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  1. #21
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    Re: Mind trapped by: We should abandon the capitalistic system...

    Quote Originally Posted by EYE
    I think your premise begs the question, what is the purpose of Capitalism?
    I tried to answer that a bit by pointing out the purpose of the earth to begin with. It is here to serve us and provide for humanity.
    Capitalism has been hands down the best manager of that resource... and as I said, it is because of the dynamic between the requirement of human labor (the thing which facilitates individual prosperity) to produce goods. Once that chain is broken... capitalism doesn't work(Or I don't think it will).

    Quote Originally Posted by EYE
    In that capitalism serves us well and has served us well and will probably continue to serve a useful purpose for some time to come – Capitalism, as we know it, may transform into something else in another 500+ years or so because that society will be ready and capable of applying economic principles that will be more efficient and beneficial within that environment and reality.
    I would contend that change is going to need to come in the next 50 years, not the next 500. Which means it is close enough that it needs to be considered and the alternatives weighed.
    We are going to face the near extinction of the human job. With the one exception being what Ibelsd pointed out.. which is thinking.


    Quote Originally Posted by IBELSD
    First, let me apologize. I didn't realize we were doing econ 101 here. So, if you are applying scarcity in a econ specific way, then you are correct, nails are a correct resource. With that being said, you provided a hypothetical, but can you produce a real-world example where this has actually occurred? Where has government ever supplied a resource which had infinite resources in a manner which was superior to a free market solution?
    Air, the gov doesn't provide it per say.. but it is about as close to what you can get when speaking of an unlimited resource, and the private sector has basically worked to dirty it. Still, I think it is comparable.

    And what is the econ 101 on an economy that doesn't require people(or only requires a small % of the population.. hell even 60% of the population) in order to produce all possible goods. 25%-40% chronic unemployment is a tipping point for me. It represents a chronic "great depression" economy of america, and that would be a failed economic model IMO.

    In the face of such a situation, I don't see an alternative to a mixed economy.. or am I missing something?

    Quote Originally Posted by IBELSD
    Idealistic platitudes... and that's what gets us here. People who would rather endure the bitter pill of a mixed economy rather than let individuals decide their own economic paths. Really, what is a mixed economy? What is the root of a mixed economy? We still have a market place of goods and consumers. We still have demand and supply. What changes when we add the "mix" of some public entity? Exactly what is being replaced? Do the laws of economics suddenly change because the price is fixed by some authoritarian (not to be confused with authority)? Does a product become less scarce because its price can be fixed? Is it in more demand because it can be priced higher via taxation? For all the silliness about how we NEED a mixed economy to save us from ourselves, exactly how does this mix improve lives? You claim it is this mix which makes people happy. By all means support this claim. Please make the correlation that a mixed economy equates to happier people. Frankly it is balderdash. Governments are merely cabals of well-dressed whores. How exactly do they make everyone's lives better? You probably don't want prostitutes working on the corner near your home, but you feel great about inviting them into your house, your place of business, and your doctor's office... so long as they call themselves public servants. This is just silly season here in America. We have absolute corruption at all levels of government and we continue to claim we need them, that they'll make our lives better. We need, we want a mixed economy... I am just gonna call b.s. here.
    I agree with your cries against the gov, but big brother business is not better. They are after all who the gov (AKA #2) works for. Oligarchy is not superior to dictatorship.
    I apologize to anyone waiting on a response from me. I am experiencing a time warp, suddenly their are not enough hours in a day. As soon as I find a replacement part to my flux capacitor regulator, time should resume it's normal flow.

  2. #22
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    Re: Mind trapped by: We should abandon the capitalistic system...

    Quote Originally Posted by mican333 View Post
    If we get so automated that only 10% of the society is needed to work
    To produce what? This hypothetical seems to assume that there is some fixed production value we are accomplishing. I think this is where the OP is flawed. If 10% of labor is needed to produce what we produce now, than the other 90% will be involved producing other things right?



    Quote Originally Posted by MindTrap028 View Post
    Basically our historical understanding of women entering the work force during/after WWII is absolutly flawed.
    This is where the term cottage industry comes from.


    Quote Originally Posted by MT
    I think however, that is not an infinite possibility. So that, if we remove people from an industry it is only so long and so many times you can do that until there simply isn't anything left to do except for a few to grease a few wheels.
    The industry of sweing women was met by the industrial revolution that eventually imployed them. My point is that it isn't really very reasonable to expect another such revolution... and whence would it come anyway?
    Which was followed by the chemical revolution, the computer revolution, the bio revolution, and the info revolution. The great thing about economies is that they are very, very smart organisms and are able to use those resources to produce things we can't even dream of.

    You could be right about it not being an infinitely continuing process, but that process only runs out when we are creating automation that is identical to humans in potential and cheaper to create/maintain. That doesn't appear anywhere on the horizon currently. And that is a far more existential question than the one posed in the op.


    Quote Originally Posted by MT
    Well, my concern is when a high labor industry is replaced by a low labor industry that services just as many people.

    It isn't that there will be nothing for people to do at all, it will be the case that there is not so much to do as there are people. AGain, back to the Blockbuster and netflix. 2K employees replaced ... some 60k.
    And we get an industry that produces more value for a fraction of the cost right? Meaning that the aggregate economy has newly freed disposable income to spend elsewhere, that resources tied up in blockbusters' inefficient model are freed up for new business aspects, and new jobs are created.

