CDZ How Might We Soften The Blow of The Third Industrial Revolution, the Age of Robots?

[320 Years of History]

Indeed, if you check to see what the average hourly wage actually was in 1970, however, you'll find that it began that year at $3.11 and ended at $3.50, and had an annual average of $3.40. Adjusting for inflation, one finds that $3.40 in 1970 corresponds to $20.74 in 2014.

The chart I presented cites $20.67 as the average hourly wage for 2014....

The general range of Middle Class income (after taxes and adjusted for inflation) is at or lower than wages in 1970, with IMO a heavy lean toward the downside.

???

• Average 1970 wage: $20.74/hour
• Average 2014 wage: $20.67/hour

We may have to agree to disagree for there is no way anyone will ever convince me that $0.07/hour constitutes a "heavy lean" in any direction. I mean really...that's $143/year difference.

The matter of wages remaining stagnant is something to gripe about. In a climate of rising prices, it is something to be concerned about and do something so as to alter so that labor prices rise at a rate somewhat comparable to goods and services prices.

Trying to convince me -- someone who doesn't need to be convinced about your central theme for I already accept the overall aims as being necessary and achievable -- that I should be concerned by pointing out a 7¢ drop in wages isn't by itself going to be persuasive. Neither is telling me wages have dropped when I can look up the data and do the math to adjust for inflation and see they have only done so by 7¢ also is not going to do it.

What that latter type of remark is going to do is taint my view of the author. It will lead me to perceive that a variety of motivators may be in play, most of which aren't positively ethical/moral, some of which are neutrally ethical/moral, and few of which are positively moral/ethical. If, say, you cite income as having dropped, when I go confirm whether it has, I should have no trouble finding data that shows it's dropped and materially so, not by 7¢.

• If we're discussing the price of a candy bar and you say it's dropped/increased by 7¢ when the starting price was 20¢, I'll think that the seven cents is material as goes the drop/increase in price.
• If a competing firm or my current firm offers me a position with projected annual compensation of $970K and I already make, say, $836K or $1.05M, I'm going to consider the compensation of the newly offered position to be comparable to my existing compensation, and the pay itself isn't going to be a reason why I do or do not accept the offer; the difference in pay is immaterial.

Below I've pasted a video in which a billionaire remarks about the earnings gap between highly paid workers and other workers. I agree with the ethics and sensibility of his argument/comments. I also know, just as he does but didn't say, that as one's pay increases, pay becomes less and less important, material, in attracting the individuals whom a company wants to hire or in why folks take or don't take offers they receive. That reality has a lot to do with why the pay of certain workers -- consultants, attorneys, accountants, engineers, architects, mid level business managers, and others -- manages to keep pace with or outstrip price increases. Quite simply, it is supply and demand (of/for highly qualified/experienced workers with first rate track records of success/achievement) in play in a segment of the labor market and doing exactly what capitalism does well.

You'll notice that the careers that keep pace with or best the rates of goods/service price increases are those that are "mental" jobs rather than "manual" jobs. Why should "things" work such that "mental" salaries keep up? Because the market for intellectual capital is one of monopolistic competition, branded competition.

• Monopolistic competition
  
• Monopolistic competition - Wikipedia, the free encyclopedia

In the fields I noted and others like them, what each worker has to sell -- themselves; their labor -- is a thing in which they have a monopoly. Just as, say, BMW have a monopoly in BMW vehicles, Bill Smith has a monopoly in Bill Smith skills and intellect. The only substantive difference is that Bill can sell only to one customer if he is an employee, whereas if he is self employed, he can sell his "product" to multiple customers just as BMW can. Otherwise, however, a monopolistically competitive worker can, as can a monopolistically competitive manufacturer, charge whatever they want for their labor. (What sellers charge and what buyers are willing to pay aren't the same things until a buyer and seller agree to transact at a given price point.)

Contrast the monopolistic competition situation with that of "John Smith" who is factory worker who "puts square pegs in square holes" all day. What does John offer the employer that his employer is willing to pay for and that his employer views as differentiable from that which it can obtain from any other able bodied worker? I dare say, nothing. That makes John's labor not a monopolistically competitive "product," but rather a commoditized "product."

What separates seemingly similar goods/services such that one is viewed by buyers as a commodity and another as a differentiable product/service? Artistry and innovation. Workers don't have to demonstrate artistry or inordinate levels of innovation every day, but they must do so often enough to distinguish themselves from their "commoditized" peers. It works that way in every industry and for every job. So when you watch the video below, that's the economic and business principle the guy who opposes Hannauer is talking about. He's not wrong, but, IMO, he wrong about there being nothing we/a nation should do about it.





You may find these stories interesting as well: Making Sen$e

A couple parting thoughts.

• You realize the very existence of the American middle class (economic) is relatively new in the scheme of America's existence as a nation. Additionally, pretty much everyone thinks they are middle class these days, until they stop thinking so, and that tends to be based on their comparing themselves with someone else -- not whole groups and cohorts in society -- whom they've seen exhibiting spending behaviors they know they cannot.
• Have you considered that a meaningful part of the problem may arise from the middle class itself?

