Skip to main content

Jobless Recovery or Jobless Future: A Reply to Jeff Jarvis

 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.


  1. Great post, Eric. Thanks for the mention.

    I think if workers could capture the full benefit of increased efficiency, things would work out great. But that would require 1) eliminating all forms of artificial scarcity and the rents on them so that all increases in efficiency were passed along in the form of lower prices, and 2) a reduction in the workweek so that available remainign work was evenly distributed.

  2. Kevin -

    I'm also concerned about the competing goals of inflating our way out of debt and capturing the deflation in terms of cost-of-living benefits.

    It's impossible to do both, but how do we get a whole economy to deleverage itself without imploding?

    Simply, deflation isn't bad if you don't owe anybody money.


Post a Comment

Popular posts from this blog

Crowdsourcing Curation: The Social Graph as Gatekeeper

I've written before about the compromise we tacitly agree to when amateurs take over the roles formerly held by professionsals. The Internet promotes this takeover by lowering the cost of production and transmission to near zero for nearly every user, for everything from words (blogs) to pictures (Flickr) to video (YouTube).

As Clay Shirky put it so well: As freedom to produce increases, average quality necessarily goes down. For example: Thanks to Flickr, we now have access to a mind-boggling array of beautiful pictures, but that's partly because we simply have access to a mind boggling array of pictures, period. Some of these, of course, are beautiful; but there are a lot more of Aunt Bettie's 43rd picture of a bundt cake than of an Annie Leibovitz Rolling Stone cover.

It is at this point that many people interject: "This is the problem with the internet! It's full of crap!" Many would argue that without professional producers, editors, publishers, and the …

Intellectual Property and Deflation of the Knowledge Economy

[Update: This accidentally became a series of posts on a theme.

Does Intellectual Property Law Foster Innovation?Where I question the efficacy of patent and copyright in a socially networked world.

Intellectual Property and the Deflation of the Knowledge Economy - (this post) Where I toy with the idea that the Knowledge Economy may not turn out to be much of an economy, especially when it comes to Intellectual Property

The Economic Reset Button- Where Jeff Jarvis asks Eric Schmidt whether or not this is a fundamental shift in the economic base

Innovative Deflation- Where I ask, "Is the knowledge economy ripe for growth, or is it the means by which traditional economies are shrunk?" ]

Friday night I was discussing the future of intellectual property law with some friends. My argument, in a nutshell:

Every business model relying on intellectual property law (patent and copyright) is heading for massive deflation in our lifetimes. We've seen it with the music industry and news…

COVID-19 and the Tools We Need to Re-open Wisely

There's a lot of graphs and stats that the news is throwing at people right now. So much so, that you can get information overload trying to make sense of the statistics that have meaning. To quote my old Econometrics professor, "There are three types of lies: 'Lies', 'Damned Lies', and 'Statistics' ". I should also lead with the caveat that I'm an engineer and data nerd by trade, but I'm not an epidemiologist. I welcome feedback from those who have more experience than I do.The most important question we're trying to answer (at least here in Michigan), is "How are we doing?", and "When can we reopen our economy?". With respect to those questions, here's my take on the most important data, and some caveats about what these data are telling us.The four most cited data in news stories are:Total Number of CasesDaily New Cases.Total Number of DeathsDaily New DeathsThis post will talk about #1 and #2 above. I'll …