Saturday, February 28, 2015

Valuing the Goods

I am not quite sure what to make of J. Bradford DeLong's essay "Making Do With More," which I read on the Facts & Arts Web site. He begins with the premise that "just three out of ten workers are needed to produce the deliver the goods we consume." He accounts for the other seven as follows:
The rest of us spend our time planning what to make, deciding where to install the things we have made, performing personal services, talking to each other, and keeping track of what is being done, so that we can figure out what needs to be done next.
He then wonders why we are not all bathing in prosperity.

Like many he attributes the problem to changes brought on by the information age. He argues that we are no longer producing goods that are either rival or excludible (terms which he defines clearly). Such goods are hard to value; and, in the absence of what he calls "true value," we have become a society of "techno-plutocrats and their service-sector serfs." Whether or not this is the sort of serfdom that Friedrich Hayek had in mind, DeLong's analysis gives one pause.

Nevertheless, he may have overlooked the fact that serfdom is not confined to the service sector. Increased reliance on high-technology equipment means that those three out of ten workers are also little more than serfs. If they are not mindless, then they are still passive for more time than they are active. The question is whether or not this state of degraded mindfulness has had an impact on what is being produced. It strikes me that there is a need to investigate whether the goods now being produced and delivered are now really shoddier than they used to be or whether the consequences of their being shoddier just happen to be greater (as in that cockpit door that locked out the pilot). Either way, we may need to own up to the fact that the information age has given us a world in which not only are fewer people doing work to which value can be attached but also they are not doing it very well.

1 comment:

jones said...

This guy's argument is nonsense, empty cheerleading for organized industry.

The notion that "we are no longer producing goods that are either rival or excludable" is based on vague notions that "we don't make anything in America anymore."

Here is raw data on industrial output from the Federal Reserve:

The exponential curve upwards is due to automation -- output per worker -- which began on an industrial scale in the mid 1800's, well before the information age.

And while it is false that "we don't make anything anymore" it is the case that manufacturing employs far fewer people than it once did. Here is raw data on the raw number of manufacturing jobs in the US:

Select the time series for 1939 to the present, and you'll see quite clearly that in terms of raw manufacturing jobs, we're today around where we were just before we entered World War II.

Fewer people make more goods. What was once called "labor saving machinery" clearly hasn't reduced working hours, or increased vacation days. Adjusted for inflation, median household incomes haven't increased since 1965.

Which means: all growth is growth in inequality. The increasing value of US manufacturing output accrues to those who are already wealthy.