Think about it, you are creating work that someone has to do so they can get paid. If that's the goal, why don't we just pay people without having to go through the hassle of creating job?
Heck, we have so much machinery and automation that feeding the population is no longer a problem, shelter might be slightly trickier, but in a simplistic view, if it takes 1% of the population to create the basic essentials(food,shelter) for everyone, why can't we just give those to citizens and let them do things they may actually enjoy?
I find it disturbing that a comment like this was actually made earnestly and not in sarcasm, and also that it has replies in the affirmative.
In short - in order to 'give' something to someone, someone else has to pay, whether in cash or in time. This is the mysterious free lunch that pops up from time to time.
If - clearly arguing by absurdity - there is so much machinery and automation that it takes 1% to feed, clothe and house the population - then one might ask - from where does the machinery and automation come from? It must be designed, created, maintained and operated. In order to be constructed, it has to be financed, the risk has to be taken, potential rewards have to be postponed.
For people to enjoy 'things that they enjoy' - it means that, instead of postponing consumption for production, it means eliminating production for people, and having their lives focussed on consumption. While, incredibly, nowadays most people can enjoy long breaks of consumption-only activity, if everyone decided to start consuming and stop producing, things would go backwards very quickly. It seems as though the 'good life' is miraculously easy - we take a day off, food is on the shelves, power is supplied to our hose, gas is available to be pumped. This gloss of good life covers up the furious production, risk and activity that goes on 24/7, globally, to make it happen.
The incredibly rich standard of living that most people reading this website enjoy is created through a system of voluntary exchange and specialization, whereby people create efficiencies by concentrating on a particular specialty, and exchanging the proceeds of that with the product of others. While there are a precious few people who have accumulated enough surplus through either hard work, theft or inheritance, this represents a tiny percentage.
The truth is - more people get to do thing they actually enjoy precisely because of the accumulated surplus of the increased productivity of people over time. But rather than rest on the laurels, most, if not all, people prefer to strive to improve their standard of living even more.
In short, what you're trying to describe is some type of utopia - a vision which has lead to the death and suffering of millions. It's dangerous thinking and I would urge you to become more educated in this area.
And, to be clear, one viewpoint I mostly agree with in terms of society right-now-this-instant.
I've normally dismissed the idea of post-scarcity economics as some unrealistic utopia. While there is an undeniable trend of a smaller and smaller percentage of the economy devoted to basic survival necessities, it was never clear to me that that number could get close to zero.
But when I step back and take a clear headed look at it, I think maybe it could.
We're not there now, and we won't be tomorrow, but we will be someday. I'm coming to believe in that conclusion.
We could get there in a decade or so if we pulled out all the stops and chased it at damn-the-torpedoes speed. We'll likely be pretty close in a few decades no matter what we choose (barring self-destructive paths, always possible of course).
So then, now that I'm coming to accept the outcome, I've started thinking about what will make it happen as quickly as possible. Why drag the transition out? It's going to be painful, but it's better to get the pain over with. The band-aid philosophy- rip it off all at once.
What are the obstacles to the transition? How can they be mitigated or avoided? What can we, as engineers and entrepreneurs, do to make it happen faster and smoother?
Even if you DON'T accept the inevitability of the post-scarcity economy, it's worth taking some time to pretend you do, imagine what that world is like, and how you would get there from here.
Certainly more value than in just insisting that the system we have will live forever. Even a casual reading of history makes it clear that absolutely will not happen.
>>What are the obstacles to the transition? How can they be mitigated or avoided? What can we, as engineers and entrepreneurs, do to make it happen faster and smoother?
Few things i can think of are:
1.Focus on solving the problem of basic living as cheaply as possible, to enable moving to different system a political and practical reality and create some sort of stability for a world in transition.
One idea: focus on solving problem for the poor and the third world. They are a good market for cheap products.
2.If we learn from the history of the of the industrial revolution, achieving a good change will be very politically dependent. We cannot assume blind "technological optimism". So one way is to think how do we create a political change.
One idea: focus on technologies that automate lawyers out of a job. The lawyers will create political pressure.
