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June 15, 2015
What's Causing the Growing Income Gap That's Gradually Undermining Our Democracy & Economy? And What Can We Do About It
By Richard Clark
Given the advancing power of ever more sophisticated robots & computer apps, the only way we can even BEGIN to keep all of us busy these days, for so many hours of our lives, is if ever more of our work-hours are devoted to the production, marketing and sale of ever more in the way of superfluous stuff. Problem is, it's the production, marketing and sale of this stuff that produces the CO2 etc. that's poisoning the planet.
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What will happen to most workers as automation and robotics find ever more applications in ever more areas of work? And need we be apprehensive about this? Not according to The American Prospect's Robert Kuttner, who explains why we actually need notfear the continuing advance of robots and ever-more sophisticated computer applications. He begins by pointing to the 1930s, when there was the first 'automation' scare, and many economists, even then, blamed high unemployment on machines taking human jobs. At that time, John Maynard Keynes explained that the problem was NOT new, labor-saving machines -- rather, it was simply the ever more depressed purchasing power of the majority of people-- an issue that could and should be addressed, he said, without getting rid of labor-saving machines -- just increase the purchasing power of the general population.
How could that be accomplished today? Answer: By beginning to break the all-to-rigid correlation between the amount and value of private-sector work done by an individual, and the amount of basic resources available to that individual. In other words, there needs to be ways alternative to the private sector, to provide everyone with housing and food staples, healthcare and quality education. And the massive public sector investments of the 1930s and 40s, proved the feasibility of this simple goal. New, labor-saving, automated technologies continued to be invented, produced, and used, but ALSO produced (as many younger people today may not know) was ever more in the way of public works jobs that benefited and improved the commons. The Civilian Conservation Corps was an early example. Hundreds of parks were created by millions of workers, and were steadily improved. Three billion trees were planted. Hiking trails were created, picnic tables and grills were built in those many hundreds of parks, as were a good many public swimming pools and tennis courts.
Meanwhile, the Works Progress Administration also put to work millions of unemployed people (mostly unskilled men) who constructed public buildings and roads. In a smaller but more famous project, the Federal Project Number One, the WPA employed musicians, artists, writers, actors and directors, many working on media and public literacy projects.
Almost every community in the United States had a new park, bridge or school constructed by this agency. The WPA's initial appropriation in 1935 was for almost $5 billion (about 7% of the 1935 GDP), and in total it spent $13.4 billion. At its peak in 1938, it provided salaried jobs for three million unemployed men and women -- as well as youth, in a separate division, the National Youth Administration. Between 1935 and 1943, the WPA provided a total of almost eight million jobs.
Also very helpful in reducing unemployment in the mid-1940s (to virtually zero), was of course all the government-ordered production of -- quite sadly -- the weaponry for WWII. Enormous numbers of new jobs (primarily for women and anyone else not thought to be fit for war) were created this way, as most people know. And by this means we had way more than enough consumer demand (by way of all that new paid work) to buy everything that was for sale. So, if by some miracle Hitler had been quickly assassinated -- let's imagine this for a moment, WWII could conceivably have been avoided. And if our government, by way of yet another miracle, had then been able to order factories to produce, instead of the implements of war, plenty in the way of manufactured housing, public transportation, new and rebuilt infrastructure, and modernized/beautified cities, and could also have, say, doubled the median wage, then there would have been more than enough money in the pockets of worker/consumers to buy and pay for all of this magnificent new, civilian-oriented production.
Instead, however, it was WWII that absorbed all that money, all those potential wages, and all that work.
So here's the crux of the matter
Robots are a threat to our economy only if we DO NOT have a national economic policy designed to produce more in the way of broad-based, effective consumer demand. That is to say, we simply need to somehow put more spending money in the pockets of the bottom 90+%, especially the bottom 50%, which would automatically create even more jobs, as ever more people looked for ways to spend that extra money. So today, just as Keynes said way back in the 1930s, it's not the automation and robotics we should fear; it's the right-wing economic policies that will accompany it if wingnut politicians remain in control.
