Thursday, September 24, 2009

Food for Thought: Unemployment Irony

I think it is safe to say that just about everyone sees unemployment as a bad thing. I'm going to go out on a limb here and say that unemployment is actually a good thing and that it is a sign of progress.

Consider the case of yourself being stranded alone on an island. In order to survive, you must perform quite a bit of work: you have to gather fresh water, gather food, gather firewood, cook the food, build a shelter, and maintain said shelter. This would take a considerable amount of time and effort. Any reduction in the amount of time and effort that you expend on these tasks would certainly be to your benefit (an economic benefit if you will).

Let's say that you change the location of your shelter from the beach to an inland stream. Now you don't have to travel as far or for as long to gather water for the day. Then you invent a stick that allows you to gather fruit without having to shimmy up trees. Once again, you'd no longer have to work as hard or as long to gather your fruit. Finally, after engineering your way to more free time in a day, you build a more robust structure which requires less maintenance and consequently reduces your labor load even further.

Take a second to think about all of this. Through innovation, you, a lone island dweller, have innovated your way to more free time. You have innovated your way into unemployment. Simply put, you no longer have to do as much work to survive and maintain a decent standard of living. So, in this case, unemployment is clearly a good thing.

Going from an island of one to a world of many changes nothing. Indeed, the portion of man-hours necessary to gather water, food, and maintain shelter has dropped dramatically in the last hundred years. Simply put, there is less work to be done and that's a very good thing as we just demonstrated. Yet without employment people lack income which is clearly a bad thing and a problem. Therefore, we should reason that lack of income is the problem and not unemployment.

How can we have income without employment? How do we separate the two?

Income has many forms. In this context, I do not mean monetary income (a paycheck) but instead "real" income in the form of goods and services. A self sufficient farmer has no monetary income but has some (indeed enough) "real" income. I have theorized over the past couple of years that people will eventually de-urbanize and enter in agriculture in an attempt to employ themselves, gain income, and be self sufficient in a sense. Coincidentally, this was the precise view the founding fathers had for our country: a nation of self-sufficient farmers.

This thought goes against the economic tide of specialization and increasing economies of scale. Indeed, by proposing self-sufficiency I am proposing the direct opposite of specialization and increasing economies of scale. I would argue, however, that specialization now lies within our technology and not within our labor force. For the time being, certain fields such as law, medicine, and engineering are undoubtedly specialized but it is clear to me that the internet is changing that by making such information accessible, interpretable, and operable to all.

I don't have an appropriate way to conclude this at the moment as it I have just made these observations though I will revisit this at a later date. As the title said, it's just food for thought.

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