

The Great Decoupling of Corporate Profits from Jobs - petercooper
http://robertreich.org/post/863304269/the-great-decoupling-of-corporate-profits-from-jobs

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motters
I think many of the jobs will return, but fewer than before. With each
economic cycle the amount of work which can be automated increases. This is a
long term trend which began a couple of centuries ago, and eventually I expect
it to culminate in campaigns to divorce income from jobs, with the
introduction of a "Citizens Income" based upon taxing mostly automated
companies (each citizen assigned some percentage of GDP per capita).
<http://en.wikipedia.org/wiki/Citizen%27s_dividend>

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jtbigwoo
Except that much of manufacturing isn't automated--building and maintaining
the robots would be too expensive. Instead companies pay third-world workers
next to nothing to assemble products by hand. Go and read Bunnie Huang's blog
posts about manufacturing the Chumby in China. (bunniestudios.com) The Chumby
is assembled almost completely by hand. Even big things like industrial
equipment are often welded and assembled by hand.

The problem is this:

Say a company is going to sell 1,000 of a particular heavy assembly per year
and profit $1,000 from each. There's no way they can afford to build and
maintain an automated assembly line to support that product. Each individual
robot might cost $50,000+. Robots are really only feasible for high-volume,
high-profit products, or where one line can make several closely related
products (e.g. a tractor plant that makes front loaders and dozers.)

I know this doesn't fit with the techno-futurist ethos around here. Maybe in
another 50 years robots will be cheap and flexible enough to truly automate
manufacturing.

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motters
"Robots are really only feasible for high-volume, high-profit products"

Untrue. Many low profit consumer products are made using robots.

Currently human labour can still compete with automation, and companies seek
the cheapest labour costs by outsourcing. But there will come a point, which
has already been reached in a few niche areas of manufacturing and
agriculture, where no human labour, however cheap, can compete against
automation in terms of productivity per unit cost.

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pchristensen
I've been wondering lately if high profits per employee could be a negative
externality for society. That is, if enough jobs aren't being created to give
people something meaningful to do, then idleness and disruption (a la
dctoedt's excellent comment) become a problem. While America is wealthier
overall today, it seems like the previous 100 years did more to spread the
growth in wealth across the whole population and make _society_ wealthier as
people benefited from universities, roads, better health and housing, etc.
These aren't fully formed or vetted ideas, just thoughts.

Regarding the article, if GM is selling and making more cars overseas, then
maybe just owning 60% of the company and profits is the best outcome.
Structurally, they were never going to employ 500,000 American workers again.

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gte910h
This is one of the issues with overly strong and long IP policies: Humans
aren't required to license IP out the wazoo.

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yason
And what's wrong with lesser jobs?

It means that eventually a society where life and status is not defined by
mere employment emerges. Currently we have few reasons to be unemployed that
are acknowledged as okay: for example students and pensioners, maybe some
others.

When the illusion that mostly everyone ought to be employed somehow, it means
that it becomes ok to not do things that are seemingly productive in the
short-term, like work. It will allow more acceptance for production of human
values that can't be done under the traditional employer—employee
relationship, like arts such as writing, composing, painting, and hacking.

The only reason to think everyone ought to have jobs is to be in a position
where you benefit from it. Like manufacturing and selling things to people.
But when production is efficient enough and/or people decide that they have
enough, the bubble breaks and you will find the society with lots of
unemployed people.

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DanielBMarkham
First of all, business is about providing value to customers, not jobs to
neighborhoods. Sorry if that sounds callous, but really, think about it. We
don't want a thousand people making a iron boiler for a steam engine anymore.
If one guy could push a button at GM and have robots make a thousand cars?
Then we are continuing in a pattern that has done us well over the last
thousand years.

So instead of looking ass-backward at economics, it might be better to ask
yourself the question a million entrepreneurs are now asking: What do all
those companies sitting on all that cash _want_? Because it's not savings
either: companies are not in the business of savings.

Perhaps the companies are dumping all the profits to investors. Fine. What do
_they_ want? Money got to go somewhere. And whoever's got it wants stuff.

