Employment – Page 10 – The Wrongologist

Democrats: Where the White Voters At?

Yesterday, we examined the fact that the poorest Americans are the least likely to vote, so they cede the policy agenda to those who do support the weakening of America’s social safety net, and who use low voter turnout as a key election strategy.

Do the Democrats have a strategy to counter the election strategy of the GOP? If they do it isn’t evident.

Dems think that they have a permanent Electoral College presidential majority, and that changing American demographics will help them build majorities in both houses of Congress by the mid-2040’s. They are apparently willing to wait for demographics to become destiny: The numbers of white working-class voters will dip to just 30% of all voters by 2020 and 44% of white voters.

This is a dramatic decline from 1988, when white working-class voters were 54% of all voters and 64% of white voters.

But, in the last three presidential elections, the Democratic candidate lost among white working-class (non-college) voters by an average of 22 points, and by 26 points in 2012 (62%-36%). Despite Mr. Obama winning two terms, his “Obama coalition” will not insure a Democratic majority in Congress, or even provide with certainty the election of a Democratic president again in 2016.

In fact, PPP, a Democrat-leaning polling firm with a great record for accuracy, says this about 2016:

Early general election contests are shaping up to be very competitive with Hillary Clinton polling within 2 points of 5 out of 6 Republicans that we tested against her. The only GOP hopeful to actually lead Clinton is Marco Rubio at 45/43. Rubio is also the only candidate in the field with a positive favorability rating among the overall electorate, at 39/37.

Pew found that those who are most unlikely to vote are demographically distinct from likely voters:

• 34% of nonvoters are younger than 30 years old
• 43% of nonvoters are Hispanic, African American, or other racial and ethnic minorities
• 46% of nonvoters have family incomes less than $30,000 per year, while only 19% of likely voters are from low-income families
• 72% of likely voters have completed at least some college, while 54% of non-voters did not attend college

On the subject of the white working class voter, The Democratic Strategist produced an analysis about the subject, “Roundtable on Progressives and the White Working Class”, which asked the question: “What do you think is the most important single step progressives and Democrats can take to regain support among white working class Americans?”

One thing stood out in their deliberations: It was clear from surveys that white working-class voters support public action to address chronic joblessness, income disparities, and unequal education and social opportunities. They cited the study on the 50th anniversary of the War on Poverty conducted by the Center for American Progress, which found that more than two-thirds of white non-college voters supported 11 out of 11 policies to fight poverty, including:

• An increase in the minimum wage
• Subsidized child care
• Expanded Earned Income Tax Credit
• A national jobs program to combat unemployment

Support among this cohort topped 80% for universal pre-k, expanded Pell grants for low-income families, and affordable child care, and was basically on par with the views of African Americans and Latinos.

That indicates that there is a path for Democrats to gain a larger share of white working class voters, but The Democratic establishment does not have a serious plan that shows white non-college voters that they see the real problems facing Americans the same way.

Here is a modest program to improve Democrats’ chances with white working class voters:

1. The old guard Democratic leaders must go: Why would any Democratic candidate want to brand themselves with a party leadership that tells them to run content-free campaigns?
2. They should look at the political landscape: People are discontented, in part, because incomes haven’t risen in 15 years. What have Democrats done in response? Virtually nothing.
3. Democratic politicians need to listen to constituents. Democrats will never appeal to the majority of working Americans by primarily making more promises to enact new civil rights rules, or environmental laws. They have to deal with incomes.

The economic struggles of the white working class, combined with a feeling of powerlessness, have undoubtedly made them susceptible to right-wing rhetoric, a major coup for Republicans. The key to Democrats winning over this demographic is more about calls for straightforward job creation, wage increases, and benefits for working-aged families, and less about ploys that superficially connect to them.

We should remember that “low income white” is not a synonym for “Republican.”

Shouldn’t Democrats Be Doing Better?

Wrongo watched the first half hour of the Republican Debate. If you feel you must, a transcript of the whole debate is here. The focus was supposedly on the economy. Perhaps the funniest thing was that the media password for WiFi was “stophillary”.

You will be inundated with expert opinion about what was said and who the “winners” were, but none of that is important. All you need are the Wrongologist’s observations: First, the moderators couldn’t be trusted to offer a reality-based picture of the world, any more than the candidates. Maria Bartiromo asked Jeb about unemployment, saying that almost 40% of Americans are without a job and are not even looking. Really? Media Matters checked, and her number included children, retirees, college students, and stay-at-home parents.

