Europe’s Populist Politicians Tap Into Deep-Seated Frustration
In the US, The Bern, and The Donald have stolen the show, and if the Democrat primary relied only on the votes of the party members, The Bern would likely have won, but the party is not a democrat institution, it only allow a modicum of democratic fixtures to palliate the masses. It is a socialist totalitarian institution, but, of course!
Read more below the break!
Robots Stake Their Claim in the Operating Room
So, what, besides pay, and prestige, is the difference between a surgeon, and an auto mechanic? Right, nothing, and the robots which replace both will likely charge you the same for similar services. Ok, the surgical robot will need additional cleaning, and sterilization, and its procedures will likely take a bit more time, after all screwing down a pipe clamp takes less time then stitching up the small intestine. So, what maybe double the price or perhaps triple for the surgery?
The upside? Fewer mistakes, faster, no need for rest, 24 hour service. The downside? No wonderful surgeons bedside manner! All those out of work surgeons trying to wash my car window at every stoplight?
A few years after this become common, mobile surgical robotic units will simply be dispatched to accidents and injuries to perform surgery prior to transportation, all for a fraction of the price of the surgery today. Cool!
Millions of people truly believe that raising the minimum wage to $15 will result in millions of workers receiving a large wage increase, and a living wage . . .
"A Total Game Changer" - From Over-Population To De-Population
The problem is too many old people, and not enough young, in the progressive system which is dependent upon a large and increasing young population to pay for the oldsters.
The progressive system became a Ponzi during the 1980s in Japan, the 1990s for Germany, and most of Europe, including East Europe, and Russia, soon in the US, and within the next few decades in China.
An economic and financial system premised on perpetual growth was bound to run into trouble (what do you do when you have taken a wrong turn?...apparently just keep going!). The inevitable deceleration of population growth was the trigger that turned central bankers into pushers offering ever cheaper credit. The lower rates drove unsustainable rates of consumption absent even further rate cuts and likewise drove overcapacity which likewise needed even lower rates. But negative rates of NIRP are simply no longer under the heading of capitalism (a market that doesn't value capital likely isn't capitalism?!?). When we've clearly changed "ism's"...we've crossed the Rubicon.
What happens as population growth turns to population decline is honestly and literally a complete and total game changer. A flat to declining number of buyers and consumers opposite ramping elderly sellers plus their unfunded liabilities is a problem with no happy resolutions. Currencies (what will constitute "money"), "free-markets", and perhaps the basis of civilization hang in the balance of the transition from high population growth to potential outright depopulation.
I believe this is the correct lens through which to view and understand why growth is perpetually weakening, why commodity overcapacity and slowing demand will only accelerate, why the Treasury market continues to see "buying" despite the near total absence of buyers (Treasury Mystery), why equities are a "buy" (but for all the wrong reasons), and why precious metal valuations are so extremely suspect in the face of a monetary onslaught. "
We need a new model which will allow us to find a new way forward economically based on these changes. The ownership economy, and the Third Way offer some good ideas, as does the economic reformation going on in both Sweden, and Germany. All of our socio-economic systems are poorly designed for the problems we face today, welfare is a disaster tying the poor to poverty, Social Security, Medicare, and the other oldster safety net no longer is functional, due to the massive cost overhang. All of these and our tax code must be reformed to meet our needs going forwards, this will require a new socio-economic model.
The essential elements of this are republican governance, free markets, reformed religions, limited government power, and personal ownership of assets. What this will look like precisely is anyones guess.
. . . it might be the place where 20 somethings go to retire, but increasingly they must do that living in the parents basement!
I spoke briefly with Abigail, a young woman who works at the local Starbucks as an assistant manager. She is a smart cookie, doing all the right things, but trapped in the hell that is the blue model. Wages in Portlandia are low, rents high, and the cost of living is fairly high when compared to the wage.
You may remember a few days ago when I discussed the fact that Portlandia is the worst city in the country for Millennial housing affordability.
Boomer versus Millennial Wrestling World Smackdown, Portland is out ahead, but Seattle is running a close second!
Abigail is the poster child for this problem. She is educated, employed, and still not able to find work at a wage which allows her to live on her own. This even though she is an assistant manager. This is not a slight on the employer, but an indictment of the current blue model, and our unwillingness to make necessary change.
Our conversation started with a comment on the high cost of rents in Portlandia. It roved from rent to wages, to college, and on to how difficult it is to make it on ones own today, especially for the young. We hit other areas like equal pay, saving, and opportunity.
Walter Russell Mead has an article addressing this problem.
Small Business Should Be Priority Number One
I agree with the thrust of this post. The blue model was in part the attempt to counter balance big business with big government, big labor, big banking, big law, etc. The idea was to create huge institutions to help create space for the little guy to keep from being crushed by the bigs.