3.I think that many engineers/entrepreneurs lack exposure to problems and knowledge needed to create the transition, so instead they're thinking on facebook apps.
Ideas:Build a database of real problems and projects for engineers/entrepreneurs to work on,find some way to break big problems into small one, and share knowledge or built communities for this.
4.One big obstacle to the transition is existing power structures. Hacking regulatory barriers that prevent disruptive innovation seems a solution here.
The political obstacles are large, since both pro and con sides involve a lot of near-religious thought. The reactions are almost reflex. Finding someway to short-circuit that would be key.
1,2, and 4 all depend on politics. 3 is relatively straight forward, but risks getting co-opted by politics.
Well, I've spent a lot of time doing more than a casual reading of history, and I certainly don't subscribe to a 'post-scarcity' view of the world.
The human desire for a better life is insatiable. By a better life - this doesn't necessarily mean bigger houses or shinier gadgets - though that is a feature of the current generation, and just about every one before that. By a better life, I mean more health, better education, and a longer and happier life for ourselves and our offspring.
Even if, using the thought experiment, we can supply the basic needs of survival for the equivalent of the first ten minutes of our labour per day - most peeople are not going to choose to spend the rest of the day doing nothing.
Taking food - already in most developed places excess calories are a problem rather than insufficient calories. But even then, when faced with more choice, many people choose to select organic or specialty foods, which require more of their available funds. Choosing an all-organic diet might take up 2 hours of your working day to purchase, but that's a choice many will make.
Similarly, the ultimate human demand - a longer life with less health problems - will never decrease. So even if the provision of basic staples as a proportion of economic activity decreases, it will be offset by increases in unlimited demand for specialised healthcare. Specialised treatments are the ultimate consumable - like fine porcelain dinnerware, what was once available only to the wealth gradually becomes more affordable to more people.
My understanding and interpretation of all the recorded human history I have read is that the desires for a better will never be sated. Going to a world in which there is no scarcity means arbitarily drawing a line under 'what is necessary' - any rational observer would say that line has long since passed in many societies - but people don't want to stop at that line. The only way to make that happen is to coerce people to stop at a level of particular of consumption, and that is something I want no part of.
What you're really arguing there is that there will always be a level of scare resources.
Sure, ok, probably true. Maybe not under some distant futures, but for the foreseeable future.
But what I'm coming to accept is that a basic survival level of resources may not remain scarce much longer. That's going to have some fundamental impacts on society, and it's worth thinking through what they are.
Later iterations will raise the level of what's no longer scarce. First it's survival, then it's comfort, then it's what today is luxury.
Of course new levels of luxury will come along that will then be scarce and yet still in high demand. That's obvious.
But that isn't all that relevant to the fundamental changes at the bottom of the scale. And those changes are both worth pursuing and likely.
What you fail to notice is a term called law of diminishing utility. Which philosophically means the perceived gains/value/utility from anything over time tend to appear less and less.
People get bored. There was thread a while back on Reddit, about discussing free ice creams and chocolates at Google. Thread bought out a very interesting aspect of human life, some people complained about quality of some chocolates in the fridge. So here you have a people who are getting free food, chocolates, ice creams, massage centers, toys and what not for free. And yet after some time they continue to have complains.
People will always have something to complain about. Besides look at the communist set ups. They aimed to provide what you say. Yet all of it went in the drain. When you award things uniformly for non uniform efforts. The concept and specialty of distinction goes away. People don't feel compelled to try a little extra or go the extra mile because there are no special rewards for that.
I acknowledged people will always want something more.
Although I would note Google still considers these perks worthwhile to free up folks to pursue useful work.
And I'm not talking about giving everyone the same thing.
I'm talking about basic survival needs being met at little to no cost and advancing from there. Nothing about uniform rewards, just a solid base from which to work.
Lets consider that situation you mentioned. Lets assume your food, clothing, shelter and health care to a large extent will taken care of.
Its still won't solve many problems. If you visit ghettos(I actually stay in one, here in India) you will see the nature of problems of a different kind. Even if you could some how solve their their problems concerning basic needs. You really won't help they have hygiene, education, solve problems related to crime. Their overall perspective of life still won't from its base position to large extent.
