(Vanity) Population and Jobs

The velveted paws of grey_whiskers ^ | 11-23-2014 | grey_whiskers

[grey_whiskers]

One of the laments of the Democrat has been that evil capitalists have been against “working families” (read: union labor) for the sake of profits; one example being the loss of jobs in manufacturing, or the destruction of the textile industry by shipping of jobs to lower-cost sites in Asia. The rejoinder of the right has been two-fold; first, that the union laborers priced themselves out of the market, and that many more jobs have been lost to mechanization and automation than to offshoring, and that the new knowledge jobs of the future depend on mathematics (e.g. designing and programming the robots that took the *old* jobs).

Of course, each side is partly right: it is true that portions of the workforce have priced themselves out of the market: but this is not entirely due to wages. Government mandates on occupational safety, maternity leave, workman’s compensation, and taxes (all of which are beloved of the left) help to drive up costs. And there are indirect costs on a business as well, not all related to compensation: taxation, safety inspections on the products, and environmental regulations all play their part. Government, it seems, while it thinks on the one hand that wealth is a zero-sum game, also believe that corporations are a bottomless well of revenue, and tax accordingly; but government power (as in empire-building) is a renewable resource: all we have to do is tax more, and *presto* -- Frank here, and Francine there, can *each* have their new subdivision within the Department of Self-Important Redundancy Department.

Business, caught between the devil and the deep blue government, have reacted to preserve their profits: contrary to the expectations of the left, companies do not exist primarily to provide a high standard of living to their employees, but to make their owners rich. (It is true that businesses hire a lot of deadweight in middle management, and fund ego trips of top executives which are of dubious profitability, but that’s another story.) So, faced with higher employee costs on the one hand, and higher taxation on the other, what can the business do? They can try to cut costs, to increase sales, and lower tax liabilities. Unfortunately, business appears to mirror government in one delusion: while the marketplace is something of a zero-sum game (among competitors within an industry), the business appears to believe that its *customers* are a bottomless pit of revenue. And so the call is always to “decrease costs, and increase revenue”: the easiest way to do this is to pay employees less, decrease product size and/or quality, and engage in flashy, trendy marketing to poach customers from competitors (think of the recent craze for “high-fiber” foods: one ingredient in many foods, added to increase fiber, is processed cellulose. In layman’s terms, sawdust.

And *you* thought you were ‘eating smart’.

Customers, on the other hand, find their livelihood threatened, demands from the government for their money, lessened personal freedom, and, due to the drive by business to cut costs (say, by hiring fewer people, making they work long hours without admitting it, or giving fewer benefits), they have less flexibility and less reserves in their own life if things *do* go bad. And when they do, and the person or family gets overwhelmed, who is there to offer “protection”? Of course, the government.

Of course, such a situation cannot be prolonged indefinitely. But when something gives, what is likely to happen?

Well, one way to treat of the problem is to consider it almost by analogy to a food web, of food, herbivore prey, and carnivore prey: too many prey and they starve due to overfeeding, and the predators have a field day eating the weakened members of the herd, bringing the numbers into balance. Too many predators cuts the herd down below sustainability, and now it’s the predators’ turn to go hungry.

But that isn’t quite right, is it, since in this case, businesses create real wealth, which can be shared by all. Well, maybe.

Is the wealth really all shared? Or is it *distributed*, in exchange or other goods or services tendered? (Remember the story about the chicken and the pigs deciding to offer a good breakfast to the farmer -- for the chickens, donating eggs was no big sacrifice, but for the pigs, supplying the bacon required *real* commitment.) So what happens in this case, when the problem is that there are increasing numbers of laborers, but due to increasing efficiency, there are not enough jobs for them; or even worse, if by mechanization, entire classes of jobs, for entire classes or intellectual / socioeconomic classes of people, have *vanished*?

In a way, you may think that this is good for the manufacturers: look, we have miniscule labor costs, due to mechanization! Yes, that’s true: but what happened to your *customer base*? (*) If there are not as many people who can afford your product as there used to be, your profits *will* shrink, unless you change your product mix, your line of business, or cannibalize your competitors. So what will happen -- in the short term -- is that you will have a short-lived race condition, and a new equilibrium established: a smaller customer base, a different set of companies, a slightly different product mix, to comport to the external conditions.

