Structural Changes

[ewagner]

The question Bush was asked in the press conference yesterday was for his opinion on "Structural" changes to the economy. Obviously he had no understanding of the question and fell back on his experiences in TExas. But that's not the whole point. Even those only basically educated in economics understand that theere is a hugh structural change in the economy and little if anything is being done to either acknowledge this change or address it. (the traditional conservative view is that the economy will take care of itself and whatever changes need to be made will take place in the private sector.)

The only public figure who ever addressed this in any coherent fashion was Robert Reich in his 1989-90 book "THE WORK OF NATIONS". Since that time, we have had the full impact of the information age, NAFTA, Globalization and WTO. which impacted the economy in a meaningful way. Yet, none, not a single official has eveer shared a vision of the new economy.

There seems to be a gathering of knowledgeable, learned people in this discussion forum. I would like to hear your views of:

1. What are the structural changes taking place in the United States Economy?
2. What policies should the government (or private industry) take to assure working wages and employment for citizens of the country?

I am anxious for a serious discussion....

note: I enjoy Bush-bashing as much as anyone else but I woild like to keep the discussion centered on policies that ANY new president and administration should take.

[brokensymmetry]

1. OK, seriously.

I think that we need to consider several things, all driven by technology. First and foremost, communication costs are going down rapidly. Second, technology makes it possible for fewer workers to do a given job. This is true across industries.

We can't just limit our views to the US economy; the same communications that make it possible to call DC from LA also makes it possible to do business in New Delhi, or Moscow, or Tokyo. We are truly in a global marketplace for labor - and ever lower barriers to companies who wish to tap that offshore labor market. One example - DARPA is working on software that will translate language. Their target date for accomplishing this is one year from today. How long will it be until one can get something similar for their PC? I suspect not long. And that means you can call Beijing and talk with someone there, each person speaking in their native tongue. The barriers to globalization will get a great deal lower.

We also face an increasing (accelerating) rate of change in technology. Retraining, as the current leadership advocates, is not sufficient - an ongoing, continual program of development is needed.

Significantly, we're only now feeling the results of globalization. The next step - which we haven't yet really felt - is the impact of artificial intelligence. Keep in mind Moore's law - computers double in capability every 18 months. This implies that the computer you buy in 10 years will be 100 times faster than the one you have today. In 20 years, it will be 10,000 (yes, ten thousand times) faster. At some point, we won't need humans to flip burgers or make telemarketing jobs. What do we do with the people who aren't able to be genetic engineers or surgeons?

What can we do? That's a very tough question. I suspect it involves a series of regulations that require companies that sell products here to provide jobs here. If we don't - wage rates will go down a lot. And that means tax revenues will too. And that means...goodbye every social program you and I care about.

[ewagner]

2. Thanks for the serious post

It will take me some time to digest and respond but I certainly will.
In the meantime, consider this also:

Does a person (or society for that matter) have to have a vision of the future in order to shape economic policy?

Thanks for the thoughts...

[brokensymmetry]

3. The vision thing?

Does a person (or society for that matter) have to have a vision of the future in order to shape economic policy?


Not an explicit one; however, we all have an implicit vision at least. We may not, and in many (most?) cases do not have an explicit vision. To a great extent, we don't even consider the future; rather we make short term decisions that we believe are in our best interest.

An example: what factors do people consider when they buy things? In general, people consider (1) price, and (2) quality. So, let's look at something like consumer electronics. Companies such as Sony, Panasonic, and Hitachi offered good products at a good price - so good that we no longer have any US based companies that produce TV's and VCR's. The simple decisions of lots of ordinary people resulted in a consequence they didn't intend. No explicit vision was required. The implicit vision is that getting the best deal for oneself is the highest and best good - which is, after all, classic capitalism.

Do we consider the effects on the economy when we buy a big SUV instead of a small economy car? Or when we travel by airplane instead of car? Or ship goods by truck instead of train? Generally not. But the actions have really big consequences. If we want to get to a given destination, it seems to me that we ought to at least consider the roadmap to get there (an explicit vision) - but it is very rare for people to do so.

[ewagner]

4. That's true but..

My argument is that government must/should manage toward a vision/goal.

For instance, if we are truly serious about curing our addiction to oil, we could set a vision for the future of a petroleum free society by 20xx and put in place a series of goals to achieve that result.

In doing so, we would truly restructure the economy and our systems of education, our market and rewards system. I suspect that only government can take that kind of leadership role.

Conversely, letting market forces alone determine the shape of the future seems to be somewhat random with a tremendous amount of uncertainty and the possibility of economic chaos. Your example about the foreign electronics manufactureers is exactly what I am referring to....consumers taking advantage of the lowest price on the market (in perfect accord with all otherr well known principles of market dynamics...)inadvertently drove American made electronics out of the market. Was this in the national interest? Where was the economic blueprint to restructure the economy to replace these workers in similar jobs with similar standards of living?


I'm pretty tired (been a rough day) so I'm certain that I am not expressing this too well. If I am rambling please excuse me.

I'll keep this bookmarked for your reply....again I appreciate your thoughts...this has been troubling me for some time.

[brokensymmetry]

5. Complete agreement.

My argument is that government must/should manage toward a vision/goal.


Absolutely. It wouldn't even need to be done with a heavy hand - just a few adjustments to the tax code would do it. For example, as matters stand, one can get a big deduction on a truck used in one's profession. So, SUV's driven by accountants (according to my understanding) get a better tax writeoff than would a small economic car.

Interestingly enough, JFK shared a vision with the nation - that being putting a man on the Moon. We accomplished that, and what a grand project it was! Wouldn't it be wonderful to have a President who could create such a vision for energy, bring us all together on it, and put American ingenuity to work?

The problem is we've got too many sly politicians and not enough leaders with the ability to perceive a better way - much less get us on the road to that end.

[ramapo]

6. Vision and more

Great thread...

It is possible, even likely, that we're at the beginning of some very significant changes.

Over the past decade or so, globalization snuck in as the new basis for how we'll live. It was sold to us as a good thing, offering new markets and opportunities, though with the caveat that we must compete.

As we all know, the US has lost over the past 30 years, the manufacturing base that transformed our country. Nobody cared too much. Unions got a lot of the blame with their greedy workers, or people just didn't keep their skills up. Besides there was all those new opportunities in data processing. Indeed some were able to transform themselves.

Now the IT/DP arena is becoming a victum of its' own success. Through the tech/comm revolution, the trickle of non-manufacturing jobs leaving the US is becoming a flood. I could give dozens of examples. And it isn't only IT. Customer service and other back office operations are also moving offshore. This, coupled with the H1B-visa problem, has transformed the IT job market. Not for the better, if you're a young to middle-aged American.

Where will we work is the question. The problem is there is no new, new thing to take the place of IT. This is also the reason for the tech collapse. The marketplace became saturated with systems, storage, and network equipment. There was nothing that required(s) a new round of investment. Now ALL of this stuff is a commodity (as are the workers).

Now this gets to the vision thing. There hasn't been a President with a vision since JFK. And as the previous post said, what a wonderful vision he had. The space program of the '60s was probably the most remarkable thing ever in history. The crime is that this was tossed aside.

The '70s brought a perfect replacement, the energy crisis. If space was not a worthy investment, why wasn't solving the energy/oil problem? President Carter was villified for trying to make this a priority. Reagan came along with the "Government is bad, taxes are bad" mantras and the country has just kind of run on the religious belief that private enterprise(corporations) and the market will solve everything.

Here we are, thirty years later, and nothing has been solved. There is no direction, no programs, no projects (unless you count the myriad projects of the military-industrial comoplex which provide little to no benefit).

I think we're in trouble. I'm at a loss when it comes to suggesting to my kids what might make a good career (not IT). The housing/credit markets are giant bubbles ready to burst. And the tech jobs are going and not coming back, just like our manufacturing jobs did.

The real problem is that nothing is seriously addressed until it becomes a disaster. Probably because politics and greed get in the way.

I believe this country needs a leader who can cut the BS and do something real. Not sure if this animal called our future can be controlled but if not it will control us.

[ewagner]

7. This is great

I'm with two very rational DUer engaged in a serious discussion about a serious problem....

mad, The question you raised "where will we work?" I think is the end game of the original question about the structure of the economy.

Broken..you raised yet another great point in that we have some sly politicians and nobody articulating a vision which will lead to an orderly restructuring of the economy. Are any of the dem candidates articulating a vision?

Broken: you said in an earlier post that technology is taking off so fast that no one can predict where it will go (e.g. acceleration of computer speeds, etc.,) and most certainly there are/will be unforseen consequences of technology.

Do either of you think that technology alone will create enough jobs in the future to attain theoretical "full employment" for America? Or, will full employment be redefined in the realities of globalization and technology?

[Resistance Is Futile]

9. Long-term economics

There are two separate structural changes in progress in the global economy at present. The first is the outsourcing of first world services jobs to the third world. The second is the advancement of technology to the point that it is possible to produce non-survival goods a far lower labor cost than the minimum necessary to sustain a market for these goods.

Outsourcing is just another supply and demand issue. There is too much labor (globally) for the overall demand. Wages therefore fall. Economics knows how to handle this; the problem is just political will. Some suggestions:

1. A Marshall plan for the third world. Raise all boats to the point that the emerging nations can compete equally--on an equal wage footing--with the first world.

2. Legally require corporations to engage in ethical behavior. Fat chance of getting this to happen.

3. A global minimum wage for workers involved in the services trade. Raise the level of pay everywhere to the point that outsourcing skilled jobs from the first world isn't profitable.

4. Strip services out of the WTO treaties. Ban all trade in services, period. Very difficult pill to get the emerging powers (India, China) to accept.

5. Renegotiate trade treaties to allow punative measures to be taken against states which cap wages through systematic repression of workers' rights. Dumping is dumping, regardless of if it's in goods or labor. This isn't perfect, but it will prevent 1st or 2nd world workers from having to compete with Indonesian, Chinese, or American (prison) slave labor.

Radical devaluation of the US dollar will not help as other countries will devalue in response leaving everyone--in terms of exchange rates--standing more or less where they started.

The second class of structural problem--radical improvements in technology--is much, much harder to deal with. Full AI is a long way off, if ever, but fully automated powerplants, factories, warehouses, trains and aircraft are here already. Automated cars, ships and financial services aren't very far off. Conventional economics has no solution to the problem of how to keep people employed when virtually the entire economic demand from a billion+ population can be met without the need to hire more than a handful of people.

