Shifts and Devices

Sharon Astyk has a grim and important essay that reminded me again of something easy to turn away from:  IT professionals are up towards the pointy end of a pyramid that is structurally based on oil, food, and poverty. Her view is that the current abstract fincancial crisis is not at all about chattering bits and risk algorithms… the pyramid has instead collapsed from the bottom, not from the top. Some excepts from the full essay:

We might look at the boom and bust cycle of our economy, and indeed, the world economy, as one moved not just by energy, but by new workers (who then conveniently become new consumers and create new markets – remember, 70% of the economy is consumer spending).  Each boom cycle has followed the move of vast numbers of new workers into the economy, essentially creating more money in the form of productivity, and more income to spread around and lubrication to the economic system. [...]

It is worth asking why these low wage workers are so important to each bubble.  There are a couple of reasons.  The first is that even in the booming periods of cheap energy, it was never possible to mechanize or use oil for the majority of jobs – and as energy supplies rose in cost and tightened, it is less and less possible to do so.  The majority of all world farmers, builders and factory workers do use some machinery, but the primary engine of production is human work.  The other thing that matters is while there is a substantial difference in the pay scale of, say, an IT professional over a construction worker or a farmer, and the value of the work of the IT professional in the industrial economy is higher, moving people over to the white collar economy isn’t nearly as effective or profitable as taking people out of the subsistence economy and putting them on the lower rungs of the industrial economy.  First of all, you take a large portion of the productivity of a human being (remember, new industrial workers generally work long, long hours), without any amortized costs to provide him or her with health insurance or education.  That is, the total society investment in someone in the subsistence economy who then moves to working 12 hours a day in the industrial economy is very small, and the amount of work she does is quite dramatically more than what she did to serve the industrial economy when she was a subsistence farmer or a housewife.  Education, on the other hand, is expensive, and white collar workers like things like health care and vacation.  The money is in the new workers. [...]

I wonder, when we peel back the layers of the onion later, and look at the history of this Depression, I wonder if we’ll see that in fact, what happened was that we squeezed out the lifeblood of the very thing we’d built our economy upon – new workers/consumers who could be counted on to grow the economy outwards and upwards.  We could have forseen this – but we chose not to – we chose, as we struggled to keep our lifestyle intact on the backs of the world’s poor, not to see that we stand on their backs, and it is people…all the way down.  In killing them, we killed ourselves. It may be that besides the tragedy of starving millions of poor people, we may also have brought down our own system, simply because we did not see, did not realize that the poor matter more to us than we like to admit.

From: http://sharonastyk.com/2008/09/25/peeling-the-onion-whats-behind-the-financial-mess/