A worker at a steel minimill in California. Minimill technology has enabled steel plants to cut 75 percent of employees over five decades, while keeping production the same. CreditDavid McNew/Getty Images
On December 21, 2016, Claire Cain Miller writes in The New York Times:
The first job that Sherry Johnson, 56, lost to automation was at the local newspaper in Marietta, Ga., where she fed paper into the printing machines and laid out pages. Later, she watched machines learn to do her jobs on a factory floor making breathing machines, and in inventory and filing.
“It actually kind of ticked me off because it’s like, How are we supposed to make a living?” she said. She took a computer class at Goodwill, but it was too little too late. “The 20- and 30-year-olds are more up to date on that stuff than we are because we didn’t have that when we were growing up,” said Ms. Johnson, who is now on disability and lives in a housing project in Jefferson City, Tenn.
Donald J. Trump told workers like Ms. Johnson that he would bring back their jobs by clamping down on trade, offshoring and immigration. But economists say the bigger threat to their jobs has been something else: automation.
“Over the long haul, clearly automation’s been much more important — it’s not even close,” said Lawrence Katz, an economics professor at Harvard who studies labor and technological change.
No candidate talked much about automation on the campaign trail. Technology is not as convenient a villain as China or Mexico, there is no clear way to stop it, and many of the technology companies are in the United States and benefit the country in many ways.
Mr. Trump told a group of tech company leaders last Wednesday: “We want you to keep going with the incredible innovation. Anything we can do to help this go along, we’re going to be there for you.”
Andrew F. Puzder, Mr. Trump’s pick for labor secretary and chief executive of CKE Restaurants, extolled the virtues of robot employees over the human kind in an interview with Business Insider in March. “They’re always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex or race discrimination case,” he said.
Globalization is clearly responsible for some of the job losses, particularly trade with China during the 2000s, which led to the rapid loss of 2 million to 2.4 million net jobs, according to research by economists including Daron Acemoglu and David Autor of M.I.T.
People who work in parts of the country most affected by imports generally have greater unemployment and reduced income for the rest of their lives, Mr. Autor found in a paper published in January. Still, over time, automation has had a far bigger effect than globalization, and would have eventually eliminated those jobs anyway, he said in an interview. “Some of it is globalization, but a lot of it is we require many fewer workers to do the same amount of work,” he said. “Workers are basically supervisors of machines.”
When Greg Hayes, the chief executive of United Technologies, agreed to invest $16 million in one of its Carrier factories as part of a Trump deal to keep some jobs in Indiana instead of moving them to Mexico, he said the money would go toward automation.
“What that ultimately means is there will be fewer jobs,” he said on CNBC.
Take the steel industry. It lost 400,000 people, 75 percent of its work force, between 1962 and 2005. But its shipments did not decline, according to a study published in the American Economic Review last year. The reason was a new technology called the minimill. Its effect remained strong even after controlling for management practices; job losses in the Midwest; international trade; and unionization rates, found the authors of the study, Allan Collard-Wexler of Duke and Jan De Loecker of Princeton.
Another analysis, from Ball State University, attributed roughly 13 percent of manufacturing job losses to trade and the rest to enhanced productivity because of automation. Apparel making was hit hardest by trade, it said, and computer and electronics manufacturing was hit hardest by technological advances.
Over time, automation has generally had a happy ending: As it has displaced jobs, it has created new ones. But some experts are beginning to worry that this time could be different. Even as the economy has improved, jobs and wages for a large segment of workers — particularly men without college degrees doing manual labor — have not recovered.
Even in the best case, automation leaves the first generation of workers it displaces in a lurch because they usually don’t have the skills to do new and more complex tasks, Mr. Acemoglu found in a paper published in May.
Robert Stilwell, 35, of Evansville, Ind., is one of them. He did not graduate from high school and worked in factories building parts for tools and cars, wrapping them up and loading them onto trucks. After he was laid off, he got a job as a convenience store cashier, which pays a lot less.