    Most of those 60K found other jobs, and most pretty quickly. Be careful in seeing change in one sector as being general economic slack. Sure the movie industry declined, but that didn't affect the labor participation rate, it simply transferred laborers from one sector to another.



    Quote Originally Posted by MT
    Well, my really more aimed at the systemic unemployment we will face in the futre due to real job replacement by automation, and lacking another industrial revolution.. is going to get worse.
    If this were the driver, then why haven't we seen a general decrease in labor participation since the turn of the 1900s? The industrial revolution had steadied (it was also a revolution that was driven primarily by automation, which I think undermines the OP as well). We've seen it increase and decrease, but not steadily. If automation was really driving systematic unemployment we would see Productivity and Participation as inversely related. No such relation can be found however.

    Don't worry that we can't see where all the new jobs will come from, if we could we would be rich rather than here. Worry when people no longer have the incentive to create jobs or work in them.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


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  4. #23
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    Re: Mind trapped by: We should abandon the capitalistic system...

    Sorry for the lengthy post, I don't have as firm a grasp of these concepts (such as cottage industry). So forgive the laymen approach (or maybe just the lame).


    Quote Originally Posted by SQUATCH
    Which was followed by the chemical revolution, the computer revolution, the bio revolution, and the info revolution. The great thing about economies is that they are very, very smart organisms and are able to use those resources to produce things we can't even dream of.
    It is the later "revolutions" that have decreased the total number of jobs. We are facing a new revolution, and that is the automation revolution.
    A revolution targeted at decreasing jobs.

    Quote Originally Posted by SQUATCH
    You could be right about it not being an infinitely continuing process, but that process only runs out when we are creating automation that is identical to humans in potential and cheaper to create/maintain. That doesn't appear anywhere on the horizon currently. And that is a far more existential question than the one posed in the op.
    Well, I disagree with that.
    For example a sewing matching is nothing like the person it replaces, and a totally automated textile industry would still not be like a person yet it would effectively take an entire industry of jobs off the market.
    As for automation being cheaper, I kind of took it as a given that anywhere automation can be applied, it is generally cheaper.
    I mean that is basically the history of farming. If they ever find a way to automate water-melon picking... then you can say bye bye to all those jobs.

    The only real defense is to say that there are some things that automation will never or can never do. But beyond that, those things which it can't possibly do, must be numerous enough to employ the vast majority of the population.
    That is what I contend is in the process of flipping.

    The jobs are the buggy and we are the horse.

    Quote Originally Posted by SQUATCH
    And we get an industry that produces more value for a fraction of the cost right? Meaning that the aggregate economy has newly freed disposable income to spend elsewhere, that resources tied up in blockbusters' inefficient model are freed up for new business aspects, and new jobs are created.
    Not quit. Because a job with income is required to purchase the cheaper products and services.
    Your point holds as long as there is some other industry or job to go to. I'm pointing to the tipping point when that is no longer the case.
    A person working the register at Block buster, could go to Mc Donalds and work the register, until that is automated, then they could go to a gas station.. until that is automated etc .. etc.

    Quote Originally Posted by SQUATCH
    Most of those 60K found other jobs, and most pretty quickly. Be careful in seeing change in one sector as being general economic slack. Sure the movie industry declined, but that didn't affect the labor participation rate, it simply transferred laborers from one sector to another.
    Certainly. And of course my specific examples are not intended to show a past occurrence of the tipping point to the economy as a whole, rather just those specific industries.
    It is one thing to talk about a specific industry, but I'm trying to speak to the economy as a whole. When the economy becomes so automated that is simply doesn't produce the # of jobs it used to.

    It tomorrow 50% of all jobs were automated, it is a real question as to where those people are going to find the opportunity for employment.

    The logic goes like this.

    If Industry X is automated and thus jobs in that industry are decreased wile production is increased/made cheaper.
    & The total economy has Y many industries.
    If enough industries are automated, then the economy will suffer a similar effect as an industry would.
    -
    I contend that we will see the occurrence of the latter sooner than later.


    Quote Originally Posted by SQUATCH
    If this were the driver, then why haven't we seen a general decrease in labor participation since the turn of the 1900s? The industrial revolution had steadied (it was also a revolution that was driven primarily by automation, which I think undermines the OP as well). We've seen it increase and decrease, but not steadily. If automation was really driving systematic unemployment we would see Productivity and Participation as inversely related. No such relation can be found however.
    Well, I would point out that, that "automation" was creating the jobs as well in many cases. They weren't so much replacing jobs.

    So for example suppose I invent product X, and develop an machine to produce it quickly.
    If I hire one person, that would be a net increase as long as my product wasn't replacing an old one.

    So, like the chemical revolution, they creating new products and new production lines, not replacing old ones. Or where they were replacing old ones they were likewise vastly increasing the potential for growth.
    Like plastic replacing wood as a container material. It didn't just replace 5 wooden box products, it created 10k more products. (not real numbers.. just tossing ideas around and against your highly trained mind).

    Also, we have seen an inverse relationship in the areas where automation has occurred. Take farming or netflix etc. Each industry that sees automation sees a decrease in work force.
    It seems to me that we can apply that to the economy as a whole. If 50% of the economy is automated, especially when that automation is not a creating an industry but replacing an industry.


    Quote Originally Posted by SQUATCH
    Don't worry that we can't see where all the new jobs will come from, if we could we would be rich rather than here. Worry when people no longer have the incentive to create jobs or work in them.
    Well, that is an excellent point.

