The US economy could sink into a quagmire of shrinking output, surging inflation, and soaring unemployment, renowned economist and New York University professor Nouriel Roubini warned last week during an eToro webinar.
He argued that the Federal Reserve might have to double interest rates to 5% in order to curb inflation. However, such an increase could choke economic growth and cause a spike in joblessness, Roubini stressed. Moreover, raising rates could trigger a debt crisis.
The economist also cautioned that the US regulator’s moves to rein in inflation could tank the economy, and cause crashes across stocks, bonds, housing, credit, private equity, and other assets in bubble territory. However, if the central bank gives up on fighting inflation, price increases could spiral out of control.
Stubborn inflation and the coronavirus pandemic might force the Fed to drive the US economy into an even deeper recession than the one it has avoided, Roubini warned.
“I worry about a stagflationary debt crisis, because you have the worst of the ’70s in terms of supply shocks, and you have the worst of the global financial crisis because of too much debt, and that combination is dangerous,” he said.
“If you’re behind the curve, eventually the recession is going to be more severe, the loss of jobs and income and wages is going to be more severe,” the economist explained, referring to the Fed’s rate hikes relative to inflation. “You need to be ahead of the curve.”
Roubini came to prominence for predicting the financial crisis of 2008-09 and was dubbed ‘Doctor Doom’ by Wall Street.
The answer to the question is “YES.”The large bailed-out creditors will end up with the property of the non-bailed-out debtors who are being pushed deeper into debt with “bail-out loans” and fees and penalties for missed debt payments. Write-offs for the One Percent, and more indebtedness for everyone else.
Turn your mind to the economy.The US has a work force of 164,000,000.The unemployment forecast from the work closedowns is 30%.That would mean 49,000,000 people who are potential rioters. (We are half way there with today’s report of a 16% unemployment rate with 22 million unemployed). Many of these people were already living paycheck to paycheck, could not raise $400, and their debts leave them no discretionary income.As they could barely service their debts when employed, how do they service them when unemployed and when their small businesses are closed and incurring costs but have no revenues?Loans further indebt them. The cash payouts to the unemployed might cover food and housing but will not service their debts.
Fast food franchises and stores in malls are saying they are not paying their rents for three months.Mall owners won’t be able to pay their creditors.The bailout works for no one except those who caused the problem. As they are being bailed out, they will have the money to buy up or foreclose on the bankrupted businesses. More property will be concentrated in fewer hands.
The bail-out scheme concocted by the New York banks and Trump’s Treasury Secretary, who earned the name “the foreclosure king” during his Wall Street career, leaves creditors whole and debtors deeper in debt.
The more debt is concentrated in fewer hands and the more indebted everyone else becomes, the less consumer purchasing power there is to drive the economy.The foreclosed assets become less valuable as their profitability declines with consumer purchasing power.
The destruction of the US economy has been underway since global corporations moved middle-class jobs offshore. It has been underway since the financial sector diverted a larger share of consumer income to the service of debt.It has been underway since corporations invested their profits in buying back their own shares instead of expanding their production capabilities.It has been underway since Quantitative Easing inflated stock and bond prices beyond realistic values. It has been going on since the rules against concentration were set aside and the Glass-Steagall Act was repealed.It has been going on since endless wars crowded out infrastructure investment and social safety net expansion.
Is this a plot or stupidity?Whatever the answer, the economy is being destroyed.
The economic problem is that private sector debt, both personal and corporate, is too great to be paid.This problem existed prior to the closedown.The closedown means that there is even less income with which to service the unsustainable level of debt.This is not a problem that can be fixed with more debt.
The problem is that banks lend to finance the purchase of existing financial assets, not to expand the economy’s productive potential.
The problem is that corporations use their profits and borrow money in order to buy back their own equity instead of investing in their businesses.The executives indebt the corporations while decapitalizing them, and they are rewarded for doing so with “performance bonuses.”
The problem is that global corporations thinking short-term moved high-productivity, high-value-added US jobs to Asia, thus reducing earned income in the US, impairing state and local tax base, and causing the Federal Reserve to substitute a growth in consumer debt in place of the lost consumer income growth.
The people in charge of the fix are only fixing it for themselves and in a short-sighted way.There is only one way to fix the situation, and that is to write down private sector debts to levels that can be serviced.As the creditors are being bailed out regardless, their loan losses don’t matter.
The bank and corporate bailouts are an opportunity to fix the economy in other important ways. In effect, the bailouts amount to nationalization.The government should accept the ownership that it is purchasing.Then the government can break up the “banks too big to fail” and separate investment from commercial banking without having to pass new Glass-Steagall legislation and without having to battle against financial lobbying in Congress.Once broken up, the banks could be sold off.This would take enormous vulnerability out of the financial system and restore financial competition.With corporations in government hands, the jobs could be brought home from overseas.The middle class would be restored.
These measures together with a debt writedown would restore consumer purchasing power. Pent-up demand would propel the economy to higher growth as occurred following World War II.
This is a real solution to a real problem.But with the One Percent in charge of the problem, we are not going to get a real solution.We are going to get more money used to push up prices of financial assets and paper over unsustainable debt and a dying economy with an artificially-inflated stock market.
The elite have failed us too many times.It is time to dethrone them.
The unemployment report today was widely acknowledged as being incorrect even by the mainstream media when “only” 700,000 jobs were reported lost last month. We already have data that approximately 10 million people have filed for unemployment benefits in the last couple of weeks. This upcoming recession, the Novel Recession, is largely one that is being brought on by a global shutdown to prevent the spread of the COVID-19 outbreak. Yet the speed in which this recession is coming just goes to show how fragile our economy really was and how many Americans were already living on the financial edge.
The Novel Depression Expands
It cannot be overstated how fast the unemployment figures are growing and we are only a couple of weeks into the shutdown. The BLS report that came out today is lagging in a big way what is happening on the ground. Already at the very least 10 million people have lost their jobs:
Last week, initial unemployment claims came in above 2 million. This week they came in close to 7 million for nearly a total of 10 million filings within a couple of weeks. Yet this does not tell the entire story. We know from countless news stories that unemployment benefits websites across many states are being slammed and many people are giving up filing since they cannot get through. So the figures are actually worse than they appear and next week they will be worse as more people get through to file.
Why do we suspect this will be worse than the Great Depression in terms of unemployment figures? The Great Depression at its peak had a 24.9 percent unemployment rate. We are going to get there if we stay at this rate within a couple of months. To project this, just look at how many people are employed by industry:
You have 19.5 million Americans working in “office admin support” roles that are largely paid on an hourly rate. You have 14.3 million in sales (hard to do sales when you are unable to get out with clients). You have 13.4 million in food preparation which is clearly been cutting aggressively. Another 8.6 million are retail sales workers (most are not working and not getting paid since most are hourly). Another 7.5 million in food and beverage serving work that are not getting paid. That is 66 million jobs with extremely high risk of being out of work based on the shutdown guidelines. Of course the other occupations are also working from home to some degree and many will be laid off if this continues.
To get to the peak of the Great Depression level of unemployment we would need to hit 36.3 million workers out of a job. The country already has 10 million filing for unemployment benefits within two weeks. At this rate, come June or July we are going to see high teens and into the 20s in terms of the unemployment percentage.
What is troubling is that half of the country was already living paycheck to paycheck before this coronavirus hit. A record in the stock market, a historically low unemployment rate, and easy access to debt simply covered the grim reality that we are now experiencing. That reality is that there wasn’t much there for the average worker already to begin with. Two weeks is all it is taking to send millions of Americans off the financial deep end. People are going to miss mortgage payments, car payments, student debt payments, and this will rippled into the financial system.
This Novel Recession is going to be painful. Some expect a V-shaped recovery but that doesn’t seem likely. Once the economy opens, up it is likely to open up slowly. If you look at China, many places are opening up but everyone needs to wear masks, some places have temperatures being checked, and other places have strict social distancing guidelines. Will people take their families to movies once they open up or to crowded locations knowing how contagious this virus is?
