K-Shaped Recovery Bites the Unskilled
Cashiers, retail clerks, servers, and hotel maids and others in the service sector already had jobs that were slated for robots.
Covid accelerated the pace.
There are now two Americas as Covid Divides Workers into groups.
Even before the pandemic, “Automation can explain labor share decline, stagnant median wages and declining real wages at the bottom,” says Daron Acemoglu, a professor of economics at the Massachusetts Institute of Technology. “It’s the bottom that’s really getting hammered.”
Robot Subsidy
Another factor that could increase economic inequality is that, as in all recessions, many small businesses will be wiped out. According to Yelp, 73,000 businesses in the U.S. listed on its website have already closed permanently since March, including bars, restaurants, gyms, salons and shops.
“I believe our field has a mind-set that will lead to a large humans-to-robots replacement for certain types of work,” says Odest Chadwicke Jenkins, a roboticist and professor of computer science and engineering at University of Michigan. “My worry is that robotic technology will be used to simply reduce costs by automating highly populated jobs—for example, vehicle driver, manufacturing, logistics,” he adds.
Blame the Robots? Covid?
It’s easy to blame robots, or Covid, or progress in general.
I have yet seen one mainstream article blame the Fed’s cheap interest rates, the push for $15 wages, labor unions, or the cost of tuition.
Every one of those accelerated inevitable trends.
The bankruptcy reform act of 2005 which made student debt not dischargeable in bankruptcies compounded the woes of those with worthless degrees and no skills.
Spotlight on the Fed
In addition to artificially cheap interest rates which lowered the cost of capital, the Fed actively promotes 2% inflation, without having any idea how to measure it.
The Fed has blown serial bubbles of increasing amplitude over time, leaving the have nots deeper and deeper in huge unrecoverable holes.
Then, when the jobs vanish in the inevitable bust, the academics blame robots,
Yes, Covid accelerated the push to robots, but so did the Fed and so did Progressives pushing for $15 an hour for people with zero skills.
The Recovery Will Have Many Shapes, Not One
On July 1, I noted The Recovery Will Have Many Shapes, Not One.
We can add a new shape to the list: K.
Mish
All these work at home jobs will vanish much sooner than you think. It’s just a good way to break the chain and close the shop with all the free money. Very soon, kaput.
“Even before the pandemic, “Automation can explain labor share decline, stagnant median wages and declining real wages at the bottom,””
No it can’t.
If it could, wages in 1970 would be plenty lower than they were before automation took hold in the form of assembly lines. And wages in the least automated countries would be higher that in the most automated ones.
As long as automation improves efficiency, hence enables each worker to create increased value, this increased value makes it worth vile to pay more for his services. And then, as long as anything even remotely resembling free markets are the norm, competition for his services will hence ensure his wages increase.
Labor is demanded because it creates value. The more value a worker creates, the greater the demand for his services. That really is about as 101 as things can possibly get.
It really is a pretty damning testament to the quackshow which is currently attempted passed of as “economics,” that a bloody MIT Prof, whom you’d think would be at least minimally literate, sits around spouting that kind of nonsense with a straight face.
Instead, THE reason why wages are stagnant, is because the added efficiency accrued from increased automation, AND THEN SOME, is by now summarily stolen by way of Fed debasement, in order to hand it to deadweights who create exactly no value; in the form of “asset appreciation” benefiting idle nothings.
THAT can explain all the “labor share decline, stagnant median wages and declining real wages at the bottom.” And very obviously so as well. After all, when A robs B and hands the loot to C; B gets poorer and C gets richer (duh!). You’d think MIT would be a bit above hiring yahoos who haven’t even figured that one out yet, but hey: It’s America in the Fed era. Not exactly a bastion of competence at anything at all. At any institution, no matter how once-was renowned.
RE: “As long as automation improves efficiency, hence enables each worker to create increased value, this increased value makes it worth vile to pay more for his services. And then, as long as anything even remotely resembling free markets are the norm, competition for his services will hence ensure his wages increase.”
Automation ought to improve efficiency eventually (the upfront cost of the automation might delay the increase a while) but very likely for far fewer workers. Certainly the demand for any workers still involved in operating or maintaining the automation might be expected to rise given that skill-set might be greater or rarer. But their (possibly drastically) decreased numbers, with the others forced into other lower paying jobs, could very well decrease the average wages among that original collection of workers prior to the automation.
The bell-shaped curve of human abilities eventually fails to match the requisite skills as the economy shifts to more and more technically challenging job classes. The middle economic class is gutted when the middle skills class is gutted by automation. Some might be able to advance to jobs requiring greater skills but those job are likely fewer in number … so the majority of middle skills people find themselves forced into more menial, less-skilled and therefore more boring and lass satisfying positions.
Some trade job/skills are perceived to be somewhat immune to the problem … but what do you do when self-driving trucks are joined by robots who can do plumbing and electrical work and repair automobiles and …… IOW, when does it stop … or how do you deal with the problems that arise if it doesn’t stop?
Not everyone is qualified to attend / graduate from Star Fleet Academy and explore the Universe on the Enterprise … AI / automation presents at least as many difficult problems as it (supposedly) solves … at least until transporters and replicators go online … ;>)
Increasing productivity only seems like it would be a problem because we live in a bizarro world in which capital is not increasing and prices are not going down even as we all work our butts off — all due to the draining of the wealth away from producers just fast enough that they don’t complain too much.
If property rights were respected, it would be a dream world to be thrown out of your job as a garbage man due to AI garbage trucks — because in that same world the price of garbage collection and everything else would always be dropping.
Since we live in the real bizarro world and the likelihood of it ever (returning to)/becoming that dream world, I would say you’ve just confirmed that increasing productivity (by use of AI/robots) is always going to be an ever-increasing problem.
There is no sense in pretending that theoretical free-market capitalism or libertarianism or any other similar or polar opposite -ISM is ever going to work out in reality the way it seems to in theory … because human nature is always going to be the over-riding factor and that always spells “bizarro world” one way or the other.
Point taken. I’m not optimistic about a positive revolution in my lifetime.