What it is likely to do is make those people more lazy. I don't have data to prove this, but the same old problems of poverty but of a different kind will exist. People will complain of not having luxury in transport, posh living, vacationing etc. It never ends..
India is hardly Sweden. But if it were, then there is no reason it could not apply Sweden's policies with the same success that Sweden has had. (While I don't think anyone thinks Sweden is perfect, it seems hard to dispute that most Swedes are doing better than most Indians.)
>> My understanding and interpretation of all the recorded human history I have read is that the desires for a better will never be sated. Going to a world in which there is no scarcity means arbitarily drawing a line under 'what is necessary' - any rational observer would say that line has long since passed in many societies - but people don't want to stop at that line. The only way to make that happen is to coerce people to stop at a level of particular of consumption, and that is something I want no part of.
Even if assumed to be true, this is only partially relevant. What matters relative to employment is to what extent people are required to deliver the goods & services people may want.
It is hardly impossible to imagine technological innovation progressing to the point at which it becomes both cheaper and more effective to disregard human labor as an essential component in the production of goods and delivery of services.
In other words, demand is irrelevant if it can be satisfied without, or with minimum, human labor on the supply side.
> The only way to make that happen is to coerce people to stop at a level of particular of consumption, and that is something I want no part of.
What a non sequitur.
Suppose I draw the line of what is necessary very low: we should not turn bleeding people away from the emergency room; we should not literally allow people to starve in the streets without providing limited quantities of inferior food.
Providing these things in no way requires "coercing" everyone to settle for the emergency room and foodstamps.
Now suppose you draw the line higher. For a really communist example, suppose everyone may receive an apartment and a food stipend in return for a modest amount of work. This also does not require coercing everyone not to get more.
Because you can just make more money yourself, and trade it for the extra stuff that isn't being provided to you.
The place where 'coercion' enters in is taxes, which are a legitimate part of the US Constitution and have been collected for eons, even if you think they are immoral out of some Randian horror of Stalinism.
A clear-headed look at the world would tell you that resources are very scarce. Just because we're very efficient at producing food compared to our ancestors doesn't mean things aren't scarce.
>>If - clearly arguing by absurdity - there is so much machinery and automation that it takes 1% to feed, clothe and house the population - then one might ask - from where does the machinery and automation come from? It must be designed, created, maintained and operated. In order to be constructed, it has to be financed, the risk has to be taken, potential rewards have to be postponed.
Your entire argument is underpinned by two basic assumptions :
1. Human labor will always be required to develop goods and maintain infrastructure
2. The number of individuals required to fulfill #1 equals or exceeds the global pool of working age individuals
Neither of the above are certainties.
>>In short, what you're trying to describe is some type of utopia - a vision which has lead to the death and suffering of millions. It's dangerous thinking and I would urge you to become more educated in this area.
Your line of reasoning is reactionary. While I too am quite the fan of free market capitalism, this doesn't mean it is the only possible sustainable system of human growth & cooperation. It's a current economic reality, not a religion.
I don't mean to argue with your points or attack a straw man, but your conclusion: "...some type of utopia - a vision which has lead to the death and suffering of millions" is confusing to say the least. I'm not sure if you think that millions have died in utopian style communities throughout (not even realistic), but even if that were true, what about those in non-utopian communities?
Dreaming, even naively, of a utopian future is dangerous only to the ones who control our dystopian present.
What I mean is that millions have died when leaders have set out on creating a utopian society. Because individuals wants and needs are necessarily diverse, they cannot be forced into a set pattern by dictat of a leader. When this has been tried, it has led to the deaths of millions. That is because the very nature of a utopian vision is radically different per individual. So the implementation of a particular individual utopia - or even a shared vision of a small group - must necessarily mean either excluding or enforcing that vision on people who don't agree with the vision.
What I mean is that millions have died because of the chasing of utopian dreams by small groups. Being killed by your own government, either directly, or via its actions, is the ultimate in unnecessary and premature death.
The Stalinist system and its non-Russian offshoots were historical particulars, not generic representatives of utopianism. You imply that it is the utopianism which caused millions to die, but you have ignored other examples in the Fascists and Nazis, who were reactionary rather than utopian (they wanted their nations restored from the damage done by liberals and other outsiders), and yet still intentionally murdered millions.
