Who Pays for Job Destruction?

Welcome to This Week’s Leyendecker View

Live truth instead of professing it.
– Elbert Hubbard

FAVORITE READS OF THE WEEK

The race to make designer babies
It’s just a matter of time.

What’s Putin really up to?
A worthwhile and thorough perspective.

The world says “quit,” but I’m not done yet
In case you don’t understand retirement.

THINKING OUT LOUD

Who Pays for Job Destruction?
What can we learn from history?

In a recent essay, The Luddite Prophecy, I suggested there’s been a disconnect between innovation that has destroyed jobs and the new jobs created to replace them. The manufacturing-to-information-technology revolution may have finally proven the Luddite prophecy true: Not all innovation creates more jobs than it destroys.

In 1900, about 40% of the US workforce was employed in agriculture. By 2000, this number had fallen to just 2% to 3%. Workers had moved from the farm to the factory.

Innovation led not just to a reduction in agriculture employment, but it also created significant agricultural output gains. According to my AI assistant, Claude, US agricultural output increased 4 to 5 times from 1900 to 2000.

As workers moved from farms to factories, they earned greater wages, which gave workers more discretionary money, which inspired the development of our modern and increasingly urban world, which led to more factories, more workers and more wages. A self-reinforcing economic cycle had been born.

Manufacturing jobs in the US peaked at around 19.4 million jobs in 1979. It was around this time that we began outsourcing jobs to cheaper labor markets across the world. By 2020, the number of US manufacturing jobs had fallen to roughly 12.8 million. Yet during this same period, US manufacturing output roughly doubled when adjusted for inflation.

The collision of technology and free trade uncorked huge productivity gains. The benefits seem to have fallen into investors’ pockets, not into workers’, as wages have stagnated for 20 years.

Technologies that enabled instantaneous and cheap global communication allowed labor-intensive production—like autos, home appliances, clothing and other consumables—to be outsourced to cheaper labor markets. Another category of technologies automated all manner of inputs, driving domestic growth in low-labor intensive production like refining, chemicals, LNG, and semiconductor chip-making.

The rapid expansion of free trade unleashed in the late 1970s boosted the exporting of labor-intensive jobs. The savings from hiring overseas were so great that they more than made up for shipping costs of goods produced in China and other cheap labor markets to the US.

To recap: First innovation reduced the number of agriculture jobs and replaced them with more and more manufacturing jobs. Then innovation reduced domestic manufacturing jobs, but it did not replace them. So what kinds of new jobs have been created since the US lost manufacturing jobs? Service jobs.

According to the Bureau of Labor Statistics, in 1980, service jobs represented 71% of total employment. In 2024, service jobs had swelled to 84% of total employment.

Is it reasonable to assume that all the tech innovations of the late 20th century grew service jobs? Not likely. My Luddite prophecy theory suggests that the explosion of service jobs was not a direct “benefit” of technology and innovation. Rather, it was highly influenced by the steady growth of fiscal and monetary stimulus, which has now put the country in a potential debt trap. Total federal government debt just passed $37 billion.

So the question is: If the information technology revolution of the last 40 years did not create more jobs than it destroyed and was not the primary catalyst of the service jobs boom, then what can we expect from AI?

The Wall Street Journal just published an article suggesting that the long-revered global consulting firm, McKinsey, may be losing its relevance because of AI. And now McKinsey is scrambling to stay relevant. This seems like a giant canary in the coal mine for what AI is about to do to high-paying service jobs.

AI has started reducing the number of jobs needed in professional services sectors—from advertising to accounting to finance to legal and to consulting. All these jobs pertain to managing, analyzing and reporting information—all work that rapidly improving AI tools can do in a fraction of the time it takes humans to do. 

The AI leaders know this. It’s why many say we will need universal basic income (UBI) to support people who suddenly find themselves adrift in an economy that, until very recently, once valued their skills. But, in a way, haven’t we already been issuing a kind of UBI? Since the information technology revolution did not create more jobs than it destroyed, the government has been propping up service industries with ever more fiscal and monetary stimulus that produced ever more government debt.

We have gone from 33% debt to GDP in 1980 to 120% debt to GDP today. What’s our financial future going to look like if our federal government doesn’t significantly raise new revenue? Is Team Trump’s new deal for the government to get a royalty from Nvidia and AMD for chips they sell to China a sneaky way of increasing taxes on the technology companies driving job destruction?

If my Luddite prophecy is correct, then either taxes have to be raised to support those whose livelihood is materially affected, government costs must fall significantly, or both. Or we may need an entirely new economic system. Given our circumstances, it should be no surprise that socialism is sounding ever more appealing to a good number of US voters.

