Predicting the Future

One of the problems of trying to predict the future is that the past, while it is some indication of future events, leaves a lot to be desired.  Let us look at job creation as an example.  How does one predict the future of the job market and what jobs will be needed in the future?  I think division of labor tell us a great deal about future jobs.  After all, it economies are essentially a zero sum game then moving from producing food to producing tools and other technological innovations gives us some idea about future jobs.  The technical innovations and inventions are used to reduce human labor or multiply muscle power, if you like.  A horse drawn plow can plow more square acreage than one drawn by oxen and reduce the amount of feed the animals need.  Certainly the idea that first originated in Egypt to use oxen to draw a plow, really just a long boom with a stick stuck in the end, meant that two oxen could replace a dozen or more men with adzes.  One horse or a team of horses could plow more acreage than a team of oxen.  And once we harnessed steam power while reducing the steam engine’s weight and size, then a steam powered plow could do more work that a team of horses.  Further improvement came with the internal combustion engine.  Add in GPS equipment and numerous other technological improvements and plowing a set amount of acreage became very inexpensive.  Of course this meant that the machinery became more costly.  One can pay upwards of half a million dollars for the very large diesel tractors with extreme large gang plows and GPS systems.  A wheat combine can cost upwards of a million dollars.  To make effective use of that amount of capital one must harvest several thousands of acres of wheat.  One man can do what took thousands of men to do two hundred years ago.

But the question is what do those thousands of other men do now?  A few actually assembly the machine.  A few make the steel and other metals that are used in its production.  and we have the people involved in its transportation to that farm destination.  We need people to operate the energy extraction that power the machinery as well as make the fertilizer.  But have re provided jobs for all those individuals whom the tractor and gang plow and combine replaced?  Apparently not for we have unemployment.  Granted, there is always unemployment due to the fact that individuals change jobs and sometimes that change is not instantaneous.  We also have the problem of those who become disabled and can no longer work.  These people are counted as unemployed until they are covered for disability income from Social Security.  But such individuals may wish to have employment, what then do we do?  We also see that many manufacturing jobs in which the workers were considered unskilled or semiskilled have gone overseas.  That means that there are fewer jobs of unskilled or semiskilled labor available.  People who work for fast food enterprises are unskilled and the notion that they must be worth an very large increase in minimum wage is highly debatable.  The problem with an increase in minimum wage is that it causes the destruction of unskilled labor positions and makes robots cheaper to use.  One can also note that rent control causes neighborhood destruction, a deficit of affordable rentals, and an increase in rents.  Every time the governments interfere in the free market people suffer the consequences.

One way to increase unskilled and semi skilled labor positions is to erect import tariffs.  Products that are assembled in foreign countries would be taxed heavily causing the movement of the assembly of such work back into the country.  But wait a minute, haven’t we been sold that free trade is the future?  Apple has been off shoring its profits for decades and to what purpose?  If it had to assemble its products in the US then the margin on those product would drop and its profits would drop.  But more than half its profits are off shore and would be heavily taxed when brought back into the country.  Do you see the problem?  Apple lobbies to bring back its profits duty free but why should we let it go tax free?  In order to generate more jobs, erect tariffs on products that are assembled off shore.  But you say, the emerging economies will suffer.  Not really, they will just stop stealing from us.  This is part of the problem but does not explain how we can create more jobs for the unskilled and semiskilled population.

Productivity is achieved in one of two ways.  Either people work faster or capital buys labor saving equipment.  There is no in between.  Thus, current job positions are finite.  Only so many cars will be bought in any one year, only so many cell phones will be bought.  Software is easy to reproduce and as long as there are tariffs on imported software we will have software engineers working.  Technology tends to cut jobs and future employment, that is its function.  Technology is used to improve productivity.  And if the average individual has only the education and ability for unskilled and semiskilled work, then every improvement in technology reduces employment for such individuals.  How do we restore the balance?  Can we restore the balance?  Perhaps a better question is: has population demographics reached a point of no return?  As long as we could steal resources from undeveloped countries we could have full employment.  But world populations have grown past that point.  I don’t think the current populations are sustainable as economic entities.  In other words, several billion people need to die.  Well, isn’t that a pretty picture?  One of the more interesting point in the history of civilization was that during that period the Black Death, or the bubonic plague was in effect, the consumption of animal meat was high.  People ate well, high on the hog, as we might say.  There was a surfeit of animals for consumption and everyone could eat steak.  Now it seems we are destined to eat the least desirable cuts of meat.  Population has an affect on food supply.  And if that is true, the population has an effect of labor availability.  Something to think about.

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