The Internet, and the tech revolution has essentially altered the landscape, allowing the individual access to information which used to be the sole providence of the bigs. This was because information prior to the Internet was expensive to obtain, and expensive to store, collate, analyze, and make usable. This is no longer true. In the Internet age information wants to be free, and it is very difficult, probably impossible to keep information sequestered. The result is that in many situations the individual has the same access to information as the big, but is without the internal bureaucracy the big is saddled with. And so the individual is able to act on information more quickly, and frequently more profitably.
Where it used to be difficult for a small business to compete directly against a huge corporation, today it is not. The small can fine tune and focus on the specific needs of a client or a small group of clients. These often forgotten clients are much happier with the individualized attention, and the extensive knowledge the small business usually has. This is one of the reasons for the massive, and ongoing crack up of the large mega law firms.
The Boomers are doing a great disservice to our young people by continuing to focus them on attempting to find a niche in the old blue model world. Big business as mega employer is likely a thing of the past. The Mead idea here for a transition to the new socio-economic model is a very good start. The sooner the young people begin to think independently of the antiquated blue model, the sooner they will be able to find a niche and begin prospering from the collapse of the blue model.
Perhaps we will need to reform welfare to create a better more usable safety net to allow these young people to take more risks in the entrepreneurial world?
Please reread one of my earlier blog posts linked below. It offers a much more comprehensive analysis of some of these issues, and opportunities.
The Stockman, The Donald, The Noonan all in one place!
The guaranteed income could be an option which allows these young people to take necessary risks.
Best of luck to Abigail. I have been toying with meeting with she and her boyfriend for a an hour or so sit-down session where I pick their brains to help me understand the Millennial better. I would be willing to part with $50 apiece. I will ask her next time I see her.
MIT students invented a robotic kitchen that could revolutionize fast food
. . . the kids at MIT have a solution, a full restaurant, automated.
See, now that wage is $0 per hour! Much better!
Does this look like the next Red Box? How cool would it be to go grocery shopping, and while in the checkout line, order the food and have it waiting in the Spyce machine out in front of the grocery story, hot and ready 10 minutes later. Just put your groceries, and the Spyce food in the car, and head home. And this is not burgers or pizza, this is a regular meal, with a significant number of possible variations.
I can't wait.
Are Robots Job Creators?
. . . as usual.
"Automation, driven by technological progress, has been increasing inexorably for the past several decades. Two schools of economic thinking have for many years been engaged in a debate about the potential effects of automation on jobs, employment and human activity: Will new technology spawn mass unemployment, as the robots take jobs away from humans? Or will the jobs robots take over release or unveil—or even create—demand for new human jobs?
The debate has flared up again recently because of technological achievements such as deep learning, which recently enabled a Google software program called AlphaGo to beat Go world champion Lee Sedol, a task considered even harder than beating the world’s chess champions."
Mass jobs are a relatively new phenomenon. Prior to the industrial period there was little need for employees, and so there were few. Most of these jobs were performed by slaves, or people who would not be confused as an employee. Today, mass jobs are common, plentiful, and essential to the economy. So, people like the author, and the people arguing about this issue seem to fail to understand that if this is a phase shift, it will likely do away with jobs as the mechanism by which the new economic model distributes wealth through society.
I am unsure whether the outcome of the massive shift we are now undergoing will necessitate a phase shift including the elimination of jobs, but if it does it will result in a fairer, wealthier, more prosperous, and more inclusive economy, not an economy which will see more segregation, and wealth inequality. Although just as the shift from the agricultural phase to the industrial phase brought some temporary wealth inequality, so it is likely will any phase shift in the economy. This happens simply because some see the way to the new economy, and this brings great wealth, while other attempt to conserve the old economy, and this destroys wealth. In this divide tech is bringing wealth, while the blue model, unions, and the like are destroying wealth.
"Ultimately the question boils down to this: are today’s modern technological innovations like those of the past, which made obsolete the job of buggy maker, but created the job of automobile manufacturer? Or is there something about today that is markedly different?"
This is the wrong question. The question is will these innovations change jobs to better jobs, or will it eliminate jobs? That I cannot answer.
"It may seem easy to dismiss today’s concerns as unfounded in reality. But economists Jeffrey Sachs of Columbia University and Laurence Kotlikoff of Boston University argue, “What if machines are getting so smart, thanks to their microprocessor brains, that they no longer need unskilled labor to operate?'"
These people are worrywarts fretting about things they do not understand, and likely cannot understand. They need to follow Niebuhr's prayer. "God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference. Reinhold Niebuhr Quotes at BrainyQuote.com" The do not, and instead they fret, stew and harumph over issues they cannot change.
