Automation and the Crisis of Work

Technology, like natural selection, has no goal.

When it comes to the impact of automation (robots, AI, etc.) on jobs, there are two schools of thought: one holds that technology has always created more and better jobs than it destroys, and this will continue to be the case. The other holds that the current wave of automation will destroy far more jobs than it creates, but the solution is to tax the robots and use these revenues to distribute the wealth to everyone who no longer has a livelihood.

In either case, we'll get richer: if technology generates more high-quality jobs, replacing lower-quality jobs lost to automation, we'll collectively get richer, and if technology destroys jobs but creates immense profits that can be distributed to everyone as Universal Basic Income (UBI), then we'll get richer via distributing profits to everyone.

But what if neither option is realistic? What if the jobs that are created in the wake of automation are lower-quality, lower pay and far more insecure? And what if automation leads to much lower profits rather than much higher profits? What if there's nowhere near enough profits to distribute to everyone as Universal Basic Income? If that's the case, we're collectively becoming poorer, even if a small percentage of the population is reaping wealth from automation.

Consider this first-hand account from a reader on Facebook (used with permission):

"With almost 40 years in the pipeline business I have seen detecting and locating leaks in pipelines go from 6-8 men, 2-3 trucks, maybe an airplane and take days. With three pieces of equipment (Laser methane detector and a Optical Gas Imaging camera), $300 drone and a 4 X 4 pickup, one person can cover in a few hours what could take days to weeks to find years ago.

The work I do has displaced at least 6 if not more workers plus the capital cost of the equipment. The total cost of all my equipment is less than $200K and labor cost of less than $2K.

A 'Smart Pig' can detect, measure and locate a corrosion indication within mm's. The fixed cost of the equipment is high but the incremental cost per use is low. Manpower and equipment has gone from 12 workers to 4-5 depending on size. The information found can prevent loss resulting in environmental damage and economic loss to the pipeline owner.

Less people doing more work to find problems. Using technology instead of manpower."

Between half and two-thirds of this workforce has been obsoleted by these technologies. If there is any competition in the manufacture of the equipment, it's likely prices will fall as components become commoditized and decline in price.

Sectors of the economy many hope will create more jobs are seeing the same dynamics. A friend recently described the technologies being deployed to increase the yields and reduce labor in organic sustainable farming: drones that monitor the water and nutrient needs of crops with sensors and relay the data to drip-irrigation systems.

As for training students to code/program: many of these tasks are being automated as well.

Even as we wring our hands over the potential for individually-targeted advertising to sway elections, we also have to ask: why should any advertiser pay marketing firms to distribute bulk emails and mailers, buy TV/radio/print adverts, etc. when an essentially automated technology can craft a data-driven micro-targeted pitch to individuals?

My point here is that it's not just blue-collar jobs that are being obsoleted, but well-paying white-collar jobs are increasingly being automated as well.

The jobs that are being created are low-pay, contingent, insecure service jobs that cannot support a middle-class life or accumulation of capital.

If we look at the gig economy that's arisen to staff on-demand services (Uber, Lyft, GrubHub, etc.), we find low earnings, no benefits and the costs and risks of auto ownership being offloaded from the corporation to individual owners.

These jobs may be "new" (although they look very similar to "old" jobs such as delivering milk) due to the interface of smartphone technology, they lack the security and compensation needed to afford a middle class lifestyle in most U.S. urban areas. In other words, they are not replacing jobs lost with equivalent jobs.

The idea that profits will pay for Universal Basic Income is simply not realistic. Even we taxed all the Big Tech corporations at a rate of 75% (a rate that's politically unrealistic), that would yield up $100 billion, one-tenth of UBI's minimum cost.

As I've discussed in my books, there's another crisis of work that UBI doesn't solve: the majority of people want and need the purpose, meaning and structure of a job--a positive social role, a way to gain self-respect, an avenue of control of one's life, a source of dignity and a means of getting ahead.

