Solutions to Automation

Government continues to force more and more expenses onto business and contrary to what most believe...none of this is free to society!

What choices are left to the business owner when expenses begin to exceed potential income? Reduce labor and demand higher productivity? Increase the price of goods and services? Downsize the business? Automation and/or robotics? Outsource some percentage of expenses? Move facility offshore? Close the doors? For those who say 'just increase revenue' I say this is disingenuous because if this could always be done we would never have these issues. It is logical that the higher the business costs the more these issues will be exacerbated...

 

simple poverty and capitalism's, natural rate of unemployment. i make a motion to solve them at the rock bottom cost of a form of minimum wage.

 

I wouldn't say that's a problem as much as a choice. Very little of what we choose to buy is a necessity, and that's OK. If you can afford it, I have no problem with you spending your money on luxuries that bring you some joy.

The problem you may be identifying though is when folks believe some of those luxuries are necessities—then after buying that crap expect others to pickup the tab for their real necessities (or for more crap they call necessities).



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The minimum wage is a floor on wages. It is not the fault of Labor that capitalists cannot manufacture a Jobs Boom with their capital Tax preference for capital gains.

 

And why shouldn't they?

And until the 20th century that floor remained relatively constant. Constant inflation has done more to increase the gap between the wealthiest and the poorest than anything else.

Suppose for 1 year all the highest income earners were to agree to work for and live on a $52,000 annual income (about $25 an hour)? What effect would that have on our economy, jobs, and even more importantly government tax revenue collection?

 

It's quite funny how 'facts' can be viewed and presented to reflect something other than a true fact.
While the 'productivity' line of the chart probably reflects a true fact, the 'hourly compensation' appears to represent the cost of total human labour hours has diminished as a result of automation and NOT that wages paid those who remain employed have not grown or have grown only 13.1% from your chart or only 40% as shown in the post you attached.

In 1970 the minimum wage was $1.60 and in 2010 it was increased to $7.25. Based on your chart the minimum wage has increased much more than 13.1% and also more than 40%, actually about 453%. In 1970 my income was only about $180 per week, and in the early 90's doing a much less labour intensive job similar to what I was doing in 1970 working for the same company I was being paid more than $800 per week.

If a machine doubles the production with half the employees, even doubling the wages of the remaining employees would produce no increase in the hourly compensation without factoring in the number of employees relative to that one particular work force. Of course if the unemployed half are factored in and as a result unable to find work with the same pay as before that might result in what your graph shows, but then the production increase of the graph has nothing to do with their employment but only with their replacement by more efficient means.

Without making any assumptions, supply and demand is more relevant to worker pay and product pricing while automation is often the least costly means by which production can be increased in a competitive market while complying with government rules and regulations.

 

The owners have a compelling reasons for both cutting costs to improve competitiveness as well as pocketing the profits so typically they do a little of both. What they don't have any incentive to do is raise workers compensation.

What many fail to do is "connect the dots" related to the graph. Union membership per capita peaked in 1954. During the 1950's it became commonly known that organized crime was involved with the Unions and that began to reduce the per capital membership in the unions while to total union membership continued to grow into the late 1970's. Organized labor, even with organized crime involvement and perhaps because of it, was able to negotiate increased compensation as the productivity increased due to automation. During the 1960's the federal government became very effective in removing organized crime from the Unions and by 1970 organized crime had been basically removed from union involvement. The "power of organized labor" was all but eliminated in our overall economy. The problem was two-fold. The government did not empower organized labor to make up for the loss of power when organized crime's influence was removed and, in fact, the government went in the opposite direction to reduce the power of the unions. The balance of power between the unions and the owners of enterprise was lost and we witnessed the divergence of productivity and compensation starting in the early 1970's. As the unions lost power then fewer Americans joined the union and today, because organized labor has virtually lost all power, we've seen union membership hit it's lowest point since the Great Depression.

If we want to see a market based solution to the problem of increased productivity without corresponding growth in compensation the government needs to re-empower the unions so that they can effectively negotiate with the owners/management of enterprise. We'd need to restore the balance that once existed in the late 1940's through about 1970 that's reflected by the graph and where the middle class really came to into existence in the United States.

