The Problem with the Job Market

Deeply superficial musings about AI and the labor market, all while missing very basic points about the substitutability (or not!) of labor and capital. Very safe to skip!

The thing is, work has always been dull and a chore. I think what's different is now basically everybody works, and home and relationships are secondary to "your career" especially two income households. It sucks and it's hollow if you try to revolve your life around a job.

I don’t understand the “it’s different this time” argument. Replace “AI” with “steam shovel” or “sewing machine” and you have the same conversation from 150 years ago, when some people predicted that by now we’d have no work to do. Which made perfect sense to them in a time when most people worked in manual labor and agriculture, just as people work in offices now.

> The ideal number of employees in any company is zero.

No. The ideal number of employees is the number that maximizes the sum of all future profit. This may be zero employees but isn't required to be.

> Nobody owes anybody a job. Literally the only reason anyone has one is because there was a problem at some point in that business that required a human to do some part of the work. Building on that, if that ever becomes not the case, for a particular person or team or department of human employees, the natural next action is to get rid of them.

Because it is expensive to find, hire, and train new employees, companies are highly incentivized to find other work for an employee whose work becomes automated. In fact, a lot of value is created when work becomes automated so that employees can do tasks with higher complexity.

> So now we have three pieces. The ideal number of employees is zero, companies are extremely unhappy with their current workforces, and just now —starting in 2023 and 2024, it is actually becoming possible to replace human intelligence tasks with technology.

Employees' work has been automated countless times in the past. They just end up doing other stuff. This is the trap that Keynes fell into when he projected we'd love eventually never do work because everything was becoming more efficient.

When everything becomes automated, we invent work to be done.

When you make wider lanes, more people drive. More capacity generates more supply.

Saving anyone a click if they don't like this stuff: It turns into an AI millenarianism article partway through.

The idea that companies needing no employees and AI doing all the work is the natural state of things that we have been evolving towards is laughable.

The modern supply chain is not self-sustaining, it’s still based on human labor, just in a more specialized, scalable, and yes, sometimes dehumanizing structure.

> Let’s say your company pays for 215 software products that cost us $420,000 a year to own and use. Nobody would object to somebody looking at that list of software finding redundancies and canceling those licenses.

That's simply not true. Big companies have special vendor management departments, their incentives are literally built around cost optimizations. Smaller startups have CEO looking at their billing and complaining about "why do we pay so much to vendor X?", check the most recent rant by DHH on Datadog:

https://news.ycombinator.com/item?id=41357726

Free economics would fix this.

> So that is two pieces: 1) ZERO is the optimum number of employees for any company, and 2) companies are realizing that they’re paying way too much for giant work forces that are not producing near the value being paid.

Let's step back a bit here. What is the purpose of a company? Profits? if so, short-term or long-term? The real problem, at least in my personal opinion, is that companies in the last 50 or so years have become pure short term profit machines. Especially publicly traded companies. That is not ok, they have become parasites who consume resources on the host country and community they have infected, until the host dies, along with them.

Companies are supposed to have a mutually beneficial relationship, a symbiotic relationship if you will, with the community they reside in. A parasite thinks in terms of short-term gains. Beyond short-term profit, companies should be geared towards creating economic value and wealth around them. They should benefit not just their owners but society as a whole. That way, they become long-term profit generators, generations and centuries later they would continue to benefit their owners and community alike.

The ideal number of employees is not zero, because then that would mean there are no people outside of the company owners that are vested long term in its success. and inevitably, the company becomes a wealth sucking machine, transferring wealth from regular people to company owners.

Naturally, a well run government will snuff out parasitical companies, so long as democracy is in effect. If the government fails to do so, then as is their nature, the parasitism must spread until the people turn on their government.

As for individuals, we should -- in the way of Nash equilibrium -- return the favor and look out for our own benefit and profit and nothing else. never mind helping your company succeed, just find the best way to optimize sucking wealth like a parasite from the company at minimal labor cost to you? That is what we should do right? that's what game theory tells us, and that is how companies are being operated these days. What's good for the geese is good for the employees.

Although, I can't get myself to that point. Not caring about anything other than hoarding wealth is not natural. I think for many people, like with myself, it is hard to not care about your company, coworkers, the public. My conclusion is that companies, employees, the public and government need to exist and work towards symbiosis. The downward pressure the author speaks of is a result of parasitical thinking at the executive level of companies. This is first and foremost a failure of economists and policy makers. But it needs to be talked about openly. Unlike countries like China, we don't have a centrally planned economy where the state party culls parasitical companies when they are harmful to the host (country), that's why they don't like western companies that extract wealth out of there. Either companies and economists change their tune or government needs to change their tune for them.

No one owes you a job as the author states, but the responsibility that comes with being able to run a company and hoard limitless wealth, is that you are expected to exist in symbiosis not in hostility towards your environment.