Robots Or Robber Barons? What If The Answer Is Both And Neither?

from the efficiency-lags-change dept

For reasons that I do not fully understand, Paul Krugman is a name that gets people really worked up for often irrational reasons -- mostly having to do with red team / blue team political arguments that have little bearing on actual economics. My personal preference is to ignore the whole somewhat meaningless "left/right" dichotomy (no matter where a particular economist is normally associated) and focus on the actual economics being discussed. And, recently, Krugman has been doing some deep thinking on what he's referred to as the question of robots or robber barons. The issue may be a little deep in the weeds for folks who aren't econgeeks, but it is both really interesting and really important to think through.

The short version -- hopefully translated sufficiently via my "econgeek to normal people" translator -- is that there are economic metrics out there suggesting that things should be much better than they are: in particular, companies are making massive profits. But, at the same time, wages are not showing any sort of increase. Krugman uses this graph to demonstrate the point:
As the graphic shows, as a percentage, wages ("labor") have been dropping. If the output is not going to wages, where is it going? Krugman uses the term "capital," which, basically (in this case), just means return on investment for assets: that is, if you own stuff, you're getting a return on it, which is going into your pockets rather than to people doing work. Of course, when you look just at percentages of a single factor, things can quickly get misleading -- and at least some have suggested that looking at just the percentage going to labor may be exaggerated by a hidden third factor, such as land. While using terms like "labor" and "capital" are standard in economics, I find that they actually can distort the conversation (and even Krugman notes that some of the discussion veers into what sounds like "Marxist" discussions on "capital" and "labor").

A simpler and perhaps more useful way of looking at things is: Where is the money going and how is it spent? And, as it stands now, over the past ten years, the amount of money going to wages, as a percentage of money being made, has been going down. So what's it all mean? Krugman has two theories -- both of which may actually be true to varying degrees.
  • Robots: The idea here is that automation has meant fewer jobs, and thus has held down wages and kept the supply of workers high. This is an old argument, of course, but perhaps one worth thinking about. We'll discuss it more below.
  • Robber barons: That is, monopolists. The argument here is that when you see an aggregation of wealth to "capital," it suggests that the free market is somehow "stuck," and one possible reason is that the "owners of capital" have effectively created monopolies, allowing them to retain more than a free market might allow, via monopoly rents.
If you think both of those suggestions sound somewhat anachronistic, you're not wrong. Both of those possible arguments sound quite similar to the complaints people made a century or so ago. And, as with that situation, I'd argue that the two explanations that Krugman puts forth may both have some element of truth, but also may not tell the whole story by a long shot.

Let's start with the robots. For years, many have suggested that greater productivity from automation leads to lower demand for human employees, thus creating less demand for workers -- leading to lower salaries, high unemployment and all that jazz. Many people (myself included) have often used the term "luddites" for this, after the original followers of Ned Ludd, who believed that the industrial revolution was destroying jobs, leading to the "Luddites" smashing machines. The term is used pejoratively, because the original Luddites, for the most part, weren't just wrong but were ridiculously wrong. Far from destroying jobs, automation eventually created many new jobs.

And, instinctively, I have the same reaction to the argument when put forth here. We've heard this claim for so long, that greater productivity leads to fewer jobs -- but in practice it has never come true. It has, certainly, meant that there has been job displacement, and potentially a shift in job skills requirements -- which can be very difficult for those whose skills are no longer relevant. But, in the longer term, such automation has always created more jobs.

Does that necessarily mean that this shall always be the case? Not necessarily, but I'd argue that the long history of it being true suggests that you would need very, very strong evidence to back up the claim this time around -- and I'm not convinced we've seen that. Of course, playing devil's advocate to myself, I can see one plausible argument that someone could make (even if I don't think it's true): automation in physical work increased demands for jobs in other sectors -- such as services and information processing (desk jobs). But the information age revolution has now started to automate many of those jobs as well, and it's not clear where we move along the spectrum from there. That is, as the argument goes, that new jobs have always been created further along the spectrum from manual labor to services to information processing, but we've more or less hit the end of the line.

I find this difficult to believe for a few reasons. First, the same argument was made in the past every time some new fears about automation came along. And every time it turned out that there were new job opportunities. I can't see that changing now. At all. If it becomes true that labor is really increasingly available or cheap, that will create all sorts of new opportunities to make use of it. The news that Apple is going to start making some computers in the US is just a small indication of that possibility coming true. And, yes, even if they're using a robot-centric process, they're still creating domestic jobs. But, further on that, there's tremendous opportunity coming out of disruptive innovation to create new jobs where none really existed previously. The number of people making a living by selling goods on things like eBay, Etsy or Amazon is astounding. Even newer tools like Kickstarter and Indiegogo are creating additional possibilities, and we write about all sorts of interesting business models all the time -- creating new opportunities. Similarly, we've seen things like distributed call center services, such that people can work from home and be productive. In fact, this could help explain some aspects of wage decline, as some people, who might have formerly not been in the workforce at all, can now work part time from home.

But, of course, job displacement is messy, and figuring out where the new job opportunities are, and how they apply on a wider scale, is not a smooth process at all. It takes time to work out the kinks -- and that could explain the lag in wages. It could simply be the dip in efficiency as we enter that chaotic period of experimentation and attempts at new things before it becomes more clear where the new job opportunities will be.

The "robber baron" argument makes a lot more sense to me -- and it even appears that Krugman may be leaning bit more that way, after hearing from some other economists:
Barry Lynn and Philip Longman have argued that we're seeing a rapid rise in market concentration and market power. The thing about market power is that it could simultaneously raise the average rents to capital and reduce the return on investment as perceived by corporations, which would now take into account the negative effects of capacity growth on their markups. So a rising-monopoly-power story would be one way to resolve the seeming paradox of rapidly rising profits and low real interest rates.
Of course, I think that the use of the term "robber barons" is potentially misleading as well. This isn't necessarily a case of the Andrew Carnegies, JD Rockefellers, JP Morgans and Cornelius Vanderbilts of old. Instead, it often seems that what we're dealing with are less super greedy "robber barons" (and yes, I know some people will point to examples that suggest otherwise -- especially on Wall Street) and more of a fight against innovation. This goes back to my recent discussion on corruption laundering, in which companies are able to secure favorable regulations that actually help them against disruptive upstarts by arguing that allowing the upstarts will harm "jobs" or will upset the economic apple cart.

In the end, that leads me to wonder if what we're really seeing is a third thing, which can account for both the "robots" and "robber barons" story lines and tie back to that corruption laundering situation: the rise of what Andy Kessler has referred to as political entrepreneurs vs. market entrepreneurs. In that scenario, you have companies who aren't quite robber barons, but are adept at using the political system to engage in a form of "corruption laundering" to put in place regulations that limit true competition and the kind of innovation that helps to speed up the creation of new jobs.

In some sense, we've discussed this before, in noting that politicians often fear disruptive innovation because it "destroys jobs" even as it's creating new ones. So they pass regulations that hinder disruptive innovation, in an attempt to "protect jobs." But the end result is that the few larger players in the industry tend to suck up control of that industry and, as such, limit job growth (and begin to profit by being able to capture the monopoly rents). They can employ greater automation to suck more profits out of their own business, but also can hold back the disruptive innovation that creates new jobs.

So, in that scenario, you get higher profits and fewer jobs -- with increasing automation. But you're missing out on the important disruptive innovations that help create the new jobs. Part of the problem with the "robots" storyline from Krugman is that it assumes all technological advancement is equal: that big companies automating is the same thing as disruptive innovation that enables new jobs. I don't think that's true. Either way, these are certainly big and important questions worth thinking about and exploring.


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    Suzanne Lainson (profile), Dec 14th, 2012 @ 12:34pm

    The energy/climate question

    I've been following along with Krugman's discussions and the links that he points to.

    First of all, I believe we are in a transition as big as the Industrial Revolution, so it isn't just another business cycle that will be worked out eventually. And the big boost in productivity from the 19th century to the present was tied to energy. Right now we are beginning to recognize that even if we continue to find more fossil fuels, it may not be in the planet's best interests to burn them. But we don't seem to be making a transition to an alternative very quickly.

