We Are Entering A Future With Less Jobs And Less Poverty, And It Need Not Be Dystopian

One question that has been haunting the Narendra Modi government is this one: where are the jobs? Every survey on the mood of the population puts unemployment at the top of everyone’s concerns, especially the young, but none of this has prevented governments in India — both at Centre and states — from returning to power on the back of freebies, subsidies and social security schemes.

The shift in emphasis in government spending in democracies, and this includes countries like the USA, from job-enabling policies and investments in public goods (health, education, infrastructure) to direct provision of private goods to the public (freebies, income support, subsidies) is indirectly related to a larger phenomenon developing in most economies: the replacement of human labour with capital and technology, resulting from greater automation and use of robots. Today, the primary reality of life is that growth can happen without a commensurate rise in jobs. Technology and automation create most of the growth in manufacturing and services.

In a testimony delivered last November to the US Congress’ select panel on economic disparity and fairness on growth, Daren Acemoglu, professor at MIT and co-author of Why Nations Fail, said: “US labour market inequality has surged since 1980. This has not just taken the form of incomes at the top growing faster than the bottom. It has also been associated with workers, and especially men, with high-school education or less experiencing significant declines in their real earnings.” The main cause, he said, was automation.

Acemoglu said: “Two types of evidence illustrate the effects of automation technologies on inequality. First, in local labour markets (commuting zones) where there has been faster adoption of industrial robots, we see not just lower employment and wages, but also greater inequality between high-education and low-education workers and a bigger gap between those at the top and bottom of the income distribution. Second, and more directly… (there is a direct relationship between)…task displacement (the amount of automation) experienced by a demographic group and its real wage change between 1980 and 2016.” Acemoglu estimates that 50-70 per cent of the negative impact on wage and employment is the result of automation.

The clear and unmistakable conclusion: we don’t need people for growth anymore. Machines and technology will do most of the hard work.

But two types of jobs are indeed available: the ones that require extremely high skills (artificial intelligence programming, cyber security, design of new products and services, sales and marketing, etc), and low-end jobs — from warehousing work to logistics and mobility. The jobs market has polarised.

On the other hand, the rise in social spending has accelerated, both before and after the Covid-19 pandemic. In the US, the 2008 global financial crisis enabled the central bank to bring the cost of money to near zero, and Uncle Sam launched massive rescues for companies facing bankruptcy. During the pandemic, the US government committed itself to over $4 trillion in Covid relief and related spending. The European Union and China did likewise.

In India, in the first year of the pandemic (2020-21), the Union government spent over Rs 8.18 lakh crore in major subsidies (food alone taking up a massive Rs 5.41 lakh crore), and boondoggles (MGNREGA). The states had their own additional freebies and income support schemes, not to speak of massive farm loan waivers announced over the last five years.

The primary achievement during the high-growth UPA (United Progressive Alliance) years was not a massive creation of new jobs, but a massive redistribution scheme that lifted millions out of poverty. This was possible because growth provides high tax revenues; the same thing may be happening now, where we have seen sustained growth in both goods and services tax and direct tax revenues, but jobs growth itself is less than wholesome.

Between cash and kind, clearly, the world is quietly acknowledging that while it may not be able to create jobs, it has enough resources, both through taxation or borrowings, to avoid mass poverty. Willy-nilly, even while it is reluctant to say so, governments will move towards payouts in cash or kind to ensure that no one starves or suffers excessively for lack of a job.

Which sets up the real question: what will be the future of work in a world where basic necessities are being taken care of by the state or charities established by the rich, and work itself is either too skilled for the masses to aspire to, or too low-paying to provide employment for all but the most desperate?

As professor James Livingston, professor of history at Rutgers University, wrote in a recent column in aeon.co: “Work means everything to us Americans. For centuries — since, say, 1650 — we’ve believed that it builds character (punctuality, initiative, honesty, self-discipline, and so forth). We’ve also believed that the market in labour, where we go to find work, has been relatively efficient in allocating opportunities and incomes. And we’ve believed that, even if it sucks, a job gives meaning, purpose and structure to our everyday lives — at any rate, we’re pretty sure that it gets us out of bed, pays the bills, makes us feel responsible, and keeps us away from daytime TV.

“These beliefs are no longer plausible. In fact, they’ve become ridiculous, because there’s not enough work to go around, and what there is of it won’t pay the bills — unless of course you’ve landed a job as a drug dealer or a Wall Street banker, becoming a gangster either way.”

In short, the 'Protestant work ethic' that allegedly created the American economic miracle in the post-war years is no longer a sustainable myth to draw comfort from. In a world without much work but without much poverty either, we need a more sustaining idea than just the idea of work.

To be sure, we have been here before. From the hunter-gatherer past to the period before settled agriculture, work was defined by the need to find food for survival, and the rest of the time was about leisure.

Once society discovered agriculture and urbanisation, the leisure class expanded at a faster pace than the toiling classes that did the grunt work. Technology drove people out of farms into industry, and over the last half century, technology again drove people away from manufacturing to services. In the next two or three decades, artificial intelligence and robots will drive many more people out of services into forced leisure.

What we can conclude is this: progress is directly the result of the expansion of the leisure class, for without free time on your hands, society cannot innovate, invent and invest in making humans redundant to the work process.

Creativity too is often the result of a growing leisure class. The great ancient works of literature, art, and philosophy were the result of an expanding leisure class. It is difficult to believe that toilers could have composed the Vedas, the Gita, the Upanishads, the Ramayana and the Mahabharata, and various other smritis that we now revel in. The Torah and the Bible, and also the great works of Aristotle, Plato, and the Stoics, from Epictetus to Marcus Aurelius, could not have come from the working class. Poverty does indeed produce some great works of art (Van Gogh) or literature, but leisure produces even more.

So, as more and more people get more me-time in a technology-enabled and less poverty-ridden world, we should actually see a great flowering of creativity and even more innovation. We will work harder to render ourselves jobless. All we will have with us is time, hobbies, interests and relationships, if we care to nurture them.

The downside of having too much time on your hands is that it also produces great destruction. The men who flew planes into the Twin Towers had nothing better to do than to invent a reason to go down in flames for a cause they thought was greater than life itself.

What we really need to invent is a new culture where work is more like a hobby, and leisure is used more for contemplation and philosophy and high thinking than something destructive.

We are in for interesting times. We have a whole new world to invest, a world where work has less meaning than it did in the past.