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Archive for the ‘economics’ Category

The average age of minimum wage workers is now 35 years of age. 78% of minimum wage workers have a high school diploma. 12% of minimum wage workers have an associate degree, and 19% of minimum wage workers have a bachelor’s degree or higher (that’s 31% of minimum wage workers with a college degree).

Today’s economy sucks for anybody who isn’t a computer geek or a marketing whiz, pure and simple. When 1/3rd of minimum wage workers have a college degree, something has clearly gone wrong with our economy.

And it certainly isn’t going to get better under Trump. Every single one of his proposals transfers money from low-wage people and the middle class to the wealthy. FUrthermore, the robots are coming. There are 3.5 million professional truck drivers in the United States. Every single one of them is going to be unemployed within twenty years. There are 3.4 million cashiers in the United States. Within 20 years, they’ll all be unemployed — you will check out by waving your smartphone at the door gate while walking out with your items — they’ll be automatically checked out via RFID and NFC. That’s if you don’t order it from home and have it delivered by a robot-driven car that’s filled with your order by a robot stock picker.

So what do we do? I don’t have the foggiest damned idea, I know capitalism as it currently exists, our economy as it currently exists, is doomed, and any ideas I have for replacing it aren’t very good. But I do know that the solution isn’t tax cuts for the rich.

– Badtux the Baffled Penguin

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In the early 1980’s, as I was studying economics and examining the details of various corporations, one thing became clear: The entire U.S. economy was dependent upon continued economic growth. Continued economic growth that was unsustainable given that there are resource limitations. For example, General Motors. General Motors’ entire pension system depended upon General Motors having more employees paying into the pension system every year. If instead General Motors went into decline and fewer employers were paying into the pension system every year, the pension system would collapse. Then there was the entire debt financed takeover craze of the early to mid 1980’s. It depended upon the corporations being taken over to continue improving in scale and absolute profit every year. If the corporations instead declined and had less business, less absolute profit, then they would be unable to service their debt and would collapse.

Which in fact is what has happened, multiple times. over the past thirty years.

Now we’re moving into a second phase, as the top 1% have increasingly monopolized disposable income in the United States. Retailers, too, depended upon constant growth in order to meet their debt service. But people aren’t buying because they don’t have money. Thus over 1,000 retailers closed in the last week of May. Retailers everywhere are hurting. Current estimates are that we’re going to see 400,000 jobs lost in the retail industry by the end of the year.

Now let’s look at another huge, huge thing that’s coming up. There’s around 3.5 million long distance truck drivers in the United States. Within the next ten years, approximately 3 million of them are going to be replaced by robots as robot-driven trucks become a reality for long haul trucking. The remaining drivers will be short-haul drivers handling jobs that the robots aren’t flexible enough to handle.

What we’re seeing, I believe, is the Cheyne–Stokes death rattles of capitalism itself. Robots have increasingly displaced humans in industrial jobs. It used to take thousands of human beings on an assembly line to assemble a car. Now it takes hundreds of robots, and a few dozen human beings. Now it’s moving downstream. Robots (thanks to the World Wide Web and e-tailing) are now rendering retail workers’ jobs obsolete. Robots are increasingly rendering warehousing workers’ jobs obsolete — Amazon, for example, uses pick-and-place robots extensively in their latest warehouses to deliver goods from warehouse shelves to the workers who do final packaging for stuff going out the door. Next, truck drivers’ jobs are gone. In fifty years, my own job — writing computer software — will be automated. What do people do once any possible jobs are taken up by robots? There’s actually only three possibilities here — either we go to guaranteed basic income scheme and people do whatever they want as a hobby, or a lot of people die, or Luddites ban the robots from large numbers of jobs that are reserved for humans. The last “solution” isn’t long-term stable, the first solution isn’t politically palatable to the 1% who determine who is elected to political office, so….

Man. It’s the other white meat.

Just sayin’.