But there’s one other element, here: there are *three* players, not two. The third is the government, which plays an especially important role. Not, despite the most fervent wishes and best efforts of the Elizabeth Warren / Barack Obama crowd (“you didn’t build that!”), because government is absolutely necessary for voluntary exchange: but rather, because government both limits the corporation, through laws and regulation, AND because government confiscates the very lifeblood of commerce, that is, profit, through taxation. And government taxes both corporations (though those are passed on to the customer invisibly), and individuals: supposedly for “the common good” but in actuality, so that the money taken from Peter gets paid to Paul. After the government takes a suitable “finder’s fee” to reward itself for its own generosity with others’ money, of course. All with the noblest of intentions, just ask them.

So what happens, when the consumer, who is also an employee, has his livelihood taken away, due to cost cutting by the corporation? Well, at first, of course, he can count on “voting himself largesse out of the public purse.” For a time. But in a time of deficit spending? When the government reaches a point of practical -- if not formally admitted -- insolvency (for example, when vendors *to the government” find that their *own* creditors do not accept a chit against the government treasury as collateral?

The government must cut back benefits, or, more likely, inflate them into oblivion.

In general, what has happened in history when people have had nothing of value to exchange for the necessaries of life? Recall the story of Joseph in Genesis, and his dream of the seven fat years and the seven lean years? Joseph was foresighted, and laid up foodstuffs in plenty during the fat years, in order that starvation be prevented in the lean years. But the people had nothing to give in exchange for the food. Their solution? “Buy *us*. Take us as slaves, but let us live.”

This, then, is one endgame for the unsustainable spiral of the rich hoarding the wealth, refusing to share it, and seeking to eliminate the very middle class upon whom their wealth was first created. The Road to Serfdom, as it were.

The other?

Famine and death: on purpose. The evident goal of historical dictators, *and* the fervent dream of the current crop of environmental utopians. Leaving the world free of the human virus (except for the anointed), and no maddening crowds with their incessant demands for justice and charity.

And *this* time, and no mistake, the elites believe that they can get away with it: for with the advent of mechanization, fewer people are really necessary. Only the elite will really be needed or wanted. As Professor Frost said in C.S. Lewis’ novel That Hideous Strength"

“In the new age, what has hitherto been merely the intellectual nucleus of the race is to become, by gradual stages, the race itself. You are to conceive the species as an animal which has discovered how to simplify nutrition and locomotion to such a point that the old complex organs and the large body which contained them are no longer necessary. That large body is therefore to disappear. Only a tenth part of it will now be needed to support the brain. The individual is to become all head. The race is to become all Technocracy.”

How do we sound the alarm?

(*)This is kind of what has happened in the pell-mell rush to outsource jobs to China and India, on the grounds that “two billion customers”: I have actually read it argued that the loss of the $65,000/yr US computer progammer is *good* the US economy, because the Indians and / or Chinese replacing him now buy Coke and Gilette, and they hadn’t before. The problem is that now the US engineer is not buying nearly as much as he *had*, and moreover, may be on public assistance -- not to mention the misallocation of the money used to train him; and the overseas engineers, not only may be devoting their talents to growing foreign economies, but often, the knowledge and trade secrets are then used by foreign companies to *compete* with the US firm: the foreign companies being supported by a mixture of tariffs and “anti-Yankee” sentiment. So the US company has traded its intellectual advantage for a mess of pottage.

[grey_whiskers]

Food for thought.

[grey_whiskers]

Like, *PING*, folks.

Cheers!

[grey_whiskers]

They'll figure it out after the fun-employment(*) checks stop coming in.

(*)"fun"-employment, rembember that spin from early on? I wonder if that had anything to do with the Dem base staying home during the mid-terms

[Califreak]

How many of the most rabid true believers want to work though?

Makes no difference to them...

[familyop]

Well written, and thanks. We might see a transition one way or another, and we might as well get to work at trying to come out of the transition into a better world. There are applications in progress for the following in technologies, too, with many people hard at work.

Permaculture and the Myth of Scarcity
http://www.resilience.org/stories/2014-10-02/permaculture-and-the-myth-of-scarcity

[Califreak]

I wish they’d hurry up with this grand jury thing

Be done with it already

Let them all chimp out already

Get it overwith

[Califreak]

There’s some poor guy on another forum who lives right smack dab in the middle of that.

His family has temporarily gone upcountry for safety but he’s still there.

I suppose he works in the daytime and spends his nights trying to make sure they don’t burn the damned house down.

I hope the good people in that area of any stripe stay safe.

[familyop]

Oh...technologies. You’ve been a software developer (re. “race condition”)? The following is not what it might appear to be, and there are good reasons for that. Please, just have a look (20 minute video). It’s a way out of the mess.

