Highlights From The Comments On Technological Unemployment

Thanks to everyone who commented on the post about technological unemployment.

From Onyomi:

Not saying I necessarily think this is what is going on, but one simple possible explanation for why technological unemployment could happen now when it never happened much in the past could be quite simply the greatly accelerated pace of change.

For most of history, technological change was very, very slow. The past few hundred years we’ve moved increasingly to a place where each new generation has to learn to function in a world different from the one their parents grew up in. We could now be moving to a world where each generation has to learn to function in multiple worlds over the course of a lifetimes, which may stretch the limits of human adaptability.

Versus Bugmaster:

I don’t know much about economics, so the following is just conjecture, but: I think one reason for this state of affairs might be the reduced pace of technological innovation. In the past, when an industry (such as horsemanship, agriculture, switchboard operation, etc.) was automated, the technological advancements that led to this automation also led to the creation of several new industries. To use an extreme example, the same technology that eliminated switchboard operators led to the massive paradigm shift that was the Information Age.

However, in the modern Western world, new industries are created a lot less frequently; and thus workers whose jobs got automated have nowhere to go but down. This could be due to a combination of factors:

1). Automation today is increasingly the result of incremental advances in the field, as opposed to paradigm-shifting discoveries. Thus, most of the new industries that could’ve been created, already have been.
2). Technological progress in general has slowed down significantly, because…
3). …All the easy stuff has already been discovered, and/or…
4). …A combination of the socio-political climate, as well as extremely aggressive copyright/patent law, is causing a chilling effect (at least, in the Western world).
5). Western countries are suffering from resource depletion; it’s harder to innovate on zero budget.

From meh:

Graphs comparing college to high school over time need to show percent of the population each group is over time. (i vaguely remember this coming up on the blog before)

This is definitely true. For example, suppose that in 1950, only the richest 10% of people went to college. But in 2050, all but the poorest 10% of people go to college. We might discover that we had gone from most uncolleged people having decent jobs to most uncolleged people having terrible jobs – not because the importance of college had changed, but only because the poorest 90% of people might usually have mostly decent jobs, and the poorest 10% of people usually have terrible jobs. When I was doing some of this research, I asked Economics Tumblr whether this was a big deal, and I was told that some people had done the relevant calculations and they had been found not to affect any of these conclusions very much.

Chris Williams on why people on disability might claim not to want jobs even if they do:

Part of this is also the way the social safety net is setup. I know a dude I went to high school with years ago. He’s bipolar and a schizophrenic (sp?). Unmedicated, he basically goes all Charlie Sheen crazy from time to time. It makes him unable to function in society.So he’s considered disabled. However, he responds very well to medication. Now that he’s declared disabled and gets medication and doctor visits/therapy for free through Medicaid, and is on meds, he’s turned into a completely normal guy. 95% normal anyway. It’s completely turned his life around. Now, he would be perfectly able to hold down a job, or go to school, or learn a trade. That’s the rub though. If he gets a job or goes to school it serves as evidence he’s not disabled and could get him kicked off of food stamps, public housing and medicaid. So it’s a safer deal for him to stay home and play xbox than to contribute to society. He’d rather be “normal” in the head and sitting around than being crazy – which are basically his choices. If our social safety net was better designed, we could get some of those people back in the workforce.

There’s some disagreement and further discussion in the responses to his comment.

From Wrong Species:

It’s bugging me that you’re comparing total number of manufacturing jobs with percent of men in the labor force. It should either be both percent or both total.

This is a really important point which I messed up in the original version of the article. I originally thought it wouldn’t matter that much (US population hasn’t grown that much over time, has it?) but when I finally found the percent manufacturing jobs graph, it looked totally different and changed all my conclusions. I briefly panicked, then realized that probably what was going on was women were entering the labor force, generally into non-manufacturing jobs, and so the percent of workers in manufacturing was gradually going down over time. I can’t find a graph that adjusts for that, so I’m just going to trust my existing number of jobs graph for now.

From the same comment, on Autor’s example about bank tellers:

[Autor wrote]: “Consider the surprising complementarities between information technology and employment in banking, specifically the experience with automated teller machines (ATMs) and bank tellers documented by Bessen (2015). ATMs were introduced in the 1970s, and their numbers in the US economy quadrupled from approximately 100,000 to 400,000 between 1995 and 2010. One might naturally assume that these machines had all but eliminated bank tellers in that interval. But US bank teller employment actually rose modestly from 500,000 to approximately 550,000 over the 30-year period from 1980 to 2010 (although given the growth in the labor force in this time interval, these numbers do imply that bank tellers declined as a share of overall US employment).”

I find it odd how people just gloss over that [statement in parentheses]. The right story is the simple one, where ATMs reduced employment among tellers. Rise through population growth doesn’t count.

DocKaon agrees:

The Bessen (2015) ATM study is a great example of the conclusion not at all matching what the actual data says. Go look at the plots in that paper. What I see is that 10 years after ATMs are introduced employment of tellers plateaus and stays there with very little increase until the present. Virtually all the job growth in the sector occurs within the first 10 years after ATMs are introduced. Eyeballing it, from 1970-1980 tellers increase by ~5% a year and 1980-2010 by 0.6% a year. In other words, it takes approximately 10 years for the ATMs to become widespread and impact tellers jobs.

From sohois:

I believe it was Gwern who made the argument that even figures such as PAMLFPR were poor ways of trying to understand total employment, since such categorization is very much an invention of the modern era.

As I understood their argument, even 100 years ago ideas such as retirement and compulsory education simply didn’t exist (note: am not historian, I don’t know when exactly compulsory schooling or retirement would have become widespread); anyone who wasn’t very wealthy would start working as soon as they were physically able, and continue until they were either dead or physically unable, more likely the former given health outcomes in those times. Thus, technological unemployment did occur following the industrial revolution, because it allowed for a huge number of former workers to stop working. However, economists did not recognize this as a decline in employment since new categories of education and retirement were introduced to absorb them.

Part of the reason the statistic only measures prime age people (between 25 and 55) is that they’re at an age where they’re probably not in school or retired. I don’t know if the decrease of working years through the lifespan can fairly be called “technological unemployment” any more than the entrance of women into the workforce can be called “technological superemployment”. They’re just supply-side trends.

From Grey Enlightenment:

Regarding the horse example, the US horse population is 9 million. The demand for horses never went away despite automation and has remained steady. If one tried to extrapolate the early 20th century horse population trend to the future, there should presently be no horses alive.

Wikipedia says there were 20 million horses in the US in 1915, falling to a low of 4.5 million in 1959, and increasing to 9 million now. So the overall story of technological unenhorsement survives this objection.

Ricraz on whether perfect cheap androids would really make human workers obsolete:

Significant parts of many jobs are driven by social interactions and status considerations. The job of doorman at fancy hotels may be both the most easily automated job in existence, and also the last one to actually be automated. In this particular scenario, it depends on how people relate to androids. If society has the general idea that interacting with androids is low-status and not as meaningful as human interactions, then there would be an explosion in customer-facing jobs, as it becomes the easiest way to differentiate your product. Also, everything produced by androids would be so cheap that people wouldn’t need to work very long hours in those jobs to earn a living.

In other words, whether or not humans are practically useful, they’ll always be useful for aesthetic and signaling purposes. This provides the missing piece of the technological unenhorsement story; machinery made horses mostly useless, but aesthestic and signaling purposes were enough to maintain them at 25% to 50% of their maximum population.

I find this worrying for the same reason I find the lack of technological unemployment worrying; it means there might never come a time when we’re forced to really confront our values and decide whether we want to be properly post-scarcity. Even in the world with perfect android laborers, instead of letting the androids labor and letting humans live in leisure and share part of the pie, we’ll have the opportunity to sleepwalk into letting a few android-owners get super rich and giving everyone else jobs as hotel doormen. What do you mean it’s time for a universal basic income? You should be grateful for the hotel doorman job you have!

AnteriorMotive with one last unenhorsement related point:

I think the horse example is deceptive: the bottleneck for horses is human labour. Horse breeders, handlers, etc, found better uses for their labour and transitioned to other sectors of the economy. Put another way, horses were priced out because they need to hire humans to be able to do anything, and humans’ opportunity cost got so high they could no longer afford to outbid it.

You can tweak the metaphor to make the intended comparison more applicable, but it rapidly starts losing its rhetorical power. I recommend the discussion in the comments of: https://slatestarcodex.com/2017/02/06/notes-from-the-asilomar-conference-on-beneficial-ai/

“This wasn’t to say that they aren’t an argument for human obsolescence, just that when you exchange the horse analogy for the structurally identical ‘cassette tape’ or ‘slide-rule’ anology, suddenly it’s lost its rhetorical punch. As I see it, this suggests a misleading analogy, hinging on the listener inappropriately anthropomorphizing horses.”

Good point. This is why I previously got accused of “thinking horses are LITERALLY humans”. I apologize for the error. But I’m not going to back down on them basically just being elongated cows.

vV_Vv asks if the existence of a middle class is just a weird historical blip:

For most of recorded history, almost every human was a subsistence farmer, likely under-using their cognitive abilities, yet no middle-paying jobs materialized to use their full potential. Then, during the first century or so of the industrial revolution, most people in industrialized countries were assembly line workers, jobs even less cognitively demanding than subsistence farming, and still no middle-paying jobs appeared until most of that low-skilled factory work could be automated. There is nothing in standard economic theory that predicts that jobs that allow average people to use their full cognitive ability should exist and pay middle-class wages. In fact, there is nothing that predicts that a middle-class should exist.

Related: Matthias quoting Goldin & Katz:

U.S. educational and occupational wage differentials were exceptionally high at the dawn of the twentieth century and then decreased in several stages over the next eight decades. But starting in the early 1980s the labor market premium to skill rose sharply and by 2005 the college wage premium was back at its 1915 level. The twentieth century contains two inequality tales: one declining and one rising. We use a supply-demand-institutions framework to understand the factors that produced these changes from 1890 to 2005. We find that strong secular growth in the relative demand for more educated workers combined with fluctuations in the growth of relative skill supplies go far to explain the long-run evolution of U.S. educational wage differentials. An increase in the rate of growth of the relative supply of skills associated with the high school movement starting around 1910 played a key role in narrowing educational wage differentials from 1915 to 1980. The slowdown in the growth of the relative supply of college workers starting around 1980 was a major reason for the surge in the college wage premium from 1980 to 2005. Institutional factors were important at various junctures, especially during the 1940s and the late 1970s.

From Yosarian2:

Looking at your numbers we may have 2 different things happening here. Maybe from 1960-2000, the decrease in male employment was caused by the increase in female employment; and from 2000-today, female employment has been more flat, and the decrease in male employment has been caused by automation? Does that correlate better to the numbers?

A similar point from Proyas:

Also, it might be the case that the entry of women into the workforce starting 50 years ago permanently depressed wages and drove down the labor force participation rate. Is there an economic theory stating that the number of jobs must keep growing and their wages must also grow or stay the same, regardless of how many new workers are added to the system?…Picking a random example, if the number of people with J.D.’s in America doubles because women are no longer barred from entry, is there any reason to assume that the economy will automatically expand to absorb them all, with the number of attorney jobs doubling and salaries staying the same? “Is there an economic theory” that says such?

Alef is more (less?) subtle:

So in 1950 we introduced (or rather, used far more widely than just its former niches) a new technology that was an essentially perfect substitute for manpower. To pretty much exactly the extent it became increasingly deployed, the ‘workforce’ declined (an almost perfect offset for 25 years, a bit looser thereafter). In the past, new technologies have (after some painful adjustment time) lead to new jobs, new opportunities, and a recovery or gain in ’employment’; but in this case we’ve waited a couple of generations and still seen absolutely nothing in the way of recovering from this offset. Is this experience not relevant, as robots and AI will very shortly do this again? For a while, they won’t be remotely as capable or flexible substitutes for manpower as in the former case; but they will also be cheaper.

I’m sure using women as a metaphor for robots will greatly increase this blog’s popularity among the feminists. But this is a good point – why shouldn’t wages have crashed when the labor supply doubles?

The only good paper I can find on this claims it didn’t happen. I agree that’s surprising and that it needs more thought.

Probably the same arguments about how immigrants (and new graduates) entering the workforce don’t necessarily drive down wages should apply here also. The only caveat is that women are already around and consuming, so they might not create as many new jobs by entering the workforce as (say) a new immigrant arriving in the country. But there’s also the effect where somebody has to do whatever they were doing before (housework? child-rearing?) so that could possibly balance it out.

There’s little room for women entering the workforce to contribute to unemployment, since Part I of the original post explained that there is not really an unexplained unemployment increase. I wish I had a better answer to the wage stagnation question, and will be eternally grateful to anyone who can direct me to more literature or analyses on this.

From VolumeWarrior:

Surprised to see no mention of videogames. The career prospects of young men are humiliating or tediously circuitous to puruse. So they just stay at home and play Xbox. See http://marginalrevolution.com/marginalrevolution/2016/09/labor-force-participation-video-games.html

Again, I want to emphasize that this is solving a non-problem. There is no unexplained jump in unemployment or nonparticipation. You can all stop trying to come up with explanations for it.

From Swami:

The data clearly shows (I can link if desired) that the larger trend happening over past thirty years is the middle class is shrinking primarily by moving into higher tiers or retiring, the lower class has grown slightly, but not if you exclude thirty to forty million immigrants. And here much of the statistical increase has been caused by lower numbers of married families (and thus fewer jumps to middle income due to failure to get hitched).

Versus sdenton4:

Given the categorization of jobs by type, there’s presumably a hell of a lot more low paying jobs than high paying jobs. So a smaller percentage increase in low paying jobs could presumably account for a lot more workers than the larger percentage increase in high paying jobs.

From Pinyaka:

I don’t necessarily think that most people think that technological unemployment will hit the least skilled first. It should hit the jobs where it’s most profitable first. How cheap would a robotic server in a restaurant have to be to actually get a return on investment? Replacing a unionized assembly line worker makes you money a lot faster even if it’s more expensive. As we get better at replacing middle cost jobs, the cost of automation should go down and that should allow us to replace the unskilled.

From Disillusioned9:

I have two comments: first, the automation of manufacturing may now have meaningfully affected the PAMLFPR nationwide, but surely the localized effects may tell a different story? The economies of manufacturing heavy States like Ohio are in crisis, which would strongly suggest that either PALFPR or underemployment would go up in these areas. Increases in non-manufacturing jobs elsewhere in the nation could smooth those numbers in the US and hide regional inequities.

Yeah, the lack of obvious jumps in unemployment and PAMLFNP have to be squared with the universal common-sense perception that parts of the Rust Belt are an apocalyptic mess right now. The idea that these areas are getting anomalously worse while others (Big cities? The coasts? Silicon Valley?) are getting anomalously better might be one explanation for how the statistics could all even out.

From resalisbury:

An argument that often gets overlooked is that housing costs in high productivity cities are crowding out potential increases in employment and productivity.

What if we are as good as ever at fundamental technological aspect of productivity innovations but have gotten worse at moving people to places where those innovations are occurring?

Interstate labor mobility rates are at an all time low since the 1960s and housing costs in our most productive cities are at an all time high.

Hsieh and Moretti (2017) argue in “Housing Constrains and Spatial Misallocation” that increases in housing costs due primarily to zoning have reduced aggregate GDP growth by 50% since 1960. That is huge. Even if they are off by an order of magnitude, it could still help explain several pp of the reduction in prime age workforce. Additional workers have to come from somewhere…


In San Francisco the median housing price is over $1 million. Not everyone needs to move here and be a programmer there’s lots of other work to be done. Unfortunately, most people can’t afford to live in the city so they sleep in cars or commute in 2 hours just to work. Imagine how many more people would work if they could just live here.

The Economist argued that if not for housing costs the population of the Bay Area would be around 30 million (can’t find the link) instead of ~7 million. That’s just one region where the employment growth would impact things on a national scale.

