News & Articles

We have reached the point with artificial intelligence and robotic machines that thousands of products are purchased each day that have never been touched by human hands until placed in a shopping cart. So who is getting most of the wealth produced by computers and electronically-controlled machines? Those who have made the computers and the machines--and those who have invested in the factors of production.
According to an article in Alternet, seven major innovations have revolutionized our lives in the last 90 years: electricity in 1873 (46 years), telephone in 1876 (35), radio in 1897 (31), television in 1926 (26), personal computers in 1975 (16), mobile and cell phones in 1983 (13), and Internet in 1991 (7). But the important development is how long it took for each innovation to reach 25% adoption by the American public. Now look at the number in parenthesis following the year of development. The span of adoption decreased dramatically for each innovation. It took 46 years for electricity to reach 25% of us, but only seven years for the Internet to reach 25% of us. Irish women are now receiving abortion pills and contraceptives by little drone aircraft while we are able to land planes without pilots on our aircraft carriers.
Former Labor Secretary Robert Reich uses the former huge corporation Kodak to point out how fast some businesses have to change to cope with innovation. In 1988 Kodak was in its prime earning years and had 145,000 employees.  But in the short span of 24 years it went bankrupt. Instagram, the world’s newest photo company in 2012, had only 13 employees but served 30 million customers. Facebook purchased “WhatsApp” for $19 billion in 2015 when the company had only 55 employees serving 450 million customers. WhatsApp CEO Jan Koum had 45% of the stock so he now has $6.8 billion to play with. Cofounder Brian Acton received $3 billion for his 20% share. Each of their early employees had a 1% share which paid them $180 million! This is definitely being in the fast lane today.

The Old Assembly Line Has Permanently Changed

Due to technology we lost 300,000 auto workers between the years 2004 and 2011. A later example: In 2009 we had 653,300 workers who put assembled six million vehicles. In 2015 the industry assembled 12 million cars with 884,000 workers. That’s a tremendous change in productivity in six years. However, there is one manufacturer who produces such a complex car only humans can handle most of the different customizations at Mercedes-Benz. Markus Schaefer, the head of production for their very expensive cars, says: “We need to be flexible. The variety is too much to take on for the machines. They can’t work with all the different options and keep pace with changes.” Some of the options offered customers: heated or cooled cup holders, a variety of wheel designs, different trims and decals, four different types of tire valve caps (!), and all the choices available in the electronics field, just for starters. They will introduce choices in car fragrances and lighting soon! They plan on producing 30 new models by 2020. Meanwhile, in 2014 the world employed 1.5 million industrial robots and plans to have 1.3 million more in operation by 2017. The car industry is the largest user of various industrial robots.
The loss of well-paying manufacturing jobs in the United States has created a situation where 80% of the metropolitan areas experienced drastic income declines in the middle class. The middle class has shrunk in 203 of 229 cities in the last 15 years while the numbers in higher-income households and lower-income households have increased. Midwestern metro areas have been the biggest losers in income, with the Janesville-
Beloit, Wisconsin area losing 49% of its manufacturing jobs in the last 15 years.
In the great manufacturing state of California, the world’s seventh largest economy, 31% of Los Angeles millenials ages 24 to 34 are still living at home with their parents. They can’t afford not to. The median rent in Los Angeles is now $2,525 a month for a one-bedroom apartment, and jobs paying more than $15 an hour are scarce.
The percentage for the country is a shocking 21% for that age group.

While The Rich Get Richer And The Middle Class Joins The Poor

Because of the United Kingdom’s decision to bail out of the European Union U.S. investors lost $1.3 trillion in the day after the vote was revealed. Our biggest banks and corporations lost big bundles on that Black Friday: Microsoft lost $27.4 billion, JP Morgan Chase lost $23.5 billion, Alphabet (Google) lost $23.1 billion, Apple lost $23 billion, Bank of America lost $19.1 billion, and Warren Buffett’s Berkshire Hathaway dropped $17.8 billion. The era of greed regenerated by Ronald Reagan and his California Mafia in the 1980’s created Leona Helmsley, the Queen of Mean and Greed, who became the national figure for that rabid sickness. Her statement “Only the little people pay taxes” brought her notoriety and probably helped put her in jail for 18 months for federal tax evasion in 1988. But her final will demonstrated her real character. She and her husband were worth billions, but her will had a few unusual stipulations. She left millions to her brother Alvin, and he was also charged with taking care of Leona’s dog Trouble, a white Maltese that evidently acquired an attitude from Leona by biting the housekeeper. Trouble lived well from a $12 million trust fund, and now is buried next to Leona in a mausoleum that “must be washed and steam-cleaned at least once a year,” according to the will. She left $5 million each to two grandchildren—on condition they visit their father’s grave site once each calendar year. She left two other children nothing—and “the reasons are known to them.” That would be interesting. While her dog got $12 million, she did leave her chauffeur $100,000.
Are you rich if you feed your dog Spike prime rib from a silver dog bowl designed by Tiffany?  Christie’s Auction House sold a private collection of “stuff” from the estate of Joan Rivers, the acerbic wit who got famous on late-night TV. An anonymous buyer paid $13,750 (about 30 times estimated value) for Spike’s silver bowl and $2,250 for his silk-upholstered dog house. The top item in the sale that totaled $2.5 million was a photo frame by Faberge’ bringing $245,000. I wonder if the bowl buyer is one of the 15 million Americans who are mentally unstable during the year. Would a person display a silver dog bowl along with the other household silver? Inquiring minds want to know.

