President Trump has unleashed the animal spirits of our economy. African American unemployment is at a record-low 6.8%.
Innovation + Productivity = Economic Miracle
Warren Buffett’s Time Essay gives us the most accurate and concise explanation of the economic miracle known as the United States of America. It is a message of hope that the greatest economic powerhouse the world has ever known will continue its unprecedented championship run.
“Two words explain this miracle: innovation and productivity. Conversely, were today’s Americans doing the same things in the same ways as they did in 1776, we would be leading the same sort of lives as our forebears.
“To all this good news there is, of course, an important offset: in our 241 years, the progress that I’ve described has disrupted and displaced almost all of our country’s labor force. If that level of upheaval had been foreseen–which it clearly wasn’t–strong worker opposition would surely have formed and possibly doomed innovation. How, Americans would have asked, could all these unemployed farmers find work?
“We know today that the staggering productivity gains in farming were a blessing. They freed nearly 80% of the nation’s workforce to redeploy their efforts into new industries that have changed our way of life.”One of the many beauties of our nation is how our economy does organically “redeploy” workers to “new industries;” indeed that is one sign of a healthy, robust economy. Easy to do in boom times, but bad times leave cast-off workers mired in unemployment and despair. We are entering boom times, and we can’t allow all the hoopla to drown out the forgotten people.
Buffett closes his short essay with an optimistic challenge:
“The market system, however, has also left many people hopelessly behind, particularly as it has become ever more specialized. These devastating side effects can be ameliorated: a rich family takes care of all its children, not just those with talents valued by the marketplace.
“In the years of growth that certainly lie ahead, I have no doubt that America can both deliver riches to many and a decent life to all. We must not settle for less.”I agree. How do we do this?
How do we "ameliorate" the "devastating side effects" and help those left behind catch up?
How do we build an America that will “deliver riches to many and a decent life to all?”
This is from Politico:
ReplyDeletehttps://www.politico.com/magazine/story/2018/01/07/the-future-of-work-a-history-216244
I thought of the discussion here on automation.
This article point out at least a parallel threat.
Ed,
DeleteExcellent article! I finally found time to read it.
Thank you for providing the link.
Simple. Either remove all tax incentives that give preference to the "corporate form" or require that corporations pay dividends to stockholder once they reach a certain size (say market cap of $1b).
ReplyDeleteThis comment has been removed by the author.
DeleteWhat year do you propose that we "time travel" BACK to?
DeleteLet the Wizard of Omaha pay Berkshire Hathaway stock holders dividends instead of forcing them to sell their stock in order to cash in on appreciating stock values.
ReplyDeleteThis comment has been removed by the author.
DeleteReally?
DeleteMany corporations (like Microsoft) require that the federal government enforce "intellectual property" laws. DO you recommend that they stop doing so?
The point is, that freedom with no limits is a bellum omni contra omnes. Laissez-faire capitalism is the same. Limits are what turn freedom into a manageable "liberty". Should we go back to the mercantile (buy my opium or else China) days of laissez-faire capitalism?
DeleteLaissez-faire capitalism without a moral compass has wrought much poverty for others, IMO.
DeleteAn upvote to AOW's comment.
DeleteWhen the idea of a market economy was formally illustrated in Smith's Wealth of Nations the need for worker protection was integral.
We are experiencing increased productivity. How was it achieved? Automation and depressed wages? Where do the productivity gains go?
To fully answer this we must once and for all admit that the market economy should not be conflated with capitalism. We continue to weaken the very necessary moral compass.
By the way, capitalism is an economic system. It has no moral code.
DeleteIt exists only to generate profit and must be regulated.
This will probably bring the naysayers screaming about freedom but to allow man to exercise his unregulated desires is clearly folly.
But here's the problem, Duck: the moral compass cannot be imposed by a government. And once the moral compass is imposed by a government, individuals shrug and "Let Uncle Sam take care of this." Meanwhile, the loopholes get a workout.
DeleteI remember a time when "the well to do" in Northern Virginia voluntarily provided help for those who were poor or otherwise disadvantaged. That cohesion to the fabric of our community gradually ebbed away once all the social services came along.
My parents could never have been described as rich. But in the 1980s, they went out of their way to stock the cupboards of my neighbors' kitchen when the head of that household of four lost his job; they also "found" work for the man: my parents' yard work, house repairs, etc. I remember Mom saying, "They need help more than we need a vacation."
In my own observation, the rich today are snootier and more selfish than they used to be. Why? They have lost their moral compass.
Duck,
DeleteBy the way, capitalism is an economic system. It has no moral code.
