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Guest Post: The Death Of Jobs
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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The only real asset is having something someone wants to buy. On Wall Street that would be some "algos" playing with themselves. Everywhere else to be 'someone' requires flesh and blood.
Any industrial plant that becomes very large in the size of the facility and invested costs will be captured by a union for example steel mills and auto plants. The union will make the govt. a not so silent partner. Separating operations geographically is practicle in todays world and often necessary. Robots can be the most cost effective option in our country in many instances. The most efficient producer will be the competirive survivor. Social engineering is a high cost factor. No profit = no production.
Stupid fucking article. Holy fucking shit. What should people believe? You need to day trade to "beat" these markets? You need an algo?
Check this, you bought aaple at the low, you bought fucking anything at the low, you bought gold at the low, you got div paying stocks at the low, you bought bonds at the low, fuck n a!
Please help me twade my stawks! Pwease! Im not worthy!
Fuck what the fuck are you fucking serious!? Buy and hold is dead hahahahahaha!!!!!!!!!!!!!!!
This is the greatest, albeit centrally planned, market, ever! All you had to do is stick it out and you are back where you were. All you had to do is DCA along the way and you cleared it. What the fuck is with all these worthless trading is dead market.
Bernanke has owned all of you fucking traders just admit it.
can't wait till the robots replace the consumers too!!!!
Already happening. Have you talked to anyone that owns an Apple product and asked them to explain the logic of their purchase.
that's zombies!!! robots are productive
Haha,
I snorked.
In college I visited one of the last remaining bronzing plants in the USA. The plant was the dirtiest place I have ever been, bronzing is just dirty work.
There were hundreds of workers at the plant moving heavy equipment, running blast furnaces, pouring bronze into molds. It really was amazing to watch and there was a lot of skill involved. The plant built its business serving many small customers withcustom orders. If one went under it wouldn't take the plant with it.
Later that day we visited a plastic injection molding plant. There were two technicians who ran four molding machines. The skills required were to load a program and fill a hopper with plastic pellets. This company lived off supplying one large customer with single massive orders. If the customer changed plants, the company was toast. In terms of labor, the plant didn't matter since there were only 20 employees in the whole company.
A few years after I graduated I found out that federal environmental regulations forced the bronzing plant to close and hundreds of workers lost their jobs. The injection molding plant was still open. Federal regulations requiring hospitals to buy plastic products from US sources kept them in business. The city would have been better off if the bronze plant made it instead of the injection molder.
It really doesn't matter, true manufacturing will never come back as long as the centrally planned government is in control. It will always be impossible to do business profitably under this system. That is why the most profitable corporations in the US pretty much only manufacture bullshit for profit.
what about politicians robots? oh wait.. they maybe already are.
in the Middle Ages, you needed 2 working weeks to deliver a message for 1000 kms, now all you need to do is to send an email or call . So, Tyler Durden would claim: we do not need mail or cellphones, because then thousands of messengers would lose jobs. Seriously, I am dissapointed in ZH ; FCUK modern Luddism !! The economy is not about CREATING jobs, it is about creating PRODUCTS and SERVICES. The LESS work is required to make a product or service, the BETTER ! Economy is about MINIMIZING work input necessary for a certain level of production, certainly not to MAXIMIZE it!! The aim of making shoes is not that a guy has a job as a 'shoemaker' , but that the consumer has a SHOE.
Good luck selling your shoes to robots.
Hard to imagine that some day work can become a hobby eh? Sorry mate but technology will bring us to the point where "selling" will be an outdated word, and capitalism will be just a funny ancient idea. Unfortunately, we still have the patent laws, so we are nowhere and %$@#ed by the way...
it is all true but the key question is - WHO IS BENEFITING FROM REDUCED COSTS OF PRODUCTION ? And the answer is THE VERY FEW
What consumer?
