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The Economics Of Efficiency: Fake Jobs, Fake Growth, And A Two Class Society
Submitted by Daniel Drew via Dark Bid blog,
The most efficient outcome is the one without human involvement. That is the problem of efficiency.
Throughout our entire lives, we have been trained to focus on how to get the most work done in the least amount of time. If we did this, we would feel satisfied. But perhaps we have set ourselves on the path to a meaningless existence.
The Luddites experienced efficiency in the early 1800s. They were skilled textile artisans, but stocking frames, spinning frames, and power looms threatened their way of life. What was their response? If this happened today, they would be called left-wing terrorists. The Luddites burned down mills and destroyed the machines that were replacing them. The word "Luddite" allegedly comes from Ned Ludd, a young man who destroyed two stocking looms in 1779.
Now, anyone who expresses anti-technological sentiments is called a Luddite in a disparaging way. Most people consider the Luddites to have been mistaken. They should just find other employment. For awhile, this was possible, but in 2000, something changed. Productivity and employment had always risen together, and economists assumed this pattern would continue. They were wrong. In 2000, productivity continued to increase, but employment declined. This divergence accelerated during the 2008 crash. As more people lost their jobs, lost their homes, lost their retirements, got divorced, and postponed starting a family, efficiency increased.
The Luddites are getting closer and closer to a vindication. In October 2011, Erik Brynjolfsson and Andrew McAfee wrote a book called Race Against The Machine that discusses this. Maybe it really is different this time. Maybe the Luddite impulse was the right one. If they were upset about some power looms, just imagine how they would feel about a device the size of your hand that allows you to see a person thousands of miles away.
One of the fundamental parts of the human experience is maintaining a sense of dignity in your work. This comic by Ruben Bolling shows what we have become as a society. It's hard to give an honest explanation to a child when they ask you what you do all day. You would rather not have them know. The disorganized pile of occupations that describes our current state of civilization is not what we told our kindergarten teacher what we wanted to become. No more doctors, astronauts, and businessmen. Now we have content creators, tech start-up P.R. disaster recovery specialists (for Uber, presumably), rage pundits, and one-percent service providers. Why do such ridiculous jobs exist? Efficiency of course.
CNN reported: Last year, a team in Oxford University performed a detailed analysis of over 700 occupations in the United States. They came to the conclusion that jobs constituting a staggering 47% of U.S. employment - well over 60 million jobs - could become automated in a decade or two.
John Maynard Keynes, the famous economist, wrote a paper called The Economic Possibilities for Our Grandchildren in 1930. He described our modern economy:
"The increase of technical efficiency has been taking place faster than we can deal with the problem of labour absorption; the improvement in the standard of life has been a little too quick...the economic problem, the struggle for subsistence, always has been hitherto the primary, most pressing problem of the human race...If the economic problem is solved, mankind will be deprived of its traditional purpose. Yet there is no country and no people, I think, who can look forward to the age of leisure and of abundance without a dread. For we have been trained too long to strive and not to enjoy. It is a fearful problem for the ordinary person, with no special talents, to occupy himself, especially if he no longer has roots in the soil or in custom or in the beloved conventions of a traditional society. To judge from the behaviour and the achievements of the wealthy classes to-day in any quarter of the world, the outlook is very depressing!"
The most common way to maintain a sense of purpose in the modern world is to take a fake job, as illustrated by Ruben Bolling. As long as you feel like you are contributing to society, you will maintain a facade of meaning. Stanley Bing, the satirist media executive at CBS, wrote an entire book dedicated to this concept. Appropriately, it's called 100 Bullshit Jobs And How to Get Them. Some jobs featured in the book include chairman, computer game tester, construction site flag waver, life coach, and investment banker.
So if efficiency hasn't stopped increasing, but jobs have declined, then where is all the money going? To the stockholders. Not the small time stockholder though. The small time stockholder had to cash out his retirement account at the March 2009 low and pay a 10% early withdrawal fee just to pay his bills after losing his house, his job, and maybe his family too. The big stockholders, with millions and possibly billions in reserves, had the opportunity to double down on their stocks - in the companies they controlled. But even they had their problems.
