Multinational Corporations – Page 4

Robots Are Coming For Your Job

Americans worry that robots could make their jobs irrelevant. A new study shows that they may be correct. The report, Technology at Work v 2.0: The Future Is Not What It Used to Be, was conducted at University of Oxford in association with Citibank. Researchers Carl Frey and Mike Osborne, co-directors of the Oxford Martin Programme on Technology and Employment, found that 47% of US jobs are at risk of automation in the next two decades.

They also found that the city where you live may influence the risk of your work being automated. Among metro areas, Boston faces the lowest percentage of jobs likely to be automated, while Fresno, Calif., faces the highest. The cities that fared best in the survey have a cluster of skilled jobs, typically because they have developed a strong tech sector. Boston, for instance, which is home to a number of top universities and has many well educated residents, has become a global technology hub, transitioning successfully from its roots as a shipping center and manufacturing economy to a tech/finance center.

Here are the best/worst rankings:

FireShot Screen Capture #079 - Cities at risk of automation-page-001

Even in cities with the lowest percentage of jobs at risk of automation, nearly 40% of jobs could disappear because of technological innovation, the report finds. So how many workers are we talking about? The BLS reports that in December, 2015 our working population was 149.9 million; 40% of that number would be 60 million people unemployed in the next 20 years. Perhaps it won’t be that bad, maybe 20-30 million jobs will replace the approximately 60 million we stand to lose.

No politician will be able to paint a happy face on THAT.

Skeptics will say not to worry, that the economy has always adapted over time, and created new kinds of jobs. The classic example they use is agriculture. In the 1800s, 80% of the US labor force worked on farms. Today it’s 2%. Obviously, mechanization didn’t destroy the economy; it made it better. Food is now really cheap compared to what it used to cost, and as a result, people have money to spend on other things and they’ve transitioned to jobs in other areas.

But, the agricultural revolution was about specialized equipment that couldn’t be transferred to other industries. You couldn’t take farm machinery and have it flip hamburgers. Information technology is totally different. It’s a broad-based general purpose technology.

There just won’t be new jobs available for all these displaced workers.

There will certainly be many new industries, (think nanotechnology and synthetic biology), and those jobs will be highly paid. But they won’t employ many people. They’ll use lots of technology, rely on big computing centers, and be heavily automated.

Think about what Facebook and Twitter have added to the jobs economy: They are two of our very “best” success stories, and they only employ 8,100 workers. They have had a huge impact on society, and have created significant value for their owners, but the total jobs they have created are only a rounding error in the US economy.

Much of what we buy is produced in factories increasingly run with robots, and maintained and operated by small cadres of engineers. Also, keep in mind that globally, some 3 billion people are already looking for work and the vast majority are willing to work for less than the average American.

So, we can expect an ever-greater number of unemployed chasing an ever-shrinking number of jobs that can’t be eliminated or simplified by technology. Thus, the prognosis for many of our medium and some higher-skilled workers appears grim.

Incomes will continue to stagnate, because automation does not threaten unskilled jobs. This is sometimes called “Moravec’s Paradox”, which says that, contrary to traditional assumptions, high-level reasoning requires relatively little computation, but low-level sensorimotor skills require enormous computational resources. The “Roomba” robotic vacuum cleaner remains just an expensive toy. It has had zero impact on the market for janitors and maids like a rechargeable cordless sweeper has done, yet, wages for American janitors and maids have fallen because of competition from the currently unemployed and newly arrived immigrants.

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 job growth in the developed world.

Workin’ in a Coal Mine

American Experience ran a documentary called “The Mine Wars” on January 26th. It told the story of West Virginia coal miners’ battle against mine owners at the start of the 20th century.

Few know that the WV mine workers struggle against the mine owners led to the largest armed insurrection after the Civil War and turned parts of West Virginia into a war zone that required federal troops to pacify.

The battle started in 1920 with a shootout in Matewan, WV. It was triggered by a plan by the United Mine Workers (UMW) to organize Mingo County, where Matewan is located, and the thuggish reaction by mine owners. There is a fine movie that documents this, “Matewan”, by John Sayles.

The town’s union-sympathizing Police Chief Sid Hatfield confronted a group of private detectives from the Baldwin-Felts company who were hired by the coal mine owners. The detectives had come to Matewan to evict the families of unionized miners. The “Battle” of Matewan left seven Baldwin-Felts men dead, along with the mayor and two townspeople.

Some background: Workers were paid based on the weight of the coal they mined. Each car brought from the mines theoretically held a specific amount of coal (2,000 pounds). However, cars were altered by owners to hold more coal than the specified amount, so miners would be paid for 2,000 pounds when they actually had brought in 2,500. In addition, workers were docked pay if rock was mixed in with the coal. Miners mostly lived in company-owned homes, and were forced to shop at company-owned stores.