Imagine what would have happened to Detroit if in the early years housing prices spike to over $1 million. Or if in the 1860s when millions were migrating to the United States they arrived to discover that the median housing cost $1 million. They would write home and tell friends not to come.

Housing costs in the last few decades have finally reached a point where they have become a constraint on growth that was not true during previous periods of economic expansion in the US.

What to do about housing costs? Obama’s outgoing team of economic advisors published a paper with policy recommendations which can be see here. Basically if calls for increased density and by right zoning (ie you can’t put someone’s bulding permit through 3 years of discretionary review and comment).


An unexpected place for the housing crisis to show up. At what point do I have to end all these posts with “ceterum autem censeo domuum numerum augendum esse”?

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178 Responses to Highlights From The Comments On Technological Unemployment

  1. loki-zen says:

    Whenever this kind of thing is discussed in rationalist circles everyone seems to make the assumption that women ‘entered’ the labour market some time in the 20th century, and that prior to that (perhaps with rare exceptions) women only worked ‘inside the home’, which is taken to mean ‘work done for their own family only, that does not provide monetary benefit to the family except in as much as it means they don’t have to pay someone else to do it, and in that not sharing household tasks frees up a husband to work longer hours.’

    This assumption is just incorrect and ahistorical, so any argument you make off it is going to be flawed. I can’t exactly blame you guys, as even (for instance) the wikipedia article makes this assumption, but it is wrong.

    I am not a history expert either, so this is gonna be spotty and skip over vast swathes of time, but this is basically how it goes:

    Prior to modern-style work-for-wages, you’ve got your feudal farmers and crafters. The family farm is worked on by the entire family; the reason ‘farmer’s wife’ or ‘baker’s wife’ is given like an occupation in fairy stories is that it is, and that occupation is basically ‘farmer’ or ‘baker’. There were different tasks that might typically be done by men, women and children, and childrearing and cooking would be part of the job of a ‘farmer’s wife’ right along with making the cheese, but it wouldn’t make any sense to say that the man was working and the woman was not. The only women who fit the trad assumption are nobility (who manage households, weave tapestries and create heirs), but as I understand it their husbands wouldn’t consider themselves to have ‘jobs’ either. Outside of wartime, you could maybe compare being a feudal lord to being a landlord or owning a company but mostly hiring people to manage it for you*. But, there’s no logically consistent reason to count the Baron as ‘working’ (business-owner/landlord) and not count the Baroness as ‘working’ (human resources/property manager). She’s as involved in the business of feudal lording as much as the farmer’s wife is involved in farming. The only reason to round off what the Baron does to ‘work’ and what the Baroness does to ‘not work’ is your own assumptions about what work is and what men and women did in the past. (Neither of them is making a wage for it.)

    *yes, smart-ass, you don’t own the company exactly, maybe it’s a franchise or the King’s the bank that owns the landlord’s mortgage, that part’s not relevant here.

    Maybe you only mean during work-for-wages times? Well, that doesn’t work either. The purely domestic housewife was a middle-class ideal, not most peoples’ actual reality. Most women worked, including after marriage – and that census is only really looking at going-out, making-a-wage jobs. Many more women were doing things like (other peoples’) laundry and sewing at home on a casual basis for extra money, and other families still worked in a similar way to the medieval farmers: in early Victorian coal mines (for instance) it may be that one man is recorded as being employed as a coal miner. He gets paid on the basis of how much sorted coal he can haul up per day. What actually happens is that he and his son stay at the face mining all day, and his daughter hauls what they mined to the surface where his wife gathers it and sorts it. These people are all employed in the coal-mining industry, and the paycheck might have the father’s name on it, but they have all contributed to its size.

    Obviously, there was a change in employment for women in the 20th century, I’m not disputing that. And I don’t know what effects it had or what parallels you can draw. I just know they’re gonna be fundamentally flawed if they’re based on faulty assumptions of what the change was from. For instance, the ‘two income trap’ starts to fall apart as a thing when you recognise that families have pretty much always benefited from the economic output of both parents, it just wasn’t always recognised as such. Men made more before women had independent careers? Sure, I bet I’d look like I was worth paying more if you lumped together my productivity and that of my unpaid assistant. Etc.

  2. Nicolas says:

    It should be the gerundive augmentandum or augendum in place of augmentum, as Michael Watts pointed out.
    “ceterum autem censeo domuum numerum augendum esse”

    Many thanks for your very interesting blog.

  3. VivaLaPanda says:

    RE: The thing about hotel doormen and signaling.

    I don’t think it’s probably true, but I often have this dread that this has already happened and that vast sectors of he white collar world are just people hiring other people to keep up appearances of being a “real business”. Seems incredibly unlikely, and yet whenever I talk to people who work in mid-range office jobs it seems like the amount of work/person being done is tiny.

  4. Matt M says:

    Re: Horses

    As far as I know (not a historian), there was never some sort of mass horse-slaughter. Google says horses live for 25-30 years. So horses becoming unemployed, as far as I can guess, had no real negative consequence for actual horses. They weren’t all killed, they just weren’t bred as much anymore.

    If lower class human labor becomes less useful, maybe poor people will simply choose to not have as many kids. Would that be the worst thing in the world?

    • The Nybbler says:

      If lower class human labor becomes less useful, maybe poor people will simply choose to not have as many kids. Would that be the worst thing in the world?

      All evidence is that it works the other way; it’s the wealthy who choose not to have as many kids.

    • John Schilling says:

      As far as I know (not a historian), there was never some sort of mass horse-slaughter.

      The cliché about unwanted horses being sold to the glue factory is obsolete, but it is not unfounded and it overlaps the era in question. “Mass horse-slaughter” would be an overstatement but, at the margin, the threshold for being gluified would have been substantially lower during the transition to equine technological unemployment.

      If lower class human labor becomes less useful, maybe poor people will simply choose to not have as many kids. Would that be the worst thing in the world?

      The horses that didn’t wind up as glue, didn’t choose not to have as many offspring; that choice was made for them. If, in the postulated future of mass human technological unemployment, not-poor people make and implement the choice for poor people to not have as many kids, that’s going to look an awful lot like eugenics. Which as everybody knows is a Nazi thing and Nazis are absolutely the worst thing in the world, so yes.

  5. deciusbrutus says:

    I think “Number of bank tellers” is not nearly as useful as “hours of bank telling”.

    I recall around the time in question bank branches started having longer, more convenient hours. And since peak demand is higher than average, branches need to solve NP-complete scheduling problems anyway.

    Did the ATM coincide with more or fewer total teller hours? The numbers I have are insufficient to tell.

  6. Strawman says:

    Not an economist, and could be entirely wrong, but plausibly, the reason the entry of women into the workforce didn’t cause a drop in wages due to increased labour supply is that that women’s new access to disposable income caused an equal increase in demand for goods and services, so employers could profitably use a larger workforce and still had to compete over labour supply by maintaining good wages (this suggests that the big bottleneck to increasing production was the availability of workers, but seeing how this happened, I suspect it was).
    This process would also explain why the entry of immigrants or young people into the workforce doesn’t particularly cause declining wages, but outsourcing does (workers in outsourced-to region A won’t spend much of their wages on widgets from outsourced-from region B), as would, by this hypothesis, automation (even ignoring the issue of where the profits are eventually being spent, a robotics multinational doesn’t exactly have the same spending pattern as a human being, and would, at the very least, be unlikely to spend that much on human performance of the same kind of work it had just profitably automated).
    And on a related note, since men and women can do more or less the same work more or less equally well for more or less the same pay[citation needed], they can both exist happily side by side in the modern, gender-integrated workplace we all know and love, which will not be the case with AI that can do the work orders of magnitude better for orders of magnitude less cost, so at this point it won’t particularly matter if (somehow) the robotics multinational invested every cent earned back into the local community, since by now every local business that could conceivably turn a profit will be staffed exclusively by robots.

    • but outsourcing does (workers in outsourced-to region A won’t spend much of their wages on widgets from outsourced-from region B)

      Suppose a U.S. firm is hiring workers in India to produce goods or services sold in the U.S. Those goods are sold for dollars. The firm either pays Indian workers in dollars or trades dollars for rupees in order to pay in rupees. Either way, there are now dollars in India–and in the long term all they are good for is buying stuff in the U.S.

      • anonymousskimmer says:

        and in the long term all they are good for is buying stuff in the U.S.

        It’s all going to flow to Ecuador.

      • Strawman says:

        Again, really not my area of expertise, so correct me if I’m wrong.
        As I understand it, the argument is that in the long run, all U.S. dollars are good for is buying goods and services in the U.S., so eventually they will be used to pay for those, thereby boosting the U.S economy.
        It does seem the concept of “in the long run” does a dangerous amount of heavy lifting in that argument.
        Suppose, all within the span of a week, Alice the factory worker uses her salary to buy bread from Bob the baker, who uses those earnings to buy some Ethereum from Carol the crypto trader, who uses those earnings to buy a pet duck from Dave the duck farmer. It does seem the money has done more to sustain people’s livelihoods this way, than if it, say, ends up sitting around in India’s dollar reserves for fifteen years.
        I suppose the increased presence of U.S. dollars in foreign currency reserves would make the dollar slightly cheaper, making it slightly more attractive for consumers in other countries to import stuff from the U.S., thereby boosting U.S. production, but as a prima facie guess, i find it unlikely that the effect would be as great as if the same amount of money was spent multiple times domestically (if so, how many transactions per year would it equal? It would seem a dollar spent ten times a year would do more for the economy and people’s well-being than the same dollar spent only twice (although talk about “the same dollar” might be erroneous in a similar way as “the same photon”, I think you get the gist of my argument), etc, and while I suppose one could argue that the export boost from a dollar in foreign currency reserves simply has to, conservation-of-energy-like, equal one of those values, I don’t see how it could equal both, but again, I’m no economist).
        Also there are probably a host of other factors I’m missing, quite likely there is more to your argument than I’m seeing, but if so I’d appreciate a few more pointers in the right direction.

        • If what is happening is that dollars are being hoarded by foreign central banks that should make prices in the U.S. lower, since it reduces the supply of money. I think it more likely that the foreign central banks would hoard dollar denominated assets, such as U.S. securities, in which case the money is coming back to the U.S. to be spent by the borrower, probably the government.

  7. theredsheep says:

    Re: the doorman scenario, I really don’t think it’ll come to pass, for two reasons: first, because it’s impossible to have a post-scarcity situation for status, and second, because it’s historically unprecedented to have a sizeable class which is truly, completely, and permanently useless for the economy. You have the elderly, the disabled, and children today, but most of us turn into the first, all of us risk turning into the second, and we need the third because they’ll look after us when we become either of the first two. Even today, the most wretched poor are theoretically capable of work even if they don’t. The work they do–stocking shelves at Wal-Mart, wiping elderly buttocks, whatever–may be menial and low-skill, but there is nobody and nothing else to do it, so they are useful. This will not be the case if the promised End of Work appears. A large and ever-growing segment of the population will be, from the POV of the remainder, utterly superfluous. Not even useful as consumers, like today’s poor, because they add no value to the economy for whatever charity money they receive, and have little to no hope of ever doing so.

    I know this is belaboring the obvious, but I think it’s worthwhile, because we frickin’ hate people on welfare today, and a lot of them do useful work we depend on. Historically, political, social, and economic power have been closely intertwined. It’s not reasonable to expect people who do not do useful work to be valued by others. The only reason they would have for doing so would be, basically, compassion, and our compassion for other humans has been endlessly proven to be both finite and malleable. We are a species that invented death camps and the “peculiar institution.” We’re not going to keep loads of idle hands around out of the goodness of our hearts. No matter how little it costs to keep them around as doormen, every resource the Haves give to the Have-nots is a a resource that could have been spent on more useful stuff for the Haves. Their houses get in the way of a new robo-car racetrack, their culture is strange and unpleasant, and their healthcare is a distraction for whatever computer does the planning and distribution. There’s always going to be something cooler they could do with [minimal upkeep X 1 billion].

    Should this end-of-work materialize, I envision a growing impetus to cull the dead weight as quickly as possible, by whatever means. Needless wars, police aggression, heavy pressure towards contraception and abortion, legalized suicide, whatever. The culture will shift to accommodate the interests of the small and shrinking group whose opinion still matters politically. It may not be an explicit goal, more a subtle shifting of priorities and values. I really don’t see how anyone with more than a passing familiarity of history could believe otherwise.

    • Matt C says:

      Thinking along these lines is part of why I think a UBI is a bad idea. I’m not so optimistic about a UBI going well at all. But even if it went OK for a while, it would be really ugly once it came to a stop, and it would, eventually, one way or another.

    • 1soru1 says:

      Under the terminology coined by Peter Frase this is ‘exterminism’, one of four possible scenarios you get when assuming near-human or better automation.

      The doormen scenario is a case of ‘rentism’; there are an endless stream of variants on that basic theme in written sci-fi, but I’d have to judge it as the least likely of the options, at least as anything long-lasting.

      The others two are of course:

      – communism, of the luxury gay space variety, i.e. the Culture.
      – socialism (the Culture trapped on a single planet, and so still limited by resources, if not by the need to work).

  8. Eli says:

    An unexpected place for the housing crisis to show up. At what point do I have to end all these posts with “ceterum autem censeo domuum numerum augmentum esse”?

    The funny thing is that this makes a very good explanation for something we otherwise can’t explain: what’s wrong with the economies in Australia, New Zealand, Canada, the UK, and the United States, all at the same time? But now we can formulate a broad theory:

    1) Mass home-ownership created a non-rich mass constituency for land-rentiering, the regulatory restriction of competition in the housing market.
    2) This slowly pushed housing prices and real-estate speculation into ever stupider heights, partly even helping fuel the 2008 housing burst in many places.
    3) But since a large part of the Baby Boomers and Greatest Generation got in on it, the voter base, for decades, collectively did not actually want a policy solution to the problem. Quite to the contrary: they were happy for landowners to have regulatory capture over land usage.
    4) Even after 2008, the policy incentives didn’t change, so everyone who could, went right back to speculating in real-estate. Evidence: today’s Vancouver, Sydney, London, Auckland, San Francisco, Seattle, Boston, New York, etc. Even the bad neighborhoods now have houses costing a million.
    5) Problem is, young people and people living in economically depressed rural areas can no longer afford to move very far. The youth can’t get on the property ladder, even when starting out in urban settings, and the underemployed can’t afford to move to a more productive area. In fact, the cost-disease of real-estate has started affecting business start-up rates as well.

    It needs a lot of work and study, but based on stuff like The Rent is Too Damn High, it’s reasonably plausible.

    • Brad says:

      I like the theory, but the problem with it is that housing prices didn’t start going nuts until the 80s, but mass homeownership started in the 40s. I’ve read an alternate theory that said home prices started going nuts around then because of the rise of two income households.

      • 1soru1 says:

        House prices not affordable to a median 2-income couple require the presence of widescale inherited wealth; someone has to be buying them. So that kind of 40 year delay in response is exactly what would be expected.

    • 1) Mass home-ownership created a non-rich mass constituency for land-rentiering, the regulatory restriction of competition in the housing market.

      I find this puzzling. Are you assuming that most home owners expect to eventually sell their home and move to some much smaller housing? If not, the home owner doesn’t benefit by an increase in house prices, since he is both seller and buyer on that market.

      • Mabuse7 says:

        You’re forgetting about mortgages. A lot of Australians plan to augment their retirement income by refinancing their house and letting the bank take it after they die, for example.

        • Fair enough. I was assuming, perhaps unrealistically, that the house would be left to the kids.