If people don't have enough money to pay for goods and services, then a society will stagnate or decline. It's the "we're in this together" concept that is a hard sell to the individualist inside of everyone. Since the great divergence of efficiency and employment in 2000, people have not had enough money. This reality shows up in the revenue for companies in the S&P 500. Sales per share have been relatively flat since 2000. But this is also misleading because of the immense stock buyback programs that corporations have initiated. This last year, companies have spent about $900 billion on either buybacks or dividends, which is 95% of their profits. They are not investing in their businesses. They are just giving it to the 1%.
From 2003 to 2012, S&P 500 companies used 54% of their earnings, or $2.4 trillion, to buy back stock. Another 37% of their earnings went to dividends. This left only 9% of profits left for reinvestment in the actual business. The whole concept of a buyback is to inflate the share price so executives can boost the value of their stock option compensation. These financial steroids boost the stock price and the sales per share and reduce the number of shares outstanding. This means the relatively flat sales per share number for the last ten years hides the fact that sales for the 500 largest companies in America have been declining for the last 10 years because the middle class cannot afford to buy what they're producing. Not only do the buybacks increase wealth inequality, they also disguise the pervasive decline of the American economy.
But at least it's efficient.
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Amusing at least.
HEY! You better be an Anarchist or GIVE ME BACK MY PROFILE PIC!!!
:)
Haha, they "efficiently" kneecapped silver down 1%. Ooooh, they have us runnin' scared now! Blood in the streets soon.
I see a resemblance. Are you two related?
Good point.
The real question is: Which one is the Evil Twin?
If efficiency is defined in purely mechanical terms, hiumans will lag machines.
The definition is too narrow, since we are humans, but we can't agree on much else, can we?
Fake jobs, fake economy, fake women with fake tits on a fake screen, it's all fake man!
I don't have a problem with fake tits.
This is a very important topic, but the Australia coffee siege will get all the attention.
Unfortunately, the writer dropped the ball in the closing words.
Anyway, John Maynard Keynes: “…The increase of technical efficiency… the outlook is very depressing!”
Indeed.
The problem with the US, specially compared to other nations, US is heavily on managerial (parasites) personnel. No one wants to perform manual labor. It is too undignified.
Technology does not care by whom it is used. It could have been used to improve the workers, as it did to the managers and the bosses.
David Noble is a must read on this topic.
http://www.amazon.com/s/ref=nb_sb_ss_i_0_9?url=search-alias%3Dstripbooks&field-keywords=david+noble&sprefix=david+nob%2Cstripbooks%2C373
And I think the “Civilian Labor Participation” is a better chart to highlight the academic delusion being spread around about job growth.
http://research.stlouisfed.org/fred2/series/CIVPART/
sneaky bastard mice
Productivity increased in the U.S. while employment decreased for one reason: sending jobs overseas.
yes but you neglect the "well we fired your co-worker and you will now do her work too in addition to yours, for no additional salary, or else".
That kind of incentive does wonders for productivity, at first.
After a worker survives three of those, he gets pretty goddamned tired of doing 3 peoples' jobs (2 of whom made more than he did before they were fired) for 1 salary. Then "hey we're giving you a full featured smart phone". Then the late night emails and conference calls from your company's Chinese factory start coming in, and the employee is expected be 'on duty' 24 hours a day. Vacations are considered working vacations or you end up being one of the people no longer working there. (Refuse-Resist refused, resisted, then started his opted out life plan, which includes poverty and desperation).
THat kind of 'gun to the head' shit works for a while. Then the poor haggard 3 job doing bastard finally makes a mistake. Then "you're fired". You did great work for 4 years but, blah blah blah.
Thanks corporate America I hope you enjoyed that increased productivity at least briefly.
Seriously, how many people here have been through that exact scenario since 2008? (Government workers and health care workers need not respond -- protected monopolies don't count).
There is no incentive to maximize one's productivity or earnings any more. The more you make, the more the criminals take.
They're not getting much from me ATM.
Distributionally Driven Demand Destruction, caused primarily from trying to perpetuate the financial asset ponzi through domestic "investment" in consumption and malinvestment in excess Chinese production to export deflation in tradeable goods...
And a fake President to boot!
Feeeling more like The Matrix every passing day.
for sure but you can also feel the decline
Market thoughts and a post on the VIX:
http://thetradingcrucible.blogspot.com/
And is "productivity" really so high?
Measure it in WEALTH PRODUCED and SOLD. Not in "US dollars" or any other currency...
Take out GOVERMENT. And protected jobs, "minimum wages, unions, subsidies and regulatory burdens etc....
