The U.S. Economy: Stand by for more worse news

First to call it, again:

 

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No problem for Aegis ship, but quite effective against an unescorted oil tanker I would think.
Iran plans more naval displays to help celebrate US going over the Fiscal Cliff, the 31 Dec12 debt ceiling arrival, and US´s ungovernably:

A sunk tanker blocking the narrow deep channel of the Hormuz Strait with a doubling spike in oil prices would be ill timed now for the US economy, to say the least.

 

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I´ll add: more than 10,000 baby boomers retire each day now (and will for several years more) most of them without adequate funds to live on! Except for the top few percent, the US is a bankrupt poor house that in a few years will have great suffering. China could, but will not, come to American´s aid like US did for Europe in the post WWII Marshall plan.

 

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Same story from different source.

 

I know, but when? Ol' Ben can print 45 billion a month. How long can the banks support (prop up the stock market) the dollar with 45 billion a month to play with?

 

I don't see how work can ever return when automation is stealing jobs. This topic was ignored in a thread on sciforums, and seems to be ignored by governments but the fact remains that everytime a machine is upgraded and can run faster people lose jobs.

A printing press 20 years ago could likely print at 7000 sheets per hour and required 3 people to run a large 4-6 colour Press. Now they can run at 20 000 sheets per hour and do both sides at the same time (sheet fed) on a 8-12 colour Press with a standard crew of 2 people. This means that a dozen people have lost their jobs because of this newer printing press. Then we look at how computers and ebook readers are replacing paper and we will see that the requirements of the field are much lower 20 years later.
When was the last time you kept a phone book in your home?

That is simply one industry.

Your grocery store used to need people to constantly do inventory. When was the last time you saw anyone taking inventory in your grocery store? When you buy a product it is scanned and subtracted from the known inventory. These scans not only help with inventory, but also accountants are only needed in smaller quantities as these spreadsheets only require once overs and signatures. Even shoplifting is taken into account and addressed with ordering systems although periodic inventory is still necessary. Some stores are even removing cashiers altogether.

A farmer today cannot compete unless they own/rent combines or huge tractors that can do as much harvesting as a dozen men from 50 years ago. That means that we require a much smaller percentage of farmers running megafarms. More unemployment.

Secretaries were once needed to greet customers, answer phones, and do dictation. This is now automated in many industries, and if a receptionist does exist it is likely the unnecessary accountant doing double tasking. If a boss cannot handle typing a simple letter in todays keyboard age, then there are dictation programs. Automated voice mail systems have removed the need for switchboards type reception.

A variety of CNC type machines have replaced the need for hand carving/buffing/cutting.

Every industry is improving. Every machine is getting faster.


Bus drivers will even be automated in years to come, but as it is they now require less drivers.

Truck and Bus drivers in many industries are now easily tracked by owners/dispatchers who can tell if their truck is parked at Starbucks for too long. If the driver is not allowed o go to Starbucks then the owner knows and discipline may follow. It is not like the "old days". Buses; Same thing, they are more accountable.

Stores were required for selling videotapes and records back in the day, but video/record stores are fading as streaming technology improves. Thousands of needless stores closed with all hands replaced by nobody.

Film was once needed in cameras, and camera stores were required if you wanted to view your pictures.

Ordering systems making restaurants more efficient with less staff required.

Yet nobody even seems to notice that people are becoming redundant.

One thing I've told my children is to choose careers that will be around in 100 years. Too bad for those folks still enrolled in accounting.

Welfare and crime will increase, and there is no governments addressing this issue.

IS EVERYONE BLIND? Am I the only person in the world who can see what is happening?

Economic recovery is only a dream for some, as people are already redundant in many areas.

The government should shorten the work week and evaluate taxes based on automation somehow. I cannot see any other way. How will governments and corporations behave when 80% of people become redundant/unemployed.

