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Guest Post: Peak Employment

Tyler Durden's picture


Submitted by GoJam of The Needle Blog,

Peak Employment

What is ‘Peak Employment’ ?

Peak employment is the theory that due to factors such as efficiency, driven by technological innovation, and demand, developed economies may have already passed beyond the highest point of employment and that from this point onwards employment will continue to fall and unemployment inexorably rise causing increased social tension. There is plenty of evidence to support this theory but before looking at the situation now it would be wise to look first at a similar period of dramatic technological change two hundred years ago, and try and understand why the Luddites, who opposed industrial progess were wrong and take it as a small warning against making similar mistakes.

It is almost exactly two hundred years since the Luddites were founded (1811) as a reaction to the Industrial Revolution sweeping Great Britain. Today they are thought of simply as technophobes but their concerns were genuine, even if their methods were shortsighted and ultimately futile. The Luddites were originally highly skilled, and relatively high paid, textile workers who were being supplanted by low skill and low wage labour  who were needed to operate the new mechanized looms. Their solution was to smash up the looms.

The Industrial Revolution initiated profound social change in Great Britain. There was a huge migration from the countryside to the new industrial centres, creating a surplus of labour and driving wages downwards in these growing cities, and the new technology, being more efficient needed far less labour to produce far greater product.

The Luddites certainly saw that their standard of living was threatened but they might have been forgiven if they thought they foresaw ‘Peak Employment’. Afterall, if fewer workers were needed to produce the same quantity of product unemployment must inevitably rise, right ?

They were, as we all know, wrong. There were two main reasons why, the first was that Great Britain had a huge captive market in it’s growing empire, the second was that the Industrial revolution needed huge ‘support’ industries, like mining and steel production, and spawned newer technologies which created new markets and drove important infrastructure  development, like the railways and shipping.

But if the Industrial Revolution did not precipitate ‘Peak Employment’ could it be said to have stoked social unrest ?

“The concept of “Skill Biased Technological Change” (SBTC) posits that technology contributes to the de-skilling of routine, manual tasks.A changing world and new technologies are usually to blame for the world’s worries.”

Was the invention of the printing press responsible for the Reformation and the religious unrest that followed ? Was the invention of the combustion engine, mechanisation, and the production line responsible for the early 20th century conflicts ? Or did atomic power shape the late 20th century conflicts ? These questions I’ll leave to you, as I think I’m already wandering away from the subject of this article, which is ‘Peak Employment’.

So, it’s time to now look at the most recent technological innovations which are shaping our world today, the internet and computerisation. I’m going to look at the UK but I’m sure the findings can be extrapolated for all developed western economies.

Clark’s Sector Model (1950)

Industry, and thus employment, can be divided in to 5 broad sectors.

“Primary: This involves the extraction of resources directly from the Earth, this includes farming, mining and logging. They do not process the products at all. They send it off to factories to make a profit.


Secondary: This group is involved in the processing products from primary industries. This includes all factories—those that refine metals, produce furniture, or pack farm products such as meat.


Tertiary: This group is involved in the provision of services. They include teachers, managers and other service providers.


Quaternary: This group is involved in the research of science and technology. They include scientists.


Quinary: Some consider there to be a branch of the quaternary sector called the quinary sector, which includes the highest levels of decision making in a society or economy. This sector would include the top executives or officials in such fields as government, science, universities, nonprofit, healthcare, culture, and the media.”

As you can see Clark’s Sector Model has been shown to be broadly correct in the 60 years since it was developed. Primary and Secondary sectors have decreased, Tertiary and Quaternary sectors have increased, the sub- branch, Quinary sector which Clark’s Sector Model does not address has also increased.

There is an alternative way of looking at sectors of employment and that is to look at those that are used to evaluate GDP. They are:

  1. Agriculture, hunting, forestry, and fishing
  2. Construction
  3. Production industries, Electricity, gas and water supply, Manufacturing, Mining and quarrying.
  4. Service industries, Creative industries, Education, health and social work, Financial and business services, Hotels and restaurants, Other social and personal services, Public administration and defence, Real estate and renting activities, Tourism, Transport, storage and communication, Wholesale and retail trade.

The first employment sector has become more efficient due to mechanisation but, for now, it is now kept relatively stable thanks to EU subsidy.

The second employment sector is slumping but has potential for growth but you only have to look at Spain and Ireland to see examples of how an artificially stimulated construction sector can result in a bubble.

The third employment sector is more complicated. The utlities are private monopolies, infrastructure improvements could create employment but it’s difficult to see this happening without state intervention of some sort. Manufacturing has been moving east and shows no sign of returning any time soon. Mining has reduced significantly over the last 30 years, Quarrying remains controversial and is resisted locally.

The fourth employment sector, the service sector, is by far the largest making up 73% of UK GDP and it is perhaps hit the hardest by new technologies, specifically Retail and Financial business services where jobs are being regularly shed. And what is left in that sector ?

A large bulk of it is the Public Sector, most of the rest is take-aways, cinemas, and theme parks. OK, that is a simplification but these sectors, excepting overseas tourist related, just circulate money around the economy. And that is the only employment sector which remains relatively high, for now, but it is plainly unsustainable.

Employment is falling, unemployment is rising but hidden behind those headlines is the fact that part time Employment is rising.

Less people have full time jobs, more people have part time jobs, which means that the hours of work are being spread increasingly more thinly across the population.

Some might argue that it is only because of the economic slump that all of these things are happening and that it is only temporary.

But I think there is enough evidence to suggest that this is a long term trend that has just been disguised by the boom of the last ten years and is only now really becoming apparent.

I fear that we have already passed Peak Employment and the downward trend will continue, perhaps disguised by increasingly more part time employment.


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Tue, 07/10/2012 - 15:36 | 2603260 Newsboy
Newsboy's picture

I'm Long subsistence farming.

Tue, 07/10/2012 - 15:43 | 2603286 MillionDollarBonus_
MillionDollarBonus_'s picture

I think I've finally worked out why there are so many poor people in the world. It’s so simple that I kicked myself for not getting it earlier. The reason there are so many poor people is literally because the 1% are keeping all the money for themselves. When the rich make one dollar, that is a dollar that is in the hands of the rich and NOT the poor. Libertarians have always said that business is good for the poor and that it promotes upward mobility, and I had always thought there was something wrong with that. Now I realize I was right all along. Businesses and rich business owners actually HURT the poor by taking money away from them. If a capitalist MAKES a dollar, the poor LOSE a dollar. Everything is starting to make sense now.

Tue, 07/10/2012 - 16:00 | 2603294 ZerOhead
ZerOhead's picture

What is ‘Peak Employment’ ?

It's the state that necessarily precedes 'Peak Social Unrest' which has something to do with 'Idle hands' and Molotov cocktails or Greece or something....

Oh and MDB?... a Bank 'creates' dollars and then lends them to 'Capitalists' to inflate asset prices and suck the 'juice' out of the real economy. The system is so efficient now that no 'poor people' are required in the process.

Tue, 07/10/2012 - 16:03 | 2603367 Aziz
Aziz's picture

Hey MDB — let's be honest — what you're really trying to say is that LIBERTARIANS are the reason there are so many poor people, right?

Tue, 07/10/2012 - 16:36 | 2603476 MillionDollarBonus_
MillionDollarBonus_'s picture

Libertarians ARE responsbile for the massive amount of poverty in the world. Not many people know this, but in third world countries like the Congo, Angola, India and Mexico there is absolutely no government welfare ... That's right - NONE. Is it any surprise that these countries are so poor when their governments are not even providing basic necessities? Liberianism has infected the minds of politicians across the third world, and as a result they refuse to provide even basic necessities for their people. People are literally DYING because of libertarians. 

