Confirmation, to the extent that the effect of technology is largely as talked about in this endeavor. Contradiction, to the extent that these authors ignore the truth of this endeavor's subtitle. Nocera dances around it with remarks from Robert Gordon and Tyler Cowen.
At its peak, Kodak employed 140,000 people; Instagram had only 13 employees when it was bought by Facebook (for $1 billion!) in 2012.
And, one might add, Kodak made money for most of its existence. Instagram, not so much.
Then [Cowen] chuckled. He had recently been in a meeting with someone, explaining his views. "So what you're saying," the man concluded, "is that the pessimists are right. But it's going to be much better than they think."
The .1% are just itching for The Last Depression. Stasis is good for the moolah hoarders. A piece in progress for this endeavor's companion discusses the notion that we're near, or in, a period of technological stasis. If so, a digital takeover may be overblown:
"Rapid and accelerating digitization is likely to bring economic rather than environmental disruption, stemming from the fact that as computers get more powerful, companies have less need for some kinds of workers."
With the likelihood that Moore's Law has been repealed, further encroachment is also less likely. Further miniaturization is problematic. A 5S on your wrist isn't in the future. Without a growing middle class, Apple's not going to shift ever more 5S each quarter.
Now, for some contradiction.
Start with the notion that the US should become more like China, and vice-versa. This is an age old, mostly right wing, tune. It gleefully ignores the twin problems of diminishing returns to capital and the giant pool of money that already exists. US corporations are non-investing like there's no tomorrow (well, may be there isn't).
The root problem, Mr. Roach says repeatedly, is America's inability to save enough at home to finance its growth -- a situation that is hardly China's fault. And a day of reckoning is coming. If China devotes more of its surplus savings to funding a decent pension plan or health care for its citizens, it will spend that much less at Treasury auctions.
Two contrafactuals here: US capitalists can't even invest, in physical plant and equipment, what they've already accumulated; and Chinese government has clearly demonstrated that neither pensions nor health care is part of the plan. The Great Recession came about, if one ruminates for a nonce, just because US corporate interests preferred fiduciary "investment" over physical investment; the creation of all those high yield mortgages came into existence because of the demand for them. If US capitalists were interested in macroeconomic growth (they aren't and never have been, but we'll skip that indiscretion), they would be building it out. The "service" economy, of course, has little need for much else besides cube farms.
Finally, the self-financed investment myth gets another go round. More pundits, including your humble servant, have been making noise about the bait and switch of 401(K). It ain't, and wasn't designed to be, a replacement for pooled pensions. Yet the notion continues to be pushed by those who've got a dog in the fight: our downtrodden financial services sector.
So, we're told that if one measures a 5 year return to 2012, one is hosed, but if measured to 2013, one is rich. D'oh!!! Big fucking deal.
Why did the five-year return change so much in just one year? First and foremost, on Dec. 31, 2013, the entire ghastly year of 2008 was effectively wiped off the books, from the standpoint of the five-year return. That tally started near a market low in 2009, and the results of 2013 became part of the record, too. And 2013 was spectacular, with a gain of 29.6 percent for the S. & P. 500 without dividends, and 32.4 percent when you include them.
Sure, if you dumped a pile of money into ETFs in March, 2009; believed the stimulus would work; believed that a successor would be done; and believed the QEs would work. If you did that, which is to say, buy and hold for that *specific* period of time, you're now sitting pretty. But that's an event specific result, as they say: "past performance is no guarantee of future results". The Right Wingnuts live in this fantasy world, where the US economy of the 19th century was perfection. Long term results back then: small booms and large busts, about every decade. The only reason we made it to the 20th century: pillaging of a huge natural resource endowment unknown in 1800, and a scientific explosion of discovery. Neither such will occur in your lifetime.
In order to count on a long-term trend like this, you may need to stay in the markets for 20 years or more -- maybe for a lifetime, or even several lifetimes. That may not be easy to accept.
Well, more time meaning significantly more return depends on technological advance and resource abundance. And you still have to be lucky enough to have been born such that your retirement years coincide with one of those booms. It also helps if you don't outlive the boom.
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