 

[JimBowie1958]

Cant respond to the whole post right now, I have to do a few things first, but I cant pass this one thing up.

The general range of Middle Class income (after taxes and adjusted for inflation) is at or lower than wages in 1970, with IMO a heavy lean toward the downside.

???

• Average 1970 wage: $20.74/hour
• Average 2014 wage: $20.67/hour

We may have to agree to disagree for there is no way anyone will ever convince me that $0.07/hour constitutes a "heavy lean" in any direction. I mean really...that's $143/year difference.

So if we said we were going to tweak US economic polices to take $143 annually from working class families and give it to the top corporate executives across the country, you would be OK with that?

Your graph also shows that the pay got a lot lower by the mid 1990s, and has steadily come up since, but the rises seem to parallel periods of increases in unemployment.

This seems to suggest that the wage increases were more attributable to the filling of unskilled labor positions with black market labor and many of the lowest paying jobs simply falling out of the equation. That is not an improvement, only a statistical disguise of the old problem.

And at any rate, lower or stagnant wages for one sector while pay and benefits have gone up for everyone else does not equate to a solution.

 

[320 Years of History]

Cant respond to the whole post right now, I have to do a few things first, but I cant pass this one thing up.

NP...I can totally relate. Take your time. I appreciate your letting me know it's inspired you to respond. I look forward to your remarks.

 

[Elvis Obama]

Nothing I have written pertains to the conflict you describe with Mr. Bowie.

I think 'conflict' is a bit strong a word.

320, are we at war?

Being partly French, I feel like I must pre-emptively surrender.

LOL, verbal conflict.

Debate: Middle English: via Old French from Latin dis- (expressing reversal) + battere ‘to fight.’

The best we can do until they get those digital light sabers together.

 

[Elvis Obama]

f you are referencing something I said as being a false premise

I wasn't.

feel they have been betrayed by their political representation.

Feeling that is so does not make it true that they are or were betrayed.

Right now the hierarchy is 1-politician, 2-party, 3-donor class, 4-patronage/pork barrel crowd, 5-you (maybe).

I would reword #5 to say "folks not in groups 1-4," or "everyone else."

Feeling that is so does not make it true that they are or were betrayed.

Technically true, but it avoids the entire question. Do you feel it is so? Apparently not, which astounds me. I'm sure you understand that we are talking about perception here, and not your opinion. If people perceive themselves to be betrayed then that is the significant fact, not your opinion as to whether that sense of betrayal is earned or not. I have nothing but contempt for the pathetic level of understanding that people have about their government and the political horror show that has grown around it like a malignant cancer. It has amazed me for my entire life that people tolerate it. Now we see what appears to be a tipping point being reached. People may lack the knowledge and language skills they need to articulate just how they've been screwed but they at least can perceive that it is so, that they have been screwed, sold out.

Princeton Study: U.S. No Longer An Actual Democracy

How can you possibly accept such a study (which I do) and also argue for the health of the social contract in America? If you believe that #5 should be amended to include "everyone else" as the group thought of last, if at all, how can you argue for the health of the social contract in America?

Maybe Bernie and Trump represent a true revolution, or maybe it's going to fizzle out, like Occupy Wall Street. The one thing I won't say is that it's all based on nothing.

 

[Fishlore]

Well, the Third Industrial Revolution aka Digital Revolution is already in full swing.

We have seen real inflation adjusted after tax Middle Class incomes stagnate and go down since 1970 and this is just the first negative aspect of robotics, computerization and automation.

Other risks such as a Robot Revolt (i.e. Skynet), or Automated error in services that cannot be fixed (Hello Steam!) and so forth are all risks from the Digital Revolution we all face.

So how can we make this transition to a mostly Jobless economy more positive and less threatening to the average worker?

1. Disincentivise Automation. Give tax breaks that encourage companies to continue the hiring of people and less the automation of the work force. We dont have to rush to fully automate and there are benefits to letting it percolate slower.

2. Require all automated services have an human element that the customer can appeal to if/when they have issues with service. Think you Robo-doc got the dermetitis diagnosis wrong? There must be a human doctor on staff to appeal the robo-diagnosis to. Same goes to every other service from online stores to an automated medical staff.

3. Require all maintenance and installation of Robots and other automated devices be done by human beings.

4. Require all code written for a Robot or automated device to be at minimum 51% of all top level code to be written by a human being. All other code must be 10% human origin and signed off on by a human for passing validation and integration testing.


If we can reduce the speed at which the automation and robotic conversion of the work force occurs, then we can have a much more stable and risk free transition to our technological utopia.

So far in human history, wealth has been produced by the application of labor to invested capital. This is as true under full socialism as under full free market (the difference between the systems is who owns the invested capital). We are reaching a revolutionary phase in which human labor is being more and rapidly replaced by "robots". Robots are, of course, a form of invested capital as much as the tools and machines etc. with which they operate. The result is an unprecedented decline in the amount of human labor required to produce goods and now even to produce services.