Tue, 07/10/2012 - 16:37 | 2603481 ejmoosa
ejmoosa's picture

Sure, blame giving individuals freedom.  That's what is wrong with the US.  Too much freedom.

Tue, 07/10/2012 - 19:33 | 2604043 sgt_doom
sgt_doom's picture

Oh wow, dood, bullwinkle the ejmoosa, you're really freaking retarded!

I mean, all those preemptive arrests, reminding one of the Gestapo from Nazi-ville times, really suggests freedom, right?

I mean, all those whistleblowers who are being prosecuted under the Espionage Act by the latest fascist in the White House, Obama (as opposed to that other fascisti now running for the prez, Romney), really suggests freedom, right?

Yup, the Obama administration financially supporting the overthrow of the democratically-elected government of Honduras, really suggests freedom, right?

Yup, those banksters granted criminal immunity by fascisti Obama really suggests freedom, right?

You got me, dood, too much freedom, right?

Tue, 07/10/2012 - 17:12 | 2603580 Debtonation
Debtonation's picture

You think this is only a monetary and wealth distribution problem.  The only way a society can be successful is if it actually produces products and services that can be consumed.  Standards of living have risen dramatically in India.  As for Congo and Angola, they probably don't produce much anything of value and therefore are poor.  There's no reason Mexico couldn't achieve a higher living standard, they just don't have an educated workforce capable of producing.  If you think free markets are so bad, tell us all why Hong Kong be came the cross roads of Asia while communist China under Mao suffered famine, tens of millions in starvation and widespread poverty. Two societies right next to eachother with diametrically opposite political systems, one succeeded, the other was a catastrophic failure.

Tue, 07/10/2012 - 19:34 | 2604051 sgt_doom
sgt_doom's picture

Yo, dipshit debtonation, ever heard of the Congo Mining Company?

Ever heard of the Guggenheims?

Ever read a book?

Tue, 07/10/2012 - 20:24 | 2604163 BigJim
BigJim's picture

Yes, wait, that's it, I can just now see how the Guggenheim's Congo Mining Company made Hong Kong rich.

Oh no, now I can't.

WTF are you talking about?

Tue, 07/10/2012 - 20:06 | 2604121 prodigious_idea
prodigious_idea's picture

Without EXPORTS, economies are usually precluded from growth.  Can't remember the last time I heard of a product from the Congo or Angola.  Never mind the political structure that impeded the otherwise distributive effect of economic growth, consider China's economic growth once their export sector grew.

Wed, 07/11/2012 - 04:11 | 2605143 AnAnonymous
AnAnonymous's picture

You never heard of product coming from the Congo, Angola? ummm, US citizens are really pampered by their State, which allows them to live in the bliss of ignorant life.

Wed, 07/11/2012 - 04:14 | 2605144 AnAnonymous
AnAnonymous's picture

If you think free markets are so bad, tell us all why Hong Kong be came the cross roads of Asia while communist China under Mao suffered famine,


Hong Kong is free market? Is it US citizen approved?

Hong Kong became the trade hub it is for the main reason the other do: the location.

Which is a physical property.

But hey, US citizenism is as US citizen do.

Tue, 07/10/2012 - 17:14 | 2603585 francis_sawyer
francis_sawyer's picture

 " People are literally DYING because of libertarians..."


People are literally being BORN because of socialism (as goes the argument)... The more useless eaters the better... Right MDB?

Wed, 07/11/2012 - 00:15 | 2604871 mkhs
mkhs's picture

Well, I have a simple mind, and I prefer leaving it at " People are literally DYING."  Everything else doesn't make a bit of difference.

Tue, 07/10/2012 - 18:45 | 2603882 MeelionDollerBogus
MeelionDollerBogus's picture

heheh, successful Re-Troll(tm)


Tue, 07/10/2012 - 18:27 | 2603794 Seer
Seer's picture

Nailed it! :-) (+1000)

Tue, 07/10/2012 - 15:55 | 2603323 Michael
Michael's picture

When the USA defaults on its $17 trillion national debt, there will be plenty of jobs because China and the rest of the planet won't trade with us anymore, a great thing, and we'll have to make shoes in the USA again.

Complete and total worldwide economic collapse solves most of these problems for us. 

Tue, 07/10/2012 - 17:57 | 2603705 Don Keot
Don Keot's picture

  Michael, I wish I could give you more than +1, that is so right on, the Amish may be on to something.

Tue, 07/10/2012 - 18:31 | 2603813 Seer
Seer's picture

"and we'll have to make shoes in the USA again."

... to sell to the Chinese...  If we weren't massively in debt I'd say that this would all be good (manufacturing locally to sell to local markets), but, I doubt that cobblers will be able to make those payments on their $2,000/mo mortgages: either shoe prices go up to allow for the cobbler to make payment, or costs of other things go up as a result of the banksters passing along the reduced mortgage costs to everyone.

And the sad thing is that the cobbler, who was shafted like most everyone else, will end up having banksters as his/her customer base (no one else can afford the cost of the shoes).

Rock and hard place...

Tue, 07/10/2012 - 19:20 | 2603999 Don Keot
Don Keot's picture

The shops on Saville Row have done alright for a couple hundred years doing just that but I'm not sure how that affects the economy.  Seems like the suppliers of goods and services to the 1% are doing better than most.

Tue, 07/10/2012 - 15:58 | 2603344 NotApplicable
NotApplicable's picture

Hey, quit screwing up the threadjack comment, and post your bait further down please.

Tue, 07/10/2012 - 16:06 | 2603379 derek_vineyard
derek_vineyard's picture

.............until those receiving million dollar bonuses start turning up bludgeoned and floating in rivers

Tue, 07/10/2012 - 16:16 | 2603403 Debugas
Debugas's picture

you are right. It is called crisis of overproduction whereas in fact it is crisis of lack of payable demand.

And this lack of demand is the primary reason why we were accumulating debt for the last 40 years like crazy -to artificially prop up the demand

Tue, 07/10/2012 - 18:08 | 2603735 narnia
narnia's picture

the economy is not a zero sum game

Tue, 07/10/2012 - 18:43 | 2603874 MeelionDollerBogus
MeelionDollerBogus's picture

Smart poor people get less poor by making money from dumber rich people. Dumber smart people get less fed then die sooner, leaving the Earth with many less poor people.

Tue, 07/10/2012 - 19:28 | 2604025 sgt_doom
sgt_doom's picture

Many Thanx, MillionDollarBonus, for injecting logic into this conversation --- some of these insipid blog posts here.....

And please allow me to add a tad of actual arithmetic:

Since the 1980s, in America, there now exist only one-quarter (1/4) of the full-time, normal year-round employment jobs today, as compared to that period.

Why, as Caviar Emptor succinctly explained some time back, the restructuring of the jobs base downward.

We are no officially in the fourth jobless recovery, and back between 1987 to 1992 or thereabouts --- the first "official" jobless recovery (although I believe there were in actuality two prior to that), only one half of those millions laid off from full-time work were able to reacquire full-time work again (and half of those below their original wages, but let's ignore that for now).

So the first jobless recover back in 1987-1992 yielded one-half of the original employment, and the next three likewise.

Ergo, there is now 1/4 the existing full-time jobs (aritmetically would be 1/16, but we factored in retirements, deaths, incapacitating illness and maternal leaves forever).

Sorta simplifies this blog post a bit, now don't it??????

Tue, 07/10/2012 - 16:56 | 2603305 sunaJ
sunaJ's picture

Muppetology: verse 2


Little Miss Muppet
Relied on 'The Gummint'
To provide for her bread and cheese.

Come the stock market crumble,
She picked through the rubble,
Lamenting in hunger, "Why me?"


Tue, 07/10/2012 - 23:46 | 2604785 merizobeach
merizobeach's picture

All muppets please report for immediate Corzining.