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You raise some valid concerns kwilborn. The double-edged sword of technology is indeed making people redundant in many fields. A few areas I see up here that are not going to be filled any time soon and will require recruitment in future are qualified tradespeople for construction of all sorts, carpenters, plumbers, electricians and the like. Cities with aging infrastructure will need to replace it and maintenance is on-going. Weather related disasters continue to add to the need for replacement building and repairs. With an aging population, the care-giver trade is also short-staffed and custodial work is booming and bringing in people from other countries because they cannot recruit enough staff locally.

What I do sadly notice is a great deal of apathy on the part of many workers regarding job attendance and lost productivity because everyone has their face buried in one of those hand held devices. Well not quite everyone. There's a few of us who don't bother with such distractions and we can pretty much write our own ticket because we show up and work. Hubby and I both work at the same business and apparently the boss remarked that neither of us had permission to quit, lol...

In my opinion, there will always be plenty in need of doing just some folks won't care to do it. Nothing new there. At the turn of the last century, society moved from the horse to the internal combustion engine and from agricultural communities to the big cities, from farms to factories. It's just another transition and we are a species that largely resents change which requires us to learn new skills, video games excepted for some.

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@ Scheherazade,

I agree some jobs will be around, yet even the few you mention are bound to lose employees.

"60 minutes" this past week ran a segment about robot health care workers.

This is a funny example,
http://www.youtube.com/watch?v=R9uyPntyXE0

The TUG robots are becoming commonplace in all hospitals now, and will become a common sight in many other businesses soon. (INVEST).

http://www.youtube.com/watch?v=66zz8ZgLGzo

http://www.youtube.com/watch?v=0JiuFOzD4Bo
but food delivery and laundry in every major hospital is switching to robots to carry the goods. Doctors themselves are becoming more efficient with online diagnosis helping their memories and cutting down on repeat business. Robot laundry is a cut into custodial.

You mention carpenters/plumbers and electricians. My neighbor recently installed a roof shingle that will last as long as his house. It won't need to be replaced in 10 or 20 years. My house has siding on it that will never require painting and will also last. Advances in technology may not entirely replace industries, but they sure can make people redundant. There was recently a Thread on Sciforums about a 16 story building that was prefabricated in a factory and the planning was so efficient even the walls being hauled up were used as loading platforms for other materials.

"Plenty" to do seems a bit ambitious. I can see lawns being cut by robots following preset paths or buried wires. I think we are already at the point where unemployment should be on a steady rise.

Politicians have two choices.
a) Let people commit crimes and jail the population. Increase the size of jails. This might be a cheaper way of dealing with the poor and uneducated.
b) Create welfare infrastructure that includes "Token Jobs" as part of infrastructure. Have silly jobs like "friendly persons" who simply try to interact with city folk in a friendly manner, or other such silly jobs that are only a creation. If someone is artistic make them a professional artist.

There needs to be a plan in place that considers how to look after a vastly unemployed society. How this will be done will require some serious thinking.

 

I don´t think having robots do relatively simple, routine jobs instead of people is "bad news" - that is progress, but it does expose need for new social norms.
In Jamestown, several hundred years ago, the English aristocratic component of the population, did not think they should work, at least not with their hands. Captain John Smith effectively said: “Ok, but those who don´t work, don´t eat.” Through out human history, almost all needed to produce the essential goods (food, clothing & shelter plus soldier to protect the society.) I.e. it was a scarcity limited society.

Times have changed, in two ways: (1) Now TV, video games, cell phones etc. are “essential goods” and (2) it is a surplus society, where distribution is the limitation. Unfortunately, mentally we are still with Captain John Smith´s POV. We think it almost evil that some should consume, without producing, despite capacity to produce several times more of most goods than we can consume. I.e. distribution, not production, is what limits our modern society.

More on (1):
Video games are a huge and growing industry with zillions of man hour “wasted” by the users. They do develop some quick reaction skill, but when I see modern kids glued to some hand held device with very active thumbs I wonder what it all means. I think it indicates a natural change from being occupied in producing goods to consuming them is in progress, perhaps even to the extent that video games, TV programs (even forums, like sciforums) etc. are now “essential goods.” Certainly, a lot of smart people are occupied in making and using them.

