Arnold Kling  

Reconfigurations

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Consider the following hypotheses.

1. The Great Depression and World War II ended the last vestiges of the Jeffersonian agricultural economy in America. The yeoman farmer disappears.

2. The current recession is accelerating a transition away from the industrial era in which efficiency requires ever-increasing scale along with tight worker discipline. The robotic human worker disappears.

For more on these notions, read on.

The yeoman farmer is a small-scale farmer. Once we have tractors and other machinery to work the land, and once we have trucks and roads for shipping farm produce long distances, the case for the small-scale farm is weakened. Sharecropping and homesteading are no longer economical. By the 1930's, millions of agricultural workers had become superfluous. During the second world war, they acquired some skills, contacts, and mobility that ultimately facilitated a reconfiguration of employment, toward sales and other white-collar work.

The industrial society is based on scale and worker discipline. You build large factories, and you want workers to adhere to a tight schedule, as dictated by the production line. Schooling is organized to instill the discipline that allows large groups of workers to gather in the same place and the same time to produce efficiently.

This industrial model became adapted to other areas. Freddie Mac and Fannie Mae turned mortgage lending into a centralized, standardized, routinized process.

The industrial model of work is that employees work in close proximity at the same time. What we observe with the Internet is something quite different. Individuals can time-shift work and co-ordinate from disparate locations.

When I had my Internet business, Homefair, I was located in Silver Spring, Maryland and my main business partners were in Scottsdale. Arizona. I time-shifted my work. I worked many hours, including nights, weekends, and one particularly traumatic anniversary evening. On the other hand, I could take two afternoons during the week to coach my daughter's softball team.

That was back in the 1990's. Today, we see much more of that. People with smart phones are carrying the office wherever they go, but that means that they do not have to be at the physical office as much.

We are seeing fewer jobs where there is the external discipline of the time clock and the assembly line. The human robot that was once needed to lift and pound in a factory continues to be replaced by non-human robots.

Instead, we are seeing more jobs where internal discipline is required. I suspect that this explains some of the wage differential that shows up for college graduates. Graduating high school shows that you can submit to external discipline. Graduating college shows that you can operate under internal discipline.

In the 1920's, the boom (or bubble) in stocks helped raise perceived wealth. This maintained demand for agricultural products, which allowed some Jeffersonian agriculture to persist longer than it would have otherwise. The 1930's forced a rapid transition.

Similarly, the housing boom earlier in this decade helped to raise perceived wealth and maintained demand in many sectors. This allowed many nine-to-five jobs modeled on the industrial form of organization to persist longer than they would have otherwise. The crash forced a rapid transition.

The transitions are unavoidable. The economy that emerges ten years from now will have very different patterns of leisure and work. Many work will be time-shifted and location-independent, in striking contrast to the industrial model.


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CATEGORIES: Growth: Consequences



COMMENTS (13 to date)
Joel writes:

Ha, I was just the other day lamenting that I spent four years procrastinating my way through college when I could have been developing internal discipline.

Shawn Smith writes:

Great post...these are a lot of my thoughts exactly.

This is something I have discussed with my wife a lot lately...that jobs, especially high-level jobs, are not about being at a certain place at a certain time. It's about getting results, such as improving the productivity or profitability of the overall company.

I work as a process engineer at a large semiconductor company. There are some weeks that I am in the office only 20 hours of that week and there are some weeks that I am there 60 hours. I sometimes go in at 6am and sometimes I go in at 10am. I sometimes leave at 2pm and sometimes I leave at 6pm. It all depends on what needs to get done to maximize the productivity of the factory, while also allowing me to enjoy time with my family and value my job.

Other companies and managers need to realize this shift and focus on creating an atmosphere that values this internal discipline type work.

Lewis writes:

That's a sharp observation for many blue collar jobs. However, currently we have a sort of pre-industrial guild system model for health care. That's one of the largest sectors of the economy, and it hasn't even adopted the industrial model yet. Factory-style hospitals in India suggest there are enormous gains from the industrial model you note is declining for the economy at large.
http://online.wsj.com/article/SB125875892887958111.html

Shangwen writes:

A proto-version of observation 2 began to appear during the early 90s recession, with all the talk about contract workers and the predictions that soon most people would be working on contracts and the usual "no more jobs for life" rhetoric. I don't know to what extent that came true; perhaps transaction costs made it unprofitable to transform HR departments into costlier contracts-management departments.

If it really is the case that more and more people will require a higher ratio of internal to external discipline to make the productive, it will be interesting to see how that affects firm structures, management style, etc.

