Charlie's Diary

For an economy that's really good at disintermediation, we certainly seem to be employing a whole of people in intermediation. More than ever, in fact, although those people are more efficient at moving stuff than they used to be.

I'm going to guess at "not very different," but it deserves more thought. I do wish you'd ask these things at econ websites, though. You know, where the commentators know stuff about the topic.

Noel: I'll maybe do that next. Or encourage folks to re-post the question.

The economic situation will likely cause the US to engage in a massive Keynesian stimulus, especially if Obama wins, which is looking increasingly likely.

The infrastructure buildout, designed to soak up unemployed construction workers, will be much more ambitious with a likely fillibuster proof majority in the Senate.

The consequences of a "Moon Shot" style energy program to try and get off oil are at a singularity level of unpredictability.

See also Vinge, _A Deepness in the Sky_, and some of his musing on the intrinsic fragility of highly-optimized systems.

Yep, Nix @4, or see gas shortages in Atlanta.

Charlie, perhaps you should postulate a future economic crash that occurs when all the packaged carbon caps become worthles due to the mass availability of rapid charge capacitors.

I'm guessing "not very different" too.

One thing I have noticed locally is an increased awareness of commodity prices ("Have you seen the price of [insert foodstuff here] these days?") & a drive toward austerity. Local media have been doing noticably more stories of getting more for your money and/or spending less by: buying houses at mortgagee sales, comparing prices of goods online first, holding off making impulse purchases and waiting for the inevitable sales as retailers try to encourage spending, buying seasonal produce & (*gasp*) growing your own veges. All addressing concerns of the current uncertain economic climate.

-Blackouts

Sporadic rolling ones at best, 1-2 week long possible, indefinite worst case. Fiber-optic repeaters and cell phone sites take a lot of juice.

-Some chilly nights

How's your home heated? Oil, gas, or electric? Got a solar hot water heater? If not, get used to cold showers.

You ask good questions. What are you missing? I'm sure you're somewhat aware of it as a Register reader, but one trend that's really about to start hitting in the next four years is utility computing (a la Nick Carr), which will mean a decline of the number of jobs for your basic corporate IT manager, hitherto considered your quintessential Knowledge Worker (a la Peter Drucker) and thus reckoned semi-untouchable by job market vicissitudes. So that's the beginning of the end of one paradigm.

A closely linked trend -- since global digital networks also make this possible and Amazon came up with this service to fill the 'human intelligence' hole that its other cloud computing services don't cover -- is the globalization of salaries through 24/7 spot markets like Amazon's MECHANICAL TURK.
https://www.mturk.com/mturk/welcome

Also, crimes committed in the real world but enabled by the Internet (e.g. somewhat like the beginning scene of Bruce Sterling's DISTRACTION). See for example this report from ABC
Wash. Man Pulls Off Robbery Using Craigslist, Pepper Spray
http://www.abcnews.go.com/US/story?id=5930862&page=1

'In what authorities described as one of the most unusual robberies in recent memory, a man wrested a bag of cash from an armored truck guard and escaped down a creek with an inner tube after using decoys summoned from a Craigslist ad to distract witnesses.'

An environmental panic to help unsettle things further? http://www.openthefuture.com/2008/09/methane_its_not_just_from_your.html

Charlie, you ask an interesting implicit question in paragraphs 5 and following. Have modern logistic techniques made intermediate links in supply streams become more susceptible to point failure? Or less so?

My own guess is that it's a wash. Firms which rely heavily on low inventory, fast delivery logistics already have adopted a supplier network which meets those needs. For instance, Toyota famously has two suppliers for every part. On the other hand, firms which don't rely on those techniques haven't.

It's the ones in between, or the ones who have implemented them badly, who could be screwed over in your scenario. But that's nothing science fictionally new.

I know one of the popular geek apocalypses is "what if Just In Time fails?" popularized by Vernor Vinge's typically half-baked speculations. Do you know what it reminds me of? The Y2K "oh my God we're all gonna die" hype. Yes, we're all gonna die sometime, but not because of a margin call or a buffer overflow error.

In re: the Mechanical Turk (btw, why not just go ahead and call it a Silicon Chink if they're going to be racist? Jeez.) -- I haven't looked at it recently, but it seems to suffer from the same problem as parallel computing. Only some jobs can easily be broken down into small chunks whose results can reliably be recombined into usable data. For those things ("Does this picture contain a cat?") it's great, but ... how universally scalable is that? Is it likely to replace any great part of the existing salary market? I honestly don't see how.

In re Noel's suggestion: Charlie, if you post it to econ sites, could I ask you to link to said sites here? Because I'd really like to see the discussion. Noel: what sites do you suggest?

In re Carlos: I seem to agree. The only discontinuity I see here is that your American man in the street may well wake up to the fact that we can't actually make very much any more, and hopefully that trend will reverse. But "we're all gonna die?" I don't see that.

I'd *hope* to see trends towards localization of the American economy and smaller companies over larger ones. I'd hope to see smaller regional agriculture. I hope to God Puerto Rico starts to grow food before the oil runs out. But I don't know beans about economics, so I have no way of predicting whether a failure of capital will help or hinder larger or smaller companies preferentially.

btw, why not just go ahead and call it a Silicon Chink if they're going to be racist? Jeez.

It's an allusion to a real (but fake) automaton:

http://en.wikipedia.org/wiki/Mechanical_Turk

Might have been racism on the part of whoever named it originally, I suppose.

I predict people will once again learn to distinguish the fundamental difference between "necessary" and "nice". Or they'll end up crying on youtube.

wench @14:
Judging from experience, we repeatedly fail to distinguish between "necessary" & "desirable". Or if we do, the lesson doesn't stick. Just take a look around.

I'll go along with "not very different" for the slide (or abrupt fall) down, but I think things are going to be very different (and very nasty for a significant part of the population of the First World*, because of the point Noel Maurer raises in #1.

For the last few decades, we in the industrialized world, and especially the more devoutly capitalist countries like the US and the UK, have been building an infrastructure which automates most of our population out of jobs. First it was manufacturing jobs replaced by robots, then clerical jobs replaced by PCs, now low-level knowledge workers like loan assessors and others making deterministic decisions for which good algorithms exist. The automation has been obscured by two things:
1) In order to keep economies based on the flow of money from consumer buying, large numbers of service jobs have been created, and massive credit debt has been encouraged as a way to pay for consumer goods.
2) the ability of Third World countries to supply cheap labor that (temporarily, thanks to Moore's Law) can undercut the machines. The result has been to keep unemployment below historical highs, a necessity for the maintenance of consumer economies.

I think that may end here. It's entirely possible that the shock to the world economic system, falling unevenly on internet-enabled and non-enabled commerce, may result in many large organizations with high numbers of essentially obsolete job positions not being able to keep afloat. And on the upswing, new businesses won't be able to compete unless they automate those jobs rather than hire into them. The result could easily be a permanent unemployment rate too high for any but the most reactionary governments** to accept without some major changes in the concept of social welfare.

Speaking specifically of the US, whatever social structures get changed, it seems unlikely to me that the consumer as economic engine is a concept that can survive that level of unemployment without still more debt, and I don't think that the ultimate sources of the money for those loans, China and Japan, will be willing to continue after the forthcoming major recession.

The classic recipe for recovering from a depression with high unemployment is massive creation of (often make-work) jobs. But if those jobs can't be funded by government money from loans, the alternative is for the government to print more money, resulting in hyper-inflation, something I think most current governments are terrified of. The "muddling through" strategy that might be politically acceptable is very likely to result in the permanent collapse of the job market, as it falls on businesses which can't afford not to automate to pull us out of the crapper.

* We might want to start calling it World 2.0. Of course, unlike with version numbers, that's not an improvement.
** A group which could very well contain the US, though that thought distresses me greatly.

For more on the Mechanical Turk's lineage in popular culture, check out E.T.A. Hoffmann's Automata. (And yes, the nutcracker referenced in the story is the nutcracker.) But the use of the Asian image to communicate posthumanity continues: it's a Chinese Room, after all, and then there's Ueno's ideas about Techno-Orientalism...the list goes on.

Part of me wants to say that we've actually been playing out this scenario in our dreams for a while. There's a reason Fight Club was so successful, and part of it was that it tapped into the longing for a world without credit. (Turns out Wall Street was just a little late to join Project Mayhem.) And the Paper Street Soap Company system of manufacturing looks not unlike the urban homestead-type projects that are becoming so popular: making one's own soap, food, furniture, etc. But I doubt that such an insular model can work on the national scale. And I doubt that the bonding necessary to grow urban villages will happen overnight. We all have villages, but they're In Here, not Out There.

So, if you ask me what Web 2.0 recessions look like, they're like this: homegrown doujinshi sold online next to the melt-and-pour soap and lacto-fermented pickles. Kids running VOIP off the PSP or DS rather than upgrading phones. Empty McMansions reduced to kipple. More porn, especially homemade (it's a recession-proof industry). Maybe at-home distilleries. In short, the Etsy-nthesis of our every desire.

#1, #2: A good place to ask this would probably be on the Agonist. They have a lot of very sharp political economists among their membership. They're not hugely into technology but I can't think of any other econ fora that have a good technology focus. For that matter, I can't think of any other economics discussions arenas that will take questions--posting questions on top-level econ blogs (Baker, Delong, Krugman, etc) is pretty much pointless as the blog owner will never reply.