Practically, if enough people are really put out of work by automation in the context of a rigged system, their bids for goods and services will drop, forcing prices lower. … Except that all of the powers that be will push for fiscal and monetary “solutions” to supposedly keep these people afloat … with the effect of keeping prices up. Exactly as we’ve seen with houses, which are unaffordable for people riding the down escalator, because houses have been turned into a real nice “investment” for those on the up escalator.
“there is no sense in pretending that theoretical free-market capitalism or libertarianism or any other similar or polar opposite -ISM is ever going to work out in reality the way it seems to in theory … because human nature is always going to be the over-riding factor”
Here I part. Human nature amounts to: ability to abstract and conceptualize, to reason and to choose accordingly. That hardly means capitalism is off the table forever. Appears what you are calling “human nature” is the desire to, let’s say, rape and pillage. That’s something that some humans do some of the time–but it’s a choice. Human nature is: making choices, reasonable or otherwise. It’s not “human nature” for irrationality to reign, just historical fact, with some pleasant counter-moves among the ancients, the American Enlightenment, and nameless individuals.
RE: “Human nature amounts to: ability to abstract and conceptualize, to reason and to choose accordingly.”
On the one hand, yes … but you choose to overlook the other hand.
RE: “Appears what you are calling “human nature” is the desire to, let’s say, rape and pillage. That’s something that some humans do some of the time–but it’s a choice. “
Well, you didn’t overlook it completely … human nature definitely includes the possibility of making choices very harmful to self and others as well as choices beneficial to self and others.
This board itself demonstrates that both aspects are still alive and well …
RE: “It’s not “human nature” for irrationality to reign, just historical fact …”
It seems to me that if you have historical fact that people will choose to lie and cheat and commit adultery and envy and covet and steal and rape and pillage and plunder and murder and war over wealth and property and on and on and on and on … that you have pretty good evidence that it’s human nature to choose to do those things. And I dare say that there is not a single person on this planet who has not at one time or another or many times chosen to do those things.
What you politely choose to call merely “irrationality” others would call “doing evil” and “sin”.
And the driving force of capitalism has always morphed from whatever it might be stated to be theoretically into what can be summarized as “greed is good”, and this is in direct conflict with “the love of money is the root of all evil” so I would have to agree that indeed this is where we part.
When people say that every attempt to “print money ad infinitum” has always ended in disaster (and they are correct) they are implicitly agreeing that there must be some reason why that has been repeatedly tried. Since we know that despite any protestations to the contrary that it’s always to bail out the rich for as long as possible before the currency dies, and the reason to bail out the rich is always the same, i.e. they are in control and they are GREEDY TO THE MAX, practically everyone on this board is arguing/agreeing that human nature will always lead capitalism (and history shows the same for all other socio-economic -ISMs) to its own self-destruction. And the same and/or other aspects of human nature will spell the same end for socialism and communism and libertarianism etc. etc.
The evil we see in the world that seems to be growing has nothing to do with some putative tendency in “human nature” to choose evil. It has to do with the fact that the establishment cultures have chosen irrational ideas. And this is not something that all cultures are destined to do, as proven by the fact that there was such as thing as the American Enlightenment which, if it had a body, and said body was alive today, would be apoplectic to observe Obama’s and Trump’s America.
This current culture is certainly doomed … as it certainly deserves. But this is because of the evil ideas chosen and ascendant throughout the 20th century.
How many individuals on this “libertarian” board are even for capitalism? I mean full laissez faire with zero regulations and full separation of gov from economy. Five, maybe? People today do not think highly of freedom — to put it mildly. So they get what they deserve: a society and system of bullying, with the trappings of civility that are fading away along with the final fumes of the Enlightenment.
Seeing that bullying is not a necessary part of human nature doesn’t even require historical knowledge: just introspect. Do YOU choose to be honest and productive? Well, no one else on this earth has any damn excuse to choose otherwise. The fact that so many of our neighbors are low-grade rapists and pillagers in their souls evidences their acceptance of irrational, evil ideas, largely by accepting without criticism the “thinking” of their culture.
RE: “Do YOU choose to be honest and productive?”
I haven’t chosen to be honest and productive every moment of every day of my entire life … if you have that’s quite an accomplishment. But perhaps you’ve not been as perfect in other areas, and neither have I.
RE: “the American Enlightenment”
Slavery still in force … sorry, hardly qualifies as a time when all people were always choosing to do good. “Better than Obama’s and Trump’s America” is hardly a high bar to exceed …
Your contention seems to be based on “not everyone chooses to do evil every moment of every day of their life”.
My contention is based on “find me a person who chooses to do good every moment of every day of their life”.
“but very likely for far fewer workers.”
Only current “jobs.” Overall, the improved efficiency increases wealth. Hence demand across the economy. Hence, while current “jobs” may be “automated” away, just like manual farm labor was by the harvester, the end result is greater overall demand for labor. No matter how fancy your cordless drill gets, it will remain almost infinitely less flexible and adaptable than a human, for the next forever years.
Also, the way technology progresses, and the sheer narrowness of the “Bell curve of human abilities,” (biggest brain less than 2x smallest), by the time machines have rendered the “least able” human irrelevant, it is within a few years of rendering the “most able” human so as well. Only totalitarian regimes looking for an excuse to pretend that just “they”, out off all human rabble, are somehow much more “zkilled” than everyone else, are naive enough to fall for the sham that humans are all that different in the big scheme of things. Instead, if some is universally replaceable, pretty much all are. Just as was the case once mechanized tractors replaced the bulls with the “least abilities.”
Even empirically, there is zero examples of improved technology/automation having rendered labor demand, for even the “lowest skilled” (for the most part just another way of saying “least specialized”) human, lower. And that despite earlier rates of technological progress and automation being massively higher in other periods, than it is today (engines, ships, planes, telephones, radio, Internet).
As Bastiat admonished; you have to look at the unseen. Not just the “seen” of a fancy car replacing the dudes who used to carry Cesar around. Those guys no doubt did lose their job; but are, even in Italy, in much greater demand today, hence able to command higher wages, than they were back in their Cesar carrying days.
