In Innovators We Trust
The number of manufacturing jobs in the United States and Canada is declining and one important reason why is growing productivity. This is often overlooked in the rush to blame shrinking manufacturing on outsourcing to the Third World. To be sure, the export of manufacturing jobs to low-wage countries has indeed played a part in hollowing out the North American manufacturing sector, but US manufacturing produces more today, with 40 percent fewer workers, than it did in 1979. That means that even if growing global competition for jobs hadn’t intensified, technological innovation would still have exerted downward pressure on manufacturing employment.
Growing productivity frees up labour. This can be either a boon or burden, depending on whether the labour is redeployed to producing new goods and services, or not. If it is, goods and services become more abundant. It’s even possible that manufacturing employment expands, as new products are developed, requiring new workers.
But what happens if freed up labour isn’t put back to work—that is, if there aren’t new products and services to absorb the surplus? The answer is persistently high levels of unemployment, and the ruin of the lives affected.
But all is well, according to economic historian Benjamin Friedman.
“When technology reduces the need for certain kinds of labor, we know that some inventive people will one day come along and find a way to use that freed-up labor making things that other people want to buy.” (1)
Except when it doesn’t happen. There’s no guarantee that some inventive person will show up one day with a plan to put the jobless to work. But even if it were inevitable that this would eventually happen, how long must we wait? Five years? Ten years? Whole generations? And how many lives are ruined in the interim?
Freidman’s prediction has something of a pie-in-the-sky character. Things might be tough now, but don’t worry. The messiah’s coming, and when he arrives he’ll whisk the jobless off into full employment heaven.
Maybe. Not counted among the elect will be those whose employment prospects have been compromised by years of forced idleness.
In the 19th century and through parts of the 20th Britain exported its surplus population to its Dominions and other parts of its empire. With no equivalent outlet today, the United States—with far and away the largest per capita prison population on the planet—warehouses its surplus population in a vast network of prisons.
It needn’t be like this. One of the possible—and promising—outcomes of growing productivity is reduced labour time. Rather than making more with 40 percent fewer workers, why not make more with the same number of workers, putting in 40% fewer hours? If more can be made with less, we should be able to consume more with less effort.
Or how about a plan to redeploy surplus labor to meet pressing human (rather than private profit-making) needs—like repairing crumbling infrastructure, building efficient public transportation, reducing classroom sizes, and developing green energy—rather than placing faith in the distant arrival of an inventive person whose innovative idea will siphon off some fraction of the burgeoning reserve army of labor?
None of this is impossible or unrealistic, though those who are sheltered from economic insecurity, underemployment and the omnipresent threat of joblessness—who are doing well by the present system—would have you believe a rational plan for deploying society’s productive resources and turning technology to our advantage rather than to our detriment is pure fantasy. But their motives in dismissing alternatives that benefit the majority of us—but not them—are plain.
Are we to entrust our future to faith in the eventual emergence of an innovative “job creator” to save us from the failures of capitalism? Or shall we reject the pie-in-the-sky of the well-to-do and take the future into our own hands?
1. David Leonhardt, “Race for president leaves income slump in shadows”, The New York Times, October 23, 2012