“I used to have a really good job, and I liked the people I worked with — until it got overtaken by a machine, and then I was let go,” he said.
Dennis Kriebel’s last job was as a supervisor at an aluminum extrusion factory, where he had spent a decade punching out parts for cars and tractors. Then, about five years ago, he lost it to a robot.
“Everything we did, you could program a robot to do it,” said Mr. Kriebel, who is 55 and lives in Youngstown, Ohio, the town about which Bruce Springsteen sang, “Seven hundred tons of metal a day/Now sir you tell me the world’s changed.”
Since then, Mr. Kriebel has barely been scraping by doing odd jobs. Many of the new jobs at factories require technical skills, but he doesn’t own a computer and doesn’t want to.
Labor economists say there are ways to ease the transition for workers whose jobs have been displaced by robots. They include retraining programs, stronger unions, more public-sector jobs, a higher minimum wage, a bigger earned-income tax credit and, for the next generation of workers, more college degrees. The White House on Tuesday released a report on automation and the economy that called for better education from early childhood through adult job transitions and for updating the social safety net with tools like wage insurance. Few are policies that Mr. Trump has said he will pursue.
“Just allowing the private market to automate without any support is a recipe for blaming immigrants and trade and other things, even when it’s the long impact of technology,” said Mr. Katz, who was the Labor Department’s chief economist under President Clinton.
The changes are not just affecting manual labor: Computers are rapidly learning to do some white-collar and service-sector work, too. Existing technology could automate 45 percent of activities people are paid to do, according to a July report by McKinsey. Work that requires creativity, management of people or caregiving is least at risk.
Ms. Johnson in Tennessee said both her favorite and highest-paying job, at $8.65 an hour, was at an animal shelter, caring for puppies.
It was also the least likely to be done by a machine, she said: “I would hope a computer couldn’t do that, unless they like changing dirty papers and giving them love and attention.”
Gary Reber Comments:
This article is about REALITY! While numerous authors envision a dire result as the technological revolution advances and less and less human labor is required to produce and distribute the products and services needed and wanted by society, with just a tiny few reaping ALL of the financial rewards, virtually every solution to counter the tectonic shifts in the technologies of production poses the same old redistribution approach that results in socialism, instead of making EVERY citizen individually productive through their personal ownership stakes in the wealth-creating, income-producing capital assets resulting from technological invention and innovation. They never address the issue of concentrated ownership, nor use the therm OWNERSHIP. Instead, the ONLY solution is a redistribution of income and wealth from the rich owners of breakthrough technologies to the rest of us.
What is direly needed are honest leaders with the communication talent to advocate for making EVERY person a productive contributor to societal development through their personal ownership stakes in the productive capacity of our future. This can be accomplished without the requirement of past savings or a reduction in wages (if one is employed) or benefits using insured, interest-free capital credit to finance technological invention and innovation with the credit extended paid off out of the future earnings generated by the investments. In this way, we can build a future economy to support general affluence for EVERY child, woman and man, while at the same time generating, over the short-term (say a generation), virtual full employment and simultaneously creating new private property sector capital owners, who will benefit from growing purchasing power and financial security, and not dependent on a job that is being replaced by “machines” or a welfare State of elites determining who gets what.
The problem is that technological invention and innovation––change––makes the non-human means of producing––tools, machines, structures, and computerized processes––ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant). This means that fewer and fewer people are necessary to produce the products and services needed and wanted by society. But when a job is one’s ONLY way to be productive and earn an income and when jobs are disappearing and the worth of labor is being devalued, we have a problem. The problem is magnified by the fact that upward of 95 percent of the products and services are produced by physical productive capital––the non-human factor––which is owned by less than 10 percent of the population and highly concentrated among less than 1 percent of the population. The result is that primary distribution through the free market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contribution through labor.
Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on job creation and redistribution of wealth rather than on equal opportunity to produce, full production and broader capital ownership accumulation. This is manifested in the myth that labor work is the ONLY way to participate in production and earn income. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Physical capital provides not less than 90 to 95 percent of the input. Full employment as the means to distribute income is not achievable. When the “tools” of capital owners replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another, such as a proposed universal basic income.