    But look at the "innovation" of today. lets say you invented a new product in the 1900's. What kind of product would it have been?
    mostly likely a very real and tangible one, one that in order to bring to market would require the physical labor of many people.
    Like a Great song.

    Now, what are people likely to invent in the future? A growing portion is becoming digital. If you produce a song greater than Elvis and the Beatles, the future will see not a single record made or produced and thus no or fewer people employed by such an invention.
    Instead it will rely on an infrastructure already in place and maintained by other products (like your computer).

    so I contend, that we will see a trend where a greater portion of the inventions and other such things will become products that don't produce many jobs at all. (all the while replacing more jobs than it creates).

    Further, My contention is resting on a projection of a specific kind of job that will occur in the future, and that is those that build automation machines and invent ways to apply automation.
    The decreased cost of powerful computers, and the increased ability of programs builds the basis for the trend I am speaking of.
    of course.. i can be wrong, My crystal ball has given some false results before.... but that one time It turned out to be an ordinary marble.

    The automation of driving will revolutionize our economy and in the process eliminate more jobs than are created.
    If our economy was waiting for an influx of unemployed people.. that would be one thing, but it isn't so we should be concerned.
    I apologize to anyone waiting on a response from me. I am experiencing a time warp, suddenly their are not enough hours in a day. As soon as I find a replacement part to my flux capacitor regulator, time should resume it's normal flow.

  5. #24
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    Re: Mind trapped by: We should abandon the capitalistic system...

    Quote Originally Posted by Ibelsd View Post
    Fair enough. And IF hell freezes over we should stop charging for popsicles.
    I don't think decreasing the need for labor due to automation is a "Hell freezes over" situation. Assuming we continually increase automation, it seems inevitable that we will need less labor.

    As an example, if a food producer has 500 people picking his produce in the field and later brings in a machine that will do it so he doesn't need those people anymore he will cease hiring those 500 people thereby decreasing the number of people needed to harvest food not just in his business but in our economy by 500 people (and assuming all food producers do that, it will result in a lot more than 500 less laborers needed). And yes, the producer will still need employees to maintain the machines that pick the food but he won't need 500 employees. If he did need 500 people to run the machines, it would make no financial sense to use the machines because he would be replacing 500 low-wage workers with 500 higher-wage workers and therefore spend more on labor. So clearly he will be hiring fewer machine operators than he had hand-pickers.

  6. #25
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    Re: Mind trapped by: We should abandon the capitalistic system...

    Quote Originally Posted by mican333 View Post
    I don't think decreasing the need for labor due to automation is a "Hell freezes over" situation. Assuming we continually increase automation, it seems inevitable that we will need less labor.

    As an example, if a food producer has 500 people picking his produce in the field and later brings in a machine that will do it so he doesn't need those people anymore he will cease hiring those 500 people thereby decreasing the number of people needed to harvest food not just in his business but in our economy by 500 people (and assuming all food producers do that, it will result in a lot more than 500 less laborers needed). And yes, the producer will still need employees to maintain the machines that pick the food but he won't need 500 employees. If he did need 500 people to run the machines, it would make no financial sense to use the machines because he would be replacing 500 low-wage workers with 500 higher-wage workers and therefore spend more on labor. So clearly he will be hiring fewer machine operators than he had hand-pickers.
    I get your hypothetical and I understand your argument. I concede, that on its face, your point seems like a valid conclusion. Yet, when we look at your argument, it has historically failed. When the hand loom was replaced by a machine, the same argument was made and it turned out to be false. When the assembly line was introduced people made the argument that human labor was becoming obsolete and they were wrong. When computers were introduced to the world, people began to panic that they'd lose their jobs. They panicked for nothing. When robots hit the factory floor, workers feared they would be obsolete. They were also wrong.

    Sure, automation will make some jobs obsolete. But the economy has always replaced the obsolete jobs with many more jobs in other fields. New services. New skill requirements. So on and so forth. The economy moves on. Jobs continually are created. So, your example of micro-economics certainly is correct but it fails when applied to macro-economies.
    The U.S. is currently enduring a zombie apocalypse. However, in a strange twist, the zombie's are starving.

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  8. #26
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    Re: Mind trapped by: We should abandon the capitalistic system...

    Quote Originally Posted by MT
    Sorry for the lengthy post, I don't have as firm a grasp of these concepts (such as cottage industry). So forgive the laymen approach (or maybe just the lame).
    Not a problem. I should note that I started a new job today and so my future replies are almost certainly going to be more terse than I would prefer. I apologize for any tone that might be inferred, it is certainly not implied.


    Quote Originally Posted by MT
    It is the later "revolutions" that have decreased the total number of jobs. We are facing a new revolution, and that is the automation revolution.
    A revolution targeted at decreasing jobs.
    Well the industrial revolution was the revolution of automation, far more so than the bio or information revolution and we came out of that with a better standard of living and more employment than we had before (well technically more unemployment, but that was because pre-industrial revolution unemployment=starvation). I don’t see any evidence that the latter revolutions actually have decreased employment. Take the Bio revolution, it didn’t supplant any jobs, it only created new lab jobs, new nursing jobs, bio-manufacturing jobs, bio-equipment jobs, etc. All of which simply didn’t exist in any form 50 years ago.