    So we have two big issues affecting employment: energy and changing economic systems. Yes, we can fully employ everyone, but that means perhaps letting everyone work a bit less and sharing the rewards of that increased productivity, which we haven't done. And from a resource point of view, we need to get away from making more stuff than people need or can afford to buy. (Also, another issue we will need to deal with is the tightening of fertilizer. Big ag may not be sustainable. Peak Phosphorus And Food Production.)

    Here's more about the evolution of economic systems.

    P2P Foundation -- Peer to peer and the feudal transition: "What I want to show now is how similar is the predicament of the current world-system. After 1989 and the fall of the centralized state socialisms, capitalism is now a global system, without any outside. While there are still wide areas of the world that could be more developed, it is hitting ecological, energy and natural resource limits. Already consuming two planets, it is an impossibility for China and India to achieve the same levels of the West, despite their very fast growth, as that would consume four planets. Maintaining an infinite growth system in a finite material world, is a logical and physical impossibility. What this means is that the limits of extensive development are being reached, just as happened with the Roman Empire. But surely, capitalism could switch to a mode of intensive development, becoming a cognitive, experience-based economy?"

     

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      Suzanne Lainson (profile), Dec 14th, 2012 @ 12:44pm

      Re: The energy/climate question

      In essence, some of us are challenging the idea that the world economy can be sustained on a concept of infinite growth. If anything, we probably should be downsizing, at least in advanced countries, but downsizing freaks out Wall Street and politicians. And downsizing isn't bad as long as everyone shares in it, rather than placing the burden on the middle and lower classes. The sharable movement at least acknowledges that we need to find ways to get by with less. And if we get by with less, we're not going to pay companies trying to sell us goods and services.

       

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        The Old Man in The Sea, Dec 14th, 2012 @ 3:26pm

        Re: Re: The energy/climate question

        The downsizing mantra.

        We don't want infinite growth, we want sustainable balanced growth. This means change and adaptability.

        Over many years, I have seen the downsizing mantra being used by politicians, accountants and other short term focussed ideologues. Instead of looking at the longer term situation, the short term gains and ROI are used. We then see enforcement being applied as the solution to infrastructure problems (that is legislative solutions instead of process and maintenance solutions).

        Again, the problems are extremely complicated and we look for simplistic solutions instead of the simple solutions that will fix the problems.

         

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          Suzanne Lainson (profile), Dec 14th, 2012 @ 3:43pm

          Re: Re: Re: The energy/climate question

          We don't want infinite growth, we want sustainable balanced growth. This means change and adaptability.

          That philosophy pretty much dictates my reading these days.

          Here's a good list of thinkers.

          The (En)Rich List : Celebrating a wealth of inspirational individuals whose collective contributions enrich paths to sustainable futures. The Top 100.

           

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          DCX2, Dec 14th, 2012 @ 7:58pm

          Re: Re: Re: The energy/climate question

          We don't want infinite growth, we want sustainable balanced growth

          There is no such thing. Growth that does not end is for all practical purposes infinite. When our government expects growth to continue at 3% year-over-year, that is not only infinite growth, that is exponential growth.

           

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        nasch (profile), Dec 14th, 2012 @ 7:59pm

        Re: Re: The energy/climate question

        In essence, some of us are challenging the idea that the world economy can be sustained on a concept of infinite growth.

        I wouldn't worry about that as long as we can solve the renewable energy problem. It's growth in pollution and non-renewable resources that has to stop. If we can continue growing economic activity and standard of living without killing our environment, we'll be fine. That's a big if.

         

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          Suzanne Lainson (profile), Dec 14th, 2012 @ 8:09pm

          Re: Re: Re: The energy/climate question

          I wouldn't worry about that as long as we can solve the renewable energy problem. It's growth in pollution and non-renewable resources that has to stop. If we can continue growing economic activity and standard of living without killing our environment, we'll be fine. That's a big if.

          Yes, I actually believe that, too. I think there is great abundance. It just needs to be distributed a bit better and we need to avoid killing the planet.

          Many Americans already have more things than they know what to do with and have room for, so we'd be fine if we had fewer possessions.

          We have an obesity problem in the US, so it isn't as if we don't have enough calories. We just don't have enough of the right kind of calories. I think the urban garden movement and converting lawns to gardens would allow us to fairly easily provide better foods for more people.

          And so on.

           

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      Suzanne Lainson (profile), Dec 14th, 2012 @ 1:45pm

      Re: The energy/climate question

      Stop and think about how this all works.

      We have a large group of scientists saying there is global warming, and it is caused by burning fossil fuels.

      The fossil fuel industry, not wanting to be disrupted, lobbies Washington to suppress an inconvenient science. So not only is Washington not addressing a problem, it isn't even supposed to know there is a problem.

      Consider how long the tobacco industry fought any research suggesting a link between cancer and smoking.

      So you can see how powerful industries have ways to control many aspects of society. They can pay researchers for studies that they want; they can pay to have killed the research they don't want; they can give donations to politicians they want in office; they can create media outlets that only put forth the stories they want covered and in ways they want them covered.

       

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        The Old Man in The Sea, Dec 14th, 2012 @ 4:06pm

        Re: Re: The energy/climate question

        Suzanne,

        The debate about whether or not we are experiencing anthropogenic climate change vs natural climate change vs no climate change is a human politically focussed debate.

        If one actually looks at the total energy equation for climate change, there is no model that has been fully vetted for accuracy. It doesn't matter what side of the debate you are on, there is very little actual science going on in the investigation of the natural/anthropogenic makeup of this debate.

        I have challenged both sides with some simple questions relating to predictions or otherwise of the models. None want to discuss because it would mean that their relevant political stance would have to be put aside. Their is plenty of evidence that change occurs, but no actual discussion on what is truly happening.

        From the seventies till now, I have seen dire predictions being forecast and no model actually producing relatively correct predictions.

        I am sorry to say that the entire topic is now so mired in political extremism that actual science has been forsaken.

        You talk about fossil fuel industry trying to suppress inconvenient truth. This done by both sides.

        In the past 100 years, it has been estimated that over 200 TCC devices have been designed for motor vehicles. These devices would have dramatically increased fuel economy in motor vehicles - but at the expense of greatly reduced profits for fossil fuel producers.

        It is not about inconvenient science, it is about stopping disruptive change to an industry.

        You talk about tobacco, the repression if you like of the link between cancer and smoking is actually minor compare to the revelations regarding genetic manipulation of the various tobacco plants to increase the addictiveness of the plant. In addition, the manufacturing processes use to create cigarettes introduces other harmful chemicals into the mix. By the way, I don't smoke, I don't like smoking around me and my own mother is now suffering the effects of long term smoking.

        Disruptive technologies and processes have always raised the ire of the then current controllers of industry. This site demonstrates examples of that all the time, from hundreds of years ago to now.

        It is not just powerful industries who want to do this, it is every group who wants to press their agenda forward (left or right).

        Those who gain political control will run their agendas through with no regard to the truth, only with their own standpoint.

        It doesn't matter what the subject is, copyright, climate change, health care, communications spectrum allocation, homosexual rights, drug legalisation, patents, abortion. All of these subjects engender political and economic extremism - somebody wants to ram their control of other down everyone elses throat without regard to the long term effects of their stance.

        All these areas have complicated scenarios and simplistic debates don't produce any real solutions.

        As I said previously, all of mankind needs to change the fundamentals but this won't happen by our own efforts.

         

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          DCX2, Dec 14th, 2012 @ 9:39pm

          Re: Re: Re: The energy/climate question

          It doesn't matter what side of the debate you are on, there is very little actual science going on in the investigation of the natural/anthropogenic makeup of this debate.

          I think perhaps you should investigate some articles on this topic written by scientists instead of journalists, because you may be surprised at the actual amount of science behind the natural/anthropogenic makeup of this debate. The explanation for the growing concentration CO2 in our atmosphere that is the most consistent with observations is the combustion of fossil fuels. For a powerful example, A brief examination of carbon ratios can help illuminate my point, but trust that there is a lot of science behind all this as well if you were truly inclined to verify the veracity of this argument.

          C14 (a Carbon atom with 8 neutrons) is unstable, with a half-life of almost 6000 years. However, C14 is also generated when cosmic rays hit nitrogen, so there is normally an equilibrium established and the ratio holds steady. Since the half-life is thousands of years, pretty much any C14 that happened to be absorbed by ancient plants and then turned into fossil fuels while locked beneath earth's crust will have next to zero C14 remaining. Should we start burning those old plants, they will release their C14-free carbon into the air, and we will disturb the equilibrium. This explanation is consistent with observations.

