Automating Ourselves To Unemployment

Excellent analysis of the emerging crisis. However, the solutions--as the author is no doubt well aware--fall dangerously short for most of the multitudes soon to be displaced by machines. Something more fundamental is required. 
Capitalism is approaching its conclusion. It cannot function without consumers and most consumers require work in order to earn an income and consume. Without work, they will need a guaranteed income. Unfortunately, as I explain in a forthcoming article in the Journal of Evolution and Technology, guaranteed income schemes as commonly proposed are extremely problematic.
I have proposed something fundamentally new, which can be created by a committed group of people relatively quickly, that addresses these issues. I call it a Celebration Society. It's been endorsed by leaders in various fields, and is discussed at 
Other solutions are also possible. We need to start exploring, simulating, debugging and then testing some of these in real life before the unemployment tsunami destabilizes everything in the 2020s.

From Investors Business Daily:

Wendy’s (WEN) said that self-service ordering kiosks will be made available across its 6,000-plus restaurants in the second half of the year as minimum wage hikes and a tight labor market push up wages.
And further replace-humans-with-automation initiatives are in the future:
The company is wary about both wage hikes and a possible recovery in commodity prices and is “working so hard to find efficiencies” so it can deliver “a new QSR experience but at traditional QSR prices.”

In addition to self-order kiosks, the company is also getting ready to move beyond the testing phase with labor-saving mobile ordering and mobile payment available systemwide by the end of the year. Yum Brands and McDonald’s already have mobile ordering apps.

Remember, these jobs are not coming back. Ever.

Automation in and of itself is not evil. But sewing the seeds of destruction for our workforce without a plan to put the displaced labor to productive use elsewhere is. As a society, we are sleepwalking into an unemployment nightmare.

The race to replace the low-skill, entry-level worker continues to build steam. The article below notes that fully 1/3 of jobs in Europe are at risk of being replaced by automation over the next 2 decades:

Building robot McDonald's staff 'cheaper' than hiring workers on minimum wage
The worrying forecast could threaten jobs at the fast food franchise, a former CEO of the company warns
A former McDonald's CEO warned that robots will take over staff jobs at the fast food empire - because it's cheaper than employing humans.

Ed Rensi has said that buying highly skilled robotics is a cheaper alternative than employing people on minimum wage to work in the company's worldwide restaurants.

He warned that huge job losses are imminent, and commented that it would be 'common sense' to replace humans in the workplace(…)

The worrying research, by professor of management practice at London Business School, Lynda Gratton, and futurologist David A. Smith, suggests that humans will be replaced because robots are able to produce better results.

Prof Gratton said: "Studies have suggested that a third of jobs in Europe will be replaced by technology over the next two decades."(…)

Prof Gratton added: "As middle-skilled roles disappear, workers may find that the 'rung' above them no longer exists


A reminder: once the investment in automation is made, these jobs will never return...

From ZeroHedge:

Last month we discussed the fact that officials had approved the latest Five Year Plan for China's economy. The ultimate goal of the plan is to overtake Germany, Japan, and the United States in terms of manufacturing sophistication by 2049, the 100th anniversary of the founding of the People's Republic of China.
To make that happen, the government needs Chinese manufacturers to adopt robots by the millionsIt also wants Chinese companies to start producing more of these robots, , and to enable that there is an initiative making billions of yuan available for manufacturers to upgrade to technologies including advanced machinery and robots.

The manufacturing hub for the electronics industry, Kunshan, in Jiangsu province is proving that that initiative is well underway. As the South China Morning Post reportsthirty five companies, including Apple's key supplier Foxconn, spent a total of 4 billion yuan on artificial intelligence last year, and more companies are going to follow suit.

Spurred by the initiative and a desire to cut down on labor costs, Foxconn has reduced its workforce by a whopping 60,000 people thanks to the introduction of robots. Foxconn's headcount went from 110,000 down to 50,000 (adding to the mass layoffs that we have warned will cause further social unrest in China).

The underlying warning of my original post above bears repeating: displacing a large percentage of human labor without a plan in place to put that displaced labor to productive use is a sure-fire recipe for long-term crisis.

Today, we are badly failing at putting our current excess human capital to productive use. 

What will things look like in 5 years, when millions of today's jobs have been vaporized by the automation wave?