This is going to be a painful recession and the virus is accelerating the already deep economic frailty in many economies. Let us hope this doesn’t last longer than a few months.
“Your rights are evaporating, your government has failed to provide the bare minimum social safety nets during a very manageable pandemic, your nation’s billionaire class has been growing wealthier and wealthier while most of you would struggle to pay a $1000 emergency bill, but sure, China is your real enemy.”
Ten million Americans declare unemployment in two weeks and all your government does is give you a $1,200 “advance” on your tax return while bailing out corporations with the largest wealth transfer ever, and some of you are still shrieking about Russia and China. Pathetic fucking tools.
Your rights are evaporating, your government has failed to provide the bare minimum social safety nets during a very manageable pandemic, your nation’s billionaire class has been growing wealthier and wealthier while most of you would struggle to pay a $1000 emergency bill, but sure, China is your real enemy.
Many Americans being plunged into debt and destitution. Many young Americans about to start contemplating joining the military. Many Pentagon officials factoring this in to their future calculations. Poverty has long served as a makeshift draft in the dangerous, dying US empire.
Not that it should surprise any American that this crisis has only wound up benefiting massive corporations, debt slave owners, government agencies and the US war machine. These are the real US government, after all.
Keep in mind that virtually everything you hear from conservatives and mainstream liberals right now is basically just an irrational lashing out over their entire ideology faceplanting in front of the entire world.
Governments which prohibit people from providing for themselves without providing for those people do not deserve to exist. There is no legitimate basis for declaring a lockdown in any area without first ensuring that you can adequately provide for everyone whose financial stability is disrupted by this, and if you do it’s perfectly legitimate for the citizenry to resist your lockdown.
I could probably think of dozens of things the drivers of the US government could stand to gain by deliberately letting this pandemic get a lot worse than it needs to in America.
The entire Cuomo family is a corrupt political dynasty and the sooner America flushes them down the toilet the better.
Friendly reminder that more people would trust “authoritative” news outlets about this virus if those outlets didn’t have an extensive history of constantly lying to the public about very important matters. You can’t blame people for being distrustful when you made them that way.
I personally wouldn’t invest a lot of emotional energy in the hope that things will go back to normal. “Normal” is gone forever. Even before the virus the only consistent pattern we’ve been seeing is things getting stranger and stranger. We’re not in Kansas anymore, Toto.
Covid stats paint an unclear picture since governments likely distort their numbers, testing is sparse and many are asymptomatic. To get a clearer picture of our situation, listen to what medical staff are saying where it’s bad, since overwhelmed hospitals are the primary concern.
People: May we please have minimal authoritarian responses to this pandemic and adequate protection from poverty?
Governments: No but you may have the exact opposite of those things.
There isn’t actually any contradiction in the beliefs that (A) the virus is dangerous, (B) mass unemployment is dangerous, and (C) authoritarian government policies are dangerous. There needn’t be any cognitive dissonance holding all three at once; they’re not mutually exclusive.
Contrary to popular belief, Bradbury’s Fahrenheit 451 was not about an oppressive dictatorship but a society getting exactly what it asked for; people were so dumbed down by television that they voted for books to be burned because they didn’t want to be challenged or offended. Worth remembering as people are demanding more authoritarian lockdown measures and snitching on their neighbors for going on a second run.
Continuing starvation sanctions during a global pandemic is biowarfare.
I don’t remember voting for a paradigm where powerful governments pour the lion’s share of resources into sabotaging, toppling and destroying nations which don’t defer to their interests. Do you?
Start-ups and mom-and-pop shops are going bust all over the place and the US government is helping the big corporations sweep them up for peanuts. Time to stop stanning for billionaires my aspirational, entrepreneurial friends. You are mere fleas to them.
USA: We’re moving more troops to the Middle East.
Middle East: Why?
USA: To protect the troops we already have there.
Middle East: Why were those troops here?
USA: To protect the military bases we have there.
Middle East: And why were those bases here?
USA: Our troops needed somewhere to sleep.
We should be relaxing at home assured of our financial and medical stability while bankers, debt collectors and arms manufacturers stress about their future.
I hope all you couples stuck at home together are getting world-transformingly vulnerable with each other and having world-transformingly awesome sex (in that order).
The post-apocalyptic movies lied to you about human nature. People tend to be more caring and compassionate with each other in a time of great crisis, not less. Please remember this going forward.
Nobody knows what’s going to happen and anyone who says they do is bullshitting.
There’s no reason to feel confident that anything is impossible anymore, because everything’s changing so quickly and unpredictably. Orwellian dystopia? Maybe. World War 3? Maybe. Nuclear war? Maybe. Revolution? Maybe. Mass-scale awakening? Maybe. Create a new world? Maybe.
When we get to a point where literally just about everything can be done more cheaply and more efficiently by robots, the elite won’t have any use for the rest of us at all. For most of human history, the wealthy have needed the poor to do the work that is necessary to run their businesses and make them even wealthier. In this day and age we like to call ourselves “employees”, but in reality we are their servants. Some of us may be more well paid than others, but the vast majority of us are expending our best years serving their enterprises so that we can pay the bills. Unfortunately, that paradigm is rapidly changing, and many of the jobs that humans are doing today will be done by robots in the not too distant future. In fact, millions of human workers have already been displaced, and as you will see below experts are warning that the job losses are likely to greatly accelerate in the years to come.
Competition with technology is one of the reasons why wage growth has been so stagnant over the past couple of decades. The only way it makes sense for an employer to hire you is if you can do a job less expensively than some form of technology can do it.
As a result, close to two-thirds of the jobs that have been created in the United States over the past couple of decades have been low wage jobs, and the middle class is being steadily hollowed out.
But as robots continue to become cheaper and more efficient, even our lowest paying jobs will be vanishing in enormous numbers.
For example, it is being reported that executives at Walmart plan to greatly increase the size of their “robot army”…
Walmart Inc.’s robot army is growing. The world’s largest retailer will add shelf-scanning robots to 650 more U.S. stores by the end of the summer, bringing its fleet to 1,000. The six-foot-tall Bossa Nova devices, equipped with 15 cameras each, roam aisles and send alerts to store employees’ handheld devices when items are out of stock, helping to solve a vexing problem that costs retailers nearly a trillion dollars annually, according to researcher IHL Group.
The new robots, designed by San Francisco-based Bossa Nova Robotics Inc., join the ranks of Walmart’s increasingly automated workforce which also includes devices to scrub floors, unload trucks and gather online-grocery orders.
Walmart is testing out a new employee structure within its stores in an attempt to cut down the size of its store management staff.
The nation’s biggest employer is looking to see if it can have fewer midlevel store managers overseeing workers, with these managers seeing both their responsibilities and their pay increase.
So the employees that survive will get a “pay increase” to go with a huge increase in responsibility, but what about all the others that are having their jobs eliminated?
Don’t worry, because in an interview about this new initiative one Walmart executive assured us that their employees “like smaller teams”…
“Associates like smaller teams, and they like having a connection with a leader. They want something they can own and to know if they are winning or losing every day. And today that does not always happen,” Drew Holler, U.S. senior vice president of associate experience, said in an interview.
Today, Wal-Mart is the largest employer in the United States by a wide margin.
But these coming changes will ultimately mean a lot more robot workers and a lot less human workers.
Of course countless other heartless corporations are implementing similar measures. And considering the fact that one recent survey found that 97 percent of U.S. CFOs believe that a recession is coming in 2020, we are likely to see a “thinning of the ranks” in company after company as this year rolls along.
Sadly, even if there was no economic downturn coming we would continue to lose jobs to robots. According to one study, a whopping 45 percent of our current jobs “can be automated”…
Here’s the truth: Robots are already starting to take jobs from hourly human workers, and it’s going to continue. Research from McKinsey found that 45% of current jobs can be automated. We need to stop avoiding the situation and create real solutions to help displaced workers.
In this day and age, no worker is safe.
I know someone that gave his heart and soul to a big corporation for many years, and then one day he was called into the office when he arrived for work and he was out of a job by lunch.