The UMW started organizing and striking in WV in 1912. When the strikes began, the mine owners used hired guns to inflict plenty of violence on miners and their families.

There is a sordid history of similar efforts throughout the US. Check out the Ludlow Massacre in 1914.

But before WWI, the UMW was unsuccessful in changing working conditions or wages for miners. The US entry into WWI in 1917 sparked a boom in demand for coal, also bringing increasing wages. After the War, demand for coal fell, and so did miners’ wages.

At that time, the largest non-unionized coal region in the eastern US were WV’s Logan and Mingo counties, and the UMW made them a top priority. Mine owners in Logan bought off the Logan County Sheriff Don Chafin to keep the union out of the county. In 1921, after increasingly violent confrontations with the owners and their hired guns, miners moved to fight back.

In August, approximately 5,000 armed union men entered Logan County. Logan city was protected by a natural barrier, Blair Mountain. Chafin’s forces took positions at the top of Blair Mountain, while the miners assembled near the bottom of the mountain. There were skirmishes and deaths. On September 1, President Harding sent in federal troops to break up the battle, and the miners soon surrendered to the feds.

By 1924, UMW membership in the state had dropped by about 50% of its total in 1921.

Mine owners also engaged in a PR campaign that portrayed the UMW as “Bolsheviks”. The Red Scare in 1919-1920 was based on fears that the labor movement would lead to radical political agitation, or would spread communism and anarchism within the country. This sense of paranoia was driven in part by the mining companies.

Does any of this sound familiar? How many red scare equivalents have we had in the last 100 years?

Corporations have always been at war with workers. Here’s the real question: Is it possible for capitalism, by its very nature, NOT to incite a constant battle between the .01% and everyone else?

Probably not. Class is a feature of capitalism, so it follows that class conflict will always be part of capitalist economies. We may find ways to mitigate the effects of that conflict, but it will always be a struggle to do so.

At the same time, we see every day that the interests of private capital are not aligned with the needs of society as a whole. We re-learn these lessons because our public institutions periodically get co-opted by capital. Until private capital’s stranglehold over our political process is ended, it will always try to rig the system.

The miners’ struggle in West Virginia was not just a backwoods conflict. The WV experience has direct relevance to today’s American economy, to today’s capitalists, and to the state of labor in America today.

What happened in West Virginia is an object lesson for what all of America might look like with unfettered corporatism.

Take a look and listen to Lee Dorsey’s 1966 hit “Workin in Coal Mine” written by the late, great Alan Toussaint:

For those who read the Wrongologist in email, you can view the video here.

Why 2016 Won’t Be Like Any Other Election

If we add together the polling numbers of Trump, Sanders and Cruz, it’s clear that a majority of the electorate is ready for a president from well outside the political mainstream.

Start with the Trump slogan, “Make America Great Again“. It’s the first time in Wrongo’s memory that an explicit admission that America isn’t so great has been heard in an American presidential election. In a world where American Exceptionalism is settled dogma, how and why can a Republican say “we ain’t so great”, and be so successful?

Of course, that same dynamic also drives the willingness of voters to support the Democratic Socialist, Sanders. Bernie offers a different solution to the economic woes that the two parties have inflicted on us in the 35 years since we elected Ronald Reagan. Now, a substantial and very motivated part of the electorate on both the right and left, is telling pollsters that something different has to be on the table.

The old electioneering rules won’t work. We are in a time of anger and anxiety. Republicans go for the emotional jugular every day, while establishment Democrats are still trying to make points with a mix of policy, pragmatism and feel-good idealism. Democrats will have to decide whether they see the current political landscape as an opportunity to free themselves of these old terms of debate, or take full ownership of them moving forward.

Regardless of the GOP candidate, emotion will dominate their argument for the White House. John Michael Greer had an insightful piece last week about ways to look at voter motivations in America:

The notion [is] that the only divisions in American society that matter are those that have some basis in biology. Skin color, gender, ethnicity, sexual orientation, disability—these are the lines of division in society that Americans like to talk about, whatever their attitudes to the people who fall on one side or another of those lines.

The axiom in politics is that voters in these “divisions” tend to vote as blocs, and campaigns are designed to bring the bloc to the candidate. That’s less true today. Greer takes a deep dive into today’s politics, suggesting the largest differentiator:

It so happens that you can determine a huge amount about the economic and social prospects of people in America today by asking one remarkably simple question: how do they [earn] most of their income?

He posits that it’s usually from one of four sources: returns from investments, a monthly salary, an hourly wage, or a government welfare check. People who get most of their income in one of those four ways have political interests in common, so much so that it’s meaningful to speak of the American people as divided into an investor class, a salaried class, a wage class, and a welfare class.

