Automation is collapsing our economy

[wellwisher]

The main reason for the economy collapsing is the growing size of the government. The easiest way to see this is with a practical example. Say you had $1000 extra dollars to invest. Many people will save this in some form of interest bearing account from saving to stocks. These choices causes their money to grow so it is worth more. This is how the economy grows since more real money is in play.

On the other hand, say we give this same money to the government. They will not save it or invest it in ways that make it grow, but will spend it at a value less than it is worth, due to redundancy, bad policy, paperwork and middlemen. This difference means less wealth is in play to grow the economy. Name one thing the government has ever done that gave the tax payer a rate of return on their tax investment? Giving money to the government, by removing it from the private sector, is like investing with a loser who will squander.

The main reason for the loser, is people are spending money that is not their own combined with no accountability for losses. Do you think Nancy Pelosi or Harry Reid or even President Obama would give their own personal money and wealth to the government to grow? The answer is no, they all use the private sector. Then like hypocrites blame this all their woes. How about elected officials having to invest their own money in the same government programs they invest the tax payer money in? If they think this will grow the economy, it should be a good investment for them, right?

Picture if one could have invested in ObamaCare from the ground floor. It was sold as saving money, so the stock would have soared in their ddi not lie or had truth in advertising. Instead every investor would be in the hole, not just losing their money, but now in debt for even more than they invested. This is less to grow the economy. This is why the CBO of the government predicts 2.5Million fewer jobs due to ObamaCare; huge money was lost and the economy shrunk.

 

[ElectricFetus]

I have no idea what a society with universal doers would find as valuable. I imagine that such a society would be so prosperous that the 'value' needed to be provided by an individual to society (and converted into money) to gain access to resources would be pretty small

Why? Human individuals that do not own robotic labor will not be able to gain access to resources that those that own robotic labor will.

- at least to meet the needs of a decent lifestyle. The way you describe these universal doers it's as if they can pull carbon from the atmosphere and soak in sunrays and make and do anything and everything.

yeah if they could do that then maybe everything would be that cheap, but they can't. There are fundamental physical limits of energy that present a minimum limit of energy needed to make any product, and in fact for many products today we are already at those limits. To make them cheaper would require more energy supply, and as I described before repeatedly there are limits to how much energy use we can expect on this planet.

If the AI has real emotion it's no longer possible to press this sentient being into doing work.

Not if it has no desired to do anything but service people and make people happy.

If it wanted to do work, then sure, it could - but if it could produce genuine human emotion, it wouldn't want to because happily working 24 hours a day 7 days a week is definitely not your typical 'human' emotion.

I said it can produce genuine emotion, not genuine 'human' emotion, making a robot that can do that would be very dangerous! But lets say your right, that there are some people that want say a REAL human maid that hates her work and hates being raped and does not like the fact that the robots only pretend to hate work and hate being raped as to try to please him... how many of those sick fuckers are there? Enough to provide everyone with meaningful employment toiling and suffering under them? If we prevent machines from having all the bad emotions, then your saying there would be value in the bad emotions only humans have? Genuine human torment would become something people would pay for? Even when they could get artificial human torment that looks just a real as the real thing? Heck even today we have video games and movies and not gladiator stadiums.

I'm not sure if I think humans would like to pump so many resources into providing children with a stimulating learning environment.

I don't think people are going to want to pump much resources into children period: look at the abysmal birth rates of developed countries as is and extrapolate. They can invest in children or use the money to have fun... people have been doing more of the latter.

Just look at the world we've created. Everything is about 'alleviating' parents from the 'chore' of parenting. Publicly funded tax-credit-based Day Supervision Factories take infant humans in the forth trimester and watch them from 6am-7pm. Leaving parents with the luxury to work longer and buy more stuff. School starts and ends to fit the work cycle - not the learning cycle (which should start around 11am for teens). TV and video games babysit kids once they do come home. Various SSRI's take care of the lost emotional development. School "Education" programs take care of all the 'teaching'.

