The New America: Rich Get Richer, Poor Get Replaced By Robots

Tyler Durden's picture

Trump has spent a lot of time during his first couple of months in the White House ramping up the rhetoric over all the jobs that are flowing out of the country into lower-cost labor markets like Mexico, China and elsewhere.  And while that may be true, as we've pointed out multiple times in the past, part of the issue is also related to good old-fashioned capital allocation decisions whereby the combination of rising labor costs in the U.S. and declining technology costs makes capital investments in automation much more attractive.

The problem, of course, is that low-skilled labor (e.g. making a Big Mac or taking an order at McDonald's) is much more susceptible to automation than higher-skilled positions which results in expanding income disparity. 

In fact, as Bloomberg points out in a series of charts today, the growing income divide, just since 2010, is fairly staggering.  The rich-poor gap - the difference in annual income between households in the top 20% and those in the bottom 20% - ballooned by just over $29,000 between 2010 and 2015. 

High-tech hubs were among the five metropolitan statistical areas where the gap between the highest- and lowest-income households expanded the most: two in California, San Francisco and San Jose, as well as Austin and Seattle.

 

The gap between the super rich (top 5%) and the middle class (the middle 20%) is also surging.

 

Meanwhile, as a new study from PWC points out, this trend is unlikely to reverse anytime in the near future as they estimate that 38% of U.S. jobs could be at risk of automation just over the next 15 years.

“Technological developments have increasingly replaced low- and mid-skilled jobs while complementing higher-skilled jobs,” said Chad Sparber, an associate professor and chair of the economic department at Colgate University.

 

This shift is predicted to continue. About 38 percent of U.S. jobs could be at high risk of automation by the early 2030s, according to a study by PricewaterhouseCoopers LLP. The “most-exposed” industries include retail and wholesale trade, transportation and storage, and manufacturing, with less-educated workers facing the biggest challenges.

 

“Companies are doubling down on costs cuts and streamlining their operations,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York. Workers “at the bottom have not seen as much improvement as those at the very top of society.”

Of course, when demand for a product, low-skilled labor in this case, is declining, the worst thing you can do is raise the price for that product.  Unfortunately, as we pointed out a couple of days ago, that is exactly what Bernie Sanders and other liberals are doing with their recently released legislation calling for a $15 federal minimum wage.

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Looney's picture

 

Robotism, Socialism, Communism, Capitalism… All these Ism‘s are so confusing!

Personally, I prefer the Rhea‘s: Gonorrhea, Diarrhea, or Pyorrhea, except for Rhea Perlman (the ugly waitress in “Cheers”).  ;-)

Looney

Orc from Mordor's picture

There is a big difference. Communism, the final stage of Socialism which has never been reached, meant that people will be replaced by robots, but it meant that people won't have to work and will have all they need, the only engagement for people being artistic creativity and other things of the kind. Capitalism means that people are replaced by robots to make the chosen few richer, and the rest must die.

wren's picture

Coming soon, robots being used to build low and no income housing communities for the underemployed and unemployed...

wren's picture

Coming soon, meth labs turn to automation to reduce production costs. Dope hoes rent sex robots to double their profits. Coyotes use robots to smuggle illegal aliens over the border reducing jail time and legal fees.

Wheresthesolutions's picture

Coming soon; an abundance-based economy to replace our scarcity-based economy. Well, that's if we have the intelligence to actually evolve ;)

SolidAssets's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

HelicopterCoPilot's picture

That's an 'alarmist' point of view, with little vision. We need a combination of UBI, deregulation & incentivized eugenics to make the transition smoothly.

While I'm philosophically aligned with most ZH'ers, most here seem to be too rigid to see the creative possiblilities of this new paradigm. 

lil dirtball's picture

> ... most here seem to be too rigid to see the creative possiblilities of this new paradigm.

Am I to guess that your alluding to the complete surveillance of the domestic population, Total Information Awareness and resulting loss of human intimacy and privacy because The State and parasitic corporations become a third wheel in every human relationship? You mean that new paradigm?

Kill yourself.

