Guest Post: The Death Of Jobs

Tyler Durden's picture

Submitted by Nicholas Bucheleres of NJBDeflator blog,

A few weeks ago PIMCO's founder and co-CIO Bill Gross penned a piece on "the death of the cult of equities."  It doesn't take a financial wizard to figure out the validity of his statement--I wrote a paper earlier this summer on the Fed's long-term malevolent effects on markets--but it is nice to hear someone with clout actually come out and speak the truth.  The Old Wall St. likes information from the "experts" for some reason.  How else does Jim Cramer have a job?

The S&P over 20 years: Empirical evidence that Old Wall St.'s "buy and hold" strategy died in 1999.

The sit-back-and-relax "buy and hold" strategy that unqualified portfolio managers banked on for so many years has indeed perished in this highly leveraged, central banking dominated environment.  There is also an interesting coincidence between the departure from the old-school investing strategy, and the corporate consumer-engineering that began in 1999,  as highlighted in my last article.

There is something, though, that is more troubling for the US economy, and specifically middle-class laborers: Robotics. 

As old names re-tool plants (Kroger) and new manufacturers conceive fresh production processes (Tesla), the marked characteristic of today's US manufacturing paradigm is the preference for robotic labor over manual labor.  The benefits are obvious: 24/7 production, lower costs of "labor," and more precise assembly.  Robots can produce faster, better, and cleaner than humans can, and US employment data is indicative of this trend.

Civilian employment-population ratio, % (blue, left), and the number of US citizens employed in manufacturing, in thousands (red, right), both since 1975.


The trends in the above graph are obvious: the United States has been shedding manufacturing jobs since 1979, and in 1999 this began to have a strong effect on the employment-population ratio.  This is the same year (1999) as the death of the "buy and hold" strategy noted above, and the same year that the "new consumer" of the United States of Pill Poppers began to be engineered by a handful of short-sighted consumer corporations--this is no coincidence.

For these reasons, it is only logical for politicians, economists, and United States citizens to adapt their expectations for lower unemployment and realize that the new employment system is much smaller.  As we will see over the coming years, robots will not only usurp the jobs of indignant manufacturers, but jobs of really any automated, repetitive process. 

"In the face of rising labor costs, Chinese restaurateur Cui Runguan is selling thousands of robots that can hand slice noodles into a pot of boiling water called the Chef Cui. Runguan says [...] that just like robots replacing workers in factories, 'it is certainly going to happen in sliced noodle restaurants.' The robots costs $2,000 each, as compared to a chef, who would cost $4,700 a year. According to one chef, 'The robot chef can slice noodles better than human chefs.'"

This is the type of phenomenon that becomes clear down the road, but it is an important lens through which forecasts about the labor markets should be made.  The reality is that this atypical Great Recession has forced business owners to become savvy: businesses have learned how to operate--and even thrive--in this dry economic environment, and the main tool that has allowed them to do so is cost-cutting.  Unfortunately for the labor market, these cost-reduction techniques  are sticking, and for the time being business owners (particularly manufacturers) see no reason to add more human employees when they can purchase robots at a cheaper rate.

Granted, many of the jobs lost over the past decades have been due to out-sourcing, but as US-based companies such as Intuitive Surgical ($ISRG), Mako Surgical ($MAKO), AeroVironment ($AVAV), iRobot ($IRBT), Adept Technology ($ADEP),  and the likes make strides in surgery, defense, manufacturing, and everything in between, jobs that were once outsourced overseas will come back to the US and be completed robotically.  This is all the same for the dislocated US employee, because the job will not be returning to him/her, but we will see more "Made in America" stickers on products that we consume.  Do not be fooled, though; very few Americans were actually involved in the production of said good.

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hannah's picture

no company will make money to pay for robots when there isnt any employed workers to buy products.....when you outsourced the jobs, you outsourced the economy.

Shocker's picture

Definitely have a point, not only do you lose the job but you lose all that "income" that normally would be spent.

Thats why Jobs should be the number one problem we are addressing now. Without them, the economy stays in stall mode.


icanhasbailout's picture

Income for income's sake is Keynesian thinking. The economy is not improved by purposely doing things less efficiently than they could be done.

Xibalba's picture

I stopped reading at "jim cramer".  I gagged a little at the mention of his name.  Why defile us all and the mention of the fucker?   Might as well deficate on my face, or...say....'boooya' and stick your finger down my throat. 

Dr. Engali's picture

I stopped reading your post at " Jim Cr...." ;->

gmrpeabody's picture

".....when you outsourced the jobs, you outsourced the economy."

They don't think that far out, only as far out as their next bonus check.

i-dog's picture

What the author is saying is that the concept of the Western economy within the world economy needs to be re-thought.