Lewis, I agree with your comments on health care, where we are indeed stuck in an agricultural-style mode of production (curiously, in a Baumol cost disease kind of way, a phenomenon increasingly limited to the public sector and sectors heavily regulated by government and government-sanctioned monopolies). In fact, the Soviets practised assembly-line medicine starting in the 60s, but apparently they had some other problems so their innovation has not survived to benefit us.

Philo writes:

"Graduating high school shows that you can submit to external discipline. Graduating college shows that you can operate under internal discipline." Worthy of Bartlett's (a future edition)!

Brett writes:
. I suspect that this explains some of the wage differential that shows up for college graduates.

How does that break down in terms of degrees? I have a suspicion that certain degrees are the primary source of the wage differential, which is then getting averaged out over the entire field of college graduates when you measure it.

Scott Sumner writes:

Isn't working in a fast food joint manufacturing hamburgers pretty much an assembly line job? Is there evidence that fast food jobs are disappearing?
Aren't they called "service jobs."

Farm jobs gradually disappeared over a period of many decades. Is there any data that the 1930s were crucial?

Wouldn't the 1920s stock boom have boosted demand for luxuries like cars, not food?

Various writes:

I agree with everything you say. I'm not sure of the exact rate of shift towards the model to describe, but it conincides with my observations. I think one implication of this thesis is that schooling at the high school and even college levels are preparing students for an every more obsolete workplace. At least that is my opinion as I look back over my academic studies up through and including college, but excluding grad school. For example, I succeeded at classes in advanced calculus, but on Wall Street I never used math skills more complex than basic algebra. I hope that our educational institutions evolve in the not too distant future to overcome this obsolescence. In particular, it seems to me that students must specialize at least a tad earlier in their studies to gain skills that will apply to their ultimate careers. This, in turn, may imply that students should gain some rudimentary understanding of various career paths somewhat early, so they can at least exclude studying those subjects that will provide them with limited ROI. For example, as I look back, I find the "guidance counseling" that I received in high school was worse than useless. It was actually misleading. This is all just my opinion of course....I could be wrong

MernaMoose writes:

I suspect that this explains some of the wage differential that shows up for college graduates.

And here I thought we'd established the fact that most college grads are worthless.

Anyway, some good thoughts here but I think, you're taking it too far -- today, for most jobs. There is still something to be gotten from face-to-face working with others, even today.

And btw, have you looked at the train wreck that is the current fad in corporate office cubicles? It's enough to make me think I should have become an academic anyway.

Nowhere in today's office space can an individual person sit down *anywhere*, with any sense of privacy whatsoever, in order to actually *think*. Everything is wide open spaces which are "intended" to "foster team work".

Not because the employees like this crap mind you. I can attest to the fact that most of them hate it. But it's the latest fad with corporate VPs these days.

Seriously, when video conferencing has evolved another generation or two, we may reach the point where your presence in the office matters a lot less.

Yes, office hours are a lot more flexible than they used to be. And it would seem that for an increasing number of job types, the office building is probably headed for extinction.

But I don't think office buildings will be vanishing over the next decade.

Unless the VPs are unable to get over their current "team work fostering" fad and put some decent office space back together, that is (because I swear there's going to be a peasant revolt). The biggest problem we've got right now is that everybody's noise belongs to absolutely everybody. I have to step outside the building if I want to talk to a customer in anything resembling quiet.

Tracy W writes:

Various, a significant benefit of studying mathematics to advanced calculus level is that it gives you sufficient practice with basic algebra to be able to do that very well, while being less boring than spending years just drilling basic algebra.

Hugh writes:

I agree with this as a general trend that has been ongoing since VisiCalc in the early 1980s.

I am less sure that this explains what has happened in 2008 - 2011. Has anything happened in these 3 years to increase the rate of technological change?

Twitter? Facebook? I don't think so....

Various writes:

Tracy, I agree with you. I'm not saying courses such as Calculus are worthless. Among other things, they reinforce what one learns in other classes and helps one learn how to think analytically. What I'm saying is that, given the finite period one can attend school, and given the ever expanding body of knowledge, something has to go, and that something will vary from student to student. It seems the attention paid to counseling students is terrible. Most successful/content people I know had the benefit of mentorship from parents, friends and others, and thus were often able to gain an early lead in determining where to take their lives.

Russ Nelson writes:

MernaMoose: the thing you learned in college is mostly useless, but having learned it, you have proven that you can master internal discipline.

Lewis: too right about medicine being a craft.

Various: never admit that you might be wrong.

Scott: the 20's boom kept price pressure off food, so inefficiencies were allowed to stand.

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