DescentBB

Last night, my money managers held their annual night at the ballpark, watching the local team (A level ball, Carolina league). We had a presentation, after dinner and during the early innings, from a fellow who has considerable investment reputation(he will be appearing on CNBC this morning at 10, if you wish to hear him). I was talking with him about preparing for the upcoming industrial revolution around automation. He stresses geographic diversity and nimble liquidity to vastly oversimplify the strategy. What was most striking was a comment he made to me about employment prospects going forward: "most people under the age of 25 in the US were born into indentured servitude and simply don't realize it yet". Ponder that. Arrogant attitude of a wealthy power player?? Callous dismissal from a PhD economist? Maybe yes to both, but sobering as hell. I told him that for years, I'd been warning of a nouveau feudalism developing with most humans becoming serfs. He just nodded and said, "you're a smart man, give yourself credit"

I was listening to a Phil Knight interview on Boomberg the other day and he said essentially the same thing. He claimed manufacturing would be coming back to the states as promised, but there would be no actual jobs for humans. He said that robots would be doing all the work from now on. I guess that the only bright side is that we now need people who can repair the robots.

Until robots repair the robots, and other robots repair those, and we hope we can stay on Skynet's good side.

Top Gun wrote:Until robots repair the robots, and other robots repair those, and we hope we can stay on Skynet's good side.

even bleaker than that......given that the US has done nearly ZERO to deal with support for such projects, Japan particularly, along with others, are well positioned to be the ones providing the repair/upgrade/design labor. Sure,there will be local low-level tech positions, but the good money will be hard for US citizens to compete for.

On the plus side, we don't have Japan's horrific demographics crisis, provided Trump doesn't ★■◆● that up too.

I was watching a show about the Tesla factory in Fremont CA last night. That place is almost totally dominated by robots in almost every phase of car production. The few jobs I saw humans had were pretty menial and almost looked like an afterthought. It's a beautiful factory, but it's sterile and devoid of people.

Tesla has at least 6000 workers, but why do you think people like Musk are advocating the mincome…because he probably wants to get rid of the pesky humans altogether, but knows that complete automation can’t happen without it.

The mincome will not be the solution to the process, it will be the enabler.

Spidey wrote:Tesla has at least 6000 workers, but why do you think people like Musk are advocating the mincome…because he probably wants to get rid of the pesky humans altogether, but knows that complete automation can’t happen without it.

The mincome will not be the solution to the process, it will be the enabler.

I wasn't making a comment on Musk or mincome. I didn't even know he advocated mincome. I was just noting the vast and almost complete automation of his factory. In fact, the production line probably puts out a better quality car without the human element. It was clean, efficient and very orderly. As for what Americans are going to do for jobs, I don't have a solution.....other than to suggest we train them with technical skill requisite for the new age, repairing robots and manufacturing machinery because that's all that will be left. UNTIL we create robots that can fix everything that needs fixing.

Training everyone to be robot repair technicians is not a solution to the problem of automation replacing most jobs. If everyone had to be employed fixing the robots, what would be the point of automation in the first place? Production level robots simply don't break down that often.

Companies riding the wave of automation to higher profits need to keep in mind that this particular wave will eventually break on the shores of an economic reality where hardly anyone has any income to pay for said products anymore.

I'm a realist Krom. I know we're headed towards the ditch with no brakes when it comes to having enough future manufacturing jobs in this country to keep people at work. No one has work, no one makes any money, then one can afford to pay for any products. Capitalism takes a nose dive off the deep end into an empty pool. You missed my attempt at snark with my everybody-will-have-to-learn-to-fix-robots line.

Krom wrote:Training everyone to be robot repair technicians is not a solution to the problem of automation replacing most jobs. If everyone had to be employed fixing the robots, what would be the point of automation in the first place? Production level robots simply don't break down that often.

well summarized

Companies riding the wave of automation to higher profits need to keep in mind that this particular wave will eventually break on the shores of an economic reality where hardly anyone has any income to pay for said products anymore.

what you don't forsee is the fact that the 10% who remain, with income or cash assets, have PLENTY of money to generate profits, so the production will just change.The rest, not so much.....

The problem is that money will be extremely devalued because of the loss of what backs it.

Yeah, I'm having a hard time wrapping my head around any concept of the economy continuing to function with 90% of the population effectively absent. Where are these manufacturing plants going to generate their economies of scale required to even stay in business? If 90% of the population has no money, then what is the value of money in the first place? Things just don't work on scales so large and so fundamental it is difficult to even try and picture how to build a solution to them.

Saying the 10% with money left over will be able to generate even more profit is assuming the system continues to function somewhat similarly to how it has in the past and I think that is a pretty risky assumption with the changes that are creeping up in the next few decades.

Exactly...

The question isn’t really how much money you have , but how much consumer demand you have…in my opinion the wealthy just can’t generate enough consumer demand to maintain their own wealth, even if there was no devaluation problem to deal with.

methinks a whole new economic paradigm will present itself. It has to. What it will be will be dependant upon how governments respond to the realities.

now, the money thing is sort of a puzzle, because, to be honest, under the current system, most folks don't HAVE much money anyway. They own real estate? Largely no, the banks own that, along with a lot of other assets of value. The personal debt in the US is massive as it stands now, so what does that salary really get you? I don't see where 90% of the people having all the money and most of the income is all that much different than you have right now.