As for the “self driving plumbers” ad other hype; you are talking an invasion by an alien species sufficiently far advanced to treat us as little more than food or curios. Anyone with the brains to design anything genuinely transformative wrt “AI”, also has enough brains to realize that far and away the most efficient means of doing so, is to use the availability of the far and away most advanced “AI” available, the human brain. Only dunces without much of a brain themselves (yet handed near all current resources by Fed theft from their superiors), plods around dumb enough to believe they can do better. If only they “inveeeest” the money the Fed stole for them…… To the detriment, and increasingly obviously even demise, of The West.
RE: “Overall, the improved efficiency increases wealth. Hence demand across the economy.”
I disagree … not when nearly all the wealth increase accrues to fewer and fewer hands over time … and we’re not talking about a “cordless drill” we’re talking about the kind of AI-driven robotics that can do many/most (all?) of the tasks a human being can do and with more accuracy, consistency, speed, 365x24x7 with perhaps some down/maintenance time tossed in.
RE: (biggest brain less than 2x smallest)
About 5% of the population has an IQ over 125 which is about the intelligence level requiring for engineering and other highly technical jobs … brain “size isn’t everything” ;>)
Appealing to the effects of past advances in technology does not necessarily translate to the effects of future advances … the discussion at hand is about eventually building “techology” that is not merely “tools” that can assist human beings in doing jobs more efficeintly … it’s about building technology that can replace human beings in doing most jobs …
RE: “As for the “self driving plumbers” ad other hype; you are talking an invasion by an alien species sufficiently far advanced to treat us as little more than food or curios.”
No, I am talking about (perhaps foolishly) creating that invasive “species” ourselves! Creating our own replacements for the vast majority of tasks we are capable of doing … with our capabilities following that bell-shaped curve so that initially that “invasive species” only supplants the low/left side of the curve but eventually, inexorably, proceeds to the right at an ever faster pace.
At like much of futuristic dystopian sci-fi, the inflexion point might arrive when that “species” decides that we human beings are ……… unnecessary.
RE: “nyone with the brains to design anything genuinely transformative wrt “AI”, also has enough brains to realize that far and away the most efficient means of doing so, is to use the availability of the far and away most advanced “AI” available, the human brain.”
I continually marvel at your clever theorizing that seems to utterly ignore the simple fact of human nature … and the fact that those human brains come embedded within human beings (at least so far they do) that actually want to be well-compensated for their services … and that the ones deciding against using them generally want SLAVES who demand nothing in return for everything they can give.
Of course that’s similar to the stupidity of those elitist corporatist sociopaths these days who think they can continually impoverish the working class, the only truly productive members of society, the truly essential producers you are always talking about, without ever thinking that doing so erodes their customer base. OF course, you don’t actually need a customer base if you have the Fed around which just keeps dumping more and more funny money into your pockets whether you have any customers or not.
“not when nearly all the wealth increase accrues to fewer and fewer hands over time”
But it doesn’t. Instead, it gets more and more widespread. As the experience from every period of increasing freedom has demonstrated. From Magna Carta to the settlement of the US to the Westward Expansion to The West and Japan post WW2 to China post Deng to Somalia post Barre.
In free economies, people get “paid” in accordance with their production/contribution. Which, as humans are an awful lot alike, don’t differ too much from one to the next. Only stilted, inefficient institutions aimed at amplifying those small differences, make it seem, to the uncritical, otherwise. it’s no different from the Olympic 100 yard dash: All the spoils go to the guy who ran 1/100s of a second faster than the next fastest. As if that really matters. In reality, they are all pretty much equally fast.
And while those who arbitrarily happen to currently be that 1/100th faster than the rest no doubt wants to preserve the arrangements concentrating spoils in their hands; any such institution is costly to maintain. Hence inefficient. Hence will be overran by “barbarians” in due time. It’s simply not sustainable to live off of the spoils created by others forever, since at some point, some of those others eventually will wise up. And start the ball towards Mogadishu-in-the-90s rolling. No matter how much it may be the “human nature” of some currently privileged leech to wish things would forever remain the same.
“and we’re not talking about a “cordless drill” we’re talking about the kind of AI-driven robotics that can do many/most (all?) of the tasks a human being can do and with more accuracy, consistency, speed, 365x24x7 with perhaps some down/maintenance time tossed in.”
If you insist on talking about tooth fairies, they yes, I suppose anything really is possible. Tooth fairies don’t exist, though. And never will, no matter how many illiterate idiots, flush with money The Fed stole from their betters, “inveeeest” in the latest, currently fashionable among the less-than-literate-set version of her. After all, the reason they do so, is just because they are idiots. Not because their idiocies somehow will make tooth fairies exist
“Appealing to the effects of past advances in technology does not necessarily translate to the effects of future advances … the discussion at hand is about eventually building “technology” that is not merely “tools” that can assist human beings in doing jobs more efficiently … it’s about building technology that can replace human beings in doing most jobs …”
Again, more tooth fairies….. In economics, aimed as it is at explaining the real world, Diminishing Returns is an iron clad law. Which is why technology improved much faster earlier, than it does today. And why advances will continue to slow, as ever more of the currently lowest hanging fruit gets picked. (Diminishing Returns incidentally is also why human brains ended up virtually the same size in rather different and isolated populations across the world…. Diminishing returns is that universal: Transcending economics to to be a constraining law of competitive evolution as well. (While contrived 99%-nonsense like IQ is, as per a rather renowned, Jewish, researcher in that field, mainly a measure of “Jewishness.” As entirely expected, if you look at who developed it, and hence their prejudices. ) ) Some illiterate yahoo with stolen funds and a stock prospectus, will never magically revoke diminishing returns. Unless he is, again, the tooth fairy. In drag if he’s a he, I suppose… Or, at least a bit of a fairy….
“No, I am talking about (perhaps foolishly) creating that invasive “species” ourselves!”
As in, fruit flies creating humans on the side? Or, tooth fairies creating money from nothing? You volunteer to hold your breath for either one? Seriously, dude: While I realize magic can make any possible argument viable, magic doesn’t exist! Inconvenient perhaps, but true nonetheless. And until magic does demonstrably start existing, it’s rather pointless to attempt to “reason” as if it does. In reality, the entire computing, and brain, power of Google combined, can’t beat a captcha asking it to identify which out of a set of pictures has a bridge in it….. Until it can, anything more complicated than that is nothing but hype and fantasy. No different from the tooth fairy.