From the utopian examples you conclude that it is a sort of Stalinist slippery slope from shorter work weeks to genocide. Yet you do not seem to conclude the same thing with regard to the church-and-apple-pie traditionalism that Fascists favored. Why not? Well, in each case the happy pictures used are only tangentially relevant to the regimes which used them. So it is quite wrong for you to draw an equivalence between the left-wing pictures and genocide, without also at least drawing an equivalence between the right-wing pictures and genocide. Or concluding that the pictures are not completely relevant.
I don't think it is especially likely for you to be killed by your western government. But for what it's worth, I can't see any reason to prefer being killed by non-governmental agents, or people who have your ideology rather than a left-wing one. Getting killed sucks regardless.
The real underlying point here is that owners of machines and stocks of resources are under no obligation to provide a penny to others under any circumstances, and that thinking they are is tantamount to Stalinesque genocide.
However, taxes are legitimate and have been around forever. I imagine that you regard this status quo as slavery. Also, limited work-weeks have been around forever. I gather that you regard this as freeloading. And these things ultimately provide for public goods, without any Stalinesque genocides being perpetrated against 'job creators'. At the same time, taxes do not get collected without legally accountable economic activity.
Indeed, as productivity increases, we should see benefits such as people not being forced to immediately begin starving in the street because their job became economically unnecessary, and people not being forced to work 80-hour weeks to provide for the profit of somebody else. If overall productivity increases only come with less social security and more compulsory work for one class, that is because another class is applying coercion to steal labor, which is not morally any better than stealing capital.
This observation does not require one to be a Bolshevik, nor does it entail that any mass killings will occur. Nor does it involve revolution. The status quo of several decades in the western world is already something of a balance between workers and capitalists. Now you are peddling the idea that this arrangement has been unfair to the capitalists who have been tremendously enriched by it.
That isn't correct. It is in the interests of capitalists not to kill and overwork the people whose time is required to produce anything, and not to strangle the average consumers whose spending power drives the economy. The problem is that short-term thinking and ideologues such as yourself are working to convince capital holders otherwise, that they should cash out as quickly as possible without regard to the social impact of what they are doing.
That's dangerous thinking and I urge you to become more educated in this area.
By promoting voluntary exchange, you're really talking about free markets and free enterprise -- but that isn't the only solution. Coercive exchange is a popular economic model that is rather prolific in the academic circles. Why should anyone believe in free markets over a command and control economy?
This is a trolling remark, right? Do you seriously believe a centrally planned economy can be superior to one in which economic activity is self-directed, decentralised and based on the price discovery model?
On most problems, no, a reasonably free market is very efficient and quite practical.
The market often fails to sort out public-goods problems. In areas where the market is not free due to widespread deception and/or coercion, going full Somalia is not the answer. The freedom of the free market has to be bootstrapped somehow.
Also notice that it is quite ordinary INSIDE companies to have central planning and resource allocation. (And not-entirely-favorable comparisons to the Soviet Union are certainly possible for many of the largest companies - I do not refer to liberal politics).
If it were a universal law that planning were always wrong, then every family and every individual would be a fractal of pure capitalism. Instead, my dog and my daughter do not pay for the health care I provide and are coerced to go for walks and go to school, respectively. And each part of my body carries out its function in a more or less compulsory way, without bidding for glucose.
Of course a planned economy has the possibility to be much more productive than one left to be self-directed. In the self-directed economy, people will only work at jobs they dislike often enough to fulfill their needs, build up security for the future, and support the elective activities that they do with the rest of their time - the demand for work is elastic. In a semi-planned economy like the US, taxes and inflation will eat up the long term technologically-growing surplus (to build the empire), the purchasers of labor will keep the demand for hours worked per employee high in the short term, bureaucracy will ensure plenty of ultimately non-producing make-work jobs to keep up the status quo, and the people stuck working more than they need to in highly skilled jobs (being ahead of the aforementioned taxflation) will spend their surplus of money on the newest version of gadgets for status and entertainment.
