Crisis and Recovery Work: the Future of Jobs in the World Economy

 

SOURCE ITEMS

Pipes carrying Flint River water are opened; the Detroit supply is shut off. The switch was made as a cost-saving measure for the struggling, black-majority city. Soon after, residents begin to complain about the water’s color, taste and odor, and report rashes and concerns about bacteria. … Flint urges residents to stop drinking water after government epidemiologists validate Dr. Hanna-Attisha’s finding of high lead levels. Mr. Snyder orders the distribution of filters, the testing of water in schools, and the expansion of water and blood testing.

Jeremy C.F. Lin, Jean Rutter and Haeyoun Park, Events That Led to Flint’s Water Crisis., New York Times, January 21, 2016. Accessed January 22, 2016.

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Health care employment expanded by 475,000 in 2015, compared with a gain of 309,000 in 2014.Chart-Job Growth by Sector 2015

 

Source: Current Employment Statistics Highlights, December 2015, Bureau of Labor Statistics, January 8, 2016. Accessed January 22, 2016.

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Air, sea and land transport networks continue to expand in reach, speed of travel and volume of passengers and goods carried. Pathogens and their vectors can now move further, faster and in greater numbers than ever before. Three important consequences of global transport network expansion are infectious disease pandemics, vector invasion events and vector-borne pathogen importation.

Tatem, A.J., D.J. Rogers, and S.I. Hay. Global Transport Networks and Infectious Disease Spread. Advances in parasitology 62 (2006): 293–343. PMC. Web. 22 Jan. 2016.

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Thus, the net gain in jobs in New Jersey over the four year period would be 270,000 (281,000 construction-related jobs less 11,000 Travel and Tourism-related jobs). Of the 281,000 construction-related jobs, about 218,000 will be direct construction jobs. …

If all of this money is spent on reconstruction, the influx of new spending will generate $53.1 billion in new total output in those 13 counties and about 352,000 new jobs. About 299,000 jobs will be construction jobs.

Economic Impact of Hurricane Sandy, Economics and Statistics Administration, U.S. Department of Commerce, September 2013

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Future warming will bring a more volatile, dangerous world, even if the world manages to keep temperature rises within a 2C limit to which governments have committed, Fischer’s research found. On average, any given place on Earth will experience 60% more extreme rain events and 27 extremely hot days.

Karl Mathiesen, Extreme weather already on increase due to climate change, study finds, The Guardian, U.S. Edition, April 27, 2015.

COMMENTS

Safe water is one of those items of wealth that comes to us as both natural wealth and fabricated wealth. We sip water purified by nature from natural springs and we sip water purified by factories from our water taps.

The water crisis in Flint Michigan illustrates the extent to which we humans have damaged the natural production of many forms of wealth and been forced to replace natural wealth with fabricated wealth. Therein lies the story of job growth in the 21st century.

During the expansive years of capitalism (roughly the 16th century through the first half of the 20th century), we increasingly used fossil fuels to transform natural wealth into fabricated wealth. We had our eyes on the growing stock of fabricated wealth and failed to see the costs in natural wealth. Now we are beginning to see that there is no free lunch. The notion that humans figured out how to add to the total stock of wealth on the planet (the notion of creating fabricated wealth at no cost to natural wealth) has turned out to be an accounting sleight of hand.

We have never been able to increase net total wealth (natural wealth + fabricated wealth). By defining nations as economies, we externalized all costs to other nations and to nature and counted only what we wanted to: fabricated wealth. Our riches seemed to grow without end. Now we can no longer expand the stock of fabricated wealth fast enough to stay ahead of normal wear and tear and a rising tide of social, geopolitical, and ecological disasters.

The work we want to do is steadily being replaced by the work we must do. Steadily, our working hands and minds are being turned to the task of fixing damage inflicted on our fabricated wealth by domestic conflicts, wars, climate events, and just plain old wear and tear; and to the task of fixing the damages we have inflicted and continue to inflict on natural wealth.

The rate at which the world’s fabricated and natural wealth are being damaged is growing fast, so more and more our jobs will be in industries that repair our bodies (and replace body parts), that repair and replace our essential fabricated items of wealth (e.g., homes, tools, transportation equipment, educational facilities, health care technologies) and that repair the planetary systems we have damaged. The proportion of jobs that produce goods and services that can be counted as net new fabricated wealth will go down.

Into the 20th century, job growth was associated with expanding the production of net new fabricated wealth. That era is over. Job growth is now becoming associated with survival goals in place of greater affluence goals.

