Responding to a dire prediction about the future

Presenting my response to “The Blip: What if everything we’ve come to think of as American is predicated on a freak coincidence of economic history? And what if that coincidence has run its course?”  by Benjamin Wallace-Wells (http://nymag.com/news/features/economic-growth-2013-7/ ).  This response and the responses of others will soon be featured at my friend’s forum www.shadowsinthecave.weebly.com.   (Feel free to come see my response and others to “The Soldier as Sacrificial Victim: Awakening from the Nightmare of History” by Richard Koenigsberg, http://shadowsinthecave.weebly.com/the-response.html)

Let me start by saying that it is easy to allow negative thinking and seemingly insurmountable obstacles to paralyze us.  That said, the TED Talks people and other followers of the motivational speaker/positive thinking cults of the world have a tendency to overemphasis the power of inspiration and personal merit while ignoring serious issues until they result in devastating crises.  The drug of inspiration can take people far, yet reality quickly crushes those who cannot overcome life’s many challenges.  You have to know when you cannot win and when to ask for help. 

Like all people, these individuals tend to respond to their immediate interests and avoid uncomfortable truths.  Those at the top of our society, i.e. the middle income and elite classes, will continue to be able to, at the very least, sustain comfortable lifestyles thanks to the status quo for years to come, thus these global middle and upper classes have few incentives to recognize and address the crises that will devastate the lower socioeconomic classes.  Unfortunately, society needs the expertise and influence of those in the middle to upper classes in order to address the fatal flaws found in our global and domestic economies.  Environment matters.  As the Wallace-Wells article discusses, the socioeconomically environment a growing number of poor must already struggle through will probably result in a far less fruitful future for the vast majority of the human species. 

 (Keep in mind, this comes from someone born into desperate poverty and a dysfunctional home who was motivated enough to earn a BS in physics and psychology based politics, yet struggles everyday with many issues from that unfortunate reality.) 

Looking at the effects of innovation over the last century, advancements in technology and the commoditization of technology have destroyed a great number of jobs/ opportunities, especially for those lacking financial capital, i.e. the lower income classes.  Focusing on the manufacturing sector, what started out as small communities of tinkerers and craftsmen working to fulfill the needs of emerging industries transitioned into a well-paying industry of highly skilled professionals.  Because the manufacturing sector demands innovative thinking, large sums of capital, and lots of labor, all of which have long been abundant in America, it was the perfect vehicle for distributing our nation’s wealth to the masses.  With the advancement of technology, productivity increases have hinged upon the ability of businesses and employees to invest large sums of capital in equipment and training.

In tandem, we must remember that the number of jobs available to workers depends upon greater consumption to compensate for the increased productivity; henceforth, the constant, unsustainable need for growth the Wallace-Wells article discusses.  The new jobs created from technological advances exist to maintain and expand the new technology.  Unfortunately, these technician jobs must be fewer in number, because the technology must produce more with less labor and other costs.  The technicianization process that the manufacturing sector has been undertaking since its inception will soon reach maturity.  At this point, the industry will be comprised mainly of machinery doing the work with a small number of technicians maintaining/operating the equipment and a smaller number of better paid engineers designing what the machines will do. 

Considering 3D printing, along with innovations in machine vision, i.e. quicker, easier means of inputting data, and the general trend towards more intuitive interfaces as seen in consumer products like the ipad, traditional methods used in parts manufacturing, such as injection molding, will soon be outmoded while those doings the work will require fewer skills, thus they will receive a lower pay.  In addition, the technology will eventually replace the need for almost all manufacturing methods once researchers develop new methods to print in different mediums, including those that will be stronger and more durable than steal, for small and large products.  In essence, the advancement of 3D printing, as well as most others industry innovations, has simply found a means of doing what was already being done faster and cheaper by further cutting the human component out of the equation versus creating new ways of distributing wealth via improving the quality of life for consumers/workers.  Because greater productivity demands greater consumption, there will be a contraction in the number of manufacturing businesses and operations, in addition to a massive loss of outmoded jobs, and/or the new high tech manufacturing sector will have to find new customers.  The highly dynamic nature of 3D printing, i.e. the technology can be used to make an ever-expanding range of products, means the former is almost a certainty.  The latter, however, will depend upon the ability of consumers to spend large sums of money, which means a significant enough number of well-paying jobs will have to created in other economic sectors, and expanding economic trade. 

