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mercredi 27 avril 2016

What jobs for tomorrow?

Economic French Journalists Association (AJEF) has devoted a series of lectures to changes in employment. Topics : "clash of new technologies and automation: what jobs will be created tomorrow and which will disappear?", with Augustin Landier, Toulouse School of Economics, and Olivier Passet, Director of Syntheses at Xerfi and   The end of wage labour is coming soon? Autoentrepreneurs, coworking, etc.: new forms of work" with Monique Dagnaud, sociologist, and Philippe Askenazy, Director of research CNRS -  Paris School of Economics.

Uberization : an ultra-liberal vision

Augustin Landier is a worthy representative of the school of Toulouse, which eventually would have us believe that there no other alternative than ultra liberalism, and that’s really nice since it will benefit the poor first. Therefore, Mr. Landier supports  El Khomri project and worked for Uber, past master of influence strategy, which commissioned a report showing that Uber would be a chance for the young mined by unemployment, and that these employees are well paid (3600 euros per month?, disputed figure valid only for those who are self-employed), young and more graduates than taxi drivers, and that, unlike the US, for most of them it's their only job and not a complement. Therefore, any attempt to regulate would increase unemployment. QED... to please the sponsor of the survey. Mr. Landier predicts a considerable expansion of uberisation which will gradually affect a large part of the functions of business, such as accounting, HR functions, various sharp expertise... There will be many highly qualified, well paid jobs which will be soon threatened by uberisation and M. Landier warns: this creative destruction shumpeterian process, which he likes, will lead to replace well paid jobs by others more precarious and less well paid. He cited with some relish the polytechniciens in their fifties who populates the staffs of large companies who will be threatened.

In praise of salarymen (and women)

At this idyllic description of the uberisation, Olivier Passet objects that Uber non-employees give to Uber not only their work, for a fallacious freedom (Uber selects those who work the most, unilaterally imposes reductions of tariffs, etc.) but  also give Uber their capital (their car, maintenance...)…for nothing.  Above all, companies like Uber are “clandestine passengers”, parasites, for they profit from a number of externalities (social protection, training, infrastructure etc.) that they do not finance.  This system is not viable. A business is something other than a pile of relations between internal customers /suppliers, but a complete system of collaboration. Uberisation results in the death of business and of society. Using the example of the Polytechninas in their fifties, Mr. Passet underlines how much the experience, networks, skills, knowledge, the habits they acquired in large companies is profitable to young start-up that would have been in trouble to acquire them in a uberised world.
Mr. Passet also embarked in a praise of the wage system in a very interesting text http://www.uberisation.org/fr/portfolio/Les-4-formes-de-la-fuite-salariale-lub%C3%A9risation-en-t%C3%AAte which an excerpt: ' '. Generalization of wage-earning pushed back all work “at the task”, archaic forms of employment relationship, under paid, under organized and under insured. It allowed also to roll back unpaid jobs unpaid in farms , in trade in particular,  and many women providing essential tasks without special status and right to retirement. Finally, it allowed to monetize a portion of domestic tasks by outsourcing. One of the main cause of the post-war growth has been the eradication of “black or grey “ work by wage work, inserted into the economic circuit and greatly expanding the base of opportunities. ».

The ultra-liberal horizon - egality in insecurity

Listening to Mr. Landier, it seems that these economists who have never worked in a business do not know how it works, and that the only future they offer is more equal, yes, but equal in poverty and de-skilling,  in brief the contrary of a knowledge-based society and a highly qualified industry. However, he mentioned an interesting data: unemployment among young people is distributed very unequally and hits little graduates and very massively non-graduates; and those ones  are  not employed or employable by companies like Uber. The Uberisation is not a solution to unemployment; it comes more from the failure of the french education system and learning. The youth unemployment figures are the subject of recurring manipulations for blaming employees and get them to consent to the sacrifices for "the youth"; in fact , the high unemployment figure is calculated only for young people without education and does not include those who are studying.
Another note: new technologies, computer science, automation... Twenty years ago, the first reaction was: ' super, we will be able to reduce working time. Today is "help, my job is threatened." As would say Houellebecq, something went wrong! We would like to know what, and this has not been discussed: explosion of inequality, confiscation of the productivity gains by a small minority, financiarization of the economy at the expense of industries?