This situation is revolutionary because for all of human history, profitable labor has been rewarded. This as true of the successful hunter bringing home meat for his tribe as the skilled machinist turning out parts for an ICBM. As less and less human labor is required for the production of wealth, our social structure becomes unstable. We have been watching the process for a couple of centuries as unskilled and semi-skilled labor have been displaced by machinery. We are now veging on the point at which doctors and lawyers face displacement much as weavers and mowers did in the past.

The only way that I can see out of this trend is to decouple wages from wealth production. Wealth must continue to be taxed and people paid to perform labor; however we must move away from the idea that people are paid to labor on invested capital in order to produce wealth and assign jobs based on social needs. This will lead to the socialism of the beehive and the ant hill but there may be no other way.

 

[JimBowie1958]

So far in human history, wealth has been produced by the application of labor to invested capital. This is as true under full socialism as under full free market (the difference between the systems is who owns the invested capital). We are reaching a revolutionary phase in which human labor is being more and rapidly replaced by "robots". Robots are, of course, a form of invested capital as much as the tools and machines etc. with which they operate. The result is an unprecedented decline in the amount of human labor required to produce goods and now even to produce services.

This situation is revolutionary because for all of human history, profitable labor has been rewarded. This as true of the successful hunter bringing home meat for his tribe as the skilled machinist turning out parts for an ICBM. As less and less human labor is required for the production of wealth, our social structure becomes unstable. We have been watching the process for a couple of centuries as unskilled and semi-skilled labor have been displaced by machinery. We are now veging on the point at which doctors and lawyers face displacement much as weavers and mowers did in the past.

The only way that I can see out of this trend is to decouple wages from wealth production. Wealth must continue to be taxed and people paid to perform labor; however we must move away from the idea that people are paid to labor on invested capital in order to produce wealth and assign jobs based on social needs. This will lead to the socialism of the beehive and the ant hill but there may be no other way.

Great post.

I have a nit-pick about your first statement though, and that is wealth is not produced solely by labor. IT also requires organization, thought, design and logistical access.

Those things come at a cost as well, but when labor is only a slim share less than 5% of the retail cost and the 'organizers' get 50%, that is out of balance and is producing the wonderful world of financial casinos once known as stock markets due to so few having so much and trying to figure out what to do with it.

 

[320 Years of History]

Princeton Study: U.S. No Longer An Actual Democracy

How can you possibly accept such a study (which I do) and also argue for the health of the social contract in America? If you believe that #5 should be amended to include "everyone else" as the group thought of last, if at all, how can you argue for the health of the social contract in America?

I'm fixin' to reply to your post, but I want to make sure your use of "you/your/you're" is indeed directed at me specifically. Is it?

 

[Elvis Obama]

Princeton Study: U.S. No Longer An Actual Democracy

How can you possibly accept such a study (which I do) and also argue for the health of the social contract in America? If you believe that #5 should be amended to include "everyone else" as the group thought of last, if at all, how can you argue for the health of the social contract in America?

I'm fixin' to reply to your post, but I want to make sure your use of "you/your/you're" is indeed directed at me specifically. Is it?

No, I meant anyone who accepts these notions of just how far the concept of representative democracy has fallen.These Princeton Johnnies are hardly the first to look into the matter. They've just conducted a fairly exhaustive analysis of the relationship between Congressional decision making and the expressed "will of the people", to determine how often the people's voice is heard and factored into the actual decision/action taken. There is almost no correlation, according to their study.

 

[320 Years of History]

Princeton Study: U.S. No Longer An Actual Democracy

How can you possibly accept such a study (which I do) and also argue for the health of the social contract in America? If you believe that #5 should be amended to include "everyone else" as the group thought of last, if at all, how can you argue for the health of the social contract in America?

I'm fixin' to reply to your post, but I want to make sure your use of "you/your/you're" is indeed directed at me specifically. Is it?

No, I meant anyone who accepts these notions of just how far the concept of representative democracy has fallen.These Princeton Johnnies are hardly the first to look into the matter. They've just conducted a fairly exhaustive analysis of the relationship between Congressional decision making and the expressed "will of the people", to determine how often the people's voice is heard and factored into the actual decision/action taken. There is almost no correlation, according to their study.

I found and read the actual study. I'll refer to it in my response.

 

[320 Years of History]

No, I meant anyone who accepts these notions of just how far the concept of representative democracy has fallen.These Princeton Johnnies are hardly the first to look into the matter. They've just conducted a fairly exhaustive analysis of the relationship between Congressional decision making and the expressed "will of the people", to determine how often the people's voice is heard and factored into the actual decision/action taken. There is almost no correlation, according to their study.

It's worth noting that the researchers, the "Princeton Johnnies," of their own study state:

Who governs? Who really rules? To what extent is the broad body of U.S. citizens sovereign, semisovereign, or largely powerless? These questions have animated much important work in the study of American politics.

