The Malthusian trap, named after political economist Thomas Robert Malthus, suggests that for most of human history, income was largely stagnant because technological advances and discoveries only resulted in more people, rather than improvements in the standard of living. It is only with the onset of the Industrial Revolution in about 1800 that the income per person dramatically increased in some countries, and they broke out of the Trap. It has been shown, however, that the escape from the Malthusian trap can also generate serious political upheavals.
Thomas Robert Malthus himself in 1795 certainly believed, as was the entire point of his Essay on Population, that no such escape was possible. And John Stuart Mill, as late as the final 1873 edition of his Principles of Political Economy, did not believe that humanity, even British humanity, had escaped. John Maynard Keynes's Economic Consequences of the Peace, written in 1919, Keynes muses about the "Malthusian Devil".
A passage from Robert C. Allen’s Global Economic History: A Very Short Introduction:
The rate of economic growth achieved in the century after 1760 (1.5% per year) was very low by the standards of recent growth miracles. However, Britain was continuously extending the world’s technology frontier. The great achievement of the British Industrial Revolution was that it led to continuous growth. Technological change was the motor --- famous inventions like the steam engine, the machines to spin and weave cotton, and the new processes to smelt and refine iron and steel --- simpler machines that raised labor productivity in unglamorous industries like hats, pins, and nails… new English products, many of which, like Wedgwood porcelain, were inspired by Asian manufacturers. Engineers extended the 18th-century mechanical inventions across the board. The steam engine was applied to transportation and power-driven machinery was applied to industry generally.
Excerpt from The history of the robot future’s future history:
The graph below (click to enlarge) represents three decades of US middle class employment shrinking. The hollowing-out is consistent with the idea of computer substitution. Low wage work --- Personal Care, Personal Services, Food Preparation, and Building and Grounds Cleaning --- have all grown and involve non-routine physical work that is hard to computerize. Technicians and Professional and Managerial Occupations have also grown and involve abstract, unstructured cognitive work that is hard to computerize. Machine Operators, Production, Craft and Repair Occupations and Office and Administrative have declined as routine work following deductive or inductive rules --- and so were candidates for computer substitution.
(A comment to this article by Brad Delong) - In the past, people who were displaced from low skill work by machines were able to find useful production spaces by making the machines. Cotton gins replaced manual workers, but these workers were in turn able to add value by making cotton gins, or tractors, or whatever. The skills needed to stand on a production line and insert part A into slot B aren't much greater than the skills needed to wield a scythe. But the leap from the skills needed to insert part A into slot B to the skills needed to design the machines that make robots that insert part A into slot B are much, much greater, and many people simply don't have the ability to make that leap. And soon, machines themselves will be designing, and making, other machines, better than even the "best" humans can, and cheaper. We're headed for a world of hurt, at least in the short run, and I don't see a way out. Humanity is slowly becoming obsolete as an economic agent.
- Intelligence and ambition are normally distributed.
- Computers make the few who can use them more valuable then ever and the resulting increase in Marginal Revenue Product will continue to increase income inequality, even among those with only a BS degree.
- Robots, cloud computing, cloud competition for high value small project contract, 3-D specialty manufacturing, and our flattening world will decrease the percentage of high paying jobs.
- At the beginning of this century employers learned that only the top few of their high priced employees were worth extra money and began paying accordingly.
- The Over Educated American was published in the late 1970’s.
- All attempts by to move the bottom half of our young people to the top half have failed. x attempt = x failures.
New York Times: Why Innovation Is Still Capitalism’s Star - Professor Phelps is worried about corporatism, a political philosophy in which economic activity is controlled by large interest groups or governments. Once corporatism takes hold in a society, people don’t adequately appreciate the contributions and the travails of individuals who create and innovate. Professor Phelps, citing a McKinsey study, suggests that in free-market capitalism, “from 10,000 business ideas, 1,000 firms are founded, 100 receive venture capital, 20 go on to raise capital in an initial public offering, and two become market leaders.”
MY QUESTION: So if this McKinsey study were applied to people, would only 2 out of 10,000 become part of the wealthy and powerful elite class --- while the other 9,998 would need a job paying a living wage, but instead, the greater percentage of these people will only end up with low-paying jobs --- jobs that can't be robotized? Is that the future of the average American worker --- barely surviving while wealth inequality continues to widen even more that the already obscenely wide gap?