A Post-Scarcity Reality

by JT McGee

Laws require everyone is exposed to some kind of economic study in high school. Between supply, demand, guns, and butter, you probably also heard your teacher repeat the word “scarcity” over and over again.

It’s pretty much the common denominator in everything economics – you only have this many resources, so how should they be best aligned for efficiency. Everything is defined by its scarcity, and everything is indeed scarce. That is, there is nothing that is unlimited.

Post-Scarcity

One of my favorite economic topics is that of post-scarcity, or a reality in which most things previously limited in quantity as now unlimited. As we know, when a certain something is plentiful, it is very cheap. When something is in short supply, it is very expensive.

So post-scarcity discussions are a lot of fun, right? Like, what if we’re on the verge of becoming so efficient that we no longer have to work? Or what if we can cure hunger with a simple mega pill that replaces our daily food intake? We would have so much extra farmland that we could use for more productive uses. Food would no longer be scarce, and it would have almost zero real value.

Anyway, these are just examples. And as much as I enjoy the whole post-scarcity idea as much as I enjoy tacky, late night productions on the Syfy channel, it’s not all that realistic. At least, a post-scarcity reality in which EVERYTHING is plentiful is kind of ridiculous.

Unlimited Labor

One thing that I have been thinking about a lot is what happens when labor is no longer a scarce commodity. Raw human work where people actually do something (manufacturing, for example) is becoming far less important, right?

Where one person could put in a few rivets per minute on an assembly line, one person operating a massive piece of machinery can put in thousands of rivets in the same amount of time. Both are relatively unskilled types labor, as the worker’s value comes mostly from his or her ability to flip a switch and watch for problems today, or fire a riveting gun decades earlier.

The current rate of technological development would suggest that we will need fewer and fewer workers to do more and more things in the future. Human work so far as physical labor has become so incredibly invaluable, mostly because it is not nearly as scarce today as it was years ago.

The Real Reason to Invest

I think scarcity better explains why you have to become a greedy capitalist to protect that which you own. Generations previous would do the same job their whole life, enjoying awesome job security because human hands were still more efficient than mechanical operation. Today, that is not the case at all.

And when you think about it, the proceeds of production are going to fewer people as fewer people are employed. The real benefactors are the owners of this capital, hence capitalism.

At any rate, I think the best reason to be any kind of investor is for the purposes of income protection. Your health and your capacity to do work are important, but perhaps problems more meaningful in 1900 than in 2011. That is to say that if you lose your job in the future, it won’t be because you could not work. It will likely be because a machine could do this work better. Years ago, you lost your job because your body just couldn’t handle it any more.

I’m curious as to what you think about a post-scarcity reality for labor. I’m of the view that labor will always (obviously) be finite, but its supply will grow far faster than most anything else.

What can you do to protect yourself from changes in your own industry?

Have you or someone you know lost their job to a machine that was more efficient?

Can humans learn faster than machines; is it possible to beat the curve?

{ 8 comments… read them below or add one }

Jonathan April 2, 2012 at 10:38

I work for a small consulting company, and we work with large amounts of data. We generate the data, then analyze it, then write reports about it. Because I have a programming background, I have created many Excel-based applications to make all of this work much easier, quicker, and less open to human error. Over the 6 years I’ve been in the industry, a process that could have taken a whole day or more of work and been very prone to input error has been reduced to where I can do it in minutes. This has made me very valuable to my company, but it’s also possible that if I had not made any of the applications, we’d need to hire additional technical staff to move numbers around. But the good thing of course is that we’re able to spend less and less time on the busywork and more and more time on producing deliverables or directly assisting clients.

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JT McGee April 2, 2012 at 12:16

I don’t think efficiency is a bad thing. But I think people who work in areas where humans are mostly there for doing something (not analyzing, or adding value with thought) should be more diversified than others.

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Bill April 3, 2012 at 09:30

Years ago I worked in a factory during the summer. It was one of the few ways to pay for my tuition, and it was a major employer in the small town I lived in.

Back then it was commonplace for workers to make a career out of a job. Most people never left the factory by choice. This article really hits me because it seemed like that factory would always be around, and so would the jobs. Over the course of 20 years the factory cut jobs as some of the bigger processes were turned over to machines, not college kids like me. When I worked there I was one of a couple thousand workers (it ran 24/7.) I’m not sure there are much more than a few hundred people there now and it still produces just as much material.

Times do change.

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JT McGee April 3, 2012 at 10:44

Hope you left school for better pastures. Thanks for the anecdote, it does help confirm what I really think the future is for relatively unskilled labor: almost non-existent.

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tom April 3, 2012 at 10:37

I work in an assembly area and have worked in automation before, and it seems that for every 10 laborers laid off due to efficiency improvements, robotics, etc, we hired at least 3 skilled workers, e.g. technicians, electricians, etc.

From my knothole, while unskilled labor is getting downsized, there is an increasing demand for skilled labor. These positions have better pay and benefits.

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JT McGee April 3, 2012 at 10:46

This pretty much explains why I think the wealth gap exists. That is, jobs aren’t there for unskilled work, and those who previously earned a good working wage in factories (where part of their wages were necessarily invested in the company or invested pension) are instead giving more to FICA taxation for a pittance later.

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Chris Gold April 3, 2012 at 13:43

It’s hard to imagine post-scarcity in relation to labor in what sees like a utopic sense. The alternative reality is one where human efficiency is replaced by automated processes which is a bit frightening. I’m still deciding whether the reliance on technology is a blessing or disguise. It’s hard to gauge true productivity when the majority of workers are sitting behind a computer all day. I’m excited and a bit worried about job security/creation as technology evolves within the workforce. It definitely seems like a solid plan to invest rather than depend as you rather presciently touch upon however.

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Matt @ Dividend Monk April 3, 2012 at 19:04

I think we’re in for a “new normal” of unemployment rates. I’ve worked building automation systems (fortunately being the guy building the machine rather than being replaced by the machine), and really, the limit for what can be automated is far, far away.

I think a lot of the common principles apply:
-Get educated.
-Save and invest more money (and therefore be an owner).
-Diversify income and skills.

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