While this body of research is rich and variegated, it can loosely be divided into four families of theories: Majoritarian Electoral Democracy, Economic-Elite Domination, and two types of interest-group pluralism—Majoritarian Pluralism, in which the interests of all citizens are more or less equally represented, and Biased Pluralism, in which corporations, business associations, and professional groups predominate. Each of these perspectives makes different predictions about the independent influence upon U.S. policy making of four sets of actors: the Average Citizen or“median voter,” Economic Elites, and Mass-based or Business-oriented Interest Groups or industries

Each of these theoretical traditions has given rise to a large body of literature. Each is supported by a great deal of empirical evidence—some of it quantitative, some historical, some observational—concerning the importance of various sets of actors (or, all too often, a single set of actors) in U.S. policy making. This literature has made important contributions to our understanding of how American politics works and has helped illuminate how democratic or undemocratic (in various senses) our policy making process actually is. Until very recently, however, it has been impossible to test the differing predictions of these theories against each other within a single statistical model that permits one to analyze the independent effects of each set of actors upon policy outcomes.

Here—in a tentative and preliminary way—we offer such a test, bringing a unique data set to bear on the problem. Our measures are far from perfect, but we hope that this first step will help inspire further research into what we see as some of the most fundamental questions about American politics.
​

What does the red text tell us? It tells us to take their results with a grain of salt, perhaps indeed, quite a few grains.

Note:
For now, I ask that you hold off on replying to my remarks above because I'm in the process of examining the researchers' methodology (applications of statistical methods -- their approach to using linear regressions of dichotomous variables, development and application of coefficients, etc.). Of course, if you prefer to deal separately with the analytical methodology and the qualitative context and conclusions of the study, fine, by all means respond to the remarks above. I can address and synthesize the two sets of thoughts together in one post afterwards.

I don't generally go through the effort to do what I've described above, but this time round, it's you who has presented a study, which means if I'm of a mind to refute or accept it's conclusions -- I don't know yet which I am of a mind to do with the Princeton study you cited -- I must do so. Usually, I'm the one citing studies, which most of the time necessitates my just getting a general sense of whether it (the methodology and the conclusions drawn from it) makes sense or not.

 

[Elvis Obama]

No, I meant anyone who accepts these notions of just how far the concept of representative democracy has fallen.These Princeton Johnnies are hardly the first to look into the matter. They've just conducted a fairly exhaustive analysis of the relationship between Congressional decision making and the expressed "will of the people", to determine how often the people's voice is heard and factored into the actual decision/action taken. There is almost no correlation, according to their study.

It's worth noting that the researchers, the "Princeton Johnnies," of their own study state:

Who governs? Who really rules? To what extent is the broad body of U.S. citizens sovereign, semisovereign, or largely powerless? These questions have animated much important work in the study of American politics.

While this body of research is rich and variegated, it can loosely be divided into four families of theories: Majoritarian Electoral Democracy, Economic-Elite Domination, and two types of interest-group pluralism—Majoritarian Pluralism, in which the interests of all citizens are more or less equally represented, and Biased Pluralism, in which corporations, business associations, and professional groups predominate. Each of these perspectives makes different predictions about the independent influence upon U.S. policy making of four sets of actors: the Average Citizen or“median voter,” Economic Elites, and Mass-based or Business-oriented Interest Groups or industries

Each of these theoretical traditions has given rise to a large body of literature. Each is supported by a great deal of empirical evidence—some of it quantitative, some historical, some observational—concerning the importance of various sets of actors (or, all too often, a single set of actors) in U.S. policy making. This literature has made important contributions to our understanding of how American politics works and has helped illuminate how democratic or undemocratic (in various senses) our policy making process actually is. Until very recently, however, it has been impossible to test the differing predictions of these theories against each other within a single statistical model that permits one to analyze the independent effects of each set of actors upon policy outcomes.

Here—in a tentative and preliminary way—we offer such a test, bringing a unique data set to bear on the problem. Our measures are far from perfect, but we hope that this first step will help inspire further research into what we see as some of the most fundamental questions about American politics.
​

What does the red text tell us? It tells us to take their results with a grain of salt, perhaps indeed, quite a few grains.

Note:
For now, I ask that you hold off on replying to my remarks above because I'm in the process of examining the researchers' methodology (applications of statistical methods -- their approach to using linear regressions of dichotomous variables, development and application of coefficients, etc.). Of course, if you prefer to deal separately with the analytical methodology and the qualitative context and conclusions of the study, fine, by all means respond to the remarks above. I can address and synthesize the two sets of thoughts together in one post afterwards.

I don't generally go through the effort to do what I've described above, but this time round, it's you who has presented a study, which means if I'm of a mind to refute or accept it's conclusions -- I don't know yet which I am of a mind to do with the Princeton study you cited -- I must do so. Usually, I'm the one citing studies, which most of the time necessitates my just getting a general sense of whether it (the methodology and the conclusions drawn from it) makes sense or not.