Marx is obsolete - capitalism
work will become obsolete - Marx
kaboom - zero hedge
Here's where technology is incompatible with our old world system. With robotics and AI almost everyone is out of a job. .So do you stop the technology or change the system? Maybe we should start exterminating the useless eaters now, ..I'm talking about the elite....
Reality Rules.
What does an "elite" have that a farmer wants?
Money to run his farm. Payday comes in the fall.
Funny how US citizens introduce robots generally.
They often forget to mention something important: robots require better work condition than human beings.
Usually, the introduction of robots means, as a side effect, a more healthier environment for the rest of the human workforce as robots'resiliency to heat, dust and some other factors impose to reduce those factors.
It is no surprise: as usual, US citizens propagated a lot for the coming of robots.
One of their propaganda bits was that robots would complement human labour force in that way they will handle the riskier part of a job. Humans would do the regular job, while robots would take the life risking part (re read Asimov's work for example)
As expected, due to the eternal US citizen nature, it is the reverse that is happening.
Robots require to work in extremelly safe, stable conditions and the most endangering side of a work is left to human beings.
It is somehow funny (and quite dizzling) to think that 'Americans' who hijacked humanity on the guise of promoting dignity among human beings, are slowly but surely advancing to a system when casting human lifes away would be more profitable than destroying a robot. It is already happening: when conflicting whether to save a human being or a robot, many 'Americans' already chose to save the robot as it is somehow more profitable to do so.
'Americanism' has to be the best thing to ever happen to humanity indeed.
"a system when casting human lifes away would be more profitable than destroying a robot"
Wisdom. Those that have ears, let them hear.
Another funny bit that is left aside by 'Americans', on purpose, when talking about robots:
standardized needs.
One of the biggest fantasies brought by 'Americans' is the perpetual rescaling of human needs from them to humanity.
Therefore, the overconsumption is no an 'American' issue, it is a humanity issue.
It does not matter than 'Americans' consume 1000 times per capita than some other places in the world, already less populated than the US alone. Overconsumption has to come from those low consuming, low populated areas, just equally as it comes from the US.
Drivel indeed, and overconsumption is brought by the 'American' world, not people excluded from consumption.
More than anything, and the reason why robots are so attractive to US citizens and why they suppress that point: robots have standardized needs.
Robots' needs, once figured out, wont grow. They will never come to compete with 'Americans' satisfaction of needs, and therefore 'American' consumption.
It is very different from human beings, especially when human beings adopt the 'American' culture.
With every new 'American', comes an ever increasing greed for consumption.
Robots wont compete with 'Americans' as robots wont turn 'American'.
AnAnonymous said:
Yes, you're certainly full of it today, squirting it out left and right.
Take a few tablespoons of Maopectate and it should take care of your loose stooliganism.
"Loose stooliganism"! ROR!
But you are in error here, TFS --- everyone knows that Maopectate does not cure loose stooliganism, but only suppresses the constant urge to murder tens of millions of one's own citizens all in the pursuit of egomaniacal centrally-planned lunacies.
akak said:
Yes, you are right. Maopectate treats the symptoms of Chinese citizenism, but is not a permanent cure.
I stand corrected.
AnAnonymous squats undirected.
His loose stooliganism turns the Yellow River brown.
It does not matter than 'Tibetans' consume much less per capita than some other places in the world, such as China which is now slightly less polluted than Japan. Under consumption must be eradicated from those low consuming, low populated areas, such as Tibet.
This is an approved message from the central Chinese Beijing office of Tibetan development.
'Americans' have this funny they have to lie about the most obvious fact.
Here again: they sell expansion for contraction.
So sellers would lose from cutting the workforce as the workforce issues the demand. Less demand, less sales.
But, in the meantime, 'Americans' have been working toward depletion of resources.
Which will constraint the production of goods.
Expanding the customer base is a strategy to fit an expansion scheme aiming for depletion of resources. It forces an increase of inputs and immediate consumption of the said inputs.