Technology, like natural selection, has no goal. Technology doesn't have a teleological drive to employ humans, save the planet or any other goal we might choose. In the current socio-political-economic system, technology is mostly aimed at maximizing profits. The surest way to reduce costs is to replace costly humans with automated tools.

If we want technology to help us create gainful work, we'll have to set that goal, and create incentives other than maximizing short-term profits. Perhaps one first step might be to broaden our definition of "profit" from the purely financial to one that includes "utility" and "value" for local and global communities. That's the goal of my work.

For more on these topics:

Get a Job, Build a Real Career and Defy a Bewildering Economy

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic

Money and Work Unchained

Inequality and the Collapse of Privilege

Recent podcast: We Are Unwilling Pawns In The FED’s Game Of Financial Chess (26:26) (CrushTheStreet.com)


Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.


My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com. New benefit for subscribers/patrons: a monthly Q&A where I respond to your questions/topics.

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NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Kurt M. ($5/month), for your superbly generous pledge to this site-- I am greatly honored by your support and readership.

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The New Orthodoxy: Blasphemy, Heresy and the New Inquisition

A corrupt Orthodoxy devoid of new ideas, an Orthodoxy devoted to maintaining the wealth, status and power of insiders regardless of cost, is a brittle, fragile, unstable system.

When the ruling Elites sense their control of the populace is waning, they seek to regain full control via the imposition of a strict Orthodoxy, enforced by an Inquisition. We are living in just such an era. Everywhere we turn, a New Orthodoxy reigns. Dissent is blasphemy, and any narratives outside the approved Orthodoxy are heretical and subject to suppression and punishment.

New Orthodoxies abound, and woe to those who fail to signal their virtue publicly. One New Orthodoxy is that one's sexual and ethnic characteristics are all-important signifiers of identity. This orthodoxy is critically important to the ruling Elites, as this fragments the populace into tribes warring over their relative degree of victimhood and indignation.

This orthodoxy insures the populace can never gain class consciousness, i.e. an awareness that the ruling Elites and their apparatchiks (the Federal Reserve, Big Tech, the security agencies, et al.) are their class enemies, as the Elites rule at the expense of everyone beneath them.

Questioning the ruling rentier "solution" to climate change--carbon credits that trade like CDOs, securities, etc.--marks one as a dangerous heretic. Anyone questioning the rentier skim of carbon credits is labeled a climate-change denier, and run through the media/social media Inquisition.

Questioning the corrupt clergy is also taboo. Just as the Catholic Church collected wealth via selling indulgences, a paid pass into Heaven that expiated one's sins--the larger the sum paid, the greater the sins that could be atoned, modern-day sinners donate money to foundations, universities, NGOs, think-tanks and other philanthro-capitalist indulgences--and to virtue-signaling politicians, of course.

Today's corrupt clergy can be found operating the modern-day equivalent of indulgences in government, higher education and other institutions. Corruption and incompetence are overlooked if one's obedience to Orthodoxy is unquestioned.

Enormous donations to Orthodox politicians, foundations and think-tanks are accepted with blessings from wealthy parasites and predators, and the corrupt clergy conveniently overlook their crimes, for example, reaping billions of dollars in profits from selling addictive drugs that were marketed as non-addictive.

Thousands of corporate cases of fraud, embezzlement, misrepresentation of facts and insider trading are given wrist slaps, while whistleblowers are hounded to the ends of the Earth.

Anyone who questions the value of a college diploma or sickcare's standards of care is on their own. Institutional punishment includes being sent to Siberia (a remote dead-end for one's career), being shunned professionally and socially, de-monetized by Big Tech (Facebook, cough, Google/YouTube, cough), or if someone becomes a real pest, executed via suspicious death or faked suicide.

Questioning the Orthodoxies of endless growth, "democracy" (the best that money can buy), the Divine Rights of the financial-state oligarchies and the superiority of technocratic expertise is heresy, and mocking the New Orthodoxies is blasphemy: you will be silenced, one way or another.