In the short term, automated industry still requires maintainance workers, operators/supervisors, and decision-making management. In the long run, virtually all of these functions, possibly with the exception of decision-making management, can be performed by machine. Assuming the economy surives this far, the only jobs left at this point will be for highly intellectual tasks that machines can't do in the absense of AI. Long run employment will only be available for researchers, artists (print/visual/audio) and a handful of leaders who tell the machines what to do.

Here conventional economics falls off the rails. There are no obvious answers other than taking draconian measures to prevent advancements in automation or to ban their use. In practice this will not work in the absense of a global effort as capital will simply flee to parts of the world where such restrictions do not exist.

What to do with the population in the face of ever increasing technological advancement will be the defining question of the 21st century and how humanity--not just America--answers it will very likely determine if we are to survive as a species.

[Code_Name_D]

11. Some notes

Clearly, there is some thinking here. But ultimately I fear that the root problem is still understood, and failing that, the ideas presented here are all doomed to failure, or worse result with unintended consequences. A classic example would the warning labels for cigarette ads, that basically dismissed the cig companies from all liabilities of their product.

Fortunately, others have already bladed a trail towards true reforms, a body of theory known as economic democracy. And you may know more of this than you thing, for its original founders, were non other than the founding fathers of America. In dead, much of the American revolution was fought for the vary same issues that we fight now, and with the solutions already being built into the constitution.

There are two separate structural changes in progress in the global economy at present. The first is the outsourcing of first world services jobs to the third world.

While true on its face. The "outsourcing" isn't the driving source as you make it out to be, but a symptom of a much more significant problem. The never ending drive for cheap labor, if left unchecked, than it's natural conclusion can only be said to be a slave based economy. And the drive for cheap labor is rooted with the corporate management structure, and its total lack of accountability both to the public, as well as to the law itself.

The second is the advancement of technology to the point that it is possible to produce non-survival goods a far lower labor cost than the minimum necessary to sustain a market for these goods.

Again with the technology. In large part, much of technologies impact on economies is over blown and grossly exaggerates. CEO's like to use technology as the reasoning to explain why GDP continues to go up, even though hours worked continues to drop. But that in itself is based on the supply sider's myth of how the economy works. That an economy is some kind of "thing" that is produced and dumped on the rest of us to consume.

In truth, an economy works in exactly the opposite fashion. Where there are people, there are needs that must be met. Where there are needs, an economic system will natural evolve both in scale and complexity in order to meet those needs, or at least meet them in so far as the availability of natural recourses. Based on that available against need will determine an intrinsic value of a material. Water for example will have more value in the dessert, than in the rain forest. Economics in truth has more to do with the gallon of milk that you buy, rather than the 2.50 that you buy it with.

Technology ultimately doesn’t change this. You require no more and no less food to live than your great grandfather, despite the fact that you now have your food shipped to you on an airplane.

Outsourcing is just another supply and demand issue. There is too much labor (globally) for the overall demand. Wages therefore fall. Economics knows how to handle this; the problem is just political will. Some suggestions:

False. There is not more labor available now, and their fore, this is not a supply and demand issue. What we have here are corporations who are going to countries with weaker, if non-existent labor laws, and lesser economies of scale, in order to exploit the workers. The whole point of "free trade" is nothing more than bypassing other controls, such as tariffs and domestic labor laws, in order take advantage of these conditions.

1. A Marshall plan for the third world. Raise all boats to the point that the emerging nations can compete equally--on an equal wage footing--with the first world.

A grand notion, but also a racist notion. It implies that other nations can not take care of themselves, or support them selves. When looking at the policies of the world bank, you would find that in controlling national loan, they have near dictatorial control over that government. And their vary first demand is to privities all public recourse. Shortly after that, the privet companies that take position of these recourses quickly began to dismantle them, or ship them to other markets where you can fetch a higher price. The end result is that wealth is systematically transferred from the community, into privet hands.

After which, we stand around and make bold proposals of "Marshall Plans." Dismantling the WTO and the World Bank would probably do a lot more good, and be a lot cheaper.

3. A global minimum wage for workers involved in the services trade. Raise the level of pay everywhere to the point that outsourcing skilled jobs from the first world isn't profitable.

There are two major problems I see with this. One is how would you enforce it? You would need a global government to accomplish this. Not to say that this isn't desirable or even visible. But it dose sound like a Roub Goldberg approach to the problem, where the machine will be more complex than the task.

Second is the difference in economies of scale. Even with a modern, 1st world economy, you are going to have drastic differences in the economy of scales. And in fact, a global minimum wage might actually make things worse given this fast difference between the reigns of the first world, and the third world. As far as I can tell, this is a fatal flaw in this solution.

4. Strip services out of the WTO treaties.

Actually, I think the WTO treaties themselves are the problem. They don't promote "global free trade" as they were advertised to do. Instead, what these treaties allow is for corporations to ship materials and goods over tradition boundaries free of terrified and import taxes. But they do nothing for the average ontrapanuwer trying to sell his goods to consumers in other countries.

Ban all trade in services, period. Very difficult pill to get the emerging powers (India, China) to accept.

But the problem isn't just in services. The manufacturing job sector is also a problem? Plus, I think the "Ban" notion may be an over-reaction.

5. Renegotiate trade treaties to allow punative measures to be taken against states which cap wages through systematic repression of workers' rights. Dumping is dumping, regardless of if it's in goods or labor. This isn't perfect, but it will prevent 1st or 2nd world workers from having to compete with Indonesian, Chinese, or American (prison) slave labor.

??? Excuse me, but sense when has a "labor wage cap" ever been a problem? Plus, the NAFTA GATTS already include such previsions. Plus, removing "protectionism" would only exacerbate the shipping of jobs to cheaper areas. The whole point of protectionism is to protect yourself from cheap labor by leveling tariffs and import taxes.

Radical devaluation of the US dollar will not help as other countries will devalue in response leaving everyone--in terms of exchange rates--standing more or less where they started.

I don't think we have much of a say in weather the dollar is going to be devalued or not.

The second class of structural problem--radical improvements in technology--is much, much harder to deal with. Full AI is a long way off, if ever, but fully automated powerplants, factories, warehouses, trains and aircraft are here already. Automated cars, ships and financial services aren't very far off. Conventional economics has no solution to the problem of how to keep people employed when virtually the entire economic demand from a billion+ population can be met without the need to hire more than a handful of people.

Ah, this sound an awful lot likes third wave notions. Many of which are extremely questionable. For one thing, improvements in technology generally do not result with a labor force depopulation. This didn't happen in the 20's with the industrial revolution, and it didn't happen in the 80's and 90's with the onset of the computer age and IT revolutions. If any thing, more jobs were created as these new technologies needed to be designed, manufactured, operated, and services. On the whole, as many new jobs are created by the new technologies as older ones fall out of use. But also, older technologies never really go away, but find other uses, retaining the jobs and expertise, all be it in smaller scales with differing natures.

But in many ways, the IT revolution itself has taken technology out of the picture as other more personal options for earning a living are presented. Art, music, and entertainment now have new opportunities to thrive, and can be distributed world wide at a fraction of the cost. And these opportunities are bounded only by the human imagination. New technologies will only expand these horizons, not contract them.

What is as stake here however isn't the technology itself, but how it is deployed, and who decides how to deploy them. Take the recent case of a clear channel radio station in Iowa. When the governor wanted to put out a flood alert, there was no one at the radio station to take the call and place the warning on the air. The technology to do this was in place as far back as the 1930's. But what made the Iowa case different was the fact that Clear Channel controlled all of the radio towered in the area, not because of the automation of technology.

Like wise, the problem with the internet it that copy right laws have no been corporate. Culture no belongs to the cooperation, and the right to express one's creativity must be signed away for it to be carried over corporate channels. And that also means signing away the money one would earn from one's own creativity. Again, this has nothing to do with technology, but in fact has to do with our the government enforces copy right law.


Here conventional economics falls off the rails. There are no obvious answers other than taking draconian measures to prevent advancements in automation or to ban their use. In practice this will not work in the absense of a global effort as capital will simply flee to parts of the world where such restrictions do not exist.

Economics is silent on this issue because it is not an economic question, but one of cultural and societal imperative. The big question is who controls the economy. Do we control it through a democratic process, or the hand full of CEO's who some how retain the right to "tell the machines what to do" retain this right over our presence, much as the Kings of old did during the dark ages?

What to do with the population in the face of ever increasing technological advancement will be the defining question of the 21st century and how humanity--not just America--answers it will very likely determine if we are to survive as a species.

The answer to this question may surprise you. The French aristocracy was certainly surprised with the rise of the French Revolution. I suspect the CEO's of today are due for a similar lesson. Let us hope it will be one that is less bloody.

[brokensymmetry]

15. But that's EXACTLY the problem!

What is as stake here however isn't the technology itself, but how it is deployed, and who decides how to deploy them. Take the recent case of a clear channel radio station in Iowa. When the governor wanted to put out a flood alert, there was no one at the radio station to take the call and place the warning on the air. The technology to do this was in place as far back as the 1930's. But what made the Iowa case different was the fact that Clear Channel controlled all of the radio towered in the area, not because of the automation of technology.

Once, radio stations had engineers, DJ's, and other staff present all the time. Now, they don't. They use syndicated programs, downloaded by satellite, save on a computer hard drive, and scheduled by computer. The commercials are also downloaded. Everything is played automatically, and according to a schedule.

Automation, then, has supplanted numerous jobs that were in the local area.

[Resistance Is Futile]

10. Next big thing after IT

Biotechnology is the next big thing after IT. The potential is earthshattering and will make the IT revolution to date look like a footnote.

[brokensymmetry]

13. And nanotech.

Perhaps you've heard of the camera (complete with flash unit) that can be swallowed? It takes 50,000 pictures and transmits them to an external unit as it goes through the digestive tract. That's only the first, faint stirrings of nanotechnology.

I find it interesting that the transistor was invented in 1947. Today, just 56 years later, we all use tens of millions of them in our computers. Arpanet, precursor to the internet, was first started in 1969 - 34 years ago.

Today we can see the impact these technologies have had - and, as I mentioned earlier, I believe that technological advance is accelerating. I suspect that none of us can even imagine what will be possible in even 25 years.

[TrogL]

21. Conservatives have a goal

Bankrupt congress and state coffers so that no money can be spent on social programs for the "undeserving". They want all social programs to be delivered from fundamentalist, evangelical churches.