As I have been saying here, over and over, labour-intensive manufacturing is never going to return to the US ... just as it never returned to the UK after it left for the US (due to mass production) ... just as it never returned to Europe after it left for the UK (due to the industrial revolution) ... just as it never returned to the cottage after it left for the factories (due to the rise of the city state).

So ... what I'm saying is that 300 million Americans (and 300 million Europeans) are going to have to find another way to make themselves useful to the other 6,000 million on the planet who haven't progressed through all of those stages yet.

At some point in the future, all manufacturing and most services will be automated. So, do we discuss how to deal with it - or just bury our heads in the sand [again]?

Ying-Yang's picture

But first let the stockholders replace CEOs and top management with HFT algos and save a bunch of moola, bonuses and stock options. Hell any robot can Corzine funds away better than the real deal.

How about robots to replace POTUS, Senate and House politicians? Damn I'd bet they could run up deficits even better than carbon based twats we have now.

Yeah.. that's the ticket.. time to replace all upper management with Bots and when they go rogue we can just pull the plug.

Carmagnole's picture

You'd have to have a plug-pulling bot on watch, to pull the plug on the next tick of the nanosecond roguery, or the world is gonna flash-crash the next time you blink

Bobbyrib's picture

Let's not get carried away, these people earned their elevated place in our society. /sarcasm

GetZeeGold's picture



these people earned their elevated place in our society.


I'm a blacksmith in Detroit......I earned my job 52 years ago. Why should I have to do anything now?


James_Cole's picture

It's a huge benefit having software and robotics to do everything for people. The only issue is such a society would be in direct opposition to capitalism as there would be very few human jobs. 

But that doesn't matter - end of human labour is inevitable. 

GeezerGeek's picture

For a darker view of relying on a computer/robot to run everything, revisit the novel (and movie) "Collosus, The Forbin Project". That computer basically took over everything and refused to let anyone 'pull the plug'.

Replacing politicians with robots may sound good, but unless they're individualized (as in Futurama, Hitchhiker's Guide, or I Robot the movie) we might as well stay with the mind-numbing sameness of living politicians. Do Democrats ever stray from the "Republicans want to kill grandma" theme? Do Republicans ever stray from the "Democrats are soft on defense" theme? Before trying robots, let's try having the elective offices vacant for a term or two and send the bureaucrats home on unpaid leave.

More generally, I have never seen a serious study about a situation (an extreme one, granted) where 1% of the population could produce everything needed by the other 99%. What would the 99% do to occupy their time? Read ZH? This actually happened in agriculture in the US, but when it did the factories were expanding and using humans for production. With automated factories becoming more dominant, where do the displaced workers go? What do they do for income? Everyone can't be a plumber or hedge fund manager, after all.

BigJim's picture

 ...Replacing politicians with robots may sound good, but unless they're individualized (as in Futurama, Hitchhiker's Guide, or I Robot the movie) we might as well stay with the mind-numbing sameness of living politicians.

Wouldn't replacing our current crop of politicians with robots would just be replacing carbon-based robots with metal ones?

As for what will occupy/employ the vast majority of the population if manufacturing goes the way of farming, it's a good question. Have a look around you - is everything in your property and neighbourhood the way you want it? Do you have all the spare time and art in your life that you would like? Time enough to spend with your kids and grandkids?

I suppose it depends how cheap things are, in real terms, if manufacturing becomes fully automated (yes, I know it will never be fully automated, we'll still need designers and maintainers, just as we still need farmers despite farming's automation). If you could buy everything you need while only working a few hours a week, would this be so tragic?

I would posit we're pretty much there already... although central planning has introduced so many distortions in wealth creation and wealth 'distribution' it's practically impossible to know.

The Big Ching-aso's picture



Wait till unions get a drift that robots don't pay dues.

DoChenRollingBearing's picture

LOL, + 1!

Actually robots have worked out VERY WELL for us.

We (our import company in Peru) buy automotive bearings from Korea, where the plants that I visited were super-advanced (at least for bearing plants), one guy or gal per 20 - 25 machines.  So, they can really crank out serious quantities of product.  At a good price.

gmrpeabody's picture

What makes you, or anyone, think that unions haven't worked this out with the Corporate hand that feeds them, much like political leaders have done with the unions? Too funny. If you actually think the union gives a flying ____ , join one and find out for yourself!

The Big Ching-aso's picture



Any union that would take me I don't want to be a part of.

GeezerGeek's picture

When you talk about whether of not 'the union gives a flying' whatever, are you talking the leadership or the dues-paying members? I've read and heard that there is often a big gulf between the two, but have no direct knowledge. Is that relationship - leaders vs. members - anything like the relationship between elected politicians and voters? You know the attitude, 'give them just enough so they don't throw us out'?


