218px-Abandoned_Packard_Automobile_Factory_Detroit_200.jpg
218px-Abandoned_Packard_Automobile_Factory_Detroit_200.jpg

It’s not that the US doesn’t make anything anymore. It’s productivity: the ability to make stuff using fewer people, that took away most of the manufacturing jobs. Economists and investors see productivity as good. But the workers left behind probably don’t, and haven’t since the Industrial Revolution began about two centuries ago. But for most of that time, the economy has managed to deal with the results of improved productivity. For most people, it has meant more prosperity, and people displaced from old jobs found new ones. Remember that most Americans were farmers then; we produce a lot more food now with only a few million farmers, and overall we’re a lot richer.

This leads to a general notion that people displaced by increases in productivity will always find new work. This is a frequentist notion. Frequentists base predictions of the future upon past experience. The classic example of frequentism’s weakness is that of the man falling off of a 60-story building. After 59 stories, nothing has gone wrong, so he might conclude that nothing will go wrong....

So 200 years of increasing productivity, of increasing prosperity, have generally been good. But we have to admit that there have been a lot of bodies left on the roadside along the way. Think about the early mills, which paid so little and kept finding cheaper and cheaper labor. Visit Lowell for a view of that. Initially they hired New England farm girls. New England (and especially New Hampshire, where many came from) does not have a lot of good farm land; between 1800 and 1850, most of the farmers left or abandoned agriculture. So for many, a low-paid factory job was actually a step up.

This same phenomenon is still happening today in China and other places and I’m not moralizing about it, just pointing out the history. In Lowell, the Yankee farm girls gave way to French-Canadian immigrants, who worked even cheaper, then Greek and other immigrants. The mills didn’t move in the 19th century; the low-paid workers did. Eventually the mills moved south, then overseas. And the mills still here need far fewer workers per unit of output.

Yet unemployment in the US overall isn’t all that high, and some other advanced economies have relatively few workers in the production sector, or in export industries. The answer comes from economics. The economy has a multiplier: Wealth input to a local economy circulates, so each productive job creates several more other jobs. These are mostly service jobs, a broad term that can include everything from housecleaners to hairdressers to mechanics to doctors to bankers.

The “service sector”, then, is basically the multiplier that hinges off of a multiplicand (no economists never use that word) of export industry and basic production. Close the mill in and the mill workers in the mill town lose their jobs, but so do the many service workers dependent on that money.

Yes, this is about politics, and it’s about why populist demagogues (no names needed) can find a ready audience in rural areas, in small towns, and in many places away from the major metropolitan areas. It explains the electoral map, and why the “Obama Coalition” failed to hold. It was automation.

In the early 19th century, the Luddites attacked the early English mills, fearful of losing their livelihoods. In the 1960s, the word “automation” got a lot of play. Allen Sherman, the comedy singer, even wrote a song about it, albeit a fairly stupid one about falling in love with a robot. But then the talk faded, with a second peak during the Reagan years when “office automation” referred to putting computer terminals, and later PCs, on desktops. Society and most workers survived those rounds of automation. Not all, of course. But many displaced workers moved to more prosperous markets. They might end up with only service jobs in Texas or California, but at least they had jobs.

And that’s what we no longer like to talk about. Productivity tools, such as automation, have always displaced people from their homes. First off the farms. But factory towns are transient too.

New England, where I live, is mostly forested nowadays. There are big urban and suburban areas, but former farmland returned to forest. Some remote towns have fewer than half as many people now as they had 200 years ago. One town I am familiar with had iron mines, forges, and farms. Then the train passed through a nearby town, making that one less competitive. Most people left. Today its land produces good lumber — a sustainable crop — and maple syrup. And many of its residents have a long commute to jobs elsewhere. The big displacement was so long ago that there is no pervasive sense of poverty; there just aren’t many people.

Now turn to the midwest (and places like it). The factories (and mines) that prospered there in the decades after WW II were no longer competitive, in a globalized economy, or else they simply make do with more automation and fewer people. Bringing back more factories won’t bring back that many jobs, but frankly even that isn’t going to happen. And without the factories, the multiplier jobs go away too —  unless the town in question gets particularly lucky, and gets a new export industry (that doesn’t just mean export from the country, just something bringing in money from outside of town), it will never regain prosperity. It will never be “great again”. Detroit itself has a better chance of a comeback simply because it is part of a major metropolitan area and the job market is naturally more diverse. Kentucky mining towns have no such opportunities.