– Badtux the Depressingly Apocalyptic Penguin

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The solar energy business is now big business — there were 260,000 workers in the solar industry in the US last year, an increase of 51,000 workers from last year. Meanwhile, the entire coal mining industry employs less people than Arby’s — only 76,500 total. Productivity per worker in the mining industry has improved to the point where increases in demand no longer result in new hiring, they result in more productivity for the existing workers as they work more hours. So even if the Trump Administration managed to incentivize building new coal-powered power plants, it wouldn’t result in an orgy of hiring — instead, productivity in tons per worker would improve back to its recent peaks again.

In short, laid-off coal workers need to be retraining to be solar installers. Except — nobody in Appalachia is putting solar panels on their homes. They’re all too poor for that. So the workers would need to move away from Appalachia to get jobs in the solar industry. But they refuse to do that — less than 0.5% of workers who go through a retraining program are willing to relocate.

At some point, we need to make people responsible for the consequences of their own choices, rather than continually pander to them with stupid lies like those coal mining jobs coming back. They’re gone. They got replaced by robots, mostly, or by techniques such as mountain-topping that don’t require miners underground. At some point as robots flood into more and more industries, we’re going to have to come up with some other way of regulating scarcity other than by how much value people’s labor is worth in the economy. But until then, people have to at least be willing to accept what jobs are available, even if they require relocating like the solar jobs, or require that these manly men do “women’s work”. And if they refuse to do so… I don’t see why we should be getting all whiny and liberal-splainy about their bad choices. Let them eat the consequences of their own choices — even if it means they’re basically committing suicide via “deaths of despair”.

– Badtux the Vicious Penguin

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That’s the question, now that yet another single-payer plan has been floated for California.

30% of California’s population is on Medi-Cal. 13.3% of California’s population is on Medicare. Then there are an unknown number of military retirees with VA and TriCare benefits. These overlap slightly, so figure that around 40% of California’s population already is on single-payer. 5.6% receive coverage via Covered California (“Obamacare”). 7.1% are uninsured. Of the remainder of insured Californians, almost 50% get their health insurance via their employer. Of that number, roughly 50% of employees with employer-provided insurance are covered by a self-insured plan that is regulated by the federal government via ERISA, not by the state.

The question is this: can California create a single-payer health insurance plan out of this mess? Average family income in California is around $85,000 and average family health insurance in California is $15000, so to cover 60% not already on single-payer, you’d need to have let’s call it a 10% Healthcare Tax on California incomes. And if you’re going to give the lowest quintile a tax cut on that, it’ll have to be higher.

So: Is it possible? Sure. The money is being spent already, it’s just going through insurance companies rather than through a state single-payer plan. Is it *probable* that Californians would vote to tax themselves that much? It doesn’t seem likely. The people at the top end of the income scale — the people who’d end up paying much more than they’re paying now, since 10% of a $250,000 income is $25,000 — would squawk loudly, and they have the politicians in their pockets. Still. It’s financially possible. It’s just a matter of political will. Unfortunately, political will has been in short supply lately…

– Badtux the Healthcare Penguin

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“The entire economy of gold consists of digging it out of the ground in one place and putting it back into the ground in another place.” -Keynes

Gold is a shiny metal. It has little intrinsic value other than in the electronics industry and dentistry. You cannot eat it. You cannot drink it. You can wear jewelry made from it, but it won’t protect you from the cold or the rain. If someone is breaking into your home, gold will not kill them. Gold has, at times, been used as money, but it has value only insomuch as it can be traded for things with intrinsic value like food and fuel and guns without which an individual or a nation cannot survive. At present, it cannot be traded for such things — you cannot go into a supermarket and buy a can of beans with gold — thus is simply another asset, not money.

Currencies are, in the end, backed by the production of goods and services in an economy purchasable by said currency, not by assets. The whole point of a currency is their utility at purchasing goods and services. It’s interesting that some of the assets of the Bundesbank may actually be fictional. But as long as there are goods and services purchasable by Euros, the Euro will continue to have value. The same with the U.S. dollar.