Well for those like you, yous can run off and start yous own agrarian 'perfect' society, but technology will need to be limited for said society.

Doesn't seem like a society cares that much about children if you ask me. So, again, I have no idea what a society with a universal doer would value. Probably a lot of drugs and robot sex. Heck, I doubt most humans in such a society would 'want' to be around other humans. Thus, there wouldn't be much 'society'. Of course, if these AI could experience human-like emotion, I suppose they'd just pick up where we died off and BE the humans.

I would hope it the other way around, that human become machines, devoid of all the emotions we find unpleasant, immortal and tele-omnipresent. What you suggest would be very silly looking.

 

[ElectricFetus]

So, assuming a Universal Doer can make itself, then there is no need for any human to perform any labor. OK. Then the problem becomes one of private property rights.

I've been telling you that for pages now.

Before we worry about 'money', we need to agree on what is private property. As I understand, there is no satisfactory answer in the field of Ethics. Generally private property starts with the notion you mix your labor with material and it's yours - example, you plant a seed, you own the tree and the fruit from it is yours. While a Universal Doer will do a lot of things - it won't do everything. Thus, for some thing, this notion of private property will continue to remain true. Example: you feed and water your kidneys - you own them.

I think we agree you own your body?
I think we can agree we own the actions of our body?

How's that for a starting point?

Its a sucky starting point because it has nothing to do with the economy of the future, only your suggesting people sell their organs for money. You need to find a way that the free market will get everyone to own automated labor to supplement and eventually replace their incomes, to do all the work for every person without leaving anyone cut out.

 

[Michael]

Its a sucky starting point because it has nothing to do with the economy of the future, only your suggesting people sell their organs for money. You need to find a way that the free market will get everyone to own automated labor to supplement and eventually replace their incomes, to do all the work for every person without leaving anyone cut out.

I'm certainly not suggesting we start selling body parts (although that should be legal if you own your body).

Do we agree you own your body?
If so, then do we agree we own the actions of our body?

 

[ElectricFetus]

Do we agree you own your body?
If so, then do we agree we own the actions of our body?

What does that have to do with anything?

 

[river]

The economy is collapsing because of the lack of credit by the banks

 

[river]

As well it seems to me that the cash companies have are being spent in acquisitions rather than expanding their present capacity

And with acquisitions come layoffs , at least potentially , hopefully not , but .....

As the business thinks in terms of efficiencies

So real jobs as a whole have not been created ......yet

 

[Michael]

What does that have to do with anything?

Owning your body is the basis of property rights. For example, in a Communist State (like North Korea) your kidney could be taken, legally, for the 'good of the nation'. In the USA, some classes of humans were not classified as fully human, specifically to deprive them of property rights - their body. And their body's actions (ie: their labor). I would say these are the most important questions.

So?
Do we agree you own your body?
If so, then do we agree we own the actions of our body?

 

[ElectricFetus]

Do we agree you own your body? If so, then do we agree we own the actions of our body?

Of course I agree, it just has nothing to do with the problem of automation: the actions we do with our body are increasingly (on average) of less and less value economically, the same for out minds and the same even for our organs which are geting ever and ever closer to being synthesized or replaceable with artificial ones.

 

[joepistole]

Our Economy is collapsing because of...

AUTOMATION

The UNION are destroying this country's economy , and if nothing will be done we will collapse like the USSR economy.

Oh, and I suppose you have some evidence to back up your claims? Ah, no you don't. You are not the kind to be bothered with little things like facts and reason. Unions are a very small part of the workforce. Unions in the US have been on decline for decades. Only about 11% of the workforce are members of unions.

http://www.bls.gov/news.release/union2.nr0.htm

Two, by any measure the economy is not in decline. The economy is growing and has been since 2009 - one of those pesky little factual details again.

Automation is increasing productivity. It certainly has lessened the demand for labor in some industries. However it has had little impact on aggregate demand for labor. As automation and technology become more advanced and more capable at some point I think automation will have a negative impact on the aggregate demand for labor. But that time is not now.