(In fact, advances in science and technology will eventually lead to a future where we will be able to cheaply engineer and customize products at the molecular level on a massive scale.  What is done with these products will help determine the industries of the future.  Given that most people do not have the capacity to understand the science involved in this type of research, e.g. quantum mechanics and quantum electrodynamics, it is unclear how such innovations will translate into jobs for the majority of individuals in our world.) 

Furthermore, given that the West, especially the United States, has embraced a purist capitalist thinking, small and large manufacturing businesses will have to invest large sums of private capital to upgrade their equipment in order to compete in the global market.  Looking at the most populous nation of the world where demand for products is likely to grow the fastest, China is a Communist country, thus the government is likely to subsidize upgrades while it is already building a modern infrastructure for the high tech future; whereas, the US is behind in infrastructure spending.  As such, the Chinese manufacturing sector has a good chance of increasing its productivity beyond that of the US and providing products to fulfill world demand.  Unfortunately, we live in a lowest bidder world economy.  Henceforth, the US economy requires an economic revolution that cannot be outsourced and does not depend upon increased consumption alone; this is not likely to happen as any advances we will have in technology will be sourced globally.

Taking a broader look at the US economy, the medium income for 90% of the American People has grown by only 59 dollars from 1966 to 2011 versus 116,071 dollars for the top 10%, according to tax analyst David Clay Johnson.  Clearly, there has been a longstanding trend toward decreased economic prosperity for the majority.  If it is true that 65 percent of the job market is in information processing as the Wallace-Wells article states then information technology is certain to exasperate this reality.  Given that technologists have failed to recognize critical faults in key issues like internet security and the economic viability of ad revenue as a vehicle for distributing wealth to the majority of the populous before those failings began to have a critical effect on our society, we need to have some very serious discussions and brain storming on how to deal with increasing economic instability and disparity.  For example, information processing will be taken over by computers, yet people must continue to validate and analyze that information, so it can be useful.  The question is how to pay enough people a viable income for doing that.  As it is, the new internet economy largely caters to those already successful in the real world and big corporations.  After all, successful internet sectors like social media is rooted in free labor.

Elementary market forces dictate increased supply translates into decreased prices.  Consequently, more workers seeking more work translates into decreased wages.  Increased productivity, ongoing increases in population, women entering the work force on a massive scale, increased need for more hours from workers due to income constraints, increased need for multiple incomes due to shrinking wages and increased living expenses, increased competition from a globalized job market, and massive job losses due to economic shifts are factors that have and continue to push wages down.  This degenerative cycle needs to be broken.  Unfortunately, it has only been allowed to undermine the mechanisms by which individuals can overcome disparity.  For example, one-third of young adult Americans have a college degree, yet there are not enough jobs for those with a college education and no significant representative groups, e.g. unions, agents, trade groups etc., acting to adequately market the skills of theses degree holders and create higher standards for the pay of these higher skilled workers.  Consequently, the incomes for the educated are subject to downward pressure and their value is becoming ever more limited.  For example, a physics degree comes with some very useful, highly applicable analytically skills, yet there is no physics economy, i.e. research produces long-term, uncertain economic benefits and the government largely funds research with support waning, while preceding generations of physicists with higher level degrees have failed to market the skills of physicists; henceforth, it is far more difficult for young physicists to make themselves look useful and maximize their potential impact on society.  Meanwhile, increased competition does not always lead to a benefit as middle class and wealthy families often subsidize their children in ways they will never fully understand, i.e. pay for school, pay for transportation, provide social experiences, provide connections, supplement an insufficient income by providing for basic needs that would otherwise be unmet, provide a sense of security, etc.  In doing so, the world economy is starved of innovative thinkers with different experiences who come from the lower socioeconomic classes.

Furthermore, society needs to act as a whole and we can start by utilizing the power of social institutions like government.  That said, a large part of the problem has been a failure of government, which serves as the hand of the People, to act in the interests of the majority of the People, i.e. build an economy that efficiently distributes our national wealth to the masses in a sustainable manner.  Considering government policies like the capital gains tax deduction (Check out my blog post for additional reading http://washingtonoutsider.weebly.com/1/post/2012/06/on-reformingthe-capital-gains-tax-and-distorting-the-value-of-wealth.html) and Free Trade (See my Yahoo! Contributor article for additional reading http://voices.yahoo.com/reviving-americas-economic-strength-6967014.html?cat=3), it has become far more evident that our government has been steering our economy to the advantage of the already rich.  As such, economic growth translates into increased wealth for the already wealthy and inflation with cheaper, i.e. less expense, less durable, goods for everyone else.  Another part of the problem has been an over-reliance reliance on government in the wrong ways.  One out of five Americans receives food stamps due to their inability to keep up with increased living expenses.  In many respects, necessary programs like food stamps act as a subsidy that keep people from revolting against the status quo that has impoverished them.  Although the need will not simply evaporate, government needs to recalibrate the rules of our economy in order to building an economy that provides a living wage for the majority.  This must be done instead of those at the top begrudgingly allotting the growing lower socioeconomic classes a stipend to provide for their most basic need and use the shame of degenerative interdependency to silence those who most need to speak out. 