Will Robots Pay Union Dues And Buy Cars?

When Henry Ford decided to double the wages of his auto workers to $5 a day in the beginning of the 20th century, he outraged many of his business friends. Henry retorted: “Who is going to buy my cars?” About a half-century later when a top Ford Motors executive was giving Walter Reuther, leader of the United Auto Workers Union, a tour of a new engine plant filled with robots and automation, he asked the union leader: “Walter, how are you going to get those robots to pay your union dues?” Reuther shot back: “How are you going to get those robots to buy your cars?” That answer remains the conundrum of our times. When robots replace lawyers, cooks, doctors, waiters, writers, drivers, musicians, fruit pickers, and pilots, how are the humans going to make a living—and how will a consumer-driven economy do with humans who can’t consume?
This is a rich country, but the money is in too few hands. Some rich collector is going to buy a rare 1970 quarter for $35,000 recently advertised on e-Bay. In rich Silicon Valley the median rent for an average apartment is $6,850 a month. Neil Hutchinson of San Francisco’s North Beach recently had his rent increased from $1,800 a month to $8,000 a month. One of the Koch brothers, among the richest men in the world and a wine collector, recently sold 20,000 bottles from his immense collection at Sotheby’s in New York for $21.9 million. A single bottle of top Bordeaux wine from that region in France now sells for over $2,000 a bottle. Cheaper bottles range from $143 to $447 a bottle. That wine could make it a very expensive lunch. A 1,109 carat uncut diamond recently found in South Africa valued at about $70 million did not sell at auction because the highest bid was $61 million, way below minimum bid price. Maybe the sale was sabotaged by the ability of making jewelry-class diamonds in the laboratory now. How can you tell a diamond that is several million years old from one that is a few seconds old?  One no longer can—and it does affect price. So what is the answer for those humans who can’t find living-wage work?

Is Universal Basic Income The Answer For A Robotized World?

It appears the rich are getting a tad nervous about so many poor people in the world getting hungry. Never have I seen so many articles about a universal basic income plan once discussed by Richard Nixon and some of his economic advisors. According to Alternet, even some of the newly new rich billionaires of Silicon Valley are running an experiment in Oakland, California with 100 families, giving them between $1,000 and $2,000 a month to see how they function with that stipend. Because of automation and new and sophisticated computers and software, robots and other innovations have speeded up the process of displacing human workers. And many jobs that people once thought were untouchable by automation are in danger.
The Sloan Kettering Cancer Center in New York City is now using IBM’s Watson to diagnose cancer. Watson is the computer that wiped out human chess and Jeopardy masters recently. The supercomputer can read 600,000 pages of medical evidence, 1.5 million pages of patient records, and two million pages of medical journals in a few minutes and compare that material with the patient’s symtoms, history, and genetics. It then recommends a complete treatment plan. A lot of “medical” people are being replaced by Watson at Sloan Kettering. And other white collar workers on Wall Street and Main Street are not immune to new algorithms and software. These jobs are already endangered: librarians, secretaries, technical writers, newspaper reporters, budget analysts, legal secretaries, bookkeepers, loan officers, accountants, paralegals.
Andy Stern, once the president of the Employees International Union, has spent six years studying the changing nature of work in the United States, and has determined that automation has brought about a permanent trend, creating huge job losses for all sectors in society. He writes that the “bond and implicit promise between employers and employee has been forever severed.”  In other words unions have been replaced by “independent” contractors, part-timers, and temps.
His solution for society and a growing economy is a Universal Basic Income plan for every person, a fixed amount of money per year, which they can use to build wealth—or as a security blanket to further explore personal growth or leisure activity. Aldous Huxley’s novel “Brave New World” was published in 1932 during the Great Depression, but we are living through some of the events predicted 84 years ago. It should be read by all politicians and workers.
Stern says the post-World War II social contract in which children go to college, get a full-time job, enjoy the benefits won by unions, and look forward to a secure retirement, and the prospect of watching their own children do better than they did, has been permanently broken. The evidence is overwhelming he is right.