Yep, Republican policies will get those kids and retirees into the workforce.

Regarding the candidates:

• There was oratory, little of which sounded informed
• Most denied basic facts about economic and jobs growth
• Most candidates agreed that nobody needs a minimum wage, much less a higher minimum wage
• They agreed we need a small government, but one that still can dominate the world

When a Republican says “small government,” they really mean making the government’s legal and regulatory arm ineffective enough to allow businesses to do whatever the Hades they want until something bad happens. Then Congress can say: “who could have imagined” like the morons they are, and ask the taxpayers to clean up the mess.

You would think that the debate performance by Republicans, and their relative lack of political experience, opens up a window for Democrats in 2016. It should, but Democrats may not be in a position to take advantage. Since the Reagan era, they have deserted the world view and policies that gave them an upper hand politically. They have left the New Deal and Great Society behind, and failed to replace them with anything that anyone thinks is worth getting excited about.

They have morphed into “Republican Lite.” Republicans don’t like Democrats because they won’t agree to the GOP’s fringe ideas on guns, climate change and gutting the Voting Rights and Civil Rights Acts.

Most of the rest of the country just doesn’t care about these new Dems. Some detest their support of abortion and gay and transgender rights. Democrats aren’t doing better because it is obvious that they have become what we used to call moderate Republicans, and why should right-of-center voters settle for the imitation flavor?

A pundit said last week that Barack Obama is only slightly to the left of Richard Nixon. Judge for yourself: Nixon instituted national price controls, ended convertibility of the dollar into gold, signed legislation that started the EPA, and endorsed the failed Equal Rights Amendment. Would Obama we know today have done all of those things?

Since 2008, Democrats have lost the electoral argument in the states. Republicans now control both houses in 31 state legislatures, and have gained 900 seats in those state legislatures on Obama’s watch.

That doesn’t sound like Democrats are following a winning strategy.

Bernie Sanders is attempting to help the Democratic Party rediscover who they once were. However, that re-discovery is not widespread, and may be occurring too late to be of service in this election cycle. If the re-awakening does not occur in this cycle, there is reason to believe that the oligarchs will have all the votes they need both in Congress and on the Supreme Court to ensure a semi-permanent reign.

So Democrats, the choice is yours: You can endorse centrist, middle-of-the-road issues, or you can represent the issues that the American people actually care about. If you go middle of the road, know that you’re putting the millennial vote in play, since they are a generation that, for the most part, remains politically independent.

This strategy may lead to Hillary taking the White House, but it will make taking back the Senate harder, and it will not reduce the Republican majority in the H0use.

Democrats need to do better.

They Call It “Class Warfare” For a Reason

Many pundits have commented on research by Angus Deaton and Anne Case of Princeton (h/t: Naked Capitalism for an ungated copy of the report) showing that mortality rates for middle-aged white Americans have risen since 1999, in contrast to the patterns for every other racial group and for residents of virtually every other affluent country. Here is a comparison of mortality rates among developed countries, with the US middle-aged white population:

“USW” above stands for US non-Hispanic Whites, while “USH” is US Hispanics, both are census descriptions. Deaton and Case found that rising substance abuse, including alcohol-related disease and painkiller overdose, was the main cause of the disturbing trend:

“Poisonings” refers to drugs and opioids. White Americans are killing themselves directly or indirectly, in increasing numbers. Suicide is up, and so are deaths from drug poisoning and the chronic liver disease that excessive drinking causes. This has happened before, in Russia after the fall of Communism. But it’s a shock to see it in America.

Why this has happened with few noticing until now, is a great question. There have been warning signs of distress, such as the fact that US life expectancy has stopped rising, and that death rates among white women had risen (and over the same time period examined in the Deaton-Case study). USA Today reported in 2008 that the problem highlighted by Deaton and Case already was already flowering in the Deep South and Appalachia. Citing a study by the Harvard School of Public Health and the University of Washington, they found that:

4% of the male population and 19% of the female population experienced either declines or stagnation in their life expectancy in the ’80s and ’90s.

Krugman in Monday’s NYT called it “Despair, American Style“, but like others, did not offer a complte explanation of the phenomena. Deeper analysis is necessary. It would be helpful to see the data mapped. An educated guess is that it is correlated with states that made up the old Confederacy and the American rust belt, as the 2008 Harvard study found.

For example, a 2013 report by the Trust for America’s Health (TFAH) identified West Virginia as leading the nation in drug overdose deaths, with a rate of 28.9 per 100,000 residents. The state’s fatal overdose rate increased by 605% between 1999 and 2010, and has jumped 1,056% since 1979. The majority of these deaths are attributable to the abuse of addictive prescription painkillers.