HelicopterCoPilot's picture

of course, I'm not alluding to that, but I appreciate your assumptions. I'm certainly not a fan of the surveillance state, but I accept that's not going anywhere & instead focus on real solutions to the economic challenges that face us. Fighting the deep state on this is a futile use of one's energy, imo. Instead, I think we are better suited expending our energy on policies that we can get the gen pop behind, that will actually improve ours & our loved one's lives.. While I maintain a philosophical disposition, I've simply concluded this is the pragmatic approach to improving our lot.

lil dirtball's picture

> of course, I'm not alluding to that

Without privacy in all affairs, anything else is just rearranging the deck chairs.

> get the gen pop behind, that will actually improve ours & our loved one's lives..

Are you not paying attention to current events? Nobody running this shitshow gives a fuck about what the 'gen pop' need or want, othewise Hillary would be in jail (lol), there would be construction crews on the border and Obamacare would be gone (gone). Trump isn't flip-flopping. He lied his fucking ass off and the moronic 'gen-pop' ate it up like so much toxic snack-food.

And if you think it's bad now, wait until the machines and their programmers are completely in charge and all decisions are made for you. The only energy you'll be expending then will be physical, mental, spiritual and economic pain evasion. We're just about there now. If you don't believe me, go read some software/corporate TOS or User Agreements. Hell, just look at what the credit card companies get away with when it comes to fucking with people's lives or what pain a DUI or two will bring you. Perhaps these examples don't apply to you. Doesn't mean there aren't plenty of others just waiting to ambush your pursuit of happiness.

Personally, I think you're delusional. Did you vote?

DelusionsCrowded's picture

No need to be boring , narrow and ignorent . Trump didn' t lie , he's been lent on , perhaps you haven't been paying attention.

DelusionsCrowded's picture

emoney and kmoney . Flatten the pyramid and start again . Eternal eduction and adventures . Work become play , play becomes life . You've scene peasants in fthe fields talking and laughing bringing in the harvest .

 

So much talk of jobs jobs jobs . Who wants to do some shit miserable labour , so's some plantation owner can sip lemonade and watch . Let the robots do it . We can sip lemonade !

NoPension's picture

Jobs ripe for automation. I mean RIPE!!!......

Doctor
Hedge fund managers
Accounting
Tax preparation
Politicians
Lawyers
Judges( maybe)
Bankers
Teachers
Prostitution
...to be continued.

biff_rapper's picture

Yep.  They're screwed and most of them don't even know it yet.  Include executives on the list, too.  The bots will be far more efficient at optimizing profits than they ever will, and they'll cost a fraction of their pay!

 

"Of course, when demand for a product, low-skilled labor in this case, is declining, the worst thing you can do is raise the price for that product.  Unfortunately, as we pointed out a couple of days ago, that is exactly what Bernie Sanders and other liberals are doing with their recently released legislation calling for a $15 federal minimum wage."

 

Ahem, Tyler, but if you CHOP the wealthy's pay, then the rest of the pay would even out and the line workers would be getting paid their fair share.  So no, this isn't Bernie's fault, this is caused by the vampires and they know it, but could care less because they absolutely need those fancy homes and cars to justify their pathetic vanity and egos.

JRobby's picture

Accounting is already done by "Apps"

Where the trouble starts is that the people who "program" the Apps don't know shit about accounting. 

And it's not that hard BTW

divingengineer's picture

You forgot glass blower, plasterer and tin smith.

Wrenching Away's picture

My wife said she will buy me a sex robot as soon as they are available, so that she can go to sleep in peace.

thunderchief's picture

They will soon replace sex workers too, so forget about that option boys and girls.

besnook's picture

adam corrola- a man will fuck anything. a man will fuck mud. if it feels good he'll fuck it again.

Implied Violins's picture

MEN and WOMEN, asshole. The boys and girls will ALWAYS be in demand at pizza parties.

Hannibal's picture

Mind blower, a must watch video of who controls the flow of monies around the world...

https://cooperatiedevrijemedia.nl/real-big-money-revelations-by-an-insid...

Akzed's picture

Ronald Bernard goes into his proximity to money laundering for terrorists, child sacrifice, satanism/Luciferianism, and the Protocols of the Learned Elders of Zion. Chilling, to say the least.

 

HelicopterCoPilot's picture

Jews have so much power because they have the tightest knit family structures, which produce great outcomes. Instead of hating their success, people should try to emulate within their own race. Not so difficult, just requires their discipline.