          But, you may say, what about volcanoes? Surely mother nature is mightier than us. Well, natural sources of carbon are not consistent with the declining C12/C13 ratio. Plants prefer C12 because it's lighter, so they have much lower concentrations of C13 than the atmosphere. Thus, when we burn ancient plants, we will release high concentrations of C12, which will disturb the C12/C13 ratio (and C14 too). Volcanoes do not have any physical mechanism for preferring C12 over C13, therefore that explanation is not consistent with observations.

          I respectfully request that you reconsider your claim that "there is very little actual science going on".

           

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            The Old Man in The sea, Dec 15th, 2012 @ 5:44am

            Re: Re: Re: Re: The energy/climate question

            Good evening DCX2.

            I have done my investigations through the scientists themselves as well as looking at what they are writing. There is much politics going on and not science - you don't get funded if you buck the standard model.

            I have seen a number of research papers which looked at direct experiments related to CO2 levels and the amount of heat retained. The experiments were conducted at an Australian university and the results at the time were publicly available. The results obtained were not what was expected. I'll leave it as homework to get a copy of the papers.

            The major problem with C14 dating and ratios of C14 to C12 is the baseline assumption that C14 production is constant over extended periods of time. This assumption is untested and cannot be tested for at least the next 10,000 years. As a first approximation it is assumed true, but if you rest on the assumption it is true, this is only belief and not properly determined as factual. Anything that gives rise to a higher or lower production rate will thence cause changes in the ratios.

            Thus the measured ratios can be changed by fossil fuel burning, by different production rates, etc.

            There are large numbers of scientists and other highly technical investigators who have disagreed with the anthropogenic causes. There are many who agree with the anthropogenic causes, We also have numbers who have moved from one camp to the other in both directions.

            Evidence assumed to match a particular model may if fact have nothing to do with the model.

            I have recently asked an expert about the computer models in use and about the public vetting of the code behind the models. I have yet to receive any response from the gentleman in question.

            One last comment, specialists in any area do have a tendency to disregard those who are not specialists in that area even though the questions being asked are quite valid and need to be investigated. I have seen this many time over the years in basically every area. I, myself, have had to have this particular point forcibly beaten through my skull. I have a technical (university) education involving engineering and science. I have had a long interest in keeping up with the general nature of research in a variety of the physical sciences. From what I have observed and the lack of reasoned response about specific topics I have raised with various scientists over years leads me to the opinion that science today is much more politically influenced than it should be. Most times there is no response, but occasionally, I have got back a response that is basically saying that I am an idiot and asking such questions is the sign of stupidity. The best answer I ever got back was that the questions raised were interesting and that he would get back to me, but nothing further has been received (that was five or more years ago).

            Hence, my comment in relation to there being little actual science going on.

            Finally thank you, your response has been much more reasoned and very pleasantly written than most of what I have got back over the years.

             

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          nasch (profile), Dec 15th, 2012 @ 8:51am

          Re: Re: Re: The energy/climate question

          In the past 100 years, it has been estimated that over 200 TCC devices have been designed for motor vehicles. These devices would have dramatically increased fuel economy in motor vehicles - but at the expense of greatly reduced profits for fossil fuel producers.

          From a quick Google search, it seems it would have also been at the expense of greatly increased noise and vibration. If there were a device that would drastically increase fuel economy with no substantial downside, it would be in use (unless the oil companies have it under patent). The competitive advantage of better fuel mileage in today's market is huge.

           

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      Old Man in The sea, Dec 14th, 2012 @ 3:17pm

      Re: The energy/climate question

      Suzanne,

      Energy is one of the factors affecting the entire system - it is the more effective use of the available energy that needs investigation. If one looks at the entire energy process in industrialisation, you will find that currently, we at looking at end user energy efficiency (low power light bulbs, high efficiency white goods, etc.). However, what is missing in most discussions is the amount of energy required in the industrial processes to manufacture their low energy devices. What becomes obvious is that more energy is required to produce the required low energy devices than can be saved by the use of such devices over their actual lifetimes.

      This comes back to economics and politics. Politically astute companies get onto to the energy efficiency bandwagon and bring out low energy device, but the costs involved are to make for as cheap as possible to maximise profits. MTBF rates go down, energy consumption for specialised chemicals and processes goes up, disposal costs goes up (at end of life).

      Remember, people, being people, have their own agendas and are generally wanting to look after themselves or their own above anyone else. It really doesn't matter what side of the debates you are on, the vast majority of people are not willing to look at the other side without a jaundiced eye.

      The problem is much more complicated than any of these simplistic discussions would indicate. All of mankind needs to be fundamentally changed for proper progress in all of this to proceed. However, we of ourselves cannot initiate such change - we are fundamentally incapable of this.

       

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        Suzanne Lainson (profile), Dec 14th, 2012 @ 3:34pm

        Re: Re: The energy/climate question

        The problem is much more complicated than any of these simplistic discussions would indicate. All of mankind needs to be fundamentally changed for proper progress in all of this to proceed. However, we of ourselves cannot initiate such change - we are fundamentally incapable of this.

        Very true. We aren't especially good at responding to threats that aren't immediate. We can be warned that something is coming, but that won't motivate us.

        The problem with climate change is that it may require a solution that starts now and requires a significant change of lifestyle among most world residents. We may not be capable of pulling it off, which means we'll be responding to natural disasters as they come. I suppose the upside of massive disruption is that if the world economy goes to hell, most people can't afford to live middle class lives. It could be back to subsistence living which would lower rates of growth and hopefully resource consumption.

        We haven't had a calamity that wipes out a big chunk of the world's population in centuries, but that doesn't mean it can't still happen.

        Here in Colorado we are simultaneously talking about fracking and declining water resources. So we want to take water, which is in short supply, to pump out more oil, which is polluting the world. If we behave like other living things, we'll keep trying to dominate our environment until we overdo it and we die off.

         

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          The Old Man in The Sea, Dec 14th, 2012 @ 5:08pm

          Re: Re: Re: The energy/climate question

          Suzanne,

          The problem with climate change is that we may not have any effect on it all, hence anything we implement is irrelevant to climate change mitigation. We just don't know.

          My own suspicion is that our efforts will further environmental poisoning but not do anything to change climate. Strange that this position may be.

          In this country, we have periodic droughts, fires, floods, cyclones and storms. In the short memories of many people, we are undergoing some very large climate effects (causing harm to many people in a variety of ways). What I find interesting, is that my youth, where I grew up, floods, cyclones and storms were the normal situation. We then had a long period of drought, which has given rise to massive fires in various parts of the country.

          I was discussing climate change with a truck driver (who was a part of the local state emergency services which is mostly volunteer) and he brought up some of the advanced training he was undertaking in relation to understanding the history of fires in the state. From information he was given, some 300 to 350 years ago, there was a large indigenous population in the lower are of the continent that was essentially wiped out by a massive fire that covered most of the state of Victoria and the bottom of New South Wales. Yet this is not common knowledge. How accurate this is, I don't know. For him, it certainly put in perspective of how easily it is for fires to sweep across Victoria, as we have seen in the last four decades.

          What I am trying to highlight, is that anthropogenic climate change may not be real and that anything we do to try and mitigate it may well be worthless and useless. In fact, the mitigation strategies may well end up causing more problems by their implementation. On the other hand, anthropogenic climate change may be a serious cause for concern, we just don't know.

          The political debate going on between both sides is not helping the science or the investigation one whit.

          We have a desal plant here in Victoria, built in the wrong place for the wrong reasons. Ostensibly, it was built to fix our dwindling water reserves. It cost a lot of money to build, it will cost a lot of money to run, which we the poor stiffs of this state will have to pay for. Politicians on both sides have rendered this burden on us.

          There were a couple of other proposals pout on the table, both could have been implemented for less than the cost of the deal plant and both would have had much lower ongoing energy requirements. Why they weren't chosen is not revealed. But we have had such rainfall levels that our reserves are now very high, well above what was here when I first came here nearly 30 years ago.

          This is an example of a solution being implemented that effectively was not required, but was essentially a political move. Go figure.

          Our circumstances change as the years go by, nothing stands still but we do see cycles appear and unfortunately we don't see history and so make monumental blunders.

          I like Techdirt because it occasionally shows some people making a difference because they know their history.