While, back in reality: People are pretty much all the same. Hence, left to their own devices, as free people, end up in societies with Gini coefficients not dissimilar from tribal Afghanistan: Flat as a board. Economically efficient arrangements increasing the Gini, as long as they leave even the “lowest” better off than an Afghan cave dweller, may, at least economically, be viable ad sustainable (although your point about “human nature” may make even that a bit speculative…) But any arrangement aimed at propping up an ever smaller group of privilegeds, by forcing the cave dwellers to effectively paying them net rent, will always be an arrangement living on borrowed time.
RE: “In free economies…”
There you go with the theoretical again … history has shown repeatedly that “free economies” don’t last very long, they always morph into exactly the same kind of economies that you describe as “stilted, inefficient” and “overran by “barbarians” in due time” … So yes, I agree that eventually those economies blow up / are blown up and the pendulum swings the other way for a while until human nature and the “slightly faster” start tilting everything in their direction again.
RE: “Tooth fairies don’t exist, though. And never will”
With your condescending “tooth fairies” substituted for ” AI-driven robotics that can do many/most (all?) of the tasks a human being can do and with more accuracy, consistency, speed, 365x24x7 with perhaps some down/maintenance time tossed in.”
The first sentence is obviously true … but increasingly less true all the time. Your second sentence is merely your opinion, expressing one side of the discussion that is central to this thread. And the rest of your post is more expansion on your same opinion, neither true nor false, just a matter of we’ll all have to wait and see how things progress/regress.
RE: “Hence, left to their own devices, as free people, end up in societies with Gini coefficients not dissimilar from tribal Afghanistan: Flat as a board.”
I might as well label all of that “tooth fairies” as well … and have frequently wondered why you seem so foolishly enamored with “tribal Afghanistan” and the Taliban.
I can only voice my opinion that I believe my “tooth fairies” have a somewhat greater probability of coming to pass than your “tooth fairies” ever do …
“Your second sentence is merely your opinion,”
That the Tooth Fairy won’t suddenly spring into existence? I suppose… It’s hard to keep any argument about the real world even remotely realistic, once one allows for the existence of the Tooth Fairy, though.
If you mean “AI driven blah, blah….”, you’re still stuck refuting Diminishing Returns. Which, while possibly (but most likely not), is no less of a hurdle than conjuring up The Tooth Fairy to do it for you.
Are you saying tribal Afghanistan does somehow not measure rather flat as Gini is concerned?
Or, that there are sound economic arguments for why a world where people are free fro the crushing boot of an overpowering government, will somehow not lead to flat Ginis? Despite all the completely one-way evidence to the contrary?
Or merely that freedom is so difficult to maintain, that it’s not even worth trying? Which I suppose is the lesson drawn from most attempts, including by now the American one.
The latter is why I am “enamored” by the Afghan tribals: They haven’t been conquered. They still retain the guns the US Founders realized all free men need, in order to remain so. And are hence far and away the best real world example of what a long term free society at least CAN look like: Flat Ginis, almost improbably efficient conversion of almost non-existent natural resources (uch of the tribal areas are barren, frozen rockpiles) into sustaining and furthering their culture and society (Massive fertility, and very little giving up “their” cultire on account of being forced to by outsiders). As willfully-bent-over lowlanders around then have come, believed they were hot shit, failed and gone, those tribals have stayed the same. And since survival is the number one prerequisite for any sustainable society, that experience is no mere triviality. It doesn’t mean I wouldn’t personally prefer a slightly different dialect of freedom than theirs, but as of yet, no other such dialect has show a similar staying power. And only cultures which last, are all that relevant in the long run. No matter how high progressives, Romans and Jones cultists may feel their particular experiment in futility are “flying”, in between falling off a cliff and actually hitting the ground a short while thereafter.
RE: “That the Tooth Fairy won’t suddenly spring into existence?”
You were using “tooth fairy” as an absurd substitute for “the kind of AI-driven robotics that can do many/most (all?) of the tasks a human being can do and with more accuracy, consistency, speed, 365x24x7 with perhaps some down/maintenance time tossed in.”
So yes, it was mere opinion regarding a future neither of us knows for certain … so don’t keep pretending I was actually saying that the literal tooth fairy would spring into existence. I simply do not accept your characterization of such future AI/robotics as 100% impossible / probability 0.
RE: “Are you saying tribal Afghanistan does somehow not measure rather flat as Gini is concerned?”
No, I am saying what you did i.e. I would personally prefer a different dialect of freedom than theirs. That’s why I used the word “enamored”.
RE: “Or, that there are sound economic arguments for why a world where people are free fro the crushing boot of an overpowering government, will somehow not lead to flat Ginis?”
No, I am saying that there are sound historical evidences that theoretical economic arguments fail to explain reality because they fail to account for the totality of human nature as well as the wide range of different motivations and capabilities of the human species.
We’ve all heard that economics has been called “the dismal science” … regardless of the original intent I take it to mean that economics and science are oxymoronic … ;>)
RE: “Or merely that freedom is so difficult to maintain, that it’s not even worth trying? Which I suppose is the lesson drawn from most attempts, including by now the American one.”
As you have just acknowledged, freedom is extremely difficult to maintain for any sustained period of time i.e. you have wisely acknowledged the lessons of history I mentioned above. But those lessons also suggest that IT IS WORTH TRYING because (so far at least) history has not reached a static equilibrium (remember the foolish claims that it was “the end of history” when the Soviet Union collapsed?) and just as freedom is so difficult to maintain, it turns out that the “crushing boot of an overpowering government” has also sowed the seeds of its own destruction and eventually is crushed itself by that very desire for freedom you speak of.
If history has not yet reached a static equilibrium (except perhaps among the Afghan tribals?), then there are some other alternatives, cyclical/sinusoidal/pendulum swings or a continuing increase in freedom or oppression to its limit, or just the ebb and flow at different frequencies among all the various cultures/regions of the world.