All honest social science researchers have a healthy regard for their own error factor, given that they work in such a speculative soft-science.

These kind of studies represent one way of analyzing current events. They rush forward, these events we call current, changing constantly, presenting ever new and more dangerous challenges. We desperately try to keep up, in our jury-rigged, duct-taped world. Then we study what we've done, and try to make sense of it. Others see trends and project themselves forward. Futurists and Sci FI writers. E.M. Forster wrote "The Machine Stops", and created an entire, fictional, historic arc for the process of automation. Not pretty, but pretty prescient. He anticipated the net and robotics.

So, how do we see the world? Through the study of Krishna? Through reviewing the methodology of academic studies? Through reading Kurt Vonnegut? Automation is a process we've been living with for a couple of hundred years. Have we wagged that tail, or has it wagged us? It's a process, I say, but it's really the aggregate of a million individual decisions, made for self centered reasons. Who can claim to encompass it all? We can speak of some generalities, however, with a fair degree of surety that we are on the same page. Automation represents a fundamental shift in the basis of our economic system. This has happened before, and the dislocations and sufferings have always been terrible, and incredibly long lasting. Think of English colonial interference in the Indian textile industry, and the knock-on effects that had on the Indian economy and culture.

I had previously referred to "dancing statistics", and I have to wonder, how much of an "error factor" do you assume, with regards to your meta analysis of studies? You can whittle down a stack of studies to your opinion, but in the end that's all you've got. Someone else will whittle down the same studies and come to a different conclusion, or maybe one of those chain things or a pipe.

I'm not sure what we're arguing here, that there is no basis for a rational person to be in the spectrum of angry---> betrayed people in the USA circa 2016? That the unrest which underlies the very weird and unsettling election we're having is... what?

 

[320 Years of History]

I'm not sure what we're arguing here

In summary, the theses of my posts in this thread have are (up to now) four:

• The claim that the wages of the American middle class is inaccurate and as such, it is a false premise on which to base the conclusion that there is something wrong with the American economy, society, middle class, industry, or employment rates and opportunities.
  • To support my assertion to that effect, I have provided:
    • A discussion about logic so as to ensure readers understand the approach and thinking standards I've used in evaluating the merit of the OP's claim.
    • Empirical evidence and discussion of how and why it is that the inflation adjusted average wage (thus income) of middle class workers has, from 1970 to 2014 (and by inference to 2016) has declined by 7¢, which I assert is not a significant enough change to do more than split hairs quantitatively over the fact that the average wage has indeed declined during the noted period.
    • Empirical evidence and discussion showing that the tax rate in recent lustra has been vastly lower than it was in 1970 or in the 1970s; thus making completely misguided the premise that the tax effects on income are relevant in evaluating whether there is something wrong with the economy, etc.
• The driver behind my comments in support of the point(s) above is not a lack of humanity and ruth, but rather my simply not being able to accept and accede to an argument that I see as fundamentally flawed by its reliance on false premises and invalid inferences.
• I am okay with and accept the actual conclusion that something needs to be done to boost the financial fortunes of middle class Americans so long as the "something" we do issues from truthful premises and valid inferences. That I am is why I wrote about "doing/thinking the right thing for the wrong reasons."
• Perceptions of individuals, in matters concerning a nation, are not, as a foregone conclusion, reality, specifically, in this thread, the perception that the American people have been betrayed.
  
  This is the point I made, and that you refuted using the Princeton study, that I have been examining in detail so as to determine whether it should be something I assign enough weight such that it alter my claim about perception and reality, and/or to determine the extent to which is should or should not alter my stance in that regard.

So, you tell me whether we are arguing about something, and if so what it is. I see myself as making points and substantiating them with credible evidence and rigorous narrative explaining how I applied that evidence to arrive at my conclusions/assertions. (I haven't fully addressed the fourth key point; that's what I'm trying to get done, but it's taking longer to do than I'd hoped...not because of the writing, but because I have to revisit what I learned, and don't know for sure what of it I've forgotten, about statistical modeling, linear regression and differential equations. LOL And quite frankly, since I'm not at home and can't run to my own library to grab my own old textbooks and personal notes from college/grad school, finding what I'm looking for is a PITA, or more precisely, slow, to do on the WWW.)

 

[alang1216]

Taking a historical perspective, businesses strive to monopolize the market and individuals strive to monopolize wealth. From a starting point of equality, monopolization will continue until those on the short end rebel and reset the system. The robber barons of the industrial revolution were masters at amassing wealth but the rules of the game were changed and their companies were broken up and their personal wealth diminished. The kings and nobles of Europe were dethroned and their power and wealth redistributed. It may happen by violence or law but the pressure builds until the system breaks.

I see both Trump and Sanders as evidence we're on the threshold of a similar explosion.