The old divisions, women, gay people, people of color, are found in all four income classes. Finally JMG has a killer thought: The political wave that Trump and Sanders are riding has roots in the answer to another simple question: Over the last half century, how have the four classes fared? The answer is that three of the four have remained roughly where they were. The wage class in particular has been destroyed. And the beneficiaries were the investor and salaried classes. They drove down wages, offshored production, and destroyed our manufacturing base. More from JMG:

I see the Trump candidacy as a major watershed in American political life, the point at which the wage class—the largest class of American voters…has begun to wake up to its potential power and begin pushing back against the ascendancy of the salary class.

That pushback could become a defining force in American politics. The problem with that viewpoint is that their desired change is anti-business and anti-middle-class. And THAT change is not acceptable to those who control our politics, most of whom are squarely in the investor and salaried classes.

And a Trump candidacy is not the worst form it could take. If Trump is sidelined by another establishment type, a future leader who takes up the cause of the wage class could very well be fond of armbands or, of roadside bombs. Like the Bundy Brigade on steroids.

Once the politics of resentment becomes a viable strategy, anything can happen.

Read Greer’s analysis. Think about how the salaried class attack on Bernie as “socialist” might actually play out for Sanders, assuming he could analyze and communicate what is really going on here.

Think about how Hillary Clinton might stumble over the problems of the wage class, given her fervid support from the investor and salaried classes.

The usual fight for independent voters using conventional wisdom will not succeed in this political cycle.

Monday Wake Up Call – November 30, 2015

Today’s wake up is for the American worker. While you were sleeping, corporate executives were piecing together an economy and associated tax regulations that allowed them to become America’s oligarchs.

The Center for Effective Government just came out with a study of CEO retirement funds. You already know the conclusion, but you didn’t know the facts:

• The 100 largest CEO retirement funds are worth a combined $4.9 billion. That’s equal to the entire retirement account savings of 47 million American families
• Nearly half of all working age Americans have no access to a retirement plan. The median balance in a 401(k) plan at the end of 2013 was $18,433, enough to generate a monthly retirement check of $104.

In addition, 73% of Fortune 500 firms have also set up special tax-deferred compensation accounts for their executives. These are similar to the 401(k) plans that some Americans have through their employers. But average workers face limits on how much pre-tax income they can invest each year in similar plans, while the plans the F500 provides to their top executives do not. They are free to shelter unlimited amounts of compensation in their retirement funds where their money can grow tax-free, until retirement.

But for the average employee? The GAO says that 29% of workers approaching retirement (aged 50-65) do not have pension or retirement savings in a 401(k) or IRA. While according to a study by the Schwartz Center at the New School, 55% of those aged 50-64 will be forced to rely solely on Social Security (which averages $1,233 a month).

The current rules mean that if CEO’s slash worker retirement benefits, they can boost corporate profits and thereby, stock prices. And since much of executive compensation is tied to the company’s stock price, these rules (and company practice) create a powerful incentive for CEO’s to choose their pocketbooks over those of their employees.

We are talking about market power. The CEO’s and their firms have little to fear from Mr. Market. In turn the rising wealth at the top buys growing political influence, through campaign contributions, lobbying, and the rewards of the revolving door between government jobs and those in the private sector. Political influence in turn is used to write the rules of the game—the tax laws we are speaking of here, antitrust laws, deregulation, union-busting—all in a way that reinforces income concentration.

The result is a feedback loop between political power and market power that created, and now maintains, a vicious circle of oligarchy.

Well, time to wake up from a snooze that allowed our politicians and the largest corporations and their CEOs to turn our country and economy into their private sandbox.

To help with today’s wake-up, here is Rage Against the Machine, the gone but not forgotten band, with Zach de la Rocha on vocals and the superb Tom Morello on guitar. They are performing “No Shelter”, written in 1998:

https://www.youtube.com/watch?v=6NEoesmnYU4

Sample Lyrics:
Empty ya pockets son, they got you thinkin’ that
What ya need is what they selling
Make you think that buying is rebelling
From the theaters to malls on every shore
Tha thin line between entertainment and war

Chained to the dream they got ya searchin’ for
Tha thin line between entertainment and war

There be no shelter here
Tha front line is everywhere
There be no shelter here
Tha front line is everywhere

American eyes, American eyes
View the world from American eyes
Bury the past, rob us blind
And leave nothing behind

Just stare
Just stare
Relive the nightmare

Those who read the Wrongologist in email can view the video here.

Soon, Antibiotics Won’t Work

It’s estimated that more people will die from bacterial infections than from cancer by 2050. Two disparate factors are driving this. First, scientists in China say they’ve identified a gene that makes common, dangerous bacteria resistant to “last-resort” antibiotics called polymyxins. The mutated gene, called mcr-1, was found in the Enterobacteriaceae germ in both pigs and people in South China, according to a report published in The Lancet.