          • Mabuse7 says:

            Of course not, they already helped the kids when they covered the deposit on Junior’s first home with their first refinance the kid could “get into the housing market”. Then they used the next refinance to cover the deposit on a good investment property or two, those places paid for themselves with the way rents are nowadays. Now our enterprising homeowners are nearing retirement and facing the biggest choice of their lives, refinance again to tap the built-up equity in their properties to live large where they are or sell off their little portfolio to buy a few acres and a big house in a quaint little country or seaside town nobody’s ever heard of, arbitraging the difference between urban and rural land values?

  9. fwiffo says:

    BTW, I don’t think it’s right to separate the rise in disability recipients from the decline in labor force participation as if technological change can’t explain them.

    A person is eligible for DI if their medical condition prevents them from finding work. This means different things depending on the state of the labor market. If it’s the 1960s, and lots of people have cushy union jobs that involve a little bit of work and a whole lot of smoke breaks and supervisory tasks (chiefly, standing around and watching other people work), then very few people will be on DI. If all the cushy jobs disappear, and the only place you can get a job is at the Amazon warehouse, walking briskly for 15km per day — suddenly a lot of people end up on DI.

    It doesn’t have to be a moral hazard / laziness story — there are a lot of people with medical conditions that prevent them from walking 15km in a day, but that don’t prevent them from standing around and watching people work all day.

    One can’t paint all union jobs with a broad brush, but it certainly the case that there were a lot of absurd negotiated agreements between unions and companies that allowed a lot of workers to not work very much — see accounts of life in the GM Fremont Assembly, or at any of Bethlehem Steel’s many plants.

    The point is that disability is a function of the worker, but also of the job environment. If robots can do all the human tasks except the truly horrible ones, then 90% of humans might end up “disabled”, i.e. unable to work due to medical conditions.

    [I think caveat is important for understanding DI, but I don’t think it changes your broad conclusions re: ucnertainty about technological unemployment. It probably shifts the needle a little toward the case where technological unemployment is a real thing.]

    • Wouldn’t you expect that, overall, jobs have been shifting away from the physically demanding, not towards, with technological progress? Do you have any data to support the opposite claim, which you seem to be making?

      • angularangel says:

        That’s actually pretty easy – Robots are good at heavy lifting and moving fast, yes, but only as long as it’s predictable. You need to do unpredictable heavy labor, you’ll want a human.

        • I thought you were describing what had happened so far. Chain saws require less labor than axes. Driving a forklift requires less labor than carrying stuff. Excavating with a back hoe requires less labor than with a hand shovel.

      • fwiffo says:

        A fair point. My proposal was that unionized jobs that involve a whole lot of not working are not as physically demanding.

        What few jobs are available for people without formal education are now Taylorized to squeeze every once of effort out of workers — Amazon warehouses being the best known example.

        But even if we just decrease the quantity of available jobs in some labor market — this will increase DI since the recipient may have a medical condition that is arguably related to the inability to find work.

  10. tvt35cwm says:

    People who say this:

    why technological unemployment … never happened much in the past

    need to read some history.

    In England, the 18th Century Workhouse movement and penal Transportation to the Colonies for increasingly minor misdemeanors both arose because of a sustained increase in the number of workless poor people. The increase was due to rapidly improving agricultural productivity,* thanks to inventions such as the seed drill, improved harnesses, improved plows, and a long R&D programme of breed and seed improvement.

    Also, without minimum wage laws “technological unemployment” becomes “technological starvation”.

    Peter Laslett, one of the progenitors of the cliometrics movement writes in The World We Have Lost: Further Explored (1965, 1983, reprint 1994):

    When Queen Victoria died, at the outset of the twentieth century, one Londoner in five could expect to come to this, a solitary burial from the workhouse, the poor hospital, the lunatic asylum. On the whole the second year of our century [the 20th] was a prosperous time for the English, one of the twenty good years not marked by depression or war which they were to have in the fifty which followed. … Nevertheless something like a quarter of the whole population was in poverty.

    Poverty, we must notice, was no vague condition then, … Families were in poverty `whose total earnings were insufficient to obtain the necessaries for the maintenance of merely physical efficiency’.

    So in a good year, 20% of the population (at a minimum; wages in London were higher than elsewhere) lived below the dollar-a-day line of absolute poverty. Technological change had caused wages to fall below that level.

    * And to a smaller degree due also to the technological innovation of drinking sterilized water in the form of tea.

    • In England, the 18th Century Workhouse movement and penal Transportation to the Colonies for increasingly minor misdemeanors both arose because of a sustained increase in the number of workless poor people.

      What is the evidence that the number had increased? Transportation developed as an alternative to hanging people convicted of non-clergyable felonies or turning loose people convicted of clergyable felonies.

      Do you have data on wage trends through the 19th century? My memory of Ashton is that, at least after 1840, the evidence suggests they were trending up.

      You might also consider what was happening to population during the 19th century. If poverty was increasing, one would expect population growth to slow, which I believe is the opposite of what was happening.

  11. tcheasdfjkl says:

    I briefly panicked, then realized that probably what was going on was women were entering the labor force, generally into non-manufacturing jobs, and so the percent of workers in manufacturing was gradually going down over time.

    I don’t understand how this makes sense. It’s not like women were choosing what jobs to go into based on their skills and preferences divorced from what jobs existed. I would instead expect something like [the market needs e.g. a certain number of factory workers and a certain number of hairdressers]–>[women joining the workforce predominantly join as hairdressers rather than factory workers]–>[some men who would otherwise be hairdressers go work in a factory instead because there’s less competition from women there].

    I guess the possible stories I can see for how this would actually affect the distribution of available jobs are:
    (1) since there is now more competition among hairdressers because there are more of them, their services are now cheaper, so they make less money but more people buy their services, so there can now be more of them
    (2) as others have mentioned, since fewer women are doing cooking/childcare/housework, demand for those services goes up (whereas demand for various widgets is unaffected since women were already buying widgets anyway)

    Did you mean one of those things? (I guess after writing this comment I am less confused than before about how this could possibly make sense)

    • anonymousskimmer says:

      (2) as others have mentioned, since fewer women are doing cooking/childcare/housework, demand for those services goes up

      I wonder if this reverses causality. Wouldn’t a rising standard of living (as happened post WW2) allow women to start purchasing these services as a splurge? Then these women would suddenly find themselves with more time and nothing to do with it, so might start looking for a job.

      What percent of working and lower class women always had jobs? Does an increasing percent of them now have jobs compared to earlier? What percent in the rise in working women is actually due to middle and upper class women, driven by ennui or the desire for independence, becoming employed?

      Was textile labor considered manufacturing? If so, part of the decrease in manufacturing jobs would actually be women losing their jobs and having to resort to the service economy.

    • Questioner says:

      I still don’t understand how this is supposed to make sense.

      Unless women coming into the workforce were only taking jobs that no man would ever take, it’s “% of the labor pool”, not “% of the male labor pool” that matters.

      What life could be provided by a male working in a factory in 1950? What life could be provided in 1980? 2010?

      If the quality of that life was dropping as technology was rising, then “technology has negative effects upon employment” seems to be proved, no?

      Because if technology improved productivity w/o negatively affecting employment, then the manufacturing % of labor pool would remain the same, the relative social position of the workers would remain the same (or improve, they are getting more productive), and we’d all have more goods.

      But, so far as I can tell, the relative social position has dropped, the employment percentage has dropped, and to the extent that we all have more things it’s because they’re being made by lower paid workers in other countries.

      You are free to argue whether this is a good thing or a bad thing. but I’m at a loss to see how you can argue this is not a thing.

  12. ohwhatisthis? says:

    –Thoughts–slightly disjointed on the topic, mildly free-flow.

    http://www.zpub.com/notes/idle.html In Praise of Idleness–By Bertrand Russell

    Most relevant quote “If the ordinary wage-earner worked four hours a day, there would be enough for everybody and no unemployment — assuming a certain very moderate amount of sensible organization. ”

    Its been a century of technological progress since then, and all our technologies have become more efficient in capability.


    Eh, this isn’t so much an argument. Signalling maybe? Aye aye aye aye aye.

    Unemployment is tricky. There are lots of ways of slightly editing underlying definitions to hide,change, or mask trends. You could really break the trends down into hours worked, percentage of part-time jobs, breaking down jobs by peoples characteristics(the unemployment statistics seemed to be worsening for males 35+ without a degree, and perhaps even with a degree from non-high tier colleges)

    I’m half convinced people just don’t like making things as efficient as possible. I think people(libertarians) underestimate how many jobs in the free-market are dragged out with some strange gentlemans agreement to not be as efficient as possible, as the pay is by the hour.

    In the jobs I have worked at, I have (without explicitly building the device) thought of things like this. Things in this nation are not done according to efficient mechanical principles. Is is poor selection of those with upper-tier spatial acumen?

    Now where is a good close-enough technology paper from the 80’s from some berkeley/caltech grad student inventing the exact same tech, but it not taking off for reasons seeming to do with the organization of people and materials?

    • Deiseach says:

      Most relevant quote “If the ordinary wage-earner worked four hours a day, there would be enough for everybody and no unemployment — assuming a certain very moderate amount of sensible organization. ”

      Which never happens; there’s been a long tradition of predicting that “increasing mechanisation/automation will reduce people’s working hours and we’ll all be working four hours a day and have tons of leisure time to spend our sizeable wages on doing what we want”. Typewriters replacing hand written documents for clerical work meant that your office clerk could now have their entire day’s work finished by noon! (and then presumably go home early). Except somehow the work day managed to keep going until six o’clock because now everyone was doing their work faster so you could get that letter from Jones and Co. tomorrow rather than in three days’ time, and you needed to reply to them as quickly, so it all stacked up on the desk all over again, and no employer said “Smith, you can do your forty hours’ work in twenty due to this automation of clerking, but I’ll still continue to pay you for forty hours’ work”. Smith turned up and did forty hours’ work or he didn’t get paid the same wage as before – this is how you measure the increase productivity, is it not? More production by the same number of workers/for the same money?

      And yet it’s come to “if you want to build your career, be prepared to work sixty-eighty hour weeks” in white collar professions and “the reason for the wage gap is because women – for various reasons – don’t or won’t or can’t put in the sixty to eighty hour work weeks you need to get promoted to the managerial levels”.

      It looks like increasing automation means you can have the four hour work day – for wages of pennies, or the good wages/good benefits/non-manual labour jobs – and work even longer than a 19th century mill worker, who at least had no emails perpetually needing to be answered on their smartphone whether at work or at home and could have Sunday off instead of ‘you need to come into the office’ and the Tokyo stock market opens at stupid o’clock our time zone but you need to be watching their prices so wake up before stupid o’clock to be ready.

  13. anonymousskimmer says:

    I’m not reading through all the comments to see if this has been addressed, but it would be nice if companies, or ideally industries, were incentivized by the state government to move east a bit (Brentwood/Antioch – so BART gets equal use both directions -, or even further east).

    The west Bay Area is home to Silicon Valley; it is also a Biotech hub. I’m sure there are other industries concentrated there too, which don’t need to be.

    I’d love it if LBNL and LLNL moved to re-aligned to UC-Davis or UC-Merced, but that would be a multi-billion dollar move and would kill the commute for various people who can’t easily relocate.

  14. Radamantis says:

    Ending with something written in Latin is also part of my modus operandi.

  15. keranih says:

    Feel free to tell me that I’m looking at this entirely wrong…but is it possible that technical licensing has had the effect of limiting movement into some higher income fields, and thus acting as a wage or employment cap that has made the downward shift (or lack of an upward shift) seem greater than it should have been?

    …I’ve got no numbers, just a gut feel that this (licensing schemes) are more impactful now than they have been in the past, and that if we’re talking about movement in one direction it might be important to look at how movement in another direction has been limited. I did a search on the last post, and didn’t find any discussion on this.

  16. ChrisA says:

    Seems like most of the people worried about the android apocalypse are making the implicitly assumption that democracy doesn’t work anymore after the androids are invented, and that an oligarchy will arise in its stead. After all, if it were the case that a democratic society existed then surely there would be sufficient democratic support to tax the rich folks hoarding the android labor product if they somehow tried to do this. I guess the argument is that having a hoard of androids would allow people to disengage from nation states and head off any attempt to tax them. This to me is a fear similar to the rogue AI one, a malevolent person with access to AI superpowers is going to be a bad thing. I don’t think evidence of lack of harm of previous productivity improvements is really getting at solving this concern. So perhaps there is a bit of a ships passing each other in the night flavour to these threads – the concern of the android apocalyptics is not an economic one, it is a security one.

  17. Brett says:

    Bank Teller employment failing to grow as fast as population (but still going up on net) still seems like a positive story to me on automation replacing labor. They may not have hired as many tellers as they used to, but the existing tellers got to keep their jobs (assuming the turnover isn’t really high). Same thing happened with employment in manufacturing until the late 1990s IIRC.

    Michael Mandel also pointed out that the Declining Labor Share of Income in the US is skewed by disproportionately high shrinkage in the manufacturing sector.

  18. JohnBuridan says:

    Surprisingly good Latin adaptation! 🙂

  19. pontifex says:

    Good point. This is why I previously got accused of “thinking horses are LITERALLY humans”. I apologize for the error. But I’m not going to back down on them basically just being elongated cows.

    Scott, being a horse is obviously a cultural construct! (Link to Folsom street parade tastefully omitted.)

  20. caryatis says:

    >The Economist argued that if not for housing costs the population of the Bay Area would be around 30 million (can’t find the link) instead of ~7 million. That’s just one region where the employment growth would impact things on a national scale.

    You guys realize, right, that the Bay Area isn’t just one more region with high housing costs? It is one of the worst–probably the worst–places for housing costs in the entire country. The point being 1) don’t live there, if you can at all help it, and 2) although housing costs are a bigger problem, it’s not as big as you would be led to conclude if you assume the Bay Area is typical of big American cities.

  21. stephentrobbins says:

    RE: women’s formal workforce participation
    “Because women’s increasing workforce participation is shaped by unrelated cultural trends, most of the rest of this article will focus on male LFPR (from here on: MLFPR).”
    @Yosarian2 @Alef

    Women were able to enter the workforce in part because of technological unemployment of housewives (gas and electric stove, vacuum, dishwasher, washing machine, dryer, infant formula, refrigerator, microwave).

    • alef says:

      I saw that, but I don’t think it’s necessarily relevant why women were able to enter the workforce. Indeed, judged on the quote you repeat, Scott seems to be sort of assuming away into irrelevance (for his questions) the very fact that women were entering the labor force. (Even if it’s true that the reason for women’s entry were for ‘unrelated cultural reasons’ (and that’s a huge if), it just doesn’t follow that you’ll get anywhere in terms of understanding recent labor trends while looking at what is happening to men alone.)

      I was trying to comment on the third graph in Scott’s original post – labor force participation rate by gender, and observe that however or why women enter the labor force, as it happened, year by year, pretty much exactly the same number of men left. (The graph shows proportion, but assuming |men| \approx |women| we can apply it to absolute numbers.) Yes, all sorts of trends and changes are arriving over this period, so who knows what was going on. But to blithely assume coincidence, so we can ignore the mass arrival of women into the workforce, seems to go against the (based on this graph alone) almost spookily close 1-1 offset in workforce participation (men leave, women enter) for a full generation after 1950.

      With a greater potential workforce, wages surely should fall (Scott puzzles about this), but employment similarly has to rise (it would be hard to make a reasonable economic argument that would decouple these.) But by that graph, it didn’t. So there are other things going on to oppose this; these other things must tend to raise wages and lower employment participation. Whatever these other things are, it’s just a bit weird how precisely they compensate (and for a long time!) no more, no less, for the women-entering-the-workforce effect.

      No, I have no explanation for this and can see no reason why ‘women entering the workforce’ explains much, let alone all, of Scott’s puzzles about male labor force participation. But this graph is a red flag to me saying: “don’t just assume this factor away or even that it must be minor/secondary.”

    • Yosarian2 says:

      My point was that, by totally ignoring female employment, he missed a major trend that really changed the whole conclusion.

