The theme today is that of the vise (with a "s" not a "c"; we'll save the latter for later): our future, given our present approach, is inevitably dystopian. The closing jaws of the vise: to left, population growth out of control; to the right, diminution of necessary resources. Turning the screw arm of the vise: capitalists deploying automation robots. One might add, in the context of "post industrial" West, the disappearance of production of necessities. How much food is a CDO worth? Likely, 0. Have a pleasant starvation.
As mentioned in previous essays, there are days when I think that the NYT folks read here, then go and do some confirmatory reporting, and end up with an anecdote laden article. Sometimes depressing. It only gets worse when it seems they're reading my thoughts.
For the last few weeks, I've been looking around for some data, not yet found. This data is the number of labour hours per widget (auto, washing machine, etc.) over the last 50 or 60 years. The Right Wingnuts *still* blame our Great Recession on the evil (unionized) workers of America. Not that even much of American industry is unionized. No matter. The problem has to be the victims. The point behind this search is to confirm (more likely than deny) that ever more capital is replacing labour, and that the resultant reduction in income (median income is well documented to be at best stagnant over the last 30 years) of the masses causes failing demand for output. Capitalists respond by replacing labour with yet more machines, further reducing income of the masses. Rinse, repeat.
As any Good Mother has said to a bratty child: "what would the world be like if everyone behaved like you?". The conflict between micro- and macro-economists has been going on since the beginning of the profession. With the introduction of ever more abstruse algebra and computerized statistical methods, the micro-economists have succeeded in re-defining macro- to be just the sum of the micro-. If all producers impoverish their workers (generally through disemployment, but also direct income reduction), the early adopters gain a temporary advantage, but soon aggregate demand disappears. Productivity is kind of like the Ogallala Aquifer: if all those who tap it treat it as their exclusive well, the water runs dry sooner than if all users treat the resource as shared. Bad behaviour triumphs, and all fail. Avoiding failure requires community action. Or, how about community organization?
So, today the NYT prints a story on robots. They don't have the data I was looking for, but does have anecdotes which make the case: labour hours per output units (autos, washing machines, etc.) declines catastrophically once capitalists discover robots. The tenet of (neo-)classical economics is that labour earns at the level of its marginal product. This is supposed to mean the more productive skills earn more. This is also supposed to mean that capital improvement productivity is *shared* with labour; not exclusively by the capitalist. "Free enterprise", in Adam Smith's construction, meant that no capitalist could unilaterally affect wages. We've seen that this is a crock in the real world.
Where affairs get even more tenuous is that the Chinese capital model would look identical to that of a 19th century New England mill owner: lots of hands from the shuttered farms keeping up with minimalist mechanization. This is the ideal for the Right Winger: the many supporting the few, the workers seldom earned enough to actually to buy their own production. It worked in the 19th century just because there was an entire continent to fill up with humans who bred like rabbits. We aren't in that sort of Kansas anymore. Not to mention having markets in Europe to sop up surplus production.
The story begins with two factories owned by a Dutch company. One in The Netherlands, the other in China. The domestic one is virtually without workers and almost entirely robots. The Chinese is the 19th century ex-farmer model of modest machinery and lots of hands.
Factories like the one here in the Netherlands are a striking counterpoint to those used by Apple and other consumer electronics giants, which employ hundreds of thousands of low-skilled workers.
Since the company operates on the micro-principle that any way to reduce cost (its own, and hopefully no others follow suit) is a Good Thing, the goal is to make more money shipping product. This only works if no other companies do the same. Yeah, right.
Even as Foxconn, Apple's iPhone manufacturer, continues to build new plants and hire thousands of additional workers to make smartphones, it plans to install more than a million robots within a few years to supplement its work force in China.
This may work for Apple, in the near term, but makes China's problem worse. Many/most of the Foxconn (and others) workers were brought in from the farms, lured by promises of a "better life". Urban poverty is arguably worse than rural. Neither is anything to envy.
But its chairman, Terry Gou, has publicly endorsed a growing use of robots. Speaking of his more than one million employees worldwide, he said in January, according to the official Xinhua news agency: "As human beings are also animals, to manage one million animals gives me a headache."
Nice to know that Chinese capitalists are up on their animal husbandry. American capitalists are no less hypocrites.
Take the cavernous solar-panel factory run by Flextronics in Milpitas, south of San Francisco. A large banner proudly proclaims "Bringing Jobs & Manufacturing Back to California!" (Right now China makes a large share of the solar panels used in this country and is automating its own industry.)
Yet in the state-of-the-art plant, where the assembly line runs 24 hours a day, seven days a week, there are robots everywhere and few human workers.
The argument that robot manufacturing makes the transition a net Good Thing is specious. Clearly, no capitalist will buy robots whose cost approaches that of the replaced workers. At the same time, the earnings of robot making workers aren't going to approach that of the workers replaced by the robots, for the same reason. While it is remotely possible that aggregate income of the robot making workers can approach that of the (by count, far more) replaced workers, the median simply can't. There'll be income/wealth concentration, and falling aggregate demand.
Which belies the Left Wing meme: we need better education to compete and keep American workers' incomes high. The nonsense of that should now be obvious. Where, in the post WWII two decades, we had rapidly rising blue-collar families reaching previously unknown middle-class status, this was largely due to a temporary diminishing of capitalists' aggression, which in turn was the result of a true "we're all in this together" ethos persisting from the war. As time moved on, attachment to the ethos faded, and by Reagan had disappeared. Capitalists were in it for themselves. And any blue-collar folks dumb enough to believe their lies. Better education for the millions, while the new robot meme creates jobs in the thousands (if that many), can't add up. The value of education diminishes as the demand for higher skills fades, or never exists. The Indian usurption of IT is fueled by very low cost education in IT in India, and more than a little bit of foreign exchange chicanery.
From here:
I estimate that my entire education in India, including a master's in computer science, cost me less than US$ 100 in today's terms.
While a single anecdote, it exemplifies how it is that Indians can work for peanuts: they spent so little on their education that work decisions become simplified, earn a pittance in the fields with cow dung or earn a pittance in an air conditioned office. Not such a difficult decision. (The Times also has a piece on the true impact of air conditioning. One never really knows where Mother Nature will spring a bear trap.)
As capitalists remove labour from the equation, they remove demand for their output from the equation. It all becomes a race to poverty. This is where the micro-economists fail: macro-economics isn't just aggregated micro-. When all capitalists behave like brats, soon they and the rest of us suffer. Distribution of output is of more importance in a capitalist/industrialized world. The Right Wingnuts are just too stupid. Then again, unlike Rand, they believe in God, Senator Dodd (the first one), and keeping old Castro (the first one) down.
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