The natural course of such towns is for people to leave. There are supposedly jobs elsewhere, even in “service”. Silicon Valley needs its servants, as does Wall Street. But that involves going there, and nowadays the cost of housing is so high in key coastal markets that service workers literally can’t afford to live there. Jobs go begging because there’s no place for the workers. And where there’s housing, there aren’t jobs.

Automation rewards capital, not labor. It is the natural course of capitalism, wherein wealth concentrates among the few with the most capital. With fits and starts, we’ve actually done okay with capitalism, but it has always worked best when the government intervened to help the displaced. That’s a missing element from today’s Randian Republicans: Government mostly helps capital, not workers. Obama didn’t do enough, it seems — actually Congress wouldn’t let him — but Drumpf wants to do far less. This will get ugly.

But it’s also quite possible that the multiplier has reached its limit. The frequentist fallacy will be proven in here too, that after 200 years of finding new work for people displaced by productivity improvements, it may not be possible any more. We just don’t need that many workers, even if they are willing to move. In a capitalist economy — and this rises to religion in America — one’s income must come from work (unless you’re very rich). So survival comes from having a job.

Now there is work that needs to be done, as the US public infrastructure is in pathetic disrepair, but it requires the public sector to pay for it, and that’s not forthcoming. Trump’s “infrastructure” talking point is a farce, basically just a plan to give tax breaks to hedge funds who invest in toll booths. Some European societies are farther along in decoupling work from survival, but the concept of permanent dole, or guaranteed minimum income, is anathema here. 

And just paying people to not work, while possible, fails another test. Work gives people dignity, and that’s a basic requirement too. It’s hard to quantify dignity, so economists ignore it, but even crap jobs like mining coal and working on an assembly line provide dignity. The dole doesn’t. This may be one reason why the working class people are so easily taken in by racism — they seek dignity from identity, since they can’t get it from accomplishment. If other avenues of dignity were provided, it might undermine racism.

Solving all of this is not going to be easy. There are several problems to be solved, and politics does not favor complex solutions when a simple one will do. If we’ve really reached the state where automation makes too many workers redundant, the market won’t solve it. But if we ignore the underlying issues, we will all be their victims.


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The 6000 lb dodge turbo diesel I just bought was

The 6000 lb dodge turbo diesel I just bought was made in Mexico. That’s  not automation, it’s a lousy trade deal made by and for wealthy people to get more wealthy. The common distraction of the wealthy blaming what are political decisions on immovable forces of modernisation won’t cut it anymore. It’s time to divvy up some of that wealth created by all this productivity. 

Instead of inventing fairy tales about how the impoverishment of huge segments of America was inevitable we need to think of ways to turn it around. It’s our choice, do we want to do it the easy way or the hard way. The easy way is via reform and a more egalitarian society. The hard way is pitchforks. 

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I often write that I commute past dozens of ligh

I often write that I commute past dozens of light manufacturing companies in a newly minted Trumplandia. The owners live in 5000 sq. ft. lakefront homes, drive Escalades and E-Classes, send their kids to Duke or Northwestern, or even Penn State, and own second and third homes in Colorado and Florida. They do well on six figure incomes and 10% ROE. Wall Street, however, demands seven figure incomes and 50% ROE. That’s what they mean by “profitable” and “competitive.”

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It maybe automation, it may be trade deals. It m

It maybe automation, it may be trade deals. It might be both. What’s sure is it’s easier to “fix” those deals than to adapt to automation.

And there is no reason not to try.

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It’s clearly both. The big debate is over the de

It’s clearly both.  The big debate is over the degree to which each is responsible. 

It’s also possible to deal with automation.  If automation increases productivity and the national wealth, we shouldn’t turn away from automation.  The issue is a distributional problem.  Given the public a dividend and a pat on the back for having made it possible to automate the task.  The problem is when all of those gains accrue to the owners of capital.  The gains never have been possible without labor’s contribution, so some accomodation needs to be made, especially for workers who are displaced.

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There's also another reason for midwestern plant

There's also another reason for midwestern plants to close. Low or no sales of farm equipment when the bottom falls out. Happened in the late 1980’s. There were massive layoffs at the farm equipment plants back then. A lot of smaller equipment is made locally, like gravity boxes used to haul grain to to elevators, sprayer equipment and they like. It's just not economical to ship them long distances. 