My view on the stripping of redundancy from the global economy is that the real problem is not with supply chains but rather that too many extremely specific, and often extremely irrational, bets have become utterly vital to the functioning of the economy. For instance, for the past five years, the prosperity of the global economy depended on American residential housing prices never going down. Once that one bet failed, everything that rested on top of it--consumer consumption funded via credit, monoline bond insurers, investment banks, insurance firms, and now hedge funds--went down like a string of dominoes.

There is no easy or obvious answer for how to prevent the global financial system from betting everything on an impossible outcome but it's clear that humanity needs to think very carefully about how to move forward from here. 1929 is not the worst possible outcome from a bad collective economic bet. Bet too much on the wrong thing and the next big crunch might take down civilization to subsistence farming levels.

Think: great filter.

@ # 4 & 14 .....

I have always been bothered by people claiming 100% efficiency.
What happens when you give it a 105% load?
But then I'm an engineer.
Three examples: In one of the ealier round-the-world singlehanded yach races, the French ahd beautifully lightweigh, optimised ship.
The weather got rough, the "ropes" snapped - game over.
The Brit/Aussie entrants were "overengineered - and won.
Railways: There's a classic example of "overengineering a few miles from Charlie - the ultimate BRIDGE (in my opinion) - and, during WWII, the then various ralway companies had lots of lococs, that didn't do too well, because of lack of maintenance - exept for the LMS Stanier "8F" - rugged, simple, effective, big boiler, and the LNER Gresley "V2" not quite so simple (Valve-gear needed maintenance) but REALLY BIG boiler.
Even further back, and a classic warning:
"Their system is like a magnificent piece of beautiful horse-harness. It looks very well, and answers very well, until something breaks, and then you are done for,
Now, I always make my harnesses of knotted rope. If anything breaks, I tie a knot, and carry on"
- Arthur Wellesley. Dk. of Wellington.

More porn?

I may have missed earlier adverts, but a porn production company. apparently planning to film in Manchester, had adverts for performers in the Grimsby Telegraph (Both UK).

How much that's the economy, and how much an easing of traditional public prudery, I don't know. There was a certain photographic magazine, in the days of film, which had a reputation for being a bit "racy"; what used to be called "Glamour Photography" was an editorial staple. I haven't seen the title lately, but they were always big on Kodachrome, and that's pretty well gone.

It's not just the financial shenanigans: the local photolab closed this summer. It's not a dead industry, not until decent digital cameras get really cheap, but technology has stripped away more of the customers.

And I'm inclined to think a lot of stuff will be redesigned with repair more in mind. Think of the power connectors on all those portable computers: the design is cheap to assemble, easy to damage, hard to repair, and I have a suspicion that the connectors--plug and socket--aren;'t rated to carry the power.

(And the people doing the disassembly for parts, and selling on eBay, really need to work on their quality control. Selling broken components is not good business, and I have a dreadful feeling about the implications of a BGA-mounted processor chip being loose on the motherboard.)

Actually, that all points up another problem. Working mail order has a minimum transaction cost--postage both ways for a repair--and you're also dependent on getting good info on what you're paying for.

So do I go to the physical Maplin shop, or use mail order, for some specific connectors? Amswer, I think I have to go look; one of the options I have, there isn't a measurement of any sort for the connector. And I might be better off at another shop anyway, because the people there know what they're selling.

#16:

The prospect of automating away most jobs is damn scary because no one has any clue how to maintain a good standard of living or protect political rights when all consumer demand can be fulfilled by a tiny minority of people controlling an essentially automated economy. There isn't even a base of economic scholarship to even begin to figure out how to run an egalitarian state in those circumstances. If it only takes 100,000 people to supply the demand needs of fifty million consumers to the limits of land and resources, those 100,000 people can demand any powers and rights they desire by either going on strike or building an automated army.

As for the current crisis, I would not be at all surprised if the US recovers late in this cycle. Unlike America, the rest of the world has comparatively solid public finances that can support Keynesian anti-cyclical spending. States with the resources and ideologies to spend into a recession will recover faster while US fiscal policy will be frozen by a combination of a high public debt and an ongoing failure of leadership that makes public discussions of wealth distribution impossible and leaves bridges to collapse while the military budget is not merely inviolate but growing.

#21 - "no one has any clue how to maintain a good standard of living or protect political rights when all consumer demand can be fulfilled by a tiny minority of people controlling an essentially automated economy"

Player Piano, K. Vonnegut.

This time round?

Well, take you 'disintermediation' and run with it. There are relatively few jobs that have to be done in particular countries. So the downturn will accelerate the shift of most jobs to the cheapest parts of the world. If I were leader of a country on the west coast of Africa I would stamp on corruption, implement business friendly laws, and hang out the 'open for business' sign. Ideal positioning and a cheap workforce.

However, as becomes obvious, that doesn't work if there is nobody who can afford to buy. The credit crunch exposes this and as a currency collapses (through inflationary policies) they disappear as consumers. What replaces them are the emerging consumers of the 'third world'. They may only have little money, but there are lots of them. Simple, cheap products - manufactured in bulk.

So this depression brings on a shift in attention/power towards the east and south.

At the same time the oil peak strikes. Its getting so there is no real question about it now. The latest is word from someone in the know that N Ghawar is "mostly watered out in 2 years". That had been predicted, but the semi-confirmation is worrying. The collapse in western demand will hide the peak somewhat, but its there to cap and kill off any large scale growth out of decline.

In other words, this is likely to be a permanent decline, particularly strong in the west.

So what role does the internet play?

Well it helps the shift from west to east by helping the outsourcing. It also helps keep connections open longer than otherwise. However for problems built on population and power its mainly a bystander.

>>>If I were leader of a country on the west coast of Africa I would stamp on corruption, implement business friendly laws, and hang out the 'open for business' sign.

Alas for Africa's broad masses, elite corruption and business friendly policies are all too often one and the same thing in the African context. Look at the revolving door between the Nigerian subsidiaries of the oil MNCs and the Nigerian cabinet under both military and civilian rule. . .

@24
True, but someone will eventually realise that by stamping down on it they get more companies and more investment which they can then tax (ie legal corruption). As a bonus the prols have more money, so are less likely to revolt.

The west coast location puts them on the same timezone as europe, ideal for certain outsourced jobs.

There are plenty of jobs that can't be outsourced to other countries.

Plumbers. Electricians. Other building and infrastructure maintenance. (Stuff that works with atoms instead of bits.)

Service occupations: waiter, chef, bartender.

Currently about 70% of the UK's work force is employed in service sector jobs. A lot of these are luxury items (beauty salons, high class restaurants) but a lot more aren't.

If we're talking about Keynsian projects to spend our way out of recession, there's a lot of potential in the shape of rebuilding decaying infrastructure and re-gearing for expensive energy/transport costs: building light rail services out to the suburbs, for example.

And I suspect the hub-and-spoke model of distribution is going to be replaced by network distribution that optimizes for fuel efficiency.

(Not so long ago there was a scandal here in Scotland when it became public knowledge that shellfish farmed in Scottish waters were being frozen and shipped to Thailand to be shelled by hand, then shipped back to be sold in Scottish supermarkets -- because the single local specialist shellfish-processing plant had become uncompetitive with cheap third-world labour and cheap refrigerated air tranport.)

Bruce @16: I've occasionally toyed with the idea of an "efficiency tax" on corporations -- effectively a sliding scale fine to be imposed if they produce too high a turnover per employee. The devil, of course, is in the details (and in the question of how to remain competitive in a global market if other countries don't join in).

Charlie,

Those service jobs are in the main MacJobs - providing services to others providing services in a grand Merry-Go-Round. Somewhere someone has to earn the money to keep it going (since debt based economy is another way of saying 'trouble waiting to happen').

If there is no money then there are no service jobs because nobody can afford them.

As you say, service jobs contain those that cannot be outsourced. That's another way of saying they are dependent on the local economy. It tanks, they go. Maybe you can say that a plumber is a key worker who cannot lose his livelihood - but the amount he can charge and therefore his standard of living can sure be hit, halved even.

Someone really needs to work out what we can do that nobody else can - and base the economy around that. For scotland that means Whisky, since the North Sea is ending. That's not really much to keep things going.

We are maybe missing the set-up costs.

How much does it cost to build a factory to produce a certain physical product?

The problem is that some of the factories are rather generic. And perhaps the machinery for the distinctive parts needs to be regularly refurbished, so the cost of moving the contract is lower than you might think.

There are also sometimes better technologies: there was a big jump in detail and quality in the Hornby-type model railways around 1975-1980. Moulds were more detailed, and the painting system completely changed. Sometimes, there is no choice but to build the new factory.

