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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