Wednesday, June 15, 2016

A Model For Wealth Sharing When Few Work?

Is this the way the wealth of our society will be shared to insure consumption and the lifeblood of our economy when technology steals most of our jobs and few people work?  Mincome Program, Dauphine Manitoba, cancelled by Conservatives on change of government 35 years ago!

Friday, June 3, 2016

Don't blame American job losses on China!

Trump, and many workers, should blame technology, not trade, for our job losses - a point I've been making on this site since 2008.

And this displacement of workers by technology is creating record returns for companies and investors and giant bonuses and salaries for the executive classes.

Without change, this practice will continue robbing the economy of consumption leading to revolution by working classes, increasing crime, and failure of our economy as companies go bankrupt through loss of sales because the population has few consumption dollars for anything beyond basic needs.

The early signs of revolution?  The "Occupy" Movement of a few years ago and now the surprising political support for Bernie Sanders and Donald Trump!

Voters are fed up with the greed, corruption, and concentration of wealth in the hands of Corporate America and they demand change!  

Workers should share in the benefits of technology through decreasing work hours to keep up employment with ever-increasing wages.   

Because of these two historical adjustments, the pre-industrial revolution world has progressed from a 100 hour work week for every man, woman, and child to the present 37.5 hr work week with the highest standard of living in recorded history---but that work week has not changed for the last 60 years despite all of the computerized technology that is stealing the jobs.

Despite Trump’s and Clinton’s claims, automation has eliminated much lower-skilled work while productivity soars


Thursday, June 2, 2016


R.K.----And what of the impact of moving jobs to Mexico, China, and other low-wage countries, Bill? Technology is a factor for sure, but it's not the whole story.

MY RESPONSE--- R.K. --Manufacturing worldwide is being taken over by machines. Undoubtedly many of those machines are manufactured in the west and sold as part of our export trade---machines for trinkets. We are being left with non-transferable service jobs that are also being replaced by technology---eg BMO $1B 2nd qtr profit that was reduced due to more technology purchases that will replace more than the 1850 workers currently announced....but dividends are increasing as will executive salaries and bonuses....only the "controllers" of the economy are benefitting from the technology---not the workers or the economy. I have written extensively on this topic since 2008 on this site.

MY FURTHER RESPONSE--- R.K.---TImes are always changing and we'll always have some luddites resistant to change. There is no question that changing ideas about work and "earnings" have to accompany the changing realities and about how we look at work, what is fair and necessary in a society to ensure consumption to keep a vibrant economy afloat, and how to fairly share the fruits of the economy when few are working.  Our practise now is to deprecate those who are given survival money for not working (welfare---a bad word!)---but what do you call it when machines do virtually all work and few people work? This will be the future norm---few workers and how to fairly provide most of society with a living stipend to provide everyone with a decent living standard and sufficient consumption to keep the economy alive. This may happen in the next 20-30 years and is a pressing problem.  In the meantime, we should get used to the idea of job sharing through a decrease in working hours, with pay based on machine productivity rather than on human hours of labour, as we transition to the future of virtually no work....a day when machines read vital signs over your smartphone and take over medicine, a day when machines build machines and buildings (3D printing!), a day of all automated vehicles, a day when machines generate all computer code, a day when voice commands direct machines to deliver your every whim and fancy----a day of 100% leisure for all when the biggest problem for humankind will be figuring out how to productively, stimulatingly, and interestingly utilize our time---maybe a major problem facing humanity---but a problem successfully met in many undeveloped regions where art, music, and social interaction flourishes....Africa, Caribbean Islands, and pockets of the American unemployed particularly among the inner-city black populations who have been cultural leaders in the development of music, dance, language, fashion, sport, etc.

R.K. ----What's your solution, Bill?

MY RESPONSE--- Solution? As stated above----up until about 60 years ago, we've been following a consistent post industrial revolution pattern--decreasing work hours and increasing pay commensurate with increasing productivity!...With the accelerated takeover of work by technology and robotics, we'll have to once again resume a cut in work week hours while maintaining a growing fair share of the fruits of our economy, with pay based on productivity of our machines rather than human work hours, as we transition to days of little human work----coming in the next 20-30 years. We have to start envisioning a new world which will have new rules than the world we've known. Those who can't/won't accept the changes will be left behind. People have to look ahead and not behind. I remember giving a lecture to Chinese students in 1998 criticizing China for its overriding worship of China's glorious history and accomplishments. I summarized with the analogy that any person (country) that walks forward looking backward over their shoulder is bound to walk into a brick wall. Old problems, old questions, old attudes,  old answers, old ideas, old skills, old insights, old habits, and old ways of doing things while looking at the new world in old ways just won't work for the new problems, new questions, and new challenges we will face in our rapidly changing world where...knowledge is advancing exponentially and doubling in rapidly compressing periods of time. As Alice in Wonderland said, "I have to run as fast as I can just to keep up!