U.S. Jobs Report for October Looks Good, But Economic Forces Are Still Aligned to Degrade Employment And Wages

SOURCE ITEMS

Making matters worse, the return on investment in education is falling, because the economy is growing slowly and changing rapidly, making it difficult for some graduates to secure employment that takes advantage of their knowledge and skills. Universities are often slow to adapt their curricula to the economy’s needs, while new technologies and business models are exacerbating the winner-take-all phenomenon.

Mohamed A. El-Erian, America’s Education Bubble, Project Syndicate, November 9 2015.  Accessed November 9, 2015.

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Chart-Imports from Emerging Markets, 2015

9/11/2015-A further sharp downturn in emerging market economies and world trade has weakened global growth to around 2.9% this year – well below the long-run average – and is a source of uncertainty for near-term prospects, says the OECD.

 Emerging market slowdown and drop in trade clouding global outlook, Organization for Economic Cooperation and Development.  Accessed November 9, 2015.

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The demonstration is significant for two reasons. First, the tasks the robot is being asked to perform aren’t rigidly defined. Instead the robot needs to identify and adapt to a complex situation involving several variables. … But that technology migration is underway, and it will change the way products are manufactured and delivered. … On the robotics front, that means we’re going to see more flexible systems that can switch between tasks on the fly.

Greg Nichols, Why a fruit sorting robot will disrupt industrial automation Adaptable, smart, and cheap. Welcome to the future of automation, ZDNet, November 7, 2015. Accessed November 9, 2015.

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Without human advisers — people are the biggest expense at any securities firm — the new ventures can charge annual fees of 0.5 percent of assets under management or less. That undercuts full-service brokers, which typically charge annual fees of at least 1 percent.

Hugh Son, A Money-Managing Robot Is About to Join BofA’s Thundering Herd, Bloomberg Business, November 6, 2015. Accessed November 9, 2015.

COMMENTS

The old economic narrative that each nation has it’s economic destiny in its own hands is dead. The old economic narrative that a rising tide lifts all boats is dead. The old economic narrative that new jobs in new industries are created faster than automation displaces workers in existing industries is also dead. What this means is that the institutional and policy logics of job creation that served Americans and other western peoples well though the middle of the 20th century are dead.

We must replace those outdated logics with new ones that fit the realities of an Inclusive World Economy in which all destinies are tied together and rights to income can no longer be tied almost exclusively to having a wealth producing job.

Sustainability and the Inevitable Return of Physical Activity and Physical Exertion to Jobs in the Affluent Regions of the World

SOURCE ITEMS

Professional, managerial, clerical, sales, and service workers (except private household service workers) grew from one-quarter to three-quarters of total employment between 1910 and 2000; laborers (except mine laborers), private household service workers, and farmers lost the most jobs over the period

Ian D. Wyatt and Daniel E. Hecker, Occupational changes during the 20th century, Monthly Labor Review, Bureau of Labor Statistics, March 2006. Accessed October 17, 2015.

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The amount of time that most of us spend sitting has increased substantially in recent decades, especially as computers and deskbound activities have come to dominate the workplace. According to one telling recent study, the average American sits for at least eight hours a day.

Gretchen Reynolds, The Marathon Runner as Couch Potato, New York Times, October 30, 2013. Accessed October 17, 2015.

COMMENTS

One of the well known trends in the evolution of jobs in the affluent parts of the world during the last few centuries has been a decrease in physical activity and physical exertion. Sedentary office jobs abound and many jobs in industries traditionally associated with hard physical work are not physically demanding (e.g., ditches and trenches are no longer dug by sweating men with shovels and wheelbarrows but by men sitting on padded seats, and sometimes in air conditioned cabs, operating earth moving machines).

This trend has been powered by the massive and still growing use of fossil fuels and small amounts of nuclear fuels to augment and displace the use of human caloric energy in the production and distribution of goods and services. Sustainable growth optimists believe this trend is sustainable, even as fossil fuels are phased out of the world economy. They believe humans can continue to increase energy use to spread affluent lifestyles (and less physically demanding work) to more and more of the world’s people as long as we abandon fossil fuels. However, this sustainability logic is flawed.