Of course the fact that there's already been this divergence is something that not even the unions could overcome. Strong organized labor could address the future but could not correct the past. We've dug a hole that we really can't get out of without positive government intervention such as a mandated increase in the minimum wage to level the playing field based upon the past increases in productivity where compensation didn't increase correspondingly.

But this doesn't address the fact that automation has progressed to the point that the jobs are simply disappearing completely and that in the foreseeable future human labor will fundamentally become obsolete. Organized labor only helps when labor is required but can't help when labor isn't required.

 

The chart reflects median productivity per worker compared to median compensation per worker and "median compensation" is not the same as minimum compensation (e.g. minimum wage) for employment. Comparing the minimum wage to median compensation is a comparison of apples and oranges.

Additionally the chart is adjusted for inflation while your response ignores this.

While supply and demand are certainly factors in a free market there also has to be an equilibrium between the "workers" and the "owners" where mutually agreeable compensation is established between the workers and the owners. That equilibrium has been lost because of the declining power of the unions since 1970. As the chart reflects when the unions were the strongest, arguably because of the influence of organized crime, there was a balance where productivity and compensation rose proportionately.

No one's advocating for organized crime but it unquestionably used tactics, often illegal, that gave power to organized labor. With the removal of organized crime in the unions that power was lost and not replaced where the unions would retain the same powers of negotiation to preserve the "balance of power" between the market forces and compensation for the workers. Instead of increasing the powers of the unions where they could use that power in a lawful manner to retain the equilibrium we further cut the powers of the unions so that the equilibrium has been lost completely and that's what the divergence in the chart represents.

We needed to replace "unlawful force" with "lawful force" to retain the equilibrium but we didn't do that and instead worked to further reduce the positive influence of organized labor in our economy.

 

Simply reserving Labor at the rock bottom cost of a form of minimum wage is a solution to automation the relies on existing infrastructure to lower costs.

 

supply side economics has a solution for that.

 

It appears we can only complain about automation. From the chart provided by Meta777 it should be obvious that automation, NOT human labour has greatly increased productivity. We might call that line Apples. On the same chart we see another line representing Hourly compensation. Let's call that one Oranges.

Apples:
What I find obvious, and correct me if I'm wrong, is that automation is much more efficient than human labour alone and when set up and running properly produces output at a more consistent quality. Perhaps it would have been more meaningful to display the product price instead of Hourly compensation on the chart?

Oranges:
What is the value of an hour of human labour? Is it worth more today than it was 20, 40, 50, or even a hundred years ago? Until the 20th century the cost of human labour did not grow constantly, but since the early 20th century we have lived with constant inflation, a devaluing currency, and a much wider choice and cost of both needs and wants. Since the creation of a Federal minimum wage in 1938 set then at $0.25 per hour inflation has resulted in what would be the equivalent of a $4.20 per hour minimum wage today yet it is currently $7.25 per hour. According to the BLS the median household income in 1948 was $3,100.00 and in keeping with the dates, 1948-2011 of the chart provided by Meta777 the inflation adjusted median household income in 2011 would have been $28,934.06 yet from what I've been able to find it was actually $50,054.10.

Can we, or should we compare Apples and Oranges? Does or should unskilled labour, when the supply is high, promote it being paid a higher wage? When more people are being educated with skills needed for higher paying jobs does their demand increase with their supply keeping the wages high or higher?

Should we continue to discuss solving automation or would our time be better spent attempting to identify and agree on the real problem sources and seek solutions?

 

No it isn't because automation is rendering human labor obsolete. If there's no job then the minimum wage has no meaning.

 

I disagree if we look at the facts.

Fact #1: Our economy is, and has always been, based upon human labor.

Fact #2: Automation renders human labor obsolete.

Conclusion: We must change our economy so that human labor isn't the foundation for the economy.

That's why I suggested we change from "human labor" to "human intellectualism" as the foundation for our economy. Of course that would be challenging but it does represent a solution to the problem of automation that's making human labor obsolete.