The new wrinkle in the New Orthodoxy is that the corrupt clergy denies there is an Orthodoxy and an accompanying Inquisition to enforce silence, complicity and obedience, even as they silence heretics and demand public virtue-signaling approval of the New Orthodoxy.

One trademark of the New Orthodoxy is that those publicly signaling their virtue deny they are kow-towing to the New Orthodoxy. This is of course the full flowering of Huxley's loving our servitude while denying our servitude to a corrupt, self-serving clergy.

This institutional suppression of free thought, inquiry and dissent has a systemic cost. A corrupt Orthodoxy devoid of new ideas, an Orthodoxy devoted to maintaining the wealth, status and power of insiders regardless of cost, is a brittle, fragile, unstable system, and all the efforts of the corrupt clergy to impose uniform acceptance of the goodness and rightness of a debauched, corrupt, self-serving status quo will only increase the scale of its eventual collapse.

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.


My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com. New benefit for subscribers/patrons: a monthly Q&A where I respond to your questions/topics.

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NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Jay and Teresa T. ($100), for your outrageously generous contribution to this site-- I am greatly honored by your steadfast support and readership.

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Markets That Live by the Fed, Die by the Fed

The "everything bubble" is not permanent.

All eyes are again on the Federal Reserve, as everyone understands that the Fed is the market-- the stock market, the bond market, the art market, the housing market, etc. All markets have been driven higher by one force: central bank money creation and distribution to the financial sector of financiers and corporations, the richest of the rich.

What few seem to grasp (because they're paid not to?) is the Fed is powerless over what actually matters in a healthy economy:

1. The Fed is powerless to create productive, profitable ventures for capital to invest in. Productivity has gone nowhere in the Fed's reign while speculative profits leveraged by the Fed's free money for financiers have soared.

2. The Fed is powerless to raise wages. Despite ginned-up claims that wages are finally rising 3% a year after a decade of stagnation, wages are still losing purchasing power once real-world inflation is factored in.

3. The Fed cannot force creditworthy households and enterprises to borrow more money, nor can they stop banks from lending to the only people who want to borrow more money, those who are credit risks, i.e. borrowers who will default at the first spot of bother.

4. The Fed is powerless to stop the New Gilded Age consequences of their policies via The Cantillon Effect: it's not just how the money is created, but how it's distributed. Those who get the Fed's nearly free money can use it to buy productive assets and pursue speculations such as stock buy-backs, while everyone else who didn't get a single dollar of the Fed's trillions experiences a loss of purchasing power as the Fed's new money expands the money supply without actually expanding the real economy.

The only power the Fed has is to incentivize profiteering via stock buy-backs and speculations of the super-wealthy--the power, in other words, to create a New Gilded Age of obscene wealth inequality.

The Fed's New Gilded Age is generating political blowback, and eventually the masses will awaken to the fact that the Fed is the enemy of the people because it is the sole enabler of the unproductive, parasitic, predatory corporate/insider class that's skimmed something like 87% of all the "wealth" "created" by the Fed's policies.

The Fed has created an economy in which capital has been stripped of low-risk yield. All capital must become gambling chips in the casino to earn a return, but gambling is intrinsically risky, and the asymmetry between the risk--rising--and the return--increasingly paltry--is setting the markets up for a fall the Fed is powerless to stop, and a political blowback to the Fed's New Gilded Age that is it equally powerless to stop.

Markets that live by the Fed also die by the Fed. The Fed's abject, pathetic powerlessness over what actually matters will be revealed in the years ahead, and everyone will look back on the decades in which the Fed was viewed as god-like as a form of mass delusion.

The "everything bubble" is not permanent. Gambling is risky, and the Fed has rigged the world's larget casino to benefit its banking / financier / corporate cronies. But bubbles burst for reasons outside the control of the Fed, a reality that's about to become undeniable.

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.


