Monday Wake Up Call – January 28, 2019

The Daily Escape:

Bell Island, Franz Josef Land with Eira Lodge in foreground. The lodge is a remnant of Benjamin Leigh-Smith’s expedition in 1880 – 2017 photo by Ilya Timin, CC BY-SA 4.0.

The largest gathering of billionaires in the world took place last week at the World Economic Forum’s annual conference in Davos. Vanity Fair reports that they:

“…consume $55 Caesar salads and shark canapĂ©s, rub shoulders with Matt Damon, and attend parties that involve “endless streams of the finest champagne, vodka, and Russian caviar, dancing Cossacks, and beautiful Russian models…”

Bloomberg added: (emphasis by Wrongo)

“UBS and PwC Billionaires Insights reports show that global billionaire wealth has grown from $3.4 trillion in 2009 to $8.9 trillion in 2017…The fortunes of a dozen 2009 Davos attendees have soared by a combined $175 billion, even as median US household wealth has stagnated…”

And there was this report from Davos in the NYT by Kevin Roose: (emphasis by Wrongo)

“They’ll never admit it in public, but many of your bosses want machines to replace you as soon as possible. I know this because, for the past week, I’ve been mingling with corporate executives at the World Economic Forum’s annual meeting in Davos. And I’ve noticed that their answers to questions about automation depend very much on who is listening.”

Roose goes on to say: (emphasis by Wrongo)

“In public, many executives wring their hands over the negative consequences that artificial intelligence and automation could have for workers. They…talk about the need to provide a safety net for people who lose their jobs as a result of automation.

But in private settings, including meetings with the leaders of the many consulting and technology firms…these executives tell a different story: They are racing to automate their own work forces to stay ahead of the competition, with little regard for the impact on workers.”

Roose quotes Mohit Joshi, president of Infosys, an Indian technology and consulting firm: (emphasis and brackets by Wrongo)

“Earlier they [large businesses] had incremental, 5 to 10% goals in reducing their work force. Now they’re saying, ‘Why can’t we do it with 1% percent of the people we have?’”

And American executives have come up with new buzzwords and euphemisms to disguise their intent. Workers aren’t being replaced by machines, they’re being “released” from onerous, repetitive tasks.

Companies aren’t laying off workers, they’re “undergoing digital transformation.” They’re being “reskilled”.

A 2017 survey by Deloitte found that 53% of companies had already started to use machines to perform tasks previously done by humans. That figure is expected to climb to 72% by next year. As an example, Terry Gou, the chairman of Foxconn, the Taiwanese electronics manufacturer, who makes iPhones, has said his company plans to replace 80% of its workers with robots in the next five to 10 years.

And Wisconsin just gave Foxconn $4.5 Billion to build a plant and employ 13, 000 workers. Can Wisconsin’s soon-to-be laid-off workers be “re-skilled”, and find employment?

A January 2019 report by the very same World Economic Forum estimates that the 1.37 million workers who are projected to be displaced fully out of their roles in the next decade according to the US BLS, may be reskilled to new viable (similar skill set) and desirable (higher wages) jobs:

“The report shows that, in the US alone, with an overall investment of US$4.7 billion, the private sector could reskill 25% of all workers in disrupted jobs with a positive cost-benefit balance. This means that, even without taking into account any further qualitative factors or the significant indirect societal benefits of reskilling, for 25% of at-risk employees, it would be in the financial interest of a company to take on their reskilling.”

The rest presumably will need to fend for themselves. They will likely rely on your taxpayer dollars to be “reskilled”, or go on government assistance.

The real question isn’t how to stem the tide of automation, it’s inevitable. The question for capitalists and our government is how the financial gains from automation and AI will be distributed, and whether the excess profits corporations reap as a result of layoffs will go in part, to workers, or solely to bigwigs and their shareholders.

Will we create a shared prosperity, or just a greater concentration of wealth?

Time to wake up America! This Fourth Industrial Revolution is underway, and estimates are that it will impact as many as 40% of American workers.

It’s time to understand that the 21st Century American corporation isn’t our friend, as constituted and rewarded. It is the enemy of our society, as they quietly work to eliminate your jobs.

We constantly reduce their taxes. We look the other way when they pollute our environment. We allow them to disproportionately finance our elections.

It’s time for a new Capitalism.

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Sunday Cartoon Blogging – January 27, 2019

It took LaGuardia Airport being closed for about an hour before Trump and the GOP crumbled on the government shutdown. Ronald Reagan must be spinning in his grave to see that the Air Traffic Controllers union that he once busted rise up again, and change policy in DC.