Tue, 07/10/2012 - 15:37 | 2603265 The Axe
The Axe's picture

the market is a no volume broken ponzi   look a iceberg....lets hit it...ha ha

Tue, 07/10/2012 - 15:38 | 2603269 Cursive
Cursive's picture

"Peak employment" as it is defined herein is a monetary construct.  Thanks to artificially low money rates and easy credit creation via fractional reserve banking, the cost of capital is much lower than the cost of labor.

Tue, 07/10/2012 - 15:46 | 2603295 Essential Nexus
Essential Nexus's picture

Don't forget impractical labor laws and a massively expensive legal system.

Tue, 07/10/2012 - 15:53 | 2603318 Citxmech
Citxmech's picture

Yes, but economic reality is also tied-in to resource depletion and decreasing EROEI in the energy markets.  This is a really insightful way to look at decreasing marginal returns in an overly complex society.

Tue, 07/10/2012 - 16:02 | 2603361 sid farkas
sid farkas's picture

I can almost smell your newly minted PhD. You have a bright future on the board of the federal reserve or other govt agency. 

Tue, 07/10/2012 - 16:28 | 2603434 TruthInSunshine
TruthInSunshine's picture

They have to birth machines to do the productive work that allows, at least for the time being, the wards of what remains of the net taxpaying population (about 47% of the total workforce pays more than they receive, and that % is shrinking), being the Too-Big-To-Succeed-Independently & Too-Knowing-&-Owning-of-Politicians Financial Institution parasites (aka Cronies & Best Friends Forever of the New York branch of The Non-Federal Reserve-less Non-Bank), the system to continue.

That system is a direct and unrelenting bleeding of capitalism's virtues until the day the last true entrepreneur, who was not weened on the gigantic mammary gland of what is the gargantuan queen maggot that is the modern day nation-state, that is propped up by the most foul activities and directed by the most foul creatures imaginable, decides that he/she can't work any longer or harder so that increasingly larger units of their sweat and toil are stolen, to prop up Big 'Sis any longer, and they turn off the lights and join the dole.

The Military-Financial-Money Masters complex is aiming for your head, bitchez.

Rise of the (labor/task-oriented) Machines, bitchez.


Tue, 07/10/2012 - 16:00 | 2603357 NotApplicable
NotApplicable's picture

I kept looking in the article for the idea of credit-fueled capital consumption as a driver, but it was nowhere to be found.

Like I tell every luddite, human needs are infinite while the human labor to meet them is not. If there is a lack of balance, it is due to a lack of freedom for the individuals concerned.

Tue, 07/10/2012 - 16:35 | 2603477 Citxmech
Citxmech's picture

I would say human desires are infinite.  Their needs are very finite.  The problem we have is that growth has been fueled far beyond that which is sustainable.

Tue, 07/10/2012 - 18:40 | 2603859 Seer
Seer's picture

GROWTH is NOT sustainable, PERIOD!

Growth -> "increasing expansion of a thing" (assuming "growth" is being applied in a positive direction [rather than negative, as in "negative growth" (which is kind of oxymoronic)]).

Sustainable -> "perpetual" (otherwise, STATE a timeframe!)

Let's be clear about what this means.  This is the premise that nearly everyone passes over (and is why people keep pounding their heads against the wall trying to figure out why things aren't working).

It's really simple, and bulletproof, math.  Look for Dr. Albert Bartlett's (video) presentation Arithmetic, Population and Energy for a very clear overview of this.

Tue, 07/10/2012 - 19:03 | 2603941 Citxmech
Citxmech's picture

Absolutely correct Seer. Poor choice of words on my part (Apologies to Prof. Bartlett!).

Maybe it would be more accurate to say that growth to a sustainable state is plausible - as long we're not talking about huge time-frames (though nature seems to abhor any such mechanism).

Of course, the human race is way beyond any point that could be considered "sustainable" right now. IMHO, our current challenge (which we're losing) is how to contract intelligently so as to avoid a catastrophic die-off.

Tue, 07/10/2012 - 19:15 | 2603981 BigJim
BigJim's picture

What you appear to be completely blind to is improvements in productivity and technology.

For instance... 25 years ago we were using 60 watt carbon filament bulbs. Then we went to 20 watt compact florescents. And now 5 watt LED bulbs are here. A 12-fold decrease in energy consumption... and they're still being improved.

30 years ago, cars typically got 20mpg. Now the equivalent vehicles typically get 40 or even 50.

TVs... computers...

Yes, Malthus was right, the Earth cannot support an infinite number of people.  But if the new NatGas fracking revolution's promise is even half true, we've pushed the peak cheap energy point out a good twenty years, plenty of time to develop, perfect, and deploy Thorium.

Population growth in the developed countries has dropped to barely replacement levels, and what reproduction there is is almost entirely down to recent immigrants from the developing world. There's no reason to suppose that once they become prosperous, their reproduction rates won't  plummet too.

Stop panicking about infinite real economic growth scenarios.  Just because our present monetary system demands it, doesn't mean the underlying, real economy needs it to bump along just fine. Once we change the monetary system, most of our problems disappear.

Tue, 07/10/2012 - 19:41 | 2604064 Citxmech
Citxmech's picture

Unfortunately, there has been a decreasing rate of return on technology investment and the actual cost of production on the commons (otherwise known as ruination) has been externalized so it is not factored into pricing.

The longer we let our bets on ever-increasing industrialization ride, the more sure it is that we will eventually lose.

Tue, 07/10/2012 - 20:19 | 2604145 BigJim
BigJim's picture

You're right, the sooner we give up bulldozers and go back to digging using sharpened sticks, the less we'll have to lose.

Tue, 07/10/2012 - 22:47 | 2604593 Citxmech
Citxmech's picture

The choice we face is closer to how much industrialization we can afford/the environment endure.  If our answer is above a sustainable limit - we will be down-sized.

Tue, 07/10/2012 - 20:06 | 2604120 object_orient
object_orient's picture

All those improvements and the cost of living is still far higher than 30 years ago, thanks to inflation, higher gas prices, higher electricity rates and falling wages. Some deal. I can't wait for the new monetary system that will solve all these problems.

Tue, 07/10/2012 - 20:20 | 2604142 BigJim
BigJim's picture

  ...and the cost of living is still far higher than 30 years ago, thanks to inflation....  I can't wait for the new monetary system that will solve all these problems.

Where does one begin?

Tue, 07/10/2012 - 22:43 | 2604578 Liberty2012
Liberty2012's picture

Individuals freely exchanging their work (without being stuffed into never ending boxes of regulation).

Wed, 07/11/2012 - 12:22 | 2606403 BigJim
BigJim's picture


But when I was asking "where does one begin?" I was referring to the (quite astonishing) assertion that inflation had nothing to do with the monetary system.

Tue, 07/10/2012 - 15:39 | 2603274 ejmoosa
ejmoosa's picture

Return consistent profit growth back to the US business environment and you will see peak employment once again.


Keep sucking the profits out of companies to support those that are choosing to sit this cycle out while enjoying all the benefits, and we have indeed seen the peak employment in this nation.

Tue, 07/10/2012 - 15:43 | 2603283 catch edge ghost
catch edge ghost's picture

Yeah but... we ain't no where close to Peak Ink.

Tue, 07/10/2012 - 15:47 | 2603300 New_Meat
New_Meat's picture

Where is Trav7777777 when we need him?

Tue, 07/10/2012 - 15:47 | 2603302 toady
toady's picture

But this was the desired state just a few years ago.

Increase productivity! Decrease employees! Do more with less!

They must not have considered consequences ...

Tue, 07/10/2012 - 16:45 | 2603426 Bob
Bob's picture

It was that fictitious "we" that lulled all the wage slaves into believing that what "we" were working on was going to benefit "us." 