    Quote Originally Posted by MT
    For example a sewing matching is nothing like the person it replaces, and a totally automated textile industry would still not be like a person yet it would effectively take an entire industry of jobs off the market.
    Agreed, I think my point may have been lost (I was writing quickly). My point was not that there is no possible automation replacement unless the machine is as good as people, only that the fears that there will be nothing left for people to do at all doesn’t materialize until that point.

    The seamstress was capable of other work. The Panera counter jockey is capable of other work. Just as the seamstress found work making custom clothes, doing repairs, alterations, etc. (which she couldn’t before because she was too busy making clothes) and which pays a bit more, current job losses due to automation both free up labor for other jobs and generally always create other supporting job functions.

    Systematic unemployment would only occur from automation if automation was able to replace all possible work functions of a human being at less cost. If it can’t, then there is still an economic role for that person.

    IE we don’t need to really worry about the scenario in the OP until it is conceivable that automation could replace all human functions, squeezing us out of any possible future created job.

    Essentially we would have to say that automation is capable of assuming all economic human roles, including the process of inventing new products and services and then automating those roles too. I don’t see any reason to think that is on the horizon, especially when you look at what kinds of jobs have been lost and what kinds of jobs have been created over the last 20years.


    Quote Originally Posted by MT
    As for automation being cheaper, I kind of took it as a given that anywhere automation can be applied, it is generally cheaper.
    I wouldn’t be so sure. The initial capital outlay is horrendous usually, which is why you only see this in capital developed countries. It also isn’t the case in many types of manufacturing where the assembly isn’t standardized or the products are variable (custom items for example).


    Quote Originally Posted by MT
    Not quit. Because a job with income is required to purchase the cheaper products and services.
    Your point holds as long as there is some other industry or job to go to. I'm pointing to the tipping point when that is no longer the case.
    Right, this is Say’s law (you must produce to consume). But that would only be a problem if we were automating everything at once, as long as some sectors are healthy, those laborers will have greater discretionary income (because of cheaper goods) which will all for new job creation to counter the job loss. It is only a problem if everyone at the same time loses their job, which isn’t a realistic scenario.

    Additionally, that only addresses half of the drivers I mentioned. The automation also frees up capital, which flows towards the next most productive use and creates jobs with it. For example, Caterpillar no longer needs to spend so much money on its manufacturing line so its has additional working capital to open up a custom weld shop or to hire local repair crews, both jobs likely better paying than the initial one, but not possible without the automation.




    Quote Originally Posted by MT
    It is one thing to talk about a specific industry, but I'm trying to speak to the economy as a whole. When the economy becomes so automated that is simply doesn't produce the # of jobs it used to.

    It tomorrow 50% of all jobs were automated, it is a real question as to where those people are going to find the opportunity for employment.
    And there are two objections to your conclusion I think.

    The first is the historical objection that I, and Ibelsd have pointed out. This process has been going on for a very long time and every time automation has come in and destroyed some sector of jobs it has also brought in vast swaths of new jobs as well. As I pointed out, automated welding machines led to the rise of custom weld professionals who command a far higher wage than assembly line welders, but whose job was not possible until we had that kind of mass production. There is no real reason to believe that that wouldn’t happen in the future as well.

    The second is the incentive argument. If we presume that there are other profitable uses for human labor it would seem a reasonable conclusion that individuals would figure those uses out as long as it is profitable for them to do so? The only objections I could see is that entrepreneurs are incapable of discovering those uses (unlikely) or that those uses would also be automated away. The latter only seems likely if we are willing to assume that all valuable human functions are capable of being automated away, which doesn’t seem to be a reasonable assumption to me. We have a hard enough time getting computers to recognize incredibly simple patterns (see Raven’s Progressive Matrices as an example), let alone the kind of complex planning that is involved in even simple service roles.



    Quote Originally Posted by MT
    So for example suppose I invent product X, and develop an machine to produce it quickly.
    If I hire one person, that would be a net increase as long as my product wasn't replacing an old one.
    Not to be overly technical, but that isn’t automation, it is invention. Automation is solely when you take an existing function and replace the human labor component with a mechanical component.

    That said, I agree that automation, in the strict sense, was creating jobs there too. When looms replaced cottage industry, it also created marketing, maintenance, design, and supervisory jobs that hadn’t existed in the old industrial structure.

    You seem to be under the impression that this has shifted recently, but that really hasn’t been the case. The two examples you use Netflix and Farming have seen job increases as a result of automation as well.

    You are correct that there were thousands of jobs lost when Blockbuster shrank. But Netflix’s rise created not only better paying, internal jobs, but thousands upon thousands of associated roles. Netflix accounts for something greater than 25% of all internet bandwidth. That requires a whole heck of a lot of server farms and their associated maintenance. From server IT specialists, IM specialists, and even plant maintenance (server farms require a lot of AC maintenance, water maintenance, and cleaning). And that is only one aspect. From the crews monitoring, repairing, and building infrastructure. Or in the industry as a whole, Hulu is on the rise, Vimeo if I recall correctly and Youtube has its own competing role. All of these companies exist within the industry and employ thousands as well. Netflix and Hulu have also allowed for entire new business models for shows to exist. Netflix direct shows, Hulu’s branded shows, Youtube exclusives, all of these have created jobs in small scale production companies that couldn’t compete before due to barriers to entry involved in retail distribution. See RoosterTeeth for a great example of this. Hundreds of jobs in that small company that did not, and could not have existed prior to the Netflix/Hulu rise.