      Scott had said that according to his numbers, manufacturing jobs started to be lost to automation after 2000 but he didn’t see an impact in the workforce from that.

      But it looks like that’s not correct to me. From 1960-2000, total workforce participation rates rose steadily; sure, male participation rates fell somewhat, but female rates rose faster, so total rates increased. So when he showed that manufacturing employment rates didn’t fall during that period I’m not surprised at all.

      From 2000-today, though, total workforce participation rates started to fall, in exactly the same time period as his other data showed manufacturing jobs started to decline (female rates went flat while male rates continued to decrease, and total rates decreased).

      That looks like it might be at least a mild case of technological unemployment, happening at the same time as the data shows manufacturing jobs being rapidly automated.

      • The Obsolete Man says:

        >From 2000-today, though, total workforce participation rates started to fall, in exactly the same time period as his other data showed manufacturing jobs started to decline …

        Dean Baker makes a good case that it is primarily the result of running chronic trade deficits that started in the mid-90s and then ballooned to about 6% of GDP by the time of the Financial Crisis. Since then we are running a chronic trade deficit of about 3% or so. Essentially, we shifted mfg production and employment overseas during this period – the value of the dollar was too high.

  22. apaperperday says:

    I had hoped someone would leave this comment on the previous post, so I wouldn’t have to bother. Reading your highlights, it seems to have not happened.

    I don’t like your disability claims. Main reason: size of population on disability (SSDI specifically) in both absolute terms and per capita terms has grown tremendously more or less because of women entering the workforce. This is something you mention, but you highlight a few graphs that really don’t take it into account.
    In order to qualify for disability you need to have a certain number of quarters of work under your belt. Women not in the workforce don’t acquire these working quarters. Those that do, become eligible. If you look at the portion of the population that is eligible for disability and on disability, it is much much more stable over time. It is still increasing of course. This is all stuff you know.
    See charts 2 from the SSAB (linked below) for details.

    Another concern on this front is that your controls for aging are atrocious. If you want to see why, ask yourself this: is the age of the average 25-55 year old higher or lower than it was in 1990? If your answer is that it has stayed the same, your control may be able to deal with aging appropriately. However, if we think that the average age in that bucket is changing, then your controls are entirely inadequate. (By controls I’m of course referring to looking solely at 25-55 year olds — if the composition of that group is changing, then we have problems still).
    This is a pet peeve of Andrew Gelman’s, so he’s written about it a bunch. Here is one example of him complaining about this.

    This complaint about ages is relevant both to your disability context, and your employment questions more broadly.
    Perhaps relevant is a different group of economists over at the hamilton project. They’ve looked at employment rates controlling for the historical employment of a whole bunch of (relatively) fine age and gender groups. They seem to find that with those controls, employment is back to (pre-recession) levels, which most other metrics don’t find (PAMLFPR).

    Just to pile on a little further. I don’t know who is on economics tumblr — but the idea that the composition of those who attended college vs hasn’t is not an important determinant of employment & wage premia for these groups, and that the ‘calculations have been done’, is flat out wrong? Here is Noah Smith arguing with Bryan Caplan — Noah is of the opinion that sorting is an important part of the college premium, and if that is the case, then these composition changes would be critical. There is, at minimum, substantial debate about the relevance of sorting and composition effects. Declaring irrelevant, or even solved, is very premature.

    All that said — I think you have managed to pull out what seems to be an important thread here. Women entering the workforce. It is borderline astonishing that the size of the workforce doubled, and we still see inflation adjusted median personal income growth. This is probably because home production got farmed out, increasing the size of the economy at exactly the same time. Nevertheless, external production should be more efficient (otherwise the women wouldn’t work), and some of that production moved overseas, so it couldn’t possibly fully compensate. IF you believe this story — that the entry of women to the workforce diminished wages for everyone, then the last three to four decades were nearly a one-time shock, and (now that its nearing completion) a simple Solow model of capital and labor should expect to see substantial wage improvements over the next decade or two, particularly as aging shrinks the labor force in the US.

    tl;dr — an aging workforce and the entry of women make nearly any claims in this realm very difficult. In particular, aging effects are not dealt with adequately in either of these posts. Combining these two explanations may offer a solid parsimonious model of most of the raised questions.

    • j1000000 says:

      I only read Gelman time to time — he doesn’t accept that Deaton result about more white people dying? That result was a big conservative talking point to support the rise of Trump back then; I didn’t know people were skeptical of it.

  23. On the question of income differences due to differing productivity of labor–as distinct from labor vs capital …

    Different adults have different abilities, and different abilities differ in their market value. There are two situations worth distinguishing:

    1. Differences due to different training. This is the point someone made earlier about the effects of improved education. If high school graduates are more productive than grade school graduates, or college graduates more productive than high school graduates, and the difference in productivity is more than the cost of the additional education, we would expect more people to get the additional education until its benefit in higher wages was driven down to its cost–ignoring complications such as government subsidies that might push the benefit even farther down. So if what we are interested in is income net of the cost of being able to earn it, this sort of difference should be eliminated over time.

    2. Differences due to different innate abilities. There is good evidence that IQ is in large part heritable, and the same is probably true of other intellectual abilities. If so, they could continue to earn scarcity rents for a considerable time. If we were in a society where reproductive success correlated with income, those rents would be eliminated in the very long term (demand for talents held constant) by increases in the fraction of the population possessing those talents, but that doesn’t seem of much real world relevance.

    So one way of interpreting the pattern someone described–income differences declining through the first half of the 20th century than starting back up–would be that the initial differences were mostly of the first type, but that as intellectually demanding tasks became an increasingly important part of the labor market later in the century the second type came into play.

  24. I haven’t read through the long comment thread on the original post, but I thought I would risk a few general comments from the point of view of an economist.

    If someone predicts that technological improvement will make workers much poorer, the obvious first question is why they can’t keep doing what they were doing, producing the same outputs with the same inputs. One can imagine it in terms of a sub-economy using early 21st technology and trading only within itself.

    The answer is that the present economy uses both labor and capital as inputs. If capital becomes much more productive, which is the basic technological unemployment story, the late 21st century economy will bid it away from my imaginary early 21st century sub-economy. Workers can still do what they used to do, but more of the output will have to go to pay the providers of capital than before and they will end up working with a lower capital/labor ratio. This basic point was made, in different language, by David Ricardo, my favorite economic theorist, about two hundred years ago, in explaining why he had been mistaken in claiming that capital accumulation necessarily benefited labor–the conclusion only held rigorously if there was no associated technological progress.

    So it is logically possible for automation to make ordinary workers poorer. The question is whether I think it likely.

    I think not, for two reasons, although I certainly can’t prove it.

    1. Technological progress means that the same amount of capital can be much more productive. So my sub-economy can introduce improved capital goods that complement rather than substituting for labor, make the individual labor more productive even with less capital than he used to work with. A larger share is going to capital than before, but that doesn’t mean a smaller absolute amount to labor.

    2. The sort of technological progress we are imagining makes the society as a whole much richer. That creates a demand from holders of capital for whatever human services the technology doesn’t substitute for. Doormen as status symbols are one example mentioned. Servants more generally. Whatever skills androids don’t substitute for.

    One further point is that it’s a mistake to think of the holders of capital as limited to a few billionaires or trillionaires. In this world, anyone who is willing to hold consumption below income for a while, whether the income is from working at old-fashioned low productivity jobs, being a doorman, or whatever, can accumulate a little capital, and a little capital will provide more for him than his labor used to provide. And very wealthy people may, as many do today, decide that some form of charity is the best use for part of their wealth–which can mean donating money to be used a capital as well as money for consumption.

    • tvt35cwm says:

      So it is logically possible for [technological progress] to make ordinary workers poorer. The question is whether I think it likely.

      I think not, for two reasons, although I certainly can’t prove it.

      Yah, it won’t happen in theory, but it happened in practice. See my comment below about England’s workhouses and penal transportation in the 18th century, and below-subsistence wages in 1901.

      In that comment, I neglected to draw parallels to the contemporary OECD phenomena of NEETs and underemployment, and the USA’s opioid and incarceration epidemics. But that was probably making the reader work too hard.

  25. Rock Lobster says:

    In my opinion, the doorman hypothesis, or some variant, is most likely what’s going on here. The ability of the yuppies and rich to invent increasingly elaborate but functionally inert distinctions between products and services is infinite, and the main way you do that is by making an elite labor-intensive (or some other scarce commodity-intensive) version of something that sets it apart from the run of the mill. Organic food, grass-fed beef from the highly-educated hipster butcher down the street, hand-crafted furniture made from some expensive kind of wood that you bought in a cute little store run by a nice old lady, bars and restaurants with human employees serving small-batch bourbon or creative small plate meals, XYZ different “investments” in a child’s development, you get the idea. In the future I will still need a way to conspicuously spend money to impress my girlfriend, and that will likely involve paying a person to do something that a robot could theoretically do almost as well like play the violin or bring food to the table, or buying some other scarce thing like a weekend in a beachfront property (how is that gonna be replicated?)

    This is not an ideal outcome of course because it means that most of the population is simply helping the elites kiss their own asses and play status games, but the pure economics of it suggest to me that you don’t wind up with 50+% of the population hopelessly unemployed just because the robots can wait tables, open doors, manage retail stores, drive trucks, deliver packages, educate kids, etc.

  26. baconbits9 says:

    What do you mean it’s time for a universal basic income? You should be grateful for the hotel doorman job you have!

    I really object to the tone of this part because quite frankly all the expectations for the post automated apocalypse are that doormen would live like relative kings compared to people in the middle, and maybe even upper, class today. Most poor people would outright reject a middle class lifestyle from a century ago, and the middle class from a century ago would outright reject a middle class lifestyle from the century before. AT LEAST. I have no sympathy for the hypothetical doorman because if the last two centuries are any guide he will be complaining about not having flying cars while enjoying luxuries beyond our predictive abilities. Instead of imagining what his life probably would be like the term ‘doorman’ makes us imagine a well dressed, polite servant of the wealthy who can’t afford to send his kids to school, eats meat once a week and lives in a tiny apartment and can’t afford a car.

    • John Schilling says:

      It doesn’t matter whether you have sympathy for the doorman. Your children, I can reasonably predict, will have sympathy for the doorman. To your grandchildren, being forced to wait hand and foot on some rich SOB, all the while forced to live in a mere 3000-square-foot hovel and with naught but a self-driving Tesla to get about, will constitute deprivation and indignity beyond tolerance. When they go off to uncollege, they will join radical political movements where they learn to protest and lobby effectively for outright communism in the name of the oppressed doormen. When they come home they will politely tell you that they love you but they won’t always make sure you are out of earshot before they start apologizing to their friends about grandpa’s offensive paleoreactionary views (they didn’t know any better in his day) but no matter because he’ll be dead soon and we can be polite until then.

      Possibly you might think of things you could do now to forestall that happening then. The easiest, of course, would be to not have grandchildren.

    • SaiNushi says:

      100 years ago, $800/month was a fortune. Today, it pays for 1 month of rent. Plus, having a job that you find fulfilling is important for mental health reasons. We get by on what we have, but both of us feel like we’re wasting our lives away because we can’t afford get the certifications to break into the computer industry. I recognize that having heating, a/c, and a car are luxuries compared to the poor in other countries. But we’re still living paycheck-to-paycheck. We still have to beg money from family and friends any time we run into an emergency. We still live under the stress of knowing that right now, we have no savings, and can’t afford to have a “staycation” or take sick days.

      (As mentioned in thread from my original comment above, at this point, we’re hoping the car lasts a few months past being paid off so he can get certified)

  27. manwhoisthursday says:

    The potential problem of androids is not that many humans will then be incapable of doing anything of economic value. The problem is that humans will be incapable of doing anything of enough economic value to make it worth their while and/or enough to keep their standard of living above subsistence level.

    • baconbits9 says:

      The problem is that humans will be incapable of doing anything of enough economic value to make it worth their while and/or enough to keep their standard of living above subsistence level.

      Somehow robots are cheap and build everything and yet everything is expensive and people starve to death?

      • manwhoisthursday says:

        I suppose my comment was worded ambiguously enough that it could be misunderstood. But I didn’t say that people would starve to death in such an society, I said that many people would not be productive enough to raise themselves above subsistence level through their own labour.

        Now, if android productivity is super high so as to make things cheap, then presumably some form of generous welfare/guaranteed income will be cheap as well. That may create its own problems, but you won’t necessarily see people starve.

        • manwhoisthursday says:

          Jordan Peterson on the problems we are likely to face with a guaranteed income:

        • baconbits9 says:

          How could they possible raise their productivity to subsistence level but not higher?

          Questions that need to be addressed:

          1. If robots are producing super cheap goods and people can’t pay for them who are they producing those goods for?

          1a. If robots aren’t producing those goods what stops humans from producing them and selling them to one another?

          1b. If robots are producing and selling these goods how are there masses of people living at subsistence level?

          • manwhoisthursday says:

            You could very well end up with a situation where the rich only think it worthwhile to trade with each other.

          • baconbits9 says:

            So what stops the not rich from trading with each other? For 200,000 years of human history everyone was not rich, and they used trading and technological advances to turn into rich, now we are going to revert back to not rich and just sort of hang out and do nothing?

          • manwhoisthursday says:

            See David Friedman’s first comment below.

          • tvt35cwm says:

            re 1b. It’s called “the informal economy,” or “the black market”.

            Theft, diversion, own production and exchange.

    • Brett says:

      If androids are both extremely cheap and capable (enough so that humans basically can’t compete with them at work except at the bare subsistence level), then that would make setting up a robot-supported safety net or “basic income in-kind” much easier. You could have robot-maintained public housing, robot-maintained food production and processing, robot-maintained public broadband/wifi, and so on and so forth. If the robots can maintain themselves on top of that and the whole system is really efficient in recycling, then the operations cost of maintaining it could be low too.

      • manwhoisthursday says:

        Right. The implications are that many people will be unemployable, not necessarily that many people will starve.

        • Brett says:

          If people are alive, free, and comfortable because of such a robot in-kind support system, then it doesn’t matter as much if they’re unemployed.

          • tlwest says:

            If you are financially comfortable, unemployment might not matter as much, but it will still matter a great deal.

            At least in my circle (middle class North American), unemployment was poisonous to one’s morale and general mental health, even when there was generous support from friends and family.

            Almost everyone needs to feel they aren’t a parasite in order not to feel miserable (and I’m not certain I’d want to live in a society where people *did* feel comfortable).

            Now having said that, there’s a lot of other ways than a job to gain self-worth, but the snag is that it’s often not quite enough incentive (especially since these other things are somewhat amorphous – unlike a job, where your worth is put in your bank account each month).

            No, unemployment provides a misery well above and beyond just the financial problems.

  28. benquo says:

    Why is it surprising that rent extraction has to do with housing prices?

  29. baconbits9 says:

    But this is a good point – why shouldn’t wages have crashed when the labor supply doubles?

    This is not backwards, but it ignores the equilibrium. Women didn’t wander into the workforce, they were drawn in by wages and benefits. If you discover a new oil field that is so large it doubles the worldwide production of oil at current prices it will cause the price of oil to crash, but this is not a good analogy for women entering the workforce. They were not sitting at home eating dry crackers and water just waiting for a law to be repealed allowing them to work.

  30. manwhoisthursday says:

    But this is a good point – why shouldn’t wages have crashed when the labor supply doubles?

    Supply must equal demand, so while women working does increase the supply of labour, there is a corresponding demand for labour created by them spending their new wages.

    Now, this is over the whole economy, so there may very well be sectors of the economy where wages fall due to an influx of workers willing to do that job. So, you might get a fall in wages for doctors, for example, as women entered that field. But that might be compensated for by a rise in wages in nursing, as women leave that field to be doctors. (No idea if this example is true, BTW.)

    I also think it’s important that women did not enter the workforce all at once. That might have created a more noticeable impact.

    • The other point is that the women were not switching from leisure to employment, they were switching from household production to market production. That created a demand for market products that substituted for household production–preschools, restaurants, etc.

  31. ricraz says:

    Even in the world with perfect android laborers, instead of letting the androids labor and letting humans live in leisure and share part of the pie, we’ll have the opportunity to sleepwalk into letting a few android-owners get super rich and giving everyone else jobs as hotel doormen. What do you mean it’s time for a universal basic income? You should be grateful for the hotel doorman job you have!

    Correct me if I’m wrong, but it seems like you’re taking a strangely accelerationist position here: “It’s worrying that mass unemployment might not happen, because then people won’t push enough for mass redistribution.” I think our priors should be strongly weighted against arguments of the form “We want bad thing X to happen, because it will make good thing Y more likely”, unless you have a very clear mechanism which links them. It’s plausible that inspiring large-scale political protest is one such mechanism, but it’s also plausible that people are in a worse position to agitate for change when they have no jobs or money.

    But also, if androids actually take away lots of jobs, goods will become much cheaper, and society as a whole much wealthier. So it wouldn’t take much spending on welfare to leave unemployed people pretty well-off, and as long as our political systems don’t transform beyond recognition, I have trouble seeing how voters wouldn’t go for that. The bigger problem is if people’s expectations also increase – in the same way that Westerners think of $10000 a year as very little, when almost everyone who has ever lived (including most people alive today) would be ecstatic about earning that in real terms.

    My more general point was that it’s not just status-driven jobs which will survive but also all jobs driven by social interactions, insofar as we’d still value having social interactions with other people. I think sports are very good examples of activities that used to be pretty niche, but now employ vast numbers of people, in a way that would be very hard to automate. At professional levels it’s entertaining because humans are doing it; at amateur levels it’s fun and social because your friends are doing it. Imagine the sci-fi and fantasy fandoms being industries in the same way as sports are – star personalities, regular events, local community managers, clubs for kids… What’s stopping that from existing now? Limited budgets + organisational difficulties (which could be solved if budgets were big enough to pay more people). Unless almost all the wealth created by automation goes to very few people, this is the sort of thing that will flourish as automation progresses.

    See also my second reply on the original essay:

    [Not just doormen, but] also things like making handcrafted goods, being artists and musicians, running events like meetups, being sports coaches or players, and generally playing a partly-social role in subcultures, like running hobbyist shops. I’ve written about this more here (scroll down to the section headed “The continued economic relevance of humans”).

    • Kevin C. says:

      making handcrafted goods, being artists and musicians, running events like meetups, being sports coaches or players, and generally playing a partly-social role in subcultures

      And, again, what happens to the sort of people who are fundamentally bad at that sort of thing?

      • ricraz says:

        Probably doing the equivalent of burger-flipping – like being a greeter at an otherwise fully-automated McDonald’s. I’m not claiming a utopia is going to be created by blind economic forces alone. But do note that such a person would likely have access to many well-organised subcultures matching their interests, in the same way that even a minimum-wage sports fan can avidly participate in sports culture today.

  32. SaiNushi says:

    My partner has an associates in Network Administration. He is one of those highly intelligent people that has trouble with schooling because he can’t help correcting the professors when they’re going against the book or what he’s learned by experience, so he had a hard time going on to getting a bachelors. The original plan was to get an entry level job in the field and study for A+ certification.

    Well, A+ certification costs about $400. We were unable to find an entry level job that didn’t need A+ which would pay more than $10/hour. For $12/hour, he could be a McDonald’s Manager. Working pizza delivery, he makes $9/hour plus tips, which rounds up to $15-$20/hour. But then he’s not getting the experience in his field.

    Two years of experience in his field, at $10/hour, would not allow him to take the A+ certification, which needs to be renewed every 3 years to prove that he’s up-to-date on technological standards. So we have two things preventing him from actually breaking in to the field he went to school for. The first is that the wages for entry level jobs are too low to keep him certified, and the second is that certification has to be renewed constantly due to the technological changes in network administration.

    His family is not in the technology field, so they can’t give him a leg up with a decent reference. My family is, but they don’t know him well enough to provide a reference, and are traditional enough to not like him due to the fact that they didn’t pick him for me, so are unwilling to provide a reference, even though they were willing to provide a reference for the husband of my best friend whom they know even less.

    I have no idea how typical our situation is, but I suspect it is very typical for a person trying to break into the field from lower middle class with no references.

    • Noumenon72 says:

      I read this a couple times and it seems like you are treating $400 like a serious obstacle. You can make that in a single week at those $10/hr jobs. The return on getting a job is so great you could make a profit putting it on a credit card. Lack of a reference from family never cost anyone a job either. You are misidentifying the real obstacles and settling for excuses.

      • Barr says:

        I’ve frequently seen well-off people misunderstand/dismiss lower-class problems. I think this is so common because lifestyles can be so completely different today. If you’re feeling charitable, please consider a few differences.

        In America, poor people usually don’t have access to reliable transportation. Most places have some of the worst public transportation infrastructure of anywhere in the developed world. When I was going to community college, I was taking three hours of buses each day. Public transportation is both expensive and unreliable.

        Poor people don’t have access to good credit. Consider taking out $400 on a credit card. They don’t get certified immediately (things don’t take less time because you’re poor). And they certainly won’t get a job with certification-prerequisite immediately. Instead, they will have to pay huge interest and can end up in spiraling debt. No one should take out a loan that is so far beyond their means from a credit agency. It’s just bad advice.

        Getting certified has other obstacles as well. You should have access to books, and physical access to people who have worked in the field.

        >Lack of a reference from family never cost anyone a job either.

        That’s obviously not true. Recommendations and work history are the most important parts of job applications. If you lack a solid work history, a strong recommendation is even more important.

        Again, I understand that it’s very difficult to imagine the kinds of problems that lower-income people face. But, having escaped poverty and helped many others to do the same, I implore you to at least try to reconsider some of your assumptions.

        • honhonhonhon says:

          OP said that the certification costs $400. If they also had in mind $400 more in books and tutors, they could have said so. I mean I understand being charitable, but surely when a specific number is provided, that number has some meaning. Perhaps the $400 was meant as a monthly cost for courses, which would make the “the wages for entry level jobs are too low to keep him certified” claim make more sense?

          • Barr says:

            I was just going off of my intuition and experience (my best friend got his A+ in highschool). Here’s what a quick Google search picks up $422 for two exams flat which is what I suspected. https://certification.comptia.org/faq/how-much-does-the-a-plus-certification-cost

            Generally people aren’t going to mention all of the misc. expenses that seem optional because it makes them seem entitled. But there are a lot of things there. What happens if you fail the exam? The prospect of throwing away 200 or 500 dollars and all the time spent studying can be pretty harrowing.

            By the way, they talk about some programs to mitigate the expenses in the link. So the obstacles to getting an A+ certification seem to be taken seriously.

      • SaiNushi says:

        25% for taxes (our state is killer on this)- $300/week, $1200/month
        assume we’re both making that: $2400/month
        $800 for rent (includes water, sewage, rent insurance, misc fees)
        $150-$250 for electricity
        $250 for the car payment
        $250 for the car insurance
        $100 for internet (anything less has us at 5mbps upload or worse, which I can’t work off of)
        $400 for basic groceries, gas, laundry
        $75 for his cell phone

        leaves us with $275-$375/month IF everything goes perfectly (average to $3900/year)

        My glasses cost $400-$600 every other year (-16ish with a -5ish angle)
        Plus, we have to save up for my taxes because my $1200 is before tax, I get a 1099. So I get charged taxes on $1800 for making $1200. 25% of $1800 is $450. Minus various discounts due to income level, I owe about $1200/year. Throw in $50 for an oil change twice a year. that’s $1600/year that we can predict of excess costs, leaving us $2300/year.

        Throw in even 1 disaster, and we’ve just spent our entire savings for the year. And we’re only human. We get sick, and can’t work some weeks. Assume two missed weeks a year for each of us, and we’re at 700 a year. So after all is said and done, each month, we have about $60 left. Due to stress, we look at the $60, say “I guess we’ll start saving next month”, and eat out a couple times a month. Oops.

        No, I was not including classes before the A+. He’s good enough to learn off of youtube videos and library books, which is what we’ve been doing.

        BTW- the complaint is not that our lives are bad now. It’s that we have no room for growth, despite having the intellectual capacity to get a better job.

        • Matt C says:

          You might consider getting on reddit and asking for detailed money management advice on some of the living expense related subreddits. (/r/frugal? /r/personalfinance? I’m not sure which is the best, but there are a few different ones.)

          It doesn’t sound like you guys are train wrecked. It’s probably possible to find ways to either save more or earn more that would make some real (not transformative in the short term) difference.

          Not having any slack in your finances is stressful and it does make growth very difficult. I hope you can figure out some changes that help.

        • baconbits9 says:

          Why is your car insurance $250 a month? in the US car insurance is fairly easily obtained for well under $1000 a year, $3,000 a year.

          • Deiseach says:

            Why is your car insurance $250 a month?

            Age? Younger drivers get charged a higher premium? Don’t know if there’s a female driver discount, I have a vague idea these were ruled illegal as discriminatory or something so if the car is insured for a young male driver he’ll pay more?

            Size of car (if they do a lot of travelling for work may need a larger car, and insurance goes by engine capacity over here)? Claimed on a previous policy for an accident and is now charged for a higher premium? Location? Perceived risk?

            Those are the main reasons off the top of my head that I’ve seen as why insurance is dearer for some people than others.

          • Protagoras says:

            Credit rating also has a big impact on car insurance rates.

          • Nornagest says:

            Don’t know if there’s a female driver discount, I have a vague idea these were ruled illegal as discriminatory or something

            Might be in some states, I don’t know, but in mine men do get charged more — especially young men, though there’s a small gap even later.

            Over here, engine size is not directly factored in; instead, insurers look at specific models (and sometimes specific trim levels) to see how much they’re expecting to pay out in claims. All else equal, larger, sportier, and more expensive cars tend to have higher insurance, but this isn’t a hard rule — it’s entirely possible for a V8 coupe to be cheaper to insure than an I4 hatchback, if the former’s a lot more reliable and/or has fewer accidents expected than the latter for whatever reason.

          • SaiNushi says:

            Bad credit. A couple crashed for each of us. Insane drivers in our area, plus a couple instances of us getting blamed for accidents we weren’t part of but our insurance refused to actually stand up for us despite having all the evidence that we weren’t involved in an accident, pictures showing not even a single new scratch since our previous claim (which was kinda impressive over a 1 year period, since I do mean literally not even a shopping-cart level scratch added). But since “the police report is already written, there’s nothing we can do”.

          • baconbits9 says:

            In short you should be aggressively shopping around for car insurance, including asking perspective insurers what type of car you could swap for that would give you lower rates.

            If you don’t have the time or willingness to commit to this call your insurance company and tell them that you are considering other options but will be happy to stay with them for a 15% rate reduction. Worst case scenario is that they say no and you say thanks for your time and don’t cancel.

            Do the same thing with every non contracted bill you have. Then figure out how to cut your electric bill by $50 a month.

      • Deiseach says:

        You can make that in a single week at those $10/hr jobs.

        If you get forty hours that week in work.

        If no tax etc. is deducted from your pay.

        If you don’t need to buy food, pay rent or any other bills, and can put every single penny to that certification.

        Most wages go on pesky things like “I have other bills to pay”, that’s why it takes time to save up instead of “here, let me hand over every cent I earned this week, no don’t be silly, I don’t need to buy food or pay for electricity!”

        • shenanigans24 says:

          Or you could tuck away $50 bucks a month and have it within the year. Or sell your car for a cheaper one. Or sell other stuff. Or move in with family or friends and earn it in a month.

          • SaiNushi says:

            Car can’t be sold or traded in, it’s basically constantly 2 months behind due to a period of 2 months where he wasn’t working. We’ve tried selling our other stuff, but we’d get maybe $50 for the lot of it, so we decided it was better to keep it since it would cost way more than that to replace it. Living with family or friends is not an option. That $50 a month doesn’t seem like much to put aside, but that’s almost our entire discretionary budget. We tried putting aside $20/month back when it was cheaper, and by the time we got anywhere they had upped the price on it. We didn’t spend a single penny on eating out for six months, and by the end of that we still couldn’t afford for him to take it, because wouldn’t you know, as soon as we had the money for it, we had to spend it all on tires and a tune-up.

            A few more months, and the car will be paid off. If we can just keep it running until he can take the dang tests, we stand a chance.

  33. baconbits9 says:

    I find it odd how people just gloss over that [statement in parentheses]. The right story is the simple one, where ATMs reduced employment among tellers. Rise through population growth doesn’t count.

    This is incorrect, there is no story on either the TU is going to be fine or the TU is going to be a disaster side that postulates every sub-sector of the economy should remain at constant proportional representation. The question about TU is if the economy will continuously find employment opportunities for the vast majority of the population that wants it. There are two general subsets to the broad concern, first will technology reduce the need for human labor as an input to the point where demand for it falls and causes wages to drop and the second is will technological displacement cause employees of specific sectors to lose their jobs and render their human capital moot leading either to dramatically lower wages or actual unemployment.

    The ATM story is a strike against both and it is even stronger than it appears on the surface. First we can observe that total employment, hours worked, LFPR all increased for the first 30 years after ATMs were introduced and for about 20 years after they started widespread adoption. The fact that teller employment growth stalled is immaterial, the fact that major technological improvements were introduced and adopted (and there were many more in many more sectors) in concert with rising job opportunities is what is relevant. The second point is that there was no crash (though some dips) in total employment within the subset. This is a direct blow to the “what about poor Jane, she has been a teller for 30 years, she isn’t going to get a job installing ATM machines and isn’t going to be retrained as a coder” as the majority to overwhelming majority of people employed as tellers could have continued to find employment within that specific sub-sector for decades to come.

    This is also a massive understatement, ATMs were not the only technology that threatened to put tellers out on the street, computers for individual tellers increased the number of customers that they could handle in a day, increased credit card payments and later online banking also are dramatic shifts that put downward demand pressure on total teller employment.

    • Wrong Species says:

      Most technology is not either pure complement or pure substitution for labor. Even in manufacturing and agriculture, there are still jobs. But it is wrong to say that because there are still jobs, no automation took place. With bank teller jobs, it’s a little different because they can transition to mostly doing customer service with the same job title. But if ATMs* were more complementary than substitution, than the demand for tellers as a percentage of jobs would go up. Since the percentage went down, that story is clearly wrong. The total number of tellers is irrelevant because it’s partly a function of population growth. If we had a population growth rate of 100%, with a corresponding percent rise in tellers jobs by 100%, then suddenly a new technology came out and teller jobs were only rising by 10%, pointing to still positive growth doesn’t rule out automation. According to the Bureau of Labor Statistics, job outlook for tellers is projected to decline by 8% while jobs for the rest of the economy is projected to increase by 7%. Automation is definitely a factor there.

      I also never said anything about the reduction, percentage wise, in teller jobs as indicative of technological unemployment in general. It’s just that some people use it as evidence against technological unemployment and that’s the wrong conclusion to hold.

      Think about it this way. How often do you think people go to the bank now for customer service reasons compared to before when they went for mundane things such as cashing a paycheck and withdrawing a few bucks? How many times have you gone inside a bank this year?

      *You’re right that that there are more than ATMs involved. Here I’ll just use ATM as a stand in for all those technologies.

      • baconbits9 says:

        But if ATMs* were more complementary than substitution, than the demand for tellers as a percentage of jobs would go up.

        No, it depends where we are on the demand curve, what the elasticities are, the costs of the capital and the training etc. People don’t have infinite demand for individual goods or services, something can be free and it will be turned down even if the consumer had previously paid for a similar good. If a complementary technology increases productivity enough it can reduce the total people needed to meet the demand at the new price, or leave it flat.

        I also never said anything about the reduction, percentage wise, in teller jobs as indicative of technological unemployment in general. It’s just that some people use it as evidence against technological unemployment and that’s the wrong conclusion to hold.

        No one disagrees that technologies have made employment in specific roles change, the point about TU is the twin claims I mentioned, that either it will cause broad based UE, or will cause narrow based UE for people who don’t have transferable skill. The ATM example is one that refutes both and it is a correct conclusion to draw.

  34. nameless1 says:

    “Why shouldn’t the wages of systematizers have crashed when empathizers entered the workforce?” Different interests and abilities led to doing different jobs?

    A postindustrial service economy is pretty good for empathizers. Every single time I asked teenage girls in my family or acquantainces about their career plans it included the sentence “I want to work with people.” or “I want to work with kids.” People are going to be around, hopefully the short people we call kids are also going to be around, and coming up with ideas for new and new kinds of services people who like to work with people are willing to do is probably not hard. Whether an “I pay you for rubbing my back, you pay me for rubbing my back” economy is workable, I don’t know.

    People who will be in trouble are mostly lower IQ systematizers. I.e. car mechanic type dudes. You can pay them BI but bored men are always dangerous to have around. You see, we often have dreams like getting adventure, experiencing danger, proving our courage… looking at the popularity of pirate movies, who were when all is said and done criminals, we should see simply male boredom as a significant cause of crime. The only reason it is not widely recognized that good people have trouble imagining crime as fun. A necessity, sure. A means for an end for ruthless people, maybe. But fun? I think if you are sufficiently immoral it is fun. It has all the properties of adventure.

    And when some bored men turn to crime for fun, other men figure getting paid to stop them is also fun. Security guard, cop, whatever. It also brings you danger and adventure but law is on your side and you have a far easier way with your conscience and moral qualms etc. etc.

    So I would predict they will mostly play cops and robbers with each other.

  35. Kevin Stuart says:

    I run sales for a midsize AI startup. Our tech would reduce the customer service team of most companies by 90% due to a series of NLP breakthroughs that mimic emotion and onversational context swapping. Maybe 1 in 20 demos turn into a sale as large enterprises are not ready for such disruption and middle management are very risk averse. In 10 years every one of these companies will have our tech or something similar, not because the tech has gotten better (though it will be) but because it will take at least that long to change minds/have the middle management layer replaced be people more technically savvy. The strange lack of increased productivity is not because of the technology, in my experience it’s newrly entirely due to the current lack of acceptance of the technology. Once it starts getting accepted, things will change VERY quickly.

    • tlwest says:

      Our tech would reduce the customer service team of most companies by 90% due to a series of NLP breakthroughs that mimic emotion and onversational context swapping.

      I suspect the problem is not so much that people are “not ready for such disruption”, but that identical claims have been made for AI for the last 30-40 years. While I’m certain that this time AI really will pull a rabbit out of its hat, the bridge to the future has been well and truly burned by the previous 30 years of salesmen.

      • Mark Atwood says:

        If/when it really does finally work, the bridge will be crossed by the usual assortment of startups who need TCSRs faster than they can train them, of companies that are in such a dire situation that their choice becomes “use this tech or go out of business”, and crazy sponsoring executives who give it a try just as it actually starts working, which gives them a huge win in their competition against other executives.

        Which implies that @Kevin Stuart should not be reaching out to established companies with established processes. He should be focusing his sales outreach on the startups, the desperate, the the crazy, and the hungry, with a sales and payment model that is palatable to them. (But the, he’s the professional at this, my own bailiwick in the crazy tech world is very different.)

  36. zima says:

    “why shouldn’t wages have crashed when the labor supply doubles?” Because that argument contains a fallacy of composition. More labor means more supply as well as more demand, in roughly equal amounts because people generally consume or productively invest almost all of their wages. If labor supply increases in a particular job, it would likely reduce wages in that job because the increased supply would be concentrated in that job but demand would be spread across the entire economy. But if labor supply increases across the whole economy, we shouldn’t see falling wages unless there is some natural resource constraint, which we seem to have broken free of in modern times. In fact, if the labor is being used productively, it could increase the productive possibilities for the whole economy and thereby increase other workers’ wages. I believe there is research showing that larger countries do better economically simply because their larger labor and consumer pools allow a greater degree of specialization; certainly this is clear if you look at which developing countries are growing the fastest. That’s why Malthus was wrong and wages were able to continue increasing rapidly alongside population in modern times. When people say they are concerned about wages falling, they really mean wages only in specific jobs and not wages across the entire economy (like there are studies that immigrants reduce wages in the specific jobs they compete in, but the research generally find that they increase wages in the economy as a whole).

  37. Vincent Soderberg says:

    i feel to tired generally to really participate, but 80 000 hours wrote a problem profile on housing/land use https://80000hours.org/problem-profiles/land-use-reform/

  38. Salem says:

    There is a strange equivocation, both in your original post and this one, between unemployment and wages. And no, stating that there is a minimum wage doesn’t explain much, because very few people earn the minimum wage.

    Our technological future is absolutely going to make some people’s wages fall dramatically (and others rise dramatically). It’s not going to cause unemployment.

    One point I don’t see made enough is that on the margin, computing power is very cheap, and all our assumptions of what we do with computers are based on this. But this is a reflection of current lack of uses for additional computing power, not an invariable law of the universe. If in our AI future makes the marginal use of computing power very valuable, then we will build out more computing power until either (A) we have satisfied all our desires or (B) we have shortages of critical resources, making computing power expensive. (A) is exceedingly unlikely, given that people already want to do crazily resource-intensive things like go to Mars. So (B) is much more likely – and think what that will imply. At the moment, we think nothing of compiling code, because computing power is cheap. But if running a compiler is taking away resource from your AI stockbroker or AI brain surgeon, you’ll think much more carefully.

    So perhaps we will have a world where our jobs are hand-compiling assembly code, hand-running unit tests, manually doing word processing, etc, on the projects of AI workers handling the higher tasks. That may sound dystopic to some, but it’s a very different prospect to technological unemployment.

    • Matthias says:

      Intriguing, but unlikely. Humans are supremely inefficient compilers.

      A human needs roughly 100 Watt to stay alive. (100 Watt works out to roughly 2000 calories a day.) My Raspberry Pi compiles much faster than me, and uses much less energy and you can shut it off when not in use.

      • Salem says:

        Of course the Raspberry Pi can compile much faster than you. It can also run all kinds of other software much faster than you. If the other software (e.g. AI stuff) is highly valuable, you won’t want to use the Raspberry Pi to compile. This is basic comparative advantage. The humans are sitting around unemployed, so they are consuming those calories anyway – you can’t melt down humans to make more Raspberry Pis.

        Superman can wash the dishes much better than me, and he can solve crimes much better than me. We still don’t want him to wash the dishes, because he can solve even more crimes if I wash up, and crime-solving is more valuable.

        • US says:

          Having Superman doing crime solving also seems very inefficient.

        • faul_sname says:

          you can’t melt down humans to make more Raspberry Pis.

          [citation needed]

          In a situation where the value of other software is so valuable that having a human compile code is a better use of resources than having a computer do so, I don’t see how it’s plausibly worth it to use all of the resources necessary to feed / shelter that human.

    • Murphy says:

      “At the moment, we think nothing of compiling code, because computing power is cheap. But if running a compiler is taking away resource from your AI stockbroker or AI brain surgeon, you’ll think much more carefully.

      So perhaps we will have a world where our jobs are hand-compiling assembly code, hand-running unit tests, manually doing word processing, etc”

      no, really really just no.

      First it would take about a billion years to hand -compile a large program.

      Second humans fuck up too much.

      Third if your total output for the day can be beaten by a $1 arduino which will also work 24/7 and make less mistakes you’re going to be replaced by the arduino.

      CPU power is too cheap to build out for humans to ever compete on simple processing power.

    • Iain says:

      I write compilers for a living. This is not a plausible future. It’s like speculating, halfway through the industrial revolution, that new uses for steam engines will make it so inefficient to use them for regular tasks that trains of the future will be powered by hundreds of men peddling furiously in the locomotive.

      If you have the computing power to run your unit tests — or, for that matter, the program you just compiled — then you have the computing power to automate that process. The compiler will generate better code than the vast majority of programmers; even the handful of humans who are capable of writing better code would be orders of magnitude slower. If you wanted your programmers to be even remotely productive, the computing power spent running their tooling would exceed your savings from hand compilation.

      Every major trend in computing would have to completely reverse itself to make this happen.

  39. userfriendlyyy says:

    Congress commissioned a report on the pace of technological unemployment that was published in 1966 with some very sensible ideas that were promptly ignored.

  40. Doug says:

    > What to do about housing costs? Obama’s outgoing team of economic advisors published a paper with policy recommendations which can be see here. Basically if calls for increased density and by right zoning (ie you can’t put someone’s bulding permit through 3 years of discretionary review and comment).

    One proposal, which I don’t see anywhere, is the creation of a federal property tax. It’s clear that property taxes are too low in many high-cost metros. This is particularly true in California (Prop 13) and New York City. You get a situation where 60 year old welders are sitting on $5 million homes in Palo Alto, because they’ve already paid the mortgage and only pay a pittance in taxes. A lot of low productivity people are squandering housing in high productivity metros. A second order effect is to create a class of property millionaires who lobby local governments to restrict new housing supply.

    Why not create a new tax at a federal level, directly levied on property. If you want to make it even better from an econ standpoint, only levy it on the unimproved value of land. This would get places like CA and NYC closer to fair property tax levels. Plus raise a bunch of revenue to cover the deficit, with very minimal economic deadweight loss. I think you could easily get a coalition to pass it. Democrats clearly want higher taxes. And Republicans would be happy that it’s mostly sticking it to Blue staters in places with high real estate values.

    • Matthias says:

      Nah, way too sensible, so would have no chance of passing.

    • Brad says:

      It’d take a constitutional amendment. A tax on real property is unavoidably the kind of direct tax that the current Constitution forbids (well requires to be apportioned, but that amounts to the same thing.)

      • yodelyak says:

        I’m less sure this is true. A tax on avocado exports is going to hit CA and FL harder than ME or AK. But it’s okay. A tax on annual personal earnings after the first $10m would hit mega-wealthy places like NY and CA much harder than, say, Wyoming. But those are fine. A tax *only* on Californians wouldn’t be okay, but a rule that turns on some factor other than which side of a state line you are on, should still be okay, right?

        • Brad says:

          It’s as clear as anything in Constituional law that a direct tax includes a tax on real property.

          Here’s the discusison from NFIB v. Sebelius (the Obamacare case):

          Even if the taxing power enables Congress to impose a tax on not obtaining health insurance, any tax must still comply with other requirements in the Constitution. Plaintiffs argue that the shared responsibility payment does not do so, citing Article I, §9, clause 4. That clause provides: “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” This requirement means that any “direct Tax” must be apportioned so that each State pays in proportion to its population. According to the plaintiffs, if the individual mandate imposes a tax, it is a direct tax, and it is unconstitutional because Congress made no effort to apportion it among the States.

          Even when the Direct Tax Clause was written it was unclear what else, other than a capitation (also known as a “head tax” or a “poll tax”), might be a direct tax. See Springer v. United States, 102 U. S. 586, 596–598 (1881). Soon after the framing, Congress passed a tax on ownership of carriages, over James Madison’s objection that it was an unapportioned direct tax. Id., at 597. This Court upheld the tax, in part reasoning that apportioning such a tax would make little sense, because it would have required taxing carriage owners at dramatically different rates depending on how many carriages were in their home State. See Hylton v. United States, 3 Dall. 171, 174 (1796) (opinion of Chase, J.). The Court was unanimous, and those Justices who wrote opinions either directly asserted or strongly suggested that only two forms of taxation were direct: capitations and land taxes. See id., at 175; id., at 177 (opinion of Paterson, J.); id., at 183 (opinion of Iredell, J.).

          That narrow view of what a direct tax might be persisted for a century. In 1880, for example, we explained that “direct taxes, within the meaning of the Constitution, are only capitation taxes, as expressed in that instrument, and taxes on real estate.” Springer, supra, at 602. In 1895, we expanded our interpretation to include taxes on personal property and income from personal property, in the course of striking down aspects of the federal income tax. Pollock v. Farmers’ Loan & Trust Co., 158 U. S. 601, 618 (1895). That result was overturned by the Sixteenth Amendment, although we continued to consider taxes on personal property to be direct taxes. See Eisner v. Macomber,
          252 U. S. 189, 218–219 (1920).

          A tax on going without health insurance does not fall within any recognized category of direct tax. It is not a capitation. Capitations are taxes paid by every person, “without regard to property, profession, or any other circumstance.” Hylton, supra, at 175 (opinion of Chase, J.) (emphasis altered). The whole point of the shared responsibility payment is that it is triggered by specific circumstances—earning a certain amount of income but not obtaining health insurance. The payment is also plainly not a tax on the ownership of land or personal property. The shared responsibility payment is thus not a direct tax that must be apportioned among the several States.

  41. jms301 says:

    Womens entry into the workforce surely had a large technological component?

    I mean washing machines, dish washing machines, vacuum cleaners, microwave ready meals are all technological developments that freed lots of women’s time and let them start doing more complex jobs.

    Exactly how big a component was political and how big technological is an interesting question.

    • Doug says:

      I can’t find the link right now. But starting in 1960, most of the time gains from homemaker technology has been sucked up by increased childcare. The average working mother now spends more hours per week on childcare than the average stay-at-home mom from 1960.

      This is driven by a couple major factors. First there’s a cultural shift against “unsupervised playtime”. In the 1960s, seven year olds would often visit the park down the street by themselves. Nowadays that would likely get a parent arrested. Second there’s been a big increase in homework and extracurricular activities, mostly driven by high-level educational policy.

      Kids must spend more hours on nights, weekend, and the summer doing academic work. Which often requires parental assistance (e.g. many science fair projects are essentially done by parents). Also kids, particularly college-bound high-schoolers, are expected to have a litany of extracurriculars and activities. That requires a lot more time from parents to drive kids to and from these activities.

      Finally, children today tend to have fewer friends. Particularly fewer friends that they physically visit, with online social networking heavily substituting here. If Alice goes over to Cindy’s house afterschool, that mostly frees up Alice’s mom’s afternoon, while only adding marginal time costs to Cindy’s mom. If they regularly switch off, both Alice’s and Cindy’s mom reap significant time gains from this arrangement.

      • Brad says:

        That requires a lot more time from parents to drive kids to and from these activities.

        It’s worth nothing that this too is driven by fairly recent changes in child rearing fashions. At one time it wasn’t considered absolutely necessary to live in a single family house on a large plot of land down a twisting cul-de-sac designed to be as difficult as possible to efficiently service by public transportation in order to raise children.

        • Crazed Slumgullion says:

          Uh, no. In my day, back when the pterosaurs quietly used the bathroom, single family residences on cul-de-sacs with poor public transportation was pretty much the rule, not the exception. And yet somehow I had tons of unsupervised playtime. Of course, there were also lots of stay at home moms. More recently, but still some time ago, I had a flat tire, a busted jack, and no cell phone in a residential neighborhood. I had to go to 10 houses before finding a house where someone was home.

          • Brad says:

            I don’t really feel like looking up numbers just now, but I believe that while rural areas are bleeding the most people, the multi-decade trend is also away from families in urban areas and towards suburban ones (albeit with a minor pull back in the last decade) and within suburban areas from denser suburbs laid out on grids to less dense suburbs laid out fractally.

        • CatCube says:

          Dude, I grew up in a rural area, where the nearest public transit was nearly an hour away, the nearest neighbor’s house couldn’t be seen, and the “play area” was a forty-acre plot that was about 20 acres of swamp, 18 acres of woodland, and 2 acres of yard.

          From about age 9 on I’d ride my bike to my friend’s house (or vice versa), a mile away, on a twisting back road that was literally a wagon trail that had been paved over, and with no shoulders on which to ride the bikes. IIRC, before 9 we’d just walk it, and of course after 16 we’d drive. At his house, he also had a 40, though it was more forest than my house. We’d disappear into the woods for hours at a time and come back for dinner. We might also go down dirt roads to other areas–one memorable Saturday we went a couple miles north across the other main road in the area and made a big loop to include wading several hundred yards through a swamp. There was also a basketball court that a neighbor had set up for the area kids to use a mile in the other direction and we’d meet up there sometimes. Sometimes we’d just hang out in the house and play Nintendo.

          “Kids can’t link up with their friends because suburbs aren’t dense enough” is a bunch of crap. This change is entirely due to cultural shifts independent of living density. Mostly what is acceptable risk for the children and the need for them to be supervised 24/7 by an adult, but also the need to have “structured” activities that will show up on a transcript for colleges probably plays a role as well.

  42. Steve Sailer says:

    “the bottleneck for horses is human labour.”

    Bryan Ferry, the elegant dandy who was the lead singer of Roxy Music, is the son of a farm worker who was in charge of the pit ponies in a coal mine.

  43. Arcayer says:

    I blame government. (For the lack of unemployment.)

    As automation eliminated jobs (throughout the 1900s) government replaced them with meaningless make-work. IE, the falling value of human labor can be accounted for using the rise in government work programs. Notably, education, medical care, the military and prisons. There are also countless miscellaneous programs like farm subsidies, and insurance requirements.

    I expect this to continue for the foreseeable future. It may well be that once AI can do everything, the entire economy will be nationalized, and for the average peasant to receive his regular stipend, he’ll have to do some sort of work charade where he digs ditches or works math problems, achieving nothing, but feeling like he did a lot, while taking home a massive paycheck.

  44. amaranth says:

    technological unemployment is heavily confounded bc we’re in a really weird state of high stagflation

    tl;dr: Starting around 1970, the scientific establishment was overrun by people who had low intellectual curiosity & little interest in truth. They created an environment where surviving and thriving required optimizing very narrowly for signaling purposes. The resulting environment was hostile to people of high intellectual curiosity, and they were (mostly) driven out of the establishment, losing financial support and a social context in which to work, which diminished their capacities to reach their potential.

    At some point over the past several decades, science stopped being real and evolved into its current state of being merely a research-based variant of generic bureaucracy.

    This was increasingly clear to aware observers from the 1960s, and indeed to the most astute observers (such as Erwin Chargaff) from several decades earlier. But now it is so obvious that only ignorance or dishonesty prevents it being universally acknowledged.

    However, bureaucracies are systematically ignorant, and dishonesty is now institutional and compulsory, therefore the disappearance of real science is not acknowledged but instead vehemently denied, and steady, incremental progress is claimed!

    Real science is smart and creative people working cooperatively on scientific problems.

    But science proved so useful that it became professionalized, and initially this seemed to accelerate progress considerably. The first few generations of professional scientists from the later 1800s into the twentieth century were immensely productive of significant scientific breakthroughs.

    Science seemed very obviously useful – the presumption was that even-more science would be even-more useful… And so the growth of professional science continued, and continued…

    Until it out-grew the supply of creative geniuses and had to recruit from uncreative but very smart people – but continued growing.. Until it then out-grew the supply of uncreative but very smart people, then it had to recruit from uncreative, only moderately smart but hard-working people – but continued growing… And so on and on, until ‘science’ consisted of whomsoever who would do specific narrow technical and managerial jobs at the wage and conditions on offer. That’s where we are now…

    More importantly, professional science initially recruited only those who regarded the pursuit of truth as an iron law (and dishonesty was punished by expulsion from science). Yet, due to professionalization, science increasingly attracted careerists rather than truth-seekers.

    (Truth-seekers are typically resistant to bureaucratic organization; and bureaucratic organization is intrinsically hostile to truth-seekers.)

    The professionalization of science having eliminated those who were internally-motivated to seek truth; various formal mechanisms and procedures were introduced to try and deal with purely careerist motivations. These mostly amount to peer review mechanisms (peer review = the opinion of a group of senior colleagues).

    So, instead of truth-seeking, a filter of committee evaluations was applied to ever-more-blatantly-careerist individual behaviour.

    And science continued to grow – recruiting less- and less-talented, weaker- and weaker-motivated, less- and – less honest personnel until… il untalented, unmotivated and dishonest career-orientated professional scientists became a large majority within science and included most of the most successful researchers; thus careerists took-over the peer review evaluation procedures such as to impose their values; and ‘science’ became nothing but a ‘professional research bureaucracy’.

    But is the Moonshot really a valid measure of human capability? Yes. The reason that the Moonshot is a valid measure of human capability is that the problem was difficult and was not chosen but imposed.

    The objective of landing men on the moon (and bringing them safely back) was not chosen by scientists and engineers as being something already within their capability – but was a problem imposed on them by politicians.

    The desirability of the Moonshot is irrelevant to this point. I used to be strongly in favour of space exploration, now I have probably turned against it – but my own views are not relevant to the use of the Moonshot as the ultimate evidence of human capability.

    Other examples of imposed problems include the Manhattan Project for devising an atomic bomb – although in this instance the project was embarked upon precisely because senior scientists judged that the problem could possibly, maybe probably, be solved; and therefore that the US ought to solve it first before Germany did so.

    But, either way, the problem of building an atomic bomb was also successfully solved. Again, the desirability of atomic bombs is not the point here – the point is that it was a measure of human capability in solving difficult imposed problems.

    Since the Moonshot, there have been several difficult problems imposed by politicians on scientists that have not been solved: such as finding a ‘cure for cancer’ (or the common cold) and ‘understanding the brain’. These two problems had vastly more monetary and manpower resources (although vastly less talent and creativity) thrown at them than was the case for either the Moonshot or Manhattan Project. But modern technological advances are not imposed problems; they are instead examples of the Texas Sharpshooter fallacy.

    The joke of the Texas Sharpshooter is that he fires his gun many times into a barn door, then draws a target over the bullet holes, with the bulls-eye over the closest cluster of bullet holes. In other words the Texas Sharpshooter makes it look as if he had been aiming at the bulls-eye and had hit it, when in fact he drew the bulls-eye only after he took the shots.

    Modern science and engineering is like that. People do research and development, and then proclaim triumphantly that whatever they have done is a breakthrough. They have achieved whatever-happens-to-come-out-of-R&D; and then they spin, hype and market whatever-happens-to-come-out-of-R&D as if it were a major breakthrough.

    In other words, modern R&D triumphantly solves a retrospectively designated problem, the problem being generated to validate whatever-happens-to-come-out-of-R&D.

    The Human Genome Project was an example of Texas Sharpshooting masquerading as human capability. Sequencing the human genome was not a matter of solving an imposed problem, nor any other kind of real world problem, but was merely doing a bit faster what was already happening.

    Personally, I am no fan of Big Science, indeed I regard the success of the Manhattan Project as the beginning of the end for real science. But those who are keen that humanity solve big problems and who boast about our ability to do so; need to acknowledge that humanity has apparently become much worse, not better, at solving big problems over the past 40 years – so long as we judge success only in terms of solving imposed problems which we do not already know how to solve, and so long as we ignore the trickery of the many Texas Sharpshooters among modern scientists and engineers.

    • Bugmaster says:

      I think that’s a good point. Perhaps one of our many problems is that we have lost the political will to impose moonshots. The task of “landing a man on the moon, and bringing him back again”, has a very specific and well-defined success condition. So is “building the atomic bomb before the Nazis do it”.

      On the other hand, stuff like “understanding the brain” has no measurable win condition; you can always publish a paper and claim you’ve understood stuff — or you could just keep milking grants for as long as you want. Curing cancer is a borderline case, since there are lots of different cancers, and curing all of them may be physically impossible (that said, AFAIK we’ve made some very real advances in this area, nonetheless).

      What’s worse, “understanding the brain” and “curing cancer” are rather old problems. I can’t think of any new massive technological undertakings that have been proposed in the past 20 years (in the West, that is), and I don’t expect to see any in my lifetime…

      • faul_sname says:

        While “understanding the human brain” is a goal without a specific win condition “emulating a human brain” has a definite win condition, and has been proposed… probably a bit more than 20 years ago, but not by much.

        Other massive technological undertakings that have been proposed (though not necessarily in the last 20 years — in fairness the proposal to land on the moon was probably proposed before 1949):

        – Land a person on mars
        – Build a colony on mars
        – Achieve net-positive nuclear fusion
        – Build a space elevator
        – Self-driving vehicles (this one is borderline on whether there is a clear win condition).

        There are quite a few proposals of similar levels of ambition out there.

      • cassander says:

        I think that’s a good point. Perhaps one of our many problems is that we have lost the political will to impose moonshots

        I think you’re overestimating how much political will those moonshots took. Apollo and Manhattan were both much less than 1% of GDP at their peak. In modern costs, they represent something on the order of a 100 billion a year effort. The US government launches efforts of that size at least once or twice each presidential administration.

    • Douglas Knight says:

      The author has also published his book here.

    • pontifex says:

      Hasn’t science always been a Texas Sharpshooter kind of affair? People make discoveries that lead to very unexpected results later on. If you asked Newton how his work would be used, he would not have answered that we would use it to calculate the trajectory for a Mars probe or something.

      Most of the bad science that is being done today seems to be getting done in the social sciences. Every time I talk to a physicist, they’re adamant about the fact that in physics, if your results can’t be replicated, you will be disgraced (like the cold fusion guys.)

      Anyway, are the soft sciences really worse than they were before? Even back in the mid-20th century Feynman was mocking rat-running experiments in psychology as cargo cult science. At least the replication crisis in the social sciences is starting to get some attention now, beyond cranky physics professors talking about it.

    • Cheese says:


      I think he gets the effect somewhat correct. A lack of co-ordination is my biggest bug-bear in biological sciences. But it’s largely driven by systemic incentives. I don’t think there’s a major role for an influx of the incurious or the particular results orientated design mechanism he mentions. That latter characteristic has been entirely common throughout history. If you ask me it’s one of the goals of scientific enquiry. We happen on to a lot of these things by accident.

      The incentives for a lack of co-ordination are huge though. To a large extent they’re a result of processes which are designed in an attempt to prevent waste. That is, a grant based system designed to ensure you get money to lots of different meritorious people who are attacking a particular question in different ways. By necessity that leads to people restricting themselves to attacking smaller pieces of the question, which is also fed by any system where a number of publications is one of the mechanisms of career continuation (I say continuation rather than progression because it’s really more a matter of survival rather than active furthering). In my old field, that’s one reason why all the discoveries recently have tended to come from a few big labs. They have the money to go large, go long and retain knowledge and experience (a huge problem IMO). What’s the other option though? You could give longer, larger grants but then you risk the kind of problem Charlton seems upset about – stagnation where people have the luxury to not actually do things and get results that get cited. Hard problem.

      The classic example for me is animal ethics. I’ve been in situations where we’ve been kind of locked in, by both budgets and the idea of trying to reduce animal use (ostensibly a good aim), to under-powered studies. Ultimately that ends up just wasting more animals than you save. Again there’s been the issue of we just can’t afford to really argue hard for more numbers, but the incentives to reduce are pretty powerful. And those incentives are, quite correctly, there because animal research can be really fucking awful frankly, it’s why I no longer work in that specific field. Again, hard problem, don’t have any good solutions.

      Kind of tangential to the point of this post but I really think he gets the causes a bit wrong, which means any proposed solutions are probably going to be wrong too.

  45. Evan Þ says:

    I looked into this a while ago and recorded that this didn’t happen, as proven by this paper. Unfortunately, the link is now down, I can’t remember what it is, and I can’t find any other papers on this except suspiciously glib ones like this, so I’m going to have to take it on faith that I once had an answer to this question.

    Good news: I plugged that link into the Internet Archive, and I got the paper you were referencing!

    • etink says:

      Even better, it’s still available on the author’s university listing: http://www.uh.edu/~cjuhn/Papers/docs/209912.pdf

      Conclusion (emphasis mine):

      “In this article we have examined to what extent rapid increases in female labor supply contributed to rising wage inequality and to declining real wages of less skilled males during the 1980s. Based on aggregate changes, we find that (1) female labor supply growth slowed in the 1980s relative to the 1970s, and (2) women increased the relative supply of skill in the economy in the 1980s. These findings are inconsistent with a simple story in which supply shifts among women have played a major role. Instead, they further support the view that relative demand shifts, rather than supply shifts, have been the underlying cause of declining opportunities for less skilled males and rapid inequality growth in the 1980s.

      Recently, Topel (1994) has suggested that cross-substitution effects may exist between men and women of different skill levels. More specifically, the entry of skilled women in the 1980s may have worked to the disadvantage of less skilled men. In a more general framework, we estimate these cross-substitution effects using state and SMSA-level data. We find that our results depend crucially on how we control for demand changes. Once we allow our measured demand shifts to play a larger role, we find little evidence that women are substitutes for men or that the entry of educated women into the labor force contributed to male wage inequality growth in the 1980s.

      • Matthias says:

        The biggest story about labour in the 20th century (in western countries) is the decline in female household work. The second biggest is the increase in female labour market participation.

        • AG says:

          Wouldn’t that open up a lovely ol’ market for men to take up jobs in household work?

          • 1soru1 says:

            The decline in female household work is largely due to the automation of that work by technology; fridges, cookers, washing machines, vacuum cleaners.

            Cultural changes are downstream of that technological change; if it was still necessary to spend 30+ hours a week keeping house, then houses would still be kept.

    • Scott Alexander says:


  46. kominek says:

    Even in the world with perfect android laborers, instead of letting the androids labor and letting humans live in leisure and share part of the pie, we’ll have the opportunity to sleepwalk into letting a few android-owners get super rich and giving everyone else jobs as hotel doormen.


    all you’ve got to do is find yourself one altruistic superrich person (or thief) to buy (steal) one of these androids and tell it “start self replicating, and when you’re doing so at a fast enough pace to keep up with human population growth, dedicate excess android capacity to fulfilling human needs from the bottom of maslow’s hierarchy on up”. maybe the android has to sit around and wait 20 years for the patents to expire, or some clever hackers have to circumvent some software restrictions and do the first few dozen generations of replication in middle-of-nowhere-istan. but self replicating technology isn’t the sort of thing that stays in a box for long. (an element of your AI concerns, i should think?)

    • Scott Alexander says:

      We can do this right now. It’s called “capital”. The super-rich could just give us some money, we could invest it, and it could “self-replicate” into more money, which we could dedicate to fulfilling human needs from the bottom up.

      Since this hasn’t worked yet (except in Norway, maybe?) I’m not optimistic about it working in the android case either. The main difference I can think of is that androids might be able to self-replicate more quickly than money does. But you still have to buy the iron and silicon.

      • Matthias says:

        Returns on capital aren’t that high to make this work. (And the way to distribute capital’s goodness to the people is by having lots and lots of capital compete.)

        Land rent is however a good candidate for funding the people’s welfare. Land value tax to finance a basic income is a very classic suggestion.

    • Deiseach says:

      all you’ve got to do is find yourself one altruistic superrich person (or thief) to buy (steal) one of these androids and tell it start self replicating

      All you have to do is find some really good forger and make your own money! There is no way the government or anyone else can stop you doing that!

      (Yes they can and do stop you doing that).

      • riceowlguy says:

        Pretty much. And I’m pretty sure that any robot that is physically capable of fulfilling all human needs would also be capable of destroying all humans, and thus there would be tremendous pressure from many people to try and ensure that only the government would be allowed to have such robots.

        (Yes, this is a bad analogy about gun control.)

