Anti-Capitalist Sentiment (with some morality)

[pantherhound]

It makes no sense for an employer to pay his employees any more than wages they would agree to. It's the same thing as paying 1.50 for a 1 dollar apple at a fruit stand. The employer owes it to his clients or customers to minimize his costs, and labor is one of those costs. This works to everyones benefit as it drives down the prices of everything and helps to spur innovation.

If the 'price of everything' is driven down, how does it benefit those at the bottom of the pay chain (since wages come down with it) any more than if they were paid a little more and commodity prices in general were proportionally higher?

[Renton]

If the 'price of everything' is driven down, how does it benefit those at the bottom of the pay chain (since wages come down with it) any more than if they were paid a little more and commodity prices in general were proportionally higher?

The prices of produced goods generally decrease over time with free market activity. This is for a bunch of reasons, mainly because innovation, emulation, and economies of scale create conditions whereby goods are produced much more efficiently and are sold competitively.

On the other hand, the prices of labor (i.e. wages) generally increase with free market activity. This reflects the scarcity of human time. Basically there are more things for people to do in the economy than there are people with time to do those things. This is especially the case in post-industrial societies with low birth-rates. Economic growth without accompanying population growth means doing more with less with regard to labor. In industrializing countries of the third world, the prosperity instead comes in the form of a population growth explosion as families finally are beginning to have access to cheap and abundant food and basic medicine. This partly explains why every developing economy seems to go through an extended period of stagnant sweatshop wages before it breaks through to becoming a modern economy; new humans are injected into the economy more quickly than the GDP grows. But it helps to have some perspective here, the GDP growth and population growth are massive in such countries (India, Indonesia, Thailand, etc) and that's a hell of a lot better than these countries were doing before.

[pantherhound]

Basically there are more things for people to do in the economy than there are people with time to do those things. This is especially the case in post-industrial societies with low birth-rates. Economic growth without accompanying population growth means doing more with less with regard to labor.

Huh? Populations are growing in pretty much all countries. Also, how do things like automation and the widespread switch to service-based economies mean more jobs?

[Renton]

Huh? Populations are growing in pretty much all countries.

"First World" countries like U.S. and U.K. have positive population growth, but much smaller than poor countries, and much of it from immigration. Japan is actually depopulating. Meanwhile, developing countries like India and Indonesia are growing much more quickly. The interesting thing is that all of the population growth curves are slowing down. It's a natural consequence of the accumulation of wealth in a country.

Basically it goes like this:

1. Pre-agricultural economy: This is where we all began. Life is extreme hardship. Sustaining life is extremely labor intensive and dangerous. There's not even a concept of income or economic growth, only of basic survival. Population grows slowly if at all. (currently, some isolated tribes perhaps)

2. Agricultural economy: Eventually people discover or are shown how to cultivate land and domesticate livestock. This allows for the most basic forms of savings and trade, with the currency being food. Population begins to grow a bit more quickly, but there's little time to be devoted to anything like research or innovation. The decision to have a child is a tough cost-benefit analysis of whether the family can support another child, and whether its worth the medical risk to the mother. (currently, many African nations and rural parts of developing third world countries)

3. Industrial economy: Just enough innovation has taken place at this point that food is in a more stable abundance. Advances in basic medicine have made childbirth less risky. Where in the last stage, having children was a tough decision, now it's usually an excellent economic choice to have as many children as possible. People in industrializing countries actually have children as a form of pension program. Jobs are primarily manual labor, so the highest earning potential is when a person is young, and it diminishes as they get older. There is usually a strong culture of parental caretaking. Trade is happening on a larger scale, and this is usually the sharpest period of percentage-based GDP growth of all the stages. It's also the sharpest period of population growth. (currently, China and urban parts of India and Southeast Asia)

Also, how do things like automation and the widespread switch to service-based economies mean more jobs?

4. Post-industrial economy: After a period of industrialization, capital has accumulated to a point that one worker is capable of doing the work of many of the former industrial economy workers. Sustenance and basic healthcare is a non-issue for the vast majority of people. Population begins to curb as adequate parenting becomes more about investing time and money into a few quality children instead of creating the maximum amount. Human capital, i.e. education and training, become more valuable in this context as automation reduces the demand for the low-skill primary and secondary sector jobs and as newly developing tertiary and quaternary sectors create demand for higher-skill, higher-education jobs.

To answer your question, automation doesn't kill jobs. It contracts the primary (agriculture/mining) and secondary (manufacturing) low-paying jobs into a smaller number of higher-paying jobs. In the old economy, a guy lugs boxes of stuff from point A to B one at a time and makes a low wage, since his job can be done by anyone with muscles. In the new economy, the guy needs to be trained on the forklift so he can do five times as much work in the same amount of time, for which he is compensated more. He gets a pay bump, the other 80% of box-lugger-guys are let go. Thankfully, there are new sectors of the economy developing for those people to specialize in as well. Basically as people get higher incomes, they take on more needs and desires, creating demand for entirely new goods and services that poorer people wouldn't have been able to afford, or in some cases, even conceive of. For example, in the U.S., almost everyone now has high speed internet and uses online services constantly. The provision of those services must come from new jobs.

The problem is that the transition can be jarring. An entire generation of people raised in an industrial economy finds themselves at age 30-45 laid off from their obsolescent jobs with little marketable skill do do anything else. It's unavoidable though, and in the long run there is cause for great optimism. This is all happening because our lives are getting better in general. It is great that the lower sectors of the economy become more productive for less invested human time. It's merely temporarily bad for a relatively small slice of the population.