He hadn’t done anything wrong at all. It is just that his heartless corporate bosses had decided to eliminate his position throughout the entire company.
If you think that they actually care about you, then you are just fooling yourself.
Unfortunately, the job losses are just going to keep accelerating. In fact, it is being projected that approximately 20 million manufacturing jobs around the globe could be taken over by robots by the year 2030…
Robots could take over 20 million manufacturing jobs around the world by 2030, economists claimed Wednesday.
According to a new study from Oxford Economics, within the next 11 years there could be 14 million robots put to work in China alone.
And as wealthy executives lay off low wage workers in staggering numbers, that will make the growing gap between the rich and the poor even worse…
“As a result of robotization, tens of millions of jobs will be lost, especially in poorer local economies that rely on lower-skilled workers. This will therefore translate to an increase in income inequality,” the study’s authors said.
The good news is that the full extent of this ominous scenario is not likely to completely play out. The bad news is that this is because our society is rapidly moving toward complete and utter collapse.
I wish that there was an easy solution to this growing problem.
In a free market system, should anyone be trying to mandate that employers must hire human workers?
But if millions upon millions of men and women can’t feed their families because they don’t have jobs, that will create the sort of social nightmare that we cannot even imagine right now.
This is something that all of the 2020 presidential candidates should be talking about, because this is a crisis that is spinning out of control, and it is getting worse with each passing day.
About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.
According to Roey Tzezana, a future studies researcher at Israel’s Tel Aviv University, technology will continue to advance, and therefore, so will automation. As this happens, the gap between the wealthy and the poor will increase as the middle class fades into nonexistence.
According to Haaretz,this is the grim reality Tzezana sees for our future: one without jobs or purpose. He argues that the jobs that will survive automation will be lower-paying, unskilled laboring jobs. And since machines won’t need to be paid, companies can profit without having the overhead costs of labor. But what most of the futurists fail to mention, is that without jobs and some sort of income, people won’t have the money to help corporations profit anymore. It’s a double-edged sword, but worth mentioning.
Recently the Boston Consulting Group released a report on global trends in future jobs and found that the jobs of the future are ones such as waiting on tables, cleaning, child care, and nursing care – and the groups of job skills with the highest rate of growth after digital skills is social services and education. –Haaretz
“This figure is the end of the world for the average people,” Tzezana said, speaking about the growing gap between labor productivity and wages.
“It reflects a rather depressing picture: The state and the economy are advancing by storm – but the workers are almost not benefitting from this progress and are left behind. It is almost a catastrophe.”
This will all happen faster than we think too, says Tzezana.
“The deeper and more interesting questions are not whether new jobs will be created, but what is the pace that old jobs disappear and new jobs open up, or what is the pace at which the tasks the jobs require change and create a demand for new expertise, specializations, and skills. The speed of closing tasks and opening new tasks is changing, and it is overwhelming,” he says.
“All the reports of the McKinsey consulting firm talk about technological progress requiring ‘up skills’ and the ability to adapt; a view that is possible to develop, learn and grow and a way of thinking of an entrepreneur – all the time looking for opportunities. All these are wonderful slogans that the large international consulting companies spread and there is a reason for it – the profile of the employees in these organizations is that of young workers who learn all the time,” says Tzezana.
Tzezana added that currently, we are seeing people moving from the middle class, for example manufacturing workers whose factories closed down because the work moved to China.
“It doesn’t match the ideas of democracy because democracy is based on the middle class,” Tzezana told Haaretz.
“It is harder for workers from the lower class to vote in an intelligent manner and make intelligent decisions. It is a situation that over time does not enable the continuation of democracy as we know it.”
Now factories are returning to the United States, and this doesn’t help anyone because those jobs are not back; they are now automated, he says.
“This is not the problem of just one or two people,” Tzezana continued.
“When a lot of people experience this drop, we are talking about an economic crisis: It is not just a problem only for those who can’t pay their mortgages — 60% of the sales of most companies are to the general public and if the public can’t afford to buy a new computer, the entire economy enters a crisis.”
According to Roey Tzezana, a future studies researcher at Israel’s Tel Aviv University, technology will continue to advance, and therefore, so will automation. As this happens, the gap between the wealthy and the poor will increase as the middle class fades into nonexistence.
According to Haaretz, this is the grim reality Tzezana sees for our future: one without jobs or purpose. He argues that the jobs that will survive automation will be lower-paying, unskilled laboring jobs. And since machines won’t need to be paid, companies can profit without having the overhead costs of labor. But what most of the futurists fail to mention, is that without jobs and some sort of income, people won’t have the money to help corporations profit anymore. It’s a double-edged sword, but worth mentioning.
Recently the Boston Consulting Group released a report on global trends in future jobs and found that the jobs of the future are ones such as waiting on tables, cleaning, child care, and nursing care – and the groups of job skills with the highest rate of growth after digital skills is social services and education. –Haaretz
“This figure is the end of the world for the average people,” Tzezana said, speaking about the growing gap between labor productivity and wages. “It reflects a rather depressing picture: The state and the economy are advancing by storm — but the workers are almost not benefitting from this progress and are left behind. It is almost a catastrophe.”
This will all happen faster than we think too, says Tzezana. “The deeper and more interesting questions are not whether new jobs will be created, but what is the pace that old jobs disappear and new jobs open up, or what is the pace at which the tasks the jobs require change and create a demand for new expertise, specializations, and skills. The speed of closing tasks and opening new tasks is changing, and it is overwhelming,” he says. “All the reports of the McKinsey consulting firm talk about technological progress requiring ‘up skills’ and the ability to adapt; a view that is possible to develop, learn and grow and a way of thinking of an entrepreneur – all the time looking for opportunities. All these are wonderful slogans that the large international consulting companies spread and there is a reason for it – the profile of the employees in these organizations is that of young workers who learn all the time,” says Tzezana.
Tzezana added that currently, we are seeing people moving from the middle class, for example manufacturing workers whose factories closed down because the work moved to China. Now factories are returning to the United States, and this doesn’t help anyone because those jobs are not back; they are now automated, he says.
Most disruption predicted in San Jose, Seattle, Salt Lake City, Boulder, Detroit, Huntsville, Louisville, and more…
82% of Americans think Artificial Intelligence (AI) is more harmful than helpful. Reports indicate there are many good reasons for this and it’s not just about massive job loss (see 1, 2, 3).
Proponents insist we’ll all be okay though – we just need UBI (Universal Basic Income). $1000/month might be okay for some, but not everyone could live off that. For those who manage to keep their jobs – they’ll still be more “exposed” to AI. They also may be forced to “merge” with it. Oh the humanity – or inhumanity.
White-collar jobs (better-paid professionals with bachelor’s degrees) along with production workers may be most susceptible to AI’s spread into the economy
AI could affect work in virtually every occupational group. However, whereas research on automation’s robotics and software continues to show that less-educated, lower-wage workers may be most exposed to displacement, the present analysis suggests that better-educated, better-paid workers (along with manufacturing and production workers) will be the most affected by the new AI technologies, with some exceptions.
Our analysis shows that workers with graduate or professional degrees will be almost four times as exposed to AI as workers with just a high school degree. Holders of bachelor’s degrees will be the most exposed by education level, more than five times as exposed to AI than workers with just a high school degree.
Our analysis shows that AI will be a significant factor in the future work lives of relatively well-paid managers, supervisors, and analysts. Also exposed are factory workers, who are increasingly well-educated in many occupations as well as heavily involved with AI on the shop floor. AI may be much less of a factor in the work of most lower-paid service workers.
Men, prime-age workers, and white and Asian American workers may be the most affected by AI
Men, who are overrepresented in both analytic-technical and professional roles (as well as production), work in occupations with much higher AI exposure scores. Meanwhile, women’s heavy involvement in “interpersonal” education, health care support, and personal care services appears to shelter them. This both tracks with and accentuates the finding from our earlier automation analysis.