With homes made by robots in factories, less than 5% of the population in any way connected to food production and distribution, and most of our clothing imported from low wage areas, we seem to be evolving a society that has say 10% of the population making time killing activities to keep 80% of the population occupied or at least distracted. TV programs watched for hours each day do that too, without even the need to develop agile thumbs!

 

From the link in post 442: "Of all Americans, ConvergEx Group says: "Only 58% of us are even saving for retirement in the first place. Of that group, 60% have less than $25,000 put away."

And what is worse, 25% of those not yet retired (and nearly all of the retired) are draining down their 401Ks etc. just to put food on the table and not lose their home to the bank! Most will zero their savings, years before the die.

Again: most retiring Americans are, or soon will be, living in a bankrupt poor house, called the USA, which is planning to reduce Social Security payment inflation adjustments by re-defining how the CPI is calculated (again). Compare US´s official CPI with that of Shadow Stats, which still uses the original calculation of CPI.

 

You have listed areas where jobs are disappearing. Can you see any areas where jobs are being created? Places where jobs that did not exist 50 or 100 years ago are now booming?

 

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That is the first DAY Treasury can´t pay; but:
More than $174 billion shortfall in first month as most tax revenue will come in only in April 2013:

 

@ Billvon,
If you cannot see the significance of the problem then I think you are fooled.

Of course there are jobs now that did not exist then, robot programmers is one. One robot programmer may take out thousands of "older" jobs.

For several years I worked on the side creating Wedding Websites for couples getting married. It was very easy, as I often only had to switch out maps, addresses and names, and copy and paste most of what I had already created with minor alterations. Now they can buy $20 software that will create a website that is nicer than the ones I was creating. The one I viewed even had a wedding trivia game about the couple. It was quite a nice program. So even programmers jobs are threatened as technology advances.

Other areas we can look for growth is with our police forces, courts, and jails. As automation removes jobs people will be forced to turn to welfare and crime to support themselves. It is likely to be a somewhat forced vocation for many until the governments (a.k.a. corporations) recognize the automation problem.

Scheherazade just mentioned Health Care as a growth industry due to the baby boomers. This means there should be an increase in staff. The TUG robots will replace thousands upon thousands of jobs in the health care industry over the next five years. Computerized phone services have already done away with hospital switchboards. Computers aid in scheduling, filing, and even diagnostics making visits more efficient and return visits less necessary. Even a technological advance such as learning to wash their hands before surgeries has hurt the employment rates in health care, as obviously there is less germ related illnesses following surgery.

@ Billvon,
I also recognize some areas where growth does happen. Your fondness for jumping out of perfectly fine aircraft is an industry that could not have existed 100 years ago for obvious reasons. Aircraft also built increased accessibility to the tourism industries and all its related infrastructures such as restaurants and more.

Restaurants now have computerized ordering systems where Chefs are advised of the order as soon as the waitress takes it. This allows Restaurants to "process" more customers in smaller spaces and with less staff. If you "forget" your wallet a common joke is that you can wash dishes to pay for your meal but many restaurants have industrial sized dishwashers that now do that kind of work. A simple dishwashing device has put thousands out of work across the country. Each restaurant used to need someone to keep track of inventory, ordering, an accounting, but with ordering systems also keeping track of stock used and sales these accountant positions are easily done by almost any member of untrained staff.

Hospitals are Using TUG systems and I am sure Malls, Hotels, Mail rooms will all start implementing these R2D2 type robots to deliver garbage, laundry, mail, and clean floors and cut grass in the near future.

Even airplanes are developing the abilities to take off, fly, and land without human interaction. A human pilot of the future will just be a "back-up safety feature".

I don't think you can list any business that has not seen job losses due to computer technologies. The automated voice mail alone replacing switchboard operators in most every big organization is such an "improvement".

Society thinks that consuming without producing is Evil, yet it is a path destined for many.

I still think a shorter work week should be imposed. Perhaps a 30-35 hour work week with overtime pay required after 34-39 hours, depending.

I know there are other industries that will grow, but the majority of growth businesses will be businesses that steal jobs from other sectors. I bet TUG robotics will have a few good years.