And don't count all the poodle-groomers, app-makers and other stuff in the above cartoon as "contributing to GDP".
What have you got left? NOT A HELL OF A LOT.
Double post / but I did get 15 ads to open in the background:-)
Excellent article. Why should 99.6% of productivity gains go to the .1%?
OK, you won- now put the chips back and let's review what we learned in kindergarten. Take turns. Share. And don't make a mess without cleaning it up.
The sharing idea was nice in kindergarten. By the time you got to elementary school you learned to watch your lunch money and stay away from moochers
Forced association will result in bullying. We were forced to attend an institution with 100s of other brats who didn't want to be there either.
Just need to change the "climate change denier" to "climate change grant writer".
I AWAYS, Have you're back Ebbie, ;-)
Thanks Yen Cross, likewise.
I graduated in 2002. I have felt this whole life thing has been just a cruel joke with me as the punch line. Sorry guys,..Im to blame I think. :(
The new American universal theme - it's my own damn fault - Why me Doctor? What's wrong with me? and how do I fix it? - And don't ever ever blame it on something or someone else, take responsibility! You always have a choice, you just plain screwed up you dumb sorry fuck!
Here, have a nail gun!
Society better come up with a new way to distribute the surplus fast,..as wages aint working as a transmission mechanism.
:(
Uh this is part of the plan where they milk america until its dry and let its carcass blow away in the wind.
Thanks agenda 21 , thanks rothchild, bush, obama and all the other collaborators.
It worked better when the currency destruction was not as extreme as it has been since the late 1920s
Welcome to a Walmart Economy
"The small time stockholder had to cash out his retirement account at the March 2009 low and pay a 10% early withdrawal fee just to pay his bills after losing his house, his job, and maybe his family too."
Raises hand. Hang the money-changers already.
Kurt Vonnegut already told this story about 60 years ago in Player piano.
"Fake jobs, fake economy"
EVERYBODY knows the economy is fake. The strategy is to destroy America in order to take power.
1) Condition the underclass to demand free stuff, so they become the FSA (aka "Roman mob").
2) Incite the mob to to destabilize an increasingly broke society (ala, Occupy, Ferguson, etc.).
3) Cue the tyrant (see Hugo Chavez's path to tyrant: elected, changes constitution, consolidates power, becomes president for life).
Strategy was laid out years ago by KGB defector Yuri Bezmenov. His lectures are on youtube.
Attempting to follow that strategy, HRC supported and promoted another Chavez like takeover in Central America:
http://www.huffingtonpost.com/eric-zuesse/hillary-clintons-two-fore_1_b_...
Expect dismal job creation to continue, today many forces are coming together that tend to make this the new normal. Over the years as we have become able to produce more with less labor we have seen the fruits of our work improve the lives of many people. Today we enjoy being able to have far more goods and luxury's then at any time in history, but soon we will find ourselves competing with robots for jobs and see many of our options for earning a living swept away.
Many people forget that small business is the backbone of America, this is the real job creator and the place where people "with skin in the game" do real work. This is where many skills are learned and honed and useful training takes place. It does not help that the President and most of Washington lack solid backgrounds in both business and the economy. Few of the people who make the laws and set the rules have ever been responsible for meeting a payroll. More on this subject in the article below.
http://brucewilds.blogspot.com/2013/12/the-reason-dismal-job-creation-wi...
A good talk here about efficiencies by Christopher Stein "when does an algorithm cross the line from being a utility to a menace". It's a very good lecture and talks about algorithms chasing our butts all over creation and a bit about the markets too. I used it with a post I made about the algorithms at insurance companies and other places that cut loose a million algorithms to record and score your current state of mind on the phone with their call centers. You've been warned, so now when you hear "this call may be recorded for quality purposes" it's bull most of the time. This recording is supposedly used to match you with a custover service rep that would best suit your personality and they may be doing that.