The economy won't collapse if we exercise prudent fiscal policies. With the modern Republican Party behaving the way it has been, that is a very big if. One of the problems we face is the huge income and wealth gap.

 

[ElectricFetus]

Automation is increasing productivity. It certainly has lessened the demand for labor in some industries. However it has had little impact on aggregate demand for labor. As automation and technology become more advanced and more capable at some point I think automation will have a negative impact on the aggregate demand for labor. But that time is not now.

I would disagree. Again demand is not matching the increasing productivity automation provides, with now 80% of the workforce reduced to service sector jobs there is not enough income to buy up more stuff, as a result are economy is unstable, growth has been minimal and mostly negated by recessions since the start of this century, sure productivity is up but not employment, income is falling, how long do you think this can hold?

Sure you can say this is not collapsing the economy right now (merely inhibiting growth now) but when will it be collapsing the economy, surely not so far in the future to be ignorable now, should we not start dealing with problems before they come devastating?

 

[joepistole]

I would disagree. Again demand is not matching the increasing productivity automation provides, with now 80% of the workforce reduced to service sector jobs there is not enough income to buy up more stuff, as a result are economy is unstable, growth has been minimal and mostly negated by recessions since the start of this century, sure productivity is up but not employment, income is falling, how long do you think this can hold?

You are confusing two different issues. Productivity is a supply side measure. Demand for labor is obviously a demand side function. And you seem to think the service sector is something one is “reduced” to as if the service sector was somehow inferior. It isn’t. The demand for labor is measured by the unemployment rate. And the unemployment rate has been steadily falling since The Great Recession of 2007-2009 which means the demand for labor is increasing. So there is no indication that automation is reducing aggregate demand for labor at this time. Our current unemployment rate is 6.6%. It’s down from its Great Recession zenith of 10%. Full employment is estimated to be about 5.5%. So we are not that far away from full employment. So your notion that automation is adversely affecting aggregate demand is just not supported by the numbers.

There are three sectors of our economy. There is the primary sector which consists of agriculture and mining. There is the secondary sector or the manufacturing sector and there is the tertiary sector which is the service sector. The service sector is the largest sector as you noted. But that doesn’t mean it is inferior to the other two in any way. The service sector includes some very high paying professions, like physicians, nurses, technicians, lawyers, accountants, architects, software developers, educators, scientists, finance professionals and government workers. So equating the service sector to low end jobs is clearly a misperception. Therefore your reasoning that our economy is unstable as a result is also a misperception.

http://en.wikipedia.org/wiki/Tertiary_sector_of_the_economy

http://www.treasury.gov/resource-center/data-chart-center/Documents/20120502_EconomicGrowth.pdf

The income and wealth inequality is a problem for our economy. If unchecked it will lead to economic and social degradation. And I think that is what you are trying to get at. Think of the economy as a stream and the water in the stream as money. The problem with unrestricted capitalism is that some folks like to dam up the stream so they can have more water. But the water then becomes stagnant and the downstream folks take up pitchforks. That is why government is needed to keep the stream flowing and the water circulating.

Income and wealth inequality have nothing to do with automation. They are two very different animals.

http://en.wikipedia.org/wiki/Economic_inequality

https://ces.fas.harvard.edu/files/events/20130918_VS_Laurent_InequalityAsPollution.pdf

The most prosperous countries have lower rates of income and wealth inequality.

http://www.huffingtonpost.com/2012/10/31/worlds-most-prosperous-county-2012_n_2049725.html

Sure you can say this is not collapsing the economy right now (merely inhibiting growth now) but when will it be collapsing the economy, surely not so far in the future to be ignorable now, should we not start dealing with problems before they come devastating?

We solve our income and wealth inequality problems, we also solve any future problems with reduced demand for human labor caused by automation which at some point in the future will occur if we continue to develop and advance our technology. We have a fiscal policy problem, not an automation or technology problem.

 

[Billy T]

Hi Joe. I agree with most of your post 152 except this sentence:
"The demand for labor is measured by the unemployment rate."