[Code_Name_D]

8. I have some issues with this.

I think that we need to consider several things, all driven by technology. First and foremost, communication costs are going down rapidly. Second, technology makes it possible for fewer workers to do a given job. This is true across industries.

I have to question both of these assumptions. TV's and blue jeans are not produced by computers, or moved through telephone lines. I have seen the idea presented that "manufacturing is no longer relevant" but this notion is ridiculous for goods do not come from thin air, nor services performed by ethereal forces. More likely this idea is floated to explain why manufacturing no longer takes place in the US. But manufacturing plants are still being built and operated else where. Manufacturing is far from irrelevant.

As to the second point. While technology dose aloud improvements in efficiency and productivity while also reducing cost is indeed true, it is quite another claim that such gains in productivity is costing jobs. If this were true, than manufacturing would still be taking place in the US. It isn't, whole factories are just being picked up, and moved to countries that still permit American corporations to exploit slave labor.

We can't just limit our views to the US economy; the same communications that make it possible to call DC from LA also makes it possible to do business in New Delhi, or Moscow, or Tokyo. We are truly in a global marketplace for labor - and ever lower barriers to companies who wish to tap that offshore labor market. One example - DARPA is working on software that will translate language. Their target date for accomplishing this is one year from today. How long will it be until one can get something similar for their PC? I suspect not long. And that means you can call Beijing and talk with someone there, each person speaking in their native tongue. The barriers to globalization will get a great deal lower.

Actually, we have had these communications abilities for some time now. And as for DARPA's translator, I find that to be irrelevant because it isn't in the field now. How can something that has not be launched, possibly have such profound effect in today's economy. And while the language barrier is significant, it hasn't been an impediment to global business since France was the world power, and all transaction were conducted in French. Similarly today, all business is conducted in English, rendering any language barriers moot.

And while we are in a "global market place for labor" as you put it, the playing field is only open for the big players, such as US corporations and whole countries who negotiate labor in blocks. All while the same corporations work to crush US labor unions, preventing collective bargaining rights on the worker's side.

The US worker isn't losing to foreign labor markets. He is in fact, being SOLD OUT by the CEO's who lord him, and would claim to by and sell the working mans labor as a commodity. In other words, slavery. Modern business practice sees US labor as something that it owns, and can discard at its will. They have simple found cheaper slave masters, and technology has vary little to do with America's current economic plight.


We also face an increasing (accelerating) rate of change in technology. Retraining, as the current leadership advocates, is not sufficient - an ongoing, continual program of development is needed.

Development to what? Just last year, we were under the impression that IT was the pinnacle of modern job skills. But those jobs are now also being farmed out to cheap labor from India. Technology alone can not explain this, but the never ending search to restore a slave based economy, can.

Significantly, we're only now feeling the results of globalization. The next step - which we haven't yet really felt - is the impact of artificial intelligence. Keep in mind Moore's law - computers double in capability every 18 months. This implies that the computer you buy in 10 years will be 100 times faster than the one you have today. In 20 years, it will be 10,000 (yes, ten thousand times) faster. At some point, we won't need humans to flip burgers or make telemarketing jobs. What do we do with the people who aren't able to be genetic engineers or surgeons?

Junk sciences. Moore's Law has nothing to do with artificial intelligence. The thing is that human sciences still can not even adequately define what intelligence is, let alone how to artificially produce it. Moore's law at best will give us faster calculators, not smarter ones. Keep in mind that the human thinking process is actually quite slow in comparison to modern computers. Even the Pentium II could perform faster calculations than any human brain alive. But is a PII smarter? But that in and of itself is a trick question, until we have a better understanding of what intelligence actually happens to be.

But that aside, I fail to see how this is even relevant to the issue of the global economy.

What can we do? That's a very tough question. I suspect it involves a series of regulations that require companies that sell products here to provide jobs here. If we don't - wage rates will go down a lot. And that means tax revenues will too. And that means...goodbye every social program you and I care about.

I can do better than that, a lot better. Your idea is based on the presumption that the investors are the sole clammiest to the wealth that a corporations create, and that labor (people who perform work for a wage) is just another cost to be reduce. Trying to regulate this is a fools game, for in the end, you will always return to the minimization of labor expenses, resulting in dire consequences to the people who actually perform the work.

There is a hazard in this model. A consumer economy can only exist when you have a general population with a discretionary alliance. That is, they must have money left over after paying for the basics of food, shelter, and clothing. The consumer and the worker are one and the same. So the more you cut the worker's pay, the more you will directly cut the consumer's buying power. The two are frankly incompatible.

I on the other hand, have a different opinion. That the worker is just as entitled to the fruits of his labor, as the "investor" is to the profits of the company. This is especially so if you wish to respect the American tradition of "all men being created equal," and "totally equality in the eyes of the law." Where the constitution is concerned, it is unconstitutional for investors to reap all of the benefits, while the workers wages are cut and their jobs exported outside the US.

Let me put it do you another way. First, the traditional business model.


Profits = Sales – (Labor + Expenses)


Where of course the investor is entitled to the profits and the worker is entitle to the labor. But this model suggests that labor is secondary to the concerns of the investors. Hence the investor takes priority over all created wealth, while labor is just another expense to be minimized. When taking this in a human dimension, one can only conclude that the investor must there fore be superior to the worker. The master, lording over the serve.

But lets try a little math magic, and see what we can do with this.


Profits = Sales – (Labor + Expenses)
Profits = Sales – Labor – Expenses
Profits + Labor = Sales – Expenses


Hence

Profits + Labor = Sales – Expenses


Now this is what I call reform. This is what I mean by the worker is as entitled to his wages as the investor is to his profits. Do not seek to over through the investors, nor do I dismiss their importance. But like wise, labor itself can not be dismissed either, and being just as human as the investor, and being equal to the investor, is just entitled to the fruits of his labor as the investor is entitled to the fruits of his investments.

:think: How dose that strike you for "vision?" B-)

[German-Lefty]

12. I have some Issues with that.

First off, nice critique there. I had some of the same issues you did there. I'm not sure how your little bit of Algebra is supposed to revolutionize the labor market, sorry. Sure:

Profits + Labor = Sales – Expenses

And the stuff on the right side is what can be maximised, but at the end of the day you still have to decide between "Profits" and "Labor".

The way I see it there's often a battle here where you have monopolies. If the employer is very large and employees have nowhere else to go, it's a monopoly on that side. If some big unbustable union has a monopoly on the labor, you can look at that as a monopoly. Both can be excessive.

[Code_Name_D]

29. The point

Is that the worker has as much right to his wages, as a portion of the profits, as do the CEO's and investors.

Conservatives like to bead us over the head with the notion that "if investors can not take a profit from their investments, than they will not invest." Well, the same is true for the worker, if you aren't going to pay them a day's wages, why should they work? Conservative's answer to that one is to mince their words claming that the investors right to profits supersedes the workers right to make a living.

And they like to use that Balance-sheet formula to back up their argument. But the argument depends on one being wowed into submission by the math itself. Especially if you believe the myth that economics is a "hard sciences" like mathematics. Mathematics is the only branch of sciences where ideas can be conclusively proven by "proofs" even physics do not enjoy that level of absolute confidence. So when you have this formula trotted out in front of you, you tend to be cowed.

My algebra trick was to smash those myths in the teeth. That not only is economics NOT a hard sciences, but one that is currently corrupted by pre-conceived notions. That the investors are some how better than the workers under them, and that investors are instilled by right, to the fruits produced by the worker

This idea isn't mine by the way, but conceived by Marjorie Kelly, explained in The Divine Right of Capital.. This idea is one of his key building blacks for a Economic Democracy. His answer to what he refereed to as Economic Aristocracy. He spells out six principals from each, just to expand on the idea.

The Six Principles of Economic Aristocracy

1. Worldview
In the worldview of corporate financial statements, the aim is to pay stockholders as much as possible, and employees as little as possible.

2. Privilege
Stockholders claim wealth they do little to create, much as nobles claimed privilege they did not earn.

3. Prosperity
Like a feudal estate, a corporation is considered a piece of property – not a human community – it can be owned and sold by the propertied class.

4. Governance
Corporations function with an aristocratic governance structure, where members of the propertied class alone may vote.

5. Liberty
Corporations capitalism embraces a predemocratic concept of liberty reserved for property holders, which thrives by restricting the liberty of employees and the community.

6. Sovereignty
Corporations assert that they are private and the free markets will self-regulate, much as feudal barons asserted a sovereignty independent of the Crown.

The six principals of Economic Democracy

1. Enlightenment
Because all personas are created equal, the economic rights of employees and the community are equal to throes of capital owners.

2. Equality
Under market principles, wealth doses not legitimately belong only to stockholders. Corporate wealth belongs to those who create it, and the community wealth belongs to all.

3. Public Good
As semipublic governments, public corporations are more than pieces of property or privet contracts. They have responsibilities to the public good.

4. Democracy
The cooperation is a human community, and like the larger community, of which it is a part of, it is best governed democratically.

5. Juice
In keeping with equal treatment of personas before the law, the wealthy may not claim greater rights than others, and corporations may not claim the rights of persons.

6. (r)Evolution
As it is the right of the people to alter or abolish government, it is the right of the people to alter or abolish the corporations that now govern the world.
-- Marjorie Kelly, The Divine Right of Capital, pages 14 & 15.

[German-Lefty]

31. Um, ok

Sure I agree we as society should question where captialism is taking us and stear it as nessesary. Though, I would also say that democracy has it's limits; it breaks when people can vote money into thier pockets. It is my belief that this is why communists never had democracy; why there was never a state with 100% well functioning socialized industry and real democracy.

Perhaps democracy and economics must evolve into a hybrid or some kind.

[Code_Name_D]

33. You are getting warmer.

Sure I agree we as society should question where captialism is taking us and stear it as nessesary. Though, I would also say that democracy has it's limits; it breaks when people can vote money into thier pockets.

I disagree. Democracy is about self rule, and that means that the general population must be mature enough to make these sorts of decisions. And that also means a Democracy will make mistakes, just like any other human endeavor. But if Democracy is an imperfect system, it still permits a community to correct its mistakes, once they realized.

But it only works within systems of equality. Which is not what America has now. Currently, the law is split into a number of tears. For some, the CEO and high end investor, there is corporate law, which shields the officers of a corporations, by shielding the corporations itself as a "citizen." And ironically, this citizen has more right to life, than the real life beings who are put to death for far more petty crimes, or are subjected to a lower code law known as civil law.

