A CAPITALIST'S DILEMMA! EFFICIENCY Vs. JOBS

I've talked about this before. How Automation and Cyber world has changed our Economic dynamics. Why we will have a stagnant high unemployment and stagnation of mean family income.



Wayne Radinsky Yesterday at 12:43pm near Denver, CO ·

A Capitalist's Dilemma, whoever wins on tuesday. Clayton M. Christensen, author of The Innovator's Dilemma (where companies fail even though they do the "right" thing because of disruptive innovations) describes an analogous "Capitalist's Dilemma" affecting the whole economy. He breaks innovation into 3 categories: "empowering", "sustaining", and "efficiency", where "empowering" innovations create new industries and lots of jobs, "sustaining" innovations incrementally improve existing products and neither create nor destroy very many jobs, and "efficiency" innovations make industry vastly more efficient and wipe out lots of jobs, and surmises that the problem with the world today is that all the innovation is on the "efficiency" side. He never makes the connection between "efficiency" innovations and AI and robotics and Moore's Law and advancing computation power, and how we're headed to an eventual future where machines do all the jobs (which won't happen in our lifetimes and certainly not in Clayton Christensen's, since he is 60 years old), and makes policy recommendations to "fix" the problem that are unlikely to actually fix it: change the metrics used to measure "profit", change the capital-gains tax rates (so that there are zero and negative capital gains taxes for long-term investments), and change the politics -- get rid of the idea of taxing the 1% and "wealth redistribution" and instead give the wealthy a reason to invest (by which he means we have too high capital gains taxes and need his idea of zero and negative capital gains on long-term investments).

http://www.nytimes.com/2012/11/04/business/a-capitalists-dilemma-whoever-becomes-president.html?pagewanted=all

Wayne Radinsky Higher returns on capital than labor is what you would expect when machine intelligence advances well enough to compete economically against human intelligence; see http://www.youtube.com/watch?v=GPaf9YGz6Es


Another talk about stagnant jobs production.

Private Equity is much different than Venture Capitalists.

This is a great article in Rollingstone with great research that give the details about Bain Capital and its business deals. It explains the difference between venture capitalist, that Bain did in the early stages and the few companies that did well like Staples. As this article states, Bain did not manage these companies and only had minority investment in them.

However, the companies they leveraged purchased as a Private Equity transaction, they also managed them, the sold them before the leveraged debt came due and ultimately most all failed into bankruptcy.

Rollingstone Mag Article about Bain Capital and Mitt Romney

This is not the type of Business Knowledge we need to recover from the destroyed economy that Wall Street created and his type of business contributed to. He was not a job creator. That is not the goal of Private Equity companies. Their sole purpose is to maximize return on investment, not create jobs

My Faith-Based Retirement

Joe Nocera | by Fred R. Conrad NYT

OP-ED COLUMNIST in the New York Times New York Times - Subscribe Today
By JOE NOCERA Published: April 27, 201


My 60th birthday is less than a week and a half away, and if there is one thing I can say with certainty it’s that 60 is not the new 50.

My body creaks and groans. My eyes aren’t what they used to be. I don’t sleep as soundly as I did just a few years ago. Lately, I’ve been seeing a lot of doctors, just to make sure everything still more or less works.

I’ve also found myself with a sudden urge to get my house in order — just, you know, in case. Insurance, wills, that sort of thing. Sixty is when you stop pretending you’re going to live forever. You’re officially old. Or at least old-ish.

The only thing I haven’t dealt with on my to-do checklist is retirement planning. The reason is simple: I’m not planning to retire. More accurately, I can’t retire. My 401(k) plan, which was supposed to take care of my retirement, is in tatters.

Like millions of other aging baby boomers, I first began putting money into a tax-deferred retirement account a few years after they were legislated into existence in the late 1970s. The great bull market, which began in 1982, was just gearing up. As a young journalist, I couldn’t afford to invest a lot of money, but my account grew as the market rose, and the bull market gave me an inflated sense of my investing skills.

I became such an enthusiast of the new investing culture that I wrote my first book, in the mid-1990s, about what I called “the democratization of money.” It was only right, I argued, that the little guy have the same access to the markets as the wealthy. In the book, I didn’t make much of the decline of pensions. After all, we were in the middle of the tech bubble by then. What fun!