           

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            Suzanne Lainson (profile), Dec 14th, 2012 @ 5:34pm

            Re: Re: Re: Re: The energy/climate question

            The problem with climate change is that we may not have any effect on it all, hence anything we implement is irrelevant to climate change mitigation. We just don't know.

            A world economy built on fossil fuels has to change, whether or not one believes anything can be done about global warming. Easy oil is gone and what we are pumping out now costs more. We do have a glut of natural gas, but can't fully take advantage of it because most vehicles can't run on it. There's still a lot of coal, but it's relatively dirty and it doesn't run vehicles.

            What is good is that people are driving less. And some people are living in smaller, more energy efficient homes. Per capita energy consumption is likely to go down in the US and other developed countries. But if India, China, and others ramp up their per capita energy consumption, the economics (if not the pollution) are going to be felt globally. If US energy companies can sell to the highest bidder, prices will go up here. Which is fine by me. Higher prices mean we are forced to conserve.

            The economics of energy are going to change things, even if governments and environmentalists stay out of it. The faster we pump out the oil here in the US, the faster we go through it. I've been reading about the decline rates for fracked wells and they are very real. Industry insiders are saying that the glorious future of US oil is actually more hype than reality. Let's just say I expect the crunch to come before long, even if we "drill baby drill."

            In the course of human history, no world power has remained dominant. I think we're headed into some very tumultuous times.

             

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              The Old Man in The sea, Dec 15th, 2012 @ 6:26am

              Re: Re: Re: Re: Re: The energy/climate question

              Good evening Suzanne,

              Don't assume easy oil is gone, just because it is economical to look at alternatives doesn't mean that the easy sources are not available. I have been observing in a very general way that volumes available/produced/used since the oil troubles of the '70's. Many of the easy access sources available today are in the control of various governments that are not allies (in all the senses that would matter).

              This gives rise to economic /political realities that say we must have secured supplies.

              I look at my own country. If one looks at the actual uses of the various grades of fuel and the ratios of use between the various grades of fuel. One sort of notices that even with increasing use, the ratios are relatively stable. However, when one looks at the various reports generated for governments in relation to price regulation, much is made on the fact that we have to import petroleum products and hence we need to have price parity to the world markets. An implicit threat is made that if price parity is not undertaken, then the local reserves will be sold on the international market and any local fuel for automotive transport will go through the roof. So we get price parity.

              What happens next, we see price speculation on the international markets that cause the price to go up because OPEC reduces production or some group by up available product to cause market spike.

              This then makes local harder to get reserves to now be more economical. Or it makes expensive alternatives somewhat more viable. In relation to automotive vehicles (using octane/heptane mixes), I made a comment in an earlier comment about TCC devices. Such devices using non-modified fuels have made some very higher increases in efficiency. Depending on the style of device, the distance travelled per unit volume can increase from 2 to 10 times.

              My own investigations have indicated that the modern fuel delivery systems being used are a significant factor in not being able to increase fuel economy above current levels. This based on how the engine thermodynamically works. I have a number of projects that I may get to in the next couple of years to test out some of these devices. I also have some research done by others who have investigated why these devices stop working after a period of time and it is a function of the kinds of fuel we use today.

              Driving more or driving less is not the real problem but the efficiency of the fuel in our engines. if we are able to markedly increase the levels of efficiency that we automatically reduce fuel usage, our current supplies will last longer and pollutant production is reduced. Win/Win/Loss. The loss is in the profits made by the producers as people need less to do what they currently do.

              With the increasing technology found in our homes, even with more energy efficient homes, it will lead to more use of more efficient devices. Hence energy production will remain the same. Additionally, in the current environment, more energy is required to build the more efficient devices which I regret to say seem to have a smaller MTBF which will also increase the per capita use in the developed countries.

              Don't forget that every device we import from China and elsewhere, which has a high energy production value but a low energy usage value has to have its allocated production energy value added to our per capita energy usage. We can't ignore this because it was made outside of our respective countries. If we hadn't imported it, it would have been made locally and the equivalent would then have been allocated locally.

              I can't say anything the USA reserves, but I have noted that Australia "keeps discovering" new reserves every so often, which is what has kept our ratios fairly consistent since the 70's, even though our current usage is much much higher now than back then.

              Tumultuous times is a mild way of saying what is on its way. All the signs are there that we are ready for a major fall based on the historical record of many previous civilisations. But enough said on that.

              Keep well.

               

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                Suzanne Lainson (profile), Dec 15th, 2012 @ 9:17am

                Re: Re: Re: Re: Re: Re: The energy/climate question

                Don't assume easy oil is gone, just because it is economical to look at alternatives doesn't mean that the easy sources are not available. I have been observing in a very general way that volumes available/produced/used since the oil troubles of the '70's. Many of the easy access sources available today are in the control of various governments that are not allies (in all the senses that would matter).

                I understand the concept of price manipulation, but I have been reading lots on oil supply and can't find any indication that there is any easy oil yet to be tapped.

                The Canadian oil sands project is so awful in its environmental damage and is so hard turn those sands into usable oil that if there is easier oil available, someone is really manipulating the market to justify that.

                Similarly fracking that is coming to Colorado is going to turn populated areas into a pin cushion. If there is a cheaper, less disruptive way to get oil, someone should be doing it.

                In some respects it doesn't matter if easy oil isn't already gone, then, because we are embarking on very environmentally disruptive projects, so we are acting as if easy oil is going.

                Here's what is involved in getting oil out of Canadian sand. And then we need to build a pipeline across the US to get it to a refinery. It's ugly.

                The Scope Of The Alberta Oil Sands Must Be Seen To Be Believed - Business Insider

                 

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    Anonymous Coward, Dec 14th, 2012 @ 12:45pm

    Sales

    The problem with robots replacing jobs is that fewer people have money to buy the goods being made. If all production and Farming could be automated, the only people with money would be the owners of the production, and they would be producing more that they could sell to each other. Their may be a few service jobs left, but most of those could be carried out by robots.
    Similarly, exporting production of goods, eliminates jobs and therefore the ability to buy the goods. This can also be destructive of the producing countries, where the wages payed do not allow purchase of the goods being produced.
    Some of the modern woes, including the excesses of the stock market come from treating money as a valuable product in its own right, rather that representing the value of labor, and to a lessor extent goods.

     

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      Mike Masnick (profile), Dec 14th, 2012 @ 1:22pm

      Re: Sales

      The problem with robots replacing jobs is that fewer people have money to buy the goods being made.

      There's an implicit assumption there that there's a one-to-one replacement, and that the robots don't lead to new jobs.

      Similarly, exporting production of goods, eliminates jobs and therefore the ability to buy the goods.

      Similar assumption, which I do not believe has shown to be true.

       

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        Anonymous Coward, Dec 14th, 2012 @ 2:10pm

        Re: Re: Sales

        Take the use of robots to its extreme, where most mining, farming, production, transport and service jobs can be carried out by robots. In this scenario, from raw materials to delivered product is essentially carried out by robots, with a few support people to deal with design and programming.
        What other Jobs of value to the ultra rich, outside of medical service and entertainment are left for the majority of people? (robots would meet the defense needs).

         

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          crade (profile), Dec 14th, 2012 @ 4:03pm

          Re: Re: Re: Sales

          I have two answers to your extreme example.
          One is that unemployment shouldn't really matter if work is really not required to live comfortably as in your extreme example.

          the other is that if the goal of living comfortably is solved already, people will focus their attention on other goals. Curiosity (Exploration), Comfort (environment improvement, etc), Death (medical and enhancement), War or whatever people decide to pick up as their goals to work towards having solved the problems you list above satisfactorily already.

           

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            nasch (profile), Dec 14th, 2012 @ 8:02pm

            Re: Re: Re: Re: Sales

            One is that unemployment shouldn't really matter if work is really not required to live comfortably as in your extreme example.

            But if we maintain the US system where you only get resources by having a job to buy them, then in this ultra-automated future there will be two classes, the rich and the starving. In other words, a violent revolution.

            We would have to find a different way to allocate resources. Or a different way to have jobs, or something fundamentally different.

             

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        Michael Long (profile), Dec 14th, 2012 @ 2:23pm

        Re: Re: Sales

        "There's an implicit assumption there that there's a one-to-one replacement, and that the robots don't lead to new jobs."