What is set up, is that one person can decide the fate of many that have no voice within the companies that they work in. When it comes to conflicts between the investor and the worker, the investor shall win every time because only the investor has a say. The worker is silenced in a way that is hard to argue isn't a brutal form of oppression.

When the CEO gets to make all the desisting, is it any wonder that they always favor the CEO? Then the unequal judicial system shelters the CEO from the consequences of his own actions.

Perhaps democracy and economics must evolve into a hybrid or some kind.

Actually, it already has. It was founded by the American founding fathers of all things. Kelly argues (quite convincingly too) that the true nature of the American Revolution was not military or even political, but economic in nature.

This was the whole function of the bill of rights. It doesn’t just define our liberties for liberties sake, the liberties themselves are drawn from the necessities one would need in order to take care of them selves.

Case in point is freedom of assembly. This means the freedom to assemble into a town, a church, or into a labor union. A labor union permits collective bargaining rights, forcing the corporations to deal with the whole, or not at all. Crush the unions, and the corporation has the power to latterly set worker against worker as the workers must compete with each other for fewer jobs.

[German-Lefty]

34. Boy does Democracy Suck!!!

I disagree. Democracy is about self rule, and that means that the general population must be mature enough to make these sorts of decisions.
I disagree the population or at least the system of government is mature enough to run the economy. What are you going to do in 2004? Vote against Bush. The American system gives you two guys to pick from. That's it, and to make matters worse most of the population is split into two camps at war with each other.

We can't say how bad we need a social program.
We can't say how bad we need tax relief.
We don't even know about most of the details.

There are better alternative voting systems. I've taken an interest in them. If we did have these things maybe our government services wouldn't suck so bad, and corporations could be state run for the public good.

Unions Suck Too
A big company can exploit its workers. A big union can exploit its company and do things which are bad for the rest of society. They can demand thier jobs be protected, and that no new people are hired. They can make the goods they produce expensive while breaking the backs on nonunionized labor elsewhere. In short when unions forget what solidarity is supposed to mean, they've sold out. In some cases unions and big buisness will gang up and screw the little guy, destroying competition, jobs, and inovation to keep the status quo. Yes they're a good tool to take the power back, but they're not an end all.

[Code_Name_D]

36. Sigh

I disagree the population or at least the system of government is mature enough to run the economy.

Well, this certainly seems to be true in America any way. But America isn't a true democracy any more. The people are not informed, and even if they wore, have no real influence in the system. But many places in Eruope seem to be doing okay.

A big union can exploit its company and do things which are bad for the rest of society. They can demand thier jobs be protected, and that no new people are hired. They can make the goods they produce expensive while breaking the backs on nonunionized labor elsewhere. In short when unions forget what solidarity is supposed to mean, they've sold out. In some cases unions and big buisness will gang up and screw the little guy, destroying competition, jobs, and inovation to keep the status quo. Yes they're a good tool to take the power back, but they're not an end all.

That is extreemist logic there. I am not advocating that Unions take over, only that workers have the right to form unions and bargen colectivly.

Your argument that "unions go to far" is a common ploy to try and trick one into throwing the baby out with the bath water.

[German-Lefty]

47. democracy first

Keep in mind I'm more American that German. I'm just pointing out that democracy isn't all or nothing. It's a sliding scale. The US has been slipping. I think if there's one good thing we can take out of all the crap that has happened in the last 4 year it's that people are paying more attention. Perhaps there are more democratic sytems that will develope to allow the people to control wealth more dirrectly. For now it seems to some degree we need a captialist free for all. I've wondered why you couldn't have a completely democratic and completely socialist country. Think about it.

That is extreemist logic there. I am not advocating that Unions take over, only that workers have the right to form unions and bargen colectivly.

I'm not tring to trick anyone I can show you instances where unions have done things that benifited thier members while hurting the rest of society more.

Look at the last round of strikes in East Germany - IG Metal workers union. They wanted a 35 hour work week. Where's my 35 hour work week? Their strike will reduce the likelyhood of people investing in East Germany where we've put tons of money to encourage people to come in. This means less jobs for others in the area. In some places I've heard they have like 20% unemployment over there; it's sick.

I'm ok with collective bargaining. I just think if people focus on unions too much as a solution they miss the big picture. They're a nesseary evil, just like big companies.

[Code_Name_D]

49. I can agree with that.

Their are extreems to any solution. The trick is to find the balance between the two. And the secrit to that is to not set it in stone, but to use a meconisem of checks and balances to regulate that line.

Democracy can only be one of the forces in that balincing system. But your point is well taken that their must be other forces as well.

[brokensymmetry]

14. Our views diverge.

I have to question both of these assumptions. TV's and blue jeans are not produced by computers, or moved through telephone lines.



On the contrary, more and more goods are produced with less human labor. Whether we’re talking computer assisted design – where we reduce the number of engineers and draftspersons – or computer assisted manufacturing – where we replace skilled machinists or other workers with automated devices – we are in fact replacing a portion of the human labor component.

More and more companies use automated voice-mail systems. These functions were once performed by human receptionists. Thus, many receptionist jobs have been supplanted by automation.

You state further that goods are not moved through telephone lines. True. Information is sent through telephone lines, and it is sent rapidly and efficiently. The recent disputes between the RIAA and those who download music is, I think, illustrative; quite aside from copyright issues, the market for distribution of information (in this case, music) is being flattened and the middlemen (music companies) are facing a squeeze on their profits. We are all, to an ever greater extent, consumers of information; and so, one class of consumer product (information) is in fact sent through telephone lines.

We can't just limit our views to the US economy; the same communications that make it possible to call DC from LA also makes it possible to do business in New Delhi, or Moscow, or Tokyo. We are truly in a global marketplace for labor - and ever lower barriers to companies who wish to tap that offshore labor market. One example - DARPA is working on software that will translate language. Their target date for accomplishing this is one year from today. How long will it be until one can get something similar for their PC? I suspect not long. And that means you can call Beijing and talk with someone there, each person speaking in their native tongue. The barriers to globalization will get a great deal lower.

Actually, we have had these communications abilities for some time now. And as for DARPA's translator, I find that to be irrelevant because it isn't in the field now. How can something that has not be launched, possibly have such profound effect in today's economy. And while the language barrier is significant, it hasn't been an impediment to global business since France was the world power, and all transaction were conducted in French. Similarly today, all business is conducted in English, rendering any language barriers moot.

The communications abilities have been around for decades. The full impact of any technology is not fully realized for quite some time. Further, it must be remembered that cheap global communication is a fairly recent phenomenon.

The DARPA translator is an example of how technology may affect the global economy and hence the labor market. Obviously a technology that hasn’t been deployed cannot impact the market; equally obviously, if we wish to exercise vision it is necessary to at least consider the impact of various technologies.

And no, language barriers are not moot. I also do not concur with your assertion that language barriers haven’t been impediments to global business. Anything that increases the cost or the time required for a transaction represents some degree of impediment. If a consumer can contact a store in Wisconsin as easily as one across the street, then the two stores are direct competitors. As an example, please consider Amazon.com and the impact it has had on the small independent bookseller. Shipping costs are a factor, but note that Amazon.com has overcome this problem. Can a store in Malaysia compete with one here in the US? I believe it could, given tax and labor considerations – if language barriers were eliminated. If that is true, then labor costs in the US versus labor costs in Malaysia become a factor.



And while we are in a "global market place for labor" as you put it, the playing field is only open for the big players, such as US corporations and whole countries who negotiate labor in blocks. All while the same corporations work to crush US labor unions, preventing collective bargaining rights on the worker's side.

This is only the case if you are hiring directly. Presently, US doctors in private practice are outsourcing medical transcription to India. The quality of the product is good, the delivery time is excellent, and the cost is one fifth of the cost for the same service from US providers. A sole practitioner in a medical practice does not seem like a big player.

The US worker isn't losing to foreign labor markets. He is in fact, being SOLD OUT by the CEO's who lord him, and would claim to by and sell the working mans labor as a commodity. In other words, slavery. Modern business practice sees US labor as something that it owns, and can discard at its will. They have simple found cheaper slave masters, and technology has vary little to do with America's current economic plight.

Technology facilitates the behavior.

Significantly, we're only now feeling the results of globalization. The next step - which we haven't yet really felt - is the impact of artificial intelligence. Keep in mind Moore's law - computers double in capability every 18 months. This implies that the computer you buy in 10 years will be 100 times faster than the one you have today. In 20 years, it will be 10,000 (yes, ten thousand times) faster. At some point, we won't need humans to flip burgers or make telemarketing jobs. What do we do with the people who aren't able to be genetic engineers or surgeons?


Junk sciences. Moore's Law has nothing to do with artificial intelligence. The thing is that human sciences still can not even adequately define what intelligence is, let alone how to artificially produce it. Moore's law at best will give us faster calculators, not smarter ones. Keep in mind that the human thinking process is actually quite slow in comparison to modern computers. Even the Pentium II could perform faster calculations than any human brain alive. But is a PII smarter? But that in and of itself is a trick question, until we have a better understanding of what intelligence actually happens to be.

AI is junk science? What a painful surprise this will be to researchers in neural networks and expert systems! It must be remembered that we need not replicate human intelligence or human thinking, just as we need not duplicate the methodologies of the bird to accomplish flight. Our goal is to solve problems more quickly, more accurately, and less expensively; and that is an achievable goal.

But that aside, I fail to see how this is even relevant to the issue of the global economy.

Faster computers process information more quickly. The same amount of labor can, then, produce a greater output. Therefore, for a given level of output, fewer workers are needed.

As an example, back in the early 1970’s, the stock market couldn’t handle 35,000,000 share days. The back offices were overwhelmed with paper. Today we see billion share days – and the industry has fewer workers. If you have a copy of Excel on your computer, you can create an extensive table of logarithms. You could do so in a short time – hours at most. This once required years of effort.

What can we do? That's a very tough question. I suspect it involves a series of regulations that require companies that sell products here to provide jobs here. If we don't - wage rates will go down a lot. And that means tax revenues will too. And that means...goodbye every social program you and I care about.

I can do better than that, a lot better. Your idea is based on the presumption that the investors are the sole clammiest to the wealth that a corporations create, and that labor (people who perform work for a wage) is just another cost to be reduce. Trying to regulate this is a fools game, for in the end, you will always return to the minimization of labor expenses, resulting in dire consequences to the people who actually perform the work.