Charlie,

Arthur @ #3 cites the inevitable Keynsian reaction which is already underway. Perhaps JMK's rosier visions of 'jam today' and the 15-hour week will satisfy us once we learn to discern wants from needs. This document certainly changed my mind about a lot of things...

http://www.econ.yale.edu/smith/econ116a/keynes1.pdf

"Of course there will still be many people with intense, unsatisfied
purposiveness who will blindly pursue wealth-unless they can find some
plausible substitute. But the rest of us will no longer be under any obligation to
applaud and encourage them. For we shall inquire more curiously than is safe
to-day into the true character of this “purposiveness” with which in varying
degrees Nature has endowed almost all of us. For purposiveness means that we
are more concerned with the remote future results of our actions than with their
own quality or their immediate effects on our own environment. The
“purposive” man is always trying to secure a spurious and delusive immortality
for his acts by pushing his interest in them forward into time. He does not love
his cat, but his cat’s kittens; nor, in truth, the kittens, but only the kittens’
kittens, and so on forward forever to the end of cat-dom. For him jam is not
jam unless it is a case of jam to-morrow and never jam to-day. Thus by
pushing his jam always forward into the future, he strives to secure for his act
of boiling it an immortality. "

Charlie at 26: Um. You have it exactly backwards. The hub-and-spoke model of distribution is already more optimized for fuel efficiency than network point-to-point, for the same reason that commuting by bus and train is more fuel efficient than everyone commuting to work in their own car.

This is why analysts who promoted low-volume P2P as the new wave of air freight and travel a few years ago aren't doing that any more. (JetBlue had to overhaul its operations, Southwest has cut costs to the bone, Boeing has a new generation of aircraft designed for the wrong type of flight, et cetera.)

Tangentially to blackouts mentioned in #7 above, we had an old-fashioned brownout a few months back. All those efficent low voltage fluorescent bulbs either didn't work or in one case flickered on and off.

Is there a glyph of frustration?

Fellas, "outsourcing" is a potential problem, but as of right now companies are having a bad time of it. It turns out that there aren't unlimited pools of skilled workers sitting around out there with nothing else to do besides sell services to people in the West.

As for "Player Piano," fun read, massively flawed, deserving of oblivion. (Unlike Vonnegut's other works.) It's like a nineteenth-century novel in which an unemployment urban lumpen wanders around wondering what they're going to do now that a small group of highly-mechanized farmers can grow all the food.

Regarding econ blogs: Brad Delong reads this blog, and could be interested in the question. Tyler Cowen responds if he thinks it's interesting. Megan McArdle drives me up the goddamned wall, but she isn't dumb, and she's got good commentators. There are plenty more.

Actually it would be the second recession of the twenty first century, most of the world did have a short shallow recession in 2000-2003. Britain didn't but most did. So far the real economy has been surprisingly little affected by the financial crisis, the US economy has contracted by about 0.1% while the economies of Europe have merely stopped growing. This is rather different to the situation in 1929 where the US economy had been in recession since early 1929 before the stock market bubble burst at the end of October.

Curmudgeon @21

Those 100,000 only have leverage if only they can produce the goods required by fifty million, if any given 100,000 of those fifty million can produce the goods then the ones who happen to actually do so have negligible leverage as replacing them would be trivial.

How it differs will depend on which recession you plump for to compare it to.

My sense is that this is the first recession where you can use the internet to find work. Even in the early 1990's recession, information about jobs required a library, access to newspaper classifieds for possible target cities in other states and lots of stamps. This time information is readily accessible via job listings and email communication is easy. So I expect that it may be a bit easier to find jobs, although not to get them, than then.

Things that do bother me are that we are increasingly reliant on technology that we cannot give up to survive. In the US, more people than ever are on drugs that they need to live. What happens when they are out of work, out of health insurance and unable to get those drugs?

OTOH, the world is so full of things, that cheap new and used goods should be overflowing from discount stores and garage sales.

@ Ian Smith, #23, who writes:
"At the same time the oil peak strikes. Its getting so there is no real question about it now. The latest is word from someone in the know that N Ghawar is "mostly watered out in 2 years".... The collapse in western demand will hide the peak somewhat, but its there to cap and kill off any large scale growth out of decline."

I've thought and heard similar things, and looked at what Robert Hirsch and Mathew Simmons are saying. Back in 2002, I expected peak oil sometime between 2006-2012. And it's very worrying that there's no transparency whatsoever regards total global oil supplies.

That said, I note that Vinod Khosla of Kleiner Perkins -- no fool he -- expects the biofuels whose development he's underwriting to be producible at $16 to the barrel before they have a chance of replacing gasoline. I've also heard oil industry scientists be quite convincing about new technologies they can bring to bear on existing fields if the economics -- the price of oil -- warrants it.

Bottom line: we really can't be sure how far away peak oil's arrival may still be. It may just possibly be decades, even though you and I tend to doubt it.

@ Noel, #32, who wrote: "As for "Player Piano," fun read, massively flawed, deserving of oblivion. (Unlike Vonnegut's other works.) It's like a nineteenth-century novel in which an unemployment urban lumpen wanders around wondering what they're going to do now that a small group of highly-mechanized farmers can grow all the food."

Yes, indeed.

Furthermore, though we're going to see much leaner companies in many cases and automation whittling away at even the knowledge worker, there remain large sectors of the workforce that cannot be either outsourced or automated within the next two decades or so.

As for the longer term, just like physicists have their longstanding joke about "fusion is the energy source of the future and it always will be," economists joke that based on the trends "one day all economists will be healthcare economists." Today, healthcare is mostly regarded as simply a cost -- a loss. That doesn't necessarily have to remain the case: what's more valuable than life itself? If you think about it, too, a hospital is the perfect example of an institution that requires all human skill levels in its work force.

In the plus column for the US is the fact that Keynesian public works style pump priming is actually needed in the US right now.

There's a need for lots of things that come straight from the government spending playbook, mostly to replace things from last time the government had to build infrastructure. The roads need lots of work, bridges need building, a sensible national transportation policy needs to be put in place.

Some airlines need to be let go, or merge/sell with/to competitors.

The problem I have everytime I read about tax cuts and trickle down is that the core of this problem is credit and mis-use of credit. The personal debt has to be paid down and people have to start living more within their means (in that much Palin was right) - the trouble is, that's death for an economy that relies on consumer spending.

The spending has to come from somewhere and the public are tapped out.

The biggest mistake of "Player Piano" and similar 50's and 60's dystopias is defining as "products" only things which can be stored, weighed and measured. A large portion of West's population today (and smaller in the rest of the world, but still larger than ever before) is employed in the fields of entertainment, leisure, travel, beautification, pampering, adventure, and of various hobbies (aquarium fishes, crocheting, you name it). IOW, they get paid to make other people's lives more enjoyable - in ways which are very very difficult to automate. THAT's where Vonnegut went completely off-mark – and I doubt anyone foresaw in 1952. When I pay $70 (plus cost of compressed air and gear maintenance) to a boat captain to take me to a fascinating wreck, I get nothing out of the experience but memories and perhaps a couple lobsters. Does that mean I became $70 poorer? No, the transaction was a net gain for me - otherwise why would I do it? My life received a "product" well worth $70. Likewise when I pay $70 to a massage therapist to give me an hour of luxury. And neither dive boat captain’s job nor massage therapist's can be automated in forseeable future.

Iam Smith above dismissed such jobs as "providing services to others providing services in a grand Merry-Go-Round". In a sense, it is true - neither massages nor recreational diving are necessities, and their providers are stuck when nobody makes "important stuff". But neither are desks or desk lamps or silverware - you CAN live without any of this stuff, and manufacturers of forks and desk lamps are in trouble if nobody grows food. So how is manufacturing of forks and desk lamps not a "grand Merry-Go-Round"?

The utility company I work at is sending a good chunk of its maps to India to be converted to GIS ... but the people here will be trained to do the maintenance on the product, and they have no idea how much work that's going to be - yet. And they'll be fixing the stuff that comes back, too: you have to know what you're looking at in order to do a good job of conversion, and that's where experience matters.

On the Aeron chairs: we have them at work. I won't use them, because I find them remarkably uncomfortable to sit in; the conventional chairs fit much better.

Book series idea!

"The Crazy Years Chronicles".

Oops.

It's a documentary. :)

Sorry Ilya, not too many people going on vacations when they can't afford to EAT.

Wired Monastery's?
Bed, Food and a workstation? with 1Gb + connectivity?

Ilya@38: spot on.

Mark@36: now you know one of the many necessary reasons why Holy Fire rises past "good book" into the realm of genius.

the Rural USA is going to get hit hard when companies like walmart or target start looking to cut back on work force (the last, biggest drain on their revenue) by implementing automated checkout in a big way. The local grocery store has it, and it works well enough. A large number of workers in the states are Register Jockeys, and they're in for a hard landing once we finally decide that we don't really need someone to accept dollars and place them in a drawer. After that they'll look to the shelf stockers.

The McJobs will evaporate in order of how rote and repeatitive the task is.

So I guess at that point we're going to see a glut of interior decorators and massage therapists as people attempt to retool or face economic extinction.

#33: Getting replacement workers isn't easy. If automation makes it possible to run an entire economy with a minuscule workforce, there will be no incentive for the unemployable masses to have the training to take over from any of the tiny employable minority. What's the incentive for anyone to spend the time and effort getting the kind of PhD+++ education that will be necessary to perform economically useful services in an automated economy if the chances of them ever getting--or needing--a job are effectively zero?

#37: Misuse of credit is certainly a large part of this problem, but the root cause is rather inappropriate distribution of income. The managerial class isn't prepared to pay consumers enough to cover essential expenses (fuel, education, health care (US only), housing, etc) and therefore increasing numbers of consumers have been forced to turn to credit to make ends meet. The system held together as long as the credit lasted but now we either need to accept a permanent decline in living standards to the level supportable by wages the managerial class is prepared to pay, or find some way to extract more of the money the managerial class is currently pocketing so those funds can be spent on consumption rather wasted propping up asset bubbles.