Realities and myths of the pseudo-independent jobs

Philippe Askenazy challenged the increase in self-employed jobs Uber type, noting that there was no such rise in the US, where the economy has recovered and unemployment almost reduced to a minimum level. For him, the development of this type of allegedly independent employment is linked to the deep crisis and unemployment in some European countries, including France, and not due to a genuine appetite for those jobs. He also stressed that the contracts of employment and the way in which they are legally qualified depend on legislation of each country and particularly the notion of subordination, linked to the employment contract; in some countries, the actual subordination (a single payer, no real possibility to organize and to refuse contracts...) Uber type contracts type would qualify as salaried jobs, in others not. Thus, the number of Uber type contracts depends on an important legislative bias. He also remarked that these pseudo self-employment also respond to a certain ideology that well would see the abolition of employers; in the absence of boss, no employer responsibilities (only royalties !) and in the absence of employees, no wage claims. Miracle !. The evaporation of bosses, a true ultra – liberal dream ?
In addition, the attrition of the salary base reduces the corrective capacity of  taxation and social protection, placing them in a financial constraint. Über jobs do not contribute to social security, they kill it; they do not contribute to taxation, yet they benefit from the infrastructure and the organisation of society. These forms of work create of significant leakage into the economic circuit, and high opacity in the identification of value creation (Olivier Passet). The sustainability of our social insurance system, health, unemployment etc. is highly threatened, and  as Philippe Askenazy stressed,  we should not be surprised that the lobby of private insurance pushes very strongly to the development of these false self-employment and defends a legislative and fiscal framework that is supportive.
Monique Dagnaud , sociologist and member of the Haut Conseil de l’Audiovisuel from 1991 to 1999, specialist of rave parties, conducted a survey which showed the immense happiness of these young people, often graduates,  to create their own non-salaried job, boss of their own start-ups (possibly several) and multi-consultants in various structures. It is to wonder if she has not abused of substances too present in raves and if she has not confused speech of self-justification or reinsurance with reality; because it seems to me that for many, they would have preferred a recruitment in the research services of a large company, which would have allowed them to focus in their activity instead of frantically seek financing and this would  have been a better benefit for them, for the development of a knowledge-based society, much talked about and everyday farther.

What is a company?

It is also quite strange that a sociologist  no more raises the question of the characterization of a company. Back to the founder of the discipline, Auguste Comte, one might be surprised by these sociologists who "much exaggerate the importance of the individual and ignore “collective beings” as representing anything real”. From a positivist standpoint, one could characterize a company as a collective being whose goal is to achieve the best, most effective possible reconciliation between two trends always growing and complementary, the specialization of functions and the coordination of efforts; and to promote cooperation of individuals. Then the question arises: can the Uber type job  organization accomplish these tasks better than a  company and its employees? I do not believe.



mardi 24 mars 2015

Monopoly is virtuous, efficient, good for innovation


The purpose of this article is to discuss the prevailing view that the priorities accorded to the preservation of free and undistorted competition and sanctions against monopolies, even dismantling, and  priority to  low prices for consumers are innovation-friendly policies. It seems even that it endangers the durability and the existence of ecosystems fostering innovation. On the contrary, we regard a policy to allow monopolies operate freely and enjoy benefits that they have been able to conquer legitimately as advantageous for innovation and sustainability, and for consumers themselves as a last resort.