Assuming that Krugman is correct and it is related to despair, maybe we should look at whether this cohort possesses the things necessary to make life worthwhile, including food security, and a decent place to live, a way to be a part of a larger community, a sense of self-worth. If you’ve lived long enough to see people break, and then try to figure out why they did, while others did not, a lot of it is whether they were part of a supportive community, or an indifferent/cruel environment.

Job and income insecurity causes stress, and stress is a killer. Over an extended period of time, the physical effects of stress can result in long term adverse effects to health, including contributing to chronic pain and depression. Some manage to find relief by opting to buy weed online, but others struggle to get a hold of these products due to local legislation and turn to their doctors for other methods. Some may even find themselves using cambodian mushrooms to help manage their anxiety and stress before turning to any doctor’s orders.

But our physicians are also at fault. Here is a CDC article that says that the amount of pain Americans report has not increased, while the prescribing of pain meds has quadrupled since 1999. Deaton and Case also point out that opioids are prescribed far more often here to treat maladies that include pain than in other countries.

This didn’t happen yesterday, and it won’t be cured by exhortations to “eat healthy,” or “do yoga,” or to follow the great American mantra: “study hard”. To end despair in the working class, we need a better program:

(a) Supportive communities that end stigmatizing of low income earners
(b) Universal health care
(c) A jobs guarantee, with a living minimum wage, so people have better options than the Dollar Store or fast food
(d) Free college, so parents believe that their kids have a shot at a better life

Job and income insecurity are insidious. When you spend a few years out of work, despair creeps in. Despair will push you to the fringes of society, and then, society will blame you for being there.

A redesign of our capitalism is the answer.

Does any presidential candidate support this?

Sunday Cartoon Blogging – November 8, 2015

Another interesting week. Here at the Mansion of Wrong, most leaves are on the ground, except for the Oak trees. Squirrels are very busy with this year’s bumper crop of acorns. In politics, Jeb and Ben looked, but couldn’t find any acorns. Mr. Obama said “Yes” to troops in Syria and “No” to the Keystone pipeline.

Not a great week for Republican candidates. Jeb can’t escape the family legacy:

Dr. Carson fumbled science, including why we have Pyramids:

Tuesday’s elections followed a tried and true script:

Mr. Obama pushed the pram into Syria:

But, we have no “boots on the ground”:

A study revealed that middle-aged whites are dying more quickly in the US:

Hillary?

An important survey by Pew released this week says that Republicans are looking for “New Ideas”: (emphasis by the Wrongologist)

Since March, the share of all registered voters who say it is more important for a presidential candidate to have “new ideas and a different approach” has surged – with virtually all of the increase coming among Republican and Republican-leaning voters. Today, by more than two-to-one (65% to 29%), Republican and Republican-leaning registered voters say it is more important that a candidate have new ideas than “experience and a proven record.”

(The survey was conducted on Sept. 22-27 among 1,502 adults, including 1,136 registered voters.)

Pew reports that Democrats have less interest in new ideas: 50% say it is more important for a candidate to have experience and a proven record, while 42% view new ideas and a different approach as more important. This is little changed from March (46% experience, 49% new ideas).

And Pew reports that Hillary has a bigger lead over Sanders than other polls show. Their poll includes Biden:

This is a very different result from other polls which tend to show Sanders just a few points behind Clinton, (at least in New Hampshire) and which say that Biden hurts Clinton enough to open a path to the nomination for Sanders, should Biden enter the race.

But despite the Pew results, many Democrats think 2016 looks grim. Here is the Denver Post reporting that Colorado’s Democratic Governor John Hickenlooper used those exact words:

Gov. John Hickenlooper on Thursday became the latest Hillary Clinton supporter to express doubt about her candidacy for president, telling a Denver audience that the 2016 election is ‘kind of grim, to be blunt’.

The Denver Post also quoted former Democratic Gov. Dick Lamm, who (speaking about the email issue) said he believes:

There’s a one in three chance that if something worse does happen, that will cost her the nomination.

From 30,000 feet, the presidential race includes Hillary, a person many people don’t trust, who seems to lack the vision thing, and Bernie Sanders, who self-describes as a democratic socialist when he’s merely an FDR Democrat.

It just shows how ingrained the memes of the right are in our society, when a New Deal Democrat honestly believes that he is a Democratic Socialist.

