suggests over on a Google+ post, that "We're not going to have a jobless recovery. We're going to have a jobless future. "
Back in 2009, he sent me and others off on this topic, so I thought it deserved a thorough response now that he's announced his intention to focus on the issue again. I wanted to reproduce my response here, but I encourage any readers to carry on the discussion over on his g+ post.
Here's my response:
Jeff -- you sent me down this rabbit hole back in 2009, and I haven't emerged since. I'm glad to see you've circled back around to it, because I think it's terribly important, and few people could focus attention on it like you can.
I take it as given that disruptive innovation, particularly at present, yeilds efficiency more than it yields growth. (Mike Masnick would probably kick me in the shins for saying this so plainly, as he did here).
In many ways, however, I think Masnick is correct. The post he was responding to was focussed merely on the *threat* side of the equation. We can't forget that the upside of this disruptive efficiency is that consumers reap the benefits of it in terms of lower cost-of-living.
So the real question becomes: can we reap the benefits at a rate that corresponds to the pain that transitioning the workforce is costing us?
As I said in the linked post above:
"[Disruptive efficiencies] cost jobs and are not likely to replace them. Too many of these jobs relied on the traditional inefficiencies of their business models--inefficiencies that have been *eliminated*, not just shifted to new markets. The closer the markets are to intellectual property, the faster they fall.
Lastly, all of these displaced professionals are going to go seeking work in still-viable markets, if they can attempt the transition at all. The labor supply will increase as both knowledge markets and traditional markets restructure to take advantage of new efficiencies, and that restructuring will include taking advantage of the aforementioned increase in labor supply. Hours will be cut. Wages will fall. So too will the cost of living fall as these efficiencies are passed on the consumer. *The balance between these two forces will be the key to determining how painful the transition is.*"
Again, is our current economic discomfort a temporary situation, caused by the difficulties in transitioning our workforce, or is it a more permanent restructuring? The same question may have been put to a farmer at the turn of the 20th century, or (closer to home for me) a factory worker in 1980's Detroit. Today, America produces more food than it did 100 years ago, and (contrary to commonly-held belief) manufactures more than it did 25 years ago. But much like you point out in your post, increased production (in those markets) does not equal increased employment when new efficiencies are introduced.
Consumers may reap the benefits of efficiency, but can it make up for the costs in terms of employment? Finding a meaningful measurement of those two rates of change, I think, are key to properly addressing this very important predicament.
Followup questions still to be framed and wrestled with:
1) Unintended consequences of deflation:
Assuming that deflation wouldn't be so terribly if we could capture the benefits of it (i.e. Would you take a 20% pay cut if bread, housing, music, movies, etc. were 20% cheaper?), what other unintended consequences would deflation hold (since public policy at present is trying desperately to use inflation to ease our debt burden)? You see, we've already agreed to past prices for these things (largely mortgages), but would be asked to pay them back in future deflated dollars. This is a huge problem, since we're all in debt up to our ears.
2) In a world of bits. not atoms (your term, which I love, Jeff), we're increasingly creating value for each other without exchanging money. Price can't always capture value. What happens to the supply-and-demand curve when supply is practically infinite? See my post on Scarcity, Abundance, and the Knowledge Economy.
Lastly, you may want to check out this excerpt from Kevin Carson's book as well. It's barking up the same tree. It also rightfully credits you with stirring up this conversation in the first place.