Instead of a sad-sack, belly-button-gazing lament at how GM actually gives
Chinese folks jobs, it might be a better use of time to continue to find where
value can be added. That's what the smart folks are doing. (And those smart
folks are more and more in small businesses and would really appreciate it if
you didn't lump them into some big bucket with Ford and GM just so you can
slide in your partisan tax barb, Bob)

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dctoedt
> First of all, business is about providing value to customers, not jobs to
> neighborhoods. ... We don't want a thousand people making a iron boiler for
> a steam engine anymore.

The value-to-customers part is the truth, but not the whole truth.

If a government's economic policies _don't_ result in jobs being provided to
neighborhoods, then three things are inexorably going to happen:

1\. A non-trivial number of (usually) young men with too much time on their
hands will do things that we really wish they wouldn't but that we have a very
hard time suppressing, especially when they can use communications technology
to their benefit: Street gangs. Drug cartels. Jihadist groups.

2\. People will blame their governments because they perceive that Bad Things
-- unemployment, drugs, crime, terror -- aren't being fixed;

3\. Disruption will result, because people won't passively accept Bad Things
indefinitely:

(a) In a democratic society, the government will be thrown out and policies
will be changed -- possibly not for the better -- and with switching costs in
any case;

(b) Even in a non-democratic society, there will eventually be unrest as
people get mad as hell and refuse to take it any more (cf. the Honda strike in
China, but then there's North Korea as an apparent counterexample);

I'm a life-long moderate Republican, but it's only been in recent years that
I've come to appreciate that, unlike some conservatives, liberals 'get' these
fundamental truths of human nature.

I wish these truths were otherwise, but to paraphrase Lazarus Long, you don't
argue with the weather, you deal with it. (That's one reason I'm encouraged by
the favorable reports I've been reading about the educational policies that
the Obama Administration is pushing.)

ISTM that some liberals have unrealistic views of _how_ we should deal with
these truths -- some of them likely would be happy having a thousand people
making a boiler -- but that's another debate.

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jbooth
Not to mention that even without risks of total upheaval, if nobody but the
top 1% has any money, who are you going to sell goods to?

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benhalllondon
Umm, quite interesting till the last paragraph:

"The reality is this: Big American companies may never rehire large numbers of
workers. And they won’t even begin to think about hiring until they know
American consumers will buy their products. The problem is, American consumers
won’t start buying against until they know they have reliable paychecks."

I'm not sure they is any link between hiring US workers and what US consumers
are buying. I mean plenty of stuff is made my Chinese workers that is
purchased by American consumers. Why couldn't it go back the other way?

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pchristensen
[http://econfuture.wordpress.com/2010/07/27/flat-or-
declining...](http://econfuture.wordpress.com/2010/07/27/flat-or-declining-
revenues-soaring-profits-is-it-sustainable/)

"When consumers in the U.S. finally fall off the edge of the cliff, where will
demand come from? The reflexive answer is always “from consumers China and
other emerging economies.” There are a few problems with that: (1) workers in
China and other low wage countries don’t make very much and, therefore, have
less to spend. (2) Those low wage workers have a very strong propensity to
save, rather than consume. (In China the saving rate may be as high as 30%,
and consumer spending is only around a third of GDP v. 70% in the U.S.) (3) It
would be extraordinarily naive to think that the Chinese government will not
manipulate things to insure that the vast majority of sales in China go to
Chinese companies (in many cases companies using technology transferred from
the West as part of China’s industrial policy.)

The fact is that we are very far indeed from a place where consumers in
countries like China are going to pick up the slack when consumers in America
and the rest of the developed world finally fail to get the job done. And
there’s yet another problem: While China has benefited from globalization, it
is by no means immune to the impacts of automation. In the long run factories
and other business in China will also automate, and unemployment will become a
serious problem. In fact, this is already occurring in industries like
textiles where automation has been progressing at a rapid rate."

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benhalllondon
I can't help but feel arguments about how high degrees of automation will lead
to mass unemployment are almost reframed Luddite fallacy arguments. I mean
compare the amount of automation now to 250 years ago, and we don't have mass
unemployment.

I was wrong to say Chinese consumers, but it's not to say there aren't things
American could produce. I mean Chinese use Google/Facebook/Youtube/Starcraft.

I mean in manufacturing, if you look in Chinese factory often their machines
will have been made by Japanese and German companies.