Book idea:
Reverse Metropolis, The minority class of stature are the people with the credentials to be employable and everyone else is literally a nation of butlers to this class and to each other.

Curmudgeon @ 21

There isn't even a base of economic scholarship to even begin to figure out how to run an egalitarian state in those circumstances.

Quite true. And this economic downturn may cause a major phase-change in the regime in which economies in the Western World operate, forcing the automation to happen despite what anyone wants. Some of the countries, the US in particular, are not likely to be able to "muddle through" to an equitable, egalitarian solution. Which is why I see hard times ahead in those countries even after the world economy as a whole starts to recover.

John Hughes @ 22

It's been quite awhile since I read Player Piano; ISTR that it's economic scenario wasn't very believable, but the way the American people reacted to it was very believable. I was thinking of Fred Pohl's The Midas Plague. His is the kind of solution I'd expect from the geniuses who gave us the consumer-debt-driven economy; it was an even more extreme form of consumer-driven economy where consumerism was enforced by law.

Charlie @ 26

I think there already is a major brake on corporate efficiency: the need for managers to create fiefdoms in which their power is based on the number of employees directly under their part of the hierarchy. This has also been a factor in reducing the effect of automation on unemployment: create new, lower-paying jobs to replace the ones obsoleted, and the manager gets his power-base, the corporation gets a profit boost from the job deletions, and everyone, except the workers, is happy.

Daveon @ 37

In the plus column for the US is the fact that Keynesian public works style pump priming is actually needed in the US right now.

That's very true, but where's the money to prime the pump going to come from? And who's going to convince the significant minority of Congress who almost scuttled the "financial bailout" because it smacked too much of socialism? This whole mess is a study in "what's needed versus what's wanted" at all levels.

#21: That period where 100,000 can produce everything for 50 million is not a stable.

Eventually we will get to the time when *any* 100k people will be able to produce stuff for 50 million if our automation gets cheap and easy enough to use. Not just those with huge amounts of infrastructure and sunk costs.

I doubt I will be alive to see processors growing on trees or room sized fabs that can create all the parts for other room fabs or whatever ends working in the real world. But hi-tech self sufficiency seems like away out of that conundrum, if humanity can become adult enough with that kind of tech.

D. Williams @40:

Is there a global shortage of food I had not noticed? More automation makes food and similar basic necessities cheaper.

Ilya- certainly there is still a shortage of people who can afford to buy food, and with speculators messing about with commodity prices and the oil price hike increasing costs, things are not going to be comfortable for lots of people any time soon.

So what are we looking at? 30 or 40 of the population employed doing things automation can't, by say 2030? Perhaps a slow loss of a few thousand jobs here, a few thousand there? But if we do end up with mostly service jobs, how can we increase efficiency and do more for less, without automation, for example along the lines of AI's that can sell you stuff over the phone. heck, we're halfway there with internet retail and the automatic checkouts at supermarkets- when supermarkets go from employing 3 cleaners, 15 checkout operators, 5 managers and a security guard (Random numbers I made up) totalling 34, to employing 2 checkout operators, 3 cleaners, 4 managers and 2 security guards (total 11), who is going to employ the left overs?

This afternoon, in a meeting:

A: "Perhaps we could _stream_ the video for the new course."

B: "Not sure - that would require the university to change its policy on broadband, and all the projections are that takeup's going to stick under 75% for years."

C: "Hang on, there's always a chance that by 2013 every household will be connected as part of a Keynsian demand-management scheme to get the construction workers off the dole."

B: "Hmmm..."

A: "Let's wait and see."

THe UK has the highest percentage of people in proper paid work, as opposed to unpaid work like bringing up the family and looking after your grandparents. Almost everything has been commoditised. But I would assume the recession will damage many peoples attempts to retire now or later. Certainly I have noticed an increase in the age grouping of checkout operators at supermarkets over the last few years. We also have fewer youngsters coming through the school system, which might in theory be good for employment prospects of older people, but as we all know, most companies couldn't care less and anyway there are not so many jobs available anyway.

I suppose the recession will help our balance of payments, with regards to slighly lower consumer goods importation. However we will be importing increasing amounts of oil and gas, so the net result will still probbely be bad. The gvt will no doubt try and cut whatever pitiful amount of benefit people currently get.

There will be a bit more telecommuting.
What sort of Keynesian stimulus is even worth considering here in the UK? I'd be all radical and go for energy efficiency and generation, that would help the oil and gas situation. Does replacing old gas lines under the city count as a stimulus, or essential repair work? Same with bridges and roads- they all need repair work, but thats just to keep them running. Its not like building a new road to somwhere which has an immediate improvement. They can't even seem to make an economic case for a railway into the borders these days.

If they manage to properly commodise education, I'm sure there will be plenty of university lecturers out of jobs, yet without the funds to do any research. After all, why have hundreds giving more or less similar lectures up and down the country, when you can record the definitive lecture by the best/ most well known lecturer in the field, and play it in every lecture theatre.

Of course to balance that you might need more in the way of those small group meetings of students and a teacher, the name of which I have entirely forgotten.

Or, you too can gain a degree by watching these lectures from home and passing the exams. Shame there's only 50 of you needed out of the 5,000 with similar qualifications.

The bottom line is, what resources are available? Might it not end up cheaper and less resource intensive to keep 3 or 4 million people dossing about with free cable TV and enough dole money to go down the pub once a week, as well as cheap food?

But the 1980's recessions were in part paid for by North Sea oil. We won't have that in the future.

#46:

>> This whole mess is a study in "what's needed versus
>> what's wanted" at all levels.

Agreed. The crisis stems from an abject failure of leadership. The 5-10 year severe global recession that we've all been sentenced to could have been avoided if G7 leaders had the foresight to drain the cheap credit swamp before it blew up to bubble proportions. It was patently clear that high consumer consumption could not be sustained on credit alone and yet economic and political leaders did everything they could to make the economy defy gravity just long enough for them to get out with their golden parachutes. Our economic and political leaders got what they wanted--political popularity and/or money--by propping up an unsustainable economic structure when what we all needed were leaders competent enough to prevent the credit bubble from forming in the first place.

@22 & @49. I think you are both arguing the "lump of labor" fallacy. Automation displaces some workers but frees them to take on other tasks that the economy generates. There may well be shocks in the transition, but it does occur. I well recall UK union resistance (especially ASTMS) to computers in the early 1980's, but it was pretty clear 10 years later that a whole new class of jobs was created, even if the new workers were not the same as the old ones.

There is no reason whatsoever for countries to become predominantly service economies, as long as some of those services are tradable exports to pay for imports of other goods and services.

Curmudgeon @ 53

The other way to look at it, one that my cynical lefty upbringing inclines me towards, is that we've reached the necessary end of any large Ponzi scheme: the desertion of the ship by the rats at the first and second levels of the scheme, and the mass screwing of everyone else. All those ex-politicians and golden airborne executives have gotten out with the loot, leaving the rest of us with the bill.

One reason I look at it that way is that I think of the actual creation of value, in whatever form, as a reverse Ponzi scheme. This is especially true of technology, since each innovation can be the basis of further innovations which add still more value, so each generation has a larger pool of value to draw from rather than a smaller one. Too bad the criminals who ran the Ponzi scheme were too dumb or too greedy to realize that they were making themselves and their descendants poorer by their caper.

Alex- presumably you meant "No reason not to become predominantly service economies"
which makes me wonder how that is supposed to work- is every country going to specialise?
As for lumps of labour, I was under the distinct impression that the very large numbers of long term sickness benefit that we have nowadays, not to mention the long term fiddling of the uneployment statistics, was in fact disguising just such a lump of labour.

Plus the oh they'll just be free up to do new jobs often doesn't work that way, and anyway, what happened to freedom to do your job? The market is inherently tyranical and certain people want you to forget that.

Plus... the new jobs created, certainly in the USA, and probably to some extent in the UK, are often not as well paid as the old ones. The aim after all is Taylorisation, but without Fords paying the workers enough to buy the product. Thats someone elses lookout.

US employers slashed 159,000 jobs in September, the largest one-month loss in more than five years, according to the latest Department of Labor report.
I was one of them as part of SUN Microsystem's 2,000
person layoff in July. (2 month WARN period) So were many
of the people I knew and had worked with there for the past 14 years. It was an across the board cut, which was not executed very well given that a number of the positions they cut are now open on their corporate website. This is not sour grapes, just an observation based on the groups I worked with that are now rehiring for a number of various positions that were eliminated.

But if you are in need of an engineering position, here's
my advice...

Brush up on the following:
JEDEC, Altera POF (Programmable Object File), or Xilinx BITstream, and also LabView.

The central states of the U.S. in terms of engineering openings are mainly for industrial automation, instrumentation and design with an extremely heavy emphasis on LEAN and KAIZEN, or the aerospace/defense industry. So the positions are there just not in what
I like to think of when it comes to the more "glamorous" engineering positions. (i.e. working at Apple/Google/or an up-and-comer in the marketing field like Obscura Digital.)

I am still the cautious optimist, and my own personal job search is yielding results and phone interviews for
a number of semiconductor knowledge-based positions.

