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The single greatest structural threat to our cozy Western democracy isn't terrorism. It's not China. And it's not Communism. No, it's probably the fact that the middle class is quickly disappearing -- due, in large part, to technology.
Welch gave the example of a company he's involved in buying. It had $12 billion in revenue in 2007 with 26,000 employees. With the greater efficiency that comes with technology, the same company, when it returns to that level of revenue in a few years, will have only 14,000 employees. That's roughly half the people generating the same revenue. That's the basic dilemma -- companies have gotten so efficient, and there's enormous pressure on these simple routine tasks that used to employ lots of people.
If this is what's contributing the most to America's middle class decline then what exactly can politicans do about this? Or will the solution be found outside of Washington?
Another example of how technology is changing our work force ALCOA has reduced its work force from 109,000 to 58,000 but its shipments of aluminium and alumina have increased 20% in the last 7 years. Over 50,000 pepole no longer share in ALCOA's sucess now all of those people couldn't have just vanished or retired. Where do they all go?
You can't do much about automation itself; all you can do is follow Germany's lead and go after high-value manufacturing in sufficient volume to still create a class of well-paying factory jobs.
You can't do much about automation itself; all you can do is follow Germany's lead and go after high-value manufacturing in sufficient volume to still create a class of well-paying factory jobs.
Where are German kids as far as math and science rankings? I'am assuming Germany is doing a good job producing students who can take those high tech manufacturing jobs. The U.S currently is too far behind in math and science to really expand in high tech manufacturing.
It's called productivity. Productivity causes short term pain for the people who are laid off but it create more wealth for everyone in the long term. Anyone who seriously thinks that a company becoming more efficient is a bad thing is economically illiterate.
If this is true, the govt could lower the hours of a standard work week to 35. With robots and computers, it obviously lowers workload, so why doesnt the worker see the benefits in a decreased work week?
When I was in grade school in the 1970s we discussed how Americans were going to deal with all their free time, since continuing increases in productivity were thought to inevitably result in a 4-day, 8-hour work week. The futuristic "The Jetsons" cartoon showed the non-working housewife, kids, and husband who worked just a few hours a day, a few days a week."
Productivity continued to increase, but businesses learned how to pocket the gains and not let the worker benefit from them. Workers would have benefitted IF the labor supply was not bloated with immigration and a government policy to maximize the number of college graduates. The 9-to-5 job became 8 to 5 because you shouldn't be paid for your lunch hour. Businesses did huge layoffs and were rewarded by huge stock price increases, and the highest-compensated CEOs were generally the ones who initiated annual, large-scale layoffs. Instead of the Middle Class or shareholders benefitting from productivity increases, for the most part CEOs got all the money. In 1978, the average CEO got paid 35 times what the average worker did. In 2004, the ratio of average CEO pay to the average pay of a production (i.e., non-management) worker was 431-to-1. CEO pay: Redefining sky-high - Aug. 30, 2005
Government had no problem with the new trend for fewer workers who had to work much longer hours. Those who were working the long hours sometimes were compensated partially for the extra time, meaning they got big tax bills (being "rich" and all). All the secretaries and assistants were laid off, and the most experienced guy out of two got to keep his job and do the other guys' also. The overworked remaining workers had no time or energy to get involved in politics or protesting their taxes. And on the other end of the government scale, those who were no longer working were thrown scraps in government programs, and were happy to be getting something for nothing.
Government forgot that it had implemented Social Security to move older workers out of the workplace to make room for younger ones. Now all they cared about was making SS solvent now that the Baby Boom was retiring, and not having anyone realize that they had already spent the SS Trust Fund and replaced it with non-negotiable IOUs. So the age for retirement to collect Social Security was raised (to 67 if you were born after 1960).
As to how to fix the problem, government could start protecting American businesses with trade tariffs and barriers, like China does. We could try and recapture the high-end manufacturing sector, like Germany is doing. Most important, it could stop immigration (both legal and illegal) and take measures to reduce the active labor force from its current state of bloated overpopulation--the structural reason many analysts are now blaming the continuing high unemployment rate. Re-directing education to prepare a future work force, and making the educational achievement of children more important than protecting the power of the teacher's unions would also help.
And yes, getting more people to retire would help the labor force tremendously. However, given our government's massive borrowing that has necessitated near-zero interest rates and devaluing the dollar, I don't see how anyone can retire with no pensions, less Social Security, and savings that produce no interest but will be devalued to nothing long before the nursing home beacons.
From the ideal of the Jetsons, to the reality of today: it was a long, hard, fall, and it isn't over yet.
It's called productivity. Productivity causes short term pain for the people who are laid off but it create more wealth for everyone in the long term. Anyone who seriously thinks that a company becoming more efficient is a bad thing is economically illiterate.
Productivity is also called the "Contradiction of Capitalism" the fundamental flaw in a system that generates wealth but efficiently concentrates it in the fewest possible hands. If you are the lucky few on the receiving end of this efficency it is a very good thing if you are not this efficiency is not a good thing. You don't need a Degree in economics to grasp this idea just a basic understanding of the human condition.
Those of us who grasp the Red Banner also believe the few who benefit from the Capitalist system will not only make the rope we will need to hang them but will make it to our specifications.
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