What they don't tell you is there's a sale for this "scored" data to all the behavioral analytics folks so they do score and sell this. I don't know how much of it gets connected to data brokers yet but if it's not there, it will be. Just the other day TD bank is now using Axciom to determine if you are creditworhty for them to issue you a credit card. We have double whammy here as of course the score that TD bank uses can br sold somewhere else too so they don't have to score you. The bad thing here of course is all crap and flaws about us at Axciom...great stuff right? Again, it's really good talk about algorithms being a utility or a menace and crossing the line. So there's some fake data in the making and sadly flawed data sells as well as good data...more lies.
http://ducknetweb.blogspot.com/2014/05/this-call-may-be-recorded-for-quality.html
This company just grinds on me...lies. We have a hospital in Long Beach, California, the former CEO is waiting to be sentenced, a state senator was bribed in this deal and had to quit. This was 3 years ago when the hospital was caught putting fake screws in people's backs that were knock offs to save money. The hospital was closed 3 years ago, so why in the hell can't get the damn 5 star rating off the web! Lies..they just want ad revenue click bait and don't care what's out there and don't update a thing and by the way the closed hospital still shows a lot doctors still on staff there.
http://ducknetweb.blogspot.com/2014/11/why-does-hospital-that-was-closed-by.html
The fake data is making it worse for people when they get scored on garbage data so access denied. This created the 2 different classes of society as those with money never have to deal with this. There's a real correlation with data selling for huge profits shaping the inequalities we have today as the algorithms cross the line from efficiency to menace. So there's two more "fakes" out there and the bad part is that our stupid government believes their stats all over the place, look at the VA for an example. We have so called efficiencies based on fake numbers everywhere and nobody gives a damn. I've been trying to get Healthgrades to either put up or shut up for 4 years. This is not one isolated case as you can still find Michael Jackson's on defunct doctor open for business there and a doctor who was on the FBI's most wanted list for about 5 years they finally found living on the edge of a glacier in Italy still open for business. Lies...
http://ducknetweb.blogspot.com/2014/06/data-selling-and-direct-correlation-to.html
People can't tell the difference between virtual and real world values any more. I caught the White House even on one of their emails using numbers with climate control somebody pulled out of their head that nobody could predict.
http://ducknetweb.blogspot.fr/2014/03/virtual-worlds-real-world-we-have....
It took me 4.5 seconds to decipher your post.
You have "zero" financial skills.
It would be a good article without the reverence to effing Keynes.
Wall Street bankers produce nothing, contribute nothing, have zero productivity, and make billions. They own the congress, always get their way, and are the enablers for wasteful government largeness. Government equals inefficiency at its worst, but the masses now depend upon it to survive.
It would be hard to believe there will be a fast-food restaurant, which in 2-3 years isn’t fully automated. You will order and pay through your I-Phone, or dash unit, from three blocks away, and the food comes down a chute into your car. The Luddites cooking up the burgers will go for sabotage in the early years, making sure your soda arrives upside-down with the top loose. But they will lose as robots will also cook the burgers and fill the orders and replace them too. Just like in the WALL-E movie, we will all sit on a giant orbiting spaceship, everyone weighs about 300lbs, and robots serve us drinks all day.
It appears things are going to get very ugly, but they just keep printing money and praying for a miracle. The 24/7 propaganda machine would do Goebbels proud. The central bankers understand greed and have almost perfected psychological economics. They know what to do to elicit favorable reactions from the masses. But, like all ego-maniacs they will fail. Their multi-million dollar algos will be discovered to have a fatal mistake in their code. “We never anticipated that one in a million event,” they will claim as it all falls apart. Massively inflated asset values will plunge, the 1%’ers will flee with their gold, and our cities will burn. ‘Faith in Fed’ will end and there will be nothing else to replace it.
I regret that I have only one upvote to give for this excellent comment.
In immoral process of exploitation of common man by 0.1% man through invention of wage labor system was step up in cruelty from horrific exploitation of slavery.
Through wage arrangement cost of labor was externalized from worker alone toward his family, wife children, his community and environment. In other words, before, owner had to pay cost of 24 hour living of his slave as well as attend to slave needs in order to maintain quality of his investment. After introduction of wage system (labor alienation from worker) the overall cost dropped to 16h,12h,8h,../day of individual subsistence cost as well eliminating substantial property upkeep cost.
That was reason of most increase in productivity in history of civilization, much more than introduction of industrial machines which was possible due to large scale financialization of the economies and availability of capital to few politically connected oligarchs, as early as 350 years ago.
Please note that, it is not worker who is more or less productive as propaganda makes you to believe but it is all about efficiency of deployed capital in constant (tech, re, and other organizational investments) and variable (wages and fees) form. The productivity is a measure of overall capital efficiency, not only workers efficiency. Workers are treated as necessary evil, often just for satisfying sadistic inclinations of the bosses, and are kept until they’re exhausted and finally disposed off in maddening quest for capital accumulation and profits.