"As the decoupling data show, the U.S. economy has been performing quite poorly for the bottom 90 percent of Americans for the past 40 years. Technology is driving productivity improvements, which grow the economy. But the rising tide is not lifting all boats, and most people are not seeing any benefit from this growth. While the U.S. economy is still creating jobs, it is not creating enough of them. The labor force participation rate, which measures the active portion of the labor force, has been dropping since the late 1990s."
This is unadulterated bullshit, or evidence that the people saying this have no understanding of what life was like in the 1970s, 1980s, or 1990s. The authors statements demand substantial proofs not mere hot air and blather.
The unemployment rate today is at a national average below 5%.
Labor force participation prior to 1970 averages about 58%, it was only after the equal rights, and the women's movements demanded their inclusion in the workforce in great numbers that we saw the labor force participation rate skyrocket to absurdly high levels. There is no evidence that Americans actually wanted this level of labor force participation. We know they did not historically. Now that we are far wealthier than we were in the 1940s, -1980s it seems likely that the LFP rate shift is due to the desires of fewer family members to work, and participate more deeply with family needs, children's needs, old age adult needs, and the like. Statements like the ones made here need extensive proof. They have none, and the author clearly has no understanding of LPF rate changes over time. Yet another piece of detritus to ignore.
The poor today live all but infinitely better than the middle class of the 1950s, 1960s, and likely even the 1970s.
Air Conditioning, Cable TV, and an Xbox: What is Poverty in the United States Today?
The poor and the average of today have a similar spectrum of amenities, although the poor do have fewer.
How Poor Are America's Poor? Examining the "Plague" of Poverty in America
"The typical American defined as "poor" by the government has a car, air conditioning, a refrigerator, a stove, a clothes washer and dryer, and a microwave. He has two color televisions, cable or satellite TV reception, a VCR or DVD player, and a stereo. He is able to obtain medical care. His home is in good repair and is not overcrowded. By his own report, his family is not hungry and he had sufficient funds in the past year to meet his family's essential needs. While this individual's life is not opulent, it is equally far from the popular images of dire poverty conveyed by the press, liberal activists, and politicians.
But the living conditions of the average poor person should not be taken to mean that all poor Americans live without hardship. There is a wide range of living conditions among the poor. Roughly a third of poor households do face material hardships such as overcrowding, intermittent food shortages, or difficulty obtaining medical care. However, even these households would be judged to have high living standards in comparison to most other people in the world."
If you scroll to the bottom there is an instructive chart on US versus international housing conditions of which only three countries even compare with the US poor's housing conditions, based on Floor Area per Person:
Country (City) Floor Area per Person Persons per Room
US Poor 439 .54
Australia (Melbourne) 545.73 .69
Norway (Oslo) 452.09 .50
Canada (Toronto) 442 .50
After this all of the entries are below the US Poor
Sweden (Stockholm) 430.56 .56
Remember this compares the US POOR with these other nations (cities). If one takes the time to compare the amenities the US poor have to the amenities the average person in Europe has it is shocking how much better the lives of even poor Americans are than the average European. This includes medicine.
CDC - Cancer Survival: The Start of Global Surveillance
The CONCORD-2 study is well worth your read. Remember that the figures for the US include our uninsured. It is impossible to believe that the European countries do not beat the US in every category since pretty much everyone in these countries is covered by a national health care plan. But they commonly do not, and even more surprisingly the US commonly beats many of these countries for the majority of the cancers, especially the more esoteric, even with our uninsured cohort.
Five-Year Survival Rates for Patients Diagnosed with Five Common Cancers in Seven Countries, 2005–2009
Country Female Breast Colon Lung Prostate Childhood Leukemia
Canada* 85.8 62.8 17.3 91.7 90.6
France** 86.9 59.8 13.6 90.5 89.2
Germany 85.3 64.6 16.2 91.2 91.8
Italy 86.2 63.2 14.7 89.7 87.7
Japan 84.7 64.4 30.1 86.8 81.1
Kingdom* 81.1 53.8 9.6 83.2 89.1
States 88.6 64.7 18.7 97.2 87.7
Comparing the amenities the poor have today with the past is eye opening, but I will leave that mostly to you. I don't remember most Americans in 1970 having a cell phone, a computer, internet, air conditioning, a microwave, color television (at all), cable or satellite TV reception, a VCR or DVD player, or a stereo. Food issues were rampant among the poor, as was hunger, and medical care was a problem as well, both in availability and the care available. Medical care today is far advanced from that of 1970.
No, the average poor person today lives better than the average person of 1970, and of everyone living in 1920 or before.