Bernie should call himself an FDR Democrat, since he has to deal with corporate media in order to win. The Democratic Socialist label easily morphs into socialist, and then on to Marxist by our media elite. This means that intellectually lazy voters will misunderstand what Sanders is really about. Better for him to conflate his candidacy with a period of American economic recovery than for him to get twisted by the media echo chamber into a second coming of Lenin, or a Jewish Fidel.

And right now, Pew says that the Republican voters are more engaged in the process:

This shows that Dems are about as engaged as they were when Barak Obama was running against Hillary for the nomination, but Republican engagement has increased steadily since 2007.

Considering that the Democratic base seems mostly on auto pilot, it could be a lot worse, particularly since the Democratic National Committee is headed by Debbie Wasserman Schultz, who gave us a Republican House and Senate.

The key question is which candidate can keep the Obama coalition together. Today, it seems to be Hillary:

• If Bernie is the candidate, money is going to be a huge problem and not just for him. How does the DNC raise money? How do other Democratic candidates raise money with Bernie running against the big money donors? It’s all well and good to rail against the campaign financing laws, but Senate and Congressional candidates have to raise money too.
• Can the Dems win the White House AND the Senate on $30 individual donations?

If Hillary is the candidate, the issue will be Hillary making the case that she won’t preside over a third Obama term. Or, the central issue in Hillary’s candidacy could be her husband Bill, and a third Clinton term.

The assumption by Democrats in the primary contests should be that Republicans will still control the House. Even with a Democratic win, neither Hillary nor Sanders would be able to get much of a domestic agenda passed.

Either way, 2016 will be a repeat, more or less, of 2012, with the significant addition of Iran, Russia, and ISIS on the foreign policy front. That may make 2016 more of a balanced issue election.

All Dems can reasonably expect from a presidential win in 2016 is Supreme Court nominations, holding on to the Obama gains, and pushing the country to return towards more economic equality than in the years since 2008.

Pope Francis on Capitalism

With the Pope starting his visit to the US, most focus will be on Conservatives’ support for the Catholic Church’s views against abortion and gay marriage. Conservatives are far less enthusiastic about Francis’ views about climate change and capitalism, both of which are covered in Pope Francis’ encyclical, Laudato Si’.

While the Wrongologist has not read Laudato Si´, he did read an extensive and thoughtful review by William Nordhaus in the NY Review of Books, who says the Pope thinks that the degradation of our environment is a symptom of deeper problems: rapid change, unsustainable over-consumption, indifference to the poor, and the decay of social values.

Nordhaus notes that the encyclical contains an extensive discussion of the features of markets and modern capitalism. It emphasizes dysfunctional tendencies and distortions, witness his criticism of excessive consumption:

Since the market tends to promote extreme consumerism in an effort to sell its products, people can easily get caught up in a whirlwind of needless buying and spending. Compulsive consumerism is one example of how the techno-economic paradigm affects individuals. [Paragraph 203]

And Francis’ criticism of the distorting effect of the drive for profit:

Once more, we need to reject a magical conception of the market, which would suggest that problems can be solved simply by an increase in the profits of companies or individuals. Is it realistic to hope that those who are obsessed with maximizing profits will stop to reflect on the environmental damage which they will leave behind for future generations? [Paragraph 190]

Nordhaus quotes Francis, who argues that profit-seeking is the source of environmental degradation:

The principle of the maximization of profits, frequently isolated from other considerations, reflects a misunderstanding of the very concept of the economy. As long as production is increased, little concern is given to whether it is at the cost of future resources or the health of the environment; as long as the clearing of a forest increases production, no one calculates the losses entailed in the desertification of the land, the harm done to biodiversity or the increased pollution. In a word, businesses profit by calculating and paying only a fraction of the costs involved. [Paragraph 195]

Francis singles out financiers for special disapproval:

In the meantime, economic powers continue to justify the current global system where priority tends to be given to speculation and the pursuit of financial gain, which fail to take the context into account, let alone the effects on human dignity and the natural environment…. [Paragraph 56]

The Pope criticizes capitalism’s push to make ultra-consumers of everyone:

This paradigm [consumerism] leads people to believe that they are free as long as they have the supposed freedom to consume. But those really free are the minority who wield economic and financial power. [Paragraph 203]

Pure capitalism ignores two major shortcomings of those economies run by Mr. Market: The first is the emergence of monopolies, or things like unregulated pollution, which distort market outcomes. The second is inequality of opportunities and income. And much has been written about rising income inequality, particularly by Seitz and Piketty, and Joseph Stiglitz.