BigJim's picture

Yup, unions are just polities writ small. In some countries, you even have enforced union membership before you can work in some places, so you're getting a double whammy of government.

Yum! When one set of coercive parasites just ain't enough!

OpenThePodBayDoorHAL's picture

If you look at films from the 1940s about the future, they always show everybody lounging around not working since robots do the work. That's how it should be, but that can only happen if deflation is allowed to occur. The moneylenders want to lend more and more though, and the only way to do that is to inflate away previous debts.

Set the price of money free and we can have a better standard of living

Grifter's picture

I read this a few years back, came back to me as a result of reading a Charles Hugh Smith article on here and it took me forever to find it again as I couldn't remember specific details of the story (proper names) to do a proper search.  Anyway, your comment reminded me of it again:


Manna -

Debt-Is-Not-Money's picture

"Wait till unions get a drift that robots don't pay dues."

And no retirement plans to steal from!

Freddie's picture

Hope and Change with the islamic from Indonesia.

TheFourthStooge-ing's picture

FrFreddie is to "the islamic" as AnAnonymous is to "US citizenism".

BigJim's picture

LOL +++++

Freddie's 'Muslims', AnAnonymous's 'US Citizens', LetThemEatRand's 'Randians'... so many trolls, so little time!

ZH really is the greatest show on earth.

roadhazard's picture

At least plastic man Romney is smart enough to offer neither hope or change.

cynicalskeptic's picture

Without income from employment people end up as a drain on society - directly through 'the dole' or some form of government aid or indirectly through crime or other activitiues injurious to society.  

Any society (define that as a nation or the world or any other measure) can be defined as 'prosperous' by any number of measures but on a fundamental basis, a society's prosperity is directly linked to the employment of its populace.  Jobs - providing 'purpose' as well as an income that allows living at some measure beyond fundamental needs - are directly responsible for the level of prosperity in a society.  And income disparity is directly linked to severe problems in ANY society so a very few who have 'good' jobs (or at least have large incomes) is historically indicative of a society with serious problems.   ANy society with a large number of unemployed - or marginally employed - STILL has to provide basics for theose people or face insurrection.  Rome and other ancient societies provided bread for the poor - look at what happened to France when teh poor wer left to starve.  

SO, you can either have a society where employment is available for its members - 'good' jobs providing a decent standard of living and means to buy goods made by others -  OR you have a society witha a few 'haves' trying to keep the far larger number of 'have-nots' from rebelling by providing them with the bare minimums of existence (an expensive form of bribery and basic support).

It is not amatter of doing things less efficiently - but a matter of the endless purssuit of the cheapest possible labor to increase profits (while not sharing those profits with those who DO labor to produce the productd being made).  I is NOT  a level playing field - the world is NOT 'flat' but full of peaks and valleys..... We have seen blue collar jobs shipped overseas where hourly rates are low and working conditions akin (or worse) to those at the beginning of the industrial revolution.   Lack of worker safety, pololution controls, benefoits and any number of other issues make for a wide variation between various nations - though the total cost to the planet as a whole remains.

You can reduce human labor to a minimum - throughout the world.  But then what do you do with all the unemployed?  do you somehow 'support' their basic existence, kill them?  They are still there - employed or not.   Better to have them productively employed.  By the same point - it is absurd to pay people NOT to work for 2 years when you could have reinstituted a WPA or CCC where those funds would  have been EARNED and prodiced somethign of value to society at the same time.  


Element's picture

Look on the bright side, robots make guns, so humans are freed up to become cannon-fodder.

Robots make bombs, humans get bombed by robotic drones, human pilots of drones are replaced with autopilots - much more efficient.

It closes the virtuous economic circle, and eliminates many social and political issues in one exquisite movement.

GeezerGeek's picture

As for "look at what happened to France when the poor were left to starve": at least Marie Antoinette was willing to let the peasants eat cake, or so the cliche goes. Compare that to what Michelle wants everyone to eat while she and Barry get Kobe beef.

Maybe every citizen should receive, at birth, a robot. The robot can be hired out to any company needing work done. The rent for the robot goes to the citizen. Now if only I could come up with a mechanism to fund the creation and distribution of the robots to begin the cycle.

cynicalskeptic's picture

get over the false right/left, Red/Blue dichotomy.  You think Mitt cares any more about you?    He'll give the Pentagon trillions MORE (for what exactly?) while cutting taxes for the uber-wealthy.  BOTH parties serve the rich and powerful - YOU are cannon fodder if you complain - and ultimately, Soylent Green.  In the mean time you exist to fund the state.