My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com. New benefit for subscribers/patrons: a monthly Q&A where I respond to your questions/topics.

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NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Daniel K. ($50), for your marvelously generous contribution to this site-- I am greatly honored by your steadfast support and readership.

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The Black Swan Is a Drone

What was "possible" yesterday is now a low-cost proven capability, and the consequences are far from predictable.

Predictably, the mainstream media is serving up heaping portions of reassurances that the drone attacks on Saudi oil facilities are no big deal and full production will resume shortly. The obvious goal is to placate global markets fearful of an energy disruption that could tip a precarious global economy into recession.

The real impact isn't on short-term oil prices, it's on asymmetric warfare: the coordinated drone attack on Saudi oil facilities is a Black Swan event that is reverberating around the world, awakening copycats and exposing the impossibility of defending against low-cost drones of the sort anyone can buy.

(Some published estimates place the total cost of the 10 drones deployed in the strike at $15,000. Highly capable commercially available drones cost around $1,200 each.)

The attack's success should be a wake-up call to everyone tasked with defending highly flammable critical infrastructure: there really isn't any reliable defense against a coordinated drone attack, nor is there any reliable way to distinguish between an Amazon drone delivering a package and a drone delivering a bomb.

Whatever authentication protocol that could be required of drones in the future--an ID beacon or equivalent--can be spoofed. For example: bring down an authenticated drone (using nets, etc.), swap out the guidance and payload, and away it goes. Or steal authentication beacons from suppliers, or hack an authenticated drone in flight, land it, swap out the payload--the list of spoofing workaround options is extensive.

This is asymmetric warfare on a new scale: $20,000 of drones can wreak $20 million in damage and financial losses of $200 million--or $2 billion or $20 billion, if global markets are upended.

If it's impossible to defend against coordinated drone attacks, and impossible to differentiate "good" drones from "bad" drones, then the only reliable defense is to ban drones entirely from wide swaths of territory.

So much for the lightly regulated commercialization of drones.

What sort of light bulbs are going off in the minds of copycats? It doesn't take much imagination to see the potential for mayhem--and without sacrificing your own life. I won't elaborate on the possibilities here, but they're obvious to us all.

The range and payload of low-cost drones is limited. The big drones can fly hundreds of miles and carry hundreds of pounds of weaponry, but these can be targeted by radar and conventional ground-to-air missiles. So-called hobby drones skimming over the rooftops (or deserts or forests) are difficult to shoot down, especially if the attack is coordinated to arrive from multiple directions.

Small hobby drones may only carry 3 KG (roughly 6 pounds), but how much damage can 3 KG of high explosives cause? The answer is "considerable" if the target is flammable, or lightly shielded electronics.

Larger commercially available drones can carry up to 20 KG or 40 pounds--more than enough explosive capacity to take out any number of targets.

Defense and intelligence agencies have no doubt war-gamed the potential for coordinated drone attacks, and the world's advanced militaries are already exploring the potential for self-organizing "drone hordes" of hundreds or even thousands of drones overwhelming defenders with sheer numbers. The success of the oil facilities attack proves the effectiveness of much smaller scale drone attacks.

Put yourself in the shoes of those tasked with securing hundreds of miles of pipelines carrying oil and natural gas around the world. What's your defense against drone attacks? A.I.-controlled or remote-operated gun towers every few hundred yards, along thousands of miles of pipelines? Human patrols covering the entire pipeline 24/7? The cost of such defenses would burden the defenders with enormous costs without providing 100% reliable security. (Guards can be bribed, remotely operated guns can be overwhelmed by an initial wave of cheap unarmed hobby drones, etc.)

It's obvious there are no low-cost, effective defenses of thousands of miles of pipelines. (Recall that the Saudis depend on seawater being piped hundreds of kilometers into the desert to inject into oil wells to maintain production. Taking out these water lines and pumps would cripple production, too.)

