Category Archives: Technology

Why Sanders and Trump Won

The results are in from New Hampshire, the two outsiders have won.  Most pundits talk about the anger at Washington the anger at the establishment, what missing is the true explanation why Trump and Sanders are doing so well.  Their support reflects the growing sense of unease among most Americans.  There is the growing sense that their  children will not be as well off as they are.  Both Bernie Sanders and Donald Trump have answers for that, and both are wrong.  Sanders blames the banks and other large corporations and Trump blames the illegal immigrants.  Both make excellent bogeymen but neither is the cause.  The banks and the big corporations are the symptoms and the immigrants are simply the wrong target.

The real economic culprit is technology, and no one is willing to say so.  How may jobs have been taken by computers in the last few years.   How many people answer the phones, act as secretaries, How many jobs has Amazon replaced?  How many printers are out of business thanks to E-=books? How many newspaper jobs have been lost thanks to Google taking all the advertising revenue?, How many jobs will be lost when the driverless car becomes a reality? How many more jobs will be replaced by robots?  The list is long and growing, and it gets event longer the better computers become and  the closer to true Artificial Intelligence becomes

For centuries there has been a balance between capital and labor, technology has upended that balance and now capital is ascendant.  The growing wealth gap is a direct result of this change.  The wealth created by Google, Facebook, Apple and others have helped fuel that growing gap.  Many of the financial instruments that have made many in the financial sector so wealthy are possible only because of ever more powerful computers.  When almost any worker can be replaced by technology the ability of workers to negotiate for better wages is very limited.  Politicians talk about preparing our children for 21st-century jobs, but I would love to know what they are. How many programmers do we really need?  How many Apps?  The answer is many less than we need taxi drivers, truck drivers and all sorts of other drivers that will soon be replaced.

Voters understand that there is problem, but it’s hard to blame technology.  In the past new technologies always brought new opportunities.  The end of the wagon, heralded the era of auto manufacturing, this time, that is unlikely.  In the past technology replaced our muscles, now it replaces our brains, which means it essentially replaces us.  Its a hard concept to fully understand, and even a harder concept to find solutions for. Since there are no clear solutions we have politicians who have created false bogeymen.  I fear that the fear in the land is very real, and without some honest discussion of the issues by someone fear will win out, and we could end up with one of these candidates as President of the United States.    A truly scary thought!

Chip
Chip
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Computers and the Future of Work

Recently there has been a number of books and articles written about the end of the work  including one in the Atlantic called World Without Work  or the book Rise of the Robots.

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It’s a problem that I have been thinking about for a long time and to me its probably the greatest economic threat  facing the Western world.  For the past few years one of the major issues topic of discussion has been the rising income disparity in most western society.  While the problem has been discussed, not enough effort has been directed at understanding the causes of the problem.  While a clear and immediate cause has no doubt the drop in income taxes and estate taxes.  However that only explains part of the problem, another part of the problem is no doubt the percent of the economy that the Financial sector takes which has risen from from 2% to 6%. Much of the rise of the financial sector was made possible only because of computers.  No one could be making any money doing high speed trading if it was not for computers, and there could be no mega banks without their computer systems.

The largest culprit however, is the raising roll of computers in society.  Whether it’s replacing factory line workers, the book store workers who no longer have jobs because of Amazon, or even the para legals who are now being replaced by computer programs, the world needs less workers to do more.  Today, there are few jobs that cannot be replaced by  computers.  This has resulted in a fundamental shift in the balance between Capital and Labor.  For centuries there has been a balance between the two, to create products you needed both- labor needed capital to buy equipment- capital needed workers to produce the products so there remained a balance between the two.

Today with enough capital you can accomplish almost anything.  Very few people with very little infrastructure, can accomplish very much.  Google is an example of that shift- Profits that were distributed over hundreds of newspapers and tens of thousands of workers are now concentrated in the pockets of Google who now earns more then the whole newspapers industry together all thanks to its massive computing power and brilliant algorithms.

Many times in the past people have lamented new technologies and the jobs that have been lost.  I believe that this time it’s different, we are not expanding the muscle power of humans, by giving them mechanized plows or making them move faster by giving them trains and planes, we are replacing the human brain with the fruit of technology.

The politicians of the world spend their time debating, lowering or raising taxes, tariffs and trade agreements, while missing the much larger story right in front of us.  The implications of these shifts are too large to fully calculate, but require serious examination.  They will also require a complete change in our social and economic policies.  It will not be enough to just retrain workers we will need to rethink the very nature of work and income.

This past week I had to pre tape my weekly radio appearance, which usually covers Foreign  Affairs, but since we did not know what would happen in intervening days we decided to talk about the future of work instead.

 

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