Work and the Transition to a Solar Future: A Perspective

Societal change is an unavoidable constant.  The totality of humans, other species, and physical earth systems constitute a single economy (the Inclusive World Economy) that is continuously evolving.  This global process of change is driven by the constant flow of energy from the sun.  Energy must do what it does: change the materials it interacts with and change the forms in which it presents itself.  Materials must do what they do: interact with the flows of energy, be changed, and facilitate the transformation of energy forms into different energy forms. As part of this enormous configuration of processes I call the Inclusive World Economy, the world of work must continuously become different and we must become different in dynamic association with this process — but not necessarily in the ways or at the speed we expect or want.

We humans are among the vast array of material instruments through which the flow of solar energy drives change.  Work is the primary way in which we are instruments of change.  In the last several centuries we have vastly expanded and continue to expand the human role in the processes of change in the Inclusive World Economy.  We did this by borrowing solar energy from the past (stored as fossil fuels) and adding it to the flow of solar energy that daily fuels earth’s myriad systems.[1] This dramatic daily increase in the flow of energy through the Inclusive World Economy accelerated and continues to accelerate the global processes of societal and earth systems change, has changed and continues to change the way societal and earth systems change takes place, and has transformed and continues to transform us and almost everything about our planet.

We already know that we can’t keep increasing the use of fossil fuels to augment the daily flow of solar energy.  We have to dramatically limit our borrowing from past solar energy income.  More unsettling is the possibility that we must learn to share the budget of current solar energy flow with other species and with various earth system processes – such as cleansing water through solar powered processes – to a much greater extent than we now think.  We just do not know how much solar energy we can divert from other species and processes in the Inclusive World Economy without generating a new round of system level changes that are both massive and destructive to human wellbeing.

In a large, complex, and dynamic system, system level change can remain evolutionary even while subsystems are going through deep and far reaching change and components are being created and destroyed at a rapid pace.  This is what is now happening in the Inclusive World Economy.  Species are being destroyed; whole communities of people are losing their ways of life; institutions that have been central to our wellbeing are losing there effectiveness and new institutional arrangements are popping up; planetary threats that we have never encountered before have emerged.  The effects of climate change, species loss, limits to vital resources like fresh water and arable land, and conflicts over these things are multiplying and coming faster and faster.

Not surprisingly, the world’s institutional arrangements, which we took for granted only a few decades ago, are becoming dysfunctional in various ways and being subjected to mounting attacks from various quarters.  This is happening to the world of work, where big changes are under way and conflicts over these changes are growing.  The pay and benefits associated with high end jobs are disappearing; protections against harmful work environments are being weakened; more and more jobs involve the work of repairing the damages inflicted by climate change, wars, and illegal business operations.  The world’s stock of wealth (including its people) is growing older, forcing us to devote much more of our work activity to fighting the ordinary ravages of time.

Everything in the Inclusive World Economy is connected, so this is a very dynamic situation.  No one can escape this global upheaval, so everyone is or will be forced to respond to and manage the specific forms in which these massive and life-altering global crises visit us.  As we take actions to respond, every other part of the Inclusive World Economy will change in response to our actions.   Ironically, as we do more to respond to the crises by exerting more technological control over other species and earth systems rather than adapting our own activities to the laws of the universe as they operate in the Inclusive World Economy, the more we accelerate the intensification of the crises.  Unwittingly and carelessly, we have pushed the Inclusive World Economy into a new and dangerous era of change.

In this increasingly hostile global environment, many of us are already struggling with life-altering consequences of these global crises.  Where this is happening, working people are experimenting with old and new ways of making a living and old and new ways of protecting their work opportunities. They have no choice.  But, some of these efforts only work for the short term because they propagate effects through the dynamic processes at work in the Inclusive World Economy to intensify crises and create new ones.

The future of work is uncertain, but at the moment bad outcomes look more likely than good outcomes.  Rising support for authoritarian governments that divide the world’s workers into categories and help one category by taking from the others is accelerating the destruction of the very institutions we need to respond to global crises effectively.  Much more importantly, though, the world’s leaders continue to strongly embrace the idea that the economic growth “miracle” of the last two centuries has no end in sight.  If only we make the right policy choices,  they continue to claim, the material riches of the world can continue to grow, everyone can enjoy a share of those riches, and the crises will wither away like so many storm clouds.