    Farming is an even more interesting case as automation has led to a dramatic reshaping of the industry. While small plot farms are down, the increase in food production has allowed for the rise of organic and local farmers who could never have competed in a world without industrial farming. It has also allowed for the rise of large food companies (like them or not, they employ hundreds of thousands of people). It has increased its share in the transportation industry as increased volumes of diverse products have needed shipment, storage, marketing, etc throughout the world.

    Both of these only cover direct replacement jobs as well. We haven’t even covered the new jobs created because these efficiencies freed up capital that could be invested to create new jobs.


    Quote Originally Posted by MT
    Instead it will rely on an infrastructure already in place and maintained by other products (like your computer).
    How is that infrastructure different? How is creating a server farm and a fiber optic capable different than running a vinyl manufacturing line? Both are funded by the consumers of the goods and services they enable.

    You might see a difference that in the past a vinyl line only produced records while a server farm hosts hundreds of products. That only means that we have a greater variety of goods and services and that we can sustain a larger number of artists than we could in the 1900s. That is why we can all listen to a much larger variety of music and sustain a much larger variety of musicians than was possible a hundred years ago. I would be surprised if the number of musicians was smaller today (even as a percentage of population) than it was then. Live music is more common and varied (because artists are partially sustained by cheaper music distribution), the iTunes music store itself adds more music a year than was probably recorded in all the first half of the twentieth century (a guess, but I suspect a good one).

    Computers can replace many job functions, but they enable a whole large range of functions inconceivable without them. Graphic artists, digital movies, digital animation, financial modeling, the explosion of published writers, ODN, marketing, analytics, etc, etc. Computers are perhaps the best example of what Ricardo argued, that automation only occurs when labor costs get too high so that automation makes labor more productive and therefore employable. Computers generally don’t replace people, they do things people can’t do, or they help people do things they couldn’t otherwise. Both functions open up the range of possible jobs more than they close them.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


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  10. #27
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    Re: Mind trapped by: We should abandon the capitalistic system...

    @ Squatch

    First let me recognize a few of your points and their validity.

    I recognize that I am working against a historical backdrop that doesn't support my point.
    Automation is not new and has occurred in the past. Farming, textiles, automobiles etc. and it has not resulted in a net reduction of jobs.

    Secondly, I recognize that in the past this has spawned many new jobs and industries. As you pointed out custom welding, and organic farms to name a few.

    So it seems to me that we should ask if the automation we are seeing is the same kind or can we expect the same sort of result.

    --- Blockbuster (et all) vs Streaming industry. --- (not directly about the above...
    The following I forward as my contention to the above without the benefit of hard facts and numbers. These are raw ideas.
    On the Netflix vs blockbuster. I'm not convinced that Netflix has resulted in an equal number of jobs. Yes the infrastructure to support the internet requires many things that create jobs, but they are directly comparable to blockbuster. For example Air conditioning workers were required to services the thousands of stores, that were replaced by what is probably a single facility. I can't help but think that led to few total AC jobs as there were fewer A/C's to be serviced (vastly fewer i would think). Building maintenance is another, I hardly think that a single (very very large) facility replaced all the general maintenance of a store front that saw abuse from foot traffic and cars. We are talking the difference between a well maintained ware house, and a well maintained store front. It is very cheap to maintain a cement floor, while carpet with high foot traffic wears out. ..You get me drift.

    On a whole, I simply don't see the industry of online streaming video, coming close to replacing the jobs lost by the DVD rental stores.
    Remember for every Blockbuster there was a Hollywood video, and for all of those there were probably 5 or 6 locally owned video rental stores. (we had blockbuster/Hollywood video and no less than 8 private stores).



    ---To the point of creating more industry---
    In the past, the thing which has neutralized any effect of automation decreasing jobs in one sector, is the number of jobs created as a direct effect of.
    1) The new automation existing (Ie those paid to service those new machines)
    2) The labor now free to do new things.

    So my contention is that the kind of automation that is going to be occurring in the future will not have those effects.
    For example, lets say we automate all cars.

    So I expect several things to occur.
    1) Many or all human driving jobs will be replaced. (this includes many farming jobs) so for sake of argument lets suppose 9% of all jobs. generous to my argument).
    2) Many accident repair jobs will be prevented.

    Past experience has told us that we should expect
    3) New Jobs to services the new systems.
    4) Newly freed up capital will gravitate to new services and thus new jobs not directly linked to the automation itself.

    My point rests on this.
    That #1 & 2 will far outpace #3. In other words, for every man hour created to service & repair the new system that didn't exist before. The new system will eliminate many more man hours that were required to maintain all the other systems.

    A) Oil changes may increase, because the automation better maintains the car, but fewer more extensive repairs requiring more labor (IE engine replacement) will be required because the total system is better maintained and more costly (and thus more man hour jobs) will be gone.

    B) Repairing the computer system of the car will be a new maintenance item, requiring more man hours, but fewer resulting fewer accidents would result in far fewer man hours by multiples.

    C) Beside the man hours lost on the repair side, the actual driving jobs (IE all/most- farm drivers, truck drivers, taxi drivers, Limo drivers) with no apparent new job created on that process. IE there are already jobs which tell those people where to go (dispatchers) their roll would just change, not necessarily create more of them. Imagine if all pilots were replaced, there wouldn't be a greater need for more Air traffic controllers.. because that job already exists.. same with the above).

    D) There would probably fewer total cars on the road because of greater efficiency. I may not need a second car all week, and so decide to share one with my neighbor, or street. (basically car pooling will become easier... but is hardly a necessary effect).