There are two reasons (or sort of just one) for that. The BLS no longer calculates unemployment as they did in 1980. I.e. now does not count the non-working who have dropped out but still want a job, but have learned there is none for them or that if there is, it is part time and or a big mac jobs that only pays slightly more than the welfare they can collect. I.e. the labor force participation rate is lowest it has been in four decades!*

ShadowStat still uses the BLS's 1980 measure of unemployment and it is about 22%. Just to keep even with the growing labor force, US needs to create ~ 200,000 jobs per month but last report said only 130,000 were created and more than half (2/3 in first half of 2013, most recent data I have, and have posted before with reference) are big-mac and or part-time jobs. Yes things are going well if you are well educated and rich, owner of stocks, but not for typical Joe American.

* You may see this low labor participation rate stated to be due to baby boomers retiring but it is not. In fact the 60+ group participation rate is INCREASING. They did not save enough to retire well, know that if they give up the job they have they will never get another so are hanging on to the job they have - This makes getting a job even tougher for the young - fewer than normal good replacement jobs are opening. I have posted a dramatic graph showing this but did not find quickly so here with Google's help is sort of the same. I.e. the percentage still working in any old group is increasing with recent years, not falling.

but for all ages the LPR is falling, making BLS's new calculation of unemployment lower or better, but in fact jobs are every harder to find. See last graph below.

"The demand for labor is NOT measured by the unemployment rate." This falling LPR is.

 

[river]

Automation could be looked at differently

What if the Corps. Thought of selling each robot to the employee and the employee was responsible for all up-keep

Therefore the corps. Overhead is lower and you have more employment

Mind you the employee would need tech. Skills

 

[Michael]

Japan liberalized their economy in the 1950-60s and enjoyed the benefits of that liberalization in the 1970-80s. At which point they began to highly socialize their economy (Communist Chinese used to say: IF you want to learn to be a good Communist go to Japan). Then their economy stalled and they started their QE and there they languished ever since.

I don't think Japan's economic stagnation was due to automation. Interestingly, Japan actually has TONS of laws that require 'make-work' jobs. It got so ridiculous that Japan made and exported automated machines for sea-ports to load and unload cargo - but it was illegal to use those IN Japan (where they were required to use a human instead). Japan actively reduces automation or simply make's it a law that people have to do such and such a made-up unnecessary job (like directing people into a parking lot - that is a fairly commonly seen job in the cities that can still afford it). Did reducing automation at Japan's ports help their economy? I don't think so. It just costs more to export and import from Japan. It's idiotic. Who knows what knock on effect this create. While it may save a few jobs now, the other jobs that would have been created in the future will never come to be. That's the Japan of today. The country that lost out on all the jobs that never came to be and kept all the one's the should have been lost. Every year it looks rustier and poorer. I expect an economic rebound in about 30-35 years.

Do inner cities in the USA seem overly automated? I don't think so. Yet, no jobs. Why not?
Has automation helped or hindered the Chinese economy? Where Chinese better off when they had no, or next to no, automation?
Did the automation of the US farmers a 100 years ago (which displaced 80% of the workforce) help or hurt the US economy?


We live in a highly regulated society with reduced civil liberties and use fiat currency - all of this make it hard to create a business - and most people don't bother to. Not to mention, thanks to Federal Reserve's policy of constant deflation, not too many people would ever save up the capital to start a business. They'd be forced to borrow from a bank and because most a running on a tread mill to pay for all the free roads (you don't get a $8.5 trillion dollar war for free, as a small example of government expenditure) it simply will never happen. A 100 years ago if you asked your average American they'd say their goal in life was to create a business - and they did. Ask now, and most just want a job. Why? Well, (1) public schools mass produce workers - most who never learn how to start a business, and so there's an over supply or workers and under supply of business owners to hire workers and (2) the hyper-regulations prevent them from ever starting a small business and testing the markets with products. It's no surprise there's no work and way too many workers. Thanks to our Central Planners over at the Federal Reserve - they artificially manipulate the interest rate (cost of money) too low for to long and the entire economy went in the wrong direction and that's where we are. A few slum-lords closest to the money made out well, the rest of the society is stagnating. And every year a few million more workers are crapped out the arse-end of the public school system, all looking for a job.