Dumb fucks.  They believed it because they read it in the newspapers and saw it on tv.  All the economists and finance people assured them it would go that way.  It's the way their books conceptionalized history and every other subject in school, as if progress from the day fire was discovered was a collective accomplishment of the species and that "we" share in it all! Someday "we" would all be living in a collective paradise. 

The only "we" that counts here is that I own the new labor saving, far more productive technology and nobody else gets any credit whatsoever.  It makes me feel good because I'm the true heir of the guy who "discovered" fire and everybody else in the line leading directly to me today. I don't owe useless eaters anything. 

I'm a producer.  Hey, so we've got too many people . . . what do you expect me to do about it?

Feel bad?  Hell no. 

Maybe they should feel bad about living.  Or significantly decrease their pathological sense of entitlement to more than they're worth, forget about the minimum wage, and get the fuck to work!

I could use somebody on the hotter days to gently blow on my balls.  Especially the left one. 

I don't think that's too much to expect.  I've earned it.  WTF?

Tue, 07/10/2012 - 17:28 | 2603625 blunderdog
blunderdog's picture

All money IS is a virtualized token for control of others.  If you understand that part, it's obvious why most of the world has none, and why it always trickles UP.

Tue, 07/10/2012 - 22:49 | 2604601 Liberty2012
Liberty2012's picture

ALL money? No. Our current money system does not represent ALL money systems ;)

Tue, 07/10/2012 - 15:54 | 2603320 Agent P
Agent P's picture

"The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment."

Warren G. Bennis

Tue, 07/10/2012 - 16:49 | 2603516 TruthInSunshine
TruthInSunshine's picture

Actually, the man will be fired, and a simple machine will inject the dog with a dose of caloric, nutrient dense syrup at regular intervals, until such time that the owner of the facility will realize that this is unnecessary, kill the dog, harvest its organs, and represent them as human organs to be sold on the black market.

Tue, 07/10/2012 - 15:54 | 2603321 SoNH80
SoNH80's picture

Automation.  Robots don't get cancer, or drink on the job.  Overseas outsourcing.  Charlie's happy with a can of rice and some rat meat, Charlie doesn't have U.S.O.  Transaction costs.  Mandatory-Forced-Health-Insurance-Rube-Goldberg-Care, S.S. taxes, workers' comp.  The young, pre-college kids of today still have time to prepare for the day when the 9-5 MegaCorp "job" is as rare as a defined-benefit pension, by learning practical skills through self-education, avoiding Kollege and other forms of debt, being nimble as rabbits, while the older workforce (i.e., anybody who's bought into the "promise" of steady employment, be they 21 or 71) faces increasing pressures and dangers, if they are cogs in an employment machine.  Be ready to lose your job, at least psychologically, and have a Plan B, and C, and D.  For the kids, no diploma guarantees anything anymore.

Tue, 07/10/2012 - 15:55 | 2603326 DCFusor
DCFusor's picture

I actually think this is a real problem, could be because I've helped develop some of the automation tech myself.  It's a fundamental limit of the basic capitalist system, or so it appears.

You could think of one endgame, where everything everyone wants is produced in just a few automated factories and mines.  But you cannot get there, as when no one is working, no one is getting paid (under the existing systems), so there's then no paying demand for the output of such.

So, you just keep bumping up against that in the current way of wealth distribution (or even the highly crooked and worse way we've been evolving of late).  It really doesn't require 20 companies to make commoditized PC's anymore - there's hardly any difference between one and another good one, and bad ones stop selling.  Consolodation is the name of the game now in businesses like that.

IP used to be a tool for the big to cross license to each other for free, while stomping any new innovation to the ground.  The little guy with his one invention, that most often can't be used without crossing some other patent, he's hosed.  But now we've seen a sudden uptick in companies using IP to fight other established companies (look at the mobile space) - instead of innovating and trying to increase the size of the pie, they've given up on that and are just fighting over the same pie.

The signs are here that we need to think about this problem.  Traditional ways of wealth redistribution are all horrific in how badly poor human nature really works for that, but if we don't figure out a way to overcome that, it all fails at some point.

While I'm sure there are plenty of exceptions to this, when I ran a business, and there was a need to let people go, you gotta know I kept the best, and lost the rest, nice excuse to do that.  Often, it actually IS cheaper to pay someone (unemployment, whatever) to at least stay out of the way of the truly productive...just an observation from real life.  So maybe it's like that with the population as a whole...

Or skip this entire clock-punching job security shit and only pay people who produce, no contracts, just pay for results, period.  I think that might be somewhat least to some.  What do you do with people who basically choose to be losers, I haven't a clue, nor do I have any real solution to this.  I just believe it is a real problem.


Tue, 07/10/2012 - 16:41 | 2603493 Poetic injustice
Poetic injustice's picture

Those "losers" will take a gun or knife and rob "successful". If they fail, they get good food in prison.

Tue, 07/10/2012 - 18:07 | 2603733 francis_sawyer
francis_sawyer's picture

I kno... They could all buy Chevy Volts & live happily ever after...

Tue, 07/10/2012 - 17:36 | 2603650 blunderdog
blunderdog's picture

"IP" is and has always been a scam to seize control over information.

If all people have access to the same information that the IP-holders have, they can no longer collect rent on something they didn't create and don't own.

There's no solution, other than to eliminate the rent.  Consider the implications.

Tue, 07/10/2012 - 17:57 | 2603704 CrazyCooter
CrazyCooter's picture

I rarely bump comments, but I think yours deserved it.

I used to think a certain segment of humanity was lazy, having had a few friends and coworkers over the years who definately fell into this bucket. I went back and forth on whether it was genetic or environmental or a combination. In some cases, I knew people that worked really hard at not working (i.e. they put time/energy/effort into being able to be as lazy as possible). I mean, they liked working the system, perhaps in the same way I liked solving problems.

Flash forward quite a few years. I noticed a lot of eagles hanging out on a creek going under a bridge at high tides near my place. Not just one or two; six, eight, or more at times. Always just sitting there on swamped tree trunks in the creek bed and in near by trees. Must be free food washing down or they wouldn't be there.

I think some of this behavior could be seen in the light of "optimal foraging theory". I think socialism breeds those who are able to make it by not making it, creating a feedback loop. You see, in nature a bad forage behavior removes that behavior from the gene pool. With broad social services, the problem grows like a tape worm infestation until the host is killed.

I think, in some ways, our species requires the "forest fires" to thin things out at times, which is, I suppose, why humans traditionally war so much.



Wed, 07/11/2012 - 00:25 | 2604893 Anusocracy
Anusocracy's picture

Foragers (liberals) are going to try to remake their environment into a forageable tribal system-thats the type of system they are culturally adapted to survive best in. Resources should be available to all from their environment.


Conservatives strive to create a pharaonic hierarchical chain of command power structure with several distinct classes-their natural environment. Their roots go back to the creation of settlements and the state and because of differimg property rightst, are the natural enemies of the foragers.

Wed, 07/11/2012 - 11:03 | 2606064 blunderdog
blunderdog's picture

The gist is correct, but actually it looks more like in-group/out-group dynamics.  The conservatives prize group-membership much more highly than the liberals, INDEPENDENT of attributes which can be measured.

Tue, 07/10/2012 - 18:15 | 2603759 Don Keot
Don Keot's picture

"Or skip this entire clock-punching job security shit and only pay people who produce, no contracts, just pay for results, period.  I think that might be somewhat least to some.  What do you do with people who basically choose to be losers, I haven't a clue, nor do I have any real solution to this.  I just believe it is a real problem."

 If you don't produce, you are an expense. Some necessary, some, not so much.

Tue, 07/10/2012 - 15:58 | 2603330 sid farkas
sid farkas's picture

It appears the author is a complete and total moron. ZH can do better than this.

Tue, 07/10/2012 - 16:01 | 2603359 NotApplicable
NotApplicable's picture

Marx would be proud though.