Long story short, robots and computer applications are allowing us to become so efficient in doing all the work that society has set out to get done, that, in spite of ever increasing production and consumption of the maximally marketed superfluous, decently paid jobs are disappearing at an ever increasing rate -- so fast that there are, now, well over 3 million Americans living in poverty or near poverty who are currently seeking a job. (Link)
As a result of this massive unemployment and poverty (which it totally unnecessary), and the poor educational standards that accompany it in our poorest neighborhoods and communities, huge numbers of men and women turn to crime, if only by selling marijuana, and millions of them end up behind bars, which has a devastating effect/on their families and communities.
Meanwhile, ever fewer workers even get an opportunity to help do the basic and most important work (e.g. in housing, healthcare, education) the accomplishment and achievement of which is absolutely essential to their success and the success of our society as a whole. In turn, this is leading to a situation where the traditional requirement (that each worker, in order to maintain his or her membership in the middle class, must put in a full 40 hours of work each week, 50 weeks/yr, for 40 years or more), is rapidly becoming obsolete. So here's the kicker: Given the ever advancing power of ever more sophisticated robots and computer applications, the only way we can even BEGIN to keep all members of the middle class busy these days, for that many hours of their lives, is if ever more of their work-hours are devoted to the production, marketing and sale of ever more in the way of superfluous luxury goods. Problem is, it's the production, marketing and sale of these very things that are not only wasting the world's resources (especially oil and coal) but also fouling our environment, raising CO2 levels, poisoning the oceans, raising sea levels, and causing ever more extreme and destructive weather events. This is capitalism running a muck.
In today's economy, as jobs steadily disappear, it is therefore literally insane to require 40 hours of work from each and every individual, in order for the "successful" ones to get the money it takes to remain in the middle class, i.e. to be able to afford a decent home, good healthcare, high quality education for their kids, and high-quality food on their table, day in and day out.
When three people are looking for every available job that pays more than the minimum wage, why continually force two of those three (i.e. the "unsuccessful" ones) into poverty or near poverty just because they can't find a job helping to produce ever more of the superfluous crap that's killing our planet?!
If, because of congressional Republicans and Blue Dogs, it is unrealistic to try and bring back organizations like the CCC and the WPA, to provide the additional employment opportunities we need (as robots and automation steal ever more of our jobs), then for God sake, let's find some way to let anyone who needs a job . . work part time, sharing the ever-reduced amount of work it takes to produce basic goods and services for all. And then find some way to allow each and every one of these people a fair share of the basic housing, food, healthcare and education they help produce! Otherwise we will continue to spend $50,000 a year, on average, keeping each of more than 2 million of them behind bars -- most of them who would never have found themselves behind bars if they had been blessed by a decently educated and employed father and mother, and a neighborhood and community that was not dominated by unemployment, poverty, the resulting crime, and those community members and family members who are missing because of imprisonment.
According to Martin Ford, in his new book, Rise of the Robots: Technology and the Threat of a Jobless Future, America's economic Goldilocks period has come to an end -- unless we are able to democratically act to correct the tragic situation just described.
The symbiotic relationship between increasing productivity and rising wages began to dissolve in the 1970s. As of 2013, a typical production worker earned about 13% less than in 1973 (after adjusting for inflation), even as worker productivity more than doubled, over that same 40-year span. In short, wages went down as worker productivity and the cost of basics rose! But why would the cost of basics rise if worker productivity doubled?! Somewhere in the system there must be a whole lot of wasted effort, wasted production, or theft, or some combination of all of those, if this puzzle is to be explained.
Obviously too much labor was being spent on the production of superfluous goods and services and not enough was being spent on the production of basics. But why was that choice made, and by whom? Answer: It happened because there were and are great profits to be made, by the owners of capital, from the production and sale of ever increasing amounts of luxuries and the superfluous -- especially if they can keep finding clever ways to keep driving wages down at the same time.