In order to transform, out of slavery or feudal servitude, "modern" capitalists needed new invention, namely consumer food market which never existed before for 99% of population. What I mean is market for those who need to buy daily food in order to avoid starvation. It was achieved by policies of late medieval governments of massive illegal/brutal purge of peasant people from their, bread giving, land, acquired under feudal system.
The forceful creation of consumer food markets enabled wage system to be widely deployed. The other forceful “free” markets followed.
Another invention of last 250 years was unemployment which did not existed before at all. The feudal system was based on obligatory work for Lords, land owners and the Church hence every able body was needed and gainfully employed to pay their dues in currency of their labor.
As manufacture owners complained, the shortage of a “free” labor was so severe that workers were being paid relatively high wages for their work in XV-XVI century England forcing government of QEI to introduce Maximum Wage and Vagrancy Laws. Such laws increased supply of new worker rank by peasants just removed from their land as well as curbed the competition for workers among different manufacturers, clearly actions, against free market principles.
Those two major factors: creation of unemployment and illegal removal people from their land against their will, were necessary for existence of modern “free” capitalism decreed by governments. The governments created armies of dispossessed poor, artificially homeless and artificially jobless people and forced fed them into new slavery of wage system. Which we “enjoy” today.
We have to realize that, there is no place for common people like us in future plans of world oligarchic class. You figure out what that means.
The multiscreen setup
Sweetness
Wot? That doesn't even make any sense.
The jobless society has been foreseen in scifi for fifty years and more, and perhaps by Keynes in the 1930s. So we added a new wrinkle to it in the last twenty years by outsourcing all US jobs to China. The US is jobless, the Chinese polluting themselves joyfully to death making widgets for the US so they can get cash and overpay for US real estate in slightly less polluted suburbs.
So what's the answer, makework projects, arts and crafts, dig a new ship canal from Sacramento to Anapolis using nothing but spoons? Well, basically, yes.
in the limit we will have a society of stockholders trading goods with each other produced by robots they own
the rest 99% will simply die off
The stockholders could pay some of the non-stockholders to entertain them with the stuff produced by the robots. Of course, those who are too proud to suck up to the owners of the land and robots are free to die.
Professional student seems to be an up and coming profession. Wonder what the retirement plan is like for someone educated in useless courses.
Tenured professorship in Gender Studies at a private East Coast college?
Creating jobs in a mature market should be required to pass a certain "taste" test. It should be pointed out that while America is creating jobs it is costing a huge amount. Are these the right kind of jobs and will they last? When a job that falls outside the description of government worker fails to make economic sense it becomes a form of working welfare with the taxpayer picking up the tab. We as a country and as a society have paid dearly for each unsustainable job created through government incentives and partnerships, because of the nature of many of these jobs we might even call them temporary.
A great weakness in government generated jobs is after a huge outlay to set up, or put them into action, they often do not create or contribute to production. If these jobs are not asked to continually justify their cost, and they often are not, they merely become another burdensome cost to society. The feeble efforts to think through and link a job to a sustainable economic base that creates a needed product or generates real value is a major flaw in most government aided ventures. Once started government sponsored ventures are often slow to react or adjust to economic reality, this can be seen in the Postal Service and its inability to drop Saturday delivery The article below delves into this subject.
http://brucewilds.blogspot.com/2013/01/creating-jobs-in-mature-market.html
Agenda 21
Oh boy. There's a reason it's known as the Luddite fallacy. Technology doesn't take away jobs. It merely changes the composition of employment. Increasing unemployment that decouples with productivity is almost always due to inflexible wages, especially due to the minimum wage. When you have a world inflationary regime, where purchasing power is redistributed to the first recipients from everyone else, nominal wages must be bid up artificially or by state decree.
At some point, the market becomes so centralized and so unequal due to the unprofitablity of workers that the system collapses on itself. Not only do you create a continuously increasing dependent underclass, but you also create a system so far removed from its fundamentals that it depends on an exponentially increasing degree of inequality caused by inflation. To say that standards of living have improved "too quickly" is self-contradictory because "too quickly" implies it's not an improvement.
TL; DR: Technology doesn't create unemployment. We are in the late stages of a world inflationary regime where employment would be even worse without increasing productivity and technology because wages are inflexible and inflation is conflated with real wealth.