However, it would be inaccurate to point solely to the depletion of resources or pollution as major causes of rising poverty. Instead, it is forces such as the labor-saving nature of new technologies like robots, rising imports from low- and middle-income countries, and the capture of our income taxing system by corporations and the wealthy that have distorted our markets.

Specifically, as economist Arthur Okun has written, markets do not have automatic mechanisms to guarantee an equitable distribution of income and wealth:

Given the chance, [the market] would sweep away all other values, and establish a vending-machine society. The rights and powers that money should not buy must be protected with detailed regulations and sanctions, and with countervailing aids to those with low incomes. Once those rights are protected and economic deprivation is ended, I believe that our society would be more willing to let the competitive market have its place.

So, as this week rolls out, expect to hear many voices on the right argue that Francis is an unrealistic economic fool. In particular, expect to hear George Will’s arguments this week in the National Review echoed by the media. Here is a representative quote from Mr. Will: (emphasis by the Wrongologist)

Francis’s fact-free flamboyance reduces him to a shepherd whose selectively reverent flock, genuflecting only at green altars, is tiny relative to the publicity it receives from media…He stands against modernity, rationality, science and, ultimately, the spontaneous creativity of open societies in which people and their desires are not problems but precious resources. Americans cannot simultaneously honor him and celebrate their nation’s premises.

See what George Will did there? He says that climate denialism is pro-science, while belief in climate change is anti-science.

Know the enemy by their arguments.

Too Much Focus on GDP

(Wrongo is back from his project. Regular blogging begins again today.)

In our lifetime, Gross Domestic Product, or GDP, has been transformed from a narrow economic indicator to our universal yardstick of progress. This spells trouble. While economies and cultures measure their performance by it, GDP ignores central facts such as quality, costs, or purpose. It only measures output: more cars, more accidents; more lawyers, more trials; more extraction, and more pollution. All count as success in the GDP equation. In fact, our cumulative real GDP growth since 2008 is 6.9%.

But we need to focus on other yardsticks to understand what is really going on with our economy. First, take a look at the growth in job openings (blue line) vs. growth in hourly wages (red line):

In the past, the two have usually moved in tandem, which makes sense, since the laws of supply and demand should also apply to employment. But since 2011, and most notably in the past year, they have diverged starkly, with wages drifting back to where they were in 2012, while unfilled job openings have skyrocketed: Job openings are now higher than at the height of the tech boom in 2000. And yet, worker’s wages um, suck.

What happened? Perhaps huge numbers of people are now returning to the labor market after years on the sidelines. We know that many people want a job, but stopped searching for lack of opportunities, while many others want more than the part-time work they’ve managed to find. The uneven pace of wage growth shows there is plenty of slack in the labor market. This is supported by Bloomberg’s report that we still need another 2.4 million jobs to reach “full employment”, (5.1%).

So by definition, we can’t be in a tight labor market.

Some of the difficulties driving American job growth are the problems in the global economy. We see low growth in the developed world, coupled with the continuing impact of automation and the movement of much of our remaining manufacturing jobs to low-wage developing nations.

Take a look at another chart, showing the growth in productivity vs. growth in wages:

Hourly compensation grew in tandem with productivity until 1973. After 1973, productivity grew, but the typical worker’s compensation has been relatively stagnant. This divergence of pay and productivity has meant that the majority of workers did not benefit from productivity growth.

This is another way of saying that the economy could afford higher pay, but didn’t provide it.

The analysis confirms that since 1973, the largest factor driving the gap between productivity and median compensation has been the growing inequality of wages. The divergence between wages and productivity we see above, along with increasing concentration of wealth in the very top of the social strata, are not just correlated, they have a causal relationship.

The two charts demonstrate the shift of income from labor to capital. Larry Mishel of EPI notes that from 2000 to 2011, there was a shift from income derived from labor to income derived from capital, accounting for roughly 45% of the gap shown above.

Workers have lost their share of gains in productivity. It was stolen by capital.

Thorsten Veblen distinguished between the Captain of Business, whose focus was on goods production, and the Captain of Finance, who concerned himself with manipulating money. He deplored the replacement of Industry by Finance; and the situation today is far worse than in the early 1900s. (Veblen died in 1929.)

The development of finance since the late 1970s has been near-pathological. It has been essentially unregulated, left free to become an oversized parasite. It has assimilated more and more of our traditional economic activity through “financialization“. The recklessness of that was made clear by its damage to the housing market in 2008, followed by the huge loss of jobs that occurred in its aftermath.