What most people don't yet realize is that these facts and statistics represent an enormous theft from America's working class, as perpetrated by our financial elite, who regularly purchase members of congress for the purpose of continuing this ongoing and systematic theft. With a compliant congress, union activity can be minimized, the minimum wage can be kept down, programs like the CCC and WPA can be prevented from reoccurring, a reduced workweek can be prevented, and wages & educational opportunities can be minimized for most people. (As long as enough voters can be dumbed down, in 3rd-rate schools, staffed by 3rd-rate teachers, Republican TV advertising still has a chance of winning elections.)
Hard evidence of this theft
On January 2, 2010, the Washington Post reportedthat the first decade of the twenty-first century resulted in the creation of "no new jobs." This hasn't been true for any decade since the Great Depression; indeed there has never been a postwar decade that produced less than a 20% increase in the number of available jobs. Even the 1970s, a decade associated with stagflation and an energy crisis, generated a 27% increase in jobs, as Robert Reich points out.
The lost decade of the 2000s is especially astonishing when you consider that the US economy needs to create roughly a million jobs each year just to keep up with the automatic growth in the size of the workforce. (Noneconomics-types should understand that the 'workforce' consists of all those people who are ready and able to work, including all those currently employed.) In other words, during those first ten years of this century, there were about 10 million missing jobs that would normally have been created, but weren't, largely because advanced robots and new computer applications were doing ever more of the available work.
Because of this huge and growing amount of (real) unemployment, income inequality has soared to levels not seen since 1929. Why, exactly, did income inequality soar? It's because the more people who must compete for a limited and ever smaller number of jobs, the more that wages are driven downward by way of the increased competition for jobs -- one more example of the old law of supply and demand.
By this means, the share of profits from rising productivity increases, which went into workers' pockets back in the 1950s, . . began being retained almost entirely by business owners and investors. And, make no mistake, this is a form of theft. So, as a result of this ongoing theft, the share of overall national income going to labor [as opposed to capital(ists)], has fallen precipitously, as Reich points out, and appears to be in continuing free fall. Our Goldilocks period is over, and the American economy is moving into a new era -- the era of the steadily disappearing middle class. Meanwhile, big corporations have accumulated $2 trillion in cash that they really don't know what to do with, other than hide it offshore to avoid paying their fair share of taxes -- also using some of it to buy back shares in their companies, so as to keep their respective stock prices up.
This will be an era defined by a fundamental shift in the relationship between workers and machines
And this shift will ultimately challenge one of our most basic assumptions about technology, i.e. that machines are tools that increase the productivity (and incomes) of workers. Instead, the machines themselves are in a very real sense turning into workers, i.e. 'workers' who replace human workers. As robots and computer applications do ever more of the work, the dividing line between the capability of labor and the capability of capital is blurring as never before. Why? Because, to the extent that labor is done by machines and computer programs, this kind of capital becomes a form of labor, as it replaces ever more human labor.
All this progress is, of course, being driven by the relentless acceleration in the sophistication and power of computer&information technology. While many people are by now familiar with Moore's Law (i.e. the well-established and empirically based rule of thumb that says computing power roughly doubles every eighteen to twenty-four months), . . not everyone has fully grasped or assimilated the political-economic implications of this unprecedented, extraordinary, and exponential progress, . . which is this:
We either need a shorter workweek, OR a whole lot more employment in the public sector of our economy, so as to put to work all those folks whose jobs are gradually being replaced by robots, automation and new computer applications -- or we need some combination of the two.
So, without a whole lot more public sector employment and/or a shorter workweek (so as to redistribute the shrinking amount of work among the ever growing number of people needing decently paid work), what will happen to American jobs, incomes, and wealth over the coming decade or two?"