Yeah, the trend has been in progress for a long time already, we just haven't crossed the tipping point yet.

Krom wrote:Yeah, the trend has been in progress for a long time already, we just haven't crossed the tipping point yet.

if I get the time to dig up proper figures, I'll do it, but it would be interesting to see exactly what percentage of all monetary assets from cash to securities, to real estate, etc are currently in the hands of the most wealthy 10% in the US. And then, really wonder what the hell has to be reached before it becomes the tipping point. Going on sheer gut instinct, I suspect it already is staggering.

You also have to account for the massive inertia of the system and how far it can coast on just that.

Can we just skip past the massive inevitable ★■◆●-show straight to the Star Trek economy where money is meaningless and people only work because they want to?

sadly, I don't think we can......

https://www.washingtonpost.com/news/the ... eal-world/

http://www.slate.com/blogs/quora/2015/0 ... state.html

sigh, it's a start, I suppose.

Well, we'll probably never return to the status quo we've been enjoying for all these years. Something's going to change whether we like it or not because automation is here to stay for the time being.

Yea well, it would be nice to see the government trying to use some incentives to keep humans in the workplace, instead of going straight to the last resort.

Spidey wrote:Yea well, it would be nice to see the government trying to use some incentives to keep humans in the workplace, instead of going straight to the last resort.

wow, I"m surprised. I thought you were all about government not being involved in business, not picking 'winners and losers', etc. Now. you're advocating that government be involved in rendering US businesses globally uncompetetive, to the point of forced obsolescence in production. Can you clarify?

You're only surprised because I never fit into that little box you keep wanting me to fit into.

I don't think that's the surprise he means.

Spidey wrote:Yea well, it would be nice to see the government trying to use some incentives to keep humans in the workplace, instead of going straight to the last resort.

Give us all an example of what you see as an incentive?

Isn’t that what we pay those brainiacs in Washington for? I don’t know, but the most obvious would be tax breaks, and stuff like government contracts, permits etc. I’m sure I could come up with many more but I’m more into the big picture when it comes to stuff like this.

I was also thinking along the lines of carrot/stick.

The biggest incentive I can think of would be an actual customer base, so not doing anything that would actually enable full automation has to be first priority.

Well, who gets the tax breaks? Corporations or consumers and who's be more likely to put that money back into the economy?

Businesses would get the breaks and it doesn't matter where the money goes as long as it does it's job.

Since I know you believe that small business needs a tax break and I agree with that, how about the large global multinationals who do business based on labor arbitrage?

Any business that agrees to keep a reasonable human workforce would qualify.

Wouldn't work. The burden of taxes is a drop in the bucket compared to the cost of retaining even entry level full time employees. Short of the government straight up paying the company to keep humans working in it, which if you are going to go that far you may as well do it with mincome because it would cost less.

Yea, my ideas always suck after they have been butchered...please note tax breaks was only one idea...and the idea that I said carrot/stick.

So yea, the problem is going to be a very hard nut to crack, and I really have no motivation to think about it.

Automation is a subject I am passionate about!

The danger isn't that most of the workforce will be out of a job, the danger is the speed at which automation disrupts industries versus the time it takes the labor market to recover (similar to climate change and evolution in that respect). A good friend of mine argues with me constantly against my "robots are coming" hysteria. He's always trying to reassure me by sending articles from these ★■◆●ing business journals he reads all the time. I think all of these smarty-pants totally underestimate the danger. That danger is not that the robots are coming to take our jobs. That's inevitable. The danger is that we won't have a legal and ethical framework in place when ★■◆● starts falling apart. Economists put way too much faith in our ability to legislate economic problems away. ★■◆●, even raising minimum wage is constant struggle because of competing statistics. Now imagine how hard it will be to manage massive job loss in every industry across all income levels in a short time span. Just look at how bad things have been in the last ten years since the Global Recession. Now multiply that.

My buddy whose always trying to calm me down, he's a good 15 years younger than I am. He makes too much money (says so himself) and feels very secure in his job in the insurance industry because it "can't be done with AI." I have to keep reminding him that even it that's true (it isn't) everyone below his position will suffer the effects of automation. Their only choice will be to move up to his position, which creates more competition and drives down wages. Even if his job still exists in 10 years (it probably will) that position will pay a fraction of what it does today. (He'll have enough to retire anyway.)

In the US, this subject needs to be discussed without the pretense of political affiliation because it affects everyone equally and we collectively have NO ECONOMIC SOLUTION available, from anyone, regardless of which "tribe" we belong to. Personally I don't think UBI is a solution because it's too narrow, though some form of UBI should be considered as part of a larger plan.

My gut keeps telling me the best thing to do may be nothing.

At some point business must learn the lesson that humans can’t be removed from the system.

And only government is in the position to circumvent that lesson.
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Speaking of minimum wage...

http://www.pbs.org/newshour/making-sens ... e-workers/

vision clearly shares the same soapbox I'm standing on. Whether there is some sort of retooled concept of a 'workforce' or not, the transition will be staggering, and exacerbate current gaps between 'haves' and 'have-nots'. Well put, Vision.

What I'm curious to see is how fast there will be a reversal of the trend to offload societal responsibility to "the market" when "the market" really starts getting deeply dysfunctional. Will there be enough clear eyed citizens to effect enough change through the pressure release valve of democracy before the pitchforks come out? I tend to think not. The big changes really only happen after the pitchforks come out.