Bigger, higher-tech metro areas and communities heavily involved in manufacturing are likely to experience the most AI-related disruption
An overwhelmingly large percentage of these folks have insurmountable debts if that are student loans, auto loans, and or credit card debt. Their wages don’t cover their debt servicing payments as their lives will be left in financial ruin after the next recession.
While the top 10% of Americans are partying like it’s 1999, most of whom own assets, like stocks, bonds, and real estate, are greatly prospering off the Federal Reserve’s serial asset bubble-blowing scheme and President Trump’s stock market pumping on Twitter.
Today’s artificial economy isn’t working for everyone as the wealth inequality gap swells to crisis levels.
The US is at the 11th hour, one hour till midnight, as the wealth inequality imbalance will correct itself by the eruption of protests on the streets of major metro areas, sort of like what’s been happening across the world in Chile, Hong Kong, Lebanon, and Barcelona.
An uprising, a revolution, people are waking up to the fact that unelected officials and governments have ruined the economy and has resulted in their financial misery of low wages and insurmountable debts.
The report shows almost half of all low-wage workers are clustered in ten occupations, such as a retail salesperson, cooks and food preparation, building cleaners, and construction workers (these are some of the jobs that will get wiped out during the next recession).
Shown below, most of these low-wage workers are centered in areas around the North East, Mid-Atlantic, and Rust Belt.
As we’ve detailed in past articles, millions of these low-wage and low-skilled jobs will never be replaced after the next recession, that’s due in part to mega corporations swapping out these jobs with automation and artificial intelligence.
The solution by the government and the Federal Reserve, to avoid riots in the streets, will be the implementation of various forms of quantitative easing for the people.
There’s a reason why you already hear the debate of universal income, central banks starting to finance green investments, and other various forms of short/long term stimulus, that is because the global economy is grinding to a halt — and the only solution at the moment is to do more of the same.
Competition drives innovation, but monopolies manifest the need for robotic automation, leaving people and their jobs behind. Taking advantage of the eCommerce boom, Amazon.com has become a monopolistic force, exerting the greatest leverage over the shipping sector of the U.S. economy. Now shipping 48 percent of its own packages in 2019, Amazon is saving billions of dollars annually, while starving the United States Postal Service and other shipping companies of crucial revenue. Because Amazon has so much leverage, the USPS, FedEx, and the United Parcel Service (UPS) must seek out automation in order to keep up.
As Amazon continues to automate its processes and cut shipping costs, the other shipping companies have no choice but to automate their processes, or perish. Two new automated unloaders that can work “as fast as people” are now being unveiled for the first time. These heavy-duty machines can unload a truck in one sixth the time it takes a human worker, without all the back-bending labor. These machines will forever change the shipping industry.
Robots make life easier for some, but drive away opportunities for others
Two new automated unloaders, manufactured by Siemens AG and Honeywell International Inc., were recently unveiled at an automation conference in Chicago. These machines can enter the trucks, recognize package size and weight, and pull the parcels using an array of suction cups. The packages, directed to the machine’s conveyor belts, are quickly moved out so they can be sorted.
The Honeywell Robotic unloader is rather large. Warehouses and logistic hubs, already packed with equipment, will have to make room for the giant robot, but it requires no modification in order to enter trucks. The Siemens robotic unloader is more sophisticated and requires an operator to modify the truck’s trailer in order for the robot to do its work. The Siemens model requires a rolling belt to be permanently installed on the floor of the truck’s trailer. When the trailer arrives at the loading dock, operators must attach the robot to the rolling belt. The robot pulls the packages out in about ten minutes. Both robots use machine learning to identify packages.
Automation continues to replace human workers. The UPS is investing $20 billion in automation over the next three years to keep up with growing eCommerce shipping demands. The vice president of product development for Honeywell is passionate about developing this kind of automation because he’s been in the miserable, back-bending position of unloading trucks. He believes employees are better off managing the machines from the dock.
“For distribution center workers, unloading packages is labor-intensive, physically demanding and injury-prone work that is often subject to extreme temperatures,” said Matt Wicks, vice president of product development at Honeywell Integrated. “Getting people out of the trailer and on the dock side managing several of these machines is a huge factor as it relates to employee satisfaction and retention.”
Retaining happy employees is a noble goal, but over time, will the efficiencies of automation allow companies to retain employees at all?
Using robots to perform labor-intensive tasks may improve employee satisfaction in the short term; however, AI and other forms of automation are predicted to take over the workforce altogether, leaving millions of people on the sidelines. By 2022, the World Economic Forum projects that automation will displace approximately 75 million jobs. At least fifty percent of companies are expected to cut workers in order to accommodate robots. The report also finds that automation will create 133 million jobs initially, requiring a large part of the workforce to learn new skills in order to remain competitive in the job market. This means millions of laborers will have to adapt and learn how to control robots or else be put out of work.
A new report by Wells Fargo & Co., warns that nearly 200,000 US banking jobs are at risk of being displaced by robots.
As we’ve explained in the past, accelerating technological advances in automation, artificial intelligence, and machine learning have the potential to reshape the world in the 2020s through 2030. The collision of these forces could trigger economic disruption far greater than what was seen in the early 20th century.
Across the financial industry, a new wave of investment, somewhere in the tune of $150 billion per year, is being spent on technology, that will “lead to lower costs, with employee compensation accounting for half of all bank expenses,” said Mike Mayo, a senior analyst at Wells Fargo Securities LLC.
The Wells Fargo study, which was first reported by Bloomberg, indicates 20% to 33% of banking jobs will be slashed by 2030. Most affected will be back office, bank branch, call center, and corporate employees. Jobs related to tech sales, advising and consulting will be less affected, according to the study.
“It will be a dramatic change in contact centers, and these are both internal and external,” Michael Tang, a Deloitte partner who leads the consulting firm’s global financial-services innovation practice, said in the Wells Fargo report. “We’re already seeing signs of it with chatbots, and some people don’t even know that they’re chatting with an A.I. engine because they’re just answering questions.”
Wells Fargo joins a handful of other major banks that have already detailed plans to cut a majority of their workforce by 2030 amid the rapid adoption of automation and artificial intelligence.
According to Coalition Development Ltd. data. R. Martin Chavez, an architect of Goldman Sachs’ push to automate its workforce, said last month, front-office headcount for investment banking and trading declined for the fifth consecutive year in 2018.
In an earlier piece, we described how tens of millions of jobs across the world, and across various industries, would be lost because of robots by 2030.
The 2020s will be known as the great transformation period where corporate America abandons its workforce for automation. The coming job losses, due to automation, will be on par with the automation revolution of agriculture (the transition of farm workers into the industrial sector) from 1900 to 1940.
Robots have so far increased three-fold since the Dot-Com bust. Momentum in automation trends suggests robots will multiply even quicker through the 2020s. The collision of automation in the economy will lead to more volatility, economic swings, and social unrest.
The Bureau of Labor Statistics reports that the US economy created 148,000 new private sector jobs during July.The jobs number does not translate into employed people as increasingly Americans hold two or more jobs.For example, the BLS reports that from June to July the number of multiple job holders rose by 233,000 which is 85,000 more than the 148,000 new private sector jobs.What we are seeing is not more people employed, but more multiple job holders. Since May the number of multiple job holders has increased by 534,000.https://www.bls.gov/news.release/empsit.t09.htm
The claim of a falling rate of unemployment over the past decade is inconsistent with the falling labor force participation rate. Normally, when employment prospects are good the labor force participation rate increases.To explain away the inconsistency, economists claim that the decline in the labor force participation rate reflects the increased retirements of the baby boomer generation.However, theBLS reported that the labor force participation rate for older workers of retirement age surged to the highest level in 7 years.
So, what is really going on?The answer is that retired people, thanks to the Federal Reserve’s low to zero interest rate over the last decade, cannot live on their pensions and their savings.They have to take part-time jobs to make ends meet.Younger people, however, cannot form independent households on the basis of part-time jobs, and as they have no pension income to supplement the meager pay of a part-time job, have dropped out of the work force.