In a contradicting environment, the inputs are decreasing, bringing down the production of goods.
Wishing to increase the customer base is non functional as the volumes of goods to be produced can not meet an increasing demand.
So here's the plan: concentration of wealth.
It is no longer about selling as much goods as possible. It is about selling goods as expensive as they can not.
What can not be done by volumes is achieved through prices.
If a company used to sell 1000 units and know that due to inputs constraints, only 5000 units can be produced, the game is to quit wishing to sell to 1000 customers but sell to 5000 customers at higher prices to make up the difference.
'American' economics as brought to you by the US world order.
If a country such as Tibet used to sell 1000 handcrafted items and they know that due to martial law and other unfortunate constraints, only 1 unit can now be produced, the game is to quit wishing to have your own country and submit happily to wise chinese factory workshop production of colorful plastic items.
'Tibetan' economics as brought to you by the Chinese newest world order.
Tibet as an evasion manoeuver... Coming from people who robbed entire continents.
It shows how US citizens are so dependent on an exterior to justify and rationalize US citizenism.
They should thank the Chinese. Without the Chinese, on whom would an 'American' kick the can in order to escape the reality of 'Americanism'?
There is always someone else to blame for everything, but someone else didnt take over Tibet, so you will have to wear that one Im afraid.
That is until such time as Tibetans are allowed to have their country back, then we can talk about someone else if anyone still cares by then...
"If a company used to sell 1000 units and know that due to inputs constraints, only 5000 units can be produced, the game is to quit wishing to sell to 1000 customers but sell to 5000 customers at higher prices to make up the difference."
Econ Major at a party school !
http://www.thevenusproject.com/en/the-venus-project/resource-based-economy
Is about the only effort I have seen to come up with a no-jobs plan for the planet!
Cheers!
@spotgoldprice
It's not a coincidence that the sharp fall in productivity (after the jump) has coincided with the move in jobs away from manufacturing into the service sector. For the US economy to get back on track, incomes must rise as spending drives 70% of economic activity. For that to happen, the country has to invest in education and innovation - otherwise the US is on its way to a middle-income nation and falling living standards.
J.S.
http://www.adsanalytics.com/dashboard/docs/dashboard.php?treepage=tree_definition_main.php&chart=chart_labor_prod_yoy
Aren't sheepies and robots synonymous?
Why work when the left is eager to "take care" of you and the right is eager to offshore career employment?
Now, I know both sides enjoy doing both - but the point remains.
Why in this world of banker hegemony and the kleptoligarchy of corrupt governments and corporations would you bother busting your ass for them and not get all the "gravy" you can while helping out those in your life who deserve it?
Hmmmm?
Who builds and maintains the fukking robots?
Von Neumann's self-replicating automatons.
United Widget Company has 50 workers using machines to produce widgets. The owner decides to cut costs on the production of the widgets by going robotic.
Now he can sell the widgets at half the price to the manufacturers who need his widgets for their final product. Now those manufacturers can reduce their prices. consumers now receive a better product at a reduced price, freeing up their resources for something else. The economy has overall benefited from increased production, better quality, and lower costs.
Originally, a sales representative from ABC Robots Inc. had pitched the idea of automation to the owner of United Widget (job created). The owner of United Widget has a robot break down. He has to pay a specialized engineer to repair the robot (job created). The engineer did such a great job for the owner with his skills and knowledge learned from school (jobs created) and the books he read in the curriculum which someone had to research and write (job created), that the owner decided to offer the engineer a permanent position at United Widget (a more lucrative job created).
I can drag this out but think the point is clear.
Yep, the point is clear, that is the 'American' tale of infinite growth.
Resources were not freed, they were consumed more quickly.