 

Reserving Labor at the rock bottom cost of a form of minimum wage means, unemployment compensation that clears our poverty guidelines on an at-will basis in our at-will employment States.

There is no reason to burden Labor for Capitalist's failure to provide jobs.

 

Unemployment compensation, in all of the states where I've lived, is based upon a tax imposed on business. It provides income to those workers that are "between jobs" and not to those that never have or can't secure employment for whatever reason.

When automation eventually eliminates the need for human labor then the term "unemployment" becomes moot because there will be virtually no employment at all. Unemployment compensation refers to compensation a person receives between jobs but when the jobs cease to exist then there's no longer a foundation for unemployment insurance. It's one thing to provide unemployment compensation if the possibility of employment exists but when employment fundamentally ceases to exist then unemployment also ceases to exist.

If there are no jobs for the workers then you're referring to government welfare assistance and not to unemployment insurance.

 

You are begging the question. In any case, simply solving for socioeconomic phenomena is a promotion of the general welfare. I am referring to unemployment compensation simply for being unemployed in any at-will employment State. Anyone that doesn't want to stay poor on an at-will basis can get a job.

As a social safety net, it would be more cost effective than means tested welfare.

We could be lowering our tax burden and improving the efficiency of our economy at the same.

 

So 'folks' should just accept as fact that they will and apply that knowledge in a way that benefits them.

Compensation to those who remain employed after automation reduces the number of their co-workers may or may not increase but it may result in some additional employees being hired at a lower compensation to do lesser skilled work.
While automation results in diminished employment in some businesses it also creates opportunities for those who become unemployed to apply their skills in new jobs possibly even competing with their previous employers.

I said ALL of them, meaning everyone who currently earned more than $52,000 per year. How did Steve Jobs live on a $1 a year income?
My point is that our government NEEDS those who are earning high incomes to provide the tax revenues necessary to fund a budget that is not primarily funded by borrowing.
At the same time many of those who are employed need them to purchase the products and/or services that only they can afford which pays their wages. The production of needs alone would not produce enough jobs to employ but a very small portion of the population, and most of the economy is based on the production and consumption of wants of those with the highest incomes and/or wealth.

 

I have been thinking about a solution to automation and at first I was thinking about an art based economy, where entertainment still required human workers because people can relate to human singers and human actors more than robotic/AI singers and actors. Even when AI and robotics take away all the jobs, even research and development jobs, there will still be some demand for human workers. It won't be enough though and the economy as it's currently designed would fail.

The way I see it, there are two options. Subsidized the entire human population, so they have money to spend, then tax corporations. Everyone would have a lot of free time to spend on entertainment, which would experience significant growth. However, there would be no reason to learn anymore, we could get really stupid like that movie Idiocracy. I was thinking instead of subsidizing people, we pay people to go to school. We can pay them on a per credit basis and give them bonuses for achieving a higher letter grade. We could decide on the range of the income spectrum, like 35k to 200k or something for students, which would be the majority of workers. Artists could make more and would be the wealthiest people on the planet but they would have a lot more competition.

 

Would we benefit if the entertainment industry produced MORE documentary films such as Idiocracy?

If automation ever progresses to the point that human labour becomes completely unneeded, then neither will human existence and any truly intelligent artificial intelligence would recognize that fact and cease to provide the needs of human survival allowing it to become extinct returning the planet to nature which progresses with no need of moral rights, wrongs, Gods or government.

 

I believe the best plan may be the one that can be implemented at the rock bottom cost of a form of minimum wage that simply compensates for structural and other forms of unemployment on an at-will basis in our at-will employment States.

The objective is to use some socialism to bailout capitalism, like usual, with a social form of minimum wage that clears our poverty guidelines and that conforms to the existing doctrine of employment at will; thus, solving for the laissez-fair, capital, laziness of capitalism with socialism's implied social work ethic; such as capitalism's simple poverty and capitalism's, natural rate of unemployment.

 

Inane repetition only becomes more boring, and like Henny Penny tends to ignore the poster who may on a rare occasion might have something of value to post.

If you needed a plumber or an electrician to do some work at your home what would you consider to be a fair hourly wage you would willingly pay?