The Employment Policy Institute just released a report finding that the minium wage hikes in Washington D.C. that started in 2014 and continue today, are resulting in layoffs and reduced hours as employers try to find ways to cope with the higher costs.
From The Washington Free Beacon:

Nearly Half of D.C. Employers Said They Have Laid Off Workers, Reduced Hours Due to Minimum Wage Hikes 

Nearly half of Washington, D.C. employers said they have either laid off employees or reduced the hours of employees to adapt to the District of Columbia’s minimum wage hikes since 2014, according to a report from the Employment Policies Institute.

The minimum wage in the District of Columbia has increased from a $8.25 hourly rate in 2014 to the current rate of $11.50 per hour. Mayor Muriel Bowser advocated a $15 minimum wage in her State of the District address earlier this year.

“In recent months, the City Council in D.C. has considered enacting a number of new labor mandates, including a higher minimum wage, a bill that would fine employers for schedule changes, and a family leave policy funded by a tax on employers,” the report says.

The institute surveyed 100 employers in Washington, D.C. to understand how they would react to a further minimum wage hike.

“Employers affected by the proposed increase to a $15 minimum wage were asked if they had either reduced the number of employees on their staff, or reduced the hours of current employees, to adapt to recently enacted minimum wage increases,” the report says. “Nearly half of employers surveyed had already taken one of these steps—suggesting that 2014-16 minimum wage increases haven’t been absorbed through higher prices alone.”

According to the report, just over half of the businesses surveyed said they planned to raise prices in order to offset the cost of a minimum wage hike. Thirty-five percent said they would likely reduce staffing levels and 37 percent said they would reduce employees’ hours or reduce the number of hours they were open for business. Thirty-one percent of businesses said they were very likely to hire more skilled workers in the future to offset the higher wage.

One in five businesses said they would move out of the District of Columbia and into Arlington, Virginia where the minimum wage is $7.25 per hour. Sixteen percent of businesses surveyed said they were somewhat likely to close their business if the minimum wage hike were implemented and 6 percent of businesses said they would likely close.

“These results are consistent with the best and most recent published research on the minimum wage, which finds that past increases (at lower proposed wage levels) have reduced employment for younger and less-educated employees,” the report states.

“These proposed laws have encouraged a perception that D.C. is becoming less friendly for businesses,” the report says. “Two-thirds of surveyed businesses agreed with this sentiment, with half strongly agreeing that D.C. is becoming a business-unfriendly city.”

This article from the Financial Times notes how the job market is getting "hollowed out" for middle/lower- skill workers by technical innovation:

US low-skill males drop out of jobs market
Labour-force participation among men of prime working age has dropped by more in the US than in any other OECD country apart from Italy in the past quarter century.

The decline has been driven in part by weaker employer demand for people with lower skills, according to a report from President Barack Obama’s Council of Economic Advisers.

The study on Monday shed light on one of the major concerns about America’s recovery: while unemployment has been falling, a large number of people have also been dropping out of the jobs market altogether.

Among so-called prime-aged men between the ages of 25 and 54, the participation rate fell more steeply than in all but one other country in the OECD from 1990 to 2014, the report found. It is now the third-lowest among 34 OECD nations.

“This fall in the prime-age male labour force participation rate, from a peak of 98 per cent in 1954 to 88 per cent today, is particularly troubling since workers at this age are at their most productive,” the report found. “Because of this, the long-run decline has outsized implications for individual wellbeing as well as for broader economic growth.”
“This fall in the prime-age male labour force participation rate, from a peak of 98 per cent in 1954 to 88 per cent today, is particularly troubling since workers at this age are at their most productive,” the report found. “Because of this, the long-run decline has outsized implications for individual wellbeing as well as for broader economic growth.”


Part of the reason behind the fall in demand for lower-skilled labour is the drop in manufacturing jobs resulting from technological change.

In addition, advances in technology favour some workers with high skills more than others, leading to a hollowing-out of opportunities for people with middle or lower skills.

Click here to read the full article

I think there’s going to come a time when the HIGH-skilled males drop out of the workforce; and when that happens, the ownership class and the political class, even the banking class is doomed.
But maybe I’m wrong.
Only thing is, I’m not raising my son to enter the workforce, because I don’t see a future in it.
I AM raising him to be skilled though.



As a result, capital investment in automation (robotics, artificial intelligence, etc) is exploding
is really interesting, because I am the one who plans and thinks of investing 10% of our last years's profits to AI development solutions. But if this is too little, please let me know.

I Think

This article has set my mind to active thinking. What I pondered over, were the losses in my health care business. I read about this AI and Machine Learning Development company and now I see that I was initially wrong, shunning the opportunity to predict the volume of fraudulent admissions.