Unless the expand their product line outside of farm related products, they won't last. My husband’s old company expanded to supplying equipment to moving companies, i.e., the trailers for towing front wheel cars behind the moving trucks and two wheelers. They could use the same welding machines and the same paint line but weren't dependent on only commodity prices and government subsidies. 

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I believe we are headed for pitchforks.

I believe we are headed for pitchforks. 

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I think so too and pitchforks are unpredictable.

I think so too and pitchforks are unpredictable. 

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There is a lot to think about here and it brings

There is a lot to think about here and it brings to mind ‘everything old is made new again’. This isn’t a new situation. Just a new era for the same old exploitation. But soon, it will bite them all in the ass. Raising the wage for a living wage (so you can get workers where needed, people buying and renting residences and spending money in struggling areas), is just common sense. But that requires long-term vision. Not short-sighted greed. 

There just happens to be more of the latter (the greed, that is), than the former.

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People tend to get pretty ornery when they can’t

People tend to get pretty ornery when they can’t access the goods and services they need to live. French Revolution time? Send the angry poor to war so they can reduce their numbers time? I hope not.

How about we recognize our right to life also creates a duty for all of us to ensure that everyone has the means to exist? One way to do this is to create minimum and maximum incomes and the means to earn them. www.greedandgood.org/...

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*White people tend to get pretty ornery when the

*White people tend to get pretty ornery when they can’t access the goods and services they need to live.

You might be doing many people a huge disservice, and making entirely inaccurate political commentary, if you fail to acknowledge that white people are the demographic that voted for the pussy-grabbing asshole.  Meanwhile, POC, immigrants, all the people who are consistently at the bottom of the economic ladder did not choose to go full nihilist and vote for a corrupt, lying, bigoted climate change denier. 

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Foxconn alone has 1.3 million employees. In Chin

Foxconn alone has 1.3 million employees. In China. Clearly it's not about automation and productivity. More likely about money (wages) and ability to control un unionized people. The same 1.3 million could be working here if you could pay them China scale wages.

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A lot of people could be working in the US makin

A lot of people could be working in the US making decent wages if the CEOs weren’t so damn greedy.

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Protectionism could work, especially since we ar

Protectionism could work, especially since we are the world’s largest consumer market.  Of course, it would have the net effect of making the society poorer in the aggregate, but if the net result is that workers see a larger share of the gains from a smaller pool of economic growth, most workers would probably be happy to accept the trade off.

Personally, I would rather go with the optimal growth option, but to have a better system of distribution of income.  e.g. Nordic model with 50%+ percent unionization rates (nearly 80 percent in Finland) and a robust safety net is one option.  The problem in the U.S. is the 10 percent unionization rate (likely will go lower in the next four years with a hostile GOP in power in states and at the federal level).  If labor had more bargaining power, it would probably help to mitigate the negative impacts from globalization. 

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I have been supporting a guaranteed basic income

I have been supporting a guaranteed basic income. If machines are going to do the work that increases productivity, then they are creating wealth that will support income for all. As for the dignity of work? How much dignity is there in getting spit on by hot oil while working at McD’s?

I am of an age where many friends and family are retiring. And I have noted that after 1-3 months, they usually go back to work or volunteering. So I think we will find our dignity even if we don’t have to work for wages. There will be more art and more community and more gardens and more content creators for sites like this, because we will have more time. People won’t sit around staring at the walls. We will find new ways to be contributing members of society. Machines can’t replace creativity.


Please see Cartoons: Last-Minute Gifts Through Christmas Day! 

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That's the worrisome bit, when I hear people rea

That's the worrisome bit, when I hear people ready to jump in to champion the ‘populism’ of xenophobic, anti-establishment politics.  

Given automation, environmental degradation and need for sustainability, we need to look at building a whole new economic paradigm, which will require radical new ways of thinking and perceiving the world.  

People who can overlook the racism, sexism, willingness to set up a mother fucking Muslim registry; to vote for a pussy-grabbing asshole are not, in my mind people who have any interest in finding workable solutions to economic and environmental problems.  They’re people who are angry and looking for scapegoats.

I just don’t think they want to hear about a different way of doing things, they don’t want to be told there’s no dignity in getting black lung working in the coal mine.  

It seems, what they want is exactly what they voted for, a return to a 1950s America where ‘those people’ know their place, and Dad works at his good paying factors job, not thinking much about it, and Mom doesn’t work cause she doesn’t have to.