For the last year, I was a virtual worker, living in the country, and doing all those things that have been suggested...Growing our own veggies, even buying an entire steer at a charity 4H auction (850 lbs of corn fed beef after butchering - I recommend this, the beef tastes so much better than the store bought stuff) and being about as "green" as possible having cut driving to a minimum.

@48: yes, there are food supply disruptions, namely rice and wheat, starting back in April of 2008...

I'd have thought that the UK has the potential, potential mind you, to be energy independent in a fairly short time scale. It depends on us embracing a hydrogen based economy based on simple things like hydro and tidal and stuff like that. Convert random energy to electricity, convert the electricity to hydrogen, and there you have a new economy.

You fill in the details.

(Bangs head into wall)

Amigo mío, you really don't want to be having this discussion on a science fiction blog. So far the labor-lumping Luddites have the field, but just wait until the libertoonians get here.

Charlie, it's worth going here, here and, best of all, here. It's old, but I think it's the kind of skeptical thinking you're looking for.

Even when he was wrong, it's smart stuff. A good way to get things wrong.

#51:

>> What sort of Keynesian stimulus is even worth considering here in the UK?

Keynsian stimulus is predicated on the idea of boosting demand by increasing spending on consumption of domestically produced goods. It works as long as the money goes into the pockets of people who will spend it. Funding labour intensive jobs done by many people working at a comparatively low wage is a good practice because people in low wage positions are most likely to spend their money. Government will get the most bang for the buck from building up assets that are themselves capable of fostering further economic output--for example, manufacturing plant--but spending on productive assets is not essential.

In the UK, a good pick would be to a program to improve residential energy efficiency in lower income households. Start by rapidly building up a glass window industry and then double glaze every window in households earning below the median income. This would put money both into the hands of glass makers, window makers, and installation contractors and also into the hands of all participating households as reduced heating costs would mean more disposable income.

Another high-payoff project worth considering in the UK would be 50mbit FTTH to every urban household and making policy changes to encourage telecommuting. This policy would have the double effect of direct stimulus through wages paid to an army of telcom installers and indirect stimulus through reduced commuting costs.

Oh, the Reverse Metropolis could be clever if done right.

The Rise of the Meritocracy bears re-reading, I think. But it getting way off Charlie's question, which is what the recession after this one will look like.

I tend to go for the worst case scenario, barring all out
thermonuclear war.

I just bought a month's supply of canned goods. Where I live, we have had snow conditions that wipe out travel for a few days twice over the past 20 years. We tend to not plan well for things like that around here. :)

And winter is coming.

Let's say the U.S. falls into
a full blown Depression style financial holocaust. In the 1930's the United States was an family farm supported country. Many people fled the cities to go back to their family farms and waited things
out. They raised their own food. There were no jobs in the cities. This is 2008. Most farms are giant, agribusiness style things that
depend on oil and natural gas derived fertilizers and pesticides. There are family farms, but there is no way they could sustain the consumption of our current population. Metropolitan areas in the U.S. contain about a week's worth of food at any given time. If
the supply chain was stopped, there would be no food to buy.Most people here have no idea how fragile their life is. Read a book by S.M. Stirling like "Dies The Fire" to get some idea of what a full blown disaster would be like. Millions of people would die in the first 2 years. Martial law would be declared but this country has millions of guns. There would be bloody chaos in most
cities. I live in a town of 35,000 with two large prisons right on the edge of town. 2000 inmates.

"Alas Babylon" indeed.

And yes, I know: "Dies The Fire" had a mysterious dampening field in it that made guns and other combustion dependent tech non-functional and "Alas, Babylon" was post-nuclear holocaust.

My point is: I HOPE for a recession. My fellow countrymen have been spending like idiots and making the stupidest financial decisions imaginable for 20 years now. Not just the Wall Street morons, EVERYBODY, including the 50% of our population that make less than $39,000 a year.

Better pain now than death later.

Automation depends on extremely expensive, extremely capital intensive, high maintenance, chip fabs.

It also depends on control design; this is really, really hard.

You know the frown curve? The money is in design and sales, not in actual assembly, in the middle of the product life cycle? Automation is going to gut the emerging Asian economies that are still stuck in the middle of the frown. (one of the reasons the Japanese have for pursuing it so intensely is that they then need fewer foreign factories and the Koreans for trying to very hard to get off bottom of the frown, and why the Chinese have this ... problem.) Not just automation but 3D "printer" machinery and other direct fabrication technology. (Plasma depositional machining is a new thing on the earth, frex.)

It's important to remember that money really is a system of rationing. (and really isn't anything real, even when the money is coined gold.) It doesn't model actual prosperity very well, and it does a worse job of modeling social status. But the primate hard wiring chases it as a stand in for both of those things, with predictable results.

Oh, and just-in-time does not inherently increase production efficiency; it often decreases it. What it does is increase cost efficiency, by removing most inventory.

You want disintermediation? Farming is intensely petroleum dependent. It's also seriously trapped by very large suppliers and wholesalers and food distribution systems. Direct sales are starting to happen, mostly of higher-end, "organic" products. Serious economic trouble will leave a lot of farmers with no practical survival option inside the existing system. Many will leave it. It will probably get violent, as a great deal of nominal wealth, tied up in the control of the distribution system, not to mention political stability in the form of predictability of food supply control, goes away.

Lots of people in an environment where their traditional job has gone away, information transmission and retrieval are pretty cheap, and fabrication is getting increasingly straightforward, is a recipe for great innovation and an increase in the general access to choice provided steam-age control processes aren't used to kill it.

This current mess was more or less inevitable as soon as corporations were required to maximize profit; there isn't that much maximal profit out there. The supposed capital glut isn't a capital glut; it's a complete lack of legitimized profitable but not maximally profitable stuff to do. (Like infrastructure. Trains. Mid-range specialty manufactures.) Easy enough to fix that; make the requirement constant-dollar equivalent or better market share n years (five or ten) in the future, or constant dollar equivalent volume of business.

There's an awful lot of money in design and planning and control, even if the machines are doing the work.

Look at photographic printing; there are still a few stubborn people doing wet process dye transfer, but there are a lot more people, even counting only the people making money off it, doing colour printing with inkjet technologies of one sort or another, everything from fine art prints (the analog of the dye transfer) through big signs and banners.

Probably less capital than the Eastman Kodak chemical plants, and more economic activity. There's a lot of opportunity for all kinds of stuff like that, if we can keep the need for control from killing it.

And yes, we could build society a nervous system and figure out how to cope with knowing what's actually going on. That's not a trivial project, though.

>no one has any clue how to maintain a good standard of living or protect political rights when all consumer demand can be fulfilled by a tiny minority of people controlling an essentially automated economy

Oh, we've already been there and done that. In 1800 more than 80% of the population worked full-time producing food. Today all consumer demand for food can be fulfilled by a tiny minority of people (less than 2% of the population) controlling an essentially automated economy (been on a farm lately? Lotsa big combines, not so many guys with scythes).

Funny thing, though. The 78% of the displaced population found other things to do.

@15: Yes, but the percentage of people who grasped the concept use to be a LOT higher. I'm thinking there will be a percentage shift.

And the ones who remain in the clueless percentage will, inevitably, wander around crying and end up breaking the law to refuel their hummvee or get shiny new baubles and feeling perfectly justified about it because *that* was the standard of living they were raised to expect, dammit, and who cares if the rest of the world is all gloom and doom as long as they can have their McMansion? And then a feral hippie activist will catch them, kill them and use them for organic fertilizer, and you'll have a little domestic scene where the feral family cheerfully eats their lunch of fresh carrots grown in long-pig compost. (They're vegetarian feral hippies, of course. )

guthrie@56 - thanks for the correct. That is what I meant to say.

Regarding lump of labor. All I am arguing is that the "lump of labor" fallacy is known and it is correct. No-one is arguing that the new jobs will come quickly or that they will be de factobetter paying. I expect dislocations. That is a role of enlightened government to see that workers can get better jobs through a wide variety of government sponsored policies and programs. We have been very let-down with laissez-faire policies, and the backlash is arriving.

Charlie has written about the singularity in Accelerando and elsewhere. What he never addressed is that humans cannot keep retraining and redeploying in ever decreasing time cycles. We need some stability.

Will anyone bother with IT certs? Are they a worthwhile pursuit? I'm only asking as MCSE was mentioned.

#67:

Within the next 25 years it is highly likely that compensation for most jobs that can be done by manipulating data on a computer (with no physical presence or short latency responses required) will race downwards towards the costs of doing data manipulation work in the lowest wage region with good Internet connectivity. Since the global wage floor will be below minimum wage in the west, most information jobs simply won't be done in the west anymore.

The effect of exporting all information jobs will be to gut the need for business computers and IT staff to administer them. The few computers that remain outside of the home will be used for government-related tasks that cannot be exposed to foreigners for security reasons, for geographically tied infrastructure and business process tools (e.g. Internet routers, utility control equipment, etc), and to support computationally intensive activities that cannot be remoted because of extreme bandwidth requirements. With the exception of government systems which handle secret data, software administration on will be handled remotely from low wage regions.

Remaining IT jobs will be largely limited to hardware and software administration of security sensitive government systems and hardware administration only for everything else. As the IT industry matures, however, the job of most hardware techs may reduce to nothing more than a low-skilled, low-paying, task of swapping out preconfigured rack units.