The bull market ended with the bursting of that bubble in 2000. My tech-laden portfolio was cut in half. A half-dozen years later, I got divorced, cutting my 401(k) in half again. A few years after that, I bought a house that needed some costly renovations. Since my retirement account was now hopelessly inadequate for actual retirement, I reasoned that I might as well get some use out of the money while I could. So I threw another chunk of my 401(k) at the renovation. That’s where I stand today.

When I related my tale recently to Teresa Ghilarducci, a behavioral economist at The New School who studies retirement and investor behavior, she let out the kind of sigh that made it clear that she had heard it all before. The sad truth, she told me, is that I’m the rule, not the exception. “People have income shock, like divorce or loss of a job or a health crisis,” and those crises tend to drain retirement accounts, she said.

But even putting income shocks aside, she said, most human beings lack the skill and emotional wherewithal to be good investors. Linking investing and retirement has turned out to be a recipe for disaster.

“People tend to be overconfident about their own abilities,” said Ghilarducci. “They tend to focus on the short term rather than thinking about long-term consequences. And they tend to think that whatever the current trend is will always be the trend. That is why people buy high and sell low.” Financial advisers — at least the good ones — are forever telling their clients to be disciplined, to create a diversified portfolio and to avoid trying to time the market. Sound as that advice is, it’s just not how most humans behave.

That data starkly backs up Ghilarducci’s contention. According to the Employee Benefit Research Institute, for instance, only 22 percent of workers 55 or older have more than $250,000 put away for retirement. Stunningly, 60 percent of workers in that same age bracket have less than $100,000 in a retirement account. Ghilarducci told me that the average savings for someone near retirement in America right now is $100,000. Even buttressed by Social Security, that’s not going to last very long.

What, then, will people do when they retire? I asked Ghilarducci. “Their retirement plan is faith based,” she replied. “They have faith that it will somehow work out.”

I laughed, but it’s not funny. “The 401(k),” she concluded, “is a failed experiment. It is time to rethink it.”

In truth, I’m one of the lucky ones. I do work that I love, which requires no heavy lifting and has no mandatory retirement age. If I become incapacitated, I will have assisted-living insurance. Otherwise, I can keep writing till I drop.

But, for the millions of others who have discovered, as I have, that their original enthusiasm for investing was unwarranted, their faith-based retirement plan is all they’ve got left.

Mitt manipulates math: a case study

By Steve Benen  -  Thu Apr 12, 2012 8:00 AM EDT

Yesterday, Mitt Romney and his campaign were eager, almost desperate, to work on narrowing the gender gap. The strategy was simple: argue that President Obama, all evidence to the contrary notwithstanding, is really the one waging a "war on women."

Their efforts failed rather spectacularly, thanks in large part to the clumsy unpreparedness of Romney's own aides. The day offered a reminder of an often-overlooked detail: the presumptive Republican nominee is accustomed to facing weak, bumbling competitors, and Team Romney is going to have to learn quickly the differences between the minor leagues and the Big Show.

But before moving on, it's worth pausing to take a closer look at the Romney campaign's underlying argument: 92.3% of the jobs lost in the Obama era have belonged to women. The claim was debunked yesterday over and over and over and over again yesterday, but my personal favorite was Kevin Drum's takedown, because he included a chart that helped drive the point home.

Kevin Drum, Mother Jones

In case the image isn't self-explanatory, Team Romney took a look at all the job losses and gains in the American economy, starting on Jan. 1, 2009 (three weeks before President Obama was inaugurated). The Republican campaign then got creative: because male workers saw a more sudden increase in job losses at the beginning of that calendar year, Romney carefully chose the starting date for his analysis that exaggerates the results.

If he'd started on Feb. 1, 2009, to reflect Obama's first full month in office, the number for women would have been 300%, instead of 92%. The Romney campaign knows no one would believe such an absurd figure, so they manipulated the figures accordingly.

The scope of its creativity and dishonesty is almost impressive, in a shameful sort of way.