From the perspective of the Inclusive World Economy, the end of the material growth miracle is right in front of us.  The era of fossil fuel energy is coming to an end, the world’s material riches are beginning to diminish, and the world of work is changing quickly.  A shift to solar energy, no matter how successful and complete, will not sustain the material wealth miracle created by massive fossil fuel energy flows.  The only choice before us is how we make the shift to a world of less.  For now, a democratic and equitable shift seems very out of reach, but an authoritarian and inhumane transition is not inevitable.  An inclusive perspective, attention to the limits of a solar future, and hard and careful political work can move the world in the direction of a much more desirable future than the one now looming darkly on the horizon.


[1] In economics we borrow from future income to augment current income.  In the case of energy, however, we can borrow from past solar energy income.

Tax Cuts and American Jobs: Where will the Corporations Put Their Tax Savings?

SOURCE ITEMS

Imagine all enterprise functions automated by software and performed through a single point of access, which happens to be a virtual agent with cognitive capabilities. You can stop imagining and start thinking about the repercussions, because this is much closer than you may think.

I have not met a single CEO, from Deutsche Bank to JP Morgan, who said to me: ‘ok, this will increase our productivity by a huge amount, but it’s going to have social impact — wait, let’s think about it’.

George Anadiotis, Who’s automating the enterprise? Meet Amelia and the future of work, ZDNet, November 8, 2017.  Accessed November 8, 2017.

COMMENTS

In commenting on the proposed tax cuts for businesses in the U.S., numerous business analysts have pointed out that many global corporations have lots of cash on hand (much of it off shore) and that borrowing costs are very low.  If there were investment opportunities in the U.S. that promised a decent return, those corporations would be using that cash and borrowing capital.

Profits have been rising largely via cost cutting and swallowing up rivals rather than through the growing incomes of customers and clients.  Can workers in the U.S. really expect U.S. corporations to change investment strategies solely because their cash holdings overflow even more?

Even if the tax cuts went to U.S. consumers, the impact on investment strategies would be minimal – unless Trump succeeds in creating a U.S. market protected from imported consumer goods.  Tax cuts and automation are not the private domain of U.S. economic policy; Germany and China and all the other players can be expected to respond with their own investment incentives, so increased U.S. consumer spending would almost certainly distribute new investment across the world economy, resulting in more automation, more global displacement of working people, more profits, more wealth inequality, and more damage to the natural environment.

It is worth noting one more thing from the article cited above.  Business operations can now be automated very quickly, much more quickly than underfunded retraining programs can retrain workers and return them to work.  This mismatch between the speed of business innovation and the speed of government responses to worker displacement and income losses will only get worse.

Hurricane Harvey: Good News for Jobs; Bad News for Wealth

SOURCES

Harvey to be costliest natural disaster in U.S. history, with an estimated cost of $160 billion

USAToday Headline, August 30, 2017.

COMMENTS

The massive destruction of property caused by hurricane Harvey will certainly increase demand for goods and services – for building materials, machinery, and appliances for countless construction projects; for health care services and disaster related government services; and for countless personal items that have been lost.  Even though the disruption of Gulf Coast businesses and industries has idled workers in that area, the longer term impact on job growth will be large and positive.  The U.S. might finally see wage growth and more people coming back into the labor force.

Yet, there is a catch.  Massive destruction like we have seen with hurricanes Katrina, Sandy, and Harvey reduces the total wealth in the U.S.  On average, the quality of life in the U.S. declines.  That means that most if not all of the added jobs will only only contribute to replacing lost wealth, not adding to the total stock of wealth.  (It is also worth adding that many of the goods that go into restoring the lost wealth will be imported, so some disaster induced job growth will be exported to low wage parts of the world.)

The bigger point is that we have to see Harvey’s impact on job growth as part of an epochal change in  job growth for the U.S. and for the world economy.  Three forces are coming together to accelerate the destruction of existing wealth in the world economy: climate change, which is producing more extreme weather events and putting negative pressures on the world’s agricultural industries; increasing civil strife and wars, which are destroying massive amounts of existing wealth in some places and forcing up the costs of protecting existing wealth everywhere on the planet; and the aging of the massive amount of wealth items produced and put in place over the course of the 20th century, which is accelerating the rates at which those items of existing wealth must be repaired and replaced.  These forces are transforming global employment.

