Friday, January 27, 2017

An Economic Model that Restores Jobs, Wages, and Profits in the Robotics Age

In response to inquiries, I have been inspired to dig deeper to further clarify thoughts I've expressed before but have never detailed through numbers. So following is an economic model that I've devised that returns and supports pre-robotics hiring and salary levels, as well as traditional corporate profit levels and that provides a reasonable and sensible model for the transition to the robotics future of little work. The major problem faced in most economic systems of all political philosophies is to glorify greed by concentrating wealth in the hands of a few. In Canada, for example, the two richest Canadians are wealthier than the bottom 30%. The rich and powerful are concentrating wealth by replacing workers with robotics, who neither get paid nor consume the product they make. Without acknowledging that in the end this slows down consumption ultimately resulting in the bankrupting of their companies as well as in helping to bring down the entire economy. The solution lies in evaluating merit of continuing the historical rules and ideas that are no longer working...Everything we know about economies and economic rules must change to alleviate the economic problems that we have to avoid upcoming revolution. In this case, historical practice and beliefs is a giant inert rock that is perpetuating a failing economy for most people. Change may require full-fledged revolution or international war but my hopeful wish is that change will come voluntarily and peacefully when all the rich corporate guys start recognizing their ensuing bankruptcy when robotics steals most jobs resulting in few product sales. A wise intermediate step would be to significantly cut work hours to retain nearly full employment with pay tied to productivity rather than hours worked. For example GM Oshawa used to employ 30,000 workers but now robotics has resulted in increased production with only 2000 workers, and huge corporate profits generated by cost savings from the decreased workforce. So GM could afford to hire the former 30,000 40 hr/week workers for 3 hr/week at the traditional old salaries based on productivity and not hours of work while maintaining traditional profit levels. Right now, the former salaries of the 28000 laid off employees is going to executive salaries and bonuses and record GM profits and investor dividends. Robotics will continue to deflate employment to near zero in the future. Lock step with this is the hope that common sense will prevail to insure that necessary change and revision occurs as needed to insure both sustainable economic health and a peaceful social future. Without voluntary and peaceful change to more fairness in the distribution of the proceeds of our North American economies, the revolutions in China and Egypt will be repeated here. Please note ---All figures quoted here are guestimates for illustrative purposes only---but principles used in their generation apply to the real situation.

Wednesday, January 4, 2017

Computerized Technology and Robotics Have Ushered In A New Era

The Intellectualist' magazine published the following table showing a shap change in economic performance in 1980---and someone asked me to account for the change.
The Intellectualist
"The Great Regression" - Do you notice where the change occurred? (Credit: The New York Times)

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And so I responded!

Apple computers were invented in 1976, and in 1977, my employer purchased 12 and provided me with one of the 12. My secretary had a very user-unfriendly IBM wordprocesser at the time where a lengthy address had to be inputted to find and access files

Apple used a menu of icons to easily find and access files, a system Microsoft copied in producing its windows operating system, which then became the norm for office computing and sparked similar ease-of-operation systems in the development of computerized mechanization of manufacturing technology.
All this happened starting in about 1980 to exponentially increase productivity, lower prices, and foster high employment and wage gains during the transition.
The reverse is true now with growing unemployment as robotics and other computerized technology steals most jobs which will usher in a new era when few work and sparking new rules about how we keep consumption necessary to keep the economy afloat for the new world.