Of course, the thing that is probably the most frightening these days is the perception of many that a continuing increase in oppression and control is happening right before our very eyes … world-wide … that we are careening toward that “one world government” … with everyone forced to bear “the mark of the beast” to even participate in the “economy”, whatever form it takes … but then we’re talking mere biblical prophecy and not reality, right? …
” We’ve all heard that economics has been called “the dismal science” ”
That’s because trying to shoehorn something which fundamentally isn’t, into a “science”, will always lead to dismal results. Economics is a branch of mathematics/logic. Always has been, always will be. Recognized as such, it’s hardly dismal at all. Just not very forgiving of neither bumbling fools nor budding “managers” of other people’s lives and property.
“probably the most frightening these days is the perception of many that a continuing increase in oppression and control is happening right before our very eyes”
More frightening yet, is that it has been happening for 150 years. Without anyone, aside from “theoretical economists” seeming to notice. The hordes seemingly content to be told they were “making money off their house” and “Massa takes care of them when they grow old.”
And when Massa, of course don’t, since he can’t; inevitably and doubly so since ay possible Massa chosen by people dumb and naive enough to believe he can, will inevitably be an incompetent idiot; it was “because this one particular Massa is mean and bought by Soros! The next Massa, and his money printers, will make Hope and Change A Great Society Again!” Just like the neeeext Caudillo down South always will!
While back in reality, totalitarianism, in five words, is no more than “Making money from my home.” That’s it. Inseparable. Free people don’t volunteer to pay more and more for things which become less and less as they decay in the weather. The illusion that people somehow do, can only be maintained by robbing someone else. One way or the other: By debasement, by “laws” mandating and restricting, by taxation and subsidies etc. .. One way or the other, every penny someone “makes off their home”, has to be stolen from someone who had to work to create it. No amount of “that’s just theoretical economics” will ever change that. Since, although just “theoretical mathematics”, simple arithmetic is pretty solidly established by now. Even tooth fairies will likely struggle getting around 2+2 being 4. Although literates of the Powell kind can, no doubt, reliably be counted on to do their best impression of the rank idiots they always were, are, and will be.
IOW, you cannot simultaneously have a society which is both non-totalitarian, and where people can “make money of their home.” Nor, from their “portfolio.” Nor, from “pensions” paying more than sticking the money under the mattress. Nor from “health care” costing less than the wages paid to doctors and nurses and the rest who provide it. Nor form “rental properties”. No amount of “studies”, inevitably by dilletante-children-of-privileged-idiots-on-Fed-welfare getting their “degree” or padding their “CV”, can ever change that. As, theoretical or not, it’s just basic arithmetic. Just like the rest of economics: Just math (and rather simple at that.)
“But those lessons also suggest that IT IS WORTH TRYING “
Which resolves to: It’s worth trying to emulate those Afghans. As they remain the only ones who seem to have figured out at least a solution. It may not be the only solution, but at least a solution. So, instead of continuously doubling down on what it patently, and obviously to anyone literate, the diametric opposite of any possible solution; which is all The West have bee doing for the past century of persistent, and continuously accelerating, decay: Look at those guys. Perhaps try shaving off some of the sharpest of the “non-Western” corners, but build on a model which has proven to work (at least if one insists on empiricism, instead of simply trusting “theory” like 2+2 and stuff….). Instead of continuing blind faith in a “model” which was doomed to failure millions of years before it was first even attempted, as is the case with anything relying on any possible succession of benevolent “Dear Leaders” and proclaimed “Experts,” to distribute all spoils and allocate all resources which others have to work for.
Globalization of the labor force, including even some professional class jobs.
It is still hard to find high QUALITY skilled labor in America. Even at the professional level, it is still hard to find quality. Immigration has given us quantity but that isn’t quality.
RE: “Economics is a branch of mathematics/logic. Always has been, always will be.”
For me that makes no sense …. Mathematics is a priori, based on axioms independent of human experience. If economics were a priori that would certainly explain why it is “dismal” and fairly useless, as any treatment of economics as independent of human experience would be the epitome of foolishness.
Some of what you go on to describe as economics, and hence as simple math, sounds more like mere accounting. And the rest seems to be more of your standard attack on the horrible state (pun intended) of the US economic/political/societal systems, many of which I (and others, probably) agree with and some that seem like your usual hyperbole that you use to emphasize your position, but which I find detracts from it, at least for me it does.
Using “always” and/or “never” and a half-dozen of the most pejorative terms you can think of at the moment to describe “the rank idiots they always were, are, and will be.” displays your contempt but in an over-the-top manner that IMO makes it seem less serious rather than more emphatic.
I also am not sure that “idiot” is the right term for individuals who might very well be doing exactly what they are supposed to be doing (according to those who give them their orders, not you or I or anyone else on this board), and doing it very well. IOW, thieves who are extremely successful are not necessarily idiots.
“If economics were a priori that would certainly explain why it is “dismal” and fairly useless, as any treatment of economics as independent of human experience would be the epitome of foolishness.”
Read Man, Economy and State. Still far and away the so-far final existing treatise on economics “in entirety”, although starting t show its age.
Math is not “independent of human experience.” It formally can be, but the math “everyone” (aside from some mathematicians…… 🙂 ) relate to, have axioms very much chosen to agree with human intuition. Hence why math is used in everything from accounting to science.
Ditto formal logic. Also awfully useful (although one could be forgiven for missing that one as well, considering what passes for “logic” in the Fed era) Economics is much the same, just narrower in scope.
I don’t want to go off on a treatise; but even much of math, at least of the industrial/applied variety, is guided by “experience,” in the way of simulations/modelling, and even observation. Difference being, noone mindlessly claims universal extension of some model discovered to map well to Trans Alaska pipeline flow, until such really is universally proven. And if someone does, he is quickly corrected by those titulated like the Krugmans of the field.
As very much opposed to the quackshow attempted passed off as “macro-economics”, where curve fitting and “data-driven” cherry-picking is all there is; in ever more vain and specious proofs of such bloopers as the Philips curve etc. And then, this mindless, completely unsupported empiricism-without-any-metaphysic justifying it, is force-fed the rest of creation at gunpoint, by way of “policy” “agreed on by” “The Experts.”