In these historical circumstances, there will be plenty of jobs for the world’s people, but they will all be devoted to protecting existing wealth (military and policing forces, home security services, property insurance services, etc.) and to replacing wealth that is being lost.  Plenty of jobs, but a very big social justice question is emerging in this era of no net wealth growth: how do we fairly allocate jobs and income when trickle down wealth growth has come to an end?

The Trump Administration’s Apprenticeship Strategy Leads to a Dead End

The idea that apprenticeship programs, especially for industries that hire people with skills in science, technology, engineering, and math (STEM skills), is widely accepted and promoted, so the Trump proposal is not out of the mainstream of thinking about barriers to employment and wage growth.  However, expecting much of an impact on employment and wage growth from the Trump administration’s turn of attention to apprenticeship programs will only hand you disappointment.

Over the last several decades, American business and government support for workforce training has declined dramatically, as shown by declining funding levels.

At a time when employers are struggling to find the skilled workers they need to fill available jobs, funding to train workers has dropped dramatically. Since just 2010, federal education and training programs have been cut by more than $1 billion.

Federal funding webpage, National Skills Coalition.  Accessed June 15, 2017.

The incidence of training in the previous 12 months fell roughly 28 percent overall during the period between 2001 and 2009. The results show that the decline in employer-paid training was wide-spread, affecting most industries, occupations, and demographic groups.

Jeff Waddoups, Did Employers in the United States Back Away from Skills Training during the Early 2000s? Seminar Invitation, Center for Work, Organization, and Wellbeing, Griffith University.  Accessed June 15, 2017.

The Trump administration’s proposal does not restore former levels of funding, much less move America to a new level of support for apprenticeship programs.  The reason is in plain sight, but studiously “undiscovered” by political and business leaders: American businesses are no longer dependent on a skilled American workforce; dozens of high and middle affluence nations are training skilled workers who then seek work through globally organized recruiting institutions, and then either migrate across national boundaries to workplaces or work across national boundaries without physically moving.  In most cases, American businesses can offer these globally available skilled workers more of what they want than can businesses in most other nations, so American businesses generally get the workers they really need.

In addition to sourcing skilled workers from a rapidly growing global pool of skilled workers, American businesses are turning to a rapidly growing supply of robots that are becoming increasing skilled with each passing month and decreasingly costly to own.  Robots may not yet be able to take over all skill intensive activities of workers, but competent management teams can (and do) orchestrate teams of human workers and robots so as to hold human staffing steady or even reduce it while still increasing output.

These are the stubborn 21st century realities that no feasible set of U.S. policies can undo or overcome.  Despite the widely held belief to the contrary, we are actually living in a world economy weighed down by an oversupply of skilled labor.  Fortunately, this fact becomes more apparent with every passing day, but, unfortunately, for a very disturbing reason.  As skilled workers around the world are pushed out into the cold because of oversupply with no employment prospects that match the expectations they were told to have, more and more are turning their talents to cyber crime, to designing murderous weapons on an ad hoc basis, and to building terrorist organizations.

A Background Note

The use of apprenticeships and recognizing the value in them goes back thousands of years.  More relevantly, U.S. states have long recognized the value of apprenticeship programs and supported and promoted them through legislation; the federal government has done so since 1937.

Since time immemorial, people have been transferring skills from one generation to another in some form of apprenticeship. Four thousand years ago, the Babylonian Code of Hammurabi provided that artisans teach their crafts to youth.

History of Apprenticeship, Washington State Department of Industries.  Accessed June 15, 2017.

Since 1937, the Bureau of Apprenticeship and Training has worked closely with employer and labor groups, vocational schools, state apprenticeship agencies, and others concerned with apprenticeship programs in U.S. industry. It has field representatives in the 50 States.

History of Apprenticeship, Washington State Department of Industries.  Accessed June 15, 2017.

The point, of course, is that there is nothing new and noteworthy in the Trump administration’s apprenticeship proposal.  They are just trotting out old ideas that seem new because they have been pushed aside long enough for many American’s to think they are seeing something new and untried.

My Book on the Future of Work is now Available for Your Enjoyment

The Future of Work in the Inclusive World Economy is posted to my website.  Click this link to view and print the book in PDF format: https://iweworkfutures.org/book-download/.