The reason the reported unemployment rate is low is that the millions who have dropped out of the labor force because they cannot find life-sustainable employment are not counted as unemployed.What do these people do?They live with parents or grandparents and they work cash jobs house sitting, walking dogs, cutting grass, and various handiman jobs.
There are many problems with the payroll jobs report, and always are.For example, the July report finds 16,000 new manufacturing jobs, but the manufacturing index weakened for the fourth consecutive month. How do manufacturing jobs rise when manufacturing activity declines?
Another anomality is the collapse of seven trucking companies this year.if the economy is so good, why has demand declined for transportation to move goods from producers to warehouses and from warehouses to retail outlets?
Americans live in a world in which explanations are controlled. The facts are whatever serves the interests of the ruling elites. Identity Politics serves to keep Americans disunited.We hear far more about “white supremacy” and “misogyny” than we hear about the agendas that control our existence.
As we’ve said in many articles, a new wave of investments in automation is already underway, could eliminate 20% to 25% of the current American workforce by 2030, or about 40 million jobs.
In the latest installment of robots plotting a takeover, we set our eyes on a Singapore-based firm called LionsBot International – who has developed an autonomous robot that can sing, rap, wink and even tell jokes while scrubbing floors, reported Yahoo.
The company debuted the robot at a live demonstration ceremony on July 17 at the Gardens by the Bay, a resort located in the Central Region of Singapore, adjacent to the Marina Reservoir.
About 300 of these robots will be produced by March 2020, will allow the company to be the first in the world to offer cleaning robots on a subscription model to clients.
Prospective and current clients can rent the robots at a rate of $1,350 to $2,150 per month.
As of last week, two of the robots have been deployed at National Gallery Singapore and Jewel Changi Airport in April, with more expected at other commercial facilities in the coming months.
LionsBot said at least six of its clients would deploy the robots early next year.
According to LionsBot, the cleaning robot is more efficient than a human and can work longer hours.
“Multiple cleaning robots are able to coordinate and clean a given area simultaneously, without the need for human programming,” the company said in a statement.
Besides regional demand, LionsBot has also received orders from companies based in Australia and Japan, said a company spokesperson, with the possible introduction to the US by 2021 to 2022.
LionsBot’s clients will be able to choose from 13 different types of robots including ones that scrub, mop, vacuum, and sweep across various terrains, effectively eliminating low wage cleaning jobs. Another version of the robot can also transport up to 1,000 pounds of equipment.
At the launch event at Gardens by the Bay, Senior Minister of State for the Ministry of Trade and Industry Koh Poh Koon said cleaning robots could raise productivity, adding that the government will continue to promote the proliferation of automation.
However, the trade minister made zero mention of the upcoming labor force shift due to automation, how hundreds of thousands of people across the region will be displaced because of robots in the years ahead.
More importantly, once these robots wash ashore in the US (maybe in the next few years), and most likely on the West Coast first, a tidal wave of job losses due to automation will be seen as corporate America continues to streamline their operations with technology to curb margin compression.
A recently released research report shows that economic disruption caused by technological advances in the robotics industry will have a disproportionate impact on poorer countries and poor regions within countries.
‘How robots change the world’, produced by Oxford Economics, examines the impact that the breathtaking growth in sophistication in robotic technology will have on economies across the globe.
Though there is undoubtedly huge potential for innovation and savings for businesses, there is also considerable cause for concern as well. In particular, the report raises the issue of job losses caused by robots taking on job tasks currently or previously performed by people. It notes that in many places “the impact will aggravate social and economic stresses from unemployment and income inequality.”
The report’s authors developed a ‘Robot Vulnerability Index’ to chart which areas would be most affected by changes.
“In many cases, our Index highlights that the most vulnerable regions are somewhat removed from the wealthier districts of their home countries—such as Cumbria in the UK, Franche-Comté in France, and the high desert of Eastern Oregon in the US,” the report states.
These areas will be particularly hard hit because of a historic reliance on manufacturing in their local economies. Areas that depend more on service sector and “information economy” jobs, on the other hand, will be less affected. In particular, major cities such as London and the areas that surround them will see the least disruption from increases in robot technology. Using econometric modeling, the report predicts that each newly installed robot would displace an average of 2.2 workers in lower-income areas compared to an average of just 1.3 workers in higher-income areas.
Furthermore, the trend could exacerbate global inequality. “Our research shows that the negative effects of robotization are disproportionately felt in the lower-income regions of the globe’s major economies—on average, a new robot displaces nearly twice as many jobs in lower-income regions compared with higher-income regions of the same country,” the report notes.
The authors add that this could have significant social and political implications, especially given that “increasing political polarisation is already a worrying trend.”
The news is not all bad, however. The report also discusses the idea of a “robotics dividend.” This includes increased real incomes, more affordable manufactured goods, and greater tax revenues. “This will be particularly important to the lower-income regions we have identified as being most vulnerable to the robot revolution,” the report states.
It also found that earlier adoption of robotics would positively impact both short- and medium-term growth. Investing in robotic technology by 30 percent above current 2030 projections could lead to an over 5 percent boost in global GDP, the report claims, which translates to an extra $4.9 trillion per year added to the global economy.
A couple of months ago, we reported that Walmart was beginning to use robots to carry out mundane tasks like mopping its floors and tracking inventory.
Last year, the company raised wages and is using the robots in more than 1,500 of its stores in an effort to cut down on labor costs. Robots “stealing” jobs should not surprise anyone – as more people demand a higher minimum wage, more jobs will be eliminated or replaced by machines…but I digress.
Walmart, which is the largest employer in the US, said at least 300 stores will introduce machines that scan shelves for out-of-stock products. Meanwhile, so-called “autonomous floor scrubbers” will be deployed in 1,500 stores, and conveyor belts that automatically scan and sort products as they are loaded off of trucks will more than double to 1,200. Another 900 stores will install 16-foot-high towers that will allow customers to pick up their online grocery orders without interacting with humans. (source)
Walmart’s claim that employees like their new robot colleagues isn’t entirely true.
Also back in April, we reported that the higher-ups at the company claimed employees are happy about their AI coworkers:
Naturally, the mega-retailer wants us to believe that robots taking over certain tasks in their stores is a good thing – a change that will allegedly benefit their human employees. “With automation, we are able to take away some of the tasks that associates don’t enjoy doing,” Mark Propes, senior director of central operations for Walmart US, told The Wall Street Journal. “At the same time, we continue to open up new jobs in other things in the store.”
“Our associates immediately understood the opportunity for the new technology to free them up from focusing on tasks that are repeatable, predictable and manual,“ said John Crecelius, senior vice president of Central Operations for Walmart U.S. “It allows them time to focus more on selling merchandise and serving customers, which they tell us have always been the most exciting parts of working in retail.”
Yeah, about that “overwhelmingly positive” response from human Walmart employees…it looks like they aren’t so fond of their AI associates after all.
According to a new report from The Washington Post, many Walmart employees are finding the robots difficult to deal with:
To Walmart executives, the Auto-C self-driving floor scrubber is the future of retail automation — a multimillion-dollar bet that advanced robots will optimize operations, cut costs and revolutionize the American superstore.
But to the workers of Walmart Supercenter No. 937 in Marietta, Ga., the machine has a different label: “Freddy,” named for a janitor the store let go shortly before the Auto-C rolled to life.
Freddy’s career at the store has gotten off to a rocky start. Workers there said it has suffered nervous breakdowns, needed regular retraining sessions and taken weird detours from its programmed rounds.
Shoppers are not quite sure how to interact with Freddy, either. Evan Tanner, who works there, recalled the night he says a man fell asleep on top of the machine as it whirred obediently down a toy aisle.
Walmart executives said they are skeptical that happened, because the Auto-C is designed to stop if someone interferes with its work. But Tanner insists Freddy dutifully stuck to the job at hand. “Someone had to pull [the sleeping man] off,” he said. Freddy “was going to swing toward groceries, just cleaning away.” (source)
Some employees feel they are training their replacements.