Bill of Rights's picture

Ya those robots will be real productive if an EMP drops ground zero.... think about that elites.

Ignorance is bliss's picture

Streamlining? Is that what they call it? We're cutting everything and sowing fear throughout the remaining workforce. Work long hours and do the job of many for your daily bread. We won't last long on this grind...

I've never worked so hard and been removed from what matters (wife and family) more then now. I won't forget nor will I forgive..

besnook's picture

it's not just menial labor getting replaced. quants are getting replaced, accountants are getting replaced, skilled trades are getting replaced, lawyers are getting replaced and coders should get replaced. almost any job that does not absolutely require only human skills, a labor and delivery nurse, for instance, is in danger of getting replaced.

swampmanlives's picture

Exactly. I'm betting that the first true AI will be open source, which means that everyone can use it for free. The great thing about code is that once it is written all you need to do is press ctrl + c followed by ctrl + v and it's yours to modify. Maybe then those philosophy degrees will come in handy since all we will be doing it sitting around smoking pot, living off universal basic income, and conversing about armchair philosophy while the robots do all the hard work.

besnook's picture

maybe that is the future economic model. everyone has to borrow money to buy a robot that does some work(for or with other robots) and the way to wealth is to be able to borrow more money to buy more robots who would work through a robot employment agency. of course you would have to maintain your robot and stay on top of new technology to keep your robot employed.

DelusionsCrowded's picture

Good thinking . I can't wait for AI . I hate searching for things on the internet , so much dross . It also means that if you come up with an invention get a patient and manufacture some , Then peoples AI can find it . No need for Google !

We just sit back and the cash roles in , Kmoney of course .

ogretown's picture

We need the rich. Whether we want them is another matter, but we need the rich as many if not most of them have been able generate wealth and wealth is good.  Wealth beats poverty.   There was a time we needed the poor.  And there was no discussion at all whether we wanted the poor. No one wants them, more or less a necessary evil - cheap labor pool, cannon fodder, etc.  But now with robots, the pools can be maintained on an hourly basis, lawns can be precision cut, etc.  As to wasting the technology on the mundane (pounding out cheap burgers) leaves me in a conondrum.  Why waste this kind of tech to feed a class of people (the poor) that we are trying to make disappear?  Surely even now, no one of merit walks through the Golden Arches or into the Burger King?  As to the able-bodied poor, the suggestion would be obvious - do not be poor.  Matters not if you get a decent eduction and get a reasonably decent job, or join a gang that pulls successful scores, or become active in the black market and stay ahead of the povery label by hustle or by barter...but do something rather than just sit there and whine while hoping against hope that the government will make real people pay you $15 an hour.  Also it would be best if the Lowers did *not* procreate as the last thing we need or want are even more of the poor.    

Due North's picture

Povery Label?.....You should be pounding out cheap burgers.

NoPension's picture

I know I'll get a lot of downvotes...but....procreation should require permission from the rest of society.

I don't know the ins and outs....( haha!)....but we need to get a handle on zeros reproducing.

DelusionsCrowded's picture

In truth , manditory parenting classes in child psycology should have been instituted  long time ago. Nothing more hopeless that an ignorent stupid parents producing more of the same .

Sometimes are really do know there is an Illuminai :-(

DelusionsCrowded's picture

From Golden Arches to Solent Green 

 

DelusionsCrowded's picture

The Rich are also beautiful . The poor are ugly , the ugly deserve less unless they create more of less ,in which case they can work for the rich .

Blankfuck's picture

Welcome to the Fed Reserve and Elite Fucker cLan who print money and just keep buying the fucking dip!------------rinse wash repeat------------Welcome to the Fed Reserve and Elite Fucker cLan who print money and just keep buying the fucking dip!------------rinse wash repeat------------Welcome to the Fed Reserve and Elite Fucker can who print money and just keep buying the fucking dip!------------rinse wash repeat------------Welcome to the Fed Reserve and Elite Fucker cLan who print money and just keep buying the fucking dip!------------rinse wash repeat------------Welcome to the Fed Reserve and Elite Fucker cLan who print money and just keep buying the fucking dip!------------rinse wash repeat------------Welcome to the Fed Reserve and Elite Fucker cLan who print money and just keep buying the fucking dip!------------rinse wash repeat------------

LEAVING THE POOR $8-15 HR SLAVES WITH THOSE TRILLIONS OF DEBT

Akzed's picture

Kurt Vonnegut’s first novel, Player Piano, spins the chilling tale of engineer Paul Proteus, who must find a way to live in a world dominated by a supercomputer and run completely by machines. Paul’s rebellion is vintage Vonnegut—wildly funny, deadly serious, and terrifyingly close to reality.

https://www.amazon.com/Player-Piano-Novel-Kurt-Vonnegut/dp/0385333781/re...