        It stands to reason, does it not? After all, a company is not going to buy a robot that's less efficient than the worker it replaces.

        And yes, a worker might be needed to make the robot. But that's, say, ten man-days work for a set of workers to make a set of robots, and then five-ten man-YEARS of those robots replacing a given set of workers.

        The end result is that there's less work for people to do, and there's definitely less work available for the unskilled workers the robots replaced.

         

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          Anonymous Coward, Dec 15th, 2012 @ 9:45am

          Re: Re: Re: Sales

          It depends a lot on what the robot-makers use their money on. With more robots I also assume that food is not a significant economic burden.

          As long as the value of the money in the country is relatively the same, it is still a market driven world and with a lower cost on food and clothes the money will be used elsewhere.
          Maybe they use it on entertainment, maybe it is used on luxury items. Again something most people forget: The machines need some degree of upkeep, creating relatively low education level jobs.

          All in all I do not see robots in itself as something negative. I see them as something increasing the demand of luxury items at the cost of basic survival items.

          If you go full out libertarian dream with no income tax and high VAT, the internal trade in the country might make robots a worse idea since they are now a far more expensive part of the investment equation!

           

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      Anonymous Coward, Dec 14th, 2012 @ 1:26pm

      Re: Sales

      Dead wrong on both counts. Automation and producing goods where there is a comparative advantage to producing those goods are both increases in efficency which lead to higher wages, not lower. When the same number of workers can produce more goods there's more money, not less, to pay them. Next time leave the economics to people who know what the fuck they are talking about.

       

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        Michael Long (profile), Dec 14th, 2012 @ 2:12pm

        Re: Re: Sales

        "When the same number of workers can produce more goods there's more money, not less, to pay them."

        Brilliant analysis, but missing a rather crucial point. Yes, there's more money with which to pay them, but are they actually doing so?

        WalMart runs a highly efficient operation but is also notorious for paying extremely low wages. As a result, they're banking the money which could have gone to higher wages.

        Apple is producing iPhones and iPads in China, under the most "efficient" conditions possible, but again, the money is not going to the workers. Instead, Apple is heading towards having $200 billion dollars in the bank, in cash.

        So to restate your sentence correctly: Automation and producing goods where there is a comparative advantage to producing those goods are both increases in efficency which MAY lead to higher wages.

         

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          Suzanne Lainson (profile), Dec 14th, 2012 @ 2:24pm

          Re: Re: Re: Sales

          So to restate your sentence correctly: Automation and producing goods where there is a comparative advantage to producing those goods are both increases in efficency which MAY lead to higher wages.

          YES. That's the issue. The benefits of productivity aren't being passed around to most of society. In theory, we should all be working fewer hours now because it takes fewer manhours to product many things. But instead we have some people working long hours and others not working at all. And it isn't just a skills issue. We need people in childcare, elder care, and care of the disabled, but we don't want to pay people much to do these jobs.

          Companies and investors make more money when they figure out how to eliminate jobs, so that is their incentive. And as soon as it is possible to replace many of the high priced labor in Silicon Valley, those jobs will go, too. And if you are above the age of 40, getting retrained for new jobs there won't help. The companies will just hire the latest crop of smart kids from high school or college.

           

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            The Old Man in The Sea, Dec 14th, 2012 @ 4:34pm

            Re: Re: Re: Re: Sales

            Suzanne,

            When companies and investors focus on reducing jobs to increase profits they actually make less money. They may make increased profits in the short term, but in the long term they have cut off their source of innovation and knowledge.

            A part of my responsibilities (as I see them) is to automate out of existence work that does not need to be done by people. This frees up the people effected to do more relevant work that cannot be automated.

            When my eldest boy was looking at doing an apprenticeship, I did research to see what his future prospects would be. What I found was quite interesting.

            Skill artisans in every area (blue collar) have been disappearing for years. Cabinet makers, builders, mechanics, boilermakers, toolmakers, etc. Automation had been used to do various tasks in each of these areas. What came to light was that there were few new people coming into the relevant industries and as a consequence, there were fewer people able to do the more intricate and un-automatible tasks.

            Wages being offered were increasing for these necessary but increasingly rare skills. I look at the market I am in at the moment, we have a glut of people available for a relatively small number of jobs, companies are being very picky about who they will employ. If you can;t tick all the boxes, you don't get a look in. I have seen this same process occur a number of times in my industry, We have had a change in job availability due to downsizing. This will change, there will come a time when there are not enough people to fill the needed jobs.

            What people forget (on both sides) is that if you try to maximise your profits at the expense of the other side, you will in the long term fail. Success in business requires both side of the production equation working together for everyones good.

             

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              Suzanne Lainson (profile), Dec 14th, 2012 @ 4:55pm

              Re: Re: Re: Re: Re: Sales

              What came to light was that there were few new people coming into the relevant industries and as a consequence, there were fewer people able to do the more intricate and un-automatible tasks.

              There are a lot of caretaking jobs that don't yet lend themselves to automation. But we don't want to pay for them. I suppose nannies can make good money in some markets, but caretaking of the elderly isn't something a lot of families have the money to budget for. I suppose we will automate as many of those jobs as we can so that the elderly and disabled won't need as many human caretakers, but there are some duties that don't lend themselves to automation. And maybe someday we'll find health care solutions to reduce the need for more caretakers (both reducing disease/disabilities and also increasing tech resources to enable more people with limitations). It could take awhile, though.

              About a year ago I had a new revelation about Social Security. While most people think of it as payments to serve the retired, it occurred to me it was actually a family solution. If you are a young or middle aged worker and your parents have some money coming in so they aren't destitute, that frees you up to do jobs other than taking care of them. I think that is why we have SS and Medicare, but hardly anyone spins it as a family benefit rather than a retiree benefit.

               

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                The Old Man in The sea, Dec 15th, 2012 @ 6:40am

                Re: Re: Re: Re: Re: Re: Sales

                Good evening Suzanne,

                Don't mistake that these are caretaking jobs. These are highly skill jobs necessary for various facets of our civilisation to keep running and advancing. Just because one may consider care of children and the elderly as being menial/caretaking and may be filled by unskilled people doesn't in fact mean that these kinds of roles don't require highly skilled people who should be paid well.

                Unfortunately, our society has gone skew-if in relation to this. We have forgotten that there is great value in our previous generation and in next generation. This is just one of the areas that is an indication that our civilisation is ready to fall

                However, my point is that there are many functions (technical artisan based) that we are losing people from which are not able to be automated. The automated solutions in use in those areas are extremely limited and are unable to handle the commonly odd situations that need a highly skill individual to solve.

                Automation in and of itself can be a very useful tool for greater productivity and increasing the number of jobs now being able to be performed. But when used solely for a short term profit motive is self defeating.

                 

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        Anonymous Coward, Dec 15th, 2012 @ 4:08am

        Re: Re: Sales

        Increasing production efficiency only leads to higher production, and possibly higher wages, in an a market where demand outstrips supply. When supply and demand are approaching balance, prices have to be reduced to increase sales, and when supply and demand are in balance, the workforce is reduced because their is no market for higher production volumes. With a reduced requirement for workers, there is a downward pressure on wages.
        Where production efficiency is increasing in all industries, prices come down, because all producers are chasing the same buyers who have a limited amount of money to spend.
        Where sales volumes cannot be increased, the increasing efficiency leads to employing fewer worker, and where replacement jobs are few, this further depresses sales. This starts a death spiral, as increasing unemployment reduces sales, which reduces the need for workers..........

         

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    out_of_the_blue, Dec 14th, 2012 @ 12:47pm

    It's The Rich, Mike, who start and profit from the class war.

    "If wealth was the inevitable result of hard work and enterprise, every woman in Africa would be a millionaire. The claims that the ultra-rich 1% make for themselves – that they are possessed of unique intelligence or creativity or drive – are examples of the self-attribution fallacy."

    http://www.guardian.co.uk/commentisfree/2011/nov/07/one-per-cent-wealth-destroyers

     

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      Suzanne Lainson (profile), Dec 14th, 2012 @ 1:01pm

      Re: It's The Rich, Mike, who start and profit from the class war.

      Yes, when your customers have no money to spend, they don't buy from you, unless you convince them to go into debt, which then comes with its own set of problems.