Sustainability optimists get their optimism about holding onto the affluent lifestyle by continuing to divide the earth into the human world economy and the rest of nature, as economists have traditionally done. This keeps open the option of attributing the most threatening environmental problems to the types of energy we use, not to the massive amount of energy we use. This option disappears when we see the human world economy and the rest of the earth as a single Inclusive World Economy. Not only can the types of energy humans use endanger our wellbeing, the amounts of energy, regardless of type, can also endanger us.

The Inclusive World Economy concept counts all the material items on earth and the totality of energy flows from stored solar energy sources (fossil fuels), from geothermal sources, from nuclear sources, from gravitational sources (ocean tides) and from current solar energy flows (wind, photovoltaic, flowing water) as a single system that produces and distributes a vast array of goods and services we humans use and consume. This is a sum total of wealth, a wealth constant, if you will.[1]

Humans can neither add to nor subtract from this totality; we can only speed up or slow down the rate at which the materials of the earth are processed from one form into another form (e.g., clay into pottery). We can change the transformation rate by mobilizing and demobilizing flows of energy (e.g., by using more or less fossil and nuclear fuels) and by diverting existing energy flows from natural processes to faster or slower paced human controlled processes.

In this Inclusive World Economy view, humans cannot solve environmental degradation problems by only changing our energy sources. The use of each energy source has its own inevitable, unintended, and destructive consequences, but so too does the volume of energy being used by humans. The wealth constant in the Inclusive World Economy requires that increasing the use of solar energy to fuel the human world will divert equivalent amounts of solar energy away from natural material transformation processes.  This must have unintended consequences, some of which will be detrimental to humans and other species of life.

Inevitably, covering vast expanses of desert with solar panels, populating thousands of square miles of farm land with wind turbines, and dotting miles of coastal waters with massive machinery to harness tidal energy will have multiple unintended consequences, not just the intended consequence of powering the human world. Those unintended consequences will propagate throughout the entire Inclusive World Economy, just as the unintended consequences of burning fossil fuels at a rapid pace have. The existential threat from fossil fuels may go away, but another form of existential threat will emerge to take its place.

A solar future is necessary and inevitable, but the Inclusive World Economy view precludes a solar future in which the caloric energy of billions of humans is not a very large part of the total amount of energy derived from solar sources to power the human world. Continuing to create jobs in which human energy plays less and less of a role in processes that transform materials from form to form will only continue to move us further into a world of existential threat and catastrophes. If we don’t stop ourselves, the rules of the universe that control the Inclusive World Economy will.

Some of the broader implications of this conclusion for the future of work are clear. Rebuilding the role of human energy in the production of goods and services will entail refitting our many workplaces with machines that are manually powered. For example, we will almost certainly decide to replace electric pencil sharpeners and staplers with manual types and stop using “always on” electrical equipment. But, such small changes will not go far enough.

To increase the share of human energy in the total energy flow into human purposes enough to sustain the viability of the planet for human habitation, we will have to invent new ways for human energy to power the human world. In the past we have put small generators on bicycles to convert human energy into electricity to power the lights on the bicycle. To create the human energy centered workplace of the future, thousands of innovations and thousands of changes in human work activity will be required.

Restoring the role of human energy in the human world economy will also require a slowdown in the overall rate of material transformations involved in the production of goods and services for human use and consumption. To accomplish this, quantity of output will have to give way to quality of output so product life cycles become much longer. Again, accomplishing this will entail vast changes in workplace environments and workplace practices.

The role of human energy in the human world economy is already increasing, although this change is largely invisible. The world’s governments are only able to monitor a portion of the world’s workplaces. This is the formal part of the human world economy. The informal part of the human world economy has been growing in recent years as formal jobs have disappeared. Jobs in the informal sector are generally more physically demanding, so this shift can be interpreted as an increase in human energy inputs into the production and distribution of goods in the human world economy.

Even in this formal part, work is becoming more physically demanding. In the U.S., this shows up as less equipment per worker – reducing costs by increasing the number of shared printers means more workers have to get up and walk to the printer to retrieve a print job. This is certainly a minor increase in physical activity, but it suggests a trend that will develop as U.S. employers work to reduce energy use both to cut costs and to meet environmental regulations.

Most of the world’s peoples and their leaders have accepted that the world must transition to using less fossil fuel to using more solar energy. We just haven’t realized that in the not so distant future even those who are middle class will have to put more physical effort into their jobs because a very big part of the flow of solar energy that powers the sustainable human world world economy will have to be human energy.