But individuals should have a moral code.
It exists only to generate profit and must be regulated.
You know that I strongly disagree with what you define as regulation. Regulations serve to cause the burgeoning of the governmental bureaucracy -- and thereby eroding individual liberty.
Automation is a sign of an "over-capitalized" economy.
DeleteSpeedy, it's driven by a pressure to cut costs.
DeleteOr by ergonomics to protect trained and skilled employees.
I'm an Automation Engineer.
it's driven by a pressure to cut costs
DeleteYep, decreasing labour costs by increasing capital investment. I'm merely stating that perhaps this represents "excessive" capital investment (especially when people are out of work).
This comment has been removed by the author.
Delete...and I understand the need for automation with un-manned space exploration, ordinance disposal or nuclear waste remediation.
Delete...and I'm suggesting that by setting certain "limits" and "rules" surrounding capitalism, you can minimuze (or at least contain) gross abuses.
Delete"I have ALWAYS said that Capitalism ungoverned by a Christian Conscience –– like everythung else –– is apt to function as a Great Evil"
DeleteIndeed. Adam Smith was more a moralist than an economist, and he believed this as well, as did the Founding Fathers.
No system of morality = Hobbesean Dystopia
The challenge is to find the middle way.
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ReplyDeleteFT,
DeleteWe do INDEED publish optimistic posts here at this site. It’s not all negative here.
See my blog post of January 2 — and note the paucity of comments. **sigh**
Whatever made you think I was talking about THIS blog in particular, AOW?
DeleteThe whole COUNTRY has been awash in a turbulent OCEAN of BILE vomited up every hour on the hour every day by the Malignant Merchants of Malevolence and Mendacity. I has bred a climate of grim negativity that has had a depressing, degenerative effect on public confidence, and befouled the mood of the populace to the point where the avalanche of GOOD NEWS is OGNORED and seems to have little or no ameliorative effect.
As a society we have been manupulated into becoming ADDICTED to endless DISPUTE and VILIFICATION.
Kurt's post was a most welcome –– and all too rare –– RELIEF from the prevailing mood. I was expressing my gratitude to him, and making an honest attempt to answer his questions that was ALL.
I cannot understand why you would think my observation had anything to do with you, PERSONALLY.
FT,
DeleteWhatever made you think I was talking about THIS blog in particular, AOW?
Well, because I have PERSONALLY grown weary of finding so many negative stories and so few optimistic stories about which to post. Sources in which I used to find uplifting stories seem to have degraded.
I absolutely agree with this part of your above comment:
As a society we have been manupulated into becoming ADDICTED to endless DISPUTE and VILIFICATION.
How that manipulation was accomplished -- and continues to be accomplished -- is a discussion for another time.
"See my blog post of January 2 — and note the paucity of comments. **sigh**"
Delete30 comments is a paucity? I'm just glad one of them was mine.
"the very idea of a Minimum Wage [is] A Marfxian concept."
DeleteIt predates Marx considerably: the first minimum wage law in Britain was passed by Edward III in the mid-14th century.
"...hiring unskilled, under-privileged people on the bottom to perform the myriad MENIAL chores that must be done at competitive wages."
there's no way this can be economical. Automation / innovation has evaporated much of this work. Illegally underpaying immigrants is of course a gross market distortion and in itself unethical, but even once that were eliminated, a sense of scale should quickly convince you that there would still not be enough of that kind of work to make much impact on underemployment. SF is right: we need new industries.
I work in a highly automated plant.
DeleteWe have lines that go idle because we can't get people in to run them!
You don't have to be a rocket scientist, either!
Ed,
DeleteFor this site, when fewer posts are published, 30= a paucity. **wink**
Ed,
DeleteWe have lines that go idle because we can't get people in to run them!
Why can't you get people to man those lines?
No candidates, or unsuitable candidates? If the latter, what are they lacking?
DeleteExcellent discussion kicked off my a mini-thesis from Freethink!
DeleteJez: Indeed, we do "need new industries" in this new world of hyper-change.
IT work is still good, if you can get it, but it hasn't met with the promise of glamour, riches or even excitement it once promised, according to the IT people I know. Wages have trended down and most of it is high-tech drudgery.
Robotics and automation-related jobs will go down the same road of good solid work but not nearly as remunerative or exciting as the sci-fi cheerleaders had us believe.
The solution, of course, is for governments to free people to explore new frontiers.
Government can be a good cop, but bureaucracies possess infamously crabbed views and no imagination.
No government can craft an economy as well as free peoples acting and reacting to signals in an intelligently-policed free market.
