●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Austerity = poverty and leads to civil disorder.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
Today, I saw these headlines:
“Waste Management will trim some management”
“Telenor to cut 2000 jobs in India”
“Alcatel-Lucent Plans to Cut 5000 Jobs”
“Mangano cuts 200 jobs”
“Morgan Stanley plans further staff cuts”
“Fairfax to shed 1900 staff”
“China’s ZTE May Cut Employees”
“HP confirms layoffs; Cutting 500 jobs”
If you think this is symptomatic of a world-wide recession, you’re right – but only somewhat. It’s also symptomatic of something else. Consider these articles:
JCPenney to get rid of check-out counters and clerks, use self check-out machines and RFID chips
Posted: 07/19/2012, By: Ann Geyser, newsnet5.com
TAMPA -CEO Ron Johnson said JC Penney it will remove check-out counters in stores and replace them with a system that won’t require clerks. Shoppers will be able to use self check-out machines, similar to those found in grocery stores. Johnson told “Fortune” magazine he hopes to phase out check-out counters by 2014.
Translation: “We don’t need people to do what computerized machines can do.”
A Day Job Waiting for a Kill Shot a World Away
Heather Ainsworth for The New York Times
HANCOCK FIELD AIR NATIONAL GUARD BASE, N.Y. — From his computer console here in the Syracuse suburbs, Col. D. Scott Brenton remotely flies a Reaper drone that beams back hundreds of hours of live video of insurgents, his intended targets.
By 2015, the Pentagon projects that the Air Force will need more than 2,000 drone pilots for combat air patrols operating 24 hours a day worldwide. Until this year, drone pilots went through traditional flight training before learning how to operate Predators, Reapers and unarmed Global Hawks. Now the pilots are on a fast track and spend only 40 hours in a basic Cessna-type plane before starting their drone training.
True, drones cannot engage in air-to-air combat, but Colonel Brenton said that “the amount of time I’ve engaged the enemy in air-to-ground combat has been significant” in both Reapers and F-16s.
Translation: As computerized equipment improves, people need less training time. Though today, drones cannot engage in air-to-air combat, tomorrow they will. Every day, computerized machined do the work people formerly did.
At the start of the Industrial Revolution, it was feared machines would cause unemployment by doing “people” jobs. That didn’t happen. The machines actually helped create jobs, not just because machines needed to be guided by human hands, but by increasing the need for “back office” hands. Slowly, machines forced people from blue collar to white collar work.
Today, we are in the Computer Revolution, and the rules have changed. Not only can machines do the blue collar work; they can do the white collar work; they can be creative; they can answer questions as Watson did.
In the May 16th post, “Coming soon to a world near you: Economics for cyborgs. Humans as a transition species” we spoke of humans being a transition species. Eventually, computerized machines will be able to do almost every physical and mental task humans now can do.
The immediate question is: What will happen during the transition?
As computers become smarter, the U.S. standard 8-hour day, with 2-3 week vacation plus various holiday, no longer is sustainable. The nation neither needs nor wants that much human labor.
Business doesn’t want it, because human labor usually is less efficient and more costly than machine labor. People don’t want it, because we wish to pursue our own personal interests rather than an employer’s interests.
The trend takes us on two divergent paths:
1. Unintentional massive unemployment, with growing starvation and homelessness
2. Shorter work day/year.
The first, unintentional unemployment, leads to poverty. The primary purpose of employment is to obtain dollars with which to pay for goods and services, many of which are necessary for, or at least contribute to, a happier life.
The second, shorter work day, has begun in some nations. Eurofound published a report showing the “Average collectively agreed normal weekly hours, 2010”. Some examples:
Greece, Hungary, Poland: 40 hours; Ireland: 39; Spain: 38.6; Italy: 38; Germany: 37.7; UK: 37.5; Denmark: 37; France: 35.6
Clearly, there is nothing sacred about the 40-hour week, or any workweek length, but this leads to the problem of pay. Will companies pay less for a less than 40 hours of work?
If workers now receiving, for instance, $20 per hour for a 40 hour week ($800 per week), and later go to, for instance, 30 hours a week, will they still receive $20 per hour — a 25% pay reduction to $600 per week? Why not?
The same question appears if we visualize annual job sharing, in which, for example, one person works January – June and a second person works July – December. No matter how hours, days or months are split, it is hard to imagine why employment matching population growth will not lead to reduced per-person salaries.
Although worker productivity continues to rise, workers themselves are not more valuable to employers. The rise in productivity is due to the computerized machines “digging holes faster,” not because people have learned to run the machines faster. Human work is becoming less necessary.
So, the total available work must be spread to more humans. By federal law, there could be shorter days (8 hours), shorter weeks (down from 5 days) or shorter years (fewer weeks of work).
This leaves the question: How do we maintain per-person income in the face of reduced need for human labor? I suggest the answer lies with our Monetarily Sovereign government.
One approach would be for the government to provide a “citizen salary” for every man, woman and child in America. In essence, the government could be an “employer” that pays all Americans a salary for life — a extension of Social Security — sufficient to provide a moderate quality of life.
Other approaches would be for the federal government to provide benefits people now must pay for:
*Free Medicare for all
*Reduced federal taxes
*Reduced sales and other local taxes (made possible by federal subsidies to local governments)
*100% free college education
*Additional salary for people who wish to work in areas most likely to improve the quality of life for Americans: Research & Development in Medicine, Biology, Physics, etc.
This proposal lacks details, and many devils lurk in those details, but we must face the fact that human labor will be less necessary in the future, while human needs will continue. There simply will not be sufficient job-related pay to spread among a growing population. Unemployment will be a growing problem, which will cause more frequent and more severe recessions, in turn causing more unemployment.
Yes, we can attempt the Chinese solution to population growth, but that seems to cause hardship, when our goal should be the improvement of our lives.
The new paradigm will be disemployment. We must recognize this inevitability and begin to formulate plans to deal with it. Else it will reduce our lives to misery.
If not this, what? If not now, when?
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports