Apples
I’m back, somewhat. For a while I thought perhaps Google+ would serve all of my needs and I wouldn’t need to bother with tumblr or facebook. The more I think about it, however, the more I realize that’s not really the place I want to put my drawn-out ramblings (maybe some other things too). For a while that was still fine, but for various reasons I find myself wanting to write again. Maybe it’s because I’ve become more reclusive than usual (I may need to start using Facebook again :P) or perhaps it’s the weather. I’m not sure but here goes.
So lately I’ve been thinking about labor economics. I would say it has strong ties to OWS but I know that OWS is more directly targeting federal regulations and integrity than market features themselves. Also I would say this started to interest me as far back as July, while I was in NYC watching C-SPAN. I saw one author giving some short talk on a book he was publishing on labor economics. The gist of it was that in order to stay competitive for a lot of jobs, we have to train our students to think creatively and critically, or something like that. I really wish I could remember the name of the author/book; I tried to find the talk on the C-SPAN archives but I had no luck.
Anyway, as I’m thinking I occasionally recall the old saying “learning the value of a dollar.” I really had no clue what this meant when I was younger. Perhaps I thought it meant finding out the dollar cost for the things we buy (certainly a detail to which I paid little attention in my early days). Of course it’s more commonly used to mean the amount of work needed to earn a dollar (at least that’s how I think of it now). But even that is somewhat subjective; after all it will depend on the work you’re doing and how the supply/demand for that work sorts itself out.
Now when we learn about supply and demand (or at least when I was taught it originally) the supply curve was described as “the number of units that would be produced if they all sold for the given price.” In my mind this perhaps conjures an image of a farmer deciding how many apple trees to grow/maintain. But the other basic concept in economics is opportunity cost. The land used and work done to grow apples could instead be used to grow pears (or something else that grows in the same climate as apples; I’m no agriculturalist). So this supply curve interacts with the supply and demand curve for other products in interesting ways. At least, if the farmer is fiscally minded.
Perhaps, however, our farmer is a firm believer in “an apple a day,” and he just wants to grow apples to spread the love and make people healthy. Then perhaps his supply curve would be a lot flatter than usual. We can also imagine that scientists discover some new food that is more delicious and easier to make than apples, but is nutritionally superior. Well, our farmer could say nuts to that and continue growing his apples like he’s wont to do. Or perhaps, he is just starting to farm and he wants to grow apples.
We can say this would be ridiculous for him either way. The farmer should follow the demand so that the entire system is most efficient and effort doesn’t go to waste. But perhaps the farmer has some passion or moral imperative for providing apples. Unfortunately for him, the rest of us might not have a corresponding passion or moral imperative for consuming apples, so the supply and demand work out for him very poorly. It is in this light that I see a lot of the labor economics issues.
For example, I think this embodies the key difference between Don’t Call Yourself A Programmer and the response that I’ve seen. It is arguably the difference between industry and academia in a lot of cases (but certainly not all). Folks optimizing for the payoff have little room to complain when they don’t like their job, and folks optimizing for job satisfaction usually can’t complain too much when their pay isn’t as high as they’d like. It all goes back to the supply and demand.
Back in September, a trader went on BBC and said that the Eurozone is going to crash and the big investors don’t care. I won’t spoil the punchline in case you haven’t seen it, but suffice to say he was not concerned with helping to fix the Euro economy, whatever that might mean. At first glance it’s somewhat appalling; we might expect him (and the other investors) to be more considerate and compassionate towards the Euro citizens, to work toward a plan that they think will work. But that’s a rather simplistic view. For one, they wouldn’t long be investors if they went about their business in a very altruistic manner. Second, the fact that they are even able to liquidate their investments means there are other people involved — those who are willing to buy up those assets. It takes two to tango, as they say.
Still, there are victims in some sense, even ignoring the potential (and probably real) government influence and corruption. If I had to describe them, I would say it’s primarily those whose jobs are being displaced. There’s no question that cutting workforce is a great way to reduce costs and bolster profits, so if your job no longer needs to be done by a human (or as many humans), it probably won’t be for much longer. In addition it’s possible that the demand for certain services will plummet (they say the artist is the first to starve when money gets tight). But these changes can occur quite rapidly in comparison to the amount of time it takes to properly train for a given job. Did you go through high school and college hoping for an education boom (this is anyway very unlikely, which depresses me greatly) only to find that Khan Academy has made your degree worthless? That’s probably not going to happen anytime soon but it’s the sort of position in which a lot of folks find themselves.
Then we might say, forget the displacement. Let’s pay people to do those jobs even if a computer would do them better. Technological progress aside this is simply a disadvantageous strategy. A corporation self-imposing such a rule would be like the altruistic trader; its viability would decline when it kept itself from playing by the same rules as everyone else. But what if we made it a federal law that certain things had to be done by hand, by real people? The same reasoning would extend to the nation as a whole, with our competitors (as allied as they might be) would gain on us (if we are indeed ahead). This is the basic argument folks make for not raising taxes on corporations, and sound or not such outsourcing has been a well-known phenomenon for a long time now. The alternatives to these tend highly toward isolationism, and I don’t really want to think about that :P
What if there were some international laws like that? Well I have no clue, but I suspect it won’t be very long before we see a de-facto effect of something like that. Only, it might not be the laws we expect or the laws we want. Perhaps we no longer find minimum wage to apply the way that it used to. Such things are the real direction that I see globalization having at a large scale.
The last thing I’ll mention is the importance that I think all of this puts on education. At a certain level, there is a patriot in me that wishes that the US could have the best K-12 education system in the world, and who is glad that we have such exceptional universities that teach in such a ubiquitous language. At the same time, I want the same things for people around the world. If we could really raise the bar on the level of work that individuals can do throughout the world, I think it would go a long way to making it a much better place. It’s one of the reasons I’m a fan of education spending, and probably one of the reasons it’s always been in the back of my mind as a viable career change. But it also reminds me of the farmer who grows apples that no one wants; it’s perhaps fruitless unless we can shift the demand back in that direction. But how do we do that? >.<