The balance between the cost of capital and the cost of labor is based on supply and demand. Labor will seek to maximize compensation, as will capital. When labor is in low supply for the existing demand, wages and other compensation – even including profit-sharing or equity participation – can and do occur. When capital is in short supply, it can (and does) demand a premium – interest yield, equity percentage, or security. Unions, labor laws, and barriers to the free movement of capital, labor, and information affect the balance but don’t eliminate it.

Presently, globalization has opened access to an abundant supply of cheap labor. And that implies that the worker is unable to demand greater compensation – if she does so, capital will merely choose another provider of labor, or a cheaper venue. As technology advances, the additional option of replacing human workers with machines becomes available.

[ewagner]

16. Great posts

Keep it up folks, I'm absorbing these ideas like a sponge.

[ramapo]

17. But where will we work?

All very interesting but the question remains. Where will we (and more importantly our kids) work?

Throughout this thread are examples of the flattening of the labor market. All while there are more and more people.

Voice mail replaces secretaries, voice tracking replaces DJs, Excel replaces a myriad of jobs. Even the music business flattens as the internet provides artists with a direct route to their customers.

Much (all?) of this is the direct result of technology, IT/DP specifically. The past 10-20 years brought unimaginable advances and along with it lots of good jobs.

But IT is at a plateau. The infrastructure is there. Yes, the march to faster, better, cheaper will continue. And this will allow new applications. But most hardware and the expertise to implement it is a commodity. What was a source of good jobs is running dry and even in reverse as the corporations look to fatten the bottom line by going for cheap labor.

One side note, I don;t consider offshoring to be slave labor, at least in IT. Maybe this can be said in some of the manufacturing areas but in the IT arena I believe these are good jobs for those in the second/third world. It just really sucks for us.

I submit that traditional "good" jobs are not so good any longer. We've beaten to death the IT problem. Want to be a doctor? It's a job but not the golden road it once was. Law? Lots of lawyers. And so on.

How about retail? Lots of jobs. But the country won't survive on that. It's like a pyramid scheme. Keep building stores where people can work so they can go to another store and buy stuff.

It gets back to the vision thing. Goals. A vision to improve our country and the lives of its' citizens. Now we are at the mercy of the chaos of the marketplace and the religious belief in the corporate gods.

So here's my list of economic drivers.

1. Energy independance. 10-year goal. No BS. Why doesn't every home have solar panels? Lots of opportunity.

2. Infrastructure. Eisenhower started the Interstate Highway project, as a defense project no less. How about a nationwide rail system following the path of existing highways? All the way down to the local level. Get away from single use auto.

3. Inner cities. Recreate these places and make them suitable for a decent life.

4. Parks, environmental cleanup. The CCC did a great job. Now these places are a mess. Get the corporations out.

5. Recycling. Reuse everything. Just like in WWII.

6. Schools. Why should anyone have to attend a substandard school? Why isn't teaching a respected profession.

7. Research. During my 10 years running a small IT consulting/integration company I have seen an unbelievable number of resumes from incredibly smart people with advanced degrees in the sciences. They were reduced to looking for a programming job because of lack of work in their field. So much for the call for stronger science/math education.

8. Rejuvenate the space program. I consider the space program of the '60s an incredible accomplishment

9. Biotech/medicine.

All of these are outside the realm of the corporation which is today the God of society. Why? There's nothing to sell on TV here. Only the government can initiatate such programs. A strong leader with a vision is required to start to unravel the decades of government bashing and corporate worship and do something like this. Of course, a bout with 10% unemployment would help.

All this would be incredibly expensive. How to pay for this? I'm not sure of the answer but how did the government pay to build the existing (and now outdated) infrastructure? Maybe divert a few hundred billion from building WMDs. But while government must take the lead, any of these projects would drive the private sector.

Well I could go on but this is already too long...

on edit...
ps for ewagner. I don;t think IT technology is going to produce the jobs. In many ways the opposite is true, like the examples starting the post. But take technology to encompass the environment, energy, transportation, etc. and the answer may be yes.

[ewagner]

18. Synthesis

Let me try to sythesize my thoughts here....

You have all brought up some excellent points. Among the most important issues facing our economy are:

Globalization
Technology
Leadership
Manufacturing/Production
Education
Energy

In my humble opinion, those issues have to be addressed as part of a single, coherent system.

Someone mentioned the term "pyramid scheme". I have had these thoughts for a long time. It occurs to me that capitalism as a concept cannot survive unless it does two things: grow and create an economic hierarchy. To some extent, Globalization was (and remains) the natural evolution of capitolism. Further, globalization is the mother-of-all pyramid schemes. For better or worse, globalization of the world economy cannot be stopped without replacing it with some more secure and isolated type of system which I am not certain is either possible or desireable. This, in my somewhat fractured logic, means that we have to live with globalization and make it part of the new structure of economic systems.

The trick then, is to make the United States the founder of the great pyramid scheme. Put in place a system of education, technology, energy and research that will keep American workers at the top of the pyramid and on the leading edge. The major problem with this is that the base of the pyramid has to be huge to compensate for the loss of manufacturing jobs (and even IT jobs) that will be shipped overseas. I don't know if the world economy itself is big enough for that.

The benefit for other natioons is that they will slowly progress in wealth and create demand for new products and services. The immediate downside is, as always, exploitation of workers in just-developing countries and possible (spell that probable) rape of natural resources and more reliance on fossil fuels.

The questiion then remains: What are the jobs that Americans can fill at the top of the grand pyramid?

[ramapo]

19. Science and technology

I believe science is both the devil and our saviour. America has pretty much led the world in science and technology for the last century or more. I think we're floundering now.

You're correct about globalization. It's here to stay, there's no putting this genie back in the bottle because it's a plus for the rest of the world. But as the rest of the world progresses, they must be smarter and more efficient in their use of natural resources and fossil fuels for the simple reason that there isn't enough to go around.

So America's chance to stay at the top of the pyramid is to lead the way by putting ourselves to work to using our resources more efficiently, cleanly, and all that good stuff. After all, this will have to happen eventually or we'll just be screwed.

There's been lots of lip service the past decade or two about the importance of science and math, etc. Go try and get a job as a scientist though, it's not so easy.

There are lots of problems to be solved. The jobs that'll keep us on top probably don't exist right now. We need the programs to research and develop solutions to the many problems we have. From this come new products, projects and jobs.

The biggest problem though is politics. Our country is so fragmented, our people so uninvolved, and the corporate colonization of society so complete, that it will be very difficult to address this hugh issue in any rational way.

[ewagner]

20. Agree

you wrote:

"The biggest problem though is politics. Our country is so fragmented, our people so uninvolved, and the corporate colonization of society so complete, that it will be very difficult to address this hugh issue in any rational way."

Truer words were never spoken!

That is why I listed leadership as a major issue. It will take a true leader, complete with a true vision (and some command of the english language...sorry, couldn't help myself on that one) to rally the country to acheive greatness.

Somebody, preferably on our siide, must step up to the plate..

[Code_Name_D]

22. You defend the statues qou quite a bit, don't you.

On the contrary, more and more goods are produced with less human labor. Whether we’re talking computer assisted design – where we reduce the number of engineers and draftspersons –

But the products being designed are of ever increasing complexity, requiring more, not less time in its design and development. In the 1920, a phone was easy to make by hand, but a cell phone requires a host of new technologies just in its production, and is far more complex, requiring more time in both its design and manufacture. So things brake even.

While other aspects of the technology remains unchanged. Injection molding for example, has changed vary little, because there is vary little to change, so technology can not give you gains in manufacturing their.

or computer assisted manufacturing – where we replace skilled machinists or other workers with automated devices – we are in fact replacing a portion of the human labor component.

LOL. The human eliminate can never be removed from the manufacturing process. Technology and automation has come a long way. But the notion that machinists are some how being removed from the equation is down right ridiculous. A machinese's still is not just about turning the handle of a drill press. They are technicians in their own right that under stand metal working, and the limitations of the equipment they are using. They THINK. Many aspects of design do not even bother with routine aspects of manufacturing because the machinist is far better equipped and skilled to complot the task. They will look at the design specks and fill in the gapes that the engineer left behind. But you make them sound like little more than fast-food workers.

True, technology has advanced, but the machine's is still the master of the technology. Taking the machinist out of the picture, is as believable as taking the rider off the hoarse. I think you are a victim of gross over simplification of the issues at hand.

Manufacturing is still bound by physics. Your powers of manufacturing are only limited by your understanding of these laws. But its junk economics that claims that this is no longer so. There fore, economics is also bound by the same laws of physics to some extent. More over, economics dose not exists in a vacuum eater. Remove the people from economics, and economics no longer remains. No mater what kind of technology is left behind, or how hard supply siders wish other wise.

It is also an economic fact that you can not produce something, if there is no demand for it. And there can be no demand, if the people can not earn a living to buy things. This will remain so, until you can teach your AI computers to shop with a credit card, and give them a wage to spend with.

You state further that goods are not moved through telephone lines. True. Information is sent through telephone lines, and it is sent rapidly and efficiently.

But an economy is built on goods, not data. People must still eat, homes must still be built, car's must still be repaired. Meeting these is the true well spring of economics. Not technology. The information age is a remarkable addition to the economy, but it hasn't made manufacturing obsolete by a long shot.

Again I point out that manufacturing is only disappearing from America. New plants are being built in third world nations as we speak. Don't tell me those plants are just another phase of the information revolution. (I noticed how you tried to tip toe past this.)

The recent disputes between the RIAA and those who download music is, I think, illustrative; quite aside from copyright issues, the market for distribution of information (in this case, music) is being flattened and the middlemen (music companies) are facing a squeeze on their profits. We are all, to an ever greater extent, consumers of information; and so, one class of consumer product (information) is in fact sent through telephone lines.

Oh on the contrary, copy right, or to put another way, who OWN's the information is at the vary heart of the mater. Currently, only the corporations seem to even have the right to own data. They even own the data about us, as they mine, buy and sell our personnel information to the highest bidder, no questions asked. Leaving us both powerless to protect ourselves from our information from falling into the wrong hands, as well as having to deal with the consequences of the transactions of others. Even while the corporations take the money they took with OUR information to the bank.

Indeed, the entire function of the copy right, and it's close relative, the patent, was designed in our constitution, so that their creators could finitely benefit from the fruits of their own labors and innovations. This compensation lets them earn a living while working on new technologies. Walt Disney is a good example. He created characters such as Mickey Mouse that have become a part of our culture. He owned these characters, so that he could make a living off of it.