The New Republic should be ashamed of itself for publishing this tripe.
"While manufacturing output is at an all-time high, manufacturing employment is today lower than it was in the later 1940s. Wages for private nonsupervisory employees have stagnated since the late 1960s, and the wages-to-GDP ratio has been declining since 1970. Long-term unemployment is trending upwards, and inequality has become a global discussion topic, following the publication of Thomas Piety’s 2014 book, Capital in the Twenty-First Century."
This is bullshit, and nonsense. It is not the actual wage which matters but what the wage can purchase, and wages today, stagnant or not purchase more than they did in the past, and they purchase higher quality goods. Plus, non-wage benefits have risen, and when accounted for, this answers the wage stagnation "riddle" nicely. Failing to evaluate all the evidence, and misunderstanding that product price deflation, and quality improvement also answer much of the question.
Stagnating Middle-Class? - Cafe Hayek
Dead Wrong with Johan Norberg - Stagnant Middle Class
The New Republic has attempted here to pull off the difficult Triple Lindy of squaring the progressive economic canard. It cannot be done, or if it is, it requires advanced forms of pretzel logic to pull off, because the facts simply do not support the progressive theories.
Millennials Like Socialism — Until They Get Jobs
. . . and find in the robbing Peter to pay Paul game, they are Peter. They will like it even less once they have to start paying for all those wealthy Boomers retirements, medical costs, etc.
"Millennials are the only age group in America in which a majority views socialism favorably."
Of course they do. Families are socialist in nature, and the children are takers, not earners. But once they learn what it is like to work for pay, they begin to change their minds.
"So what does socialism actually mean to millennials? Scandinavia. Even though countries such as Denmark aren’t socialist states (as the Danish prime minster has taken great pains to emphasize) and Denmark itself outranks the United States on a number of economic freedom measures such as less business regulation and lower corporate tax rates, young people like that country’s expanded social welfare programs."
Also unsurprising, since these people have little savings, they feel insecure. The American system is based on the atomized nuclear family, where each individual or couple is economically separate, and independent from others including their family. This creates a dynamic economy since each nuclear family must achieve to support itself, but it also creates a high level of insecurity. Traditionally this was solved by lots of hard work. Since the welfare revolution back in the 1930s, we have seen ever more welfare, or security spread across the land. The Millennials believe it is appropriate for them to access some of this security to assuage their feelings of insecurity.
This is likely the least efficient way to solve this problem. A better way would be to create, and fund personal tax favored (and bankruptcy protected) accounts which will allow the individual to create a personal welfare buffer. While the government will need to backstop such a program, it would go far to reform the welfare system in a positive manner.
Another mechanism to address this would be a minimum income formulation (this can be used in conjunction with the tax favored account model). This should be accompanied by the elimination of the income tax, the corporate tax, the payroll tax, and the estate and gift tax. Then a minimum income could be instituted where individuals so needing would have to access the funds by agreeing to pay income tax. Of course, this "tax" would be negative while the individual's earning were below the minimum income level, and once near or above the individual would simply stop participating in the voluntary income tax and no longer receive minimum income funds. Payments would be direct deposited into one of the above tax favored accounts.
This would eliminate the income tax for those who make a living wage, and only require it for those who do not, and who wish welfare income supplementation. The unpleasant nature of the income tax, the penalties, and other issues would likely limit who would be willing to seek this assistance to those who need the assistance.
The real benefits would be the total elimination of the federal welfare state, and the elimination of the income tax, corporate tax, etc.
The benefits of this would be huge. Just the billions of dollars saved in tax preparation costs would be huge. Plus, without these taxes, there would be no need for offshore tax avoidance schemes, or the myriad corporate tax dodging schemes. The tax would become a consumption tax, and everyone from businesses, to illegal immigrants would pay their fair share. The minimum income would eliminate the need for a minimum wage, and most of the other inane employment regulations.
These changes would make businesses more competitive, and bring businesses to America. We would have an onshoring "problem" with businesses, not an offshoring problem, since there would be no corporate income tax to push business to incorporate in foreign nations with lower tax rates. Nor would Apple have an incentive to anchor income offshore.
The problem? Not enough graft, and corruption for the politicians. This is nearly always the reason simple, effective, and efficient political changes never happen. Add to that we have the worst political class in history, and one might despair. However, the current government pension and inefficiency/funding crisis is likely to result in wholesale change to our body politic, and our underlying political, and governmental institutions. I suspect this will offer us the ability to move from the now decaying progressive system to a more vibrant economic, social, technological model.
Hat tip: Instapundit IT’S USUALLY LIKE THAT: Millennials Like Socialism — Until They Get Jobs.