The value of human work

I work in IT, but I’m not a programmer. I get non-IT stakeholders to agree on what they want from a new computer system, and communicate that to the techies who are putting it together, and then test the completed system against what the various stakeholders said they wanted. A job like that isn’t a long-term job, and the quality of the projects can be uneven for lots of reasons, but it provides both challenges and variety which I need to keep going.

Often projects like that involve reductions in employee numbers; those decisions aren’t ones I take, but I facilitate them. When I was younger I would go on about how people should be liberated from jobs that they, for all their lamentations after the fact, find dull and unfulfilling while they last. Now I have a keener appreciation of how important a good-seeming job can be, and how people can be ambushed by events that I come to regard as obvious. Now I understand how stupid and crass Prime Minister Abbott sounded when he talked about ‘liberating’ car workers from subsidised jobs. Still, I think I have developed a keen eye for the doomed job, and for the person beavering away at a task that will be done by a piece of software into the not-too-distant future.

Conventional wisdom has it with the mass redundancies like those coming to the Australian car industry that about a third of employees will get jobs straight away, another third will spend some time unemployed before finding other work (not necessarily at the same pay grade), while another third will never work again. Far-reaching economic, social and technological changes like those responsible for that decision gives rise to questions like: what is human work worth?

Most considered writing about the future of work is written from the perspective of what technology makes possible, where a sober piece of news on economic or technological developments leads to barely restrained flights of science-fiction fancy. You know the writer is having a lend of you when they use the word ‘simply’ (e.g. :the person will simply push a button and a delicious meal will appear”). Here is one example on the future of retail:

Shopping should be much easier and more enjoyable in the future. Computers and robots will come to your aid and enable you to shop at the very best stores. You won’t have to lift a finger, let alone a shopping basket. For shopping will be yet another service that the home videophone computer will be able to provide.

Instead of going out to the shops and stores in your town or city, you contact them through your videophone computer. You’ll need to see what you’re buying, even if you can’t handle it, so the viewscreen of the videophone computer shows you the goods available. You then instruct the computer to order the goods you want and have them delivered to your house.

Your computer “talks” to the store’s computer, which in turn orders robots in the store to collect the goods together and pass them to a delivery vehicle. Under the guidance of the computers, this brings them to your home.

In this way your home computer can make sure that your home is always supplied with all its essentials, for it automatically orders new supplies as soon as they are needed. It also instructs your bank to pay for the goods, so you do not need to part with any cash.

What’s missing from that is how your home is supposed to have the money to pay the retailer. All that work, from growing basic foodstuffs to supply-chain logistics and the automated retail outlet/warehouse featured in that article, makes no economic sense unless there are customers at the end of the supply chain with the readies to consume the product.

Such people need to be doing work of economic value in order to pay for that stuff. We already know that welfare and a ‘living wage’ are unsustainable, that you don’t just get paid for being a human any more – an assumption once shared by left and right in developed countries, and not shared by most people outside them.

Retail was the sector of the economy most responsible for employing Australians until five or so years ago. To go into even a busy store and see busy workers scurrying around gets your antennae for doomed jobs quivering, if you have them. The self-serve checkout is like a whirlpool set to devour the jobs of the checkout operators, and back-end workers pushing resupply trolleys likewise face replacement by automated systems. Training is scarcely an answer: most people can get across the full gamut of retail knowledge after about six months on the job. People shopping online make different decisions than they do when physically within a shop, which rustles the jimmys of marketing people but rarely translates into changes to the way that retail workers operate.

This push to automate and even obviate lower-paying work is real and driven by both economic drivers and technological possibilities. How strange, them that the pressure to automate higher-paying jobs out of existence is not all the greater. Pieces like this, questioning the economic value of “modern nonsense jobs” (as opposed to a non-modern jobs like, say, Silver Stick in Waiting), are commonplace. They tend to veer off into snark rather than attempting to explain why such non-jobs both have such high value (for the holders of such jobs as well as a social structure around them), and why they seem impervious to being rationalised out.

I couldn’t find any Austrian economists who could explain this at all convincingly. The nearest I got was this economist:

I don’t think Capital in the Twenty-First Century adequately answers the most telling criticism of the executive power hypothesis: the concentration of very high incomes in finance, where performance actually can, after a fashion, be evaluated. I didn’t mention hedge fund managers idly: such people are paid based on their ability to attract clients and achieve investment returns. You can question the social value of modern finance, but the Gordon Gekkos out there are clearly good at something, and their rise can’t be attributed solely to power relations, although I guess you could argue that willingness to engage in morally dubious wheeling and dealing, like willingness to flout pay norms, is encouraged by low marginal tax rates.

It may simply be the case where so long as a deal-maker can bring in a multiple of what they are taking home, they can’t be rationalised out. Surely (and I haven’t read the book Krugman is critiquing) there are diminishing returns from having so many of these dealmakers on the books, many of whom may overstate their contribution to their firm’s performance. Maybe there is a kind of Bez effect where the contribution of an individual member (‘je ne sais quoi’) doesn’t really matter where there’s plenty of money being made.

Krugman’s point about “morally dubious wheeling and dealing” is a poor attempt to give moral force to an economic construct he finds distasteful, and can’t otherwise explain. Consider Nick Leeson, whose dubious trades were valued highly by his then-employer Barings until they broke that employer. Consider also cat burglars and street-level drug dealers who cut their wares, who are not in a position to flout norms on pay or anything else in a sustainable fashion but who come under greater social pressure to conform and have their business models smashed. The moral issue seems to be appreciated better once it is couched in the mechanistic language of risk management.

Umar Lee tries to make a moral argument against economic and technological drivers, and doesn’t succeed. Driving a taxi is not a profession and those who use Lyft and Uber are not scabs (he should come to Sydney and subject himself to Reg Kermode’s Cabcharge). He states how much he enjoys driving a taxi in St Louis but says nothing about the coming of driverless cars to the taxi industry (or who’s going to clean the vomit from them). The problems he attributes to hipsters and Lyft users are things cabbies everywhere whinge about. Linking those apps to gentrification is another example of his reactionary short-sightedness that any change is bad news for working people. The conditional plug for the Mayor at the end is a deft touch in a piece lacking them in general.

Back to Krugman:

Just about all economic models tell us that if [economic growth] falls — which it has since 1970, a decline that is likely to continue due to slower growth in the working-age population and slower technological progress — [return on investment] will fall too. But Piketty asserts that [return on investment] will fall less than [economic growth]. This doesn’t have to be true. However, if it’s sufficiently easy to replace workers with machines — if, to use the technical jargon, the elasticity of substitution between capital and labor is greater than one — slow growth, and the resulting rise in the ratio of capital to income, will indeed widen the gap between [return on investment] and [economic growth]. And Piketty argues that this is what the historical record shows will happen.

In 1970 many countries were just getting started in terms of economic growth. In 1970 the British economy was four times bigger than China’s; now the reverse is true. The degree to which it is easy to replace workers with machines is known as the Cobb-Douglas function, a mathematical formula that assumes perfect competition (stop laughing) and constancy over time (I mean it).

Healthcare is one area that is both ripe for automation, and resistant to it. It is the sector of the economy most responsible for employing Australians today. The doctor who insists on reports (and emails!) being printed should be billed for printing in the same way that FOI cases are. When I’m small-e elderly I doubt that a robot will be taking me to the toilet, though it is possible. The thing is, such work is only valuable if you think the consumer has value in themselves, rather than just as the payer of bills (or the instructor of banks).

This whole issue of people being valuable and adding value is the sort of thing this blog will be doing more of, but perhaps in a bit more focused way as time goes on.