Bus Riding Economists

Lord, I was born a ramblin’ man
Tryin’ to make a livin’ and doin’ the best I can[1]

A couple economists took the same bus I did one day last week. We’ll call them “Home Boy” and “Ramblin’ Man.”. They made acquaintance when Ramblin’ Man put his money in the fare box and didn’t get a transfer coupon. He was from out of town, he said, and didn’t know how to work it. Home Boy explained that you need to wait until the driver gets back from her break. Ramblin’ Man said he guessed the money was just gone, but the driver showed up about then and checked the meter — it showed he’d put the money in, so he got his transfer. Technology’s great, ain’t it?

Ramblin’ Man took the seat in front of me. Home Boy sat across the aisle. When the conversation turned to economics, I eavesdropped[2] shamelessly. Well not exactly — they were talking pretty loud.

viet nam vets

Ramblin’ Man said he’d been riding the bus for two days to get to the VA. That gave them instant common ground:  they were both Vietnam vets, and agreed they were lucky to get out alive.

miley-large

Ramblin’ Man said when he got out he went traveling — hitchhike, railroad, bus, you name it. That was back in the 70’s, when a guy could go anywhere and get a job. Not no more. Now he lives in a small town up on northeast Montana. He likes it, but it’s a long way to get to the VA, but he knew if he could get here, there’d be a bus to take him right to it, and sure enough there was. That’s the trouble with those small towns, said Home Boy — nice and quiet, but not enough people to have any services. I’ll bet there’s no bus company up there, he chuckled. Not full of people like Minneapolis.

Minneapolis! Ramblin’ Man lit up at the mention of it. All them people, and no jobs. He was there in 2009, right after the bankers ruined the economy. Yeah, them and the politicians, Home Boy agreed. Shoulda put them all in jail. It’s those one-percenters. They got it fixed now so nobody makes any money but them. It’s like it was back when they were building the railroads and stuff. Now they’re doing it again. Nobody learns from history — they keep doing the same things over and over. They’re stuck in the past.

Except this time, it’s different, said Ramblin’ Man. It’s all that technology — takes away all the jobs. Back in 09, he’d been in Minneapolis for three months, and his phone never rang once for a job offer. Not once. Never used to happen in the 70’s.

And then my stop came up, and my economic history lesson was over. My two bus riding economists had covered the same developments I’ve been studying for the past 15 months. My key takeaway? That “The Economy” is a lazy fiction — none of us really lives there. Instead, we live in the daily challenges of figuring out how to get the goods and services we need — maybe to thrive (if you’re one of them “one-percenters”), or maybe just to get by. The Economy isn’t some transcendent structure, it’s created one human transaction at a time — like when a guy hits the road to make sense of life after a war, picking up odd jobs along the way until eventually he settles in a peaceful little town in the American Outback. When we look at The Economy that way, we get a whole new take on it. That’s precisely what a new breed of cross-disciplinary economists are doing, and we’ll examine their outlook in the coming weeks.

AmericanaIn the meantime, I suspect that one of the reasons we don’t learn from history is that we don’t know it. In that regard, I recently read a marvelous economic history book that taught me a whole lot I never knew:  Americana: A 400-Year History of American Capitalism (2017)  by tech entrepreneur Bhu Srinivasan. Here’s the promo blurb:

“From the days of the Mayflower and the Virginia Company, America has been a place for people to dream, invent, build, tinker, and bet the farm in pursuit of a better life. Americana takes us on a four-hundred-year journey of this spirit of innovation and ambition through a series of Next Big Things — the inventions, techniques, and industries that drove American history forward: from the telegraph, the railroad, guns, radio, and banking to flight, suburbia, and sneakers, culminating with the Internet and mobile technology at the turn of the twenty-first century. The result is a thrilling alternative history of modern America that reframes events, trends, and people we thought we knew through the prism of the value that, for better or for worse, this nation holds dearest: capitalism. In a winning, accessible style, Bhu Srinivasan boldly takes on four centuries of American enterprise, revealing the unexpected connections that link them.”

This is American history as we never learned it, and the book is well worth every surprising page.

[1] From “Ramblin’ Man,” by the Allman Brothers. Here’s a 1970 live version. And here’s the studio version.