This is actually a paradigm I think we will be forced to explore in the coming decades. With increasing automation, it seems logical to conclude that the sum total of available commercially viable jobs will decrease with time. Not necessarily in a purely linear fashion, as new industries will emerge, but the overall trend may point downwards.
Ultimately, we may have to consider alternate ways of structuring a society. If this does come to pass, it will be a very uncomfortable transition.
> it seems logical to conclude that the sum total of available commercially viable jobs will decrease with time.
It might seem logical, but it isn't true.
The Luddites were people who were frightened of the introduction of machinery, and used to go around attacking factories, thinking there would be no more jobs.
In reality, whenever automation provides benefits through lower prices, what this does is reduce the amount of hours labor a person needs to spend in order to fulfill that need. If you have a cow, it will take a person a couple of hours to obtain a gallon of milk, and then you have to house, feed and look after the cow. Instead, with automated and factory-produced milk, the average person spends a fraction of that time - maybe 10 minutes - to earn the money to purchase that milk at a convenient location.
And so it goes with everything - whenever a product is automated and the jobs (hours) required to produce that thing is reduced, then the cost of the product falls. The consumer then has a surplus of cash, which is really just a surplus of their time spent, to either keep for themselves, or spend on something else.
As human needs and wants are essentially unlimited (most of us want to go to the moon if it was possible) then, for each good that falls in price, demand will shift to other goods. As automation lowers the cost of each additional good, a person is able to consume more of that good or more additional goods.
Now, you might say that 'consumption' is bad - but consuming a good might also mean consuming a service, like a movie, a local band, or an art gallery, which is still consumption, but not in the 'using up resources' manner (although nearly every consumption save for walking to a tai-chi class on the local beach uses up some kind of resources)
This curve of increasing standard of living is intrinsically linked to increases in productivity, which roughly means the amount of goods + services produced for the given input of working hours.
Thus increasing amounts of automation will never, ever reduce the supply of jobs, because each automated thing that frees up human time for something else, in itself creates activity which generally means creating more jobs.
You don't get an iPhone 5 to buy unless farmers can milk a herd of 150 cows singlehandedly. And so we'll never have tourist trips to the moon unless there is increasing automation amongst industries that are currently labour-intensive. This has been going on for a millenia, and there is no tipping-point or transition point, as it is a very smooth curve. Yes, it can be disruptive for small pockets of workers who become no longer required - there are no more pools of typists - but at the macro level the transition is relatively smooth.
>> As human needs and wants are essentially unlimited (most of us want to go to the moon if it was possible) then, for each good that falls in price, demand will shift to other goods. As automation lowers the cost of each additional good, a person is able to consume more of that good or more additional goods.
I'm well aware of the Luddite Fallacy :)
While it is true that the economy has thus far been able to re-absorb a workforce displaced by automation, we should not take as a given this will be the case forever.
Certainly not based on the premise of "infinite human wants".
Frankly, I am not convinced our desires are in fact infinite. Our demands do adjust with opportunity, but only to a point. For instance, many people are satisfied after achieving a certain relative level of security and comfort.
However, more important than demand is how many workers are required to meet the supply. If innovations in automation continue at even a linear pace (and, frankly, we're probably talking quadratic), then we will eventually reach a point where staggeringly few actual workers are required for the production of a given good.
On a slightly less speculative note, a documented phenomenon of workplace automation in developed nations in recent years is the increase in income & labor polarization (or, inequality) [1]. Essentially, while total employment is somewhat maintained, skill (and, to a large extent) income become polarized at the ends.
From the MIT study [1] :
In net, employment changes in the U.S. during this
period were strongly U-shaped in skill level, with
relative employment declines in the middle of the
distribution and relative gains at the tails
...
Technological progress in our model takes the form of an
ongoing decline in the cost of computerizing routine
tasks, which can be performed both by computer capital
and low skill (‘non-college’) workers in the production
of goods. The adoption of computers substitutes for low
skill workers performing routine tasks–such as
bookkeeping, clerical work, and repetitive production
and monitoring activities–which are readily computerized
because they follow precise, well-defined procedures.