Pelosi made Trump cave:

An ancient artifact blocks entrance to Capitol:

It was indeed a great fall:

The bar has been lowered:

The herd is heading to Iowa and New Hampshire:

Davos: Where the rich and the insincere act like something other than profits is important:

Trump’s buddy Roger Stone desperately acts as if all is well:

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The 1% Are Heading to Galt’s Gulch

(Galt’s Gulch was the sanctuary in Atlas Shrugged where Ayn Rand’s Real Men of Genius spurned American socialism for their own libertarian paradise.)

Welcome to the economy that has just turned the page. But not that page.

The World Economic Forum ended in Davos Switzerland. This is their 45th annual meeting at Davos. Who attends? 2,500 business leaders, politicians, diplomats and a few celebrities take part in the meeting. As in the past, 73% of the delegates are men, and almost 800 of the attendees are from the US.

According to CNN, most of the 1% flew in to Davos on private jets. Roughly 1,700 private flights landed in Switzerland, 5% more than last year. The Guardian reported that, for Davos insiders, the big story was the world economy, but this year, they weren’t concerned all that much about income inequality. From The Guardian’s live blogging at Davos: (emphasis by the Wrongologist)

A year ago, Davos attendees said income disparity was the top threat to world stability, as years of lobbying by the likes of Occupy Wall Street hit home. Today, though, the issue doesn’t appear in the top 10. The Ukraine conflict, and the turmoil in the Middle East, have elbowed it out.

However, another Guardian article described that many of the global oligarchs attending Davos are already planning their escape. These people know full well that the current game won’t last forever. Their response is to take as much money as possible, and flee before the pitchforks emerge. At a packed session in Davos, former hedge fund director Robert Johnson revealed that worried hedge fund managers were going to create an oasis of uber-wealth and then lock the doors:

I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway.

They want to leave to live in a Galt’s Gulch of their own creation. And Hedge fund managers are just a small part of the Plutocracy. The concentration of wealth and ownership in very few hands is growing, and that process has reached epidemic proportions.

In fact, according to the anti-poverty charity Oxfam, the wealthiest 1% will soon own more than the rest of the world’s population. Oxfam’s research shows that the share of the world’s wealth owned by the richest 1% increased from 44% in 2009 to 48% last year. Based on the current trend, Oxfam says it expects the wealthiest 1% to own more than 50% of the world’s wealth by 2016.

But, hasn’t our economy turned the page? Apparently, the Davos 1% types are way ahead of the Obama administration. From Monday’s NYT: (Brackets by the Wrongologist)

The middle class has shrunk consistently over the past half-century. Until 2000, the reason was primarily because more Americans moved up the income ladder. But since then, the reason has shifted: [Now] there is a greater share of households on the lower rungs of the economic ladder.

The Times uses yearly income of $35,000 to $100,000 to define middle class. The $35k amount is about 50% higher than the official poverty level for a family of four.

Here is the NYT’s graph of the current breakdown by income:
HH Income by Group(All numbers on the solid black lines in the chart are percentages of the US population and do not add to 100% due to rounding)

From the NYT:

Even as the American middle class has shrunk, it has gone through a transformation. The 53 million households that remain in the middle class — about 43% of all households — look considerably different from their middle-class predecessors of a previous generation…

Recently, the fastest-growing component of the middle class has been households headed by people 65 and older. Today’s seniors have better retirement benefits than previous generations. Also, older Americans are increasingly working past traditional retirement age. More than eight million were in the labor force in 2013, nearly twice as many as in 2000.

A December New York Times poll showed that 60% of people who self-identify as middle class think that if they work hard, they will get rich. But the income and census data suggest that goal is moving increasingly out of reach.

If 60% of the middle class still think they can get rich, despite clear evidence to the contrary, the Plutocrats and lobbyists have successfully brainwashed the American public. They are unable to see just how systematically and catastrophically they have been played.

We may be able to take back control from the Plutocrats and the Oligarchs. But they now have control of our militarized police, they control cyber spying programs aimed at American citizens, and they control a byzantine political system completely removed from the average person’s day-to-day.

Gone are the days when we could storm the castle with torches and pitchforks, demanding change, and win.

If we succeed in bringing about real change, and not the faux change marketed by politicians, it will not be a pretty affair. They will fight. And they have the means to do so.

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