Our economy is collapsing due to central planning.
Automation is the only thing holding this economy together.

 

[Michael]

Owning your body is the basis of property rights.So?
Do we agree you own your body?
If so, then do we agree we own the actions of our body?

Of course I agree, it just has nothing to do with the problem of automation: the actions we do with our body are increasingly (on average) of less and less value economically, the same for out minds and the same even for our organs which are geting ever and ever closer to being synthesized or replaceable with artificial ones.

IMO we don't have a problem with automation, we have a problem with property rights. A symptom of this is decreased opportunity in the hyper-regulated markets as fewer buyers become available relative to the number of people seeking to sell labor-hours. Could automation exacerbate the problem? Depends on. If your job was digging holes by hand, then yes, the shovel was no friend to you. But if you were in the business of buying dug holes - it was a boon. Not only do you get a cheap hole, but the people who dig holes can go on do something productive with themselves (if allowed to). Which they are not. Thus, the real underlying fundamental problems are the mediocre middle-class run public schools that create too many laborers looking to sell labor-hours to a middle class that doesn't want to deal with any competition; the therefor middle-class rigged market regulations that act as rent-seeking to reduce any and all competition and then there's the effects of our Centrally Planned fiat currency.

Welcome to a country run by mediocrity and owned by an oligarchy. The middle class has never liked playing fair and because this they always end up being owned. A story as old as time. Guilds and the Kings who protect them and therefor own them. Anyway, until we resolve property rights, these problems will only get worse. I'm fairly confident we'll continue to lose property rights, not gain them so the problems will only get worse.

 

[joepistole]

Japan liberalized their economy in the 1950-60s and enjoyed the benefits of that liberalization in the 1970-80s. At which point they began to highly socialize their economy (Communist Chinese used to say: IF you want to learn to be a good Communist go to Japan). Then their economy stalled and they started their QE and there they languished ever since.

I don't think Japan's economic stagnation was due to automation. Interestingly, Japan actually has TONS of laws that require 'make-work' jobs. It got so ridiculous that Japan made and exported automated machines for sea-ports to load and unload cargo - but it was illegal to use those IN Japan (where they were required to use a human instead). Japan actively reduces automation or simply make's it a law that people have to do such and such a made-up unnecessary job (like directing people into a parking lot - that is a fairly commonly seen job in the cities that can still afford it). Did reducing automation at Japan's ports help their economy? I don't think so. It just costs more to export and import from Japan. It's idiotic. Who knows what knock on effect this create. While it may save a few jobs now, the other jobs that would have been created in the future will never come to be. That's the Japan of today. The country that lost out on all the jobs that never came to be and kept all the one's the should have been lost. Every year it looks rustier and poorer. I expect an economic rebound in about 30-35 years.

Do inner cities in the USA seem overly automated? I don't think so. Yet, no jobs. Why not?
Has automation helped or hindered the Chinese economy? Where Chinese better off when they had no, or next to no, automation?
Did the automation of the US farmers a 100 years ago (which displaced 80% of the workforce) help or hurt the US economy?


We live in a highly regulated society with reduced civil liberties and use fiat currency - all of this make it hard to create a business - and most people don't bother to. Not to mention, thanks to Federal Reserve's policy of constant deflation, not too many people would ever save up the capital to start a business. They'd be forced to borrow from a bank and because most a running on a tread mill to pay for all the free roads (you don't get a $8.5 trillion dollar war for free, as a small example of government expenditure) it simply will never happen. A 100 years ago if you asked your average American they'd say their goal in life was to create a business - and they did. Ask now, and most just want a job. Why? Well, (1) public schools mass produce workers - most who never learn how to start a business, and so there's an over supply or workers and under supply of business owners to hire workers and (2) the hyper-regulations prevent them from ever starting a small business and testing the markets with products. It's no surprise there's no work and way too many workers. Thanks to our Central Planners over at the Federal Reserve - they artificially manipulate the interest rate (cost of money) too low for to long and the entire economy went in the wrong direction and that's where we are. A few slum-lords closest to the money made out well, the rest of the society is stagnating. And every year a few million more workers are crapped out the arse-end of the public school system, all looking for a job.