Make your own judgment if IT is a good career prospect or not.

Tony Zbaraschuk @ 64

The 78% of the displaced population found other things to do.

Actually, a lot of the ones living at the time of the shift didn't, and many of those that did worked harder than slaves (because the bosses didn't have any capital invested in them, as they would have with slaves) for barely subsistence wages. In Britain, where the Industrial Revolution hit first, and was well documented, the shift of the bulk of the population took place over a couple of decades between the 1820s and 1840s, and the resultant shift of wealth and decrease of living standard didn't even start to get evened out for most of the rest of the 19th century.

Working class people rarely fare well in major dislocations of that sort, and that sort of dislocation may just be the result of the current economic downturn. The prospect is one of severe economic conditions for a lot of people, with as much as a generation before the effects die back to where most people have some sort of economic stability. It's easy to be cavalier about events almost two centuries ago, not so easy when they're staring you in the face.

I'm most worried, I think, about infrastructure. Here in the US, we've got a whole lot of stuff built in the 1920s through 1950s designed to last for forty, or fifty, or seventy-five years. A sane administration would have embarked on a moderately large-scale long-term effort to update and replace key roads, bridges, tunnels, and the like in the 1980s. But of course we didn't have a sane administration. And no administration since then has had both will and ability to make it happen. Obama's campaign site says it's a priority for him, and he has a legislative history of supporting sensible investment in infrastructure matters (as does Biden). But the conservative machine was bound to use any excuse to stop anything that lets people seeing government being useful and productive, and now they've got the financial crisis as an even bigger stick.

I think we're in for more "extinction" events like New Orleans after Hurricane Katrina - something fails, towns get wiped out, and nothing's done because Congress can be hamstrung into not voting for anything and executive efforts can be tied up in litigation and other nuisances.

@ 33 / 44 / 46 / 69 & 70 .....
"Well-Qualified"? PhD Level?
Don't make me laugh!

I've an M.Sc. in Engineering for Ghu's sake, and I have NEVER been able to use my qualification - admittedly I retrained, and was awarded that MSc at age 48 - so what? Except that the supid, who are running the show, only see someone less than 20 years from retirement.
Also, thanks to the UK's incredibly stupid legislation, I can't even work as an electrician (I've got a first degree in Physics and an HNC Electronics a well) because I haven't got the neceesary bit of paper - I'm officially not even allowed to do re-wiring in my own house at 250V single-phase.
How's that for self-defeating?

69: The "Industrial Revolution" started a lot earlier than the 1820 's ... That's one of the reasons we cleaned Boney's clock - the London Docks were opened in the MIDDLE of the Napoleonic conflicts, the world's first mass-production machinery was in Navy dockyards, for making pulley-sheaves for the ships, about 1806, the year after Trafalgar, etc, etc.
70: Infrastructure.
Yeah.
Our idiot guvmint is STILL "thinking" (you should excuse the phrase) about BIGGER AIRPORTS. for Ghu's sake!
The Treasury STILL has its petty, spiteful and wasteful hate-campaign against really modern railways, or serving even slightly less-popuilated areas.
They can't afford to be seen to make a mistake, EVER, you see?

If you don't believe this last, two very disparate cases will illustrate.
One: The conviction and execution of Timothy Evans, for a murder commited by Christie .
It took direct orders, with the threat of sacking of the most senior Home Office officials, by the great Roy Jenkins, to undo that one.
Two: The almost perpetual campaign of spite and non-recognition waged not only by the civil service, but also helped along by the spite of Stafford Cripps against one of the greatest aeronautical engineers ever produced by Britain, or indeed, anywhere - Barnes Wallis.

#68

Interesting - but not the whole picture. As an IT contractor (database specialist) I have been directly affected by outsourcing to the developing world.

First the jobs dried up as more work was outsourced.

Then rates dropped to the point that contracting was unsustainable (I went back permie).

(Due to a 1 year hiatus due to sickness I lost my job and went back to contracting)

Now rates are rapidly increasing as developing world skilled staff demand higher wages. This happened in S. Korea and is now happening in India - I'm actually impressed at the rate this is happening; what I was expecting to take decades is happening in 5-10 years.

Without the massive savings to be made outsourcing, work is now moving back locally (the ability to monitor quality being a huge issue). However, now the skills no longer exist locally.

Net result - rates are on the rise again.

Add to this that in a recession more firms are looking to run projects with contract staff (as a capital rather than continuous cost) and the situation in the IT sector is, erm, interesting.

Basically I can see a clear division in staff calibre in the IT sector.

"Mindless Coders" are readily available and 10 a penny. These are basic HE graduates. Pay for these will be minimal and they are pretty useless unless under intensive direction. The bulk will come from the developing world since developed world graduates aren't going to stand for those rates of pay.

"Experts" will be at a premium. Msc level and above and very specialised. They'll also be in limited supply since fewer graduates will be moving through the "tech slave" phase of being a mindless coder.

Long term - not sure what will happen. Local IT will be very much alive since most outsourcing survives solely on the costs being so low that a project can be repeated 5 or 6 times (until they get it right). Once costs rise mistakes due to cultural misunderstandings and poor communication will not be sustainable.

All in all, interesting times............

(Note: Due to the nature of my work I have a somewhat jaundiced view. They call me in when projects go down the toilet! So take the above with a pinch of salt. At this very moment I'm working on a computer system where male relatives can't be registered as primary carers because the people who wrote the system are from a culture where men do not look after the sick............)

Noel @59: thanks, that was interesting. Must spend a day or two poking around in there ...

Bruce @70: yes, infrastructure is key. And in my optimistic moments, I tend to think that infrastructure maintenance is the Achilles' heel of the strip'n'burn group currently running the Republican party in the US. We got an object lesson in what happens when you fail to maintain infrastructure in the UK during the 1990s with the Railtrack scandal.

(Briefly: you need to rebuild 3-5% of the track on a railway network every year to maintain it. The Conservatives privatised British Rail, and spun off the track and signaling infrastructure as a monopoly company called Railtrack. Railtrack got a subsidy from the government, and charged fees to train operators: in return they were supposed to keep the tracks usable. Pretty early on they out-sourced their engineering expertise, and then their engineering management, and switched to a model of only fixing tracks when something actually broke: towards the end, they were replacing less than 1% of the network per year, and handing out the largesse to their shareholders. Then an express train came off the line at somewhere upwards of 120mph, with fatalities ...)

I'll grant you, Katrina was a horribly worrying sign: something like that simply shouldn't have happened in a developed nation -- the response, that is, on top of the failure to maintain the levees adequately -- but by the same token, a political party that starts being identified with mass deaths due to infrastructure failure is a political party that is going to have to reform or, in the long term, it's going to be in trouble with the voters.

Alex #66- exactly. When I was in Sheffield a few years ago the local tv news mentioned a scheme to retrain ex miners as gas engineers and plumbers. Something which should have been done 20 years ago...

If you want a country like the USA, you leave re-training up to the individual, and surround them with money making opportunities disguised as training institutions. Or, you make sure your taxes go towards well funded re-training institutions so that we can all be re-trained as and when required. I'm 7 years out of uni, and trying to work out what I should move into given that my current job may not be around for ages and there are very few others in any related fields. (I have a chemistry degree and materials MSc, worked in a lab and as a technical/ development person for a company making insulation.)

I could try and find a PhD, but what sort of PhD would give me a chance to earn enough money to pay off my debts? Maybe I'd get lucky and get a funded one. But I would have to have a reasonable chance of employment in 3 years time, in this recession...
Or I find something else, but what else could pay me enough for me to afford to re-train?

Noel #61- I fear I am annoying you. But anyway, my understanding of our hosts post was that it refered to the current recession, not the next one along.
(Which I assume will be along in another 10 years or so)

wench @ 65 - it's difficult to compost meat. The feral hippies would be better off feeding the long pig to an actual pig, then using the manure as fertilizer.

Michael @76: it turns out that if you freeze-dry the long pig then run it through a wood chipper, the resulting fragments will compost quite well. (It's being investigated as a possible ecologically friendly alternative to burial in Sweden, IIRC -- source: "Stiff" by Mary Roach.)

Guthrie@75: not at all. Charlie asked about a recession in a "Web 2.0" world. I'm not sure that this recession is going to look all that different from earlier ones, so I interpreted the question a little more broadly.

guthrie@52: "Or, you too can gain a degree by watching these lectures from home and passing the exams."

This is neither as easy nor as cheap as it sounds. Even if your course materials are perfect (and they're not, and in any case that's a very labour-intensive process) you cannot get away without significant course presentation costs. Course production costs do not scale with output. Presentation costs do.

(That was an argument from authority, brought to you by a lecturer in History at the Open University.)

Chris- so are you saying learning from home at a higher education standard is pretty much never going to get bigger than the OU?

Guthrie, I know a couple of folks with OU degrees. It's definitely not an easy option; costs run, conservatively, well north of a thousand quid a year (back in the mid-90s it was around the thousand mark, IIRC), and the time input to do it properly is on the order of ten-plus hours a week, and summer school sessions. If you're unemployed you can't spare the money, and if you've got a demanding day job you probably can't spare the time.

(I'm sure Chris can correct my laughably off-target misconceptions about costs and time.)

The OU has been around for a third of a century and has done a sterling job, but a silver bullet for ubquitous higher education it ain't.