Reich answers by amplifying and expanding on, and driving home, the answers and explanations just provided, using examples like those that follow here. Human workers will, to an ever larger extent, be competing with, and be replaced by, a great multiplicity of things, like those that follow here, the prototypes of which we are already familiar with, all of which will be greatly improved and made more efficient and less costly as time goes on: automated tellers, computerized cashiers, automatic car washes, and robotized vending machines -- as well as personal computers linked to television screens through which tomorrow's consumers will be able to buy furniture, appliances, and all sorts of consumer electronics from their living rooms, . . ever more easily examining the merchandise from all angles, ever more easily selecting whatever color, size, special features, and price seem most appealing, and then transmitting the order instantly to warehouses, from which their selections will be shipped directly to their homes. In other words, Amazon will replace ever more department stores, shops, clerks and trips to the mall. So, too, with financial transactions, airline and hotel reservations, rental car agreements, and similar contracts, which will all be executed between consumers in their homes, and computer banks somewhere else on the globe, connected to us by satellite.
Perhaps as soon as ten years from now, Reich says, Amazon will have wiped out most of today's retail jobs, while self-driving cars, buses and trucks will eliminate the need for a great many bus drivers, truck drivers, sanitation workers, and even Uber drivers.
Even more alarming, we are now faced not just with labor-replacing technologies but with knowledge-replacing technologies. The combination of advanced sensors, voice recognition, artificial intelligence, big data, text-mining, and pattern-recognition algorithms, is beginning to generate super-smart robots capable of quickly learning human actions, and even learning from one another.
In tandem with all this, a revolution in the life sciences is also underway, doing things like allowing drugs to be tailored to a patient's particular condition and genome.
If the current trend continues, many more symbolic analysts (a Reichian term for knowledge workers who deal mostly with complex abstractions) will be replaced in coming years. The two largest professionally intensive sectors of the United States -- health care and education -- will be particularly affected because of increasing pressures to hold down costs and, at the same time, the increasing accessibility, and use of, 'expert' machines in these fields.
For example, we are on the verge of a wave of mobile health applications that measure everything from calories to blood pressure. This data will then be processed by software programs capable of performing the same functions that costly medical devices now perform. This new diagnostic software (using the data just collected) will tell you what it all means and what to do about it, thereby doing the work of a great many medical doctors, nurses and medical technicians.
Schools and universities will likewise be reorganized around smart machines (even as replaced faculty scream all the way through the transition). Many teachers and university professors are already on the way to being replaced by software -- so-called "MOOCs" (Massive Open Online Courses that teach thousands, even tens of thousands of students at once, and yet each at their own speed, with an automatic record and an easily reviewed summary of everything taught), as well as interactive, online textbooks, along with help from relatively low-cost adjuncts (teaching assistants) who will answer questions and otherwise guide student learning.
As a result of all this, Reich says, unless redistributive measures are taken to avoid it, income and wealth will become even more concentrated at the top than it already is. Increasingly, then, the rest of us will be forced to scramble for ever more scarce jobs that pay a living wage. Those who create or invest in blockbuster ideas will earn unprecedented sums. The corollary is that these super-privileged people will also come to have enormous political power over the rest of us -- we who will continue to be "forced out of the loop" in ever greater numbers, as computer applications multiply and become ever more sophisticated and wide-ranging, taking ever more of our jobs away.
Since the very large majority of people will not share in the fantastic monetary gains to be derived from this process, and since money buys political outcomes, the political power of everyone outside of the nouveau/computer riche (and the old rich) will continue to disappear. And if we fail in the attempt to organize politically, so as to stop and possibly even reverse this process, the middle class's share of the total economic pie will continue to shrink, while the share going to the very top (and, in a more limited fashion, to certain highly skilled professionals who will be all to happy to assist them) will continue to grow.
Therefore, we must ignite a political movement to reorganize the economy for the benefit of the many, . . rather than for the ever more lavish lifestyles of a Godly few and their heirs. (Reich has much more to say on all this in his upcoming book, Saving Capitalism: For the Many, Not the Few, which will be out at the end of September 2015.) He also explains how income inequality helped lead to both the Great Depression and the financial crisis of 2008 in this short video.
(Article changed on June 17, 2015 at 22:59)
(Article changed on June 17, 2015 at 23:10)
Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've always been more interested in political economics and what's going on behind the scenes in politics, than in mechanical engineering, and because of that I've rarely worked more than 8 months a year, devoting much of the rest of the year to reading and writing about that which interests me most.