Tue, 07/10/2012 - 16:40 | 2603490 jazze
jazze's picture

the author clearly hasn't read Mises

Tue, 07/10/2012 - 15:56 | 2603332 Forgiven
Forgiven's picture

Did Hope, Change, Bailouts or QE or Twists REALLY do any good.  You decide.


Tue, 07/10/2012 - 16:03 | 2603369 NotApplicable
NotApplicable's picture

Five out of Four criminals agree, "Gimme the money or else!"

Tue, 07/10/2012 - 15:57 | 2603337 Shigure
Shigure's picture

This model seems to assume that the earth's resources are infinite.  If there was not enough oil to power the tractors, the UK might be in need of an extra 5 million farmers.

Tue, 07/10/2012 - 16:02 | 2603363 Citxmech
Citxmech's picture

Substitute that straight downward slope of primary production with a bell-curve (ie Hubbard's oil peak, etc.) and it seems to accomodate resource depletion nicely.

Tue, 07/10/2012 - 16:12 | 2603397 Shigure
Shigure's picture

The downward slope on the chart represents employment in primary production, not primary production

Tue, 07/10/2012 - 16:25 | 2603444 Citxmech
Citxmech's picture

Right - but beyond reduced employment strictly due to worker replacement to technology/automation - at some point - there should also be a componant of that line/curve that factors in reduced workforce due to negative productivity due to increasing scarcity and decreasing return on a company's investment per worker.

It would be interesting to see, for instance, a measure of the number of geologists employed in finding new oil fields overlaying the bell-curve of oil field discoveries.  My guess is that the curve will lag substantially, but at some point along the decline curve of field discovery, the market value per geologist will break, and employment will drop.

Tue, 07/10/2012 - 16:37 | 2603482 Shigure
Shigure's picture

Maybe the market value per geologist will break...but what do you think will happen to the market value per farmer?

Tue, 07/10/2012 - 16:49 | 2603522 Citxmech
Citxmech's picture

I think that they are generally inverse (fewer geologists/more manual farming) but the number of farming jobs is also bounded by the amount of arable land and efficientcy of that land to feed said farmers.

Maybe we could sustain a farmer/acre or whatever, but not 20 farmers/acre.  Of course the implication of all this is that we need to match the number of workers/mouths to feed to our efficiency at sustainably harvesting the environment or we're courting a die-off.

Tue, 07/10/2012 - 17:37 | 2603657 Shigure
Shigure's picture

It takes about 1 hectare of good quality land to sustain one person, a bit less if using permaculture methods, such as layering crops, or if the person changed their diet, for example substituting potatoes for wheat.

A high energy return on the energy invested can support a complex society.  As this rate declines, I think that employment rates in the different sectors will change too.

Tue, 07/10/2012 - 18:30 | 2603809 Don Keot
Don Keot's picture

Where there are people, from the desert to the ice covered land, they have adapted to their enviornment and have survived.  There must be a consumable and replenishable resource.

Tue, 07/10/2012 - 19:07 | 2603959 Citxmech
Citxmech's picture

Which implies an upper population limit for a given set of resources/harvesting methods.  Technology can increase this number, but it cannot do so ad infinitum.  There is some upper practical limit.

Tue, 07/10/2012 - 16:02 | 2603364 Alcoholic Nativ...
Alcoholic Native American's picture

Let's start picking some winners.

Tue, 07/10/2012 - 16:03 | 2603371 tony bonn
tony bonn's picture

"...I’m going to look at the UK but I’m sure the findings can be extrapolated for all developed western economies...."

babycakes, i think you might be plein de merde.....the uk held a position of imperial aggressor which few other countries, including France, could match.....its prosperity was built on the backs of conquored and subjugated peoples....your confidence is a surety that you are an f-tard.

Tue, 07/10/2012 - 16:04 | 2603373 Debugas
Debugas's picture

one does not even need technology for unemplyment to go through the roof. It is enough to have monopoly. Imagine one person own all farmlands and decides to grow food for one person only (himself). Despite the fact there are many jobless people they simply have no land to work on

Tue, 07/10/2012 - 18:39 | 2603855 maximin thrax
maximin thrax's picture

How would his income from growing food for just himself, much less the taxes he'd pay on it (if any), pay for security (public or private) to protect either his land from being taken or his crops from being stolen? Fact is that the monopolist would have to produce enough excess to buy security. He'd need to hire an army of workers to produce the revenue to run a modest local government to protect his interests if everyone else is unemployed; a workforce, being dependent on work to eat, that would have a prime interest in making sure the crops come in and get to market.

Tue, 07/10/2012 - 18:59 | 2603931 MeelionDollerBogus
MeelionDollerBogus's picture

Robots & animals. Enough tigers, hungry dogs and robot-controlled digging, irrigating and gun-emplacements and a very small number of people would maintain the entire section forever. Then again it would still require more than one person if any.

Let's just be thankful it's not ZERO people and skynet.

That's still not entirely impossible as a future outcome from here.

Tue, 07/10/2012 - 16:04 | 2603374 AchtungAffen
AchtungAffen's picture

I would say that when there's way more people than there is land to labour, you'd have reached peak employment.

Tue, 07/10/2012 - 18:40 | 2603837 Don Keot
Don Keot's picture

Germany, for example adds value to a purchased resource, therby increasing employment and income, while their natural resource is specialized workers.

Tue, 07/10/2012 - 18:41 | 2603863 Don Keot
Don Keot's picture

Why is my reply in bold text?

Tue, 07/10/2012 - 16:12 | 2603399 grid-b-gone
grid-b-gone's picture

It's time for the 4X9, thirty-six hour workweek to increase total jobs, cut commuting by 20%, and put continued downward pressure on the price of oil.  

Tue, 07/10/2012 - 16:16 | 2603416 Sudden Debt
Sudden Debt's picture

We just have to invent more accessoires for the Ipad which will create more jobs!!!!! for the chinese.....

Tue, 07/10/2012 - 16:17 | 2603418 lasvegaspersona
lasvegaspersona's picture

'fewer people' not 'less people' ...I know...I'm a nerdy nit picker...but it just grates even when I read it...

use less when the....screw it...if you are interested:

Tue, 07/10/2012 - 18:00 | 2603716 Dr. Acula
Dr. Acula's picture

Thanks, I'll tell at fewest five of my friends.


Tue, 07/10/2012 - 16:26 | 2603448 El Tuco
El Tuco's picture

It's all a race to Zero....

Tue, 07/10/2012 - 16:27 | 2603454 Getting Old Sucks
Getting Old Sucks's picture

Eventually, the machine breaks down and no one knows how to fix it.

Tue, 07/10/2012 - 16:58 | 2603542 Debugas
Debugas's picture

unless it is a self replicating machine.

actually we will need those to establish colonies on the moon mars and so on

Tue, 07/10/2012 - 17:35 | 2603641 ZeroAvatar
ZeroAvatar's picture

Mankind is not going to 'Mars' or anywhere else in our solar system, let alone Galaxy or Universe.  We had our shot, made it to the moon, now, it's back to the caves.


That's where mankind is headed.

Tue, 07/10/2012 - 17:45 | 2603684 Dr. Acula
Dr. Acula's picture

Give it some time...

Tue, 07/10/2012 - 18:01 | 2603722 Citxmech
Citxmech's picture

"It has often been said that, if the human species fails to make a go of it here on Earth, some other species will take over the running. In the sense of developing high intelligence this is not correct. We have, or soon will have, exhausted the necessary physical prerequisites so far as this planet is concerned. With coal gone, oil gone, high-grade metallic ores gone, no species however competent can make the long climb from primitive conditions to high-level technology. This is a one-shot affair. If we fail, this planetary system fails so far as intelligence is concerned. The same will be true of other planetary systems. On each of them there will be one chance, and one chance only." 