“Their jobs, some workers said, have never felt more robotic. By incentivizing hyper-efficiency, the machines have deprived the employees of tasks they used to find enjoyable. Some also feel like their most important assignment now is to train and babysit their often inscrutable robot colleagues,” the report says.
Sometimes the robots are charming and helpful, the employees said. But others said the machines had “accelerated” the pace of work and spoke of having to respond to the robots’ nagging alerts. When the AI senses a problem, it sends an alert to the handheld devices most Walmart workers are expected to carry to let them know it is time to gather the carts or replenish the shelves. Human employees are the ones who do the physical work, and some say that feels demeaning. Others say they feel as if they are training their replacements, but also tending to them when things go wrong:
The self-driving floor scrubbers, for instance, must be manually driven until they learn the store’s layout — and when the aisles are shifted around, as is common during seasonal displays and remodels, the machines must be retrained.
Technical glitches, surprise breakdowns and human resentment are commonplace. Some workers said they have cursed the robots out using their employee-given nicknames, such as “Emma,” “Bender” and “Fran.” (source)
Some said they feel the company doesn’t value their own work:
Many Walmart workers said they had long feared robots would one day take their jobs. But they had not expected this strange transition era in which they are working alongside machines that can be as brittle, clumsy and easily baffled by the messy realities of big-box retail as a human worker can be.
The robots also don’t complain, ask for raises, or require vacations and bathroom breaks. (source)
Many Walmart customers aren’t big fans of the robot employees either.
Employees have reported that some customers don’t really know how to act around the robot employees, and some have acted aggressively against the machines:
Customers, too, have found coexisting with machines to be confusing, if not alarming. Some shoppers have been spooked, for example, by the Auto-S scanner, which stands six feet tall and quietly creeps down the aisles, searching for out-of-place items by sweeping shelves with a beam of light. Other shoppers, store workers said, have made a game of kicking the things.
Walmart workers said they have seen people following the robots around, recording them, talking to them, slapping their emergency-stop buttons, jumping in their way suddenly — and, yes, assaulting them with kicks and shoves.
Other customers find their time with the robots to be unsatisfying, including older shoppers for whom a trip to the store is as much about human interaction as anything else. “A lot of them will say, ‘I didn’t come here to talk to a machine,’ ” said a worker at a Walmart in Dunedin, Fla., who spoke on the condition of anonymity because he didn’t want it to affect his job. “ ‘I came here to shop and have someone help me with my groceries.’ ” (source)
The matter was brought into sharp focus by the World Economic Forum last year when it forecast that machines may be capable of performing half of all “work tasks” globally by 2025 — that’s equal to around 75 million jobs — though we should point out it also estimated that more than 130 million human jobs could be created during the same time-frame. (source)
Retail jobs were already disappearing at an alarming rate. Now it appears that remaining retail positions are increasingly at risk of being lost to artificial intelligence. How long until humans are rendered entirely obsolete?
What do you think about this?
Do you think robots will eventually replace human workers entirely? If so, how soon do you think it will happen? Have you seen a robot “employee” in a Walmart store yet? Please share your thoughts in the comments.
About the Author
Dagny Taggart is the pseudonym of an experienced journalist who needs to maintain anonymity to keep her job in the public eye. Dagny is non-partisan and aims to expose the half-truths, misrepresentations, and blatant lies of the MSM.
The story line is going out that the economic boom is weakening and the Federal Reserve has to get the printing press running again. The Fed uses the money to purchase bonds, which drives up the prices of bonds and lowers the interest rate. The theory is that the lower interest rate encourages consumer spending and business investment and that this increase in consumer and business spending results in more output and employment.
The Federal Reserve, European Central Bank, and Bank of England have been wedded to this policy for a decade, and the Japanese for longer, without stimulating business investment. Rather than borrowing at low interest rates in order to invest more, corporations borrowed in order to buy back their stock. In other words, some corporations after using all their profits to buy back their own stock went into debt in order to further reduce their market capitalization!
Far from stimulating business investment, the liquidity supplied by the Federal Reserve drove up stock and bond prices and spilled over into real estate. The fact that corporations used their profits to buy back their shares rather than to invest in new capacity means that the corporations did not experience a booming economy with good investment opportunities. It is a poor economy when the best investment for a company is to repurchase its own shares.
Consumers, devoid of real income growth, maintained their living standards by going deeper into debt. This process was aided, for example, by stretching out car payments from three years to six and seven years, with the result that loan balances exceed the value of the vehicles. Many households live on credit cards by paying the minimum amount, with the result that their indebtedness grows by the month. The Federal Reserve’s low interest rates are not reciprocated by the high credit card interest rate on outstanding balances.
Some European countries now have negative interest rates, which means that the bank does not pay you interest on your deposit, but charges you a fee for holding your money. In other words, you are charged an interest rate for having money in a bank. One reason for this is the belief of neoliberal economists that consumers would prefer to spend their money than to watch it gradually wither away and that the spending will drive the economy to higher growth.
What is the growth rate of the economy? It is difficult to know, because the measures of inflation have been tampered with in order to avoid cost-of-living adjustments for Social Security recipients and the payment of COLA adjustments in contracts. The consumer price index is a basket of goods that represents an average household’s expenditures. The weights of the items in the index are estimates of the percentage of the household budget that is spent on those items. A rise in the prices of items in the index would raise the index by the weight of those items, and this was the measure of inflation.
Changes were made that reduced the inflation that the index measured. One change was to substitute a lower price alternative when an item in the index rose in price. Another was to designate a rise in price of an item as a quality improvement and not count it as inflation.
Something similar was done to the producer price index which is used to deflate nominal GDP in order to measure real economic growth. GDP is measured in terms of money, and some of the growth in the measure is due to price increases rather than to more output of goods and services. In order to have a good estimate of how much real output has increased, it is necessary to deflate the nominal measure of GDP by taking out the price rises. If inflation is underestimated, then real GDP will be overestimated. When John Williams of Shadowstats adjusts the real GDP measure for what he calculates is a two-percentage point understatement of annual inflation, there has been very little economic growth since 2009 when a recovery allegedly began, and the economy remains far below its pre-recession level in 2008.
In other words, the belief that the US has had a decade long economic recovery is likely to be an illusion produced by underestimating inflation. Indeed, every day experience with the prices of food, clothing, household goods, and services indicates a higher rate of inflation than is officially reported.
The low unemployment rate that is reported is also an illusion. The government achieves the low rate by not counting the unemployed. The economic and psychological cost of searching for a job are high. There are the economic costs of a presentable appearance and transport to the interview. For a person without a pay check, these costs rapidly mount. The psychological costs of failure to find a job time after time also mount. People become discouraged and cease looking. The government treats discouraged workers who cannot find jobs as no longer being in the work force and omits them from the measure of unemployment. John Williams estimates that the real rate of US unemployment is 20%, not 3.5%
The decline in the labor force participation rate supports Williams’ conclusion. Normally, a booming economy, which is what 3.5% unemployment represents, would have a rising labor force participation rate as people enter the work force to take advantage of the employment opportunities. However, during the alleged ten year boom, the participation rate has fallen, an indication of poor job opportunities.
The government measures jobs in two ways:the payroll jobs report that seeks to measure the new jobs created each month (which is not a measure of employment as a person may hold two or more jobs) and the household survey that seeks to measure employment. The results are usually at odds and cannot be reconciled. What does seem to emerge is that the new jobs reported are for the most part low productivity, low value-added, lowly paid jobs. Another conclusion is that the number of full time jobs with benefits are declining and the number of part-time jobs are rising.
A case could be made that US living standards have declined since the 1950s when one income was sufficient to support a family. The husband took the slings and arrows of the work experience, and the wife provided household services such as home cooked nutritious meals, child care, clean clothes, and an orderly existence. Today most households require two earners to make ends meet and then only barely. Saving is a declining option. A Federal Reserve report a couple of years ago concluded that about half of American households could not produce $400 cash unless personal possessions were sold.
