Tag Archives: economics

The end of the German Economic Miracle?

There was an interesting article in The Observer today which argued that the German Economic Miracle maybe coming to an end. The argument was that the obsession with balanced budget had resulted in years of underinvestment in infrastructure and innovation and that the country was therefore unprepared for the challenges of it’s changing demography.

The Observer quoted Christian Democrat politician Jens Spahn saying:

“While we have been enjoying our success, we’ve been falling behind in key areas such as the digital economy. Today people across the world may be buying BMWs and Mercedes cars because of their quality engineering, but tomorrow we may be choosing one car over the next because it has superior software.”

I must say I agree with him on the car front – German cars definitely don’t prioritise software and to my mind it is unquestionable that software functionality will become more and more important for car buyers – to the point that it may indeed become a deal-breaker.

At the same time I’m not sure I really buy the picture of German industry starving for investment in advanced technologies. I have recently (and co-incidentally) been very struck by the number of times it has been a German firm behind innovative precision engineering products which have popped up in various TV programmes. In Grand Designs, for instance, any really innovative module systems seem to be built in Germany and then shipped in on the back of lorries to some forlorn plot in rainy England. And I seem to recall the huge tunnel boring machines which are cutting Crossrail tunnels under London are – you guesses it – German. And I seem to remember that the dramatic lattice work for the roof of the new Canary Wharf Crossrail station is also German.

I realise this is all rather anecdotal – but still…. it makes me wonder if the article is writing off German industry a bit too soon….

The post-scarcity world

The number of articles which are now talking about the problem of work are increasing. Techcrunch cites many of them in a recent article  pointing out the productivity conundrum in the US; the economy is slowly bouncing back, but the jobs just aren’t coming back with growth as they usually do.

Henry Blodget points out “Fewer Americans are working than at any time in the past three decades.” The New York Times observes “The jobless rate remains far higher than it typically would be this far into a recovery,” quoting a factory owner: “Because it is automated, we won’t have to add a lot of employees with the upturn in the construction industry.”

There is a lot of doom and gloom around as I’ve written here centred on the rise of technology and its replacement of increasing numbers of jobs.

Even lawyers, financiers, and surgeons aren’t safe. The Economist observes “Intelligent machines have reached a new social frontier: knowledge workers are now in the eye of the storm … teachers, researchers and writers are next.” And in the City of London, arguably the world’s primary nexus of finance, “analysts expect [banking] job losses to keep on coming, as technology replaces jobs that people once did.”

The Techcrunch article is the first I’ve read, though, that points out the potential of all this automation.

..technology may be destroying jobs, but it’s also creating wealth; and as I’ve argued before, the endgame of all this wealth creation, some generations hence, isn’t a world of full employment. Instead it’s a post-scarcity world of no employment, as we understand the word. Fewer and fewer jobs coexisting with more and more wealth is exactly what you would expect on the road to that outcome. 

However, the conclusion isn’t the only one imaginable:

So the good news is, if you lose your job some years from now, with any luck the same technological advances that devour it will also have generated enough wealth that the government will pay you and your family a basic income while you’re unemployed. The bad news is that you’re not likely to get another long-term job–ever–and that basic income will probably be only just enough to scrape by on.

If we learn to adjust to less work maybe we will spread out what is there more evenly (though there isn’t much evidence of this happening yet) and eventually wean ourselves off work as we know it altogether. The utopian world of The Culture could yet come to pass.