The Post-industrial Economy is upon us. The developed world is experiencing the death throes of industrial labor as a combination of automation and off-shoring to lower wage countries relentlessly eliminates manufacturing jobs. Delusions about ‘bringing back manufacturing’, as voiced by Trump and other populists, will appear ever more irrational as the exponential advances in AI and robotics put the final nail in the coffin.
In reality, the post-industrial economy has been insidiously emerging over the last 90 years, as the service industry grew exponentially and other labor sectors stabilized or declined due to automation. Here is a graph that depicts how services have increasingly dwarfed manufacturing and agriculture since 1840.
Significant numbers of manufacturing jobs left the US for lower wage countries. Advances in robotics and AI will replace even those jobs at some point in the near future, just as automation essentially reduced farmwork to a skeleton crew of farmers and seasonal workers whose jobs few Americans want and are likely to be performed eventually by clever robots.
So now the future of labor is in services and so-called ‘knowledge work’ – jobs that require specialized education. But for a significant segment of our population the service jobs are a poor substitute for the high-paying factory jobs of the past.
Why is the average service job so much lower paying than the manufacturing jobs? One theory is that the service sector has very low union representation compared to factory work. Collective bargaining has historically been one of the primary means for workers to achieve a better standard of living. But even with labor unions, it is unlikely that the majority of service jobs will provide a satisfying standard of living.
In addition to traditional service jobs, there is a growing segment of so-called ‘gig jobs’. These are jobs that are often independent work for limited periods of time making use of the Internet, social media, or working for Big Tech as contract labor. These jobs may have a reasonable level of compensation, but they are typically short-lived and workers must hustle to stay employed and achieve a continuous cash flow.
As automation continues to advance it will no doubt take over many service jobs. Much of customer support has already been automated, and brick and mortar storefronts and salespeople are disappearing. Logistics, trucking, ride services, low level legal services, initial medical diagnoses, cashier services, fast food services and many other services can conceivably be partially or totally replaced by AI and robotics.
New service and gig jobs will be created, and perhaps there is no limit to what new ways people will find to make money, but it is likely to be a much more chaotic and uncertain labor model. Can social media influencer be a career? Will there be any stability in the work life of the vast majority of people?
Neither the democrats nor the republicans nor the MAGA world have the faintest idea how to recreate the American workplace of the 50’s and 60’s. Trade wars won’t do it. Culture wars and immigration raids won’t do it. Even taxing the rich more won’t do it, though using some of their vast wealth to create a better infrastructure, universal healthcare and free education might at least make the stagnating middle class less vulnerable.
We are facing a brave new labor world. Populists have benefitted from the fear, anger and uncertainty that this new world has provoked, but they will be no more successful in finding a solution than the globalist elites that they have blamed and castigated. The invisible hand of the market will flail helplessly. Bold new social engineering ideas are needed ASAP, or the future will be one of disharmony and revolution.
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