“Some of what you go on to describe as economics, and hence as simple math, sounds more like mere accounting.”
Again, I can’t do better than referring to Rothbard.
As for “Never” and “always”, both are acceptable in (even boringly long….) internet comments, since qualifying every darned utterance down to precise probabilities, takes (even by my sordid standards for brevity…) too much space (both on page and in brains as constrained as mine..)
Once you have a “system” which is obviously incoherent, hence “wrong”, only “idiots” can ever believe in it. And when such a system is observably at least locally self sustaining, it is doing a good job of allocating power and influence over who gets to decide whether to sustain or dismantle it, to exactly them. Being “good” at doing what it takes to be rewarded for being an idiot, still resolves to no more than being unusually good at being an idiot. Which is a pretty good definition of an idiot.
RE: “Math is not “independent of human experience.” It formally can be …”
It formally can be is the point …
“The reason math has to be a priori is that we assume that all humans will agree ultimately upon the same mathematical truths.”
“Math is a priori, as evidenced by the fact that it is pure deductive reasoning and doesn’t require any sort of empirical observation.”
Notice that says “does not REQUIRE” rather than “never utilizes” … that is key …
I’m not saying there has never been any debate on the matter. There has been and there still is. The Philosophy of Mathematics has been, and still is, comprised of different schools of thought … as with any Philosophical subject.
But your suggestion that I read a book by an economist in order to be convinced that mathematics is a posteriori is absurd to me … I’ll stick with the works of Kant and Hume and Godel and other philosophers and mathematicians.
RE: “but the math “everyone” (aside from some mathematicians…… 🙂 ) relate to, have axioms very much chosen to agree with human intuition”
Euclidian is not the only “geometry” … “imaginary” numbers are counter-intuitive … and on and on …
RE: “Ditto formal logic.”
Again, I suggest you do a whole lot more research on the topic, read much more about the philosophy of mathematics rather than economics, because your reasoning as to why mathematics is a posteriori focuses on the wrong notions.
The mathematics relevant for economics, is a very, very narrow sliver of all of math. Non Euclidean geometries simply aren’t particularly relevant to any economic argument I am aware of. Maybe they will be in the future.
But basic arithmetic is relevant. And isn’t any more open to empirical refutation in economics, than it is in any other deductive pursuit. Hence, you know, for example, that if
1)Printing Washington’s face on paper pieces does not increase real wealth,
and
2) yet doing so “saves” some banks from “collapse”
and
3)
Owning something saved from collapse, makes one wealthier than owning something collapsed
then, if printing is undertaken:
a)those owning banks are wealthier than if the printing did not take place
and
b)those not owning banks must hence be less wealthy
No empirical “studies” can ever refute that. And any study purporting to do so, is bunk a priori.
We also trivially know, again without any “studies”, that the above generalizes to “since The Fed does not, can not, create any real wealth, any action it undertakes, which makes someone wealthier than they would be if the action was not undertaken, must inevitably come at the expense of making someone else less wealthy, hence poorer. As long as The Fed does not create any real wealth, it cannot do anything more than redistribute what is already there. Taking every penny of additional wealth it awards some, directly from some others. There is no net “stimulus.” Just redistribution.
Again, zero “studies” required. And furthermore, if any “study” purports to demonstrate otherwise, we know (or at least ought to…) that the study, and the clowns wasting their time performing it, is the problem. Not arithmetic.
The reason physics (and other natural sciences) cannot be reasoned about in a similarly purely deductive fashion, is that their subjects of study aren’t themselves simply abstract, logical definitions (the way “value” in economics is). Instead, natural sciences deal with interactions between objects which are themselves empirical. Such that, even two plus two isn’t necessarily always 4. For example at the subatomic level. Such that if two particles are added to a space with two others, and 5 particles are then observed, then whatever model expects it to be 4, must then be revised.
In economics, this is not the case. Because “value”, a/the fundamental entity of economics, is defined purely logically. It cannot be empirically measured directly. But is instead simply defined such that it excludes creating it out of thin air by way of nothing more than adding zeroes to a computer screen, or ink to paper. And furthermore, it is defined this way, in economics, because this is the only way to define it, which corresponds with human experience and intuition (In mathematics, it is perfectly valid to define it any other way and create fundamentally unintuitive alternative “economicses”…). Also, because of the way value is defined, deductions from its definition, are then also not open to empirical refutation. So you end up with the entirety of economics being a deductive discipline. Yet, on account of of intuitively, and coherently, chosen fundamental definitions and axioms, with an economics which still very much corresponds to human experience and intuition. Which is in no way rendered less so, by the mere fact that formal mathematics itself could work very well even with much less intuitive definitions for economic terms.
RE: “The mathematics relevant for economics, is a very, very narrow sliver of all of math.”
Agreed … and I’d also agree that people were probably “counting” from empirical observation before they ever started developing a formal deductive approach to “counting” via set or number theory. But that still does not make Mathematics a posteriori.
To repeat: “Math is a priori, as evidenced by the fact that it is pure deductive reasoning and doesn’t require any sort of empirical observation.”
Notice that says “does not REQUIRE” rather than “never utilizes” … that is key …
Thanks for pushing me to look up “economic value” …
What Is Economic Value?
Economic value can be described as a measure of the benefit from a good or service to an economic agent. It is typically measured in units of currency. Another interpretation is that economic value represents the maximum amount of money an agent is willing and able to pay for a good or service. The economic value should not be confused with market value, which is the minimum amount a consumer will pay for a good or service. Thus, economic value is often greater than the market value.
I’m not sure that qualifies as a “purely logical” definition … nor does it say that “value” cannot be measured empirically … it’s just that it is a highly subjective definition, rather than objective. It depends upon the subjective judgement of the “agent” or the “consumer”. But even subjective measures can be measured empirically … that’s where the statistics of populations/samples (the collection of subjects having the subjective measures) comes into play.