As the Federal Reserve’s low interest rate policy has not served ordinary Americans or spurred investment in new plant and equipment, who has it served? The answer is corporate executives and shareholders. As the liquidity supplied by the Federal Reserve has gone mainly into the prices of financial assets, it is the owners of these assets who have benefited from the Federal Reserve’s policy. Years ago Congress in its unwisdom capped the amount of executive pay that could be deducted as a business expense at one million dollars unless performance related. What “performance related” means is a rise in profits and share price. Corporate boards and executives achieved “performance” by reducing labor costs by moving jobs offshore and by using profits and borrowing in order to buy back the company’s shares, thus driving up the price.
In other words, corporate leaders and owners benefited by harming the US economy, the careers and livelihoods of the American work force, and their own companies.
This is the reason for the extraordinary worsening of the income and wealth distribution in the United States that is polarizing the US into a handful of mega-rich and a multitude of have-nots.
The America I grew up in was an opportunity society. There were ladders of upward mobility that could be climbed on merit alone without requiring family status or social and political connections. Instate college tuition was low. Most families could manage it, and the students of those families that could not afford the cost worked their way through university with part time jobs. Student loans were unknown.
That America is gone.
The few economists capable of thought wonder about the high price/earnings ratios of US stocks and the 26,000 Dow Jones when stock buy-backs indicate that US corporations see no investment opportunities. How can stock prices be so high when corporations see no growth in US consumer income that would justify investment in the US?
When President Reagan’s supply-side economic policy got the Dow Jones up to 1,000 the US still had a real economy. How can it be that today with America’s economy hollowed out the Dow Jones is 25 or 26 times higher? Manipulation plays a role in the answer. In Reagan’s last year in office, the George H.W. Bush forces created the Working Group on Financial Markets, otherwise known as the “plunge protection team,” the purpose of which was to prevent a stock market fall that would deny Bush the Republican nomination and the presidency as Reagan’s successor. The Bush people did not want any replay of October 1987.
The plunge protection team brought together the Federal Reserve, Treasury, and Securities and Exchange Commission in a format that could intervene in the stock market to prevent a fall. The easiest way to do this is, when faced with falling stock prices, to step in and purchase S&P futures. Hedge funds follow the leader and the market decline is arrested.
What few, if any, economists and financial market commentators understand is that today all markets are rigged by the plunge protection team. For at least a decade it has not been possible to evaluate the financial situation by relying on traditional thinking and methods. Rigged markets do not respond in the way that competitive markets respond. This is the explanation why companies that see no investment opportunities for their profits better than the repurchase of their own shares can have high price/earnings ratios. This is the explanation why the market’s effort to bring stock prices in line with realistic price/earnings ratios is unsuccessful.
As far as I can surmise, the Federal Reserve and plunge protection team can continue to rig the financial markets for the mega-rich until the US dollar loses its role as world reserve currency.
* * *
We live in a Matrix of Lies in which our awareness is controlled by the explanations we are given. The control exercised over our awareness is universal. It applies to every aspect of our existence. In the article above I showed that not only is our understanding of the economy controlled by manipulation of our minds, but also the markets themselves are controlled by official intervention. In brief, you can believe nothing that you are officially told. If you desire truth, you must support the websites that are committed to truth.
Paul Craig Roberts was Assistant Secretary of the Treasury…
Robotics will not be implemented everywhere all at once. it will come upon us in stages.
I have been lonely in my concern with the dire economic implications of robotics, but now Clarity Press has provided me with some company by publishing The Artificial Intelligence Contagion by David Barnhizer and Daniel Barnhizer.It is telling as to the irrelevance of the economics profession that the coauthors are lawyers.
The concerns about robots and artificial intelligence have come from scientists who express worries about killer robots with super intelligence taking over from dumber humans with less capabilities.Possibly, but it is more likely that these kind of concerns stem from an incorrect model or understanding of mind, consciousness, and creativity.I do wish that Michael Polanyi were still with us to give us his take on our proclivity to attribute intelligence to machines.
The coauthors briefly mention these threats as well as the very real and already presentthreats from governments armed with the intrusive surveillance and control that the digital revolution and artificial intelligence make possible.Warnings from Stephen Hawking, Nick Bostrom, and Elon Musk of an immortal godlike superintelligence, amoral at best and immoral at worse, that will determine our fate are speculative, but the adverse economic impact of robotics are already upon us. Thus, the main focusof the coauthors is on the massive economic dislocation that will result from making people superfluous.
Recently, I read about a smart machine that displaces warehouse workers and also the workers at the plants that make the mechanical forklift machines that warehouse workers use to move and stack the crates and boxes. As the smart machines themselves are made by robots, the forklift production workers are also displaced.
According to the latest job report, there are 1,192,000 people employed in warehouses. Unlike the forklift, the new smart machine does not contribute to increasing the productivity of labor. Instead, the smart machine displaces labor by eliminating the need for people to do the work.Every dollar that would have been paid in wages goes instead into the profits of the warehouse owners. This is the great difference between earlier innovations that increased human productivity and living standards and the AI robotic innovation that eliminates the need for humans and makes them redundant.
Robotics will not be implemented everywhere all at once. it will come upon us in stages. The 1.2 million displaced warehouse workers will look for other jobs. The lucky few will find one. The rest will join the unemployment ranks until they become discouraged and are dropped out of the unemployment measure.State, local, and federal tax revenues will decline as a result of the lost jobs. But unemployment compensation and other social welfare benefits will rise. With constrained or nonexistent incomes, 1.2 million people will have less participation in the retail market. Car sales, home sales, restaurant, clothing, and entertainment sales all decline. The Social Security and Medicare payroll tax revenues decline by the earnings of 1.2 million Americans as do pension contributions. Social Security and Medicare are funded by the current work force paying for the retired work force.As robotics eliminates the current work force, payroll tax revenues collapse.
For an unknown period of time, as the US dollar is the world reserve currency, the federal government can print money to fill in the gap in the difference between Social Security and Medicare benefits and payroll revenues.But large parts of the world (Russia and China) have already been driven away by sanctions from using the US dollar, and this means that the dollar will lose its reserve currency role.Then what do we do when there are untold millions of Americans expecting Social Security pensions and medical care and there is no work force to pay the payroll tax?
These kind of questions, and there are many more, should be the primary focus of every economist, not that it would do much good as neoliberal economists are indoctrinated beings incapable of thought.Nevertheless, that there is no concern among economists shows their irrelevance and uselessness.
Many years ago I pointed out that under present law and practice, the entirety of the GDP would flow to the handful of owners of the robotic and AI patents.There would be no income for anyone else.Such a situation is not possible, because it would mean that the patents would produce no income for the owners as no one would have jobs and incomes with which to purchase the products of robots and artificial intelligence.The obvious dilemma I described received no response.
One way of looking at our dilemma is that we need artificial intelligence because those bringing us the AI revolution have no intelligence themselves.How intelligent is it to make humans useless?How intelligent is it to have robotic production lines when no humans have incomes from jobs with which to purchase the output of robots?
Well, you might say, we will make the owners of the robots pay the payroll taxes from their sales revenues. We will guarantee sales by socializing the patents and sending everyone a check for their share of the GDP.And so on.
But why?Why eliminate the need for human labor when no gain can accrue to the elite as there would be no consumer market for their products? The cost savings from robotics and artificial intelligence are meaningless when there are no consumers at the other end. When the patents have to be socialized in order to support a population displaced by robotics, what is the point of the robotics?
The coauthors of Contagion, and that is what artificial intelligence is, understand that humans with their limited awareness and intelligence have found intellectual interests in developing the means for their own self destruction.Nuclear weapons, for example, are an insane accomplishment of mindless idiots, because they can not enter general use without destroying all life on the planet.A doomsday weapon is a pointless weapon.
The same for robotics and artificial intelligence.What is the purpose of producing threats to humans from police states and by taking away all purposes for human existence?This is a mindless act.Those responsible for it are the worst criminals the world has ever known.Yet these destroyers of humanity bask in public approval for all the benefits they are bringing to mankind.