    Only 2 and 4 really add money to the pockets of people in general.. as well as lower insurance costs. So we could see lots of new money to go to new things and industries.... But we are also living in a time where people have been spending more than they make anyway... so it could make almost no difference at all, as people simply bring their budgets into balance. (not likely). Still the larger point, is that I'm not certain that new money would create more jobs. having money freed up by the automated car, doesn't increase jobs if I purchase an automated created T.V. That money must flow to a non-automated job.



    That #4 is all well and good, but there doesn't seem to be an industry waiting to absorb a 9% increase in the unemployed especially as many other low skill jobs are easily replaced by automation. (Fast food check out/order taker). Especially in light of our already low work force participation rate. There is currently in the market many people with skills to do any job that can be conceived or any industry that can be imagined to be created. (that would be a direct response to the incentive objection you brought up.)

    So it seems to me that we are more likely facing a chronic unemployment issue the more automation we see going forward.


    --Up Front automation costs ---
    One of the major issues with automation is it's upfront costs, but that is really being muted by the very cheap nature of technology. Your cell phone would have been the Envy of NASA for the moon missions. My first computer cost $3k and now you can get very solid computers for $500. For the most part all the parts are there for automation and it doesn't take massive changes or investment to eliminate jobs. The major hurtle to automated driving, is programming. All the sensors have already been built. And a program is more of an idea than a real thing.
    Basically, machines are going to be smart enough and cheap enough to supplant human labor in many areas. MC- D's has but to turn their register around (just about) to eliminate thousands of jobs.



    -------The Flaw of micro management and my limited imagination ---
    It has been said here that we shouldn't worry about where the new jobs will come from and in a very real way I am not qualified or smart enough to even guess (otherwise i would be rich).

    But I don't think that makes the question an invalid one, nor does that answer why there are so many currently unemployed if there are profitable jobs that could be done that are not directly related to any new automation.


    It just seems very intuitive to be concerned if a large portion of our economy becomes automated, as to what people will actually do, and if capitalism would still operate if we found ourselves with a very high chronic unemployment due to automation. Given the track record I understand the faith in capitalism that the challenge will be met. But I recognize that growth is not eternal... and that seems to pose a serious problem to our current system, a system based on capitalistic growth.
    I apologize to anyone waiting on a response from me. I am experiencing a time warp, suddenly their are not enough hours in a day. As soon as I find a replacement part to my flux capacitor regulator, time should resume it's normal flow.

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  12. #28
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    Re: Mind trapped by: We should abandon the capitalistic system...

    There has never been another system except in name: witness China today.
    The ambitious nature of man makes it so. The elite sit on top of the pyramid of wealth as they have always done. Check out Safa Motesharrei he has applied matematics to the breakdown of civilisation.
    If we magically leveled everyone within a hundred years we would be back as we are.
    You can't change human nature.

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    Re: Mind trapped by: We should abandon the capitalistic system...

    Quote Originally Posted by MindTrap028 View Post
    I recognize that I am working against a historical backdrop that doesn't support my point.
    Understood, I'll do my best to not rely on the "it has never happened" argument in my future replies (with one minor exception later).




    Quote Originally Posted by MT
    On the Netflix vs blockbuster. I'm not convinced that Netflix has resulted in an equal number of jobs. Yes the infrastructure to support the internet requires many things that create jobs, but they are directly comparable to blockbuster.
    I think this may be too limited of a comparison. There might well have been a shift in the employment prospects for HVAC workers following this transition, but just because the HVAC industry was harmed does not mean that the overall job market was, or even the job market for comparable levels of employment. Electricians, local technicians for ISPs, small company administration all rose as the move from hard copy to digital took off. It is also important to remember that Netflix's small employment level is primarily due to its contracting make up rather than its actual labor requirements. Netflix contracts out the large data storage and server functions to other companies and contracts with them. These companies employ thousands of people. Even a perfunctory search shows several hundred server wharehouse companies (http://www.datacenterknowledge.com/a...t-web-servers/). Some of the bigger ones like Rackspace and OVH employ 4-5 thousand people (http://ir.rackspace.com/phoenix.zhtm...359&highlight=). Given that Netflix takes up something like 25% of all internet bandwidth, it wouldn’t be irresponsible to say that it accounts for something like a quarter of those jobs. That means it would only take 10 or 11 such companies for Netflix to account for more employment than Blockbuster did at its height. It isn’t much more to compare Hulu to Hollywood. Youtube’s comparison to any of them would be daunting given its massive server usage and Google’s giant server farms and legions of developers.

    So while I certainly agree that Netflix did not directly replace lost HVAC opportunities (though I have a sneaking suspicion someone did), that doesn’t mean it didn’t drive more employment.


    And of course this ignores the job creation led by freed up capital. This comes in two flavors.

    The first is the freed up disposable income. Netflix is cheaper than Blockbuster or Hollywood was in price per title, certainly in usage rates. That means one of two things. Either people are consuming more, which means their quality of life has improved or they have more disposable income to spend on other things. Likely it is a combination of the two. That extra spending also facilitates new job creation as they are purchasing new goods and services or as savings facilitating capital accumulation and investment in new job creation.

    The second comes from the company’s freed up working capital. Clearly Netflix has a lower working capital model than Blockbuster. Less inventory, fewer stores, fewer trucks, buildings, etc. That freed up capital (which runs into the billions of dollars) represents developed resources that are no longer needed to provide this entertainment service and can now be used to provide other goods and services. This ranges from the newly open storefronts which were filled by other restaurants or services to a lower “cost of capital” for new companies who are looking to raise money for their startups. These savings spur innovation, entrepreneurship and ultimately jobs (job growth primarily comes from small, innovative companies).