-- Sir Fred Hoyle, "Of Men and Galaxies," 1964 --

Wed, 07/11/2012 - 04:18 | 2605146 AnAnonymous
AnAnonymous's picture

We have, or soon will have, exhausted the necessary physical prerequisites so far as this planet is concerned. With coal gone, oil gone, high-grade metallic ores gone, no species however competent can make the long climb from primitive conditions to high-level technology. This is a one-shot affair. If we fail, this planetary system fails so far as intelligence is concerned. The same will be true of other planetary systems.


But, but intelligence is not limited by the environment. We, Americans, have proven times and times again, that our intelligence allowed us to abstract the environment. So my american dad told me.

This sir is a noble and should die with his ideas from a wretched, we, Americans, have saved humanity from.
We are Americans, and we will prevail.

Signed: an American.

Wed, 07/11/2012 - 04:20 | 2605147 AnAnonymous
AnAnonymous's picture

US citizens know it is a one shot experiment.

Once reminded, the use of debt to consume as much of the environment as US citizens are doing takes another dimension.

US citizens want to win the race to zero.

Tue, 07/10/2012 - 18:17 | 2603765 Citxmech
Citxmech's picture

Interestingly, biological organisms are self-replicating machines, they all break down eventually, and we can't fix them.

Tue, 07/10/2012 - 18:55 | 2603914 MeelionDollerBogus
MeelionDollerBogus's picture

IF we can make a better self-replicating machine than plants & ants are from actual life, prions and RNA, the smartest thing we can do is harden it to radiation and cold and send a star-seed to another star-system hoping one day it will rebuild our civilization since we'll destroy this one no problem.

Then again, if there's any neighbors there, they'll be very pissed off at the Earth-dog that just took a virus-infested dump on their front lawn.

Tue, 07/10/2012 - 16:32 | 2603470 earleflorida
earleflorida's picture

building out an infrastructure on all major highways, byways and roads... throughout american cities, towns, and municipalities to facilitate natural gas [cng/lng] and ev fueling station [vehicles] - - this would be a start in the right direction?


Tue, 07/10/2012 - 17:38 | 2603659 ZeroAvatar
ZeroAvatar's picture

earleflorida=   +100

Tue, 07/10/2012 - 16:36 | 2603479 jonan
jonan's picture

if krugman is quinary, call me the fucken tooth fairy

Tue, 07/10/2012 - 16:44 | 2603503 American Sucker
American Sucker's picture

The Unibomber wasn't wrong, just early.

Tue, 07/10/2012 - 16:48 | 2603517 Dr. Acula
Dr. Acula's picture

"We may try to imagine the conditions within a world in which all material factors of production are so fully employed that there is no opportunity to employ all men or to employ all men to the extent that they are ready to work. In such a world labor is abundant; an increase in the supply of labor cannot add any increment whatever to the total amount of production... Those seeking employment would be ready to go to work for any wages, however low, even if insufficient for the preservation of their lives. They would be happy to delay for awhile death by starvation.

There is no need to dwell upon the paradoxes of this hypothesis and to discuss the problems of such a world. Our world is different. Labor is more scarce than material factors of production... In our world there is no abundance, but a shortage of manpower, and there are unused material factors of production, i.e. land, mineral deposits, and even plants and equipment... The substitution of more efficient methods of production for less efficient ones does not render labor abundant, provided there are still material factors available whose utilization can increase human well-being. On the contrary, it increases output and thereby the quantity of consumers’ goods. “Labor-saving” devices increase supply. They do not bring about “technological unemployment.”




- Ludwig von Mises, Human Action pp. 136-137

Tue, 07/10/2012 - 17:03 | 2603551 Debugas
Debugas's picture

“Labor-saving” devices increase supply.

only if there is payable demand, otherwise we get manufacturing over-capacity which is idling

Tue, 07/10/2012 - 18:25 | 2603770 Bob
Bob's picture

You see how full of shit that is, right?

Oh, my mistake.  He assumes no shortage of material imputs relative to labor.

Hilarious!  He must be a genius.   

Wait . . . an economist, right?

Wed, 07/11/2012 - 04:23 | 2605149 AnAnonymous
AnAnonymous's picture

Hilarious! He must be a genius.


Being a US citizen is enough. The belief that the environment is no limitation, that work does not consume the environment, that physical inputs to an economy do not matter (as long as you can steal the environment of others, it is valid, US citizen unspoken but actual solution), that one can produce than one consumes etc are all well shared US citizen beliefs among US citizens.

Not a genius, simply a US citizen.

Wed, 07/11/2012 - 13:07 | 2606574 akak
akak's picture

Thank you for your ongoing displays of the hypocritical, denialistic, psychological projecting of your own Chinese Citizenism faults and sins onto others, notably the laughable and nonexistent fantasy of your own creation which you nonsensically label as "US Citizenism".

Wed, 07/11/2012 - 13:10 | 2606584 AnAnonymous
AnAnonymous's picture

Mises is a chinese citizen?

That is quite a piece of news.

Wed, 07/11/2012 - 13:36 | 2606633 akak
akak's picture

No, but Mises was a Chinese Citizenism citizen, whose nature is eternal.

Follow the logic here (which is representative of your own):


US Citizenism = Chinese Citizenism

US Citizenism = fantasy

Chinese Citizenism = blobbing-up reality

AnAnonymous = insanity

Mises = European

European citizens = US Citizens

Therefore, by the associative principle:

Mises = European Citizen = US Citizen = Chinese Citizen = cauliflower



Tue, 07/10/2012 - 16:50 | 2603525 imapopulistnow
imapopulistnow's picture

All of this might be truel  But then again, it might be that 1.3 billion Chinese, working for 1/10th the pay that we demand, could also have something to do with it.

Tue, 07/10/2012 - 17:11 | 2603578 perelmanfan
perelmanfan's picture

What's interesting about these analyses is that they don't address a central question - what do people WANT to do? I personally don't care if farming is a "declining primary activity" in a macroeconomic sense. I LIKE to farm. So I shall.

Tue, 07/10/2012 - 17:21 | 2603581 maximin thrax
maximin thrax's picture

We may one day have a peak employment problem, but that's not our problem now. When you can cut the number of man-hours it takes to build a house in half due to increased efficiency, for example (and we have over the last century), you free up the other half for putting cars in the garage and appliances throughout. When there are as many jobs going overseas as we have, and as many "guest" laborers coming here for work, there's plenty for domestic labor to do.

A wealthy nation should be so because technology and efficiency makes each man hour do more, increasing its value, and by cutting the number of man-hours going into making something, decreasing its cost.

A nation isn't rich because its homes average $200,000 while a poor nation's averages $10,000. It's stupid, because it has let inflation blow away all deflationary advantages gained from increased efficiency. So the worker in the rich nation has been priced out of the world labor market, even with all the advantages in technology and education he may have over his worldwide counterparts. Now his nation is a debtor nation.

Building iPhones in China is the opposite of a solution for efficient labor at home. But for 80 years government has paid people to not produce, putting them on ever-expanding government payrolls, social programs, millitary, unemplyment, SS and Medicare, and even incarceration in order to  continue increasing per capita consumption. That only increases the cost of everything, because productive labor has to shoulder the unproductive, and we get a deceptive system that measures wealth in dollars rather than in product. Now we think expanding money supply will make things unbuilt just appear, and corn not yet sown pop onto the dinner plate.

The solution to being a creditor nation instead of a debtor nation is to place more hands on the plow. We have not figured out yet as a nation how to make that work, but will have to out of necessity.

Tue, 07/10/2012 - 18:12 | 2603749 potlatch
potlatch's picture

you forgot to mention the free ponies that we all get when we demonstrate good old fashioned stick-to-it-ness.