This is not a heavy political debate because it happens very slowly and is advantageous to the corporations.

Am I the only one with vision enough to see a problem with automation in the future?

Our society could comfortably live someday with an unemployment rate of 80% (unless we create fake jobs (Police, Army, City Cleaners, Counselors)), as robots could do our farming and build our homes. The problems will be how we accept this change politically. Do we jail the populations or alter our welfare system to adapt?

Is this not obvious?

 

Yep. And website programmers have really taken away jobs from weavers; back in the 1900's you had to weave websites.

This loss of jobs due to automation (and non-human power) goes back to the days of the Pharaohs. Think of all the laborers replaced by horses! And a wheeled cart can do the work of nine people carrying stones. There must have been near-100% unemployment when the wheel came out!

What happened, of course, is that the horse and the wheel hugely improved human trade. As people could move more goods, the economy improved. And thus jobs that could not formerly be supported (shopkeepers, foremen, road workers) were created, seemingly out of thin air.

Likewise, the tremendous amount of energy that fossil fuels made available improved the economy enormously. Our country used to run on horses, and the support of those horses (pasturage, hay, blacksmiths, stables, veterinary, tack shops etc) made up a good 10% of our economy. Does that mean that the coming of fossil fuels and the loss of an entire industry destroyed our economy? Quite the opposite; the new economic opportunities made possible by coal, oil, cars etc more than overcame the loss of jobs.

Today the Internet has created a massive new market that is just starting to be tapped. The Internet is responsible for about 5% of employment in the US - and this is an industry that didn't exist 30 years ago. It has gone from wired to wireless and a large percentage of people in the world are now connected. Apple - Microsoft - Google - Intel - Cisco - when you think about all those giants, each one employing tens of thousands to hundreds of thousands of people, in an industry that didn't exist a few decades ago, it's hard to believe that new technology leads to loss of jobs.

What is the new technology that will be the next Internet?

Yes. And physical therapists will be hired as we learn more about rehabilitation. (Another field that barely existed 30 years ago.)

Good example. Hundreds of people out of work - and millions employed answering phones, doing telemarketing, repairing phone systems, putting up new lines and taking calls for executives.

Agreed. Conversely, you cannot point to an area of technology that has not created far more jobs than it has obsoleted.

Sure; companies can do that now. We have some part time employees.

Or just change our definition of work. Today we have professional shoppers, professional cooks, professional golfers, professional talk show radio pundits. I'm a professional skydiver. In the future we'll have professional Internet posters, professional spam monitors and professional website evaluators. No need for jails or increased welfare rolls.

 

Couldn't though as far as robots are concerned

Couldn't you SELL these robots to an employee(s)

So that the company is not responsible for the maintenance of these robots

The employee is

It would create jobs and competition between robotic companies

 

@ Billvon,
I was not overly surprised to see you lacked the vision to see problems with over automation as it relates to real people.

My father made a fortune in the Printing Industry. There was an age when it was a good business and occupied almost 25% of the industrial sector. People needed phone books to find a phone number. People needed newspaper to tell them the news.

I recall feeding 6 tons of paper into a press daily as a teenager as a summer job making phone book covers, but when was the last time you even saw a phone book?

Computers killed that industry as information no longer requires paper mediums. The remainder of the industry is falling with machines that can operate a dozen times as fast as they could 20 years ago.

Accountants, switchboards, manufacturing, cashiers, receptionists, inventory helpers, and basically every business imaginable has been helped with computers and created job loss.

Even skydiving relies on
a) scheduling jumps for customers
b) getting information about the business to the customers (advertising)

Websites do not really create jobs. Websites are created quickly and often forgotten and neglected with changes easily done if desired. They do cut down on need for advertising in many cases though. 20 years ago a skydiving agency would need to get their name and number out more frequently through paper mediums. Scheduling would require more hours than it does with a computer.

@Billvon,
You mention the millions who get jobs answering phone and telemarketers, which demonstrates how often you must phone businesses. The automated voice you hear directing your call only sounds human. You may not recognize the hang-up calls you receive, but they are often computerized dialers testing your number for telemarketers to use so they do not waste their time on dead numbers.