Importantly, occupations intensive in these tasks are
most commonplace in the middle of the occupational skill
and wage distribution
The same paper does mention that some low skilled workers are able to shift (and even see some relative wages rise) towards service economy jobs. However, that certainly doesn't change the macro picture.
Lastly, in the near-mid term the greatest challenge is most likely not the absolute out-and-out displacement of work, but rather that displacement vastly outpaces the ability of the economy to re-generate employment.
>> This has been going on for a millenia, and there is no tipping-point or transition point, as it is a very smooth curve.
A very smooth J-curve perhaps. Implying that historical trends over the past millenia are a guaranteed predictor of future events is a highly dubious claim. We are living in a relatively unprecedented age of advancement and growth by just about every possible measure, and it's hardly a given that what has held true in the past (e.g. "Luddite's fallacy") will always hold true.
1) Income inequality isn't something that worries me personally, as long as all income levels are rising in quality of life. It's absolute, not relative poverty that concerns me - definitely it's fashionable to hate on billionaires at the moment and I understand that, but don't subscribe to it. It's true that the inventor/owner/beneficiary of newly-automated industries accrues a large amount of wealth, but generally this wealth is either put back through into new ventures through investment, higher purchases or even philanthropy. This is self-evident in Silicon Valley, which has been operating a virtuous cycle of the beneficiaries of breakthrough technologies both spending it on themselves, re-investing in new businesses and giving it away to charities.
2) I don't really put any credence in Malthusian scenarios where the long-term ability of humans to improve their lives suffers a sudden and irreversible decline, so I can't agree on that type of point. The reason I don't put any credence in these is because they've always been popular, but never have been true. Of course, there is the possibility that someday automation completely eliminates all workers leading to a destitute class, or overpopulation overtaxes the food supply, but all evidence points to supreme adaptability of people to overcome these problems, so on the balance of probabilities I take it as a given that the same progress will continue. Optimism, arrogance or idiocy - people would accuse this view of all three, depending on their viewpoint.
3) It often gets missed that when automation occurs, even the people who lose their jobs often get access to the product of that automation at a cheaper price than before, and in the long run are better off once re-employment is found. The classic case is the buggy whip maker, who, despite losing their livelihood, is eventually able to afford the Model T that put them out of business.
>> 1) Income inequality isn't something that worries me personally, as long as all income levels are rising in quality of life.
We disagree, in that relative inequality is IMHO a concern. The consequences of high societal inequality are reasonably well documented. Negative effects of high inequality include but are not limited to higher rates of obesity, incarceration & drug use, and lower rates of life expectancy, social mobility and educational performance.[1][4]
In addition to affecting levels of trust and civic
engagement, inequality in society has also shown to be
highly correlated with crime rates. Most studies looking
into the relationship between crime and inequality have
concentrated on homicides—since homicides are almost
identically defined across all nations and
jurisdictions. There have been over fifty studies
showing tendencies for violence to be more common in
societies where income differences are larger.[1][3]
Furthermore, lower levels if inequality are correlated to an increase in sustained periods of economic growth, both among developing as well as developed nations [2].
>> 2)Of course, there is the possibility that someday automation completely eliminates all workers leading to a destitute class, or overpopulation overtaxes the food supply, but all evidence points to supreme adaptability of people to overcome these problems, so on the balance of probabilities I take it as a given that the same progress will continue. Optimism, arrogance or idiocy - people would accuse this view of all three, depending on their viewpoint.
Reasonable people can agree to disagree on this point.
>>3) It often gets missed that when automation occurs, even the people who lose their jobs often get access to the product of that automation at a cheaper price than before, and in the long run are better off once re-employment is found. The classic case is the buggy whip maker, who, despite losing their livelihood, is eventually able to afford the Model T that put them out of business.
You will find no argument from me that the economy has thus far been able to re-allocate labor assets reasonably efficiently. The key to the above is not the availability of new goods (the Model T), but the ability of the laborer (buggy maker) to secure re-employment having been made obsolete. You mention it as a given, however this is not necessarily the case.
Since this ultimately ties back to point #2 above, we can agree to disagree. I personally view current trends as being volatile enough to make direct comparisons with the past highly unreliable as markers for future prediction.