THE RANDOMS

Amazon shared that there are over 10,000 English language books available with the word “diet” in the title or description. A 91-year-old neighbor and friend recently gave me the only diet advice anyone needs: Consume fewer calories, and burn more calories. Now why are there 10,000+ diet books on the market?

How is it that collecting government data today is fraught with challenge? That American Express can dependably process 5,000 transactions per second says our government isn’t using the most advanced technology tools.

Angst seems to drive lots of artists and musicians. Maybe it’s a childhood trauma. Maybe it’s a difficult family. Maybe it’s intellectual insecurity. Whatever it is, angst seems to be fuel for creatives.

One hundred years ago, people learned about what was going on in the country a week or more after something happened. Today, we learn about what is going on in the country and in the world seconds after something happens. Does this mean we’re better informed and more capable of making better judgments of the news than we were 100 years ago? Or have we all become totally reactionary rather than contemplative?

What in our world has become simpler? What has become more complicated? How is the math between the simple and the complicated adding up? Is it improving our lives?

ECONOMIC NEWS

Economy

The cardboard box economic indicator
A breakdown of July’s inflation
US consumption depends on the rich
Is a restaurant apocalypse coming?

Labor

Job market blues for male college grads
How to be an emotional leader
How many people are laid off each month?
Labor is going on offense again

BUSINESS

Finance

Fanny and Freddie IPOs may be coming
Foreign investors go big on US
Foreign ownership of US stocks, WHOA!
Student loan defaults are exploding
Earnings downgrades gaining momentum

Real Estate

Rural Europe could have bargain homes
One-third+ of homeowners will never sell
Where homeowners are spending big

Tech

Will Team Trump invest in Intel?
Apple thinks we need way more technology
Smartphones are ruining our brains
Coders are an AI casualty
AI green tech is an investor darling

AI

ChatGPT-5 users say it sucks
Meta’s consumer AI app flops
LLM hallucinations aren’t going away
AI is creating lots of new billionaires

Energy Transition

Ford stays committed to EVs
CA governor embraces Big Oil
Mexico wants to increase production via fracking
Utility scale battery storage up 15X

THE NATION

The Washing-Tone

Trump takes over DC’s police force
Team Trump taking more control of economy
Trump to appoint a Democrat to energy post
US to get royalty on chip sales to China
Too bad China now doesn’t want to use them
Could more export taxes be coming?

Tariffs

Here’s who’s paying tariffs
GE Appliances plans US plant expansion
US and China still negotiating
Beat tariffs: Recycle your beer cans
Samsung to build iPhone chips in Austin

Social Trends

America’s mobility is stalling
Detroit, back from the dead
Its mayor has left the Democrat party
Sleep-away camps for grown ups
US drinking rate at a new low

GEOPOLITICS

Global

Sudan’s famine enters dangerous new phase
Bolivia experiencing a real gold rush
Trouble brewing in Serbia
Romania is on the brink of collapse
Trump brokers a peace deal
Russia building Kazakhstan a nuclear plant

Europe

France has a growing debt problem
Italians prefer dogs over kids
China plays tit-for-tat with Europe
Germans not happy with their government
The Netherlands has a bomb problem

Ukraine

Let the negotiations begin!
Why India can’t quit Russia
Ukraine hits another Russian refinery

Middle East

Israel prepares to “finish the job”
The other Iran-Israel war
Israel’s plan for Gaza

China

China hosts humanoid robotics “Olympics”
China tries to boost consumption
China going big on hydropower
China’s stolen mineral wealth
China limiting minerals to Western defense companies

War Creep

South Korea has a soldier problem
Drone war defense strategies on the rise
Germany prepares for big military buildup

MAKING A BETTER YOU

Mind
Get more quiet time.

How to be better at things instantly
It’s okay to feel uncertainty
Daydream if you want to be more creative

Body
Get more outside time.

Were Americans ever healthy?
Psychedelic nasal spray may be coming
Common super foods for you

FUN STUFF

Let your hair down, baby! Even if you’re all alone.

The Extraordinary

The oldest living land animal
Three-person IVF babies
40 quintillion, the number of black holes we’ve found

Music That Found Us

Marcus King, “Workin’ Man Blues”
Check out 9 years olds covering King
“The Subway” by Chappell Roan.
Jeff Daniels live

Worth a Watch

Spike Lee’s Highest 2 Lowest.
Americana, a modern Western.
Stolen: Heist of the Century documentary.
The charming documentary, Folktales.

The Yum Yums

Seven ways to make morning toast
One-pan fish roasted with tomatoes
Top food trucks in the country

PARTING THOUGHTS

In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists.
– Eric Hoffer

IN CASE YOU MISSED IT

Will US Tariffs Save Globalization?
August 8, 2025

Headhunter’s Secrets: Why Use Recruiters
July 30, 2025

The Luddite Prophecy
July 25, 2025