profession.

    I do agree that some of my education metrics don't measure the kind of broad-based thinking necessary to working in this kind of economy. But I'll have to ask for your forgiveness there -- I didn't want to choke my editors with another page or so of reasons why education is failing, when that was just a secondary point to the larger argument.

    I agree with you that a liberal arts education is valuable at all levels of development and should be encouraged. But encouraging a liberal arts education won't by itself be THE long-term solution, only a part of it.

    - Alex

  • Report this Comment On March 30, 2012, at 10:19 PM, prginww wrote:

    Seriously enough we are looking at zombie apocalypse hoo-haw. Henry Ford had it right - build what the workers can afford to buy and churn the cash. Stagnating it in the upper hemispheres of society kills economic growth.

  • Report this Comment On March 31, 2012, at 2:47 PM, prginww wrote:

    As an attorney, I would like to see a robot take my place as a litigator, in both international and domestic suits, and convince a jury of humans that my client has been damaged by the other party and award a well-considered amount of money.

    Good luck!

  • Report this Comment On March 31, 2012, at 5:57 PM, prginww wrote:

    @ 1022ThirdAvenue -

    I never said that all jobs will be gone. Just that most would. The quote below is from the article, and responds to your comment:

    "The few jobs resistant to digital encroachment are those requiring high-level abstract thought, and those positions will never be feasible or necessary for the majority of the population for two reasons that go beyond the accelerating pace of technological change."

  • Report this Comment On April 01, 2012, at 1:01 AM, prginww wrote:

    cleaning up the mess?

  • Report this Comment On April 01, 2012, at 5:50 AM, prginww wrote:

    As a ( former ) CNC machinist I can relate to most of this article in the first person.

    However many of the people now unable to find "a job" are people who -

    wont or cant move

    learn anything new

    refuse lower wages or status

    poor health

    lack any mass critical thinking skills

    The entitlement mentality is rampant - since when does anyone deserve a good job.

    business is in many ways its own worst enemy

    anyone with half a brain knows today's corporate managers are self serving and lend nothing to the idea of loyality in the RAT RACE. And yes allow them to be the smartest man in the room or be a threat to their small minded platform.

  • Report this Comment On April 01, 2012, at 5:51 AM, prginww wrote:

    Good article and many great comments to go along with it :)

  • Report this Comment On April 02, 2012, at 2:02 PM, prginww wrote:

    Someone has to install robots. Someone has to repair robots. Someone has to know when a robot has to be repaired. Someone still has to deliver the products. Someone still has to load and unload the products. Someone has to sell products to new customers. Someone has to sell robots. Someone has to make the robots that make the robots. So on, so on, so on. If you make buggy whips you may have to learn to install or repair or deliver robots. When the first computer came into the work place people complained of all the jobs that would be lost. Actually created more jobs by the time figured, programmers, hardware people, salesmen, more production etc.

  • Report this Comment On April 02, 2012, at 2:26 PM, prginww wrote:

    The economic data is smoke and mirrors because GDP represents transactions (sales) without regard to where the goods and services are produced. We all know that today, unlike 2 or 3 decades ago, with a few exceptions, most of the products we purchase, the technical support, the financial and accounting functions, etc. use offshore labor at the expense of U.S economy. The companies like Apple are getting filthy rich from the offshore labor arbitrage. Every Apple product sold transfers north of $150 from our economy to China, contributing around $1,050 to the China's GDP. This loss of capital is even worse than welfare (social implications aside), because welfare recipients returned 100% of their receivables to the host economy.

  • Report this Comment On April 02, 2012, at 11:12 PM, prginww wrote:

    This may be a divergence from the article, but if I may step on my soap box for a moment. . . . . .

    We have 'lost' a lot of jobs and a lot of people are 'unemployed'. We definitely seem to be in the middle of a S#!T storm. I have no answers to fix the mess we are in and I do not see that it will end any time soon.

    What I want to know, though, is where has all the innovation and good 'ol American ingenuity gone? I agree that the only loyalty a company has any more is to its' balance sheet. And, because of that, I doubt that manufacturing will come back to America in any meaningful way. So we must invent new ways for people to find fulfillment. If we could just have all out needs met so that we could all become self-actualized and work for the betterment of human-kind. . .(Star Trek comes to mind)

    But we have become complacent. Most people seem apathetic or oblivious to what is happening around them. Instead of waiting for the government to fix everything that is wrong, (especially since they are likely a large part of the problem ) why aren't more people becoming active in their communities? We are so selfish and 'afraid' of our neighbors, that we can't even pull ourselves away from the TV for 15 minutes to help an elderly person get some groceries, or help a child with his homework. I think that after the first three months of unemployment, there should be a mandatory volunteer clause - 5 hours a week. Who knows what possibility might hit you in the face?

