E-Books and the Unemployed

In the late 1980s, there was a lot of hot talk among geek programmers about electronic books.  Bill Gates, a fellow microcomputer nut had done well and was using the wealth to pursue the visions the early microcomputer pioneers had about how everything would be revolutionized.  One of these visions was that of nonlinear writing and hypertext– an idea being popularized at the time by an enthusiastic fellow named Ted Nelson.  To create electronic books would be very expensive, but in the late 1980s Gates was saying he wanted to develop the technology.  I was there.  Microsoft didn’t produce the Kindle or the channel to publish and sell electronic books, nor did hundreds of other companies who put out good products that incrementally pushed the envelope of what was possible.  It is hard for any of the participants not to be proud of the achievement of bringing the eBook to reality.

Any honest assessment of the impact of the technology must face the fact that the ebook caused the destruction of US jobs that are unlikely to be displaced elsewhere.  Am I a technophobe?  Do I have any axe to grind about ebook technology?  Hardly.  I am not a Luddite in the conventional meaning at all.  But that is how a person is labeled if they are not a devout believer in the principle that technology always creates enough new jobs to replace those destroyed.  The principle is integral to the fairy tale of technological progress because without it, the rise of the machine would be a very dark horror story.  Well, I am optimistic about future and do not believe this narrative has an unhappy ending.  I am as techno geek as they come with a handful of patents that are incorporated into products used by hundreds of millions of people worldwide.  Being labeled a Luddite is not particularly frightening to me, but I do think we need to come to grips with the challenges that ubiquitous computing are posing to American workers.  A huge number of them are out of work, and there are not enough open positions in high technology to employ them all.  That does not have to be the case, but it will be unless the playing field is not so tilted against them.

In September 2011, there was a story about how Amazon, a beloved high tech company was mistreating its workers.  This was an echo of stories that Chinese workers assembling iPods had abused their workers.   This was the Allentown Amazon story It turned out to be a bit of a tempest in a teapot but the very real abuse going on at Amazon went unreported.

The story was that workers were suffering from heat in warehouses where there were some unusually hot summers, and in their defense, Amazon stated they had already been in the process of upgrading the air conditioning.  Everyone hopes they were sincere and if so, the workplace is restored to a comfortable and worker friendly environment.  End of story?

In the 70s were were told- such factory jobs are repetitious, mentally unchallenging and don’t pay much, so maybe it would be better if Amazon sold fewer and fewer paper books that are being shipped from the Allentown warehouse, and we are all instead bought electronic books.

Actually, that is happening. Within the last 5 years, Kindles electronic book sales have gone from the single digits to outselling print book books on Amazon. The predictions are that within the next few years, print sales will be down to 25%.

Which means Amazon will be able to close down many of those warehouses, and with them, all those $12 per hour jobs.

I know what you are saying- But- the technology is great! This means we are ecologically more sustainable. Long tail authors can get published much easier- Users have vast libraries they can search always available for reading. Yeah yeah. I spent the better part of my career getting such technology out of the labs and into the hands of consumers.

But I challenge the idea from neoclassical economists that somehow technology will create newer, better paying jobs to replace those that are eliminated. This was the case up until the mid 20th century but it is no longer so, as Bryce Covert at the Roosevelt Institute points out. In the 2000s, average wages went down for the first time in recent history, and for the 30 years before that, they had stagnated. Job growth is lopsided- only 14% in high paying jobs, and more that 50% in low paying jobs. The jobs to write the electronic book software are high paying but Amazon doesn’t need many of those guys. They mostly need people to stuff orders in UPS boxes. And the middle income jobs? those are steadily reducing, not increasing.

Why? Because such innovative companies like Amazon remove the middle men (middle class jobs) by making commerce much more efficient. Who needs stores that may or may not have exactly what you want? When you look at something will you be able to tell what others have said about it? Is it the best price? Online shopping offers all these advantages. But they put local stores out of business- and with those closures, the middle class jobs those businesses supported.

So regardless whether Amazon does upgrade their air-conditioning sufficiently, they are aggressively eliminating the sweatshop jobs.

There is hope for the middle class, but it will probably require market intervention. It will require society to recognize that for a consumption economy to work, companies cannot be allowed to remove significantly more purchasing power from the economy than they return in the form of wages and low cost products. If they continue as they have, they will dry up the consumption river and we will continue to suffer from the current economic drought in consumption.

Maybe some of the folks down at Zuccotti park or elsewhere in the Occupy Wall Street movement would like to download Lights in the Tunnel by Martin Ford. Because although Wall Street was a big part of the problems we have now- even after we get Wall Street completely fixed, we’ll still have the even larger problem of job stagnation and jobless recoveries.


About John JMesserly

Mostly harmless

Posted on 2011-10-26, in job loss, luddism, purchasing power. Bookmark the permalink. Leave a comment.

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