But a modern day Walt Disney is not even possible in today's so called "information age." Walt could not even show Mickey Mouse to the public unless he sold it lock stock and barrel to the corporation who also happens to own Clear Channel. He may see a one time perk by selling the rights, he can't live off of it. If he can not profit from his own works, why produce it?

Today, Disney corp owns Mickey Mouse. No one can use its likeness without first acquiring permission from Disney corp, and paying them a hefty gratuity. Today, Mickey only shows up on the Disney Channel, which happens to be a pay channel. You have to pay money, just to look at a cartoon character, and this is so long after Walt Disney himself has passed away. Today, Mickey is little more than a cash cow. They do little with him other than have him prance around at Disney World. That dose NOT sound like a free flow of ideas. Quite the opposite in fact.

Data can move from one end of the world to the other in a flash, but what's the point when the corpers own the data? And its because the coprs own every thing that the system is so "flat." It's flat because there is an even flow from into the pipe, to out of the pipe. If our information age was truly diverse, than the information available would be a lot more dynamic, and would be thriving. Right now, the music and entertainment industry thrives, only because they have a monopoly on culture itself.

But what about the exemptions to this? Take Ira's "Waste Land of the Free." It’s a good song that you may or may not heart that Ira still owns the copy rights too. But will you ever hear this song on the radio, or sold in stores on a CD? Not in America. Ira's song sounds too much like treason. When it was played on Public Radio in Florida, a Florida statesmen was so offended by it that he had the whole station shut down. (Censorship any one?) If we live in such an information age, such a dead wouldn't even be possible. But not only is it possible today, it is routine. There is a word for that, its called fascism.

Who owns what is a critical ingredient to a modern economy. If the common people do not own the vary things they produce, where in instead the profits from such innovations fall into the hands of an elite few, than why bother? That is part of the reason why the economy is so depressed today.

You can talk reform all you want. But until start taking into account issues such as these, its nothing but hot air.

And no, language barriers are not moot. I also do not concur with your assertion that language barriers haven’t been impediments to global business. Anything that increases the cost or the time required for a transaction represents some degree of impediment.

Oh good grief, buy that logic; pot holes are the greatest threat to capitalism. Am I to truly believe that billion dollar deals fail for want of a translator? Corporations spend more on caviar.


If a consumer can contact a store in Wisconsin as easily as one across the street, then the two stores are direct competitors. As an example, please consider Amazon.com and the impact it has had on the small independent bookseller. Shipping costs are a factor, but note that Amazon.com has overcome this problem. Can a store in Malaysia compete with one here in the US? I believe it could, given tax and labor considerations – if language barriers were eliminated.

Why wait, when they could write the web page in English and conduct their business in dollars. Or Spanish if you choose. I run across Japanese web pages all the time that give you the option between Japanese, Mandarin, Korean, Russian, French and English. Heck, I know of at least one sight written in Klingon.

Come on, their has been global trade as far back as the 16th century. What do you thing the Victorian Era was all about? Do you really want to but heads against something that is so obvious?

If that is true, then labor costs in the US versus labor costs in Malaysia become a factor.

If language were a factor, than it wouldn't bee cheap labor in Malaysia, would it. Or is this DARPA program so powerful as to make its effects felt today? If it has no impact in the current economy, than you are only speculating.



This is only the case if you are hiring directly. Presently, US doctors in private practice are outsourcing medical transcription to India. The quality of the product is good, the delivery time is excellent, and the cost is one fifth of the cost for the same service from US providers. A sole practitioner in a medical practice does not seem like a big player.

But US doctors are increasingly under the control of HMO's who are all about cutting costs.

And how would you explain the fact that IT jobs are moving to India? It can't be because they are better at it because they are still having to be trained by American IT workers. And most IT workers in America are privet contractors. Am I also to believe that they simply opted for the unemployment line? They weren't even given a chance to be competitive with India. No, a far more likely explanation was that American IT workers were sold out as the CEO's continue to search for cheaper and cheaper labor. This is the fact on the ground, your opinion to the contrary has little impact on this fact.

AI is junk science? What a painful surprise this will be to researchers in neural networks and expert systems!

Nice straw man. No, the notion that Moor's Law has any thing to do with AI systems is junk science. Much of what you recite (including your other comment about nano-technoligy) is contained within an idea known as the third wave, and is as junky as it gets.

Nor did I ever imply that no one was working on the subject. That's two straw men from you.

It must be remembered that we need not replicate human intelligence or human thinking, just as we need not duplicate the methodologies of the bird to accomplish flight. Our goal is to solve problems more quickly, more accurately, and less expensively; and that is an achievable goal.

Oh, another nice little straw man. Where ever did I hitch AI to human intelligence? I said that human sciences are still at a loss of what intelligence happens to be. It is a mistake on your part to assume that they were just interested in human intelligence. Or that some are even waiting for a definition, working on their own. Their would just be much debate on weather AI has actually been achieved.

But I find it amusing that you seem to think AI can be developed without studying human intelligence. True, airplanes do not flap their wings, but the wings are shaped exactly like that of a bird. Any thing else, just won't fly (pardon the bun.). This is precisely what I mean by junk science.

AI researchers do indeed study humans, specifically, child development. But so to do they study insects and the process of evolution in and of itself (trying to learn how human intelligence evolved, and why.) The latest thinking into AI even involves an evolutionary process into the circuitry itself.

Faster computers process information more quickly. The same amount of labor can, then, produce a greater output. Therefore, for a given level of output, fewer workers are needed.

And exactly how dose the capacity to process information more quickly, result in the ability to manufacture products more quickly? Or do computers have the power of telekinesis? Even robots are limited by the laws of physics, not the limitations of computing power. Building a faster computer dose not automatically translate into a faster robot, or a faster moving assembly line. And human engineers must still sit behind the computers to put the design specs down in the fist place.

And again, if the manufacturing of products requires less labor, than why are corporations flocking to cheap labor sources? If such technology could result in faster production lines, why relocate to India or Malaysia? Wouldn't these technologies be just as fast in the US as in India?

I can do better than that, a lot better. Your idea is based on the presumption that the investors are the sole clammiest to the wealth that a corporations create, and that labor (people who perform work for a wage) is just another cost to be reduce. Trying to regulate this is a fools game, for in the end, you will always return to the minimization of labor expenses, resulting in dire consequences to the people who actually perform the work.

The balance between the cost of capital and the cost of labor is based on supply and demand. Labor will seek to maximize compensation, as will capital. When labor is in low supply for the existing demand, wages and other compensation – even including profit-sharing or equity participation – can and do occur. When capital is in short supply, it can (and does) demand a premium – interest yield, equity percentage, or security. Unions, labor laws, and barriers to the free movement of capital, labor, and information affect the balance but don’t eliminate it.

And you have completely missed the point. The point of my balance sheet example is to demonstrate that the worker can and should be considered an equal to the investor. And that returns in labor have an equal weight to returns to the investor. Your resuscitation of a paragraph in an economics text book fails to address this.

The consequences of supply and demand in regards to both labor and capital are irrelevant to how they are treated and their station in the society. Just as technology happens to be irrelevant.

As they now stand, the corporation is latterly and figuratively, the kings of America, and their merits whims suddenly carry the weight of law upon the worker. Take the recent American Air Lines labor negotiations. CEO's told the unions that they had to accept drastic cuts in pay and benefits, or the company would go into bankruptcy. But the day after the union vote, the board announced huge pay raises for them selves to the tune of billions. Why is the CEO entitled to this wealth while the worker's pay must be reduced to stave off bankruptcy?

In a democracy, the worker and the CEO are equal persons, with neither having no more, nor no less rights than the other. With neither being no more, or no less entitled to the fruits of their labor. But in today's economy, the worker is little more than a slave, whose labor is latterly owned by the corporation he works for, and is bought and sold as nothing more than a commodity. If labor is nothing more than a commodity, than the laborer is little more than a slave.

Your fixation on technology blinds you to this reality. And it is exactly this fixation that supply siders want to you focus on. That way you never see the hand in your pocket, nor see the cast iron collar coming in from behind.

More and more companies use automated voice-mail systems. These functions were once performed by human receptionists. Thus, many receptionist jobs have been supplanted by automation.

Wait a minute. You aren't critical of the current economic situation at all, are you? Thus far, you have only defended the status qou. Why are you here again?

Your automated voice-mail system is yet another example on how you are fixated on technology. But lets focus on Clear Channel for a moment. In its quest to maximize efficiency, and lower cost, Clear Channel has automated all of its AM and FM broadcasting towers and transmitters. Programming is assembled at a central point (New York) and beamed via satellite to all of the transmitters. Its all vary efficient.

Until one day the Governor of Iowa (At least I think it was Iowa) tried to brake into programming to warn the people of a risk to a flash flood. But he failed because no one was there to answer the phone. Suddenly that efficient system was no longer efficient, was it? In fact, it was inadequate, and could have been deadly. Now I don't think any one died because of this, but what if some one did? Douse Clear Channel's rights to maximize efficiency for profit over ride the welfare of the public? Especially on air waves that are suppose to be commonly owned?

But why look at such an extreme situation? What of the consumer? Douse the consumer truly want all of their programming decided on from a central point? Do they truly want a national uniformity, with no diversity what so ever, save what ever stereo types the master programmer entertains? The polls say no. Heck, even radio listener says no as it has steadily declined senses Clear Channel started dominating the market. Am I to believe that Clear Channel's right to profits, even supersedes the desires of the consumer? But why not, they supersede our vary lives.

This has nothing to do with technology. The same exact thing happened when the British occupied the colonies. Only instead of the radio, it was the printing press. Where do you think "freedom of the press" came from? No, this has to do with social norms, laws, and the governments that define and enforces them.

[cosmicaug]

38. On technology vs. labor

But the products being designed are of ever increasing complexity, requiring more, not less time in its design and development. In the 1920, a phone was easy to make by hand, but a cell phone requires a host of new technologies just in its production, and is far more complex, requiring more time in both its design and manufacture. So things brake even.

Oh, come on, that's bullshit! A telephone in the 1920's would probably have been constructed almost entirely by hand. All the soldering, screwing, even the cabinetry work. I wouldn't be surprised if even the winding of insulated wires to fabricate the electromagnets for the ringers were done also entirely by hand.