PS - the point is, there are some service jobs that are inherently hard to mechanise with our current levels of processing power, standards, bandwidth, and cultural expectations.

Overall, though, I think that the UK's in for re-run of 1980-1984. The rest of the world, without our hideous over-dependence on financial services, should get off more lightly. Web 2.0 will make little difference save only to make it more bearable for some. Last time, we only had Ceefax - any other Central Jobfinder fans out there?

I first encountered the overt comparison of capitalism to a pyramid scheme in the book Two Hundred Pharaohs Five Billion Slaves, which is worth a read if only for the blurb on the back. I've been thinking about the concept rather a lot recently.

The singularity occurred with the development of fractional reserve banking.

Or not. I just wanted to say that.

guthrie @ 80 - I can think about ways that distance learning will become more ubiquitous, but it's never going to get better than the OU... Right now, in other universities, the students are spending a lot more time doing distance learning - working through Blackboard (or increasingly Moodle), getting resources on-line, checking out podcasts of lectures, etc. It's not like it was when I were a lad, or even when I were in my 20s.

Lots of universities try to 'cut the cord' and move to a distance learning model every so often. They tend not to thrive because they've not got systems - tutorial support and exams are the two most crucial - that are suited to scaling up. But if demographic and cost factors drove HEIs into the distance market over the next ten years - and they stick with the topics that they're good at - they might give us a run for our money. This might force us to bring the standard down to compete with them, with bad results for (a) everyone and (b) me.

Charlie @ 81 Taking 'my' course as an example, the price for UK residents is more like £600 for a 60 point course (6 of them gets you an honours degree in 6 years). But the_cost_ is a lot higher than that: if you're not getting a place subsidised by HEFCE (funding council) then the price is £1450, which more closely reflects the cost of actually putting it on.

All is not lost - people who are unemployed or on a low income can get their fees partially or wholly remitted. The 10-15 hours that you need to spend (still some summer schools - I run one - but for most awards they are now optional) are pretty much irreduceable, though.

NB the govt are about to remove all HE fee subsidies for EnglishandWelsh residents who have a degree already. Charlie's alright, but if any of the rest of you want to do an OU course, do it _now_.

ObSF: That's twice that Michael Young has appeared in this thread (the other one being the reference to Meritocracy). What an amazing man he was. He's my candidate for the 'man most likely to have been a time traveller' award: sorry, Leonardo.

Boy, whispers of the Euro not necessarily surviving this crisis. So much for assets flowing out of dollars.

Recession 2.0

Right now, it appears to resemble Wall Street 2.0, with
the US government creating entities that are starting to
look a lot like so-called "socialist" government. The
confidence of the big boys has been shaken to the core.
Isn't it interesting that this crisis was created by
physicists using computers? Without the computing power,
the securities causing this could never have been created. Or is it that the businessmen who bought the crap were fooled by the "science" backing them?
It will take months for the truth about the worth of
those instruments to come to light, if ever.
I guarantee you if the experts look through all that
paper and find a big pile of shit, they will be pressured to lie.
The new recession may be the start of a new era of information vetting. Banks are now going to want assurances about their investments that did not exist before. Pseudo-scientific "derivatives" are going to be highly suspect. People will remember all this for a long time.

Socialism was pushing FNMA to give out loans people can't afford. What's going on now is not socialism, is attempttosaveourassfromadepressionism.

It's obviously not socialism ...

In socialism, the government nationalizes the successful companies!

(With apologies to John Scalzi.)

D. Williams@86 Amazingly, the 1929 Wall Street crash and subsequent depression was created w/o computers. They even had derivatives - options - priced by human minds.

Nope, the problem then was caused proximally by leverage that wiped out equity once confindence was lost. The depression was caused by wrongheaded government economic policies. The problem today is very similar, albeit a little more complicated.

Good one , Charlie.

I read that and about choked on my lunch laughing. :)

Alex@89: "To err is human. To REALLY screw up requires a computer."

This crisis will make 1929 look like a mosquito bite,
even adjusted for inflation, etc.

I see factories moving back to the US as energy prices increase and US wages plummet (already happening in some high tech manufacturing). Now if we only had networked robots anyone could control you could auction off assembly line positions to anyone ala ebay.

D. Williams @ 86

I guarantee you if the experts look through all that
paper and find a big pile of shit, they will be pressured to lie.

So far, the experts named as candidates for the job of picking through the paper are all financial executives who created and own that paper. Damn betcha they're not going to tell anybody about what they really find, and they're going to give it all a nice high value as they sell it back to us. Talk about insult and injury.

I know OU courses are hard work, my dad got half way through one and had to stop for various reasons. I was just considering whether they or something similar would be a competitor for universities as they now are. After all, much of your first year is spent peering through binoculars at a lecturer who is often reading out something you could have read in a book. One of the cheap easy ways to expand higher education was just to crowd more people into the lecture theatre.

And stuff seems to have changed so much even in the 13 years since I went to uni and we were the first year to have our own e-mail accounts.

The thing is, there are successful UK manufacturing companies, generally in high end efficient expensive products. They sell all over the world, but by the very nature of their product (be it insulation or vacuum conveying or stuff that goes bang) there is not a huge demand and it is physically impossible, due to the expense of real materials (steel, oil, etc etc) for demand to expand in such a way that would greatly increase output. Thus, it is impossible for the UK to grow out of the recession by manufacturing leading the way.
Anyone know about these Japanese car factories?

wench @65:
Your comment's got me wondering if that's the the effect of population demographic, like millennials' tendency to a high level of debt & instant gratification. Not that the rest of the population is immune from it.

The economic situation will likely cause the US to engage in a massive Keynesian stimulus, especially if Obama wins, which is looking increasingly likely.

And if that breaks the strained tacit agreement they have with the Chinese about funding, then what? The US currency slides, they start getting hit by inflation from two angles, and the populace suffers as the terms of trade change permanently.

Cue Christo-fascism.

My first time around at uni was a BEng, Structural, in the middle of the last recession, along with a long running road protest on the door step. This rather put me off the idea that 'roses round the door' was a long term successful prospect. This time I'm going for arcane knowledge. If I can convince anybody that my singular opinion is worth anything. Otherwise I'll have to wait for the mills of Huddersfield to re-open.
The department I am in has a larger MA contingent than Undergraduate. (the BA's being Johny come latelies). The core course has 56 bodies, delivered in 3 seminars (that's the world you were looking for Guthrie). Moodle is new this term and might help - but there is always the librarian and copyright law looking on…but there is only so much you can do before your ears start bleeding.
I don't think any of the courses I have attended would work as distance learning, far too practical/ comprehension based, rather than rote learning. So big classes are out. Or maybe the classes i've don't attract the hordes
Most of the foriegn students are EU or north american (think of the money) the lack of the far easten students is probably reflected in the attraction/ relavance of the subject (or not) in those cultures.
I'm not sure how viable, long term archaeology in the UK is in the climate being discussed. Most of it is funded out of major construction work.

as for lumpen masses - the terrible education system in this country is not going to help people find a use for them selves in a 'post- post-scarcity' world. How many SF stories are predicated on high density tele addicts?

As for the surplus agricultural workers of the early 19thC they died in their thousands in manchester and her sister cities, but it didn't stop the population explosion that filled the really big mills a generation later.

My intake of SF has slowed down slightly in recent years due to the reading of anthropology papers and getting bored of being thrown out of book shops.

"Instead of the supply chain being a pipe with stuff flowing through it in regular quantities, goods tend to be ordered, built, and despatched like network packets, as and when they're wanted. This sort of system has very little overhead and is highly efficient, but it's prone to catastrophic breakdown..."

Two words: Bunker fuel (sold by the metric ton)

This is the cargo container ship fuel that moves actual products around the world. I started looking into the container shipping business when I found out that one can still book passage aboard cargo container ships rather than the typical cruise ships.

What's fascinating about this fuel is that it is the absolute garbage of the oil distilling process. It actually needs to be pre-heated before it can be used to power the diesel ships that carry the world's cargo.

However, as the price of this fuel rises, so does the cost of shipping goods worldwide, and ultimately the price is passed onto the consumer. As long as this fuel
remains relatively cheap, outsourcing of manufacturing will remain the name of the game.

Hopefully I'm just a tired sick puppay and this hasn't occured to anyone else:

Re @97 etc, etc: Nightmare scenario right now - half a dozen planes into oil refineries.......

Right now would be a really bad time for economic attacks :(

Hopefully I'm just being paranoid.

D. Williams @62: My point is: I HOPE for a recession. My fellow countrymen have been spending like idiots and making the stupidest financial decisions imaginable for 20 years now. Not just the Wall Street morons, EVERYBODY, including the 50% of our population that make less than $39,000 a year.

Yes, that's me, spending a third of my income on medical stuff like an idiot.

Re: distance learning, to follow the learned comments of Chris Williams. The institution were I did my PhD was one of the major distance-learning suppliers in Oz. All the lectures were taped or videoed and went up on the internet within a few hours. But (at least in second and third year courses), 90% of the students still turned up for your actual physical lecture. There's something missing from a tape.

A lot of "nollidge" type courses actually involve quite a lot of hands-on teaching and work, too. A science course that didn't involve lab or practical work wouldn't be worth doing, and most jobs in science are actually fairly hands-on.

Andy W@98: Hopefully I'm just being paranoid.

