The Inconvenient Reality of the Global Labor Glut

A Review of
The Wealth of Humans: Work, Power, and Status in the Twenty-first Century
(Author: Ryan Avent)

The Economist writer Ryan Avent’s thesis is that the world has a glut of labor that will only get worse forever—due to advancing technology and automation—and that the main solution is politically-difficult redistribution. Among other things, he discusses the potential remedies of trying to increase global demand (questionable feasibility) and of breaking down barriers to immigration.

It would be great if ordinary Americans could digest and debate his economic analysis; unfortunately, Avent’s discourse is rather too advanced. Yet the topic, of course, has political urgency. We see many voters who have resonated to economically-futile proposals to tax imports and to “bring back manufacturing jobs.”

Avent foresees, in the long run, a future in which most of us will not need to work, and he acknowledges the sociological challenges that would accompany this. Central to his thesis, though, are two assumptions that I am particularly skeptical about:

Even if Avent is off about both of these points, however, I do believe in the basic proposition of a worldwide labor glut that is depressing wages and employment. It is the central political challenge of our time.

On the question of redistribution, Avent provides useful perspectives about the way we try to shut out others who are not so lucky as us. He discusses immigration, of course. But he also talks about how big-city property owners fight to prevent building of additional new housing, which drives up property values (and their own wealth) and prevents outsiders from participating in the most vibrant areas of the economy.

Beyond that even, Avent raises an incredibly profound point, based on the observation that wealth really comes from what he calls social capital. He admits to the unlikelihood that prosperous societies will simply throw open their borders, but continues,

But we should also realize that those societies do not belong to us. If we are lucky enough to find ourselves within them, we can argue credibly that we are contributing to them and therefore deserve a share of the benefits that flow from them. But the fact that we are lucky enough to be within them and contributing to them does not confer on us the exclusive right to such a position. If anything, it confers on us the responsibility to try to make the society as robust as possible, so that its membership can be extended to as many people as possible. No one deserves to be poor. No one deserves to be arbitrarily rich. Rich societies can find ways to justify their great wealth relative to others: their members can tell themselves stories about the great things they did that others could not have done that made them wealthy beyond imagination. Alternatively, they could recognize the wild contingency of their wealth, cultivate human empathy, and do what they can to extend the wealth of humans to everyone.

Elsewhere he uses the example of Bill Gates, who did great things, but is it unlikely that a Microsoft would have emerged if he wasn’t there? Further, if Bill Gates had instead been born and raised in the Central African Republic and tried to start a software company there, would he have been successful, in spite of the lack of social capital?

This obviously raises deep questions about how deserving the super-rich are of their billions. Ever since the Soviet era, conservatives have warned us about the centrality of incentives, and most people have grudgingly accepted the arguments. When we understand the concept of social capital, though, skepticism may arise.