The capitalism practiced today is what, for a long time, I have termed “Hoggism,” propelled by greed and the sheer love of power over others. “Hoggism” institutionalizes greed (creating concentrated capital ownership, monopolies, and special privileges). “Hoggism” is about the ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the money through monopolized productive capital ownership. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to get the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption made possible by “customers with money.” It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being, not to a hand-out derived from government coercion that takes from those who make productive contributions as workers and capital owners and gives to those who are unable to earn a minimum sustainable income.
Binary economist Louis Kelso postulated: “When consumer earning power is systematically acquired in the course of the normal operations of the economy by people who need and want more consumer goods and services, the production of goods and services should rise to unprecedented levels; the quality and craftsmanship of goods and services, freed of the corner-cutting imposed by the chronic shortage of consumer purchasing power, should return to their former high levels; competition should be brisk; and the purchasing power of money should remain stable year after year.”
Without this necessary balance hopeless poverty, social alienation, and economic breakdown will persist, even though the American economy is ripe with the physical, technical, managerial, and engineering prerequisites for improving the lives of the 99 percent majority. Why? Because there is a crippling organizational malfunction that prevents making full use of the technological prowess that we have developed. The system does not fully facilitate connecting the majority of citizens, who have unsatisfied needs and wants, to the productive capital assets enabling productive efficiency and economic growth.
America has tried the Republican “cut spending, cut taxes, and cut ‘entitlements,’ eliminate government dependency and shift to private individual responsibility” and the Democrat “protect ‘entitlements,’ provide tax-payer supported stimulus, lower middle and working class taxes, tax the rich and redistribute” through government brands of economic policy, as well as a mixture of both. Republican ideology aims to revive hard-nosed laissez-faire appeals to hard-core conservatives but ignores the relevancy of healing the economy and halting the steady disintegration of the middle class and working poor.
Some conservative thinkers have acknowledged the damaging results of a laissez-faire ideology, which furthers the concentration of productive capital ownership. They are floundering in search of alternative thinking as they acknowledge the negative economic and social realities resulting from greed capitalism. This acknowledgment encompasses the realization that the troubling economic and social trends (global capitalism, free-trade doctrine, tectonic shifts in the technologies of production and the steady off-loading of American manufacturing and jobs) caused by continued concentrated ownership of productive capital will threaten the stability of contemporary liberal democracies and dethrone democratic ideology as it is now understood.
Without a policy shift to broaden productive capital ownership simultaneously with economic growth, further development of technology and globalization will undermine the American middle class and make it impossible for more than a minority of citizens to achieve middle-class status.
We are absent a national discussion of where consumers earn the money to buy products and services and the nature of capital ownership, and instead argue about policies to redistribute income or not to redistribute income. If Americans do not demand that the contenders for the office of the presidency of the United States, the Senate, and the Congress address these issues, we will have wasted the opportunity to steer the American economy in a direction that will broaden affluence. We have adequate resources, adequate knowhow, and adequate manpower to produce general affluence, but we need as a society to properly and efficiently manage these resources while protecting and enhancing the environment so that our productive capital capability is sustainable and renewable. Such issues are the proper concern of government because of the human damage inflicted on our social fabric as well as to economic growth in which every citizen is fairly included in the American dream.
Our current system is rigged to continually concentrate the ownership of capital in the 1 to 5 percent of the population. The current system is presently propelled by greed in our society, which creates dire moral implications. A new system that would ensure equal opportunity for every child, woman, and man to acquire productive capital with the earnings of capital and broaden its ownership universally does not require people to be any better than they presently are, but it does enable our society to leverage both greed and generosity in a way that honestly recognizes and harnesses productive capital as the factor that exponentially produces the wealth in a technologically advanced society.