Some people apparently believe that Tesla has a “value” of ~1150 times its objective earnings … others do not …
The term “value” seems somewhat analogous to many physical properties which according to relativity are dependent upon the “reference frame of the observer”.
I agree that your argument about the Fed printing more currency simply redistributes already existing wealth by giving the newly printed currency to some (they have more of something worth less per unit) and taking wealth from those who receive none of the newly printed currency (they have the same amount of something worth less per unit) is irrefutable.
RE: “The reason physics (and other natural sciences) cannot be reasoned about in a similarly purely deductive fashion, is that their subjects of study aren’t themselves simply abstract, logical definitions …
Agreed …
RE: ” (the way “value” in economics is)”
Again, I ‘m not sure “value” is nothing more than an abstract, logical definition … I agree that it is a subjective rather than objective definition.
We’ve been watching Outlander. Pretty good depiction of the rentier society in France around 1745. Todays rentiers: Government, Med Cartel, Banks, Higher education. After they are done with you, there ain’t much left. Eventually the peasants rise up.
The Recovery Will Have Many Shapes, Not One.
A recession is when a neighbor loses his or her job. A depression is when you lose yours.
I guess some professional folks will be joining the lower ladder at American Airlines:
American Airlines to cut 19,000 jobs when U.S. aid expires in October
It is a bifurcated economy we live in. It has been that way for the better of part of 20 years. Even Trump will not be able to stop globalization and financialization with a second term. In fact I predict things get worse faster. I fully expect the United States will be taken over by Putin one day soon if Trump “wins” a second term as he is getting older. He is waiting to exact his revenge for tearing down the Berlin Wall and breaking up the Soviet Union. If you thought capitalists were bad wait until the oligarchs take over.
By 2030 on 22nd year of “recovery” LOL the majority of Americans will live on the street!
The FED and TPTB appear so incompetent that it’s almost as if the destruction of the working class was the intended result.
stuki would have a field day with this comment.
lol good one
One of the problems with robots/automation in the USA seems to be that it doesn’t get adopted as quickly as I thought it would. I wonder how much of the delay is because of unions and management not wanting to change the status quo? From a fiefdom perspective, perhaps less people is like less budget – you lose status and relevancy?
For example, years ago I read of a machine that repaired potholes. the story showed what appeared to be a working model of a machine that incorporated lasers, cameras, etc. and was manned by a single driver (sort of like modern garbage trucks). The truck moved over the pothole, where the hole was computer analyzed, hot tar was dropped in, a roller then rolled over the and job was done in a few minutes. Using this truck would replace a typical pothole repair team of 5 people with one person (you know, the guy directing traffic, the guy shoveling the tar, the guy driving the lead truck, the guy driving the roller, etc.).
Apparently, these machines are in active development:
Yet, I have never seen such a machine here in CA and potholes often take years to get fixed, especially on Caltrans maintained roads. Evan if they costs a$1 million apiece, when you figure out the cost of a 5 person unionized work crew including benefits and eventual pensions, the ROI on a $1 million machine should be 2-4 years. Are such machines being blocked by unions out of fear of job losses?
This is only one example. There are many, many other places where automation should have been deployed already but has not. One has to wonder if driverless trucks are really going to get deployed in any meaningful amount anytime soon.
“One has to wonder if driverless trucks are really going to get deployed in any meaningful amount anytime soon.”
…
Shush! This is one of Mish’s pet topics.
IMO, it will be at least a decade before meaningful impact – for a variety of reasons – technology, recession cratering capex, and enough thorough testing to get all the governing bodies to sign off.
I posted this link inside a thread above but for those who will miss it because they don’t reopen threads, this is a useful metric for employment (or lack of).
Daily Job cuts made a small announcement that they are not counting Covid job losses in their total. This is of courclse rediculous. They now post right wing garbage articles. I know because I have followed the site for 11 years.
Politico has a story saying WC workers also getting hit. Based on job postings, WC job postings are down 28% vs. 12% for BC work.
‘Not just a low-wage recession’: White-collar workers feel coronavirus squeeze
The drop in overall employment that white-collar industries have seen in five months is already on par with or worse than the hits they took during the Great Recession.
By MEGAN CASSELLA
08/23/2020 06:50 AM EDT
I don’t buy that labor unions would be to blame for this rising mess as Union membership has done nothing but decrease in the last 30+ years. Of course labor unions may not be peak efficiency, but isn’t there a negative correlation between union membership and federal deficits?
The cheese is gone… now there is just cheese scented spray.
Not with public sector unions. That would never have a negative correlation.
Private union membership is below 10%. Public union membership is still around 55%. Quite a difference!
Don’t ignore the retired population.
For most of us, nothing has changed financially.
Good thing they haven’t stopped deducting social security….
What about financial repression. Interest income is down 60%-70%.
For wealthy retired people with stocks, their portfolio has probably increased! However, if Trump defunds Social Security, it will run out potentially by 2030.
covid19 has only just begun: Coronavirus: World’s first reinfection case confirmed in Hong Kong University study, as city reports single-digit rise in cases for first time since early July
Covid-19 is likely to continue to circulate in the human population as in the case of other human coronaviruses, HKU researchers say link to scmp.com
This article is actually positive. He was infected by another strain. The virus changed like corona viruses typically will. But he had no symptoms with the second infection and was only caught during airport security. He had immunity. This is why 35-40% of first time infections also show no symptoms as people at some point in their lives had a similar corona virus. Our bodies are going to deal with this virus like all others. We basically have herd immunity in same areas already. Obviously some will keep the doom and gloom going and 90% of the people on this board are old unhappy men so I am sure you will flame me for being positive but this virus is going to go away quicker than you fear mongering will.
well said … finally, sentient, substantiated intelligence
Watched an MD on Anderson Cooper’s CNN this morning punch a lot of holes int his story/experience. One person’s experience, assuming that it is even being reported correctly is nothing more than an outlier at this time.
That up-and-down elevator also visualizes the tax burden. In a rational world someone has to pay for those government bailouts, or are we already post-rationalists?
That ship sailed long ago. We only look at assets and not liabilities.