Have there actually been any attempts at hijacking since the WTC? Al I can recall is the shoebomber, and ISTR he got pretty badly beaten up by the other passengers. I think it's yesterday's problem.

Adrian Smith@101: Yes, there was a lull in hijackings of 5 years since the 9/11 hijackings. 6 since then starting in 2006.

Internet Voyeurism Source:
http://en.wikipedia.org/wiki/List_of_aircraft_hijackings#2000.27s

Next is the Goblin Year.Then the Ebb.
Worry Not,Wonder Not.

@94: not sure; I comprehend trends but I'm wary of labels like "Millennial". Too many variables.

I'm also wary of doom and gloom: The world may yet be saved by the generation raised by depression-era parents, home-crafts enthusiasts and feral hippies. We're a deeply spoiled society, and we don't give that up easy; which could be our saving grace. I've seen some of the things people are doing to maintain their lifestyles under renewable conditions. I don't think our infrastructure is going to die, I think it's going to mutate: if you want power and you live in the sticks you find a way to make it work. If everything fell apart tomorrow (or yesterday, as the case may be) our comms network will survive, if not in the fashion we're accustomed to; our electricity will survive, even if it's as a distributed network of solar, wind and hydroelectric mini-plants run by local co-ops. Knowledge is very difficult to eradicate and we have a LOT of tech junk to use as resources.

My apologies to any of my fellow Americans

that I may have included in my hyberbole.

I realize that not ALL Americans have been living beyond

their means. And for those who HAVE, it is very hard to

resist the advertisements created by teams of sophisticated

scientists dedicated to influencing our life choices.

wench @104:
Too many variables.
Agreed. It's what happens when using broad-brush generalisations. But I still wonder if there are shifts in the mindset/approach of movers & shakers in the financial world that relate to the era in which they grew up.

Noel @83:
I read that as fractal reserve banking.

Soon Lee: As fractal reserve banking would clearly circle around the loan of currency denominated in imaginary numbers, I think it's fairly clear that we're already there.

PPS I am old enough, just, to remember that vast explosion of DIY energy that flowed from the last big recession in UK employment, in the late 70s / early 80s. Punk, fanzines, etc. Worldchanging it wasn't, but fun it was. Now we've got Make and boingboing, as well as all the kit (save possibly letraset) that we had last time round. Could be interesting for some - even as it's pretty horrible for others.

'That's twice that Michael Young has appeared in this thread '

Toby Young's book _How to lose friends and alienate people_ was pretty interesting as a commentary on his dad's work. Those are ideas that really deserve a lot more exposure in the current climate.

Anyone know if any of that side of it made it into the new Simon Pegg film?

Thatcher Dryden@103: awesome. Simply awesome.

I love Womack's work. Curious inquiry to a professional: Charlie, what's your opinion of Womack?

Noel: I'm a big Womack fan. And if you haven't already fallen upon and swallowed "Let's Put The Future Behind Us", you're missing a treat.

Womack? Can someone please explain?

It's not socialism, it's falangism.

d.williams @105

Does that include the "do no evil" scientists at Googe that figure out which ads you are more likely to click on? :)

wench, this article makes the point that:

... the generation who went through the Depression, the people who were around in '29 to experience it, certainly as adults, are virtually all gone now. If you were ten years old in 1929, you're pushing ninety. So this was largely not part of our memory.

Some of us who didn't personally experience the Depression have nonetheless been exposed to the type of thought processes common to many who did. Ferex, my mother was a teenager during that period, growing up on a farm in the northern U.S. Great Plains. (One of her daily duties was driving the cows to pasture -- in Canada. A lot of things were . . . ah, a tad less formal then.)

However, as the price of this fuel rises, so does the cost of shipping goods worldwide

Or not, as the case may be. On the Baltic Exchange today, you could have chartered a Panamax-size bulk carrier from South Africa to China for zero pounds. Rather, you'd have had to pay the port costs and the fuel, but you'd have paid absolutely no charter fee. And the price of oil is down to $80-odd, so the price of bunker-charlie will be tanking too..

Sorry, you're misreading the Baltic Dry Index. It has crashed because worldwide shipping has come to a standstill due to the refusal of sellers to accept letters of credit from buyers worldwide.

At the risk of becoming irascibly contrary, permit me to demur from Charles' assumptions in the question: "Is the increasing performance curve of consumer electronics going to give way to a deflationary price war as embattled producers try to hold on to market share as Moore's Law cuts the ground away from beneath their feet?"

Moore's Law crashed a while ago. Moore's Law stopped cold in CPUs with clock speed around 2003. Moving up to a clock speed of > 5 Ghz would produce temperatures in exceess of burning thermite, and a clock speed > 10 Ghz would generate more heat than the surface of the sun. So CPU designers tried a hail-mary pass and went to parallelized multicore CPUs...except it didn't work. CPUs haven't gotten meaningfully faster by going multi-core, except for a handful of exotic apps like PhotoShop radial blur or inverting large matrices. Sometime around 2004-2006, Moore's Law crashed in audio when DVD-Audio and Super Audio CD died in the marketplace, because no one could hear a difference between a 16-bit 44.1 khz CD and a 24-bit 192 khz SACD. Now Moore's Law is crashing right now in TV, because the difference between an upscaled line-doubled regular DVD on a large flat-screen TV and a Blue Ray movie of the same content is minimal at best. Also, hi-def video from cable TV companies has been so compressed (to squeeze in more channels, the better to charge customers for 'em) that hidef video on cable TV looks like crap.

In fact, the big story of the last 10 years has been the reversal of Moore's Law. Look at Microsoft Vista. Runs much slower than XP on the same hardware because Micro$haft screwed up and assumed CPU clock speeds would continue to increase...but they didn't. In 1996, Micro$haft wrote Windows 2000 Pro assuming that the much larger codebase would run at acceptable speed by the time the OS was ready for rollout -- and they were right. But by 2003, clock speed, and, as a practical matter, the overall speed of Intel hardware, had stopped increasing, so when Micro$haft wrote Vista's much larger codebase (14 gigs on a typical hard drive after install compared to 4 gigs for XP) and the Intel hardware didn't speedup, Vista slowed down to a crawl. Linux fanciers (of which I'm one) need not gloat, since linux has suffered similar (if not quite as extreme) bloat. A typical linux distro demands a minimum of 256 megs, up from just 64 megs 6 or 7 years ago. History in consumer electronics is now grinding into reverse, and video and audio and apparent computer speed are all getting worse, not better. People watch YouTube (crummier video, lower resolution, lower frame rate) and listen to mp3s (less bandwidth, more artifacts than CDs, let alone SACDs) and use Vista (much slower on the same hardware than XP and offers no additional features to compensate). An Ee PC netbook has slower CPU and less storage space than a state-of-the-art laptop just a few years ago. In fact, I don't see why anyone would buy a netbook instead of just buying a used Pentium 3 500 laptop with 128 megs of RAM and a 15 gig hard drive and installing Windows 2000, or an older version of Vector linux, or Damn Small Linux, or Puppy Linux.

At every point on the tech front, we're going backwards, getting less storage on iPods (courtesy of FLAC downloads) and slower response from our computers while adding no discernible improvements. Even the internet has slowed down to a crawl, courtesy of the massive LAMP bloat and overuse of embedded javascript to trigger ads from multiple servers, etc., etc., as you've pointed out yourself in a previous article. The payload of a webpage required to deliver some typical minimal ASCII content keeps rising and rising, yet the ASCII gets no bigger. It's all getting burned up in ever-more elaborate CSS or tables, Flash animations, and more and more and more ads. No one has noticed this, of course. But the breakdown of Moore's Law remains a huge (albeit uncovered) story.

I'm no economist, I defer to those who have posted. But if there's a large recession maybe people will stop paying for Web 2.0 entirely:

* sky (satellite tv)
* ADSL 2+ (and/or phone lines at all. hastening the death of the mobile, and possibly bringing wifi closer to ubiquitousness).

Gosh, that's be bad for Sky (good for ITV and 5?). And bad for the telcos.

And what if companies stop paying for expensive programmers to make their websites "2.0", and all the other "fluff" they've been paying for?

Do we end up with is not only an economic recession, but possibly a technology recession - a new Dark Ages... Are we witnessing a collapse analogous to the fall of the Roman Empire? There's a Wikipedia entry for the coiner of the phrase that describes that (my entries: techcession. Or webcession (but only cause it's a geek pun).

When was the last time technology went backwards?

Anyone read John Christopher's Tripods or Sword of the Spirits?

mclaren @ 118: Multicore processing *is* an expected result of Moore's Law (because it's about the transistor budget: trying to find something to do with them) combined with marketing trying to look like on at least some tasks performance is following folk-Moore's-Law.

I like to think that we're finally reaching the end of the line for C. Not sure what comes next.

mclaren @118: The payload of a webpage required to deliver some typical minimal ASCII content keeps rising and rising, yet the ASCII gets no bigger. It's all getting burned up in ever-more elaborate CSS or tables, Flash animations, and more and more and more ads. No one has noticed this, of course.

New around here, are we? Why your internet experience sucks (from May this year).

Netbooks have one huge advantage: they're cheap. Another advantage over the PIII: battery life. Another: LED backlights. (Elderly eyes suck.)

But yes, I agree with your overall point. Hardware hits limits, software takes years to get the message.