Li: ritual, propriety, etiquette. Hsiao: love within the family (parents for children and children for parents. Yi: righteousness--the noblest way to act in a situation. Xin: honesty and trustworthiness. Jen: benevolence, humaneness towards others. Chung: loyalty to the state and authority. --Confucius (Kong Fuzi)

All articles appear in reverse chronological order [newest first].

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I believe the past is relevant, sometimes more than others of course. In most cases we are seeing history being repeated, so it is most relevant.

Thursday, March 19, 2020

Growing income inequality: The contribution of automation/mechanization and Artificial Intelligence to a smaller job market.

Remember those jobs that were shipped overseas by those so-called job creators? Remember the 2016 campaign rhetoric about bringing those jobs back? Well, the jobs coming back will not be the manual labor jobs that left.

Through the '50s, 60's and 70's there was an acceptance of the inevitable shift to automation, but it was progressing too slow. Many accepted it as inevitable but no one was ready for it. Mindsets and technology were to slow for corporate America, but corporate America couldn’t wait. Seeing the slow-motion increase of automation was drawing too much criticism and fear of job loss by the working man they realized that they needed an intermediate mechanism for developing automation technology and a fall guy to make way for the acceptance of automation. The intermediate mechanism was third world countries and the fall guy would be the unions.

Corporations shipped those jobs overseas to undercut unions. By villainizing union workers as the blame for high prices, they reduced their overhead greatly, but did you ever see a labor cost related price cut? No, because there is no such animal. After all lower prices weren’t the intent, higher profits were the motive.

Knowing that even non-union workers couldn’t compete with third-world wages, corporations lobbied for trade agreements that made it easier to ship American jobs overseas. In doing so they got the added benefits of avoiding regulation and environmental concerns as well as labor costs such as vacations, insurance, seniority, and safety regulations.
Still no related price reductions.

Corporate America villainized union workers by painting their good wages, benefits and job security as greedy detriments to low-cost manufacturing. Behind this villainization, corporate America was able to steadily ship those union jobs out of the country.

Those jobs will never return because they were never meant to. It wasn’t about reducing labor costs to acceptable levels, or lower prices… it was about reducing labor costs to near zero to increase profits! The rationalized shift to reduce manual labor cost was a distraction from the ultimate goal: automation/mechanization. Jobs were exported to reduce labor, environmental, benefits and safety cost until technology could catch up with the ultimate zero dollar manufacturing model:

As predicted workforce reductions have led to factories staffed with more machines and fewer workers, fewer supervisors, and once machines can fix machines, or even themselves, no supervisors or IT guys. Near zero labor cost.

That's what happened and now that most of those exported jobs have been mechanized they will return in the form of robotics and AI.
When was the last time you heard any rhetoric about bringing those jobs back? The 2016 election… and since then zilch!
“Declining unionization, increasingly demanding and empowered shareholders, decreasing real minimum wages, reduced worker protections, and the increases in outsourcing domestically and abroad have disempowered workers with profound consequences for the labor market and the broader economy,” the authors write in Declining Worker Power and American Economic Performance.

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