Tue, 07/10/2012 - 18:27 | 2603796 maximin thrax
maximin thrax's picture

Perhaps you'd like to expound on the benifits of all the free stuff we get overseas from printing money because we don't produce it ourselves and we don't have savings from prior production? You think we can run $1.5 Trillion deficits forever to afford a decent living standard for people by the millions who don't contribute to it? You think we can expand credit forever without keeping the working poor at a disadvantage? Or, do you just like living off the sweat of someone else's brow?

Tue, 07/10/2012 - 22:34 | 2604546 Seer
Seer's picture

The US's trajectory to debtor nation status is the result of costs from the Vietnam war, then compounded permanently by losing export capability of oil (US oil production/extraction peaked in 1971; nearly 50% of the US's trade deficit is due to energy imports).

But, really, "debtor," "creditor" etc are nice words covering for "unsustainable" and "sustainable."  W/O all the energy reserves we're pretty much relegated to only the energy available from the sun (and mostly on a day to day basis).  Figuring things on this energy level starts looking a bit troubling (to point at any lifestyle other than hunter-gatherer).

Working harder doesn't get you there.  As a beginning farmer I can tell you that it looks pretty grim for achieving and "excess" (higher energy costs hit two ways: 1) your production costs; 2) less available income from buyers, as they are faced with more of their money going toward energy costs).

Anyone that thinks there are simple (magic) answers is likely not thinking very deeply/comprehensively.

Wed, 07/11/2012 - 04:26 | 2605150 AnAnonymous
AnAnonymous's picture

In a finite environment (so is the planet), when major actors (like US citizen nations) are on unsustainable course, everyone else is on an unsustainable course.

Creditor means not sustainable.

Wed, 07/11/2012 - 02:39 | 2605092 acaciapuffin
acaciapuffin's picture

I think you nailed it right here. By the manipulation of the currency and adding all the social welfare programs to job requirements the US has lost any advantage that it may have over foreign competitors.Inflation isn't called a tax on the poor for nothing.

Tue, 07/10/2012 - 17:22 | 2603601 automato
automato's picture

We reached the Peak 2-axis graph relevance level a long time ago. Virtually any complex analysis today requires 3,4, or 5 axes at a minimum in order to even begin to scratch the surface of clarity. A 2-axis Peak Employment graph is all but meaningless without further axes for wage level (in China, for example, it is sometimes cheaper to pay 10-20 workers to dig a hole than the cost of fuel for a back-hoe!), energy costs, welfare/unemployment availability,etc...

It is foolish or maybe just naive to suggest that Society will allow a growing percentage of working-age people to lay idle for any significant length of time unless they are prepared to provide free food, shelter, drugs, and entertainment either in or outside of a prison. The consequences are Social unrest, War, mass homicides/suicides, the Worst parts of the Bible.

Tue, 07/10/2012 - 18:03 | 2603726 JR
JR's picture

The Keynesians in power don’t want communism; they want serfdom.

Essentially they are saying what the King would say: don’t let the peasants have any money and everything will work smoothly. We won’t have any of those dreams about the future; we’ll take care of the basic needs of the worker peasants.

Keynes was a leveler. The Keynesian-Rothschild idea has always been to keep everybody dependent on government because if the peasants should start saving, it would destroy the elites’ own wealth, they would become a rival of the government. And, as economist Melchior Palyi said, “the Keynesian’s medicine (poison) is inflation.”

Malcolm Bryan, president of the Federal Reserve Bank of Atlanta, said in 1957, “If a [government] policy of active or permissive inflation is to be a fact…we should have the decency to say to the money saver, “Hold still, Little Fish! All we intend to do is to gut you.’”  

The fruits of capitalism, had they been shared with those who cultivated and produced them, would have resulted by now into more leisure time, shorter working hours and higher standards of living for all Americans.

Instead, those fruits have been consumed by cronyism and corruption, a national welfare redistribution industry and the ongoing destructive money printing policies of the Federal Reserve banking cartel which are intended to destroy traditional savings.

Keynes, in his ignorance, postulated that [since there is no special virtue in pre-existing [high] rate of interest…[there can be no] evil [in bringing it down by government intervention].

So much for throwing under the bus the central role that the price system played in the American economy.

Henry Hazlitt, the great commonsense economist, wrote: “One of the worst results of the retention of Keynesian myths is that it not only promotes greater and greater inflation, but that it systematically diverts attention from the real causes of our unemployment…”

Hazlitt wrote in 1978: “[G]overnment has nothing to give without first taking it away from somebody else—or from themselves.  Increased handouts to selected groups mean merely increased taxes, or increased deficits and increased inflation.  And inflation, in the end, misdirects and disorganizes production.”

Tue, 07/10/2012 - 20:43 | 2604204 Seer
Seer's picture

And when we're out of affordable resources (for our present paradigm), then what?  Will any of this fucking matter?

Sorry, but as long as ANY system is predicated on perpetual growth it WILL run us over the resource cliff.  START WITH THE PREMISE!

Wed, 07/11/2012 - 04:27 | 2605151 AnAnonymous
AnAnonymous's picture



US citizens can not go against their own creed.

Others have to pay, to support the costs to entitle them to a cosy life built on fake beliefs.

Tue, 07/10/2012 - 23:09 | 2604668 Liberty2012
Liberty2012's picture

Excellent Thank you

Tue, 07/10/2012 - 18:10 | 2603741 potlatch
potlatch's picture

moonbase = lots of work.

Tue, 07/10/2012 - 18:32 | 2603815 Stuck on Zero
Stuck on Zero's picture

Peak employment.  Cute buzzword.  Mostly Malthusian technocrap.  The only things that are peaking are government and stupidity.  There is no unemployment in a state of equilibrium in a free market.


Tue, 07/10/2012 - 18:44 | 2603878 Seer
Seer's picture

"Mostly Malthusian technocrap."

With a simple dismissal the premise is COMPLETELY swept away, and from there on one can pretty much make up any shit...

"state of equilibrium"

LOL!  NOTHING exists as such.  EVERYTHING is in TRANSITION (increasing or decreasing).  Further, as populations continue to increase (OK, couch it in "consumption continues to INCREASE") things can NOT be equilibrium.

Let's duke this one out, OK?  Rather than flailing away at "terms" let's discuss ACTUAL FACTS.

Tue, 07/10/2012 - 18:51 | 2603900 MeelionDollerBogus
MeelionDollerBogus's picture

I think maybe you don't understand Malthus.

The only way Malthus can be wrong is to live in 1 of 2 universes:

Universe #1 - infinite growth and energy - nothing is anything but free, in the long-run, and every species can expand because all resources are forever.

We do NOT live in this universe.

Universe #2 - infinite efficency, whereby we can extract more utility from ever smaller portions of matter and time no matter what the scale for there is no limit to how much more efficient all life & machines will be, or information processing be it in the mind, in pseudo-matter or computers of some sort.

We do NOT live in that universe - quantum physics is clear enough to show there are finite limits to the smallest scales after which one can't clearly even FIND a measured space or PLACE a specific-sized object, CERTAINLY not able to use such a thing "efficiently".

That leaves only one conclusion: Malthus is right. There's no validity in demanding a specific date or population limit for resources to be tapped out to demand Malthus be right. There's on validity that our finite universe, finite scales of size and population growth MUST become balanced meaning growth MUST END.

Tue, 07/10/2012 - 19:01 | 2603938 Seer
Seer's picture

Thank you for stepping up to bat!  Logic is just wonderful, isn't it?

"There's on validity that our finite universe, finite scales of size and population growth MUST become balanced meaning growth MUST END."


"There's on validity that our finite universe, finite scales of size and population growth MUST become balanced meaning growth WILL END."

But perhaps the unicorns will show up? Space Aliens deliver REAL hopium?  Not that it wouldn't be nice for these things to happen, but these are hardly bets that I'd put all my money/life on.

