The reference to Sancho Panza is to suggest a less cavalier attitude toward the future of labor opportunities for less-productive workers. I’m just not clever enough to formulate a better title for this post.
Jordan wants us to think about what will happen in the labor market when the productivity of some people increases exponentially relative to others. His argument grates against my priors, so I had better reinvestigate those biases.
He provides “Four Theses about [American] Work:”
1/Average company could lose 30-40% of staff without unacceptable output quality decline.
2/Average company is just competent enough to not go out of business.
3/Most employment is a form of privatised welfare tolerated because society lacks a compelling counternarrative to finding meaning in work.
3.5a/Corollary: we are still only in the beginning stages of technological unemployment, and
3.5b/the pressure against it will be rooted in existential angst and the failures of a welfare system predicated on near-full employment
4a/Competitive pressure strips resources needed for antifragility.
4b/Then, when pressure abates, excess resources do not (necessarily) improve resilience.
4c/Resources that could be spent on a second lung or kidney go toward additional fingers instead.
Very good, and a challenge to the laissez-faire economist’s usual cavalier attitude toward laborers. The first simple result is to say that if some people can’t match others’ productivity they will starve and die off, society will be richer on average and so much the better. This echoes the approach adopted by eugenicists that preferred a negative check on population, like Darwin. Survival of the fittest among people just as among animals. Birth control is problematic to these folks because the fittest are actually more likely to cut out the fittest rather than the weakest, the fit having better access to contraceptives. The eugenicists that preferred a positive check on population also treated humans like animals, but domesticated animals, desiring active management of the herd. Contraceptives should be forced upon the unfit specimens, up to sterilization in many cases.
The progressive discussion over eugenics (that I think included Keynes’ optimism) was possibly a response to never-before-experienced increases in productivity and quality of life. The distribution of improvements in productivity was possibly more even in the progressive era than the increases in productivity Jordan is concerned about looking forward from today. I say possibly because we have a problem of survivor bias. The distribution may have been every bit as lumpy as what we may experience imminently. I don’t know how many people starved to death in the industrial era because they were left behind by progress. Was the Irish Potato famine an example? What about the Chicago slaughterhouses? Did many elderly farmers simply die of starvation? How would that have been reported and recorded? I don’t know. I think Progressives might have said, cavalierly: good riddance.
Of course the lesser classes also had a lesser voice in that era. They were not included in any deliberative form of democratic decision-making. The survivors of that era may all have been of “better stock” than those that experienced it. Our great-parents may have experienced an era of relatively evenly distributed levels of productivity because the previous generations’ under-productive members died off. Or maybe the improvements in technology were such that everyone’s productivity improved apace. Just last might I recounted to a friend how in my family only one person in my parent’s generation was above a blue-collar worker, and none of may grandparents were above blue-collar. Yet they all owned houses and cars. I don’t know, but it may be worth investigating.
Considering a general, ahistoric case of skewed distribution of productivity improvements what options are available to the low-productivity laborer, and how will the rest of society treat them?
I consider my barber for a moment. I can’t remember where the example was introduced to me, possibly Bastiat, but I pay my barber $12 for a haircut (plus a tip that operates as an efficiency wage such that I always get my preferred barber whenever I go to the shop). I remember paying $6 for a haircut in North Jersey as a kid. Has barbering technology improved greatly over time? Not really. But the opportunity cost to the average client of cutting his own hair has increased apace to his productivity. Hence, barbers’ wages increase along with my productivity.
This can be applied generally. As the ultra-productive increase in productivity their opportunity costs also rise. They become willing to pay more to have more menial tasks done for them. Witness the rise in the services sector.
But suppose a haircutting machine is developed such that I can stick my head into something resembling the odd domes our grandmothers used to stick their heads in at the salon (what were those things for?!?). I sit under the dome and the machine cuts my hair to perfection, every time. Capital supplants labor, and the owners and technicians of barber-domes see an increase in personal productivity while barbers are the newest victims of creative destruction.
Is there any shortage of new service-opportunities for former barbers? The cavalier economist typically shouts “no!” with little evidence to support him. There is an infinite supply of unmet-wants. New service industries—witness personal trainers, life coaches, dog walkers, etc.—will emerge, and those laborers will earn wages that reflect high productivity workers’ opportunity costs.
But we must consider the elasticity of labor supply. As ultra-productivity increases fewer workers are actually engaged in making stuff and more workers are engaged in pampering people. But if the supply of service workers increases to perfect elasticity the ultra productive will be able to capture greater shares of the surplus from hiring pamperers.
Inequality of quality of life follows, generating envy at least, at worst we are back to the eugenic negative check. Worse yet if the classes become further separated and sympathy fails to cross class lines.
I find at this point that many critics of inequality become concerned about the deliberative process. If the political sector can be captured by the ultra-productive we may observe a move toward an effectively positive-check sort of eugenics. That is, introduction of policies that cause the least productive to be removed from legal protections. The extent to which cronyism is an example of this should be considered.
Modern Progressives (I’m thinking of the Bruenigs, for example) might suggest radical redistributive schemes to prevent the capture of the political sector. Of course, that is not the typical appeal, rather they attempt to awaken our sympathies more generally. The political challenges attached to such an agenda frighten many, but particularly the ultra-productive, who stand to lose both wealth and status. Perhaps the loss of status is more important to some, witness Trump’s supporters. To what extent are Nozik’s arguments for Wilt Chamberlain’s income really just upper-class propaganda?
Another option for the under-productive is to abandon society and try to eek out a living in the wilderness, or the trash heaps, where we see some living today. In the extreme we experience the antifragile result that the peasants revolt, and the ultra-productive are either stripped of their lives, their work, or their marginal productivity. In any case society will have fewer resources in total to distribute by whatever criterion afterwards.
What is to be done? Mass public education has not overcome the problem of unequal distribution of talents, and has perhaps only exacerbate the problem, pushing lower-productivity workers into student debt, and effectively subsidizing their higher-productivity counterparts’ education, with no productivity gains to speak of.
We do observe lower levels of fertility among the wealthy, so maybe the long-run labor supply becomes more inelastic.
Or maybe new technologies will have a more even distribution of productivity gains.
I’m hesitant to make any prescription, because moving in any direction presumes knowledge we just can’t have. I hope I’m a little less cavalier than I used to be though.