Is The Old Model Of Work Broken?

Charles Hugh-Smith, writer of the blog, Of Two Minds, recently wrote post arguing that the old model of work is broken and the average man or woman can no longer count on employment based on this old model.  He has simplified the model to two basic actions: Show up for work on time; Follow orders.  In place of the old model he proposes the work value proposition and the idea that one become self employed in work that cannot be commoditized.  The problem with the new enterprizes is that not only is work now a commodity but it can be done by robots, thus denying individuals a job in whatever industry exists at the moment.  At first thought one might believe him to be right, but like so many “futurist thinkers”, he gets it wrong.  For him, the symptoms of unemployment are the causes, a circular argument.  So many very bright individuals tend to believe that work and employment are exactly alike.  We might think the two are but we must stop and think a minute on the differences.  Work is an activity for which one may or may not be paid.  If I sweep the floors of my house, prepare the meals, wash the dishes and the laundry, and all the other “chores” or work one may do at home, I am engaging in work.  If I help a friend move furniture I am engaging in work.  All of these activities are services that someone else could do and even offer to for for payment.

Now back in the old days, a man worked at a job, it may have been the self employment of being a farmer or being in the employ of the owner of some business.  He acquire a wife who performed the domestic chores we call housework and child raising.  Now days we see very few wives doing all the housework that used to be done and the husbands may have taken over some of those chores as well.  The point is that the old model is really that one was either self employed or employed by the owner of a business.  If I sell ties on the sidewalk, I am self employed in that I will sell what I have bought.  If, on the other hand, I sell those same ties on consignment, then I am employed, albeit loosely, by the owner of those ties.  The money that I receive from each sale if I have bought the ties is all mine, but if the ties are consigned, I only have earned a portion of that sale.  Selling ties on the sidewalk is work.  That is, in many ways it fits the old model of showing up on time, since no one is out late at night and wanting to buy a tie at 1 AM, and it is following orders to a certain degree, that is, go to the sidewalk, set up the stand and convince (sell) individuals to buy the ties on hand.  When one is self employed one still must show up on time and follow orders.  That one may not always receive a regular paycheck is irrelevant.  Obviously it is work for me to write the many posts I publish on my blog.  The fact that I receive no payment for such work is irrelevant.  I am still working.

So perhaps what he really means as the old model is that one is hired by an employer to come to work for a specified time and follow instructions to do a specified job.  Like the old drill press operator in a factory.  Come to work a 8 AM, drill holes in material for eight hours each of the five working days in each week, and receive a paycheck or pay envelope at the end of the work week.  Almost all of those old factory jobs are gone and with those jobs the old pension agreements and retirement benefits, and so forth.  Before Fredrick Taylor, the old factory method was disorganized.  That is, if you were employed as employee in a factory that made wooden crates, you did all the operations in making those crates.  You selected the wood to be cut and then cut each piece to measure.  Then you nailed the pieces together.  Finally, you took the finished boxes to the warehouse or loading dock.  Perhaps you were paid by the box and could set your own rate of work.  But Taylor saw that such operations were grossly inefficient.  What was needed were economies of scale.  If you want to improve the quality of woolen goods then create the spinning machines to make uniform thread and then the looms that use the uniform thread to produce uniform quality cloth.  Ah, industrialization and the death of the old weaving guilds.

The modern machine, or now, robot, give us greater economies of scale.  We produce more uniform goods at lower costs.  We also eliminate more work or positions of employment.  Well yes, we will need skilled people to build all these new machines but we will need far fewer than we employed producing the product prior to the improvements.  Henry Ford came along and did Taylor one better.  He invented the modern assembly line.  Before Ford, automobiles and trucks were built by groups of workmen, each group working on one vehicle.  If Eli Whitney gave us uniform and interchangeable parts and Taylor showed how to organize workers into better productive groups, Ford showed how to put it all together.  Instead of five or six men working together to assemble one automobile, a hundred men doing only one or two operations on each vehicle as it moved on a conveyer belt from the start to the finish of operations could assembly far more vehicles in that same eight hours each day.  Each operation was uniform and could be performed by unskilled men.  And as the movement towards standard parts came to a head, automobiles started to look more uniformly alike.  As standards press a uniformity of design and assembly, our products lose their individuality.  When on thinks about it, there is very little real difference between an Apple iPhone and a Samsung Galaxy.  And as engineers and designers come up with ways to reduce the number of parts so that there is more uniformness to the interchangeability, so more work is lost.  In the automotive industry the bodies for the GM sedans are interchangeable, Same with Ford, you need to see the body trim and name plate to tell the difference in the same size vehicle between Ford and Mercury.  The axles and other running gear are the same.  You may have a choice of engine sizes but those engines are no different between the two marques.