The only effective way to limit drone attacks is to ban all drones and institute a shoot-on-sight policy in restricted areas. But that will not negate the potential for coordinated drone strikes or drone attacks on remote facilities.

The mainstream media will be under permanent pressure to downplay the consequences of this attack, but the cat is out of the bag: the Black Swan is a drone. What was "possible" yesterday is now a low-cost proven capability, and the consequences are far from predictable.

This unpredictability alone should unsettle markets, as the risk of future asymmetric warfare drone strikes just increased to a degree that is difficult to measure or hedge.

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.


My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com. New benefit for subscribers/patrons: a monthly Q&A where I respond to your questions/topics.

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NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Mediabound ($5/month), for your marvelously generous subscription to this site-- I am greatly honored by your support and readership.

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What a Relief that the U.S. and Global Economies Are Booming

Doing more of what's failed for ten years will finally fail spectacularly..

It was a huge relief to see the charts of the Baltic Dry Index (BDI) and the U.S. retail sector ETF (RTH): both have soared to the moon, signaling that both the U.S. and global economies are booming: the BDI is widely regarded as a proxy for global shipping, which is a proxy for global trade and economic activity.

Amazon is 18% of the RTH basket of retail stocks, but the rest are conventional bricks and mortar chains with online sales: Walmart, Home Depot, Lowes, Costco, CVS, etc.

The American consumer must be ready, willing and able to spend freely since the retail sector is hitting new heights.

OK, now let's change channels from soaring market valuations to the real-world economy. What planet are buyers of BDI and RTH on? Maybe the shipping and retail sectors are incredibly robust on Sirius B, but here on Planet Earth the global economy is weakening, trade is stagnating, shipping is in recession, and retail sales and profits are stagnating.

Lumping all American households in one basket gives a false signal of financial health. If we look at averages, debt levels are reasonable, incomes are notching higher and so expectations of rising household debt and spending are reasonable.

But this radically distorts reality: only the top 10% are creditworthy and have rising incomes; the bottom 90% are over-indebted, poor credit risks and their income is stagnant and/or precarious.

The top 10% of households--a mere 12 million households--are also precarious, as much of their wealth and income is based on insanely overvalued asset bubbles in stocks, bonds and real estate. The wealth effect fuels their free-spending ways (recall that the top 10% collect roughly half of all income and account for almost half of all consumer spending).

As all the asset bubbles pop, the reverse wealth effect kicks in. Once households feel poorer, they tighten their borrowing and spending.

Another under-appreciated reality is the top 10% of households have much lower levels of debt (relative to their income) than the average middle-class household. This has several sources:

1. The top 10% hasn't needed to borrow as much for college, healthcare, vehicles, vacations, etc. because their higher income enables saving and paying cash.

2. The top 10%, especially the self-employed and small-business owners, tend to be debt-averse. They understand that debt is always a noose around the neck. As a result, the desire to take on more debt, even at near-zero rates of interest, is near-zero for many top 10% households.

3. The wealth effect is real for 10% households which have sold off bubble-valuation stocks, bonds, real estate, art, vintage autos, etc. The smart money has been selling these assets and pocketing the gains. The bottom 90% don't own enough bubble-valuation assets to move the needle on their overall wealth, income and financial security.

Globally, those who want to borrow more are poor credit risks while those who are creditworthy don't want more debt, regardless of how low interest rates fall. If we set aside the top 10% of households and enterprises, and focus on the creditworthiness and precariousness of the bottom 90%, we get a much more accurate picture of global debt exhaustion, a.k.a. debt saturation.

As I've written here recently, the recession that's unfolding isn't one triggered by crisis such as higher oil prices or a financial panic. It's a recession of debt exhaustion and diminishing returns as doing more of what's failed for ten years will finally fail spectacularly.


Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.


My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com. New benefit for subscribers/patrons: a monthly Q&A where I respond to your questions/topics.

---

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Daniel C. ($5/month), for your wondrously generous subscription to this site-- I am greatly honored by your longstanding support and readership.

Read more...