 

[Fishlore]

So far in human history, wealth has been produced by the application of labor to invested capital. This is as true under full socialism as under full free market (the difference between the systems is who owns the invested capital). We are reaching a revolutionary phase in which human labor is being more and rapidly replaced by "robots". Robots are, of course, a form of invested capital as much as the tools and machines etc. with which they operate. The result is an unprecedented decline in the amount of human labor required to produce goods and now even to produce services.

This situation is revolutionary because for all of human history, profitable labor has been rewarded. This as true of the successful hunter bringing home meat for his tribe as the skilled machinist turning out parts for an ICBM. As less and less human labor is required for the production of wealth, our social structure becomes unstable. We have been watching the process for a couple of centuries as unskilled and semi-skilled labor have been displaced by machinery. We are now veging on the point at which doctors and lawyers face displacement much as weavers and mowers did in the past.

The only way that I can see out of this trend is to decouple wages from wealth production. Wealth must continue to be taxed and people paid to perform labor; however we must move away from the idea that people are paid to labor on invested capital in order to produce wealth and assign jobs based on social needs. This will lead to the socialism of the beehive and the ant hill but there may be no other way.

Great post.

I have a nit-pick about your first statement though, and that is wealth is not produced solely by labor. IT also requires organization, thought, design and logistical access.

Those things come at a cost as well, but when labor is only a slim share less than 5% of the retail cost and the 'organizers' get 50%, that is out of balance and is producing the wonderful world of financial casinos once known as stock markets due to so few having so much and trying to figure out what to do with it.

Thanks for your favorable review. You are correct that wealth requires "organization, thought, design and logistical access," the are also "labor" i.e. human activity. The first industrial revolution displaced lots of unskilled and semi-skilled labor -- harvesting machines, backhoes etc. without reducing "white collar" labor significantly. Now, IT is displacing bookkeepers, inventory clerks etc in large numbers. Even lawers are being replaced by sophisticated text analysis software.

 

[320 Years of History]

So far in human history, wealth has been produced by the application of labor to invested capital. This is as true under full socialism as under full free market (the difference between the systems is who owns the invested capital). We are reaching a revolutionary phase in which human labor is being more and rapidly replaced by "robots". Robots are, of course, a form of invested capital as much as the tools and machines etc. with which they operate. The result is an unprecedented decline in the amount of human labor required to produce goods and now even to produce services.

This situation is revolutionary because for all of human history, profitable labor has been rewarded. This as true of the successful hunter bringing home meat for his tribe as the skilled machinist turning out parts for an ICBM. As less and less human labor is required for the production of wealth, our social structure becomes unstable. We have been watching the process for a couple of centuries as unskilled and semi-skilled labor have been displaced by machinery. We are now veging on the point at which doctors and lawyers face displacement much as weavers and mowers did in the past.

The only way that I can see out of this trend is to decouple wages from wealth production. Wealth must continue to be taxed and people paid to perform labor; however we must move away from the idea that people are paid to labor on invested capital in order to produce wealth and assign jobs based on social needs. This will lead to the socialism of the beehive and the ant hill but there may be no other way.

Great post.

I have a nit-pick about your first statement though, and that is wealth is not produced solely by labor. IT also requires organization, thought, design and logistical access.

Those things come at a cost as well, but when labor is only a slim share less than 5% of the retail cost and the 'organizers' get 50%, that is out of balance and is producing the wonderful world of financial casinos once known as stock markets due to so few having so much and trying to figure out what to do with it.

Red:
The "organization, thought, design, and 'logistical access' "** is just mental labor instead of physical labor. Make no mistake, however. Labor of both types are compensated, but mental labor is far more highly compensated than is purely physical labor. If/when/where an economy is sufficiently bereft of the quantity of people needed to perform the physical work that only people can perform the compensation rate for those skills goes up.

Business owners who can replace a person with a robot is wise to do so. Why? Because robot labor, in the long run, is less expensive than is a human laborer. People who bother, again, to look at "the writing on the wall" will realise that they cannot compete favorably with robotic labor in many acts of physical labor. That's similarly so for some forms of mental labor. Those people will shift to working in areas where low is for the foreseeable future (the span of a human career) the likelihood of robotic labor replacing human labor. Even folks who misjudged or misinterpreted "the writing on the wall" can, at the very least, observe that they did, and guide their children so they don't make the same mistake. What they cannot do and expect to succeed is bitch and moan over the fact that they are not and cannot be as efficient and expensive as a robot.

I know some folks may take my above comments as implying or indicating that there is competition between robots and humans. Well, that's not so, at least not now, nor will it be in the foreseeable future. If there's a race or competition, it's the one whereby workers must pay enough attention so as to keep ahead of, or become one of, the innovators who are always aiming to find ways to lower production costs -- make no mistake, there are always going to be folks (maybe one day computers) whose aim is just that -- as part of their business strategy of maximizing profits, be it for themselves directly or for others to whom they can sell their ideas, not their tactile toiling.


**Note:
I don't really know what precisely "logistical access" means, but I am taking it to mean "physical proximity to something," maybe available jobs, maybe education, maybe something else...not sure what exactly.