      I used to think this reality would take down the rich and their companies. But now I have come to realize that they have so much money they are overspending on art, property, and so on, so if most of the rest of the world disappeared, they'd continue to live on their estates, have a few servants, and then just trade back and forth amongst themselves. Now with automation, they don't really need a huge army of workers to maintain their lifestyles. Unfortunately the "workers" of the world don't really have much leverage. Even if they organize revolutions, the wealthy can retreat behind walls and stay safe.

      Naomi Klein on Capitalism and Climate Change | BillMoyers.com: NAOMI KLEIN: ... "there's a privatization of response to disaster, where I think that wealthy people understand that, yes, we are going to see more and more storms. We live in a turbulent world. It's going to get even more turbulent. And they're planning. So you have, for instance private insurance companies now increasingly offer what they call a concierge service. The first company that was doing this was A.I.G. And in the midst of the California wildfires about six years ago, for the first time, you saw private firefighters showing up at people's homes, spraying them in fire retardant, so that when the flames came, this house would stay. ... After Hurricane Katrina a company in Florida saw a market opportunity. And they decided to offer a charter airline that would turn your hurricane into a luxury vacation. That was actually the slogan. They would let you know when a hurricane was headed for your area. They would pick you up in a limousine, drive you to the airport, and whisk you up. And they would make you five star hotel reservations at the destination of your choice. So, you know, why does a hurricane have to be bad news after all?"

       

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        nasch (profile), Dec 14th, 2012 @ 8:07pm

        Re: Re: It's The Rich, Mike, who start and profit from the class war.

        Unfortunately the "workers" of the world don't really have much leverage. Even if they organize revolutions, the wealthy can retreat behind walls and stay safe.

        If there are enough angry people who have nothing to lose and someone to blame, there is nowhere safe (on Earth) the rich will be able to hide. It is in the wealthy's best interest to keep the rest of society fed, clothed, and sheltered enough that storming the enclaves of the rich doesn't start looking like the best option. Unfortunately, it's in their best interest to keep them just barely that well cared for.

         

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    out_of_the_blue, Dec 14th, 2012 @ 12:48pm

    It's The Rich, Mike, who start and profit from the class war.

    "If wealth was the inevitable result of hard work and enterprise, every woman in Africa would be a millionaire. The claims that the ultra-rich 1% make for themselves – that they are possessed of unique intelligence or creativity or drive – are examples of the self-attribution fallacy."

    http://www.guardian.co.uk/commentisfree/2011/nov/07/one-per-cent-wealth-destroyers

     

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    CuiJinFu, Dec 14th, 2012 @ 1:09pm

    I'm assuming Krugman's chart is showing data only for the United States. If so, there's an obvious 3rd theory to consider...outsourcing. Over the last 20 years, globalization has effectively created a huge surplus of laborers as billions of Chinese and Indian workers have been given the opportunity compete with first world workers. Money that Americans spend now largely goes to increase the standard of living of foreign workers rather than their compatriots, and those foreign workers are not consuming nearly enough of our goods to balance that trade deficit. It seems obvious that this is a big contributor, and I find it odd that Krugman overlooks it.

     

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      Mike Masnick (profile), Dec 14th, 2012 @ 1:21pm

      Re:

      I'm assuming Krugman's chart is showing data only for the United States. If so, there's an obvious 3rd theory to consider...outsourcing.

      Interesting point, and definitely worth considering. Though, fwiw, it would also be interesting to look at how outsourcing has created additional new jobs in the US as well. I don't think it's as simple as some people have made it out to be.

       

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        Michael Long (profile), Dec 14th, 2012 @ 2:26pm

        Re: Re:

        The president of Foxconn has a huge pool of labor from which to draw, and even he has stated that he's going to put a million or so robots online in the next couple of years...

         

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          Suzanne Lainson (profile), Dec 14th, 2012 @ 2:44pm

          Re: Re: Re:

          The president of Foxconn has a huge pool of labor from which to draw, and even he has stated that he's going to put a million or so robots online in the next couple of years.

          Robots don't have the same issues as humans. They don't need breaks. You don't need to feed them. They don't get pregnant. They don't need to be protected from dangerous chemicals. They don't commit suicide (thus embarrassing you).

          We'll replace as many jobs as we can with robots. Unfortunately, robots aren't consumers, so as you eliminate workers, you eliminate markets for your products. Of course, if you are already rich, you don't need to be in business anymore anyway.

           

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        Colin Davidson (profile), Dec 14th, 2012 @ 3:56pm

        Re: Re:

        It's very easy to view the world with dismay, if you look at it through American lenses, but the simple fact is that but for the financial meltdown, which has nothing to do with Robots and little to do with Robber Barons (none, outside the financial industry), there would be more jobs Today than at any prior point in human history (indeed, we may have recovered to that point already), viewed world wide. One problem is that human population is growing, so it is perfectly possible for employment and unemployment to both grow at the same time.

        A particularly American issue is that the US government ran a "strong dollar" policy for three or four decades that only really broke down within the last two or three years. A strong dollar means adverse terms of trade, which means less manufacturing in the US, which means fewer manufacturing (and related services) jobs. I takes industry time to respond to changes in terms of trade, and the less imminent the threat of bankruptcy, the longer the time required. I wonder how much of the recent employment woes have been just accumulated costs of this overvalued currency phase.

        Another thing to remember is that the recent recession was atypical, in that it was caused by a financial meltdown. Such recessions typically take a lot longer for recovery to kick in and tend to be relatively jobless (consider Japan from the early nineties on, which has been basically stagnant for two decades).

        On the flip side, it does take time for displaced workers to find new fields and if the pace of automation is increasing, it could increases the long term rate of unemployment by increasing the "normal" number of temporarily unemployed and by increasing the average time it takes them to find new employment (as changing career takes longer than changing employer in the same field).

         

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          Anonymous Coward, Dec 15th, 2012 @ 2:04am

          Re: Re: Re:

          A significant contributor to the financial meltdown was robotics in the shape of computers which because of speed of analysis are used to increase the volume of trading and calculate derivatives to increase the volume of trading over the number of shares in trade. Also high speed trading makes for an unstable market, driven purely by robotic(computer) trading.

           

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      Anonymous Coward, Dec 14th, 2012 @ 1:31pm

      Re:

      Wrong. The vast majority of foreign investment by US companies serves foreign, not domestic demand.

       

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    Paul Brinker, Dec 14th, 2012 @ 1:12pm

    I am a robot programer

    I work in the programming field, every year I destroy countless jobs, not only in my own field, but every field I touch.

    Accounting is a vary basic example, 10 years ago you would find an accountant, pay him a few hundred, and get your return filed for you.

    Now you do it online for free.

    In corporate accounting it can be even worse. 10 Years ago I would have a full time bookkeeper, now I can hire an out of state super bookkeeper who does everything in a few hours and has 20 clients who each take a few hours a week.

    The point is that if a job requires a basic pattern, it can be automated. This means we need more bosses and less worker bees for a given project. At the same time the worker bees you do have need to be really well trained apart from a few min wage jobs that have had all thought process removed (burger flippers for example).

    Now comes capital requirements to get into most fields. Its true that in software this is more or less a non-issue, and we see huge growth and innovation in software because of this. But for physical things, like microchips, radio stations, and a whole host of other stuff, you need capital to get into the field. Sometimes the field is locked off due to a monopoly who has scale that you cant even break into the market.

    The end result is you end up with a 3 class system:
    The Poor and Untrained: This group has no skills that are relevant to the current market. They also lack capital to break into a market they may have skills in. This group is not useless, and can be trained, but there against a vary hard cliff of required skills to break into anything. This can be anything from a min wage worker to jobs that top out around 20 an hour. Jobs of this class can sometimes move into low level management.

    The Highly Educated: This group has skill enough to work for the capitalistic class. This group is actively recruited and earns a middle class wage. This is where your programmers and engineers live, as well as medical professions and other well payed jobs.

    The Capitalistic class: This group has money and/or resources. They own some means of making money or a way to collect rent. Since this group is shrinking (the .01%) they are the only ones with the resources to go into new business. This group feeds on the top levels of the Highly educated to make even more money because those highly educated sometimes like to break systems (Uber for example).

    My point is that if your a member of the first class, and most people are, then your effectively unable to do all that much. Those in the educated class have some power, because they have the means of disrupting the capitalistic class. Finally those with capital simply want to buy / destroy those who disrupt there current rent system.