— Badtux the Economics Penguin

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So, you get your economists who are saying, “competition will always reduce costs!”. Yet that is quite clearly incorrect for at least two places where the United States has more competition than in any other nation on the planet — healthcare, and higher education. WTF is going on here?!

The deal is that old criticism of economists — that they know the price of everything, and the value of nothing. If you have a life-threatening illness, the value of a cure for that illness is practically infinite to you. You’re not looking for the cheapest doctor. You’re looking for the doctor that can cure you — that has the latest certifications, the latest equipment, prescribes the latest medications, you’re going to pay for the best you can get. Because if you’re not cured, you’re *dead*. What good is saving money if you’re dead? So hospitals and doctors compete for your business not by being cheap. They compete by getting the latest certifications, the latest equipment, prescribing the latest medications. The fact that this results in an oversupply of doctors with that certification and equipment, and results in demand for that medication that allows its manufacturer to hike its price, is irrelevant to the doctors because they’re not paying the bill — patients (and their insurers) are, through higher prices and through overprescribing diagnostic tests.

The same is true of higher education, to a certain extent. Economists know the cost of higher education. But they don’t know the value of higher education. Education is your future. So you’re going to try to get the best education you can get, regardless of cost, because the better your education, the better your future will get. So colleges compete with each other based on how many high-priced “big name” scientists they have on staff, how much equipment they have in their labs, the plushness of their dormitories, the gleam of their shiny bright new classroom buildings and football stadiums, rather than competing with each other based on price.

Now: you and I both know that shiny isn’t always best. I graduated from a somewhat shabby state university with minimal college debt. I get paid the same as the people who graduated from Stanford or Cal-Berkeley that same year who will still be paying off their college debt a decade from now. Unfortunately, outcomes information is almost impossible to come by. So people use proxies such as the labs having the latest and greatest equipment, even if cheaper equipment would be just as good for their purposes. Which brings up another point that the “competition will always reduce costs!” guys just don’t get: they assume a world in which everybody has perfect information, where it actually is possible to tell that doctors A and B have equal results but doctor A is cheaper. But we don’t have perfect information. Hell, for a lot of things, we don’t have any information — we don’t have the outcomes information needed to know that doctors A and B have equal results, and it’s absolutely impossible to get pricing information out of doctors, they shrug and refer you to their back end billing people who then ask who your insurer is and tell you that it’d require submitting a claim etc. to know, literally nobody in that whole entire office knows how much your treatment will cost.

But the question of information is a topic for a post in and of itself, so I’ll leave you with the final takeaway: Competition does not always result in lower costs. In fact, we’ve proven with both healthcare and higher education that it can increase costs.

So take that and stick it up your ass crack and light it, neoliberal economists. Because reality simply *is* — and your “reality”, laughably, isn’t.

– Badtux the Economics Penguin

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A chilling story about how the Reagan Revolution unleashing vulture capitalism and destroyed Lancastor, Ohio, and its principal employer, Anchor Hocking.

There’s been plenty of people who claim that the goal of the 1% is serfdom for the 99%. But what they’re doing has nothing in common with serfdom. What our 1% lords have instituted is not a feudal system, unlike what their critics often claim. Under the feudal system, the lords of the realm looked after the serfs on their land, for if the serfs starved or became unable to work, their own fortunes dwindled. But our new lords of the realm say “there’s no shortage of serfs, I’m going to use up these serfs then move somewhere else where there’s more serfs.” They are burn and slash agriculturalists, burning down a forest to bring in a few crops, then once the soil is exhausted, moving on to another forest to burn down. And the people and animals who once lived in that now-forever-gone forest starve. But the 1% don’t care, because there’s always more serfs, another forest, another place to go.

And, sadly, the people who live in the destroyed landscape once our slash-and-burn capitalists move on still worship Ronald Reagan, who made the destruction they live in possible.

— Badtux the Baffled Penguin

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