We’re halfway, maybe more, through with an experiment to see just how much money we as a country can waste without completely debasing our currency. People were saying that in 2008….but at that time I didn’t think we were really that close….but now we probably are.
A good time to hold tangible assets with little or no leverage. That’s about the only hedge I see, anyway.
“If you are a professional able to work-at-home you probably landed on your feet.”
…
Sure. So far.
Recession nowhere near over. Just getting started. Waning fiscal stimulus / forbearance / moratorium + tightening credit = vicious cycle. It consumed the low wagers first, now heading up the wage ladder.
I fear you are correct. i’m one of those work-at-home folks, but I work for a medium sized software company who sells to government and big companies, and if they aren’t buying, its going to catch with us – sooner rather than later.
2022 — We are all Amazon now.
Well the world needs ditch diggers…. wait, maybe not.
We’re in the process of discovering that we have no use for the majority of human beings, but more keep coming.
Access to cheap debt gives a false sense of wealth and financial security. This eventually trickles down to individuals’ decision to reproduce. Debt can be erased in bankruptcy, but feeding humans can’t.
Feed humans, all you get is more humans.
I fall into the professional working from home category. despite being a little stir crazy, financially it works out. I’m saving on lunches at work(which are not cheap) as well as dog walking fees. its literally $1,000 a month so not pocket change.
You willingly paid $1K per month for 22 dog walks and 22 lunches? You must have spent nearly $30 per day on dog walks and $15 per lunch. Looks like you just cut out some insane waste. I’d rather live outside of a COVID petri dish and pay less than half for all of what you paid.
never said that. but dog walking isn’t cheap. $20 a walk
I saved even more money by not having a dog.
Automation is nothing new. 200 years ago in the US, most worked on a farm. Now only 2% work on farms. Secretaries were replaced by word processing software. No one needs a mathematician anymore. Maybe some low skilled, easily automated jobs will be gone, but something new will replace them.
“but something new will replace them.”
…
Why?
I see no turning back on automation / robotic. As it gains traction prices on artificial will drop as it scales … exacerbating situation.
Business in business to make a profit. Not provide welfare.
Automation is nothing new. Factories used to be very manual. Now much of what’s done in factories is automated. The number of employees per factory is far lower than it used to be. And the number of jobs overall keeps going up every decade.
I believe you have to ask yourself “what job would a human not tolerate being done by a robot.”
Do humans want to be entertained by robots? Be touched by robots as in health care or aesthetics like hair and nails? Some people don’t even want to be driven by robots.
I don’t know the answers but I have an odd faith that humans will find new ways to occupy themselves productively.
If you are saying we have a disconnected economy because of globalization I agree.
Absolutely. I would throw in globalization’s twin – financialization, too.
The irony of “academics” blaming robots for the despair of the unskilled is super rich given most of them champion big gov’t funded by payroll taxes, which is partially responsible for robots being a better proposition than hiring the unskilled.
Further, that “academics” wouldn’t recognize that robots lower the cost of living laughably puts them in same category as Luddites. Their lack of self awareness is incredibly funny.
Yep, every worker is also paying for someone he doesn’t even know. How can we be competitive when employers have to pay twice for each employee.
Ever take a deep dive into student loans? I did, and I was pretty surprised to find that the actual defaults are rare at flagship universities…..but rampant in these trade schools….many of which are nothing more than conduit schemes designed to put tax money into the hands of minority run diploma mills….And…that bankruptcy “reform” act was nothing more than a gift to the banks.
The MSM likes to talk about people who owe big money….but the average defaulted loan is in the 10K range. Did you know that?
Another thing. When I started professional school in 1981, interest rates were sky high (after Volcker raised them)….but the interest on student loans was about the same as it is now…with prime now nearly 10X lower than it was back then….making the spreads a big fat deal for the lenders too. Nothing but a scam.
Whether you get a great credential that gets you a good job or not, the set-up is grossly unfair to young people, who don’t have as many good options as we did.
The changes to the 2005 bankruptcy laws have basically made universities and the banks unaccountable for their product at the cost of enslaving many of the youth. Further, there’s no question that those changes combined with gov’t backing of student loans(see the housing market/FHA loans) has driven up the cost of college to the the point that it could be a dubious proposition if you don’t pick the right degree and/or college. (granted, gov’t backed loans have been around a long time…but a bankruptcy used to keep their activity in check and didn’t drive up costs as much previous to the 2005 changes)
I’ve been to 3 different colleges and two of them I went to I paid for myself, working during the day and going to college at night- 5 days a week for years, so that I wouldn’t have debt. That was the late 80’s/early 90’s. I don’t think most kids can do that today. I worked out an agreement with my employer attending the last college. (I also went to both summer sessions, so it was school year round, basically doing a 3/4 load while working full time)
The tuition for a low level small private college in Ohio at that time was around $13k a year(for full time-not including boarding if you had to) if you received no gov’t subsidies. (which I didn’t look for)
So my employer was doling out around $10K for me in addition to my salary. but got to write it off.
Maybe there are some kids doing something similar today…but if so I don’t see a whole lot of them- whereas I think it was more common place prior to gov’t backed loans in combination with no bankruptcy allowed driving up the cost of tuition.
My undergrad education mirrors yours…it was cheap enough to borrow short term and work…for most of it. I borrowed for dental school, at a time when it was wonderfully subsidized….such a small sum it seems funny now…. but my kids (whom I gave a full ride for undergrad) all had to borrow more than I did, just for 2 years of grad school. They have paid (or will pay) their loans, onerous as it is. But it will also keep them poor for years longer than should be the case.
Yea. Back in the late 60’s/early 70’s, to fight racism, the gov’t decided to get into the loan business. Black people could get loans for education and housing from the gov’t. And it may have helped some. Now, these policies have ballooned the cost of housing and education. People in their 20’s and 30’s of all races have been screwed by these policies.
Johnson really shouldn’t have pursued the Great Society and the Vietnam War at the same time. 🙂
Should he pursued any?
I believe the shot that killed Kennedy also killed America. I’ve often wondered how things would be today if he had not been assassinated. Johnson and Nixon have been disasters for our country.
Recall that there are a lot of “professionals” that rely on the worker bees for their daily bread.