     

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      crade (profile), Dec 14th, 2012 @ 3:52pm

      Re: I am a robot programer

      Becomming more efficient (robots) works the same way as it does on a smaller scale. If you are more efficient, you can do more in less time. This means you can either accomplish more, or work less. Your choice.

       

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        crade (profile), Dec 14th, 2012 @ 3:53pm

        Re: Re: I am a robot programer

        should be with less effort, since it isn't always about time :)

         

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        Suzanne Lainson (profile), Dec 14th, 2012 @ 4:11pm

        Re: Re: I am a robot programer

        If you are more efficient, you can do more in less time. This means you can either accomplish more, or work less. Your choice.

        If you have the choice. If you need the benefits that come with full employment and there are a limited number of full employment jobs, you may end up working more than you want.

        The health care system, tied to employment, and insurance companies being able to deny insurance for the self-employed with pre-existing conditions has forced people to take jobs they may not want.

        I think the maker movement and interest in self-sufficiency are attempts for people to control more of their own time. The more than they can detach from corporations, the more choices they may have.

        Which brings me back to my overall philosophy: the more people can get away from corporations, the better for them. When it was about economy of scale, corporations had value. As we find ways to eliminate the need for economy of scale, maybe we'll eliminate the corporations, too.

         

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    Suzanne Lainson (profile), Dec 14th, 2012 @ 1:28pm

    One possible revolution

    I suppose one way to bring down the very wealthy is to destroy their financial system. Since most of their wealth is on paper, if you eliminate the ways to record and transfer wealth, it doesn't really exist.

    Of course it would bring down a lot of other people, too, and there would be chaos, but I suppose some terrorists might decide to do it (presumably there would be backup systems so there would be adequate records, but if one figured out how to wipe out everything, it would be a mess). The doomsday scenario people are stockpiling food and water, just in case.

     

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      Paul Brinker, Dec 14th, 2012 @ 1:57pm

      Re: One possible revolution

      Not true: (Econ 201)

      If I become 10% more efficient at my job my direct wage can do 3 things based on the kind of employee I am.

      If I am an apple picker, paid based on lb of apples I pick, I earn more money.

      If I am salary I earn no additional money.

      If I am hourly I will earn less money. Since there is only so much total production required.

      This is true of almost any technology improvement in the short term. Its even more true if the 10% boost comes with out any additional skills being required. Thus depressing my wage in the long term. If more skill is required then my wage will go up in the long term.

      Of course I am dead in the long term as well.

       

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        Suzanne Lainson (profile), Dec 14th, 2012 @ 2:01pm

        Re: Re: One possible revolution

        If I am an apple picker, paid based on lb of apples I pick, I earn more money.

        Or you just expand supply and the money per apple that you make goes down.

        It's been happening for a long time for clothing. Machines allow people to make more clothing, so the pay per item goes down. At best they are treading water.

         

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        Beech, Dec 14th, 2012 @ 2:06pm

        Re: Re: One possible revolution

        True that. I am an hourly employee and have never understood why my company seems to be trying to be giving me incentive to do as little work for as much sweet overtime money as possible.

         

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          Anonymous Coward, Dec 16th, 2012 @ 9:14am

          Re: Re: Re: One possible revolution

          If your work is not as simple as apple picker, but say an engineer. The engineer is seldom responsible for the actual production and he is only moderately economically responsible for the project too. What incentives do you give him?

          I have seen/heard of more than a few worthless incentive structures. Lets take a leader of a section of a company. Some would give incentive for worker satisfaction or customer satisfaction. In that case it is often possible for the leader to give people hints to the need for a high score or even other direct incentives (legal or illegal). If it is a question of production speed, taking massive fines on worker safety is a good strategy. If it is a question of economy, cutting corners on maintenance is fine etc.
          Even combinations will be possible to abuse because of how they are weighed. Black box combinations are likely to be better, but the leader will then be extremely inflexible in how he runs things because he fears a lower incentive wage after changes.

           

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        Michael Long (profile), Dec 14th, 2012 @ 2:33pm

        Re: Re: One possible revolution

        Or, more likely, the supply and demand for apples is pretty much in equilibrium, in which case the more likely scenario is that with a 10% increase in per-worker productivity, the owner of the orchard fires 1 worker out of every 10.

         

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          Anonymous Coward, Dec 17th, 2012 @ 2:43am

          Re: Re: Re: One possible revolution

          Picking 10% more apples requires 10% more apple trees, which can come from buying out a small producer, and firing their staff.

           

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    Anonymous Coward, Dec 14th, 2012 @ 1:33pm

    I think there is a lot that has been mentioned that's relevant. So I'll try to keep it short to go through it

    The Industrial Age hit much the same way the Information Age hit, in its effects. Just before it hit, 20% of the national workforce was engaged in farming to produce the food for themselves as well as the nation. After tractors and equipment hit the farm, 2% were all that were needed for a workforce to produce the same amount of food. People in the rural areas sometimes took months to make it to the city where the jobs were now. But the factories weren't looking for farm labor as much as they were looking for mechanical aptitude. The majority didn't qualify for the jobs and the few that did were taken advantage of in serious ways. From company stores and company housing to being paid in company script instead of money, with long hours and low pay. That pay wasn't good outside of the company and if you got on the wrong side, suddenly you found yourself without a place to stay nor money to support yourself and your family. Very similar to today.

    Automation is something I saw at the workplace till the day it nailed me. For 13 years, I saw a 10% reduction in workforce every year. Nothing in the job requirements were ever reduced and wage did not increase in any meaningful manner other than for the senior management. Each year saw ever greater implementation of automation into the job. Those left with a job were expected to have the same turnout of work production as the years before. By the end of the 10th year, expectations of job performance had outstripped the ability of the employee to keep up and moral took a drastic hit. I doubt it is any better today.

    I too lean a lot towards the robber baron by looking at where the money went over the years. It didn't filter down to increase the wage. It moved upwards to senior management as they saved the corporations by cost cutting and merging.

    You can only mine a mine for so long before you run out of material or need reinvestment into the business to upgrade abilities. I sort of feel that even though it isn't wanted to be acknowledged at the bottom line for corporations, I believe we are seeing the result of that across the economy. As it continues it will get worse until jobs are found to employ the vast amounts of people that are now unemployed.

    You often hear the megacorp wanting more slots available for HB1. It isn't so much they need qualified people as not willing to put the money in it and down grade their expectations. Most companies don't want to put any time into training and again the majority have in cost cutting measures terminated the ability to train new employees. So expectations are for the worker to come in and be productive within the week and hence the lack of ability to hire "qualified" workers. Its a catch 22 as most jobs are unique in company requirements and expectations. Often unique in the terms of equipment as well. With out the training needed to teach a new worker the required methods and performance no workers are going to qualify.

     

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    Anonymous Coward, Dec 14th, 2012 @ 2:11pm

    There are basically two views of economics.

    Hegel to Marx to Keynes to Krugman which ultimately leads to Statism to Socialism to Authoritarian Monopolistic State Control.

    Or

    Adam Smith to Joseph Schumpeter/Friedrich von Hayek/Milton Friedman/Ludwig von Mises Which initially gave us Liberty Freedom and Representative Democracy.

    Along with Crony Capitalism, the first group is starting to gain to strong a foothold. This will lead to a worsening economic condition for the USA.

     

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      Anonymous Coward, Dec 15th, 2012 @ 11:04am

      Re:

      Jeez, you need to get out more.

      Keynes has far more in common with Adam Smith than Marx, who is basically not really an economist as much as a political philosopher. Krugman is a scientist having gone far outside of his field in some discussions, but really...

      As for the anarchistic libertarians. Well, they are what they are. They do not need science because they are that good. Hail the austrian school of illiteracy!

       

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    cosmicrat (profile), Dec 14th, 2012 @ 3:04pm

    Capitalism is outmoded

    Great discussion. I didn't realize so many techdirt followers were amateur economists but I guess I should have.

    One thing that hasn't been mentioned much is "reward for non-productive activity". Patent trolling is an example often discussed here, but the big kahuna by many orders of magnitude is derivatives trading and the like on by "Wall Street" and it's global analogues. The volume of trades on "synthetic financial instruments" is in the 10's of trillions any given year now. In normal economic activity, I produce a product (or service),and am paid a reasonable amount for it, so now there exists a tangible product in the world which fulfills a need. But Wall Street speculators never produce any tangible product of any use to anybody! They turn on their computer, push numbers around on a screen, and at the end of the day are rewarded with $20,000 (or $20 mil) more in their bank account. They didn't produce any product or service of any value to anyone, yet the economy still has to account for the money they are now holding. And the volume of this kind of activity is staggering. No economy could work with this kind of unproductive weight pushing down on it from the top.