As Kevin explained, "There was a steep job loss among men right at the beginning of the recession and a slower job loss among women. So what happens if you just lop off that bit of the recession and count only the strength of the recovery since January 1, 2009? Well, men have recovered steeply and women have recovered more slowly.... Men have made up ground faster then women since January 2009, so technically that means that women have sustained the bulk of the job losses since then."

Romney's talking point is the kind of argument Americans would expect from a candidate who simply doesn't respect voters enough to be straight with them. The "92%" argument is a con masquerading as political rhetoric. That this is what Romney has been reduced to in April -- on the first day of the general-election phase of the race -- does not bode well for the kind of honesty we can expect from the GOP campaign in the fall.

There's a larger point to keep in mind -- when should the clock start when it comes to evaluating the economy under Obama? -- and I'll have more on that a little later this morning.

Bye Bye American Pie: The Challenge of the Productivity Revolution

Robert Reich

Chancellor's Professor of Public Policy, University of California at Berkeley; Author, 'Aftershock'

03/ 2/2012 7:55 am

Here's the good news. The economic pie is growing again. Growth in the 4th quarter last year hit 3 percent on an annualized rate. That's respectable -- although still way too slow to get us back on track given how far we plunged.

Here's the bad news. The share of that growth going to American workers is at a record low.

That's largely because far fewer Americans are working. Although the nation is now producing more goods and services than it did before the slump began in 2007, we're doing it with six million fewer people.

Why? Credit technology. Computers, software applications, and the Internet are letting us produce more with fewer people.

In theory, this is a huge plus. We can live better and have more time off.

But as Tonto asked the Lone Ranger, "who's 'we,' kemosabe?"

The challenge at the heart of the productivity revolution -- and it is a revolution -- is how to distribute the gains. So far, we've been failing miserably to meet that challenge.

True, some of the gains are widely spread in the form of lower prices and higher value. My 3-year-old granddaughter gets more out of an iPhone in five minutes than my 98-year-old father ever got out of reading the daily paper (putting to one side their relative capacities to process the information).

But many of the gains are distributed narrowly in the form of profits to owners, and fat compensation packages to the "talent."

The share of the gains going to everyone else in the form of wages and salaries has been shrinking. It's now the smallest since the government began keeping track in 1947.

If the trend continues, inequality will become ever more extreme.

We'll also face chronically insufficient demand for all the goods and services the productivity revolution can generate. That's because the rich save more of their earnings than everyone else, while middle and lower-income families -- with fewer jobs or lower wages -- no longer have the purchasing power to keep the economy going at full tilt. (Before 2008 they kept up their buying by sinking deep into debt. This proved to be an unsustainable strategy.)

Insufficient demand -- as everyone but regressive supply-siders now recognize -- is a big reason why the current recovery has been so anemic and the pie isn't growing faster.

So while the productivity revolution is indubitably good, the task ahead is to figure out how to distribute more of its gains to more of our people.

One possibility: higher taxes on the rich that go into wage subsidies for lower-income workers, combined with job sharing.

We also need better schools (from early-childhood through young adulthood, followed by systems of lifelong learning) so everyone has a fair shot at a larger share of the gains.

Finally, the benefits of the productivity revolution should be turned into more abundant public goods - cleaner air and water, better parks and recreation, improved public health, and better public transit.

Regressive right wingers want Americans to believe we've been living beyond our means, and can no longer afford it.

The truth is just the reverse. Most Americans' means haven't kept up with what the economy could provide - if the fruits of the productivity revolution were more widely shared.

Regressives growl about America's borrowing and tut-tut about future federal budget deficits. The reality is the world is willing to lend us vast amounts of money because we're so productive. And the productivity revolution is making us ever more so.

Get it? The pie is growing again but most people aren't getting much of a slice. That's bad even for those getting the biggest pieces. They'd do better with smaller slices of a pie that grew much faster.

Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.

Robots will steal your job, How to survive.

Robots will steal your job, but that’s OK: how to survive the economic collapse and be happy

Federico Pistono

Federico Pistono
Ethical Technology

Posted: Feb 10, 2012

You are about to become obsolete. You think that you are special, unique, and that whatever it is that you are doing is impossible to replace. You are wrong.