AnAnonymous's picture

The economy is not improved by purposely doing things less efficiently than they could be done.

In 'American' economics, nothing is more efficient than the successful externalization of negative consequences' costs.

TheFourthStooge-ing's picture

In Chinese citizenism excrenomics, nothing is more efficient than the successful externalization of digested dog meat onto the roadside.

ebworthen's picture

Be sure and use self-checkout with no discount so you can pay for the fancy computer hardware, and your kid or grand-kid won't have a job functioning in society but can draw unemployment or become a shadow banker raping retirees on Wall Street or in Washington.

I hate the Keynesian's and their ilk but you can't argue that our country could make a tank or jet or dishwasher without begging China or some third world country for materials and labor, much less a can opener or door knob.

What happens when there are no more career jobs or productive employment?  Why, they rob the assets, any assets, of anyone who has any left (except of course people like JON FUCKING CORZINE).

We're screwed, completely screwed.

Bobbyrib's picture

"Income for income's sake is Keynesian thinking. The economy is not improved by purposely doing things less efficiently than they could be done."


Then the economy was very efficient at killing itself.

Bicycle Repairman's picture

When the government provides income they keep citizens in the game, instead of going DIY.  There are political and psychological considerations.  It's not all about economics

cherokeepilot's picture

Please explain where the "government" gets the income to provide to the citizens when very few citizens are employed and paying taxes.  My problem with your statement is the word "government".  Government rarely does anything correctly.  Having been in a high level postion in goverment and seeing the waste and inefficiency existing there (Command level, Chicago Fire Department), I was amazed that anything the government touched worked at all. 

Bicycle Repairman's picture

The robot owners will send the government the money to disburse.  The government will advise the robot owners on the best means of dispersal to ensure order and maximum participation.

Will the government make mistakes?  Sure.  Suck it up!!

fredquimby's picture

Thats why Jobs should be the number one problem we are addressing now. Without them, the economy stays in stall mode.

I have said it before and I will say it again.

Jobs are just sooooo passé!

Until technology is embraced and we TRY to mechanise everything we possibly can, the "unemployment" problems will continue. We have outsmarted most jobs with technology and just wishing for more "jobs" is not going to change this situation.

If technology does not liberate all people for the pursuit of higher aspirations in human achievement, then all its technical potential will be meaningless.

Jacque Fresco


LetThemEatRand's picture

Unfortunately, there is always going to be a business next door that will use the noodle slicing robot, forcing the other guy to get one, even if both of the businesses can foresee that one day there will be no one left to buy the sliced noodles, meaning there will be no one left to buy the noodle slicing robots, and so on.    The usual way of dealing with the inevitable downward spiral by the oligarchs involves large scale war.  Someone here on ZH made a good point the other day, however, that full scale war may no longer be an option given weapons of mass destruction all over the planet (do you think any major power would not use them if tanks started rolling over their borders)?  Perhaps that's where the FEMA camps come in to play.

Dr. Engali's picture

That's right it will be the one world government against all of us. They are coordinating their monetary responses right now. Why would they stop there? The only countries that will be invaded are those that don't play along and those that can't defend themselves.

AnAnonymous's picture

Unfortunately, there is always going to be a business next door that will use the noodle slicing robot, forcing the other guy to get one, even if both of the businesses can foresee that one day there will be no one left to buy the sliced noodles


Competition reduces choice.

GeezerGeek's picture

Competition reduces choice? I'm pretty sure that there was little competition in the Soviet Union when it came to household appliances, cars, food, clothing, etc. I don't recall hearing that their consumers were bedazzled by the vast array of cars to choose from, or the mulitplicity of refrigerators, or...well, you get it. Perhaps - and this is just a guess - the only product that may have afforded those consumers a variety of choices was vodka. They did seem to consume a lot of it.

DOT's picture

"Competition reduces choice."

Boy !  That's a WOPPER !

DormRoom's picture

America hasn't needed robots.  She has millions of unpaid interns at her disposal, and to exploit.



SanOvaBeach's picture

We did bring in some interns from a local community college.  Some were slackers and we let them go.  Others were really working hard and smart.  I don't think any of them are making less than $50,000.00  Have a nice day.

Dingleberry's picture

The ultimate question is how does (or pehaps should) society as a whole benefit from this massive increase in productivity, instead of it all going to the .0001%?  Then again, there will be new industires popping up that we cannot yet imagine, so maybe that will take up the slack.

Element's picture



no company will make money to pay for robots when there isnt any employed workers to buy products.....when you outsourced the jobs, you outsourced the economy.


Nah, you just invent robots with a credit account and program them shop for shoes or whatever, and you know you can get them to work it all off again.  Win-Win!