Our economy is collapsing due to central planning.
Automation is the only thing holding this economy together.

How can one person get virtually everything so wrong?

 

[Aqueous Id]

How can one person get virtually everything so wrong?

Not without a lot of practice.

 

[joepistole]

Hi Joe. I agree with most of your post 152 except this sentence:
"The demand for labor is measured by the unemployment rate."
There are two reasons (or sort of just one) for that. The BLS no longer calculates unemployment as they did in 1980. I.e. now does not count the non-working who have dropped out but still want a job, but have learned there is none for them or that if there is, it is part time and or a big mac jobs that only pays slightly more than the welfare they can collect. I.e. the labor force participation rate is lowest it has been in four decades!*
ShadowStat still uses the BLS's 1980 measure of unemployment and it is about 22%. Just to keep even with the growing labor force, US needs to create ~ 200,000 jobs per month but last report said only 130,000 were created and more than half (2/3 in first half of 2013, most recent data I have, and have posted before with reference) are big-mac and or part-time jobs. Yes things are going well if you are well educated and rich, owner of stocks, but not for typical Joe American.
* You may see this low labor participation rate stated to be due to baby boomers retiring but it is not. In fact the 60+ group participation rate is INCREASING. They did not save enough to retire well, know that if they give up the job they have they will never get another so are hanging on to the job they have - This makes getting a job even tougher for the young - fewer than normal good replacement jobs are opening. I have posted a dramatic graph showing this but did not find quickly so here with Google's help is sort of the same. I.e. the percentage still working in any old group is increasing with recent years, not falling.
but for all ages the LPR is falling, making BLS's new calculation of unemployment lower or better, but in fact jobs are every harder to find. See last graph below.
"The demand for labor is NOT measured by the unemployment rate." This falling LPR is.

The unemployment rate is a measure of the demand for labor. And there is nothing wrong with the unemployment numbers and data produced by the Bureau of Labor Statistics. The official numbers, the official methods are correct. That is why they are used by professionals and why Shadow Stats, the website you often reference and use as source material, is not a part of mainstream economics or even reported by on credible sources.
Definition of 'Demand For Labor'
A concept that describes the amount of demand for labor that an economy or firm is willing to employ at a given point in time. This demand may not necessarily be in long-run equilibrium, and is determined by the real wage, firms are willing to pay for this labor, and the amount of labor workers are willing to supply at that wage.
http://www.investopedia.com/terms/d/demand_for_labor.asp

Keynesian economics emphasizes the cyclical nature of unemployment and recommends government interventions in the economy that it claims will reduce unemployment during recessions. This theory focuses on recurrent shocks that suddenly reduce aggregate demand for goods and services and thus reduce demand for workers. Keynesian models recommend government interventions designed to increase demand for workers; these can include financial stimuli, publicly funded job creation, and expansionist monetary policies. Keynes believed that the root cause of unemployment is the desire of investors to receive more money rather than produce more products, which is not possible without public bodies producing new money.[4] http://en.wikipedia.org/wiki/Unemployment

 

[elte]

Some thoughts about automation and an economy in danger of collapse. In the respect that automation adds complexity to economic systems, and there are more potential failure points in complex systems, generally, then maybe our economy is more susceptible to collapse than a simple agrarian system, say.

But automation doesn't have to cause economic disruption. Everyone could spend almost all their time at leisure with robots doing all work, and it still be a perfectly viable system, IMO. Everyone would get paid a basic income for just being a person living legally as opposed to a life of crime.