Notes

[1] For additional reading on the argument for conceptualizing the human world economy and the non-human natural world as a single economic entity, see my article, Replacing the Concept of Externalities to Analyze Constraints on Global Economic Growth and Move Toward a New Economic Paradigm, Cadmus, October 19, 2014, and the work of Jason W. Moore and his colleagues at their website, World-Ecology Network).

The Broken Capitalist World Economy and the Future of Good Jobs

SOURCE ITEMS

But things are changing. Longer-term shifts—such as declining middle-class jobs, a continued fallout from the global financial crisis, but also a shrinking global workforce—are shaping labor markets worldwide. Whereas the problem today seems to be a glut of workers, in coming years the global labor force will shrink. These shifts could constrain growth, but they should also help correct some of the current labor market imbalances that have prevented workers from sharing in productivity gains. The beneficiaries, however, will mainly be high-skilled workers. The prospects for lower-skilled workers are less hopeful, which is bad news not only for them, but for efforts to reduce inequality.

Ekkehard Ernst, The Shrinking Middle, Finance & Development, International Monetary Fund, March 2015, Vol. 52, No. 1. Accessed September 19, 2015.

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“It has become clear that we are really dealing with a different kind of economic recovery than anyone has experienced since World War II,” says Mr. Hammond, chief executive officer of Hammond Power Solutions Inc., a Guelph, Ont. company that makes electrical transformers for industrial clients around the world. … “This is far different from any recession I have seen.” … Seven years after Europe and the United States slipped into what would become the one of the deepest global recessions in history, and five and a half years since the North American economy returned to growth, the recovery remains a perplexing, inconsistent and frustratingly elusive work in progress.

David Parkinson, Richard Blackwell and Iain Marlow, The 7-year slump: Why the global economy can’t seem to get started. The Globe and Mail, January 23, 2015. Accessed September 19, 2015.

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Many have characterized the U.S. economy’s inability to grow robustly as an expected after- effect of a severe cyclical downturn. Such interpretation is well past its sell-by date. It’s time to recognize that globalization has brought with it issues that defy cyclical economic prescriptions.

Daniel Alpert, Why the US economy can’t seem to shake off the Great Recession, BusinessInsiDer.com, May 21, 2015.

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Climate change threatens to provoke a new ecological panic. So far, poor people in Africa and the Middle East have borne the brunt of the suffering. … Climate change has also brought uncertainties about food supply back to the center of great power politics. China today, like Germany before the war, is an industrial power incapable of feeding its population from its own territory, and is thus dependent on unpredictable international markets.

Timothy Snyder, The Next Genocide, New York Times, Sept. 12, 2015. Accessed September 19, 2015.

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Together with his team of designers and engineers, Dutch artist and innovator Daan Roosegaarde is working on a prototype of a Smog Free Tower, that would create a clean air zone outside. … This smog solver is meant to move to other major cities too. So everyone can get acquainted with it. This way, Roosegaarde wants to bring NGO’s, concerned citizens and designers together in smog-free bubbles, to work on healthy cities around the globe.

Daan Roosegaarde’s clean air zones, Rotterdam City Blog, July 28, 2015. Accessed September 19, 2015.

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The paper contends that we have already crossed four “planetary boundaries.” They are the extinction rate; deforestation; the level of carbon dioxide in the atmosphere; and the flow of nitrogen and phosphorous (used on land as fertilizer) into the ocean.

Joel Achenbach, Scientists: Human activity has pushed Earth beyond four of nine ‘planetary boundaries’, Washington Post, January 15, 2015. Accessed on August 27, 2015.

COMMENTS

An abundance of good jobs is one of the core features of societal prosperity and it is an article of faith for most of the peoples in affluent societies that capitalism is the engine of growing prosperity.

However, it is quite clear to almost everyone that global capitalism is malfunctioning. Economists who write for the media and journalists who cover economic matters routinely refer to the fact that the world economy has still not recovered from the financial traumas of 2008 and that global employment trends are not good one.

There is much more to the problems afflicting the world economy than a cyclical downturn and poor national policy choices. The world economy has entered an era of declining wealth accumulation that is irreversible. Without increasing prosperity, the world economy will not be able to generate the growing stock of good jobs for the world’s working people.

The few good jobs the world economy has to offer are found almost exclusively in the affluent cities and nations in the world economy. And even in those affluent areas very large proportions of workers are consigned to jobs that pay low wages and benefits, expose them to health risks, and offer no employment security.