Read The Artificial Intelligence Contagion and then tell me about the benefits.
“A United Nations Development Programme (UNDP) report found that some 60 percent of Ukrainians were living below the poverty line in 2016, as Ukraine remains one of the poorest nations in Europe. Meanwhile, its oligarchs continue to grow richer; in 2018 local media reported that the combined wealth of the country’s 100 richest people has jumped by 43 percent to $37bn in just one year.”
Ukraine is on the verge of yet another revolt. This time, however, Ukrainians will not take their anger out onto the streets in another revolution; rather, it looks like they are getting ready to quietly rebel against the political elite and their corruption in the polling booths, as they vote for the next president on March 31.
The ballot is a whopper, with the names of record-breaking 39 candidates on it. Even better, the leader in the race is the most unlikely candidate of them all: Volodymyr Zelensky, a comedian with no political experience or governance expertise.
Days before the vote, Zelensky is leading in the polls between eight and 15 percent ahead of the runner-up, incumbent President Petro Poroshenko. The two are likely to meet in a runoff vote, which will take place on April 21.
Zelensky’s most famous role is in a TV series called Servant of the People. He plays a poor, honest teacher who becomes president by chance. The comedian likes to say he “shares the values” of his character.
And just like in his TV series, Zelensky took Ukraine’s politics by storm. He was propelled to the very top by a popular TV channel owned by one of Ukraine’s top oligarchs, Igor Kolomoisky, who currently lives between Switzerland and Israel.
The channel gives ample airtime to both Zelensky, the candidate, and Zelensky, the actor. The actor even gets to shine in a whole raft of TV programmes and documentaries on the eve of the election, when campaigning is banned by law.
Both Kolomoisky and Zelensky deny a political connection, despite the fact that the oligarch’s lawyer is part of the comedian’s election campaign team, and his guard is accompanying him on the campaign trail.
Pollsters say Zelensky’s popularity is the result of the high name recognition he enjoys, and Ukrainians’ deep disappointment and disillusionment with their ruling elite. Voters are ready for a new face, even when they know it belongs to a man who has next to no competence in politics.
A recent Gallup survey showed that Ukraine holds the world record in low trust in the government for the second year straight: Just nine percent have confidence in it, way below the regional median for former Soviet states of 48 percent, and the global average of 56 percent.
This is the price the political elite is paying for failing to live up to the promises of Ukraine’s 2013 Revolution of Dignity for economic growth, rule of law, transparency and higher standards of living.
More than five years on, unemployment and underemployment have pushed an estimated 3.2 million Ukrainians (about one in 10 adults) to seek work abroad on a permanent basis, while many others take up temporary jobs outside the country every year. Poverty rates are high, and so is inequality.
A United Nations Development Programme (UNDP) report found that some 60 percent of Ukrainians were living below the poverty line in 2016, as Ukraine remains one of the poorest nations in Europe. Meanwhile, its oligarchs continue to grow richer; in 2018 local media reported that the combined wealth of the country’s 100 richest people has jumped by 43 percent to $37bn in just one year.
Competitive Ukrainian business has also taken a hit.
“In my worst nightmares I couldn’t imagine this is where we would be now,” Yevgeniy Utkin, an entrepreneur and pioneer of the IT industry in Ukraine, told me recently.
He is not upset because his IT business has been raided a few times by masked law enforcement agents, searching for proof of financial crimes (and not making any charges afterwards) – a common occurrence in today’s Ukraine which has come to be known as “maski show”. Nor is he upset about the loss of most of his Russian assets after Moscow annexed Crimea and started the war in eastern Ukraine in 2014.
Like many others in the business sector, Utkin has simply lost hope over time.
He told me of one incident in particular that made him disillusioned early on. In the summer of 2014, soon after Poroshenko was inaugurated, Utkin approached him with an idea for a hi-tech solution for army radio communications. He was referred to a senior administration official and fellow multimillionaire, who was more interested in inviting Utkin to join him on a yachting trip to Sardinia. Utkin gasped – and declined.
Just a few weeks later, in August, one of the fiercest battles of the war took place in the eastern Ukrainian city of Ilovaisk. At least 366 Ukrainian soldiers died, 429 were injured and hundreds captured in an ambush. There were many factors that led to this tragedy, including a significant presence of Russian troops, the government later found. But Utkin was struck by the major role that poor communication played in this tragedy, and it was exactly the problem he had wanted to fix.
Poroshenko surfed into the presidency on the wave of revolution and war, and on the promise of change. He said he would end the war within days, come after the mighty oligarchs and “personally oversee” the fight against corruption.
Four years later, Poroshenko had to apologise for making a hasty and arrogant declaration about ending the war
He had much more leverage to fulfil his other promises – fighting oligarchy and corruption, but did equally poorly on both of them.
Oligarchs still control massive areas of the economy: energy, agriculture, media and access to state-owned monopolies and natural resources. They are difficult to rein in because the rule of law is hard to come by in Ukraine.
The European Business Association, which conducts a regular survey of CEOs to gauge Ukraine’s investment climate, found that 78 percent of its respondents were critically dissatisfied with the level of corruption in the country, 74 percent distrusted the judiciary, and 65 percent complained about the shadow economy
Less than a month ago, a series of journalistic investigations revealed that Oleh Hladkovsky, deputy head of the National Security and Defense Council and Poroshenko’s friend and former business partner, and his son, were allegedly involved in corruption related to defense procurement deals.
In the aftermath of the scandal, the Ukrainian president vouched to make corrupt officials “bring back every kopeck they had stolen with their teeth”.
That is terribly unlikely given that Ukraine’s judicial reform is failing.
In a recent illustration of this spectacular failure, a special commission in charge of appointing judges to the High Court of Ukraine gave positions to a number of judges with questionable track records, including some who have let dozens of drink-and-drive offenders walk free, are holding two passports (which is illegal in Ukraine), and have covered up for other corrupt judges – among other things. At the same time, Ukrainian judge Pavlo Parkhomenko, who has accumulated much recognition domestically and internationally for his human rights work, was the sole candidate to be rejected.
Pressure for change from outside
To be completely fair, there has been some change in Ukraine since 2013. Its gross domestic product (GDP) grew by 3.3 percent last year, the highest level since 2011. The Ukrainian banking sector was mostly cleaned up, with over 100 suspect banks closed and the National Bank completely reformed.
The state-owned gas holding Naftogaz underwent a near-miraculous transformation and went from a net loss of 18 billion hryvnia ($2.2bn at the time) in 2013 to a record profit of 39.4 billion hryvnia ($1.5bn) in 2017.
A national electronic procurement system Prozorro was launched to ensure that all public money is spent efficiently and transparently. It has saved an estimated $2.76bn in less than five years and won scores of international awards for innovation and excellence.
Significant reforms have started in the healthcare and education sectors, too.
And most importantly, for the average Ukrainian, the country now has a visa-free regime with its European Union neighbours.
But most of these reforms were made possible by pressure mounted by the Ukrainian civil society (which has very much been supported by the West) and international donors and partners, such as the United States, the European Union, Canada and others.
Each of these reforms also took a kamikaze-style leader, typically hailing from outside the existing system, who temporarily came in from the business sector or other walks of life to push through a specific cause.
After accomplishing the task, many of them left or were pushed out; others are lasting it out until the election, and still, others were sabotaged, and their efforts often reversed by the more politically shrewd players who fill senior government offices.
Thus, over the years, Ukraine’s political elite has proven in a multitude of ways that on its own it is incapable to bring about change of the scale and depth expected by its electorate.
In one episode of Servant of the People, Zelensky’s character tells the parliament that “the society has changed, and it’s no longer going to wait and forgive”. He then goes on to shoot all the parliament members with an automatic weapon.
The Ukrainian society has indeed changed and it clearly doesn’t want to wait and forgive any more. On March 31, it will most likely “shoot down” its failed political elite through the ballot box. Afterwards, what shape or form its growing anger will take is anyone’s guess.
The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.
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