[Sixstrings]

$this->bbcode_second_pass_quote('patience', 'S')ixstrings said:
"...AUTOMATION is why we're now past peak employment."

Low wages, high productivity, decent quality, and a really cheap currency all have a part of it, but automation does not. The only way the US was able to be close to competitive for a long time was the level of automation here, and when Asia caught up with us in automation, the US took a licking for the above reasons.

[Sixstrings]

$this->bbcode_second_pass_quote('Plantagenet', 'L')et me add the idea that while there cannot be infinite demand for nails or any other item, there can simply be more items.

[Ibon]

$this->bbcode_second_pass_quote('Sixstrings', '
')Let's say McDonald's develops new automation tech that enables them to eliminate half their restaurant staff. Using your "just create more items" example, you'd have to double the number of all fast food restaurants to end up with the same number employed as before. The problem here though is that demand is finite -- as fat as consumers may be, they still can only eat so much within a 24 hour period. So if restaurants figure out a way to cut out half their workforce, those jobs are just gone forever -- because demand is finite, and at least in the US we're pretty well saturated with fast food joints.

[Ibon]

$this->bbcode_second_pass_quote('Pops', 'a') study by the Kaufman Foundation[/url] found that new business formation is remarkably constant over time, so even though the movie rental place and the equipment rental place in our little town have gone belly up in the last couple of months, some new businesses will open more in tune with the times, maybe a real bakery, maybe a new greenhouse, maybe a Weatherization Supply Outlet, who knows?

.

[Sixstrings]

$this->bbcode_second_pass_quote('Ibon', 'I') agree with you totally about your point of peak productivity especially if there are no longer any disruptive technologies that can create new markets and jobs. But this example of McDonald's could point to a progression say toward the replacement of these fast food industry jobs and a move toward say what Italy, France or Thailand have as examples of countries who dedicate a lot of their economies to the "slow food" industry of growing locally fresh produce, harvesting and selling them daily, preparing meals that take time.

[Ibon]

Maybe I am going off track with this thread but my intuition tells me it is somehow related. So anyway yesterdays NY times had two articles that caught my eye that seem to somehow be relevant to this topic. The front page article was on how disruptive to social and family life all the digital media can be and then on page three was an article on the suicide rate of Chinese factory workers who are overworked and underpaid.

On one end the human slavery and on the other the willfully enslaved with their digital gadgets. The Chinese worker leaves the agrarian province to toil in sweat shops with the promise of economic gain and the bored modern consumer buys an IPad to add to their digital arsenal believing this will put them more "in touch".

Related to this peak of productivity there is also a peak as to how far we can go with this consumer producer paradigm when the sacrifices made on either end are not worth the rewards promised.

When 75% of the consumers in the coffee shop who apparently went there for some sense of common space are all looking into their labtops then at what point do they look up and say WTF am I doing?

Can this really go on for an extended period of time still?

[Pretorian]

$this->bbcode_second_pass_quote('dsula', '')$this->bbcode_second_pass_quote('Sixstrings', 't')hat an even bigger destroyer of jobs has been automation.

[dsula]

$this->bbcode_second_pass_quote('Sixstrings', '
')So this is what I mean by technology reaping ever more massive levels of productivity. And yet, demand is finite. As fabulously productive as Netflix is (1,000 employees producing almost two billion in annual revenue).

[dsula]

$this->bbcode_second_pass_quote('Pretorian', '
')sorry but thats a load of wash. Just because you learned how to make 2 nails an hour with that little machine of yours does not mean that the demand appears out of nowhere for your extra nail.

[Sixstrings]

$this->bbcode_second_pass_quote('dsula', 'Y')ou're right and wrong at the same time. Your example with Netflix:
Since netflix can do the same job with only 1000 people they are fabously more efficient and therefore cheaper. As a consumer you now have spare change left after paying for netflix. With this spare change you're going out to McDonald and can afford a hamburger.

[patience]

Pretorian said:
"If automation wasnt killing real jobs we wouldnt have 90% of population occupied in luxury items and services and pretending to be busy at governmental jobs."

And people are doing those things because? How about because the Chinese have the manufacturing jobs that used to be in the US? Why? Because they can do it cheaper, in dollar terms. The average Chinese factory worker makes significantly less than a US union employee, IIRC. They have no unemployment insurance--if they don't work, they may starve. Real incentive there. No OSHA, no EPA, no minimum wage, no medical insurance, no pension, etc., ad nauseum. Wonder why they can make it all cheaper?

The "service" economy in the US is the last stop before a dead economy. I think we are just about at the saturation point of car washes, nail salons, and burger flipper jobs.
What we are seeing now is a levelling of the standards of living around the globe, or at least, some moves in that direction, because capital will seek the cheapest place to do production. The US, Germany, and other highly paid areas will get paid less in the future, and the poorer areas will make a little more that they used to make, so it sucks to be in the US right now.

[Newfie]

Pops, I could not get your questions so I didn't vote, but here is my long winded answer.

We are going down, never to return. Why?

Peak fossil fuel calories per person has long since passed. Each calorie now has more "buyers", supply and demand will win out.

Peak productivity. We are getting old dude. So while we remain highly productive, on an individual basis, those workers MUST be more and more productive to pay for my Social Security (and your!)