It takes considerably more than 1% of the population to create the basic essentials. I think you dramatically underestimate the (non-automated) work required to make the food you eat. Farming, transportation, retail... automation hasn't reached as stage where we can just remove people from these equations.
The only thing I can think of here is that for all that we think of startups as being largely high-tech things, in reality a huge number of them are in the construction industry, in one way or another. In a word, subcontractors. And no one’s starting new granite-countertop installation companies right now. But still, startups are a decent proxy for the dynamism of an economy. And these charts don’t bode at all well, on that front.
Was going to say the same thing. The Small Business Administration (SBA)tracks a number of these 'new small businesses' which are job creation engines. Construction companies and restaurants generally lead the pack in their stats. Others have pointed out a large correlation between these companies forming and the availability of credit. Generally there is some level of capital cost to start and without functioning credit markets those businesses don't start.
Note that this article uses the term startup for any small company under one year old.
Also the underlying paper is pretty weak. The first thing the institute should have done is look at the breakdown of new companies by industry/location and see how that's change. Without doing that the claims blaming "outsourcing" and "occupational licensing" are pretty unscientific.
Yeah, the underlying paper is by the Hudson Institute, which is a right-wing think tank. Any place with a political axe to grind will bend facts to suit their hypothesis.
In any case, Felix Salmon makes this statement which struck me as odd:
> Intuitively, if people can’t find work for an existing company, they should be more likely, not less likely, to go out and found a new company themselves, instead.
It's intuitive if you assume that people are homogeneous and it is only circumstance that affects their behavior. I suspect that people who found companies that ever actually hire a significant number of employees are unlikely to have a hard time finding work.
My guess is that he means "intuitive" in the sense that if you can't find a job that already exists, your only alternatives are either creating a new one for yourself or being out of work (and suffering economic deprivation) indefinitely.
In reality, though, this is not as intuitive a leap for people to make as he thinks. If there's no jobs available at existing companies today, that doesn't mean that there won't be some tomorrow; and starting a new business involves navigating a big thicket of complicated issues most people have no experience dealing with, like forms of legal organization, raising capital, state and local regulatory compliance, taxes and accounting, insurance, etc.
Social factors are also important: if everyone around you makes a living as an employee, the idea that you can start your own business might never even really occur to you, because you have no role models for that kind of behavior. If you go ahead and do it anyway, you risk looking like the odd man out in your social group -- constantly having to explain your decision to people who don't really get it. And of course there's the non-trivial risk of failure, which potentially exposes you to scorn ("I told you opening that shop was a dumb idea, but you wouldn't listen," says your mother-in-law).
Given the choice between checking the job listings again tomorrow and taking on a radical change in lifestyle that requires learning a whole bunch of new skills, it's understandable that just sticking to the job listings as long as they can is the more appealing choice for lots of people.
So it takes less people than ever to start a company, and that's supposed to be a bad thing? They could have easily framed it as "its cheaper than ever to operate a start-up".
A more interesting angle would be to compare the total number of people employed in start-ups over the years, as a percentage of the labor force.
I would have thought this outcome logical and heartening - yet journos have a history of baby/bath-water syndrome.
If GDP is increasing (just, tick), large corporations are steady (fair assumption) then productivity increases are due to SMEs increasing productivity (ie. capital/labour ratio).
This assumed equation is qualified in commentary around VC fund size and investments - "it's the easiest and cheapest it has ever been to start a company."
This doesn't mean more start-ups, but if it were less, means less full-time equivalents for young companies.
Think SAAS, lean and cloud computing. This along with a new attitude to risk amongst investors post-GFC (no large bets), means this data makes sense yet they've got the story completely backwards.
Think about it, you are creating work that someone has to do so they can get paid. If that's the goal, why don't we just pay people without having to go through the hassle of creating job?
Heck, we have so much machinery and automation that feeding the population is no longer a problem, shelter might be slightly trickier, but in a simplistic view, if it takes 1% of the population to create the basic essentials(food,shelter) for everyone, why can't we just give those to citizens and let them do things they may actually enjoy?