    I am one of the 'lucky' 25% in my company that still has a job. It is easy for me to sit here and rant because I will be able to make my mortgage payment this month. It does not mean that I do not feel stress because I may be the next one let go. I know that I am a resource and not personnel. There are no guarantees anymore and we all, somehow, need to get up to speed in this new game that is afoot. And, it would certainly help if we all played by the same set of rules (moreover, if we even knew what game we were playing. . . .)

  • Report this Comment On April 03, 2012, at 2:50 AM, prginww wrote:

    In his book Annals of an Abiding Liberal, the economist John Kenneth Galbraith wrote an essay "The Multinational Corporation: How to Put Your Worst Foot Forward or in Your Mouth". I think it is worth re-reading today. In his essay, he analyzes the power held by large corporations. he also reminds us that corporations have been created by society to fill the needs of society in terms of goods and services. A situation where structural changes and automation means that we can fulfill these needs with only X % of humanity employed, it may be the time to re-think some fundamentals.

    I think the issue of outsourcing is a temporary red herring and a blip on the curve. Some years ago, I heard the news that a large European corporation had shifted all its service centers to Prague in the Czech republic to save on labor costs. I few days later, I heard the news that wages in Prague were approaching the European average because of the influx of companies from western Europe. Things will find an equilibrium and workers in Asia will not accept the current low wages forever. They will also want a fair share of the goods they produce and the profits they bring. Granted, that is cold comfort if you got laid off during the "blip".

    Another tension in the system is the fact that older or retired workers want to stay engaged in the professional/work sphere. And for many it is not only they money. They are searching fulfillment. We operate a website, Dinosaur Exchange, to try to fill that need; A large percentage of the users are mainly motivated by wanting to use the skills they have and not sit at home twiddling their thumbs.

    @vidar712: France implemented a scheme like that in 2001: The official work week was reduced to 32 hours after some years of salary freezes to keep the per-hour cost of labor constant. It has been a mixed success. One factor has been that in many jobs, the workload stayed the same and the employers didn't hire, so the people just had to do the same amount of work, but in less time.

    I regret to say that I don't have the magic solution, but I am convinced that we have to re-think some societal fundamentals in a big way.

  • Report this Comment On April 03, 2012, at 4:24 PM, prginww wrote:

    This is an excellent article, thank you Alex.

  • Report this Comment On April 03, 2012, at 6:14 PM, prginww wrote:

    I've got an idea,let's use our 401K's and be DAY TRADERS. How bout that. Al

  • Report this Comment On April 04, 2012, at 5:08 PM, prginww wrote:

    Great article, long live the fool(s).

    facinating notion, "Luddites".


    Do you seriously care about this issue and the burden it places on mankind?

    or is this strictly business?

    I read recently "Homo Sapien have been irresponsibly releasing carbon dioxide into earths atmostphere for the last 1,000,000 or so years"

    Will we stop the Chinese using coal to heat homes and fuel furnaces? I think not.

    Luddite = Sore Loser.

    Education, so that humanity might understand the elegance of nature and fit in...finally, is paramount.

    I am 25 going on deceased, Scottish, unfortunately, and slowly shaking off the illusion I once called "life", my generation and those that are to follow MUST learn to think for themselves and fit into the universe with it's partly pre-arranged framework.

    I (perhaps naievely, but shamelessly) feel that things may actually be that simple.

    Anyway, I have a lot to learn about investing !

    Keep up the good work! Cheers!

  • Report this Comment On June 25, 2012, at 11:42 PM, prginww wrote:

    I'm surprised that getting rid of minimum wage was not offered as a suggestion. Minimum wage actually increases the problem of unemployment. Like many political schemes, it is something that is framed as protection for workers but really harms workers as it puts people who can not output the value of minimum wage costs out of work. (If minimum wage is $7.50/hr and you can only produce $6.00 of goods/services/hr then you will likely have NO job instead of a job that pays you $7.50).

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