Workforce Economics and Productivity

[ng_nighthawk]

I'm confused about this. Or maybe woeful is the word.

Why is it that as we get more efficient, instead of getting better livelihoods so many people get left behind? Or is this a problem that's created by the media?

Comments

[ng_nighthawk]

I'm not sure how farm subsidies come into the equation. When we're talking about subsidies, you're talking about corn (ethanol), cotton, and commodities. Commodity farming is a bit different than what you're talking about. Cotton farmers are very unlikely to turn to vegetable farming for local farmer's markets if their subsidies disappeared.

But still, your point is well taken. In my restaurant dishwasher, for example, the former dishwashers could be growing a garden near the restaurant. Or the owner could partner with a local farm, and using that income the local farm could hire the dishwashers.

Perhaps this is our different perspectives, but while subsidies can be ridiculously inefficient and a drag on productivity, I don't think they're directly related to this problem. Or, better said, they're another example of the kind of disincentive to achieve competitive pricing. I think the main thing with productivity increases is that they're used to increase profits, but rarely used to increase quality or lower costs to consumers.

I was pondering this some more and I think it might be that the curve on efficiency and productivity has gotten much more steep. It used to be that the difference between top of the line technology and the lowest technology still in use was not that high. Any enterprising mid-sized business might get the latest technology in, say, 1890.

But now to get the latest technology requires a much more significant investment, meaning that the opportunity to get competition in that space is more limited than it used to be. And the productivity rewards for adopting that expensive technology is much higher--our business in 1890 that was adopting new technology might double its productivity, but today a business adopting the latest technology might have 10x the output per employee over their less technical competitors.

Which means that there's a funnel effect at the top, which lowers competition, which means more centralized profits and more discrepancy between rich and poor.

Subsidies do the same thing, only based on political clout instead of access to investment capital.

[srotu27]

And this is where my ignorance of the area comes into play, and why I thought twice about posting at all. I've heard a lot, especially when I was in Iowa, about farmers being paid not to grow things. And I was amazed that almost all of them grow corn or soy pretty exclusively--- it's not like there's a broad diversity of crops being grown--- as you travel across the state, it's feed corn or soy in every blessed field. But we also face real problems related to our dependence on corn and soy, health problems at very least. It seems like this change from more independent farming (I've heard horror stories about everyone being forced to use the same seed and having crops destroyed or facing penalties if non-approved seed is used, but they're all very anecdotal) to more institutionalized farming (which I associate with subsidies, possibly wrongly), has narrowed opportunity for non-specialized work that has real social value. So when technology replaces workers without specialized training, there are fewer opportunities, even where there is a need. But (a) I'm speaking on a topic I know virtually nothing about, which means I'm probably looking foolish and (b) even if that were not true, it's tangential at best to your point, so I won't keep you going down this path. The "paying people not to grow things" is just a source of frustration for me, to the extent that it's true.