Perhaps you remember the claims by economists Matthew Slaughter, Michael Porter, and other shills for jobs offshoring that moving American jobs offshore would create better and more jobs in the US. After many years I am still watching for any sign of these promised new jobs.
Despite promises to the contrary, the US economy has been halted in its tracks by jobs offshoring. US corporations have moved middle class manufacturing jobs abroad. The high speed Internet has made it possible for tradable professional skills, such as software engineering, information technology, research, design, and scan interpretations by medical doctors, to be performed offshore. This enormous giveaway of American middle class jobs and GDP to foreign countries has left the domestic economy with non-tradable service jobs.
Robotics is now attacking the remaining domestic service jobs. Robots are becoming sales assistants, providing room service to hotel guests, filling orders at delis, providing medical diagnosis, cooking and serving meals, and becoming incorporated into smart household appliances that reduce the need for electrical and repair services. All of us are familiar with customer service robots. We encounter them whenever we telephone about a bank or credit card statement or utility bill.
The unaddressed problem is: what happens to consumer demand, on which the economy depends, when humans are replaced by robots? Robots don't need a paycheck in order to purchase food, clothes, shoes, entertainment, health care, go on vacations, or to make car, utility, credit card, rent or mortgage payments. The consumer economy has suffered from incomes lost to jobs offshoring. If robots replace yet more Americans, where does the income come from to purchase the products of the robots' work? Any one firm's owners and managers can benefit from lowering costs by replacing a human workforce with robots, but all firms cannot. If all firms replace their work forces with robots, the rate of unemployment becomes astronomical, and consumer demand collapses pulling down the economy.
Economists call what works in the singular but not in the plural the fallacy of composition. Keynesian macro-economists teach that if everyone in society is thrifty with the consequence that savers save more than investors want to invest, aggregate demand falls, and with it incomes and savings. Thus, by trying to save more, savers end up with less.
With the advent of jobs offshoring and financial deregulation, the US has one of the most unequal distributions of income and wealth. As robotics patents are held by a mere handful of people, the concentration of income and wealth at the top will increase.
What kind of society would result? Will governments nationalize robotics or heavily tax the incomes of owners in order to issue monthly payments to people with which to purchase the work product of robots? What would a population living off the work of robots do with itself? Would population growth be tolerated? Or would the powerful owners of robotics use the governments that they control to reduce the surplus population?
Free market economists with their heads forever in the sand will say, "No worry, people thought that the industrial revolution would destroy the demand for labor, but industry employed ever more people." A former MIT professor who has gone into business producing robots says robots will bring the jobs lost to offshoring home to America. But will they be jobs for humans or for robots? I am waiting to hear how robotics will expand the demand for human labor beyond a few repairmen to fix robots. And I am still waiting for the new and better jobs that offshoring promised. By the time they get here, if ever, robots will take them away.
Stock Market Supported By Corporate Buybacks
Pension funds purchase corporate bonds, and the corporations use the money to buy back their own stocks, thus driving up the price, enriching executives with bonuses and shareholders with capital gains, but leaving the company in debt. One study found that last year 95 percent of all corporate earnings were used either to pay dividends or to buy back the company's stock. Read Mike Whitney's report in CounterPunch.
The Ship Did It
The presence of The White Lady, a four-masted Chilean sailing ship, at the Tall Ships Festival in England is being protested. Protesters believe the ship is guilty of human rights violations as the ship was allegedly the site of torture inflicted by the Pinochet government as it put down the terrorism that followed the overthrow of the Allende government. Just as guns murder, ships torture.
The torture alleged to have occurred aboard The White Lady sounds like a small town performance of the torture sanctioned by Washington and London at Abu Ghraib, Guantanamo, and numerous secret sites. How are the American and British democracies superior to Chilean military dictatorship if the former out-tortures the latter? To my knowledge, the Pinochet regime, unlike the Bush regime, never had John Yoo write a legal memo making torture legal. This is probably why, prior to stepping down and returning Chile to constitutional democracy, Pinochet issued pardons both to the military government and to the terrorists.
Demand for Silver Outstripping Supply But Price Is Falling
On numerous occasions Dave Kranzler and I have pointed out that despite high and rising demand for physical bullion and constrained supply, the prices of gold and silver are forced down by concerted manipulation in the futures market. Silver supplies are so tight that both the US and Canadian mints have had to suspend the production and sale of silver coins. Despite supply constraints, in the manipulated futures market the price of silver has been falling, but in the physical market the price of silver coins has risen with premiums over spot raising coin prices as much as 30 percent. Regulatory authorities have brought no action against the obvious manipulation in the futures market.
It is important to the value of the fiat currencies that are being printed in profusion that gold and silver be discredited as hedges against currency depreciation. Thus, authorities turn a blind eye to the obvious manipulation, the purpose of which is to show that inflating fiat paper currencies are gaining in value relative to gold and silver.
I am awaiting the explanation from the Commodity Futures Trading Commission (CFTC) why it is normal for inflating fiat currencies to gain value in relation to gold and silver bullion. Kranzler and I, supported by individuals thoroughly acquainted with the bullion market, have written to the CFTC asking how it is possible for price to fall when demand is rising and supply is constrained.
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