In what way aren't people free to explore new ideas?
DeleteI have in mind regulatory barriers to market entry.
DeleteNot only is Goliath bigger than David, he now bellows out laughter from his impenetrable near-monopoly citadel built for him by government.
We could also discuss frivolous state and local licensing requirements of industries like manicure and pedicures, etc.
Point is, people with ideas and moxy drive economic growth and innovation, not governments. The better government is at fostering an environment of experimentation, the better the economy. The US is a prime example of that.
Did Obama's "Weathering" teams ever get all the nation's windows caulked? They haven't visited my house yet.
I don't know why we can't get people.
DeleteI have hired (and HR had fired over drug tests) people who seemed qualified. Others play a game of chasing higher wages. Those are technicians.
Operators just need math skills, good attitude and drug free screens.
We have good operators running robotic laser welding cells with high school educations. They do minor troubleshooting, loading and unloading, documenting production, forklift, etc.
Ed,
DeleteIs the drug problem that bad?
Which drugs are the drug screens monitoring?
Pot, Meth, Opiates, but I'm never told what they found.
DeleteHair clipping goes back 6 mos. One mistake in 6 mos....
Hair clippings, too? Yikes!
DeleteI can see a hair test catching a lot of people for pot, and I've heard of opiate tests lacking specificity, eg. testing positive for benign dosages, see https://www.snopes.com/medical/drugs/poppyseed.asp . I just looked up meth tests, and I see that false positives can be caused by a wide range of common anti-depressants and common remedies (including ibuprofen and sudafed, which I use fairly often).
DeleteI would suggest that HR shouldn't screen for pot (monitor for behaviour, not chemicals!), and not place too much trust in the other tests. Meanwhile, I hope candidates can contest those screens.
Jez, I agree on the pot.
DeleteMy dad left me a lot of Tylenol-4s before he died.
I would take them occasionally if I felt needed, and my niece living with us took them for cramps.
Now I could loose my job if I did that.
These extremes with regard to drug control will not work -- except to exacerbate the real drug problems (addiction).
DeleteTaking a pain killer from time to time does not constitute a drug problem.
I'm fairly libertarian (fully automatic machine guns should be sold in vending machines) but meth manufacturers should be put to death along with anyone that disagrees that they should be put to death.
DeleteTC,
DeleteMeth devastates the users and their families.
I've personally known only one person who managed to kick the meth habit. It took the loss of her oldest child, who walked away at age 14 and went to live with her grandmother, and the dissolution of her marriage to bring her to her senses.
She has left the stuff alone for about 10 years now. "Relapse" is always a possibility, though.
From Ed's referenced article:
ReplyDelete"Or maybe it won't be necessary to work as long and hard as we all seem to do today"
Also consider: https://eh.net/encyclopedia/hours-of-work-in-u-s-history/
It seems axiomatic, to me, that with continued increases in mechanization the above quote is undeniable.
Thanks for reading the link Jon.
DeleteI got from it (although a lib point) that the bigger threat to middle class is that everyone goes part time.
Retail and service is almost all there already.
SF,
ReplyDeleteHow do we build an America that will “deliver riches to many and a decent life to all?”
De-regulations and tax cuts should be a large part of that amelioration, IMO. President Trump seems to be moving in those directions.
BTW, I heard from my tax accountant over the weekend. Great news! Very likely, I will at long last be able to stop the time-consuming record keeping that has been necessary for the past several years -- in particular the record keeping related to tallying medical expenses.
Every tax cycle beginning with Tax Year 2009, I have spent innumerable hours and endured great angst with that kind of record keeping.
With the coming smart robotics revolution, the result of AI (artificial intelligence) the way we think about work, how we value work, and how we find self worth related to our work will need to change. Significantly so.
ReplyDeleteHow do we "ameliorate" the "devastating side effects" and help those left behind catch up?
ReplyDeleteWe don't. Let them starve to death.
Oh jeez. Fine. Give them jobs digging graves.
I got mine. F*** everybody else. You should be the spokesperson for the Repuglican Party.
DeleteMany on the "Religious Right" are neither.
DeleteYes yes, next you libs will scheme to get every high school football player into the NFL. Gold stars for showing up, regardless of work, acheivement or skill.
DeleteF*** off, commie.
You're still starving to death. :)
DeleteLet the Dirt Begin!
ReplyDeleteSCANDAL: OPRAH’S WORLD DEPOPULATION SCHEME DASHES PRESIDENTIAL HOPES
Oprah met secretly with Soros, Rockefeller to discuss population reduction
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ReplyDelete