As we speak, millions of algorithms created by computer scientists are frantically running on servers all over the world with one sole purpose: do whatever we used to do, but better. These algorithms are intelligent computer programs, permeating the substrateof our society. They make financial decisions, they predict the weather, they suggest which countries will wage war next. Soon, there will be little left for us to do: machines will take over.

Does that sound like a futuristic fantasy? Maybe so. This argument is proposed by a growing, yet still fringe, community of thinkers, scientists and academics, who see the advancement of technology as a disruptive force which will soon transform our entire socio-economic system, forever. According to them, the displacement of labor by machines and computer intelligence will increase dramatically over the next decades. Such changes will be so drastic and quick that the market will not be able to abide in creating new opportunities for workers who lost their job, making unemployment not just part of a cycle, but structural in nature and chronically irreversible. It will be the end of work as we now it.

Most economists discard such arguments. Many of them don’t even address the issue in the first place. And those who do claim that the market always finds a way. As old jobs are replaced by machines, new jobs are created. Thanks to the ingenuity of the human mind and the need for growth, markets always find a way, especially in the ever-connected and globalized mass-market we live in today.

I don’t think we should approach this issue based on our beliefs, hunches, or gut feeling. Rather, let’s use logic and reason based on the evidence that we have so far.

Consider this. The exponential expansion of technology has been growing remarkably smoothly for a long time. And I’m not referring to the well-known Moore’s law, which states that the number of transistors that can be placed on an integrated circuit doubles approximately every two years. Integrated circuits are just a tiny fraction of the whole spectrum of change that pervades technological advancement.

Kurzweil notes that Moore’s Law was not the first to do so, but rather the fifth paradigm to provide accelerating price-performance. Computing devices have been consistently multiplying in power (per unit of time), from the mechanical calculating devices used in the 1890 U.S. Census, to Turing’s relay-based “Robinson” machine that cracked the Nazi enigma code, to the CBS vacuum tube computer that predicted the election of Eisenhower, to the transistor-based machines used in the first space launches, to the integrated-circuit-based personal computer which Kurzweil used to dictate the very essay that described this phenomenon in 2001.

To get an idea of what exponential growth means, look at top graph below, which represents the difference between a linear trend and an exponential one.

A curve that explodes out of the normal graph looks like a straight line on a logarithmic plot. You’ll understand why we utilise logarithms when talking about exponentials: there simply isn’t enough space to show the curve.

The other graph, underneath, represents growth of computing over the last 110 years, on a logarithmic plot.

It is not a straight line. It is another exponential curve. In other words, there is exponential growth in the rate of exponential growth. That’s fast.

Computer speed (per unit cost) doubled every three years between 1910 and 1950, doubled every two years between 1950 and 1966, and is now doubling every year. Computer power is not simply increasing. It is increasing faster and faster.

We can see already the consequences of this today, as technology progresses at an unprecedented rate. Computers used to cost hundreds of millions of dollars; they required huge rooms for storage, cooling, maintenance, and a lot of power. Now they can easily fit in your pocket. They are thousands of times more powerful and cost millions of times less. That’s a billions-fold increase in just thirty years. As we progress even more, the changes will be so rapid that we will hardly be able to keep up. Things will change dramatically in a matter of months. Or weeks. The long awaited dreams of science fiction are becoming a reality.

We already have autonomous cars that drive hundreds of thousands of miles without a problem, and with no human intervention. They are perfectly safe, and they even outperform highly trained human drivers.

And, unlike us, they can only get better and better.

We have coordinated groups of autonomous robots that can do the job of building workers, constructing a six meter high tower without any human intervention.

We have new and smart ways of building houses. Typically, it can take anywhere from six weeks to six months to build a 2,800-square-foot, two-story house in the U.S., mostly because dozens of human beings do all the work. But a new prospect may change everything. It is possible than within this decade Contour Crafting (a sort of large scale additive manufacturing) will have become so advanced that we will be able to upload design specifications to a massive robot, press print, and watch as itspits out a concrete house in less than a day. No humans required, except for a few supervisors and designers.

Don’t think that’s possible? Think again.