      • kominek says:

        so in this increasingly implausible scenario, we’ve got androids that can do anything people can do, making all of the super-rich even more super-rich, and all the governments of the world have totally, successfully, clamped down on all trafficking in these mechanical devices.

        come on. most of them don’t even try very hard to stop actual human trafficking, let alone succeed. the androids would be even easier to move around. and only one has got to leak past controls.

        i was hoping for some argument along the lines of “well the rich will get rich so much faster they’ll be able to purchase the entire volume of the planet and solar system before anyone could get their own android operating”. not “well of course we’ll just implement eternal flawless restrictions on technological proliferation”

      • nadbor says:

        Conflict theorist as ever. Governments don’t crack down on counterfeit money because they want to keep people poor. Forging currency is equivalent to taxing/stealing from everyone else holding that currency. It’s illegal for very good reasons. Enough said.

        If you have a way of actually creating wealth (using androids or whatever) – as opposed to stealing from everyone else – governments (at least in democratic countries) will generally happilly allow you to do it and tax the profits.

        The real objection to the simple ‘self replicating androids solving poverty’ solution is the one Scott already mentioned – it’s no different from having capital (androids literally are capital, in the economic sense). If the androids were capable of creating infinite wealth out of nothing and take 0 time to do it, then sure. Give one to every person and poverty is solved. In the real world though, androids will be subject to the same constraints as other types of capital. They will replicate at a finite rate, they will consume scarce physical resources and they will take time to produce stuff.

        Maybe the android-driven economy will start growing at a faster rate than the current ~2%/year of the developed countries. Maybe it will be 20%/year, maybe 200%/year for a while (before we hit hard physical constraints). But this is not qualitatively different from what we have now. We’ve had fast economic growth before and it failed to eliminate poverty.

        Perhaps if the growth rate exceeds some critical threshold, something qualitatively different will happen and the wealth will have to start trickling down. I wouldn’t hold my breath though. Already today in developed countries, even poor people have wealth unimaginable to a hunter-gatherer. And yet they can still be poor and miserable. And even when a poor person wins big in a lottery (put it in S&P index fund and you have an equivalent of an android that builds a copy of itself in 7 years!) not infrequently lose it all and return to their misery.

        • Perhaps if the growth rate exceeds some critical threshold, something qualitatively different will happen and the wealth will have to start trickling down. I wouldn’t hold my breath though.

          One of my favorite factoids … . Per capita real income in the developed world is currently about twenty to thirty times what it was averaged over the globe through most of history.

          Which reinforces your later point.

  47. shakeddown says:

    I advise you, however, to be, however, an increase of the number of houses,

    In case anyone else had to look it up.

    On this subject, does anyone know of a way to get involved in pushing for more housing in the bay area that might actually help?

    • Brad says:

      There’s SF YIMBY and they seem to be making some progress. You could lobby for SB 827. Or it being California, maybe you could start a push for a constitutional amendment initiative to take zoning away from cities and move it to the state government. While Sacramento may not be perfect, they are probably less susceptible to capture by NIMBYites than the SF munipipal government, to say nothing of Sunnyvale or Palo Alto.

      • sandoratthezoo says:

        While San Francisco proper can and should become somewhat denser, let’s note that it’s the second-densest major city in the US (after NYC) and is a relatively small part of its metro area. SF isn’t really the problem, and also its infrastructure can’t support massive increases in density.

        The Peninsula, on the other hand, is vastly more suburban, can probably handle more significant increases in density than SF can without exploding, and is much physically larger than SF. And the South Bay likewise. And the East Bay likewise.

        However, we would need to figure out how to get more people around the Bay Area. BART, Caltrain, and the freeways are all essentially at capacity right now, and increasing throughput of any of them substantially would be a major, expensive, and most importantly many-year process. (Caltrain also serves an unconscionably narrow corridor). I don’t see any realistic approach to improving the arterial transportation of the Bay Area, which is probably one reason why people focus on SF proper, but there just isn’t all that much low-hanging fruit in SF proper.

        (If you want a really ambitious project that would actually potentially help people, turn San Mateo and let’s say Union City into business hubs with office space in the same order of magnitude as SF downtown and the big campuses of the bottom of the Penninsula/top of the South Bay. Then increase density in the East Bay and Penninsula and basically tell people that if they want to live in a place where they have to go through a hub to get to their job, their commute will be like the 9th circle of Hell. But otherwise, we’ll even the load out on the infrastructure a little.)

        • shakeddown says:

          Increasing housing around employment hubs can help with reducing road usage. SF is the obvious one, but there are some other places like Cupertino that have a lot of room for densification (And SF has plenty too, to be fair).

          • sandoratthezoo says:

            If everyone both lived and worked in downtown SF, that would reduce rush-hour freeway (and BART, and Caltrain) use, sure. But that’s not the only infrastructure that you need to have, and downtown SF is already very dense. As soon as you move even a little ways away from where you work, you start to put the same amount of strain on the parts of the road infrastructure that are already the choke points. While it would help, ceteris paribus, if some of the people who currently live in let’s say Redwood City and drive in to SF were driving in from Daly City or indeed the Sunset, it wouldn’t help nearly as much as if those people still lived in RWC but drove to San Mateo instead.

            I don’t think it’s fixable, honestly. A little improvement around the margins, sure, but the idea that there is a plausible path to the Bay Area not having gigantic housing costs within the next 20 years seems like bullshit. The most plausible scenario I can come up with is “VR becomes really good and all office work becomes remote.” (And I don’t think that’s a very plausible scenario).

          • Brad says:

            That seems pretty defeatist. Plenty of cities around the world manage to do major infrastructure improvements in less than multiple decades.

          • sandoratthezoo says:

            Not US cities. Especially not California US cities, and especially not high-even-for-California-property-value cities.

            People tend to handwave “first, imagine that everything is different. Then this problem is easy!”

          • tmk says:

            I would say that both the inability to build houses and the inability to build infrastructure is caused by the same cultural refusal to let cities grow.

          • Brad says:

            That’s part of it, in terms of NIMBY pushback. But another part of it is that the US has totally insane costs when it comes to building public infrastructure. Wildly higher than anywhere else in the world. Even if everyone were totally enthusiastic about the idea of overhauling the Bay Area’s infrastructure and there was no NIMBY lobbying or vexatious litigation, the costs would be a serious issue.

            I agree that these problems are not likely to be solved. But mass social movements can be powerful things and two decades is a long time.

          • The Nybbler says:

            The vexatious legislation and NIMBY/BANANA activism are reasons for the high cost.

          • Brad says:

            It’s a part, but it isn’t the largest part. At least not on the projects that I am familiar with (admittedly more on the east coast than the west). The single biggest problem is that government contracting frameworks designed to prevent corruption, favoritism, and featherbedding have turned out to be absolute disasters in practice. There are other serious problems, but that seems to be the worst of them.

            That’s why private housing isn’t nearly as terrible in terms of cost as public infrastructure. Both face NIMBYs and vexatious litigation. Both face union pressure. But only public infrastructure has to deal with government contracting rules.

          • sandoratthezoo says:

            I think that NIMBYism is a relatively small part of it, union stuff is a part of it, government procurement/bidding/whatever rules are a part of it, general government incompetence is a part of it, the fact that land is really fucking expensive is part of it, and also there’s some weird divisions in our political coalitions that prevent political pressure from being effectively brought to bear on this subject.

            For example: Liberals who are “pro-density” will vociferously object to adding car infrastructure. Conservatives who are “pro-density” will be at most meh and might vociferously object to adding rail infrastructure. Liberals who are “pro-density” will object to removing affordability requirements to projects. Conservatives who are “pro-density” will object to applying more density to places marked in their minds as “suburbs” even if they’re totally for it that they’ve marked in their minds as “cities.” And so forth. This makes it hard to actually move forward pro-density initiatives even if there are a lot of people who are sort of generally pro-density.

            And you might, with focus, change any one or two of these things, but wishing away a dozen interrelating factors that make infrastructure expensive and slow in the Bay Area is just wishful thinking. Yes, these projects wouldn’t be that hard or expensive in, say, Japan. But California is not Japan, and predicating your results on, “First, we’ll turn California into Japan” seems wrong-headed to me.

          • The estimate I have seen is that between eighty and ninety percent of the land in the Bay Area is unavailable for housing, through some combination of parks, zoning rules, and other restrictions. I don’t know if it’s true, but I have seen the same numbers from a source that was arguing that the percentage should be lower and one arguing that it should be higher.

        • Squirrel of Doom says:

          I agree that other cities also need to do much more, but San Francisco absolutely is the center of the problem. If you measure by number of housing units by number of jobs, SF is probably one of the worst culprits.

          Bottom line is that it’s a statewide problem that need to be solved with state legislation. This is the current hope: https://sf.curbed.com/2018/1/16/16897868/bill-wiener-transit-midrise-housing-growth

          Here is a tragicomic story of how deliberately impossible it is to supply housing in San Francisco: http://reason.com/blog/2018/02/21/san-francisco-man-has-spent-4-years-1-mi

        • Chris Hibbert says:

          The issue I keep bringing up with respect to trying to build employment hubs with housing near them is that one of the strengths of the Bay Area’s economy (and any area with a concentration in a single industry) is the large number of people who can switch jobs as employment needs change. As Google has been talking about building a few employment hubs of its own (Mountain View, San Jose) and increasing nearby housing, I’ve been pleased that they’ve explicitly been talking about not restricting the housing to G employees.

          It’s crucial for the long-term health of the local economy that we don’t think in terms of people living near their place of work, since the place of work can change frequently for many. Homeowners in particular, will work for several employers without moving, and if the roads will only remain uncongested if most people live near work, then the roads will always be congested.

          • John Schilling says:

            It’s crucial for the long-term health of the local economy that we don’t think in terms of people living near their place of work,

            Unfortunately, it is crucial for the long-term health of the people, at least the ones who aren’t two-sigma introverts or otherwise asocial, that they think in terms of being part of a community with friend, family, and local institutions. And yes, this means in meatspace.

            So if a person has to change jobs, they will be very reluctant to change homes in search of a new job. And if taking a new job means moving to a new home, they will be reluctant to leave their old job when they otherwise should. This is not something that will change just because you patiently explain why it is economically suboptimal.

            People are going to live in their preferred communities, and commute to work. They’d rather drive “home” for an hour on a clogged street than ride to an optimally-located domicile a five minute subway ride from work. If you want to get them out of their cars and off the streets, you’ll need to arrange things so that the subway will get them home in reasonable time even after they’ve changed jobs three times while keeping the same home.

      • Steve Downing says:

        As a pro-housing partisan, I completely support contacting your CA state senator about SB 827. There are also YIMBY groups popping up all over the bay area that can use help. I’m less sure than I used to be that national-level politics is mind-killing, but in my experience, local politics never was, and can turn on just a handful of motivated individuals.

        One kind of frustrating thing about Trump’s election that I don’t see getting talked about much is that we were well on our way to having a useful state-wide and nation-wide discussion about land-use policy. Losses due to zoning restriction are largely a Blue problem, and redirecting efforts to resisting Trump sucked all the air out of the room.

        This may be my bias showing, but a surprising number of political issues come back to land-use policy. I’m glad it’s getting talked about here.

        • JayT says:

          I think that ferries are an underutilized method of mass transit in the Bay Area. I ride the ferry pretty much every day, and it’s only 75% full. If there was more housing around jack London Square and on the old Navy base in Alameda I think you could easily add housing for 100,000 people without putting too much strain on the infrastructure past an extra couple ferry runs.

    • Kevin_P says:

      “And furthermore, I am of the opinion that the number of houses should be increased”. It’s a reference to Cato the Elder, who used to close his speeches (on whatever subject) by demanding that Carthage be destroyed.

      • Michael Watts says:

        Well, not really. As accurately reflected in what I assume is Google Translate’s rendition above, augmentum (“an increase”) makes no sense there; if we’re paralleling Cato the Elder, the word should be augendum (numerus augendus est “the number should be increased”).

    • Barr says:

      My friends and I try to convince owners of vacant houses to let us rent them out as hacker houses on AirBnB. That works pretty well, except 98% of house owners would rather leave them vacant than take in 100k of free income each year.

      • sandoratthezoo says:

        It’s not that free! If I have a $2M house and someone says, “I’ll give you $100k to put a bunch of young men in your house,” then I have to ask what the odds are that you’ll:

        1. Do a ton of damage to my house.
        2. Hurt yourself in my house and sue me.
        3. Refuse to move out of my house when I want you to and be protected by a legal environment that is very hostile to eviction.
        4. Do something illegal in my house that will, even if it doesn’t directly damage my house, suck away my time and attention and possibly lower the value of the house.


        The problem with high housing costs is that they are self-reinforcing.

        Like, take two dice games. In both of them, we roll a standard fair six sided die. On a 1, you lose bad, on a 2, you lose a little, and on a 3-6 you win.

        For the first game, that means that on a 1 you lose $10, on a 2 you lose $3, and on a 3-6, you win $4. The expected value of this game is +$3. Cool! It’s a good game! You’d probably be willing to play it more or less as it was offered.

        For the second game, that means that on a 1 you lose $1M, on a 2, you lose $300,000, and on a 3-6 you win $400,000. This is obviously the same payout structure, just multiplied by 100,000, and the expected value of the game is +$300,000. Which is great, but if that means a 1 in 6 chance of losing everything you own and a 1 in six chance of spending several years trying to recover your financial status, you have to have a much healthier appetite for risk to play it. And it’s not repeatable any time soon, you only have one opportunity to play every few years. And you don’t get to play again any time basically ever if you get a bad outcome. And if you choose not to play, in the same time frame you could get let’s say $100k or $200k with much lower risk by just hanging out.

        • Barr says:

          You make some good points. However, I don’t like your example illustrating marginal risk. Society has invested trillions of dollars into institutions whose main job is to mitigate risk and allow people to eat the healthier payouts.

          For instance, in your example, I could play your second game and declare bankruptcy or negotiate down what I owe since you know there’s no way I’m good for that juicy 1M.

          Anyway, I the point I wanted to make is that the very rich have very little incentive to even rent out their homes much less solve the housing crisis. The expected appreciation value of homes / property taxes for a home in the peninsula is so high that it obscures a lot of the discussion.

          • CatCube says:

            You’re basically asking them to become a landlord, and if they were interested in being landlords there are already plenty of property-management companies out there that will enable them to do this.

            You’re asking them to be a landlord in a very risky way, as well. If they’re renting to a single family (for this single-family home) they’re renting an expensive house to essentially one tenant (the single family) that has a lot to lose if they fail to pay the rent and get hauled into court.

            You’re proposing that they now have five or six tenants. This is going to increase their risk much more than five- or six-fold, since a bunch of young males acting as roommates are much less thoughtful about how they structure this household. A husband and wife with three kids is also five people in the house, but none of those five are likely to let a “friend” who’s a degenerate thief crash on the couch for a couple days that turns into a couple months (and AIUI, in California that guy now has legal rights and has to be legally evicted), whereas this is a known failure mode for five college-aged dudes living together.

            And for your handwave about “they can just declare bankruptcy” if this goes wrong: what’s your skin in this game? If you, Barr, are not going to lose your shirt if one of the tenants turns out to be a gaping, diarrhea-spewing asshole that requires months of legal wrangling to evict and does tens of thousands of dollars of damage on the way out after the eviction finally goes through, it’s not hard to understand why somebody else might look askance at your proposal–after all, you could just declare bankruptcy, too, if that’s a viable option.

          • Barr says:

            I didn’t mean to overstate my complaints. There are many many issues that come up in any complex business transaction. My main annoyance is having the experience of making multi-millionaires hundreds of thousands of dollars that they wouldn’t already have and having them bulldoze their own houses to build a mcmansion. Most people don’t really understand the dynamics of the real estate market out here and I was just trying to add some of my experience.

            You misunderstood my point about Bankruptcy. It was just an example of how many societies are structured to mitigate risk. There are tons of other ways like insurance, contracts, escrow, etc.