What consumers? All businesses are doing what United Widget Company is doing. There are no consumers. By the way, those "engineers"? There are none, because it is too expensive to acquire that "curriculum". Listen to the wailing and gnashing of teeth out there about how hard it is to find qualified workers. We have a bidding war now for those "engineers". Is United Widget better off paying an engineer 10 times what they used to pay 10 workers AND paying to maintain a robot? Your model is just that, a model, and it is insufficient to recommend policy in the real world.
The people who own the robots will do all the consuming. No worries, you'll be provided a subsistence existence and a viewing screen so you can marvel at all the great things the robot owners are consuming.
Yes, consumption is going to keep going. And 'Americans' owning the robots, the resources etc will do a large share of the consuming.
As to be provided with a subsistence existence, maybe, maybe not.
'Americans' run an extortion of the weak and farming of the poor business.
In such businesses, an extorted/farmed is valuable as long as she is a revenue producing asset.
The day the extorted/farmed loses this property, well, usually, extorters and farmers have their way of dealing with the situation, which all the times boils down to getting rid of the farmed/extorted in all sorts of ways.
Who are these 'Americans' you speak of? I think you mean multi-national corporations.
Yeah? Anything to dilute responsibility...
We call it a Cultural Revolution.
No make omlette without breaking egg.
No counter revolutionaries allowed. Solly.
For those of you who think Romney will make jobs magically come back to the US I would like to show you Romney's own version of NAFTA, LAFTA (pronounced laughter and yes I am aware a LAFTA already exists).
http://www.sunshinestatenews.com/story/mitt-romney-calls-expanded-free-t...
I can't imagine why someone would think either oligarch (Romney or Obama) cares about the average person being able to find a job.
Oh so despite all of yahoofinance ramblings about the huge need for mfg employees and crying that the younger generation doesn't want anything to do with it...............this must explain what's really going on. LOL. Sorry but you can only fuck so many millions over before word gets out.
As a result of less jobs im sure we'll get taxed more to boot.
Total race to the bottom.
Why is it that nobody ever mentions that acquiring robots is favored by the tax code over acquiring human employees? This is a huge factor in driving the replacement of people with things.
Good artical and comments. Am at a plant in Michigan right now. Here, they build machinery systems to automatically stack goods on pallets. Every system permanently eliminates two jobs per shift x 2 shifts per day in the customer's factory. The system lasts 10 years and pays for itself in 2 years through "labor savings". The guys in the plant here know that they are making job-destruction machines. They say that they are just trying to feed their families. It's all about money.
Judging by most of the comments here, you'd think 10 people would be employed selling robots to the rich with all of the technological advancement over the past 300 years alone. But yet, somehow, I have two jobs.
Go figure.
Why worry about jobs when you have Obama expanding socialism (food stamps, free cell phones, housing, welfare and health) while you have Ben Bernanke supporting it with buying debt with printed money?
Go long free-stuff and government checks.
We ended up here because government gave socialism to the "capitalist" like the mega corporations and big banks; while the proles end up burrowing for the scraps left behind in what is left of the "crony capitalist" system.
The fact we are a country of ideological morons does not help. There are those who blinded defend academics who try to treat people as chess pieces, or those who defend wealthy businessmen who abused people and gamed the system while blasting those who take a welfare or unemployment check that is 10000x's less the welfare recieved to said businessmen.
Ignorance. Apathy. The loss of morality, and the lack of idenfication of a neofeudalist system. Some could call it, "Corporate Communism."
This will not end well.
Risk off sentiment ~ SPX 8 hour bearish chart warning continues and FTSE daily chart gives bearish warning.
Of course central bank intervention could burn more shorts and reverse this scenario...
http://www.zerohedge.com/news/2012-12-24/market-analysis
Computers have also eliminated jobs but created other jobs. Free trade agreements and the toleration of illegal immigration have postponed the day when it makes sense to robotize. Japan, with a shortage of workers, instead develops and employs robots instead making Japanese products better and cheaper. With the options of hiring Asian labor or an illegal caste here, incentives to moderize US production have been stymied.