We are running out of water. Pick up the latest National Geographic, and more importantly, the IEEE Spectrum to get a real reality reset.

Lack of food and water in the poor nations opens us to epidemics; medical or terror - pick your poison. We will not be able to dodge that bullet forever. And we are not smart enough to figure out realistic strategies.

So, I feel strongly that you and I have lived through the best that is to be.....in the current model. Others can have great lives after us, but they will need a new normal...which includes honing your adaptive skills.

2¢

[Sixstrings]

$this->bbcode_second_pass_quote('patience', 'T')he "service" economy in the US is the last stop before a dead economy. I think we are just about at the saturation point of car washes, nail salons, and burger flipper jobs.
What we are seeing now is a levelling of the standards of living around the globe, or at least, some moves in that direction, because capital will seek the cheapest place to do production. The US, Germany, and other highly paid areas will get paid less in the future, and the poorer areas will make a little more that they used to make, so it sucks to be in the US right now.

[Pops]

Another great bunch of comments!

Sorry newfie, the question: are we already moving into a zero growth economy?
yes
uncertain
no
could you repeat the question?

My kneejerk is to agree with patience about the economy, on the other hand, look at the example of me and patience. Both part of the group of older men now experiencing high and prolonged unemployment and guess what? We both have small business of our own and haven't starved yet - he fixes things and I grow some things and provide some services.

The netflix example of increasing efficiency was a good one, thanks. One of the things I like about modern life - if you work things right and don't necessarily want everything and want it now, you can live pretty good without working much. Living on the Edge of the rich world is a good place to be.

[patience]

Sixstrings said:
"....automation / efficiency / productivity factors. I know you don't think those are significant factors, but I think that along with the cheap foreign labor issue the productivity angle is just an extra kick in the gut."

All true. I think we were talking about different points in time. I was saying that the US and Asia were on a competitive footing for automation and productivity 15 to 30 years ago, when the jobs started moving out of the US, primarily because the difference and that time was cheaper labor. Now, US productivity sucks, too.

Tool and die shops are about dead here. A company down the road that makes frames for the small Ford SUV's, stamps these out of coil strip stock with a huge punch press. Those huge dies used to be made in the US, but now are made in China because the price is about 35% of what it costs to build the dies here. That is all CNC and manual machining and handwork. No difference is methods, hours worked is very close to the same, only lower labor costs. Materials are the same, supplied by the US plant. So, productivity there is not the issue. The quality is crap on the Chinese dies, but Ford doesn't care.

IIRC, Mahindre (sp?) tractors are the ones made in India (400 series , I think it was) from the old drawings, dies, and casting patterns of the International Harvester plant that closed in Louisville in the 1970's after a protracted labor strike. (I narrowly missed going to work there as an engineer just before the strike started!) Again, the quality of the tractors ain't what it was when IH made them, but people buy 'em anyway. Just not as many. So, IH closed a plant and downsized, then merged with Case to stay alive in a tough market.

What has kept IH going is quality and service. You can STILL buy every part for a Farmall Cub made 70 years ago! (And most of them are still running.) But the Wal Mart mentality has won out in most places, so price is the bottom line for most people, and that means that the US is losing.

[Pretorian]

$this->bbcode_second_pass_quote('dsula', '')$this->bbcode_second_pass_quote('Pretorian', '
')sorry but thats a load of wash. Just because you learned how to make 2 nails an hour with that little machine of yours does not mean that the demand appears out of nowhere for your extra nail.

[Pretorian]

$this->bbcode_second_pass_quote('patience', 'P')retorian said:
"If automation wasnt killing real jobs we wouldnt have 90% of population occupied in luxury items and services and pretending to be busy at governmental jobs."

And people are doing those things because? How about because the Chinese have the manufacturing jobs that used to be in the US? Why? Because they can do it cheaper, in dollar terms. The average Chinese factory worker makes significantly less than a US union employee, IIRC. They have no unemployment insurance--if they don't work, they may starve. Real incentive there. No OSHA, no EPA, no minimum wage, no medical insurance, no pension, etc., ad nauseum. Wonder why they can make it all cheaper?

The "service" economy in the US is the last stop before a dead economy. I think we are just about at the saturation point of car washes, nail salons, and burger flipper jobs.
What we are seeing now is a levelling of the standards of living around the globe, or at least, some moves in that direction, because capital will seek the cheapest place to do production. The US, Germany, and other highly paid areas will get paid less in the future, and the poorer areas will make a little more that they used to make, so it sucks to be in the US right now.

[Sixstrings]

$this->bbcode_second_pass_quote('Pretorian', 'I') agree with all that but then how do u explain Germany keeping its productive sector? Labour costs are atrocious there. And all those epa, unemployment, pension, healthcare , ets are there too.

[Pops]

Just for the record, US manufacturing sales have increased 80% in the last 20 years, a far higher increase dollar wise than all countries but China.

We still make a quarter of all the "Stuff" (down a few points from '90) and we still only have 5% of the worlds population.

List

compensation

[efarmer]

Between shifting the manufacturing process to using foreign value added materials, components, and sub assemblies, and also fully exploiting automation, I think the manufacturing dollar growth can be almost decoupled from domestic manufacturing jobs growth.

We are doing an experiment to see if you can make a society without a middle class,
to me this is like taking the insulation from between two high voltage wires.