Study author Jian-Hua Liu, a professor at South China Agricultural University in Guangzhou, China, said:

The polymyxins (colistin and polymyxin B) were the last class of antibiotics in which resistance was incapable of spreading from cell to cell…

The new gene was found on mobile forms of DNA that are easily copied and transferred between different bacteria. According to the researchers, this suggests a much greater potential for the gene to spread and diversify in different types of bacteria.

Liu went on to say that the discovery points to the emergence of a gene which can create multidrug resistance that:

is readily passed between common bacteria, including E. coli and the Klebsiella pneumoniae germ, which can cause deadly pneumonias or bloodstream infections.

We have all heard that extensive use of antibiotics in agriculture may contribute to this resistance gene. Liu’s team said that pigs were more likely than people to have bacteria with mcr-1 gene-related colistin resistance. That suggests that the resistance originated in animals and then spread to people.

The discovery bodes ill for public health worldwide. Timothy Walsh, Professor at the University of Cardiff in Wales, told BBC News: (emphasis by the Wrongologist)

All the key players are now in place to make the post-antibiotic world a reality. If MCR-1 becomes global, which is a case of when not if, and the gene aligns itself with other antibiotic resistance genes, which is inevitable, then we will have very likely reached the start of the post-antibiotic era.

According to the Review on Antimicrobial Resistance, drug-resistant infections could kill an extra 10 million people across the world every year by 2050 if new antibiotics are not found. That’s 350 million people lost. By 2050, this could cost the world around $100 trillion in lost output: That’s more than the size of the current world economy, and roughly equivalent to the world losing the output of the UK economy every year, for 35 years. Here is a graphic representation of the scale of the problem:

The second factor driving this disaster is our Bad Corporate Citizens. There are two classes of these bad actors. The food conglomerates that feed antibiotics to animals raised for meat, so that pig farmers can make more profit, and the Big Pharma companies that spend their intellectual calories on corporate inversions (such as Pfizer is doing in its merger with Allergan) rather than on antibiotic research. As David Cox reports about drug company research:

They’re happy to sell existing antibiotics, but they’re not interested in researching and developing new ones.

Professor William Fenical at the Scripps Institute of Oceanography in San Diego discovered a new antibiotic capable of attacking the bacteria MRSA, a hospital superbug. However, most large pharmaceutical companies abandoned their antibiotic programs by 1995. And even though we know that animals raised with no antibiotics are less likely to contain drug-resistant bacteria than those routinely given antibiotics, about 80% percent of antibiotics sold in the US are given to animals raised for food production.

So, we have a perfect storm brewing: To enhance corporate profits, we give antibiotics to animals, weakening the value of those antibiotics in controlling human disease. And we look the other way when the big drug companies use innovation to avoid taxes, while saying that research into new antibiotics is “too risky” for their shareholders.

Again, the strategy of big business is “privatize the gains, socialize the losses.” And maybe when you get sick, the doctor will only be able to prescribe you a pork chop.

The world needs a new capitalism. Mr. Market isn’t going to fix this.

Friday Cartoon Blogging??

It sounds like an old story, but the Wrongologist and Ms. Oh So Right are again headed to a wedding in Vermont, so there will be no new posts until Monday. Therefore, cartoons!

We can’t ignore the visit of Pope Francis. Yesterday, he spoke to the Congress, and the usual spin ensued. Like the Liberty U folks when Bernie spoke there, the defining political issue for 90+% of Republicans is abortion. As long as the Pope remains with them on that issue, there’s no contradiction between their faith and political affiliation.

They will no more listen to this Pope on other issues than they did to John Paul II’s anti-war messages.

Liberals, including liberal Catholics, appreciate Francis because he says some things that they’ve believed for a long time. It’s always nice when an authority figure affirms one’s beliefs. But the three Catholic POTUS candidates, Christie, Jeb, and Santorum, have already rejected anything Francis has to say on climate change and income inequality. As have all the GOP members of Congress regardless of their religious affiliation.

The Pope’s big job:

Brian Williams returned from banishment to anchor coverage of the Pope:

We may see a government shutdown this fall. One thing to keep in mind about the Republican debate over whether or not to risk a government shutdown for the “defund Planned Parenthood” movement is that this isn’t a fight over goals or principles. There isn’t a single Republican presidential candidate who does not favor “defunding Planned Parenthood:

The GOP is moving on to Carly:

Volkswagen’s CEO Martin Winterkorn resigned on Wednesday over the emissions cheating scandal, saying “I’m not aware of any wrongdoing on my part.” Strange choice of words, probably written by his PR team. This is a rogue company that undertook anti-social activities for profit. Anyone can see that this is the outcome we should expect if Mr. Market is allowed to run free:

The Beetle morphs:

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.

The Wrongologist

Geopolitics, Power and Political Economy

Category: Multinational Corporations