Blue:
I can relate to, perhaps even accept that sentiment on ethical/moral or humanitarian grounds, but not from any empirically driven POV.

Look at the data found here. As you look at the types of jobs on that list, which ones generally pay decently and which generally don't? Over and over again, with perhaps a few exceptions, you'll see that the jobs that have a higher share of labor cost in the total cost of goods/services sold are the jobs that are (1) in healthy demand and (2) pay a decent wage. Overwhelmingly, they are also job types that require and use brain power roughly to an equal or greater extent than they use physical power.

So far in human history, wealth has been produced by the application of labor to invested capital. This is as true under full socialism as under full free market (the difference between the systems is who owns the invested capital). We are reaching a revolutionary phase in which human labor is being more and rapidly replaced by "robots". Robots are, of course, a form of invested capital as much as the tools and machines etc. with which they operate. The result is an unprecedented decline in the amount of human labor required to produce goods and now even to produce services.

This situation is revolutionary because for all of human history, profitable labor has been rewarded. This as true of the successful hunter bringing home meat for his tribe as the skilled machinist turning out parts for an ICBM. As less and less human labor is required for the production of wealth, our social structure becomes unstable. We have been watching the process for a couple of centuries as unskilled and semi-skilled labor have been displaced by machinery. We are now veging on the point at which doctors and lawyers face displacement much as weavers and mowers did in the past.

The only way that I can see out of this trend is to decouple wages from wealth production. Wealth must continue to be taxed and people paid to perform labor; however we must move away from the idea that people are paid to labor on invested capital in order to produce wealth and assign jobs based on social needs. This will lead to the socialism of the beehive and the ant hill but there may be no other way.

Purple:
There is another way: people can "wake up and smell the bacon." Rather than insisting our leaders bring back bygone days, folks can accept that those days and their economic climate have gone for the foreseeable future and that to be successful prospectively, they must "get with the program," that "program" being working in (or preparing to work in) fields where there exists sufficient demand that wages remain decent, if not outright high. To that end, one must as early as possible demonstrate earnestly one's ability to perform every more complex thinking, or perform work that quite simply cannot ever be done as substantively well by a robot as can a human.

Thanks for your favorable review. You are correct that wealth requires "organization, thought, design and logistical access," the are also "labor" i.e. human activity. The first industrial revolution displaced lots of unskilled and semi-skilled labor -- harvesting machines, backhoes etc. without reducing "white collar" labor significantly. Now, IT is displacing bookkeepers, inventory clerks etc in large numbers. Even lawyers are being replaced by sophisticated text analysis software.

Agreed. I suspect that at some point, even careers that require critical analysis of business processes and organizations will one day be performed by computers. I feel confident, however, that much of the "judgment call" work humans today perform will remain human tasks unless there comes a time when humans become willing to cede political leadership and management to machines.

 

[320 Years of History]

Those things come at a cost as well, but when labor is only a slim share less than 5% of the retail cost and the 'organizers' get 50%, that is out of balance and is producing the wonderful world of financial casinos once known as stock markets due to so few having so much and trying to figure out what to do with it.

I think you may need to read this: "The Labor Share."

 

[Elvis Obama]

I'm not sure what we're arguing here

In summary, the theses of my posts in this thread have are (up to now) four:

• The claim that the wages of the American middle class is inaccurate and as such, it is a false premise on which to base the conclusion that there is something wrong with the American economy, society, middle class, industry, or employment rates and opportunities.
  • To support my assertion to that effect, I have provided:
    • A discussion about logic so as to ensure readers understand the approach and thinking standards I've used in evaluating the merit of the OP's claim.
    • Empirical evidence and discussion of how and why it is that the inflation adjusted average wage (thus income) of middle class workers has, from 1970 to 2014 (and by inference to 2016) has declined by 7¢, which I assert is not a significant enough change to do more than split hairs quantitatively over the fact that the average wage has indeed declined during the noted period.
    • Empirical evidence and discussion showing that the tax rate in recent lustra has been vastly lower than it was in 1970 or in the 1970s; thus making completely misguided the premise that the tax effects on income are relevant in evaluating whether there is something wrong with the economy, etc.
• The driver behind my comments in support of the point(s) above is not a lack of humanity and ruth, but rather my simply not being able to accept and accede to an argument that I see as fundamentally flawed by its reliance on false premises and invalid inferences.
• I am okay with and accept the actual conclusion that something needs to be done to boost the financial fortunes of middle class Americans so long as the "something" we do issues from truthful premises and valid inferences. That I am is why I wrote about "doing/thinking the right thing for the wrong reasons."
• Perceptions of individuals, in matters concerning a nation, are not, as a foregone conclusion, reality, specifically, in this thread, the perception that the American people have been betrayed.
  
  This is the point I made, and that you refuted using the Princeton study, that I have been examining in detail so as to determine whether it should be something I assign enough weight such that it alter my claim about perception and reality, and/or to determine the extent to which is should or should not alter my stance in that regard.