    Quote Originally Posted by MT
    On a whole, I simply don't see the industry of online streaming video, coming close to replacing the jobs lost by the DVD rental stores.
    Remember for every Blockbuster there was a Hollywood video, and for all of those there were probably 5 or 6 locally owned video rental stores. (we had blockbuster/Hollywood video and no less than 8 private stores).
    Are those store fronts empty now? Or have they been replaced with other companies with other job opportunities? (With their own HVAC requirements).

    Quote Originally Posted by MT
    So it seems to me that we are more likely facing a chronic unemployment issue the more automation we see going forward.

    I think there are two major points to be had here. The first rests in that I don’t see anything categorically different about the type of automation that you are offering and automation we’ve seen and know doesn’t have this effect. I think a distinction about why this automation is different and will have different effects would benefit your position. We would need to see something inherently different if we were to expect outcomes to be fundamentally different. I haven’t seen, imo, a compelling reason why automating driving tasks is fundamentally any different from automating weaving tasks.


    The second tact is that your scenario (just like my reply will be) are “just-so” stories as a famous economist called them. The problem with just so stories is that, as humans, we have a very hard time fully accounting for all the possible permutations and outcomes of emergent systems like economies. I think we can add a few more factors to your scenario that cast a bit of doubt on the final outcome.

    a) The first revolves around why would people want self-driving vehicles? Part of it is the increased productivity. Giving people back something like 30% of their time means there is a lot more they can get done in a week. That extra work also necessitates extra positions and growth. It means we produce more as an economy, and that extra production acts as capital accumulation for further expansion and job creation.
    b) A great example of the above has been the rise of the personal assistant. Several firms now offer remote personal assistants (who usually cover several customers) that can do quite a bit that you don’t have time for. They can buy theater or movie tickets, ensure you pay your bills, plan your day, work on projects like researching the best deck repair company in your area and calling them for quotes, etc. This is not meant to be a 9% of the economy replacement (which might be pretty high given that smaller roads, dirt roads, and farms are unlikely to have the requisite sensors to enable automated cars), but it is an example of an area that will expand as the result of the extra productivity and free time enabled by self-driving vehicles.
    c) Even more broadly, this free time will give rise to a whole host of new consumer activities. Larger news consumption, app consumption, planning, reading, entertainment, etc. The time taken to get to work will transition greatly and new products and services will be needed to fill that gap. Better remote working tools, better collaboration tools, etc. It will be necessary for people to develop these tools and those developers will likely work in small companies or teams that also include other support staff, all of which are new jobs.
    d) We can also expect to see a rise in road maintenance crews and an increase in the requisite skill level. It is likely that automated vehicles will have very specific roadway requirements, perhaps sensor posts, or integrated data sensors on the lane bumps, or something as simple as precision alignment of the reflectors on the bumps. Regardless of the specific form, it is likely roadways themselves will have additional requirements for maintenance to facilitate these vehicles and that these requirements will be specialized in nature.
    e) As you pointed out, additional maintenance will be required as the vehicles become more heavily computerized. Specific IT focused mechanics will need to be brought on staff to ensure the network of systems composing the nervous system of the car are working perfectly. Likely there will need to a larger industry supporting the firmware updates and other specialty software changes just as there are for home computers.
    f) The vehicles themselves might well get in less accidents, but being more complex, will need far more maintenance. Not only the standard preventative maintenance listed above, but we are talking dozens if not hundreds of new sensor packages on the car that need to be replaced, checked, and calibrated quite frequently.


    Again, I’m not pretending that I know, for sure exactly what new jobs will or will not be created. I’m only pointing out that there are drivers for job creation as well, so it isn’t clear exactly what the outcome will be. We can hypothesize on what free, intelligent individuals will do all day, and be wrong all day. But as long as there are profitable chances for employment, it is likely self interested individuals will figure out what they are.


    Quote Originally Posted by MT
    Especially in light of our already low work force participation rate. There is currently in the market many people with skills to do any job that can be conceived or any industry that can be imagined to be created. (that would be a direct response to the incentive objection you brought up.)
    The question then is, why are these people not being employed? Let’s set aside that we have yet to really recover from the last recession, or the political reasons that this is so.

    Essentially, your argument would be that they are unemployed because no one can figure out a profitable way to employ them.

    I would argue (and I think we could find some support from economists on this) that regime uncertainty is what is going on. When business leaders are polled about job creation, only a few number of them are stating that they lack employable projects. Since 2008 polls regularly hit above 60% for regime uncertainty, the idea that employers are afraid to invest because they don’t have confidence in what the regulatory and legal environment will be over the short term.

    Certainly that doesn’t come as a surprise given the Administrations rule by fiat policies over the last few years.

    We should also point out that regulatory costs of employment are staggering. Labor protection laws make it extremely expensive, on average, to terminate employees, so the risk of hiring increases dramatically (why would I hire you if I knew it would be difficult to let you go if you didn’t work out?). Additional regulatory costs of compliance (this is about 80% of what your HR department does if you company is above 50 people) add somewhere between 50% to 75% to the cost of your labor. So if you can only produce $20/hour in value, a $15/hour wage is probably not going to be offered since there is somewhere between $5 and $7.50 in additional regulatory costs, making your employment unprofitable.