The timing for posting my book is not bad.  Gallup just published a major study of the slowdown in economic growth in the U.S., “U.S. Economy: No Recovery”,  and Robert J. Gordon’s book, The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War, has been getting lots of attention.  Yet, Donald Trump is vowing to buck the U.S. economic growth slowdown and a lot of economists will try to help him do it.  Elsewhere in the world, new leaders are making the same promises.  We have not had such a real world battle of economic policy ideas in a very long time.

Name Change and Book Coming Soon

The website and blog, U.S. Jobs Going Down, will be changed to IWE Work Futures in the next day or two.  This change is to reflect the shift to a more comprehensive perspective on changes in the world of work I refer to as the Inclusive World Economy.

At the time of the name change, the first draft of my new book, The Future of Work in the Inclusive World Economy, will be posted as a PDF file.  You will be able to view and print it for your own use. 

Jim

Paradigm Premises and Insights into Stagnating Global Economic Growth

SOURCE ITEMS

Why does political instability afflict Europe and the United States? The answer is that just as the great transformation of the world economy between 1850 and 1890 generated political instability, so too does the globalization of the present era. In addition, the second great transformation of the world economy is larger than the first, and thus, not surprisingly, generates greater churn. … Those countries able to keep unemployment and inequality within bounds will be more stable. The greater the levels of inequality and unemployment, the greater the political instability and the smaller the chance of achieving stable economic growth.

David W. Brady, Globalization and Political Instability, The American Interest, March 8 2016. Accessed March 24, 2016.

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Political instability reduces the likelihood of defining and implementing a reasonably comprehensive, coherent, and sustained economic-policy agenda. The resulting persistence of low growth, high unemployment, and rising inequality fuels continued political instability and fragmentation, which further undermines officials’ capacity to implement effective economic policies.

Michael Spence and David Brady, Economics in a Time of Political Instability, Project Syndicate, March 23, 2016. Accessed March 24, 2016.

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We tend to focus on the problem of the moment — the subprime crisis, the euro crisis, the China slowdown, the oil bust. But surely these events are connected. What threads link them? I’ve been collecting possible story lines for a while now. … Put these all together, and what do you get? A Great Muddle, perhaps. Some stories overlap. At least two of them contradict each other. They don’t all add up to any kind of consistent narrative.

Justin Fox, Eight Story Lines Explain the Global Economic Crisis, BloombergView, March 10, 2016, Accessed March 24, 2016.

COMMENTS

Statements about what can be done and should be done in a particular arena of human activity rest on foundation premises about how that part of our world works. These premises establish a paradigm for gathering and interpreting data about the world. They pull certain things into view and push other things out of view.

Professor Brady says we are in an era of transformation in the world economy.   Everyone knows that things are changing rapidly and in big ways and Brady is far from alone in concluding that a transformation is underway. This is an important development because the term transformation connotes change that reaches past surface phenomena, change that runs deep into the machinery of a system.

Such deep-running change often exposes weaknesses in a paradigm that worked well in the past. This is the case for theories of economic growth.

The field of economics is in turmoil because of the unpredicted crisis of 2008 and the persisting economic growth stagnation. In the search for answers, the paradigmatic premise that humans act rationally is now widely questioned. But, other premises should be getting more attention.

One premise worth questioning is that systemic continuity is a given. This premise is embraced across the fields of economics and politics. It is reflected in two assertions that are widely made and widely accepted.

The first is that this time is really not different. Although a few economists have argued that the financial crisis of 2008 is unusual, the dominant view is that it is not fundamentally different from numerous other financial crises in the history of capitalism. Brady affirms this view by comparing the transformation of the world economy in our time to the transformation in the 19th century. He sees it as more destabilizing, but not fundamentally different. After the transformation has played itself out, life can return to what we call normal.

The second assertion is that government policy interventions can restore world economic growth. In the past, economic growth has stagnated and stalled, but in every case it was sooner or later restored. Now is no different. By adopting the appropriate economic policies, governments can restore economic growth to levels that restore full employment and steadily increase human wealth and well-being.

The concepts of transformation and systemic continuity do not sit together well. This is a telling juxtaposition to which economists should be giving more attention. Perhaps as I have been arguing in this blog, it isn’t bad policies that are limiting global economic growth; perhaps it is existential limits to economic growth that make all policy interventions fall short.

Perhaps economists, including Brady himself, should set aside the premise of continuity and explore all the implications of applying the concept of transformation to our current circumstances.