TOP 1000 REVIEWERon April 10, 2017 Format: Kindle Edition|Verified Purchase

 

Kurt Vonnegut was never willing to concede that he wrote science fiction. Though it’s difficult to read his work without drawing that conclusion anyway, his many novels could also be considered as social commentary. Biting commentary, at that.
A pessimistic view of the future

Vonnegut was not an optimist. Though it’s been a long time since I’ve read most of his books, rereading Player Piano, the first of his novels to be published, brought that pessimism home to me. Clearly, dystopian writing came naturally to him from the very beginning.
U.S. society in thrall to automation

Player Piano is the story of Doctor Paul Proteus, the wealthy and powerful manager of the Ilium Works. (“Doctor” is always spelled out in full, never abbreviated—and everyone who holds a responsible position is a Ph.D.) The Works is a sprawling automated factory in the town of Ilium, New York, that produces a multitude of products, as determined by EPICAC XIV, the computer that manages the economy with nominal human supervision. It’s one of a number of such facilities, all integrated into the economic machine that supplies everything anyone in the U.S. might need to live comfortably. The problem is that machines have displaced people from virtually all the jobs.”Those who couldn’t compete economically with machines had their choice, if they had no source of income, of the Army or the Reconstruction and Reclamation Corps” (the “Reeks and Wrecks”).

 

Dilluminati's picture

Kurt Vonegut: He brought the information from Margo, a planet where the natives conversed by means of farts and tap dancing.

https://www.youtube.com/watch?v=VW8dgdpce80

Here is a youtube interview of him to give an idea of his genuis.

I have told one guy at work who sort of runs this stream of conciousness by you verbally as he reiterates whatever it is that he is detailing this, and damn if today I told him to just look at the forward delta in data within an XSD, and he started tap dancing and farting.  And I was left saying Ok, Sure, yeah, ok, sure, yeah.

To all people who have met the tap dancing farter.. well Vonnegut was genuis, his interview in his own voice and insight interesting, I recommend his alternate views on things just to loosen up the rigid constructs we have a tendency to cling to.

His genuis was the absurdity of the profane and mundane.

DelusionsCrowded's picture

Tick Tock--John Sladic (?)  is another great book on Robots and the future . Very funny . The robot Robert (?) is a house hold helper  that becomes a run away living under a bridge with other discarded machines , then a sociopath , steals an identity and builds an empire of retirement villages for humans . When business starts going bad Robert takes to arsonry to try and collect on insurance and gets caught at night on top of one his burning homes in the police spot lights . Short an fun book .

man from glad's picture

For now. But the poor and middle class will be the rich ones after the reset. After that there won't be much use for information peddlers and skimmers,  but what will be needed are folks with real skills.

l8apex's picture

Nice idea, but I fail to see how it could/would happen.

 

pitz's picture

The high skilled jobs have mostly been given to foreign nationals on the H-1B visa program. 

swampmanlives's picture

This is going to make job hunting exponentially worse for grads in the coming years. All those "entry level" jobs that now even require 3 years of experience to have chance to land an interview, will be completely wiped out of A.I. Now, of course A.I. and advanced robotics will create some jobs, but they will end up replacing more than they create. The real kicker is that to be involved with A.I. and advanced robotics will require even more education and money which most do not have. And of course, not everyone is intelligent enough to be succesful at A.I. and robotic engineering. If you guys don't think manual labour can be replaced, think again. Check out some of the robots Boston Dynamics have already created. Battery technology is currently the greatest impediment for autonomous robots. Once high capacity batteries have been invented, watch out...

ThuleNord's picture

Intellectual capabilities standing in the way of the poor succeeding?

Isn't evolution a bitch?