The reason is straight forward: good jobs are expensive to create and maintain. Not only do good jobs garner premium wages and benefits, they also require high cost work environments (expensive machines, high volumes of consumable supplies, expenditures on training and workplace safety), and expensive public and private oversight and enforcement activities. Thus, for the world economy to continue to produce and maintain good jobs, the wealth of the world’s people must continue to grow. But, it can’t.  The world economy has hit a wealth production wall.

We typically use the word ‘wealth” to refer to human made goods and services, yet we know, at least intuitively, that such things as the oxygen rich air we breath and zones of moderate temperature that support agriculture are forms of wealth that nature produces. What we have yet to fully acknowledge is that these two worlds of wealth creation are inextricably interconnected.

The capitalist world economy is the human part of an inclusive world economy that includes nature’s wealth production processes. The human world economy is a massive economic machine that takes forms of wealth produced by nature and converts them into different forms of wealth – the goods and services that define affluent society. In so doing, the capitalist world economy extracts and uses flows of energy and stocks of living and non-living resources that nature would otherwise use in its own production processes.

As a totality, this inclusive world economy of humans and nature is a single economic system. The only real input is the energy from the sun (discounting the miniscule meteorite contributions to the mass of the earth). We can process one form of wealth (say soil and water) into another form of wealth (crops), but we cannot make net additions to the earth’s total store of wealth.

The point here is that the human part of the inclusive world economy grows at the expense of the natural part. Conversely, the natural part expands at the expense of the human part (in the forms of rust, rot, and natural disasters). Human economies have always used nature, just as all living things do, but the capitalist world economy is the first human economy to press against the fixed stock and regenerative limits of the entire earth. This is a crucial and overlooked reason the human world economy is trapped in dysfunction.

The capitalist world economy grew and thrived on an earth where yet another pristine forest, yet another stock of game fish, yet another unspoiled river, yet another abundance of fertile land, yet another source of cheap labor, was just an explorer and a military conquest away. It was an era in which yet another technological innovation would solve a problem and increase human wealth. That was the era in which some parts of the world became extraordinarily affluent and good jobs were created.

Fossil fueled industrialization was the driving force in that period. It provided the means for accelerating the diversion nature’s supply of energy and resources into human economic activities and it provided the means by which certain parts of Europe and North America incorporated the rest of the world into the world economy, primarily as suppliers of labor and resources and more often than not through economic and military coercion. Affluent European, North American, and allied nations became more affluent and good jobs became abundant and set the standard for the world’s people.

That limitless earth disappeared over the course of the 20th century. The era of global geopolitical economic incorporation of “foreign” lands and peoples has come to an end. It is no longer possible for human wealth to increase as it did in the past. Thus, it is no longer possible to add to the stock of good jobs in the world economy and maintain them all.

The scale of the human world economy is now so enormous that the costs for maintaining human wealth are demanding an increasing proportion of the productive capacity of the world economy.

First, the scale of damage done to nature’s wealth production by the human world economy has become enormous and keeps growing, so more and more of our human economic activities must be devoted to repairing the damages and compensating for the damages we can’t yet repair (industrial cleaning of air and water because nature’s regenerative capacity has been overwhelmed). Second, the massive stock of human wealth (including people – human capital) that we have accumulated over the last several centuries gets older every day and, as we well know, with age comes deterioration and death. A large and growing proportion of human economic activity must now be devoted to maintaining this large stock of wealth and to replacing those items of wealth that are lost to rust, rot, and irreparable damage.

As the world’s population continues to grow and the world’s rulers continue to invest in massive urban infrastructures, the energy and resource conflicts between the human and natural parts of the inclusive world economy will increase. Our technologies will not save us because they were and continue to be designed to divert evermore energy and resources from nature’s wealth production processes. Nature will prevail and force an irreversible decline in human wealth and a loss of good jobs as that happens.

The world’s leaders continue to talk about restoring global economic growth and moving more and more of the world’s people into good jobs, but the actual trends in both parts of the inclusive world economy expose this as empty rhetoric. The leaders of affluent nations have already begun to dismantle the stock of good jobs available to their peoples and most people in the poor areas of the world know they have almost no chance of ever working at a good job.

The kind of affluence and the configurations of good jobs the peoples of the west became comfortable with in the 20th century can no longer be offered to the rest of the world; nor can they be retained for the majority of people in the now affluent nations. We must invent a new definition of affluence and a new kind of good job for a new kind of world. We won’t do that until the world’s economists and policy leaders acknowledge that the world has hit the ceiling on net wealth growth and incorporate this knowledge into economic and policy theory.