Your reference to the wheel replacing employees/slaves who carried people and supplies is reminiscent of this cartoon I posted a few posts ago.

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Internet/computers/robots are not aiding job growth, and cannot be compared to cars replacing horses. It is lack of vision.

 

About five years ago.

When you were feeding those tons of paper into that press, did you ever shop on Amazon.com?

Agreed. And the Internet book industry - Kindles, Nooks, tablets, smartphones - is taking off. More authors than ever before can self-publish and are making money.

You know you were wondering what those 80% can do? They can write books and sell them via the Net - something they could never have done 20 years ago.

[/quote]Accountants, switchboards, manufacturing, cashiers, receptionists, inventory helpers, and basically every business imaginable has been helped with computers and created job loss.[/quote]

Yep. And has also created jobs - in far greater quantities than the lost jobs.

Yes, they do. And nowadays the technology exists to take tandem passengers on jumps. The technology exists to jump with cameras and very quickly create DVD's or web video for paying customers. The technology exists to manage manifests of hundreds of jumpers, and rapidly (and accurately) calculate weight and balance, fuel loads etc. And those web videos? Customers post them on Facebook and tell their friends "YOU GOTTA TRY THIS!" And their friends call up and make a reservation.

Result - more jumps, and more instructors/video people make more money.

That's like saying books do not create jobs. After all, they are just paper, and one librarian can handle tens of thousands of books.

Oh, I think "Mike" the IT service guy is quite human.

Yes. That cartoon mocks the shortsighted guy carrying the sedan chair. He thinks that the wheel will cause lost jobs - when in reality there are far more people hauling even more people in the background because it's so much easier and faster. It also pokes fun at the guy in the chair, who laments the fact that more people can enjoy a higher standard of life.

Good example. I'd compare the guys carrying the chair to you, who cannot see that new technology creates even more opportunities for employment.

 

Worth the time (< 5 minutes) to watch is CNN´s R. Quest video here: http://edition.cnn.com/2013/01/10/opinion/quest-davos-2013-opener/index.html?hpt=hp_bn7

Some point in it:
Treasury now thinks it can play accounting games to pay bills until 26 Feb 13.
2 March 13 is when the 100 billion of spending cuts kicks in (half from defense)
27 March is when the continuing resolution (to spend with no budget) dies.
US´s GDP, even if make it thru the above, “tipping points” will drop > 1% due to 2% step up in Social Security tax (and some other things* cutting Joe American´s power to spend); But if fail on any one, US is recession bound.

Part of US economic problems is we don´t have a "Parliamentary System" of government that makes big decisions, but one where only baby steps get taken at the last minute with a lot of “can kicking” delays.

* If you think Congressional Republicans are sweet little lambs that will see the need to raise the debt ceiling (or better to abolish it) without getting some deep spending cuts, mainly from non-defense, but "social programs," then, I have a bridge in Brooklyn you could make into a toll road, I´ll sell you cheap.

I´ll add, as I have in some other posts: Treasury get most of its income tax collections in first two week of April, so lacks revenue to pay bills as they come in until about "April Fools Day" - well named, don´t you think?

 

@ Billvon,

It would take too long to convince you, so I will point you at articles like this one.

http://www.wired.com/gadgetlab/2012/12/ff-robots-will-take-our-jobs/all/

It will happen. I do agree that jobs can evolve into arts like Writing, Painting, or fake jobs like wandering counselors that engage people in conversation everywhere. I said this many posts back. I myself profit from publishing on the Internet.

The problem is transitioning to that kind of work. If the unemployment rates just grow continuously, and the automation is not addressed by politics then forced welfare recipients and jailed citizens will not be in purchasing positions for art. The government will need to tax more and create more government work.

Perhaps the above article will be more convincing. I have no worries about the future for myself or my family as we have our eyes wide open. I just feel sorry for kids when I see them with accounting books in their hands.

The article mentioned does consider your side and that is why I mentioned this article as opposed to others more vehemently on my side. It suggests that we will create jobs we don't even know we want yet. I can see it already though affecting the workplace so I know my position is correct.