Marcin Jakubowski - The Open Source Economy | @marioninstitute
https://www.youtube.com/watch?v=MIIzogiUHFY

http://opensourceecology.org/

There’s nothing wrong with a technocracy in the original sense—that is, technically capable producers having a part in running things. Nearly none of the influential folks running things now have any technical ability. They are anti-technology.

We need you, not necessarily for funding but for effort, yes. Not one particular subgroup of us (like that above) but any subgroup. Jump right into a project somewhere. Choose your own project, or start a new one. We each lead, at times. Other times, we follow or get out of the way.

[grey_whiskers]

Too late at night, I’ll look at it tomorrow.
I might PM you after I’ve seen it.

Thanks for the info. :-)

[Alamo-Girl]

Thank you so much for the engaging essay!

[nathanbedford]

You have articulated so well a question that has preoccupied me for some time: how can liberty and a decent society be preserved in the wake of technological revolution? You also confront us with the question whether in the era of globalization we should adopt a more mercantilist policy?

The obvious historic parallel to our digital and technological revolution currently remaking our world is the advent of the Industrial Revolution which dislocated whole populations as it eliminated traditional ways of sustaining life. In the modern age Western societies, for good or for ill, demand the government intervene to cushion dislocations generated by technological change. You raise the question whether governments are capable of coping with the scope of dislocations which are bound to occur as we move into a society in which wealth is increasingly created by robots and software.

Our social safety net society is peculiarly vulnerable to such change because so many of our social welfare programs rest on the foundation of employment. If workers are displaced for robots, what happens to the Social Security system? What happens to healthcare funded at the workplace? How can society be made to work if the social net is kept in place for those who do not work because robots are now doing their job? When a robot becomes obsolete with age does its employer pay a pension to the individual who lost his job to that robot? If not, what happens to our aged?

Obama's solution only makes the problem worse and of course that is the solution being imposed on us tyrannically, to import millions of uneducated (you should excuse the expression, Congresswoman Bachmann), illiterate and unskilled alien workers to fund Social Security and the rest of the social safety net. I think that scheme was tried by a fellow named Ponzi and it came to grief. Both the solution and the process which brings us this solution are, I fear, a model for future solutions be pushed by the left.

Elizabeth Warren tells us that we have no right to that wealth our robots might generate because " you didn't build that" and that song is going to become more and more popular as displaced people seize on it to rationalize government compelling wealth transfers to themselves.

History tells us that the dislocations of Dickensian horrors of the early Industrial Revolution in England should not be allowed to happen to us. Certainly, the people will not permit the government to stand idly by without "fixing" the problem, making things more "fair" and in exchange a huge chunk personal liberty will be readily sacrificed. Government will be only too eager to "manage" these dislocations but it is up to conservatives to preserve liberty while they do so.

I have no answer, I do not know how conservative values of liberty and preservation of property can be maintained in such an atmosphere. Clearly, the idea of basing the social net on employment will not survive. The idea of keeping wealth must somehow survive.

As to globalization, the United States is taking a knife to a gunfight because our leaders, beginning with George Bush Senior and Junior and right on through to today were oriented not as trustees with a fiduciary duty to their nation state, but as pioneers of one world global market. Philosophically, they saw no harm in sacrificing national advantage for the greater long-term goal of globalization. In dealing with the Chinese, the United States has exhibited an astonishing level of naïveté. History will undoubtedly someday reveal that the United States trade posture with China is also the product of an enormous degree of corruption.

The Chinese are making war by other means and we are making nice. Eventually this rubber band, like the rubber band holding the social safety net together in the face of technological change, will tear asunder.

[JDoutrider]

Bump for later

[Tax-chick]

Nice to see you composing again. A lot of important questions, without easy answers.

[grey_whiskers]

*Thank* you, tax-chick. It means a lot to hear from you.
(”Better composing than decomposing.”)
Cheers!

[Tax-chick]

”Better composing than decomposing.”

Very true. I make sure to eat plenty of preservatives.

Your point about cellulose in one's food was interesting, although I suppose it doesn't really matter to me. The whole point of fiber is for it to be indigestible.

[central_va]

There is a misconception, propagated by gloBULLists using standard fear tactics, that products manufactued in the USA are prohibitivly expensive due to “high” labor costs. This is not the case, as labor is only one component in manufacturing, a small one at that. Labor is between 5-7% of a finshed good’s retail price. Offshoring only saves a few pennies on the dollar and this foolish and short sided practice costs us dearly in social instability and the death of small manufacturing towns all over the USA. Sad and stupid.