> Let’s go back to first principles. Call it automation, call it robots, or call it technology; it all comes down to the concept of producing more with fewer workers. Far from being a scary prospect, that’s a good thing.
> Becoming more efficient (what economists call “productivity”) has always been central to a growing economy. Without higher productivity, wages can’t go up and standards of living can’t improve.
What’s wrong with this quote? It appeared in an oped piece, by Steven Rattner in today’s (June 22, 2014) NYTimes Sunday Review section. The topic, as this quote suggests, was about the “danger” of losing jobs to more innovation. Here’s a one-liner about him from Wikipedia: “Steven Lawrence Rattner is an American financier who served as lead adviser to the Presidential Task Force on the Auto Industry in 2009 for the Obama administration.”
Two of the five sentences are arguably true and two false. Which ones? The first one is a simple request, neither true or false. The second one is true as it merely defines the topic. The third one is false, at least according to my calculus. This sentence typifies the problem with economics. It may be true or false depending on the premises that are either stated or unstated (as they are here). Presumably producing more using less labor creates a producer surplus, assuming (unstated) that people will continue to buying the excess production at the same price. The truth of the statement depends on how that surplus is distributed. If it goes to the capitalists, it will exacerbate income inequality. In the aggregated accounting of standard economics, distribution isn’t counted and carries no moral weight.
If you do not care about who shares in the surplus, then the statement can be held to be true. But for those who believe that those who own the capital, at least in the affluent US, don’t need more wealth to flourish, this statement is patently false. To the argument that capitalists include many of the working class through investments of pension funds in the capital markets, I would counter that those so represented are those who were holding jobs at the time their funds were added to the pot.
No matter how you explain or justify inequality, it is a fact. It is a fact starkly contradicting the very fundament of our country: “all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” In our secular age, the phrase pointing to the Creator as the source is longer to be translated literally. We are equal, perhaps, only immediately after we emerge from the womb, but given the huge difference in the realities of life that surrounds every one of us from the moments of our births, the idea of some endowment of equality is more a myth than a fact.
I will return to this shortly, but onto the next sentence. The next sentence is true within the workings of conventional economics. It is simply a verbal statement of the mathematics of neoclassical economics. Efficiency is central to economic growth, ceteris paribus (the infamous all other things being equal that without which economists would be lost), but the irrelevance of the truth of that statement shows up in the next and key sentence. Wages can certainly go up without higher productivity. That they don’t is a sign of the amorality of the capitalist system. Walmart can, without any real restraints, increase the wages of its employees. Of course that would mean that the Walton family and other shareholders would have to settle for less. If the top managers of many corporations would accept wages below those which have become no less than obscene, workers could earn more without a dime’s worth of change in the P&L.
Having shown that wages can go up even without gains in efficiency, the last clause also becomes false. That, however, is not the real problem with this last clause. It is neither true or false, but irrelevant. “Standard of living” is an arbitrary term having little to do with how people actually do exist. It perhaps measures what stuff they have around them to assist in daily chores. It is used by economists and others (politicians) primarily because it can be enumerated, and, as every first-year MBA student knows well, things have to be measured if they are to be managed. I agree that “things” do need to be measured to be managed, but life is not a thing. What matters to human beings, even if they ignore it, is the quality of their existence, and quality is difficult, if impossible, to manage. Ask Picasso if he created his works by measuring, or in another related metaphor, try to create a masterpiece with a paint-by-numbers kit.
I could go on for quite a while exposing Rattner’s prose for what it is: an arbitrary set of sentences build on many hidden presuppositions, but I want to close on a different subject. What I have just written is a rudimentary example of critical thinking. Critical thinking is little more than passing what one sees and hears though a set of “truth” filters. As this tiny example indicates, more so-called truths offered up in public (and private) conversations is the end of a chain of reasoning based on unstated presumptions and presuppositions. Only if one is aware of all these precursors to what is heard or seen, can one assess the truth of a statement. Since the world works best, maybe only, when the truth comes straight from the world, the importance of critical thinking should be clear.
Yes, you may say, “John is not telling us anything new,” but then, “Why are your children being less exposed to critical thinking than more by the growing emphasis on the so-called STEM curriculum (science, technology, engineering and math).” I find this very ironic in view of the few sentences I have cribbed to start this post. These (STEM) are the very subjects that are assumed to be the basis of the improvements in efficiency that will cost some of these very students their jobs in the future. When that happens and someone says to them, “Sorry, but it’s a fact of life that with more efficiency comes less jobs,” they will not have the tools to dig down to discover the arbitrariness behind that “truth.” And without that ability, they can do very little about the quality of their lives. Vaclav Havel, the intellectual liberator and President of Czechoslovakia, wrote, “Keep the company of those who seek the truth-run from those who have found it” Steven Rattner is a small example of the many who claim to have found it.