The resulting impact of our current approaches has been plutocratic government and concentration of capital ownership, which denies every citizen his or her pursuit of economic happiness (property). Market-sourced income (through concentrated capital ownership) has concentrated in individuals and families who will not recycle it back through the market as payment for consumer products and services. They already have most of what they want and need so they invest their excess in new productive power, making them richer and richer through greater capital ownership. This is the source of the distributional bottleneck that makes the private property, market economy ever more dysfunctional. The symptoms of dysfunction are capital ownership concentration and inadequate consumer demand, the effects of which translate into poverty and economic insecurity for the 99 percent majority of people who depend entirely on wages from their labor or welfare and cannot survive more than a week or two without a paycheck. The production side of the economy is under-nourished and hobbled as a result.
While Americans believe in political democracy, political democracy will not work without a property-based free market system of economic democracy. The system is the problem, but it can and must be overhauled. The two prerequisites are political power, which is the power to make, interpret, administer, and enforce laws, and economic power, the power to produce products and services, whether through labor power or productive capital.
Kelso wrote: “In the distribution of social power, whether it be political power or economic power, all things are relative. The essence of economic democracy lies in the elimination of differences of earning power resulting from denial of equality of economic opportunity, particularly equal access to capital credit. Differences of economic status resulting from differences in advantages taken and uses made of differences based on inequality of economic opportunity, particularly those that give access to capital credit to the already capitalized and deny it to the non- or -undercapitalized, are flagrant violations of the constitutional rights of citizens in a democracy.”
We need a recognition in America that we should deliberately begin to broaden the capital ownership base in a way that is consistent with the laws of property and the Constitutional safeguards of the rights of men and women to own property and be productive.
What needs to be adjusted is the opportunity to produce, not the redistribution of income after it is produced.
The government should acknowledge its obligation to make productive capital ownership economically purchasable by capital-less Americans using insured, interest-free capital credit, and, as Kelso stated, “substantially assume financial responsibility for the economy through establishing and supervising the implementation of an economic, labor and business policy of democratized economic power.” Historically, capital has been the primary engine of industrialization. But as used, as Kelso has argued, has, as well, “been the chief cause of the institutional deformities that have created and maintained two incompatible classes: the overcapitalized and the undercapitalized.”
We cannot balance the budget without cutting out coerced taxpayer-dependent redistribution of the earnings of capital workers, which if we did at this juncture would collapse the economy and ruin lives, resulting in social strife, personal suffering and degradation, the erosion of freedom, and ultimately anarchy, which will bring on totalitarian government. While welfare, private charity, boondoggle employment and other redistribution measures are now seen as necessary, they do not have to be sustained indefinitely. There are policies that can be adopted and executed to reverse the ultimate direction of collapse of the American market economy system. Such policies are based on the recognition that as the production of products and services changes from labor intensive to capital intensive, the way in which every human being––not just a few, but every person––earns his or her income must change in the same way. At the core of this quiet revolution is the understanding and commitment to broadening the ownership of productive capital.
We need new justice-committed leaders, especially those who want to end the corruption built into our exclusionary system of monopoly capitalism––the main source of corruption of any political system, democratic or otherwise. We need to advocate the need to radically overhaul the Federal tax system and monetary policies and institute proposals to get money power to the 99 percent of American citizens who now only rely on their labor worker earnings. Under the Just Third Way’s (http://foreconomicjustice.org/?p=5797) more just and simple tax system, access to ownership of the means of production in the future would by provided to every child, woman and man by requiring the government to lift all existing legal and institutional barriers to private property stakes as a fundamental human right. The system was made by people and can be changed by people. Guided by the right principles of economic justice, “we the people” can organize and demand that the system be reorganized to make true economic democracy the new foundation for true political democracy. The result of this movement of new justice-committed leaders leaders and activists will be inclusive prosperity, inclusive opportunity, and inclusive economic justice.
The proposed Capital Homestead Act would achieve this objective. Support the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/. See http://cesj.org/learn/capital-homesteading/ and http://cesj.org/…/uploads/Free/capitalhomesteading-s.pdf.