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My thoughts exactly.

My thoughts exactly.

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I note with amusement that the author of this st

I note with amusement that the author of this story takes a few passing swipes at frequentist statistics.  For those who don’t know this, there’s a bit of a philosophical war between the advocates of frequentist statistics and Bayesian statistics.  The key distinction between them is that the latter claims to quantify bias by putting a number on it, called “prior plausibility” or “Bayesian prior” (and similar names). 

In theory this sounds good, but in practice it’s subject to the mischief of subjectivity.  One can set the number high or low for the purpose (deliberate or otherwise) of seeking to falsify or support a hypothesis regardless of the data developed from observations.  This gets especially pernicious where the subject matter is in some way controversial or associated with other philosophical or factional fights in a field. 

For example what’s the prior probability of life existing on a given planet in a given star system?  Those who are committed to the belief that life is common, will tend to set a high number; those who are committed to the belief that life is rare or that Earth is the only life-bearing planet in the universe, will tend to set a low number.  Those numbers add exactly nothing to whatever understanding we may get from observations of the planet and the star system in which it resides.

In practice, both frequentist and Bayesian statistical methods can yield useful results or useless results.  But taking passing swipes at one or the other of them is lazy and disingenuous. 

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the economy just may no longer have plausible jo

the economy just may no longer have plausible jobs for everyone who needs one.

Wasn’t this a common refrain during the Long Depression in the late 19th century?  At least part of the problem was that so much wealth was concentrated in so few hands, that it had an impact on job creation through consumer consumption.  On the other hand, this was not much of a problem during the era where the top marginal tax rate was in excess of 90 percent.

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That’s not a frequentist assumption, it’s a grow

That’s not a frequentist assumption, it’s a growthist assumption.

Growthism reduced to math: the belief that it’s possible to map an infinite plane onto the surface of a Euclidean solid in Einsteinian fourspace.

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Glad to see this post on a really important topi

Glad to see this post on a really important topic.  I feel a bit weird about it because I started worrying about automation back in the 70’s and was proved wrong for many years.  But now, there seems to be a consensus that automation and particularly artificial intelligence (AI) are going to replace a huge number of jobs in the near future.  A number of recent articles have hypothesized that 40% of today’s jobs will be gone.  And we’re not talking about service jobs; we’re talking about the middle class.

What to do?  I think one of the critical functions of a government, at least one that is responsible to its citizens, is to nurture an economy that has jobs for all its citizens, whatever their skill and education is.  One way to do that is for government to hire people to do stuff that needs to be done, even if a machine could do it instead.  So taxes go up on high earners so government can hire more people.  But they need to be doing things that benefit society.  

So obvious things that we could use more of are:

• upgrading water and sewer systems

• improving recycling and waste disposal

• improve safety patrolling of neighborhoods

• drug treatment

• fix up the national parks, already

• day care.  Sheesh.

I’m reasonably confident that Exxon and Trump Enterprises aren’t going to do any of these things.  So we should tax them, so government can. 

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I dunno man (*or woman) I think it’s dangerous a

I dunno man (*or woman) I think it’s dangerous and ahistorical to gloss over people allowing themselves to be conned by a lying bigoted demagogue and to justify it because they face economic hardship.  The Germans faced economic hardship as well, largely of their own making and in response to WWI, do we go back and rewrite the history books to say that Nazism was justified because post-WWI sanctions were too harsh and caused an economic crisis?

Americans were the ones who forced ‘Good Germans’ to walk through concentration camps to confront what their willful blindness and inaction had wrought; now they’re saying he doesn’t really mean it when he talks about a Muslim registry?  Or deporting millions?

I agree with your economic analysis, especially when you speak of the future of automation and labour, and the need for human dignity.  But I’m not so much concerned with the dignity of people who have no concern for the dignity of women who will wake up every morning with a president who bragged about sexual assault, or the disabled who now have a president who mocked them.  I am much more concerned with protecting the dignity and rights of those who will be under attack during the next presidency. 

I also don’t think the same people who fell for such a con, that were willing to believe or overlook the ‘reality’ of a candidate who lied 70% of the time he opened his mouth (or fingered his Twitter) are willing to do the introspection, hardwork, and face the challenges of adapting to the new economic model we need to see global equality, environmental sustainability, and human dignity for all.

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The basic problem is income distribution.

The basic problem is income distribution.

Displaced worker have none.