I recently talked to some immigrants who paid $80 000 to come here. After less than a few years here they are tired of the work environments and have decided to go back to India where they could at least work their own land and provide themselves a living. When immigrants start yearning for other countries then that is a bad sign.

Part of my research into this was to help advise my own children who are still in school. What fields are good for them? They can be a soil Engineer like their dad, as that field will likely always be around. What else? Doctors? I honestly think a robot could do as good a job diagnosing and treating a patient as most family doctors. Maybe not completely there as a surgeon yet, but for general aches and pains and prescribing remedies.

Architecture is even becoming robotic. Now you can draw up a house in a simple program and the program will spit out a structural blueprint and make recommendations to cut costs.

I'd like to think I am wrong about automation unemploying too many, but I'm not.

 

SeeBetween 1946 &1964, 79 Million “baby boomers” were born. They are now, and for several years more, retiring* at > 10,000 per day. The 65 and older are now less than 14% of the population, but by 1930 will be more than 20% of the population. The constant dollar cost of Social Security will grow from current 5.3% to 6.6% during this decade. The cost of Medicare & Medicaid is growing at ~7.5% annually. (I.e. doubling in less than a decade.)

Most of above facts are well known or reference to them given at top of page 386 here:
http://www.amazon.com/exec/obidos/ASIN/0393338959/counterpunchmaga#reader_0393338959 book called: Freefall: America, Free Markets, and the Sinking of the World Economy by Joseph E. Stiglitz a professor of economics at Columbia University and the recipient of a John Bates Clark Medal and a Nobel Prize in economics. He is also the former senior vice president and chief economist of the World Bank. (Amazon´s "look inside" let you read much of it for free - and you should, if you want to better understand how US (and world) got into current sorry state, with little hope of cure.)

Billy T Notes: Usually a greater fraction of retired baby boomers and those over 65 votes than any other group and AARP helps keep their votes coordinated to be mutually supporting. Since they will soon be 20% of the US population, there is zero chance, Congress will significantly reduce the real cost of their CPI adjusted benefits before the US defaults as unable to pay this cost, which cannot be “monetized away” and the growing cost of interest on the growing debt.

Even monetizing the debt away may be impossible as most of it is now short term and the interest rates required to roll that anticipate the coming inflation, whether or not it comes.** I.e. interest rates will climb faster than inflation, (as they are now - see graph below and final text quoted at end of this post), and low inflation means dollar is only losing value slowing, so it becomes harder and harder to pay the more rapidly growing interest cost of short term debt. Also, part of the debt, like TIPs, has the principle to be repaid indexed for inflation. I.e. Default is becoming the only US option, even if House´s Republicans start to place interest of the country first.

* Ceasing to be tax payers in their highest incomes years and becoming "negative savers" as they draw down their 401k etc. and become great collectors of government benefits.

** Interest rates have already started to rise: ~32% from their low on 23 April 2012. The "smart money" is already net sellers of Treasury bonds. The crowd will follow soon, but too late to avoid significant losses, as usual. ("Smart money" includes the Chinese government, which is slowing reducing its holdings down from the peak of a couple of years ago but some months, with record trade surplus of dollar influx, do show a slight temporary increases in Chinese holdings of US Treasury´s paper promises.)

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Since ~March 2011 bond holders are losing purchasing power.
Interest rates (blue line) must return to at least the inflation rate (pink line). Note left scale is inflation with larger range, but 3% line is same for both.
Even the Fed cannot make money losing investments for ever! China has proven it will not. Many central banks are now buying gold with dollars.

quote from source of above graph:

See more detailed (daily) last 6 month graph of 10 year bond interest rates climbing from 1.39% to 1.87%, up 34.5%, with rising lows (a "flag formation" with upper resistance at 1.95%) and discussion* at: http://www.moneyshow.com/trading/article/25/Charts09-30352/Keep-Your-Eye-on-Treasury-Rates/#

*Good for equities, bad for bonds, as money continues to come out of bonds (making rising interest rates and cost for government) and into equities.