A modern cell phone, on the other hand, would be very heavy on the design phase (though using a great amount of CAD), but I imagine, as is the case with all mass produced electronics nowadays, would have a manufacturing process completely dominated by robotic assembly (of course the most complex circuitry in these phones --including things such as processors and various memory chips-- will be part of massive --in scope, not physical size-- integrated circuits which are created by photolythography). In other words, while the initial design (including all the R&D) is undoubtedly more complex, the actual manufacture just isn't going to involve that much in term of man hours as compared to a telephone from the 1920's.

To look at a more modern example, I quote the opening paragraph of an article on Newsweek:

IBM’s year-old, $2.5 billion computer-chip plant in East Fishkill, N.Y., is a manufacturing marvel. Three hundred robotic tools, six miles of networking cable and more computing power than NASA uses to launch the space shuttle all work together to produce tens of millions of chips a year—each with circuitry 800 times thinner than a human hair. Not that you'll find much human hair around the plant. Other chip plants need about 400 employees at all times to operate the complex machinery. But today at East Fishkill, 100 engineers per shift oversee a totally automated production line, solving problems and generally keeping their distance from the real work. Last winter, when a fierce snowstorm sent everyone home early, the machines didn’t even notice and hummed along overnight without a glitch. “The productivity increases for IBM are amazing,” says Perry Hartswick, the senior program manager at the plant.

So there you have how a good plant automation program got rid of 75% of the jobs as compared to other equivalent plants elsewhere (probably heavily automated as well).

As to whether it is a good thing or a bad thing or whether this makes some other jobs magically appear from somewhere else, I won't offer an opinion.

[Code_Name_D]

39. You are incorect.

Cell phone and other simuler devices are still heavly dependent on hand labor. Especualy in the quality control phaze of the product as automation is repleat with assembly errors that have to be undone. Not to mention the trubleshooting for the prosses.

Asembly mestakes must be found visual. That means a technition must stare at a board through a micro-scope to insure work quality.

The scale is irrelvent. From micro-chip design, to fianl product assembly, the human componet is indespecabule.

I should know, for this is my Job as a customer service technition.

Your IBM example is intresting, but am I truly to beleive that 400 to 100 qualifies as the elimantion of a labor force? More likly, the low end technical jobs were shipped off else where.

Most high tech devises are now assembled by slave labor forces in South Mexico ot Tiwan. Just as I have seen low end technical skills at my plant being shipped else where.

And my plant has a dirty little secrit. They don't count failed product. They will ship it to the customer, weather it works or not, so they can log the product down onto the books as production.

Your argument smakes of desperation.

[cosmicaug]

40. Human component

The human component might indeed yet be indispensable, but how many cell phones are going to be coming out of the factory per actual man hour spent as compared to people making a phone during the 1920's? That's what I'm getting at (I wasn't arguing that all human labor get's eliminated only that less human labor need be used to do a given task with increasing automation and indeed less human labor is used --don't be shifting the goal posts).

And humans being mostly relegated to quality control as you describe (via visual inspection) instead of doing most of the assembly is strongly suggestive of exactly what I'm talking about.

Your IBM example is intresting, but am I truly to beleive that 400 to 100 qualifies as the elimantion of a labor force?

Yup, that would be exactly what you'd be expected to believe if we assume the article is accurate. They're making the case that other plants use four times the amount of labor to do a similar job (and yes, reporters have known to get their facts wrong but it's fairly clear the article is describing an increase in automation that allows everything to be run by a smaller number of personnel). If, as you speculate, they had really been talking about outsourcing (they deal with that issue later in the article in a different context), they would have explicitly called it outsourcing.

[Code_Name_D]

44. Keeping at it.

Congratulations. You have vary ably and thoroughly proven the obvious. Again! I truly find it most telling how you retreat to this one point over and over again, even though I have already conceded the point some time ago.

Your problem however is that this point is still completely irrelevant to the topic of discussion. Structural changes in the economy. Not to an assembly line. While you may be able to show me that technology allows for an assembly line to move faster, produce more product, and do so cheaper and with less labor. But it doses not necessarily follow that this trend applies to the whole economy. The fact you seem to be ignorant of is that growing automation has been with us for almost 80 years. This labor depopulation didn't happen in the past, what makes you think it is happening now, or going to happen in the future.

Let me reiterate my points to back this up. (The same points you have declined to respond to, thus far.)

Complexity.
Your previous post seems to vastly understate the difference in complexity to a stand phone found in the 1920't to the cell phone of today. The stand up phone was little more than two coils, a switch (called the hook), and a diaphragm, connected to the end of a loop of wire that was ran from the central office. The phone itself was hardly designed at all, and every aspect of its design, manufacture, and repair could be done in one building. Even the individual components were manufactured on sight.

In contrast, just a signal integrated chip now requires a full campus of specialized engineers. There are wave analog specialists, digital circuit engineers, circuit geography specialists, environmental simulation engineers, and chip architecture specialists, just to name the few fields who must all work together to make one integrated circuit schematic. Laying out the chip in an of itself is also a remarkable challenge. Literally hundreds if not thousands of persons are involved with just one integrated chip. And a typical cell phone is going to have tens of hundreds of integrated chips in its composite. The cell phone itself, or composite is going to need a similar team to develop it. All with strikingly different technical issues that must be sorted out. And that is WITH the aid of the CADS line of engineering products, along with other tools. Remove the technology, and such an engineering concept wouldn't even bee possible. CAD for engineers isn't about efficiency, but about making complex operations and calculations possible.

Hundreds of thousands of man hours go into the design of a cell phone and its components. The task is so large that one company, even a mega-corperation, can not handle the task by itself, so it outsourcers much of the work to other companies who are already competing with their chips & components on the market. Designing the composite involves digging through massive component catalogs, literally looking for "inspiration" much as a painter will walk the countryside, looking for an inspiration for his painting. If nothing is found that strikes their fancy, they will contact a vender and contract them for the part. But it's then up to the vender to design and build the part. Even the most mundane of components can present technical challenges, not just in its design, but in its manufacture as well. So even more engineering specialists must be brought in to figure out how to economical build that part, and to do so with consistent quality.

And then there is constant re-engineering that must take place to work out the bugs out of a line. The first production line never works perfectly, and will usually require updates to the schematics. So even though a product is on the assembly line, doesn’t necessarily mean our engineers job is over.

And that is just the design and development. This must take place for every new cell phone line produced. And the wireless communication's revolution has not stopped, and the system must literally re-invent itself from a technical standpoint at least once every two years.

Production Scale.
In the 1920's, a phone company would be lucky to sell a few thousand stand up phones. You may not know this, but a stand phone actually starts its life as a lamp stand. They were largely sold only to the wealthy, and those who were in service areas. A small factory could easily keep up with demand and keep stores of new phones at the ready.

Today, production lines aren't serious for consumer based products until you start in the 10's of thousands. And a full production line could easily range into the hundreds of thousands, and possible into the millions of the product proves to be popular.

Even if they were just producing some thing as simple as the stand phone with no automation. Such a plant would still have to vastly expand its manufacturing capacity to meet the demand. And that requires more people to man the manufacturing lines.

Quality control.

And humans being mostly relegated to quality control as you describe (via visual inspection) instead of doing most of the assembly is strongly suggestive of exactly what I'm talking about.

You make quality control sound so incidental. As if may be one in 100 units might need to have something fixed. My plant currently produces a 2975 Cellar Unit & Station Testing System. It’s a box that basically tests and enables trouble shooting both for QT and "Go, no-go" production output for cell phone units, as well as the central towers from which they operate. And in its production, each and every board must be visual inspected under a microscope in order to remove things nicked named as "be-bees." They are tiny little droplets of solder that splatter onto the boards.

Every product that my plant manufactures must under go this visual inspection to remove these Be-bees, otherwise the unit will fail on assembly, and have to be dismantled and repaired. In fact, the more sophisticated the box, the smaller the circuitry, the more critical this issue becomes.

You are correct that advancements in technology make for grater productivity. But I have no idea where you are coming up with this notion that each product requires fewer human man hours in its production. Come to think of it, you’re the first person to even ague this.

Technical support.
Ah, now we get off the assembly line, and into the real heart of modern labor. Service. In the 1920's it was feared by the workers that automation would replace their jobs. It turned out not to be so. In fact, as mechanization took hold, there was a demand for skilled operators and technicians. The vocational school came on the seen for the first time. They latterly took people right off the street, and trained them mathematics, physics and what was then the cutting edge of the technology.

Some technology operated on a capacity for efficiency, that is a machine was able to do the work of X number of men doing the same job. Like the cotton gin. While other technologies were "enabling" in nature, that is the machine could do what man could NOT do. Such as a press strong enough to roll steal like silly putty. Called "cold working." The type of power needed to force cold steal through a die or set of rollers could only come with the onset of steam power.

Regardless, this machinery needed to be serviced, and then repaired when it unbeatably broke down. Are stand phone could be built by hand, requiring only basic hand tools. But the manufacture of cell hones requires a long list of other forms of advanced technology, like the 2975 that I just mentioned. Products which in and of themselves must be operated, maintained, and repaired.

Ironically, this sort of labor rarely shows up on production time logs. And why should they sense they do not have any thing to do directly with production. But none the less, these jobs are essential. And while you would seen to be pained to admit it, as production technology becomes more and more advanced the grater the dependence of this type of technical support.

Its one reason why I chose the electronics field in the first place is because these jobs, part of the service sector, wouldn't be shipped out. As this kind of job can not be automated. At the time, I believed as you do. You might imagine my surprise when I found out how wrong this assumption was, the HARD day. Much as the IT sector is learning now.

Riddle me this.
If technology is resulting with the recent lay offs, supposable due to increased productivity, than explain to me the following problems with your position?

1) Why are jobs being shipped over sea? Especially the IT sector and other service sector jobs? There is no automation here to improve efficiency with? If technology is improving efficiency, than am I to believe that places like Korea are more technologically advanced than America? How do you explain this? Examples:

Thousands left jobless as 16 plants close doors.
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=44585&mesg_id=44585

Laid-off factory workers find jobs are drying up for good.
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=26143&mesg_id=26143

India group: Outsourcing saves U.S. jobs.
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=14259&mesg_id=14259

2) If places like Korea are more advanced than America, then how did they get that way? Is this truly a better explanation that companies looking to exploit cheep labor?

3) America has not had a significant manufacturing sector sense the 80's after the textiles collapse. How can advancements in technology improve manufacturing for a sector that doesn’t exist?

4) What about the trade deficit? If advancements in technologies are reducing the work force here, while keeping up productivity, than the trade deficit should remain constant. The opposite is the case. How do you enplane that?

