Amazon's 75,000 New Robots Are Your Answer To No Wage Inflation

Authored by John Mauldin via,

Like millions of other people, I am a fan and a user of Amazon.

They do make buying things convenient, especially little things that you might have to go to art specialty stores to find. I’m a huge user of the Kindle app, too.

I will admit that I don’t quite understand the Amazon business model of growth over profits. But I have noticed that most of the profits Amazon actually makes are coming from their non-commercial side—stuff like cloud services.

Be that as it may, there is a semi-dark side to Amazon. They are slowly but surely eating retail jobs.

Amazon Is Not the Only One to Be Blamed

Now, to be fair, Amazon represents only a small portion of US retail sales, but it accounts for an outsized portion of the growth in retail sales.

And, again to be fair, Amazon does not do even a majority of online sales, since other online retailers are just as aggressively pushing their own products.

To be even more fair, a great deal of the problem in American retail jobs and businesses is that we simply have too many retail stores.

Reasonable analysis that I’ve read suggests that we have anywhere from 10 to 15% more retail stores than we actually need.

Now, that’s good for competition and choice, but it is just one more reason why there is going to be a consolidation in retail companies and further losses of retail jobs.

What’s That Going to Do for the Wage-Inflation Issue?

As we head into 2018, there are a few dark clouds here and there, but I am mostly optimistic. I do think the primary risk in 2018 will be major central bank policy errors.

I will probably repeat these figures again this weekend, but between the $450 billion that the Fed intends to pull out of its balance sheet and the $500 billion by which the ECB is going to reduce its QE, there will be almost $1 trillion going into the market.

Since the Fed, and especially Ben Bernanke, took credit for the rise in asset prices induced by its QE, why this Fed thinks that quantitative tightening (QT) will have no effect at all on the market is quite beyond me.

It’s one thing to raise rates, which they should have done years ago, and it’s another thing altogether to raise rates and fire up a QT program at the same time.

I think they will be doing this at precisely the wrong time and for the wrong reasons.

In the meantime, let’s look at one of the technological forces, Amazon, and the tidal wave of online sales that is putting pressure on the retail sales market. You wonder why there has been no wage inflation when, theoretically, unemployment is so low?

Here’s one of a number of answers: Amazon has hired approximately 75,000 robots just this year.

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ElTerco Five Star Mon, 12/11/2017 - 17:54 Permalink

Right -- skyrocketing real estate prices are the underlying structural change in the economy that has screwed everything up, both for individuals and business models. The sad thing is that there is still plenty of "empty" land in the United States, meaning the only real mechanism/cause for real estate prices to increase is Fed excess printing (and "recent" changes in the tax structure to some extent).

In reply to by Five Star

eforce Automatic Choke Mon, 12/11/2017 - 18:21 Permalink

"To complete the ruin of the industry of the goyim we shall bring to the assistance of speculation the luxury which we have developed among the goyim, that greedy demand for luxury which is swallowing up everything. We shall raise the rate of wages which, however, will not bring any advantage to the workers, for, at the same time, we shall produce a rise in prices of the first necessaries of life, alleging that it arises from the decline of agriculture and cattle-breeding: we shall further undermine artfully and deeply sources of production, by accustoming the workers to anarchy and to drunkenness and side by side therewith taking all measure to extirpate from the face of the earth all the educated forces of the goyim."-The Protocols.

In reply to by Automatic Choke

Handful of Dust Boris Alatovkrap Mon, 12/11/2017 - 19:02 Permalink

My neighbor's son has worked both for Amazon and for the USPS handling hundreds, thousands, millions of packages each day.He said there is a BIG difference:If you don't work fast at the Amazon facility, you get canned.If you don't work fast at USPS, no sweat since they can't fire you. In fact, he said if you work too fast at the USPS they threaten you for making the lazy ones look bad.Private Sector vs. Gubmint Sector

In reply to by Boris Alatovkrap

lasvegaspersona Temporalist Mon, 12/11/2017 - 18:05 Permalink

I would love to be able to go to a speciality store and buy what I want when I want it.I have given up. Unless what you want is a commodity as simple as toilet paper or rice (or a hammer if we are talking about Home Depot) you will only find it online. Want a bushing for that guitar tuner? Want a real book or CD? You'll have to order it from the Sears catalog (that's a joke for those who were born after there was a Walmart).In a way we have come full circle.

In reply to by Temporalist

wisehiney Mon, 12/11/2017 - 17:03 Permalink

Domo arigato, Mr. Roboto, domo...domoDomo arigato, Mr. Roboto, domo...domoDomo arigato, Mr. Roboto,Domo arigato, Mr. Roboto,Domo arigato, Mr. Roboto,Domo arigato, Mr. Roboto,Thank you very much, Mr. RobotoFor doing the jobs that nobody wants toAnd thank you very much, Mr. RobotoFor helping me escape just when I needed toThank you, thank you, thank youI want to thank you, please, thank youThe problem's plain to see:Too much technologyMachines to save our lives.Machines dehumanize. Thanks Styx

jmack Mon, 12/11/2017 - 17:04 Permalink

They may as well put in on site power generation as well because when unemployment gets up to 30% , someone is gonna get bored enough, or drunk enough to start knocking down power transmission lines.

JustPastPeacefield Mon, 12/11/2017 - 17:13 Permalink

75,000 Americans who didn't get a job, so ... by all means, open up the border a little wider. We need more Third World, no-skill, low IQ welfare suckers in the country. And if we get lucky, a few of them will bomb our subways. 

falak pema Mon, 12/11/2017 - 17:14 Permalink

Bitcoins and Amazon AI are deflationist FOR SURE; AND THE DESTROYS THE $ EMPIRE BUILT ON DEBT that needs megainflation to blow debt away.And that liberates the rest of the world with less debt and moar growth.

moonmac Mon, 12/11/2017 - 17:25 Permalink

The beauty is someone will have to fix all those robots for $25/hr while traders on Wall Street make $25K an hour gambling on markets rigged to only win.

silverer Mon, 12/11/2017 - 17:26 Permalink

I only use Amazon as a price reference now. I blew them off after they sneaked me onto Amazon Prime. I took a screenshot of each page through checkout, and nowhere was the statement "You agree you are signing up for a trial of Amazon Prime." To top it off, I had just cancelled Prime two weeks before after having it a year because I came to the conclusion it wasn't worth it.

Deep Snorkeler Mon, 12/11/2017 - 17:38 Permalink

An Over-Populated Planet Fully Robotized1. humans without purpose: no mission, no value2. people defined by depth of lethargy3. eating, consuming, wasting4. obese, mobility scooter zombies speeding to nowhere5. a public education system extinct6. sex robots for every whim7. thoughtlessness, alcohol and drugs

CRM114 Mon, 12/11/2017 - 17:40 Permalink

The root of the problem is that corporations have no morals, but are legally treated the same as humans, who largely do.This would not be a problem if the people running corporations had morals, but the corporate promotion system favors sociopaths, who are solely focused on profit.Party politicians value loyalty above all else, so the party system also tends to favor sociopaths. Party politics also tends to reward the party that can spend most on publicityThus, the party politicians write the laws to favor corporations, in return for financial backing.This can be fixed any number of ways.It would be best if people could join the dots for themselves, but the MSM consists of corporations, and the politicians control education. And whilst I am not religious, I have to agree that the love of money is the root of all evil.