Did Google’s Larry Page just solve a major economics problem? Umm. No.

Everyone’s wondering what we’re going to do about the coming unemployment crisis as technology and automation displace more and more workers.   It’s a serious problem and it’s one that’s approaching far faster than most people think.

With current technological research, we are realistically looking at a frighteningly near-term future with driverless trucks, “lights out manufacturing”,  automated agriculture and even 3D-printed houses.  What’s scary is that rise of automation is looking more and more like an end to the need for most  laborers.

So what are all those people that once actually made things and performed physical tasks going to do?  How do we as a society adapt to a future where machines and robots do most of the things we used to do — and more importantly, got paid to do?

Larry Page’s “answer”:  Nobody works full time.

Larry Page thinks he has a simple answer:  Everyone works part time.

Not working.  Brought to you by Google.

Slacking.  The new economic philosophy.

On first blush, the idea seems to work.   Instead of hiring one full-time worker, why not hire 2 or 3 part-time workers to do the same job.   We could just divide the existing “pie” of necessary tasks between more and more people until everyone had a job to do.

You just reduce work time. Everyone I’ve asked– I’ve asked a lot of people about this. Maybe not you guys. But most people, if I ask them, ‘Would you like an extra week of vacation?’ They raise their hands, 100-percent of the people. ‘Two weeks vacation, or a four-day work week?’ Everyone will raise their hand.

Most people like working, but they’d also like to have more time with their family or to pursue their own interests. So that would be one way to deal with the problem, is if you had a coordinated way to just reduce the workweek. And then, if you add slightly less employment, you can adjust and people will still have jobs.

Sounds good right?

Wrong.

First off, Page’s utopian “age of plenty” reasoning only takes into account labor costs and fails to account for limited resources, food and energy.   Secondly his kind of thinking is a very slippery slope towards the historic oppression of socialist systems.   And thirdly, Page’s plan doesn’t save us from the same dark future where those who control the “inputs” of food, energy and raw materials rise to become a master-class of historically unprecedented power.   Let’s walk through the problems:

Resources are forever limited.   Consumption is not.

Limited resources are the fly-in-the-ointment here.  Why?   Because regardless of labor-costs, which promise to be repeatedly slashed with the benefits of automation, input-costs like raw-materials and energy remain limited.   Unfortunately, automation does not come hand-in-hand with unlimited energy or unlimited natural resources.  While in some cases the acquisition/harvesting/mining of raw materials may be facilitated by advances in automation — we ultimately live in a finite world and scarcity continues to drive cost.   We are already pushing the limits of what the world can provide in terms of energy, many forms of food,  rare earth metals and more.

The limitations of energy and raw materials ultimately constrain the benefits accrued from cheap automation:   When we divide a job that previously required one person into two jobs that now require two humans, those two humans still consume roughly the same amount as they would when they were working full time jobs (ex-commuting costs and some work related expenses).   We haven’t changed net consumption significantly.   All we’ve saved on is labor costs.  But our input-costs remain roughly the same.   As manufacturing-inputs increase in scarcity, competition for produced products rises regardless of labor costs.   Automation does not solve the problems of consumption vis-a-vis scarcity or price inflation.

Enter competition.

As scarcity continues to drive prices north, how might one of those part-time workers better compete to secure limited resources for his or her family?   Well here’s an idea:  They could work more hours.  After all, they’ve suddenly got lots of free time with which they could work more.  Enter, competition.

Hence the only way to maintain the broad availability of resources in this “utopian” society would be to both limit consumption AND the ability to perform additional labor.   “Work” becomes a State-managed resource.  Here’s where we get into very hot water, and the monster of the historic socialist-state begins to rear its ugly head.

Ultimately what Page is proposing is indeed yet another flavor of socialism.  To put a finer point on it:  He’s not just proposing a world where people work part time.  He’s proposing a scenario where the State must control the right to work full time.  His scenario is one in which consumption must ultimately be limited by the state in order to protect the availability of both resources and  the opportunity to work.  In any system where availability of resources must be controlled or curtailed by the State (and in this case “work” too, is a resource being managed) we see freedoms curtailed in short-order in order to prevent uncontrolled consumption (or participation, as is the case where the availability of work is also controlled).

The resource overlords.

Lastly, the continued reality of scarcity in a highly automated world is where things still look to get extremely grim:  The problem with our swiftly approaching roboticized future is not just the problematic surplus of labor, it’s what the automation doesn’t bring us:   We haven’t managed to do away with our natural limits on energy and resources.

Ultimately, we’re still looking at a scenario in which the necessary products and services which we need to survive will still be limited by traditional input-costs.   Those who control the manufacturing-inputs will ultimately become a ruling class of unprecedented power, with little need for labor and more importantly, no mandate to listen to the demands of labor. 

This problem would seem as yet, unsolved.  And no, you can’t have an “age of plenty” when the only thing that’s plenty is labor. Sorry, Larry.