[2] If you wonder, as I did, where “eavesdrop” came from, here’s the Word Detective’s explanation.

The Super Bowl of Economics: Capitalism vs. Technology

Flippy

Technology is the odds-on favorite.

In the multi-author collection Does Capitalism Have a Future?, Randall Collins, Emeritus Professor of Sociology at the University of Pennsylvania, observes that capitalism is subject to a “long-term structural weakness,” namely “ the technological displacement of labor by machines.”

Technology eliminating jobs is nothing new. From the end of the 18th Century through the end of the 20th, the Industrial Revolution swept a huge number of manual labor jobs into the dustbin of history. It didn’t happen instantly:  at the turn of the 20th Century, 40% of the USA workforce still worked on the farm. A half century later, that figure was 16%.

I grew up in rural Minnesota, where farm kids did chores before school, town kids baled hay for summer jobs, and everybody watched the weather and asked how the crops were doing. We didn’t know we were a vanishing species. In fact, “learning a trade” so you could “work with your hands” was still a moral and societal virtue. I chose carpentry. It was my first fulltime job after I graduated with a liberal arts degree.

Another half century later, at the start of the 21st Century, less than 2% of the U.S. workforce was still on the farm. In my hometown, our GI fathers beat their swords into plowshares, then my generation moved to the city and melted the plows down into silicon. And now the technological revolution is doing the same thing to mental labor that the Industrial revolution did to manual labor — only it’s doing it way faster, even though most of us aren’t aware that “knowledge workers” are a vanishing species. The following is from The Stupidity Paradox:  The Power and Pitfalls of Functional Stupidity at Work:

“1962… was the year the management thinker Peter Drucker was asked by The New York Times to write about what the economy would look like in 1980. One big change he foresaw was the rise of the new type of employee he called ‘knowledge workers.’

“A few years ago, Steven Sweets and Peter Meiksins decided they wanted to track the changing nature of work in the new knowledge intensive economy. These two US labour sociologists assembled large-scale statistical databases as well as research reports from hundreds of workplaces. What they found surprised them. A new economy full of knowledge workers was nowhere to be found.

“The researchers summarized their unexpected finding this way:  for every well-paid programmer working at a firm like Microsoft, there are three people flipping burgers at a restaurant like McDonald’s. It seems that in the ‘knowledge’ economy, low-level service jobs still dominate.

“A report by the US Bureau of Labor Statistics painted an even bleaker picture. One third of the US workforce was made up of three occupational groups:  office and administrative support, sales and related occupations, and food preparation and related work.”

And now — guess what? — those non-knowledge workers flipping your burgers might not be human. This is from “Robots Will Transform Fast Food” in this month’s The Atlantic:

“According to Michael Chui, a partner at the McKinsey Global Institute, many tasks in the food-service and accommodation industry are exactly the kind that are easily automated. Chui’s latest research estimates that 54 percent of the tasks workers perform in American restaurants and hotels could be automated using currently available technologies—making it the fourth-most-automatable sector in the U.S.

“Robots have arrived in American restaurants and hotels for the same reasons they first arrived on factory floors. The cost of machines, even sophisticated ones, has fallen significantly in recent years, dropping 40 percent since 2005, according to the Boston Consulting Group.

“‘We think we’ve hit the point where labor-wage rates are now making automation of those tasks make a lot more sense,’ Bob Wright, the chief operations officer of Wendy’s, said in a conference call with investors last February, referring to jobs that feature ‘repetitive production tasks.’

“The international chain CaliBurger, for example, will soon install Flippy, a robot that can flip 150 burgers an hour.”

That’s Flippy’s picture at the top of this post. Burger flippers are going the way of farmers — the Flippies of the world are busy eliminating one of the three main occupational groups in the U.S. And again, a lot of us aren’t aware this is going on.

Burger flipping maybe to particularly amenable to automation, but what about other knowledge-based jobs that surely a robot couldn’t do — like, let’s say, writing this column, or managing a corporation, or even… practicing law?

More to come.

Check out Kevin’s latest LinkedIn Pulse article:  Leadership and Life Lessons From an Elite Athlete and a Dying Man.

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