For Charles Hugh-Smith the new work model is: the worker has ownership of his work and human capital.  So each participant creates the work and owns the value proposition; innovation and collaboration are paramount.  His point is to avoid having one’s work become a commodity and thus replaced with lower cost human capital or robots.  The new worker must learn to create values for his work in ways that the work cannot be made into a commodity.  Essentially, his new model is based on personal services, like an athlete or performer.  Since robots will replace every work who is involved in producing and assembling standard units, humans must find ways to provide personal services to others and with others.  But will this really work?  By the time that 2050 comes around and we see a world wide population of 10 billion or more individuals, and certainly 20 billion by 2300, it is difficult to see how one can sell unique personal services on a scale large enough to at least earn a middle class income.  Do you see the problem?  If I am an artist, a painter of oils, and I develope a unique style, like Thomas Kinkade, there is a limit to the number of paintings I can sell that will still be considered unique.  And the more landscapes I do, even if everyone is a bit different, there are only so many variations on a theme before I wear that theme out.  And then there is the problem of price, the higher the price my paintings  might command is a function of supply.  If I make prints and sell them I must make sure that I limit the number of prints of each painting or I will be faced with an oversupply of prints and the prices decline, rapidly.  The same applies to the design of houses.  I can create quite a few designs but for them to retain their uniqueness I cannot create too many variations.  Thus one must factor in marketing and sales into one’s work.  It will not be enough to simply make some wooden toys to sell at the flea market, now I must undertake the market research to discover what might sell and then make sure I have to skills to make such items.  Then I must sell these products to individuals.  Or perhaps I sell them to Mattel.  But Mattel wants uniform toys that children and adults associate with Mattel.  What’s the difference between a black Barbie and a white one?  The skin color.

This simplistic approach by Hugh-Smith is just that, a simple and superficial one that does few any benefit.  And it does not address the real problem with unemployment, that of excessive credit creation that causes extensive reliance by multinational corporations on the economies of scale that will eventually bankrupt them.  I know, you are going: What?  Yes, why did you think had happened?  We need free trade agreements.  That is what the multinational and global corporations have been crying.  We need to make our products cheaper so our customers, you the consumer, can buy them cheaper and in greater quantity.  But if the global corporation takes employment away from those in one country than how will those same people be able to buy the products and in greater quantities?  Do you see the problem.  When no one has a job in America then how will Apple sell iPhones and iWatches in America?  Well, you say, it will never reach that point.  Don’t count on it.  Excessive credit is the main impediment to employment and the debt that it leaves behind (remember, credit spends just like currency in your bank account), results in default due to unemployment.  And while the one percent may own half the world, they don’t have enough money (real money, not fiat currency) to be able to support all those who are unemployed or will be soon enough.  You forget that their so called wealth is in assets and assets are only worth what someone is willing to pay.  Did you buy your house at the market high and now it has lost halve its value?  What happened to your wealth?  The rich don’t have piles and bags of gold coins in their vaults, not even the banks.  Value is an ideal, not a real and tangible something that one can hold and put into a pocket or eat when hungry.  Value only exists because we think it exists.  Do you see what Hugh-Smith has missed?  If you don’t grow it, don’t make it, what you think you create is only an idea.  When it comes to survival, we need food and shelter and a little bit of energy.  All else goes by the wayside.  Once you understand this point then you can think about work and what it is.  You may have skills as an accountant but unless your skills are needed and result in being pain in food and shelter, you are out of luck.  You may own you own value proposition but it will be worthless it no one has any use for it.  And if Hillary is elected, will she create work for all those unemployed?  Oh hell no.  If you want work to return to America, then end the easy credit and erect trade tariffs.  The work will return because it will be cheaper to make it here.  Now some believe that it makes no difference, open up trade, let others game the system, in the long run it will sort itself out.  No, it won’t.  When one nation is now starving and hungry they can’t wait.  One locks one’s doors at night to keep others from stealing.  When you take away to opportunity to steal, people tend to be more honest, they have to be because there is not other choice.  If I can’t rob you then I have to do for myself.  And no, unions don’t protect anything but their own jobs at the cost of jobs for others.

Each year I travel to France for three months.  I bought a small village house in a rural community.  I do my own upkeep.  That means I am my own stone mason.  Every year France looses several thousand dwellings because the maintenance has not been kept up.  A stone mason charges 45 euros per square yard to repoint stone walls, that is, to remove the old and crumbling mortar and replace it with new.  All it takes is a cold chisel and a hammer and some time to chip out the old to a depth of two to three inches.  And a square yard of stone will take five to ten kilos of mortar at 20 euros per twenty five kilos of dry mix.  But the French are horrid at DIY projects.  They also don’t want to pay the outrageously high rates for masons and roofers.  So every year without fail more and more dwellings are lost.  That is what unions do to a country.  The higher the union scale the more likely people will try to circumvent that cost and produce a lot of problems.  There are more non union carpenters and other tradesmen who will willing undercut the union worker and still make a profit.  Quite a number of remodeling, new builds, and other work is done by non union tradesmen.  Unions price their members out of a job eventually.  Bring back tariffs and eliminate unions if you want to see prosperity again.


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