So, you tell me whether we are arguing about something, and if so what it is. I see myself as making points and substantiating them with credible evidence and rigorous narrative explaining how I applied that evidence to arrive at my conclusions/assertions. (I haven't fully addressed the fourth key point; that's what I'm trying to get done, but it's taking longer to do than I'd hoped...not because of the writing, but because I have to revisit what I learned, and don't know for sure what of it I've forgotten, about statistical modeling, linear regression and differential equations. LOL And quite frankly, since I'm not at home and can't run to my own library to grab my own old textbooks and personal notes from college/grad school, finding what I'm looking for is a PITA, or more precisely, slow, to do on the WWW.)

As to points 1-3, once again, not me. That's the discussion you're having with the other fella. FWIW, I don't think his point about middle class wages was meant to be central to the issues of automation or mitigating the effects of a fundamental economic shift. Also FWIW, although I agree that I've most often heard the wages of the middle class referred to as "stagnant", that's hardly a good thing.

Also, also, FWIW, I would regard the plight of the lower class as being more pertinent to this discussion. They are the most vulnerable to being replaced by automation and the least capable of making the adjustments they'd need to make to mitigate the worst effects of the transition in question.

The Princeton study I cited is not intended to deliver or define "the truth". It is merely a signpost. One amongst many. Gerrymandered "safe" districts is another signpost. Congressional gridlock is another. Voter disenfranchisement efforts. Special interests and campaign finance. They all point to stolen, diverted representation.

I couldn't disagree more with your statement about perception. Perception is all. If enough people are pissed at you, whether it's for sensible reasons or not, you're in trouble. Politicians are nothing to anyone except themselves. Cross a line and you're gone, Eric Cantor. One day high and mighty, the next, gone. Who cares? He becomes a footnote in history and goes into private employment. Awww.

Do you feel that voters, and specifically Republican voters, are wrong to feel betrayed by their party? I think they're nuts if they don't feel betrayed. They're always being called the disaffected "rust belters", the very ones who are most affected by automation. Who's got their back? Reince Prebus?

 

[there4eyeM]

The fundamental fact that must be remembered is that systems exist for people. We must not cut and fit people so that an out-dated system continues. The economic models of the past are inadequate to the times. Just as a revolutionary new situation evolved at the time of the Renaissance, we are in a new era. We have to be ready to be audacious and inventive.
All value comes from human life.

 

[320 Years of History]

As to points 1-3, once again, not me.

Okay.

the wages of the middle class referred to as "stagnant", that's hardly a good thing.

I seriously doubt anyone thinks it is a good thing. Have you seen anyone frame stagnant wages as a good thing? I haven't.

I couldn't disagree more with your statement about perception. Perception is all. If enough people are pissed at you, whether it's for sensible reasons or not, you're in trouble.

I am certainly "in trouble" from one thing: the folks who are angry with me. That they are pissed is a reality. Both they and I are aware of it. It is real and it's accurate to say it is. Why they are pissed, their perception of what I've done or didn't do that, because they perceive my as having so acted, angered them, however, may not be accurate at all, thus not a reality. Indeed, it can be completely fabricated by them or others who influence them. That does not however have the might to convert their perception of my deeds (or inaction) or an object into a real deed or real object. Perception is not reality it's just perception, even if that perception inspires very real responses, be they physical responses or emotional ones.

Do you feel that voters, and specifically Republican voters, are wrong to feel betrayed by their party?

Yes, I think and feel that Republican voters unjustifiably feel betrayed by the GOP. I think they perceive they have been betrayed; however, I see nothing indicating they indeed have been betrayed. The complainers are, to my read of the facts, loud and strong but nonetheless wrong.

From an objective standpoint, my answer to your question rests in large part on the fact that being a Republican is a voluntary choice and the practices folks claim constitute the betrayal are the very same practices that the GOP has used for years and years. What has changed is not that the GOP has changed, but that this time round, there are a lot of very vocal folks (but not the majority of folks in the GOP) who've observed that those practices may not yield the outcome they want, whereas in prior years, there was no similarly large and loud plurality of dissatisfied GOP members.

From a subjective standpoint, and building on the preceding thoughts, my answer derives from the fact that I'm not now or ever going to agree that their willful ignorance of how their own self-chosen party "handles things" is any reason at all for anyone to grant that it is thus the GOP who betrayed those willfully ignorant folks. The fact that one relied on incomplete information and later doesn't or might not get one's way does not show or even suggest the cause of one's dissatisfaction is someone else's having betrayed them.

I would feel differently were the GOP to have implemented new tactics that resulted in an undesired outcome on the part of the folks now griping, but that's not what the GOP has done. And what Trump is doing now is essentially claiming that in the fight to win delegates the GOP allocates via caucus or state convention, he "arrived at a gunfight armed with a knife" and we are supposed to have sympathy for his $2B ass and the fact that he didn't win those delegates. Well, to that, I say BS! Not today, brother, and not tomorrow or the next day.