    Those are the drivers economists and business owners cite when they point to systematic unemployment.


    Quote Originally Posted by MT
    It has been said here that we shouldn't worry about where the new jobs will come from and in a very real way I am not qualified or smart enough to even guess (otherwise i would be rich).
    First, I certainly hope I didn’t offend you, you know I have nothing but the utmost respect for you. I didn’t mean to imply that MT wasn’t smart enough to understand the ramification, I meant that no human is. It is the Hayekian argument against Keynes, that we should beware of thinking, even if you are a nobel prize winning Peer, that you able to anticipate the outcome of macro level, emergent processes.

    To your point though. If your hypothesis were true, we should expect systematic unemployment to be confined primarily to automated industries, but that isn’t what we’ve seen. In fact, nearly the opposite. Automated fields like manufacturing saw a far faster recovery post 2008 and lower levels of systematic unemployment that more service oriented fields that have seen little automation (see the legal profession here).

    Quote Originally Posted by MT
    It just seems very intuitive to be concerned if a large portion of our economy becomes automated, as to what people will actually do,
    Understandably so. But I would ask one, somewhat fundamental question (and it isn’t originally mine, I stole it from David Ricardo the famous economist who first wrote about Comparative Advantage). When do companies purchase automation?

    It generally isn’t when that automation is invented. IE they aren’t immediately replacing workers with cheaper machines to save money.

    In most cases this automation comes when labor costs rise and so employers need to make each laborer more efficient. This increase in labor costs is almost exclusively confined to industries or time periods where demand increases are outstripping increases in labor, either because the labor is skilled and so it is hard to train more or when there are large pipelines for new sources (like doctors). The increase in product demand increases labor demand which drives up wages. This means that employers need to pay more to keep talent and therefore need to invest capital to ensure that that expensive talent is able to “earn their keep” as it were. Automation then comes in as an efficiency tool, not as a replacement.

    Only in rather odd situations, usually involving legislation, does automation come in directly to replace labor. Situations like Panera are more the result of minimum wage laws rather than inevitable change. Farm automation came about because laborers were scarce and being drawn away to cities for better paying jobs, that drove equipment investment, not the other way around.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


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  15. #30
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    Re: Mind trapped by: We should abandon the capitalistic system...

    Well, that is a rather well put together post.

    I am pretty much forced to concede all my previous examples as not supportive of my general point. That however is not surprising to me, because I really am working against history.

    You can consider all points conceded that are not brought up here. As a note, I feel like my argument is defeated... but the splinter has not been removed from my brain. Does capitalism have an upper limit? Can automation destroy the foundation of capitalism? I don't think I am asking the right questions, or making the proper points to really explore that topic. I suppose you can sum up the following as me brainstorming.


    Quote Originally Posted by SQUATCH
    The first rests in that I don’t see anything categorically different about the type of automation that you are offering and automation we’ve seen and know doesn't have this effect. I think a distinction about why this automation is different and will have different effects would benefit your position. We would need to see something inherently different if we were to expect outcomes to be fundamentally different. I haven’t seen, imo, a compelling reason why automating driving tasks is fundamentally any different from automating weaving tasks.
    This is pretty much the best place to start.

    The only difference I can point to is that of degree. Specifically in relation to the total economy. In the past, automation has caused the creation of jobs some where else in the economy, thus me appealing to even a hypothetical good example is not support of my general point.

    Question to opponent.So, my question is.. what will happen to the capitalistic system when 50%(IE a large portion) of all possible jobs are occupied by automation?

    Here I am forced to concede my previous point that car automation will be the tipping point, though I do think we may look back in history and say that it was. that is little more than intuition.

    Historically, the capital free from the lower costs automation ,assumed to exist, has gone to create other jobs. But in a 50% economy we would have to assume that many of those jobs are also automated. Take your personal assistant jobs created by people having more free time in the car. .. That would be done by an $2 app.

    At some point the job list of what can only be done by people is going to shrink. There at least I have history on my side, as automation has become capable of doing more and more as well as being cheaper. What will happen to "IT" jobs, when computers more resemble the capacity of a human brain? Suppose a single facility could house all memory requirements of the world. That is pretty much science fiction now, but given our exponential growth of tec... it shouldn't be ridiculed as outlandish.

    Here again, my and any mans lack of imagination raises it's ugly head. If can barely imagine what tec or what world would exist in said future, how can we possibly answer or imagine what jobs would arise from it, or what people would do? (we probably just can't).

    Hence I try to project it upon our current world. ... a failed effort.
    I look around and see so many jobs just waiting to be replaced with a well made ap and simply don't have the foresight to see where that labor would go.. else I would be rich.
    I apologize to anyone waiting on a response from me. I am experiencing a time warp, suddenly their are not enough hours in a day. As soon as I find a replacement part to my flux capacitor regulator, time should resume it's normal flow.

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    Re: Mind trapped by: We should abandon the capitalistic system...

    Quote Originally Posted by MindTrap028 View Post
    Question to opponent.So, my question is.. what will happen to the capitalistic system when 50%(IE a large portion) of all possible jobs are occupied by automation?
    That is an interesting question I think I hinted at above. What happens when automation essentially becomes human. When automated systems are so intelligent that they can replace quite a bit of the possible things we are capable of doing then we get to an interesting place where the questions become a bit more metaphysical, and a bit out of the scope of my argument. ;-)
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


 

 
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