3D printing is already a billion dollar industry. It’s growing exponentially, and it’s going to revolutionize the way we think about manufacturing forever. We can print a physical object ourselves, both as individuals and as part of small research centers. Not just toys, tools, and simple objects for the house, but also prosthesis, teeth, and even human organs. Things become better, more reliable, cheaper, customizable, personalized. And most important of all, easily sharable, either with a market place similar to iTunes, Amazon, and Android, or even for free. Legally. Or not. Either way, once the information is out there you can’t stop it. Once the technology becomes available, you can’t un-invent it. It’s out of your control.

Where does this lead us? I know some of you technoskeptics will think this whole thing is a fad, and very little will change. On the other side, I know there are many technoenthusiasts who believe this will finally liberate us from this 18th century mentality that keeps us behind, and project us into a Star Trek-like future of abundance, wonder, and exploration. But before that, there is a very real problem that needs addressing, right now. Not in 10 years time, not in 100 years time. Now.

The following data is taken from the U.S. Bureau Labor of Statistics, 2011.

Take a good look at the table above. Now answer this: how many occupations were created in the last 50 years? There are 7 main occupations listed above, making up 43.88% of the U.S. Workforce. How many new types of jobs were introduced because of the advances in technology? Not a single one.

The reality is that the new jobs created by technology employ a very small fraction of people, and they tend to disappear soon after they are created. They require a high level of education, flexibility, intelligence, and entrepreneurship. Most people have not been trained to be like that. In fact, our entire educational system was created just after the industrial revolution, with the idea of creating factory workers. Manual jobs. Repetitive jobs.

So, I have one simple question:

What will the millions of middle-age, unskilled workers do when they are displaced by technology?

I have discussed this with economists, entrepreneurs, futurists, and not a single one was able to give me a convincing answer. Technology is advancing simply too quickly for the newly unemployed to learn new jobs. In the past, we have seen automation cutting the workforce, but unskilled workers all gravitated towards places like Walmart to find an easy (even though very unsatisfying) job. Now, if Walmart begins automation, competitors will have to do the same, in order to stay alive in the market. There would be no coming back for the shopping industry. It is an irreversible process; the replaced jobs will not come back.

The same will happens for millions of drivers, construction workers, and many others. But having these jobs removed, what will people do? So far, nobody has been able to answer that question. The reason for this, I think, is because there is no answer. Not in this system, not in the way it’s designed to work. The displacement of human labor in favor of automation will have a snowball effect on everything. With unemployment levels at 30% or 40%, the economy will collapse.

Without a backup plan to adjust to a new paradigm, we can expect the worst. Civil unrest, riots, police brutality, and general distress of the population will continue to rise until critical levels are reached, at which point the whole socioeconomic system will crumble upon itself. This has negative repercussions across the whole spectrum of the population, and it is against the interest of everyone on this planet, even of the richest and wealthiest people.

I think that if we want to solve this challenging problem of our time, we will have to rethink our whole economic and social structure. Rethink our lives, our roles, our purposes, our priorities, and our motivations. It’s time for a paradigm shift, one that will radically revolutionize our social system.

Have we ever considered the possibility that finding job replacements, no matter what, might be the wrong choice to being with? Have we ever stopped and wondered if the only possible economic systems are capitalists and socialists, and everything just lies in between? Have we ever conceived of the notion that maybe the need for constant growth is not just ecologically unsustainable, but also diminishes the quality of our lives?

Too often we treat things as separate subjects, not realizing the interconnected nature of our reality. This mistake has made us weak and vulnerable. Over the last 70 years, we have set the stage of our own demise, we have become increasingly discontent, the quality of our relationships has fallen, and we have lost track of what really matters. Today, everything is amazing, and nobody is happy. It’s time to take a step back and think about where we are going.

Let us begin the journey.

Did the Stimulus work or a failure? Check this out.

The Republicans and Mitt Romney are continuing to claim that the Stimulus that Pres. Obama had passed, with the help of a few nervous Republican Senators, was a big waste of money. Mitt even claims that Pres. Obama has even made the economy worse.

One might argue of the stimulus bill worked or was it just coincidence that the economy started to turn around, not get worse as Mitt claims.

Watch his video and you decide?