It is that crisis that leaves wages weak today. It is those jobs that we have been looking for the past eight years.

It is well past time to put finance back in its place. The Dodd-Frank law will never be enough, since it continues to allow the very innovations in finance that can take down the financial system, even while pretending to decrease them.

Capitalism has a phenomenal capacity to lift people out of poverty. But it does so at a cost. Capitalism changed before, and it’s time for it to change again. Free markets have existed for thousands of years; capitalism as we now know it, for fewer than 150.

Effective and productive free markets should also provide workers a living wage. If today’s capitalism isn’t the means to that end, it is time to change it.

Defining Business Success in the 21st Century

In 2012, the Wrongologist reported on the bankruptcy of Hostess, the iconic bakery behind Ding Dongs, Ho Hos and Twinkies. Hostess’ closing was something of a national moment, with people mourning the Twinkie, and possibly, something lost from a better, more optimistic time.

It was also a symbol of the dire state of American manufacturing. Hostess died after a decade of failing health that saw two bankruptcies and five different CEOs. It left behind 36 factories, 5,600 delivery routes and 19,000 jobs.

Then, a partnership between private-equity giant Apollo Global Management and C. Dean Metropoulos, a billionaire turnaround artist known as “Mr. Shelf Space” for his revival of retail brands like Vlasic, Hungry-Man and Chef Boyardee, bought the assets of the defunct Hostess. Now, two years into the comeback of Hostess, we are learning what the cost of putting Ho-Hos and Ding Dongs back on shelves really means: The new Hostess Brands has automated more than 90% of the company’s bakery jobs.

How did they do it? Cherry picking the best assets, modernizing manufacturing and distribution, doubling the shelf life of products and capitalizing on the rare place in pop culture that Hostess products enjoyed:

• The new, smaller Hostess kept just five of the 14 original bakery plants: Of those five, one was sold, and another bakery with 400 employees closed in October.
• They invested in automation: One 500-worker Kansas bakery outfitted with a $20 million Auto-Bake system, now spits out more than a million Twinkies a day, doing 80% of the work once done by 9,000 workers across 14 plants.
• They spent on chemical research, trying to create a longer Twinkie shelf life, and succeeded in extending it to 65 days.
• The longer shelf life enabled a change in distribution. The old Hostess relied on more than 5,000 delivery routes to drop off product to individual stores. It was incredibly expensive (each route required a driver, a truck, gas and insurance), eating up 36% of revenue each year. Even with a great delivery route planner that’s a big chunk of revenue.

What kind of “cream filling” has a shelf life of 65 days?

Now, the company has arisen from the ashes to find a new place on America’s shelves, and they are thinking of an IPO at Hostess. From 9,000 bakery employees at 14 plants to 500 at one plant in Kansas. That’s just the bakery division. Thousands of more supporting jobs were lost when the plants closed for good. This may be an extreme example of automation in the 21st century, but more of it is coming, and it’s going to put a lot of people out of work very quickly.

It used to be that layoffs were a sign of bad management, now they are a sign of good management. Back in the day, bankruptcy was the last thing management wanted. Today, it is a strategic choice.

Destroying jobs is now a badge of honor.

But, no one should blame Metropoulos or Apollo for a winning strategy when, in the prior decade, five different CEOs failed at the task of saving Hostess. They have created a huge turnaround, from Chapter 11 to an IPO in two years. But, it cost thousands of jobs. Automation, layoffs or not, made sense for this business.

We all know that technology creates fewer jobs than it destroys. By some estimates technology could cost half of all current jobs in the next 20 years. So, we can expect an ever-greater number of unemployed chasing the ever-shrinking number of jobs that can’t be eliminated or simplified by technology. Thus, the prognosis for many medium and some higher-skilled workers appears grim. In fact, a good question to ask today is how much can we attribute the fact that the US labor force participation rate is the lowest in 50 years to automation?

The issue is not technology, or robots, or restoring our manufacturing base. Nor is the issue better skills, or technology or outsourcing. We have too many people chasing too few good jobs.

If we forecast continuing technology breakthroughs (and we should), and combine that with the 3 billion people currently looking for work globally, we have to conclude that the planet is overpopulated if the goal is a growing global middle class.

This is why the quest for better technology has become the enemy of sustaining middle class growth in America and the rest of the developed world.

Enjoy that Twinkie while you can still pay for it.

See you on Sunday.

The Wrongologist

Geopolitics, Power and Political Economy

Category: Employment