Tue, 07/10/2012 - 19:17 | 2603986 Citxmech
Citxmech's picture

One huge problem we face is that the folks in charge seem to believe we live in Universe 2.

Unfortunately, economists and politicians never seem to confront the possibility that Malthus' prediction is only being held at bay by reliance on a technology base whose returns on investment are diminishing.

Tue, 07/10/2012 - 19:32 | 2604041 Seer
Seer's picture

"One huge problem we face is that the folks in charge seem to believe we live in Universe 2."

It's the System, it's how folks have been programmed.  I'm sure that some know the truth, but, sadly, many are as stupid about this as one can be.  Like I said, if you just skip past the premise any shit can be shown to fly...

The Dr. Albert Bartlett video has some great comments on "leaders" being totally ignorant.  I think it was Undersecretary of the State(?) Jack Kemp(?) who flatly stated that humans have "NO AFFECT" on the planet.  Granted, I understand that it's hard to make accurate measurements and all, but it is IMPOSSIBLE to NOT have an affect on something that one touches/consumes etc...

Tue, 07/10/2012 - 19:56 | 2604102 Citxmech
Citxmech's picture

The whole concept of "progress" as an "upward" tendency toward an increasingly beneficial and complex society is thrown about like it's not only a given feature of the human condition - but a God-given right.

Tue, 07/10/2012 - 20:30 | 2604172 Seer
Seer's picture

Heck, the very word "progress" is up for question!  Is it really progress if it isn't permanent?  Take all the "progress" in the medical field, in suppressing various viri; then realize that we're creating super bugs!  And don't anyone dare bring up the "progress" from the "Green Revolution!" (it'll end up being the greatest catastrophe ever for mankind)

"Entropy" isn't something you escape from, something you progress from.  "Progress" is only a temporary buffer.

Tue, 07/10/2012 - 22:57 | 2604635 Citxmech
Citxmech's picture

There ain't no free lunches are there?

Tue, 07/10/2012 - 20:42 | 2604199 mjk0259
mjk0259's picture

If we develop cheap space flight before the collapse, resources are infinite. Doesn't look like US will but maybe China.

Tue, 07/10/2012 - 21:14 | 2604289 Seer
Seer's picture

OK, let's try this again...  One thing or the other can be plentiful, energy OR "resources" (separating energy out even though it itself is a "resource"), but not both.  Having one's cake, but not being able to eat it...

Might be "cheap" to build a rocket/container, but energy isn't so cheap, and it's not looking like it's going to be getting any cheaper any time soon.

People need to understand the difficulties in getting something off the planet and out in to space.  Here's a primer:

So, how much energy *does* it take to fire a pound of bacon into the Asteroid Belt?

(yes, it's really just insane bantering, but it IS funny, and it also does bring up same meaningful stuff)

Wed, 07/11/2012 - 04:33 | 2605155 AnAnonymous
AnAnonymous's picture

Malthus is right, wrong about what?

Sticking to Malthus'writings, it is hard to say that the quasi certain future as delivered by US citizens is going to be checked.

Malthus lived in a world when the mean consumption per capita was not dispersed as it is now.

Malthus lived in a world of standardized needs. He failed to factor in the US citizen revolution and the way it would shoot the disparicy between consumption per capita.

Wed, 07/11/2012 - 12:58 | 2606543 akak
akak's picture

Sticking to Maothus' writings, it is hard to say that the quasi certain blobbing-up future as delivered by Chinese Citizenism citizens is going to be checked.

Maothus lived in a mean world when the Chinese consumption of dogs, cats, bear gall bladders and tiger penises was not as perverse as it is now.

Maothus lived in world of standardized means of statist force: "All power flows from the barrel of a gun".  He failed to factor in the Chinese Citizenism penchant for copycatism and blobbing-uppityness and the way it would shoot the disparicisticalzationalism  between Chiense consumption of dogs and cats per capita vs. the rate of roadside shitting.

Wed, 07/11/2012 - 13:12 | 2606589 AnAnonymous
AnAnonymous's picture

And US citizens want to stand their ground with their story of inventing...

Wed, 07/11/2012 - 13:21 | 2606636 TheFourthStooge-ing
TheFourthStooge-ing's picture


And US citizens want to stand their ground with their story of inventing...

More claptrap and hogway strawsman from AnAnonymous, typical of his eternal nature of tangential blobbing up and offuscation.

Wed, 07/11/2012 - 13:21 | 2606644 akak
akak's picture

And Chinese Citizenism citizens want to shit on their ground (particularly on their roadsides).

Tue, 07/10/2012 - 18:48 | 2603893 Seer
Seer's picture

People now starting to see what "economies of scale in reverse" means?

China is now starting to drop off its hyper-growth level.  The last of the big spenders out there.  There's no longer enough wealth and or credit to prop up over-production.

The efficiencies gained from high manufacturing volume is going to disappear, thus increasing costs, which in turn have companies cutting costs (usually in the form of head count), which places further downward pressure on all their suppliers (and their head counts).

Tue, 07/10/2012 - 19:08 | 2603961 Don Keot
Don Keot's picture

Like the man said "sometime it will be cheaper to hire 10 people to dig a hole than the expense of using a backhoe"

Tue, 07/10/2012 - 19:23 | 2604010 Seer
Seer's picture

Did you have to go and bring up a backhoe?  I've got a need for lots of backhoe work, but I just don't have the money :-(

One of the reasons why I'm running my tractor hard, do as much work as I can before diesel becomes unaffordable.  I'll really miss the tractor...

Tue, 07/10/2012 - 21:42 | 2604379 Tom Green Swedish
Tom Green Swedish's picture

Peak Communism


Here are the 10 tenets of Communism and my analysis of the features we have in the USA.

Central banking system - Check
Government controlled education - Half Check
Government controlled labor - Half Check
Government ownership of transportation and communication vehicles - Half Check
Government ownership of agricultural means and factories - Half Check
Total abolition of private property - Half Check
Property rights confiscation - Half Check
Heavy income tax on everyone - check
Elimination of rights of inheritance - Half Check
Regional planning - Uncheck

Tue, 07/10/2012 - 21:57 | 2604436 dolph9
dolph9's picture

Just keep on buying those iPads, sheeple.  Endless "entertainment" for you and plentiful "jobs" for a few liberals in northern California and a million Chinese peasants.

Tue, 07/10/2012 - 22:18 | 2604496 Liberty2012
Liberty2012's picture

Tecnological advance means there is less required or essential work. That's a unique problem in history.

Fiat leveraged currency created an illusory rat race that masked that phenomenon.

How many man hours are required tor the essentials? What would a new average work week be? 20 hours ? 30 hours ? If our work wasn't being stolen, how would we spend our time instead?

We will all need to help each other as much as we can to make those two transitions happen as smoothly as possible. Otherwise, we will wind up being Atlantis.

Tue, 07/10/2012 - 22:44 | 2604580 Seer
Seer's picture

"If our work wasn't being stolen, how would we spend our time instead?"

Quit fucking pushing this nonsense!  No one fucking STOLE ANYTHING!

Most of the supposed "exported" jobs were taken up by robots (automation- look it up!).  And those that were picked up by humans elsewhere occurred because some International company, whose shareholders said it was OK (and among these many folks' pension $$), saw greater profits elsewhere- that's CAPITALISM!

Perhaps heathcare costs are a big reason why?  We can no longer pollute the hell out of this country w/o it affecting costs elsewhere.  China is able to smash any dissent that would get in the way of protecting their environment (these costs will appear down the road in the form of increasing healthcare costs).

Tue, 07/10/2012 - 23:21 | 2604705 Liberty2012
Liberty2012's picture

I'm referring to work stolen by a dishonest payment and tax system, not exported jobs.

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