(Check out my Yahoo! Contributor articles on leverage http://voices.yahoo.com/the-greater-economic-leverage-12069168.html?cat=3 and the narrowing of power http://voices.yahoo.com/democracy-narrowing-power-elite-12069164.html?cat=37 for additional reading)

Looking at those in the manufacturing sector again, these workers can expect periods of unemployment.  For someone earning a medium income wage of around 25 dollars an hour seeing overtime of twenty hours per week for three months and unemployed of three months per year with a 70 percent unemployment benefit payout, the unemployment benefit is around 14,700 dollars a year, which is just under the maximum cash and food stamp welfare benefit a family of four might receive.  Of course, this supplemental income does not normally come from Federal and State taxes; it comes from all those who pay into unemployment, including many who may never use it and a greater number of lower paid workers who cannot afford to be unemployed.  With their solid income level and technical skills, well-paid individuals in the manufacturing sector should be encouraged to create new businesses instead of being restricted by unemployment benefits meant to preserve the financial gains of those who experience a temporary hardship, versus those who endure cyclical unemployment.  Unemployment is an essential program that has kept many people afloat in dire times, but the program can be improved to help spur innovation and job creation while changing the bad habits of more lucrative industries.

Meanwhile, the American education system is structured to use students who may or not see an economic benefit but will certainly feel the burden of their debt, to funnel taxpayer dollars into their schools.  Institutions of higher learning should be the ones to come up the revolutionary ideas that will transform the American economy; therefore, the government needs to incentivize them to do so.

Unfortunately, the shrinking of the Middle Class translates into a far weaker tax base.  This will, eventually, result in a massive contraction, or collapse, of government.  Given that many businesses have been built around government contracts while many individuals turn to government for help in their pursuit of retraining, education, jobs, including military and civilian positions, and social safeties programs like unemployment insurance and social security, this will result in a major economic and social crisis.  Consequently, how the government supports those in need and spends money on research, education, and infrastructure must be done in a more thoughtful manner. 

Furthermore, we need to shift away from a growth model to more directly focus on how money flows throughout our economy, which is the fundamental reason we look at grow.  In doing so, we can design our economy to service the needs of the majority instead of catering to a global middle class and wealthy elite.  That said, innovation is the driver of the economy while opportunity, which encompasses necessity, is the mother of all invention.  Because development of transformational technology will likely require a great deal of capital, the wealthy elite and wealthy businesses can help ensure a brighter future by creating channels for innovation and personal achievement.  Google and Amazon, as two well-known examples, have developed various platforms for users to create and profit from their own unique content, thus these companies have created financial opportunities for creative individuals.  Although these platforms do not yet provide the same financial security and viability as traditional employment for a critical mass of individuals while a great deal needs to be done in order to foster technological advancement in a similar fashion by innovative individuals, this type of thinking can help spur new opportunities on a broader scale that might lead to a transformational revolution.  The question becomes how can we foster innovation and new job/business/industry creation in the economy by creating channels for innovation. 

Moreover, those who live in the optimist’s paradise are failing to recognize and address critical threats to the modern lifestyle and world, because they want to belief in a brighter future.  Instead of assuming the world will be a better place in the future, those best positioned in our society with the skills needed to force change must do more to give others direction, places to start in life, and channels for innovation.  In summary, I agree with the Wallace-Wells article that the economic outlook for the global economy is grim, yet I also agree that there are ways of dealing with the brewing crisis.  A healthy economy distributes resources in the most efficient way possible in order to provide from the needs of the majority and afford innovators with the resources they need to innovate.  Just as the previous two economic revolutions allowed the industrial world to achieve a healthy economy and catapult the human race into our modern world, we must now find a new means of efficiently distributing our resources into the hands of those who can use them to further improve our world, so we can afford a quality standard of living for the majority of people.