5) How do you explain sudden mass layoffs that take place without any outlays made in re-tooling? Examples:

Pe< Boys closes 33 stores, lays off 860.[br />http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=48403&mesg_id=48403

I. B. M. Explores Shifts of White-Collar jobs overseas.
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=26947&mesg_id=26947

6) How come service sector jobs are also seeing such reductions? Even though work automation doesn’t take place?

The only explanation for these layoffs is the shipping of jobs over seas, or contraction of the economy. Again, I tell you that technology itself has little to do with this. These observations are all consistent with the persistent efforts to eliminate labor costs. All of the things that can be done to make a work force more efficient has already been done. So the only way to go lower is to go back to a slave based economy.

[rapier]

23. the service economy

The biggest structural changes in the economy is the long term trend to the so called service economy. This long term trend reached the blow out stage by the mid nineties and has continued to accelerate. The deindustrialization of America, a trend beginning in the 50's, has reached it's end as production accounts for only 15% of the economy and in aggregate that is showing no profit. (For instance all GM and GE's profits come from lending money. I don't have GM's number but US auto makers are currently losing $180 per vehicle according to a recent calculaion)

I'll spice up this pat answer by proposing that the service economy is at root a financial phenomenon.

What do I mean by that? I mean that the success, or apparant success, of the service based economy as opposed to a production based economy is contingent upon the wonders of mondern accounting, easy credit and profligate monetary policies.

Few understand that corporate profits have been sinking relentlessly for years and are now at the lowest point since WWII. Most of those 'profits' are financial in nature. In other words not real cash flow but rather money that is made by accounting practices. Against these low profits corporations, like government and households, have ever growing debt loads. In other words there is ever less real cash flow to pay off the ever growing debt. In 1929 corporations had 1 dolar in cash for every dollar in debt. Today that number is $1 dollar in cash for ever $11 in debt.

Oopa, I've spun off...

As most know it is not easy making money making things. Long ago the elites learned it was so much easier making money on paper. Thus the entire economic system has been structured to inflate paper assets. If your good with finance your rewarded hugely. If you have a skill for making things your a loser, a chump, a has been. Thus billions flowed into the dot coms which never stood a chance of making a single dollar and their promoters took a nice portion of it. In the meantime any company making things was falling all over itself moving to China.

All this was made possible by a gross rejection of the primary rule of capitalism. Sound long term investment in real things lost favor as the rush into paper of every sort was made so much more 'profitable' by modern accounting.

In so many ways Enron was emblimatic of the age. It never was a very profitable enterpise and the bulk of its bussiness was services. BY 96 its profits were non existent. Yet it was a shining star of the new economy. Just recently the bankrupstsy was finalized. Debt holders are getting 14 cents on the dollar. This number is a monumental disaster. Typically the number is over 50 cents on the dollar in large corporate bankruptsies.

Enron was a 'service' bussiness don't you know. Masterful in the arts of accounting, lending practices and self promotion. A select few made billions in total from Enron. Except for poor Fastrow it will forever be a gigantic success. That it is gone now is no matter.
No matter to them. In total we are all poorer for Enron's waste of capital. Enron, like much of our 'investments' are simply malinvestment. As a nation huge swaths of our investments are have been speculations and are doomed to go down the rat hole. Much of that will be in the service economy.

[mhr]

24. Excellent Post Rapier

Thanks For Sharing!

Can you suggest some sources for your facts. I would like to study some of this on my own.

[rapier]

25. here is a start

http://www.prudentbear.com/archive_home_com.asp?category=18

http://www.morganstanley.com/GEFdata/digests/latest-digest.html

http://www.dailyreckoning.com/home.cfm?loc=/body_headline.cfm&qs=id=1548

The top one, the Credit Bubble Bulletin is my bible. Always skip the first 1/3 or so of the weekly articles where he discusses the weeks numbers and try to find the start of the comments. It might be heavy going at first but stick with it. (GSE means Government Sponsored Enterprise, which means FANNEMAE and FREDDYMAC the mortgage agencies. The authors of the credit bubble)

See espeically his post of 12/28/01, Financial Arbitrage Capitalism. http://www.prudentbear.com/archive_comm_article.asp?category=Credit+Bubble+Bulletin&content_idx=8794

Also:
http://www.prudentbear.com/archive_comm_article.asp?category=Credit+Bubble+Bulletin&content_idx=12034

All good. This was a crucial week really. We are at an historic crossroad and if this type of analysis is correct we are at the very edge of the good old days for almost all now living. Or maybe I'm a crackpot.

[ewagner]

26. Great Conversation

Looks like I have a bit or reading to do before I get back here.

Oh yeah, re: your comment on being at a crossroads....I have not evidence for it but I also agree....things are coming to a head...

[rapier]

28. panic

I refer to the melt up in long term interst rates over the last month. The financial markets are in crisis, yet even the financial press ignores it.

Or so say I. I may be a crackpot.

[Code_Name_D]

30. Or so say I. I may be a crackpot.

Don't tell me that is going to be your new sig line? :o

[ewagner]

27. Another interesting post....

This one was up in GD regarding Repubs feeling job "insecurity"

"There is no betterment of fundamentals in the stock market. The increase in the indexes is due to laying off employees not increases in revenue. There is also thoughtless speculation that the situation in the economy will have to improve somehow for the election campaign season which has no basis in economic reality. Perhaps the regime will open the commercial debt floodgates further in a futile effort to spur growth. There is nothing else to spur the economy. There is no economic plan only several war plans. National government and state government revenues are going down not up.

People have lost their life savings in the stock market. Those who haven't can't figure out a way to make money with investments. How does that instill confidence? It is a caste oriented feudal economy of corporate monopolists, rentiers and swindlers. The demographics of an aging population with no security is against them."


This goes directly to the thoughts that we are at a crossroads.
Apparently a lot of us think the same things.

on edit: oops forgot to give credit to robbedvoter for the post.

[cap]

32. mission to mars...

will accomplish the following things:

1. Make America feel good. Very positive goal. I remember watching a man step onto the moon. The whole world stopped and was one. This may be too big a goal to do by ourselves and may end up being an international enterprise. Yes, it will cost a lot; but aren't some things worth sacrificing for?

2. Spin off new technologies. Give IT sector a lift. Start new businesses. Give stock market something real to build value on.

3. Increase employment especially in IT sector. Where is our strategic depth in this sector if it is all going overseas?

4. Increase our spiritual awareness. Even the nonreligious felt an awe upon seeing the moon and some sense of being connected to a greater universe.

[German-Lefty]

35. "mission clean energy"

Yeah, I agree a mission to Mars would be a cool idea, but why not just a mission to fix our energy problems.

[Code_Name_D]

37. Who is going to pay for the mission to Marse?

Its clear the US can't aford it.

[phgnome]

43. Must be a global effort

because of the size, magnitude and social implications (i.e. social cooperation towards a common goal to stop wars between countries).

The US debt could also be paid in terms of developing space technologies.

[Code_Name_D]

45. Dubble billing.

The US debt could also be paid in terms of developing space technologies.

No thank you. I have seen how the gov is "re-paid" for these investments. More like whole sail rip off. Case in point.

In 1988, the US government began launching a series of television relay satellites at tax payer expense. The mandate was to expand the public bandwidth of national broadcasting, and in theory, freeing up the local TV stations that were increasingly falling under the control of the national networks.

But broadcasting rights were never public released. Instead, licenses to the spectrum was placed "on an auction" and the licenses themselves were organized into "commodities" in that spectrum, or even shares of a spectrum, could be auctioned off to the highest bidder, then barbered (speculated) for profits. The argument was that this was the best way to insure the public had control over the new satellite spectrum. But the opposite in fact happened. Those who were left with a minority share in a spectrum essentially had NOTHING, and the auctions that took place only returned a tiny fraction of the original capital outlay of the satellites. A system that the us gov is still maintaining, BTW.

Eventually, ALL of the shares ended up in the hands of three companies. Two of which are the two dish networks you see advertised. Not only did these companies get their satellites for pennies on the dollar, but violations of the mandate give these companies the right to bill for service. (Technically, you have the right to receive their signals without having to charge the provider. However, the provider won a supreme court ruling 5 to 4 of course, that gave the companies the right to scramble, and later encrypt the feed. If you want to de-code the signal, that you have to pay for, my the month.) So you are paying for the right to view something transmitted by something your tax dollars paid for.

[ramapo]

46. Yes but...

You're absolutely correct code, we've been ripped off on the wholesale giveaway of the entire broadcast spectrum.

The cause is the corporate takeover of the political system that has allowed what is owned by the public to be basically gifted to the corporations. And to add insult to injury, we have paid for much of the infrastructure, in this case the space technology for the satellites.

If we can ever get back to a government for the people, not the corporations, then space technology can be an unlimited arena for growth.

[Code_Name_D]

50. I can go with that.

:)

[phgnome]

42. R+D in space effort

Fossil fuels are not for use in space -- it would be inefficient to haul liquid fuel up into space. We will need alternative sources of energy to travel through space. Finding the solution to this is essentially finding one of the many solutions to the energy crisis on earth.

[German-Lefty]

48. R&D

Fossil fuels are not for use in space -- it would be inefficient to haul liquid fuel up into space. We will need alternative sources of energy to travel through space. Finding the solution to this is essentially finding one of the many solutions to the energy crisis on earth.

Well one of the proposed solutions to get to Mars is a fission drive. You just let the nuclear waste shoot out the back. They'd better not try this on earth.

You never know where the space stuff will take you. You may get something cool for cars; you may not. We can do both things at the same time as far as I'm concerned.

1) Science works best when there is collaboration. This is why the public sector may be better for it.

2) Science works best with slow and steading resources. Peoples work depends on other's work. You can't spend double the money and get double the technology in the same amount of time, in the same field.

[phgnome]

41. Here! Here!

I could not agree with you more.

Let's even take it a step further and aim to terraform Mars into a livable habitat (an international effort would spur R+D all over the world). Let's also aim for construction in space (NOT the missile defence shield, as Bush is proposing) towards the end of humans making short stays in structures that are in space. Make it available to the masses.

AND, a space elevator to make it cost-effective to get up there and come back down. (I've seen ideas being tossed around by various scientists about doing this -- there was one man in San Francisco who's working on this -- I forget his name right now).

It's tough right now but it's a fascinating age to be alive. I can't wait to see us get through this and see the first major group of average Joe's go to space and not just the super wealthy.