Interestingly, when machines take over all work, machine labour will cost the same everywhere and most production will migrate back to consumming countries or resouce-producing countries as transportation of goods and materials will become the determining issue. 

 R.K.---(drum roll please...) I agree with you, Bill. :)

R.K.---Not sure it will be as short a time frame as 20-30 years, but the world industrialized economies are evolving into a scenario where the masses will find it increasingly difficult to find meaningful, full time work based on the changes you elaborated on above.

My question to some free-market capitalists in an online debate group I participate in was, "What will happen to the tax rate on the affluent citizens if the range of traditional middle-class industrial and commercial worker jobs keep getting replaced by robotics and out-sourcing to low-wage, Third World countries? Who will pay all the tax revenue needed by the current-style, size and scope of Western Democracies?"

No one ventured a solid, solutions-based answer.

When I asked about a UBI (Universal Basic Income)? No answer besides, "Where would the money come from?"

What's your answer Bill?

MY RESPONSE---Ah ha, the tax rate!  Let's be fair!  In a utopian sharing world, everyone would realize that we are all on this boat together and there is no room for anyone whose insatiable greed wants to sink us all.  Those who benefit more from the society should pay more---basic!

In these days of soaring executive salaries, soaring stock markets as a result of record dividends payouts, burgeoning corporate bank accounts of dead cash, and  the resulting record concentration of wealth in the hands of a few, all facilitated by a race to the bottom in corporate tax rates granted by right wing governments, I have no sympathy for corporations or the wealthy who continually call for tax breaks, only as likely to hide their surplus cash in offshore tax dodges.

In the case of taxes required to sustain governments, i suspect they'd be fewer in the idyllic and inclusive "new world" that brought everyone fairly into the economy---with I'd suspect, less war, less crime, less jails, and less poverty, erasing the costliest functions of governments and reducing the size and massive costs of our bureaucracy to fund and carry out these programs.

But, carrying on the "boat analogy," there is a need for leadership on that boat by a captain and his lieutenants.  But, no matter how smart or skillful the captain, he is unlikely to save a leaking boat.  Boat safety, in large measure, rests on factors external to the captain---just as in an economy where profitability is often more a factor of world and national economic climate, which are factors external to company leadership.

The captain has a grave responsibility as best as he can, for looking after all others on the boat and thus may deserve a finer bed than the rest of us....but 10 beds or 50 beds on this crowded ship---NO WAY!  No one on the ship should be thrown overboard because the captain wants more room.  Similarly, it is unethical for self-interested and greedy CEO's to throw workers overboard to cut costs to justify their own increased salary and bonuses.  It is a privilege to run a business in this country and that comes with costs---taxes and social responsibility!

In point of fact, executive pay levels continue to climb, no matter the financial or business performance of the company.  CEO's are often awarded healthy increases despite slumping sales, profits, and stock market performance, even while laying off hundreds or thousands of workers. 

I have little concern for tax rates on the affluent.  According to Forbes Magazine, the 85 wealthiest in the world have as much wealth as the 3.5 million poorest, and in the USA, the wealthiest 1% captured 96% of all posi-financial crisis growth since 2009, while the bottom 90% became poorer.

According to Oxfam's "Working For The Few" Report, wealth controls government policymaking causing the rules to bend in favor of the rich, to the detriment of everyone else.   In the report, Supreme Court Justice Louis Brandeis, is quoted with the observation ‘We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both.’

In the above illustration, I've demonstrated that I believe in a variance of economic rewards within ethical and reasonable limits.  The question is what is a reasonable and fair variance...and actual practice varies widely around the world.   While the Swiss will vote on capping CEO salaries at 12 times the pay of their lowest paid workers (which is a huge incentive for them to raise these minimum wages), the 2012 average of S&P 500 US companies was $12.3M, or 354 times the salary of the average worker (or in perspective, the CEO makes his worker's annual salary in 6 hours), and in Japan, the large cap CEO makes 67 times the salary of his average worker who makes approximately the same as his counterpart USA worker.   It is interesting to compare how many hours top paid Canadian CEO's have to work to earn your annual income.

In the case of the giant wads of taxpayer cash provided to "save" GM, this appears to be the corporation calling "wolf" to get cash to add to their bottom line.  The $12B didn't produce one job, create one unit of increased productivity, create one new sale, or save jobs in Canada.  It showed in the financial statement "bottom line" as increased profitability supporting executive bonuses and salary increases and increased dividends for the investor class. The corporate world is always complaining of high costs and high taxes yet executive salaries and bonuses, the soaring stock market, and burgeoning corporate bank accounts are all at record highs so things cannot be too bleak for the corporate world....tag days need not be arranged for them anytime soon.  And Corporate tax rates, on monies not hidden offshore, have fallen to record lows and far smaller marginal tax rates than you and I footing the bills. Corporations operating here have to be held far more responsible for their ethics, honesty, and social responsibility---and paying their fair share of taxes.