(1) There is a well established link  between monopoly and innovation, and this link has been universally recognized ;  it is the very principle of the patent. It would certainly be interesting to look at the historical controversies, for example between James Watt, favourable to patent system, and Rumford, who was against, but the mass is said, now universal: the monopoly granted by a patent is considered to be the most effective and legitimate way to reward and encourage innovation.
(2) Schumpeter considered that  monopoly rent seeking is one of the most powerful reasons to start a company ;  logics applying even in economy, it follows that one of the best ways to discourage innovation is no doubt dismantling or sanction monopolies that were built on research, daring and ventured funding of research and development, on an innovative vision of our needs and the evolution of our societies.
(3) the most consistent economic liberals, such as the followers of Hayek show themselves logically very suspicious towards any intervention of states and even more of super-etatic structures to dismantle monopolies. From their point of view, if a monopoly survives, there are reasons for this. When monopoly position is based on a breaking invention which results of years of research (scientific barrier), the mastery of a unique technology and the investment it took to develop it (technological barrier), the futuristic vision of a leader or leadership group, it is probably fair that those who participated in this adventure derive significant benefits. Either a monopoly effectively meets some needs, or it will disappear.
4) Schumpeter has described two schemes for innovation ; we usually consider  creative destruction” , but he had also theorized  creative accumulation”. For Schumpeter, the "entrepreneurial" regime is characterized by 'fluid' industries, with low barriers to entry; the process of creative destruction here plays an important role; creative accumulation is characterized by barriers to the entry of competitors and the cumulative knowledge generated in a "routine" process within the departments of R & D by large firms.
In a presentation somewhat analogous and newer, the Economist and Nobel Prize winner 2014 Jean Tirole (cf theory of industrial organization, Economica, 1993) opposed the effect of replacement to the effect of efficiency; in this second case, when a firm invests, it still faces competition and profit lower than those of a monopoly. Innovation is less profitable for the firm in a strong competitive environment.
(5) The monopoly is the only structure to allow sufficient profits to continue to be able to finance fundamental research and innovations of rupture.
(6) Everywhere, at all times and in all places, the opening up to competition has meant less money for research; and when it exists, incremental innovations are favored over brekthrouh innovations. There are now thousands of examples to suggest that practically every time, the opening to competition means that money is taken from research budgets to go to communications agencies and advertising.
7)  Comparing what were Bell Labs with the discovery of cosmological noise by future Nobel Penzias and Wilson, and also the discovery of the transistor, of the UNIX language, of CCD cameras with their successors. Bell Labs were sacrificed on the altar of the cult of free and non-distorted competition, dismembered in several Baby Bells that have not marked and likely will not mark the history of science and technology.
In IBM laboratories have been notably invented the Fortran language, the RISC architecture, relational databases... Gerd Binnig and Heinrich Rohrer in 1981, invented the scanning tunnelling microscope, with huge applications from  electronics to biology, for which they received the Nobel Prize. In 1986, Johannes Bednorz and Karl Müller have discovered a new type of superconductivity at a temperature of 35 K: two other Nobel Prize for IBM. I do not have the impression that the anti-trust actions against IBM and the intensification of competition will maintain this research level.
In the field of the pharmaceutical industry, where basic research was widely supported by the industry, increased competition, including by the introduction of generics, supported by the states - and which is a kind of disregard for the patent system - has led to a collapse of therapeutic innovation, to disengagement from research that it more and more outsourced, and finally the end of the machine to invent drugs that the Pharma have been  for more than fifty years.
In fact, the dismantling of monopolies has, in many cases, favored the emergence of firms who, with respect to innovation, lived in a parasitic way at the expense of the monopolies.
(8) The monopoly does not have to worry too much about  investors, it is less prone to short trem stock market strategies, it is less subject to competition by price, therefor, the monopoly can grant to its employees, in particular researchers, better wages and working conditions – always better to work with happy people. More specifically for research, it may conduct basic research programs, look for breaking through innovations and attract the best researchers, giving them means and time required.
(9) This is quite understandable. The main concern has the leader of a monopoly, each morning, arriving at his work is the following: What  appeared yesterday in the vast world which could threaten my monopoly? For this same reason, the monopoly doesn't neglect, contrary to what is sometimes claimed, its customers, and will devote time to understand and anticipate needs, developments, alternative strategies that might threaten its monopoly. If it does not, there is little chance that it will remain a monopoly.
An often heard argument is that if monopoly has the motivation and the means to conduct an intense technology watch and identify the breaking innovations that might threaten it, it is not necessarily very motivated to put them into practice and could delay innovations. By doing so, it would take a great risk ;  and patent system include sanctions for penalizing obstruction tactics, which can go to compulsory licenses. They could be used more often; it is easy to remedy disadvantages of this type.
As a summary, the priority given, in particular by the European Union, to the the fight against monopolies seems to endanger sustainability and the existence of ecosystems fostering innovation. This policy is neither fair, nor efficient, nor to ensure the sustainable progress that we need, as much as in the past. One tragic example was the french aluminium industry collapse, when the European Commission stopped the Pechiney/Alcan merge.
  The school of Economics of Toulouse : I had the opportunity to discuss twice this subject with prominent members of the Toulouse School of economics. Once, I was told that creative accumulation of Schumpeter was a period where he was going through a severe depression...A second time, that of course, if innovation is represented according to the intensity of competition, it got an inverted U-shaped curve..., but that almost always, one was on the side where the competition had a beneficial effect on innovation (?, without any indication on the parameters characterizing the position of maximum ?); but more recently, Paul Seabright (e.g.Le Monde 28/01/2013) noticed a slowdown in innovation, particularly for the pharmaceutical industry. The revelation in the cassoulet?