    I also think, especially in terms of the U.S. economy, you are underestimating the impact of automation and outsourcing. We've shipped several tens of millions of relatively high wage factory jobs to Asia and Mexico in the last two decades, and the average factory still here employs significantly fewer workers because of automation. Population keeps going up, people retiring later, -how could we not have a high unemployment rate?

    Capitalism is obsolete

    "In theory, we should all be working fewer hours now because it takes fewer manhours to product many things. But instead we have some people working long hours and others not working at all. And it isn't just a skills issue. We need people in childcare, elder care, and care of the disabled, but we don't want to pay people much to do these jobs."

    If we divided up all the work that really needs to be done, and assigned it equally to all the available workers, we would all be working about 20-30 hours a week. But of course those of us who can compete won't do that because then your family is living in poverty. I average 60 hours a week so that my family can have a decent standard of living. My neighbor is jobless and broke and is going to lose his house. Such is the result of capitalism.

    And let's look at some important jobs that aren't getting done: environmental restoration and infrastructure restoration. There are plenty of workers looking for work but no one can hire them to get this urgently needed work done because it isn't profitable. Patent trolling and foreclosing houses on poor families is handsomely rewarded by the system but things the world and it's people really need are not. Such is the result of capitalism.

    It is high time we move past systems of artificial scarcity and into a more humane and sane economic system. In the future people will look back at capitalism and regard the same way we do feudalism now: an outmoded economic system that was a step on the way to something better.

     

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      Suzanne Lainson (profile), Dec 14th, 2012 @ 3:20pm

      Re: Capitalism is outmoded

      And let's look at some important jobs that aren't getting done: environmental restoration and infrastructure restoration. There are plenty of workers looking for work but no one can hire them to get this urgently needed work done because it isn't profitable.

      Totally agree. These activities are worth doing and there are likely economic rewards, but not immediately, so those with capital don't want to invest in them.

       

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    Calvin (profile), Dec 14th, 2012 @ 3:36pm

    Job Filters

    Isn't part of the problem that as jobs are displaced along a curve that is dependent on technology improvements the new jobs are effectively sifted through a skill filter. The low-paid, low-skill jobs are retired through technology improvements and the new jobs that are available require a richer skill-set.

    This is fine for those that able to adapt/learn but not so good for those who are educationally challenged and may not be able to adapt to the higher/different skills easily or quickly.

    When change is rapid and/or hits large portions of the existing job market at the same time this becomes a social/political problem which may well require a throttling back of the rate of change just so that people can keep up with the impacts of the changes.

     

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      Suzanne Lainson (profile), Dec 14th, 2012 @ 3:51pm

      Re: Job Filters

      Isn't part of the problem that as jobs are displaced along a curve that is dependent on technology improvements the new jobs are effectively sifted through a skill filter. The low-paid, low-skill jobs are retired through technology improvements and the new jobs that are available require a richer skill-set.

      Part of the problem is that we are rewarding skills we don't necessarily need. We need more caregivers, but our system won't pay them much.

      On the other hand, we significantly rewarded people on Wall Street, and yet what real value have they generated? If anything, their system has created negative effects for the economy.

      It's like having a rich person being able to pay a paid killer well. The paid killer may be of value to the person with money, but the paid killer doesn't contribute anything to society overall. He just protects his employer and his employer's wealth.

       

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    desertgeek, Dec 15th, 2012 @ 9:12am

    Luddites get a bad rap

    I am compelled (yes, freakin' COMPELLED) to defend the Luddites. Too often we leave out what they were truly wrong about, and more and more I think it's an important issue..

    They were not wrong about the problem-they were wrong about the solution. There was no solution.

    In the King Lud world, when jobs were lost to machines, the loss was permanent and more or less fatal. There was no retraining program, and people didn't so much have a job as a weaver (for example) they WERE weavers. No market for weavers=starving to death.

    In desperation, they destroyed the machines. It's a totally different kingdom now. The Luddites could not change (or truly believed they couldn't--it was damn near impossible at the very least) but they could destroy machines. Those we call Luddites now can't destroy the machines, but they can much more easily adapt.

    That little peeve aside, this is a fascinating article--however, as it notes, there are possible hidden factors that might impact any interpretation.

    It makes me wonder what the real Luddites would do...

     

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    Roland, Dec 15th, 2012 @ 11:55am

    We've been here before

    This situation has occurred in the past, and was solved:
    http://en.wikipedia.org/wiki/Henry_ford#The_five-dollar_workday
    Underpaying employees is shortsighted and will end up hurting the 1%, unless they wise up like Henry Ford did. I'm not a fan of the guy, but this is one thing he did right.

     

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    Suzanne Lainson (profile), Dec 15th, 2012 @ 1:06pm

    Alternative economics

    I was an econ major in college (a long time ago). I remember thinking then that what I was getting in my classes was the American business version of economics.

    More than ever I feel we need to move beyond conventional thinking.

    Here's a good article.

    P2P Foundation - Towards a Commons Accounting Revolution

     

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    Alex, Dec 16th, 2012 @ 6:41pm

    Simpleton's take

    Well, my take is simple. If tech improvements lead to robots little people can use, that's good (stuff like 3d printing, for example). On the opposite scale, if the robots cost millions to make, so that only a big corporation can afford them, this would mean big corps would get to keep all the benefits (like they would decrease the selling price - in your dreams!) and the former workers get shafted with great cost to the society, which has to get them re-trained (or suffer from increased volatility).

    I am looking forward to a future where producing is so cheap that anyone can build decent items, so there would be no need for mass manufacturing at all (no made in china crap anymore.) This would free the tinkerers to build new amazing things, assuming the patent system and regulations do not smother them.

    There is plenty of problems waiting to be solved, plenty of things to be improved, if only the right people had enough time to work on them.

     

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      Suzanne Lainson (profile), Dec 16th, 2012 @ 7:01pm

      Re: Simpleton's take

      I am looking forward to a future where producing is so cheap that anyone can build decent items, so there would be no need for mass manufacturing at all (no made in china crap anymore.)

      That's how I hope things will be. A big reason I differ from the usual Techdirt perspective is that my take on music, for example, isn't the CWF+FTB model. Mine is this, "I'll give you the tools so you can create for yourself whenever you want." That's for music, video, photography, design, anything.

      Technology is getting so good and so cheap that I'd like to spread the benefits around to the widest possible audience. While there isn't an equal distribution of talent in the world, I think technology can close the gap significantly and fill in the voids when people fall short.

       

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      nasch (profile), Dec 16th, 2012 @ 7:07pm

      Re: Simpleton's take

      This would free the tinkerers to build new amazing things, assuming the patent system and regulations do not smother them.

      Imagine the "job protecting" regulations that will be proposed in coming years. I hope only proposed.

       

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        Suzanne Lainson (profile), Dec 16th, 2012 @ 7:25pm

        Re: Re: Simpleton's take

        Imagine the "job protecting" regulations that will be proposed in coming years. I hope only proposed.

        It's actually a good thing if we eliminate jobs as long as we don't need jobs to survive. And this is possible if we think differently about how to make sure everyone has the basic necessities of life. And that's the issue. It's not really a jobs problem. It's a resources distribution problem.

         

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    Suzanne Lainson (profile), Dec 29th, 2012 @ 12:50pm

    Here's a lot in one place

    This article has links to many, many articles and can be considered a great resource. I like to push the discussion beyond the Techdirt borders so we can contemplate a vast restructuring of ownership and control. I'm in favor of democratization rather than corporate control. If changing IP laws helps Google, but doesn't eventually disrupt Google, I don't think we have gone far enough.

    The tech debate blasts off (a linkfest) - Towards a leisure society: "But what really makes this time different, I would argue, is that a lot of the competition is now coming from a) the voluntary and crowd sourcing/open source arena and b) it’s only artificial scarcities (patents, monopoly interests) which are preventing complete democratisation of technologically-fueled abundance across the world. It is thus because monopoly power is slipping, challenged as it is by free alternatives rather than cheaper ones… that the crisis is beginning to manifest."

     

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