Pauperization Meat Grinder…
Off the keyboard of Steve from Virginia
Published on Economic Undertow on October 1st 2012
Discuss this article at the Epicurean Delights Smorgasbord inside the Diner
Mish posted an interesting video the other day, another TED-talk by Andrew McAfee. it is an example of how far down the technology rabbit hole we’ve traveled. McAfee’s idea is that robots are going to take everyone’s jobs … but this will be alright! We’ll be ‘free’ (from hated jobs, money, etc.) Insert buzzword here:
McAfee is a shill for the computer/telephone industry. He has cleverly put the wind to his back and proselytizes for the job-eradication industry. It’s actually a safe job! In the process he promises all sorts of abstract benefits that are certain to arrive ‘tomorrow’ …
Humans are suckers, we always wind up believing the promises. We really have no choice, we’ve become desensitized and can no longer imagine alternatives to mechanized mass-marketed ‘prosperity’ other than ‘Third Reich’, ‘Mad Max’ or ’40 acres and a mule’.
Technologists: it’s always tomorrow with these people. Tomorrow’s benefits are essential to overcome the baleful consequences of yesterday’s benefits. Tech is the ultimate tail-chasing exercise, nobody gets anywhere except unemployed. The outcome is a deeper and deeper capital hole that can never be dug out of. Here is McAfee in his own words:
About Andrew McAfee
Andrew McAfee studies the ways that information technology (IT) affects businesses and business as a whole. His research investigates how IT changes the way companies perform, organize themselves, and compete. At a higher level, his work also investigates how computerization affects competition, society, the economy, and the workforce.
He and Erik Brynjolfsson are co-authors of the ebook “Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy”. The book brings together a range of data, examples, and research to show that the average US worker is being left behind by advances in technology.
He coined the phrase “Enterprise 2.0” in a spring 2006 Sloan Management Review article to describe the use of Web 2.0 tools and approaches by businesses. He also began blogging at that time, both about Enterprise 2.0 and about his other research. McAfee’s blog is widely read, becoming at times one of the 10,000 most popular in the world (according to Technorati).
Industrialization concentrates employment within manufacturing centers and has done so since the Industrial Revolution: in this sense nothing has changed for hundreds of years. Machines are the instruments of the pillage economy: as long as there are fossil fuels to power machines there will be machines stealing human jobs. Machines cost less to operate, they never go on strike, never complain or fail to perform. If a particular machine is balky it is repaired or thrown away and replaced without concern. Machines are collateral, they can be debt-subsidized, humans workers cannot. The machine-dynamic is self-amplifying, reflecting the desires (greed) of machines’ owners. If one owner doesn’t have job-pillaging machines, his competitors obtain them and destroy his business. Technological advancement is the essence of ‘ruinous competition’.
According to McAfee, machines will labor so we won’t have to. Nothing is said about how the great bulk of the world’s citizens will entertain themselves absent jobs. Undertow has mentioned this before: the greatest shortage in the world right now is not one of resources or water or fossil fuels, rather it is a shortage of interesting, useful things for people to do! As the late, great Charles Bukowski said, you can only fuck once a day, what do you do the rest of the time? A: drink. Who makes the beverages? A: robots.
I am personally still a huge digital optimist, I am supremely confident that the digital technologies that we’re developing now are going to take us into a utopian future … not a dystopian future … and to explain why I want to pose kind of a ridiculously broad question. I want to ask what had been the most important developments in human history? No single answer to it … what does the data say? The Industrial Revolution …
The bottom of the pyramid is benefitting hugely from technology … the economist Robert Jenson did this wonderful study a while back, where he watched in great detail what happened to the fishing villages of Kerala, India, when they (?) got mobile phones for the very first time. And when you write for the Quarterly Journal of Economics, you have to use very dry and very circumspect language … but when I read his paper I kind of feel Jensen is trying to scream at us and say … ‘Look, this was a big deal, prices stabilized’ … so people could plan their economic lives (!). Waste was not reduced … it was eliminated! And the lives of both the buyers and the sellers in these villages … measurably improved.
The ‘droids are taking our jobs … but, focusing on that fact misses the point entirely. The point is that then we are freed up to do other things. And what we are going to do, I am very confident, what we are going to do is reduce poverty and drudgery and misery around the world …
What is there not to like about cute little ‘droids?
Readers can come to their own conclusions about Jensen’s paper which measures the impact of cell phones on independent fishermen and their customers on the Arabian seacoast of southern India. The fishermen and customers use the phones to discover where the best price might be had for fish as well as who has fish available for sale. What Jensen does not examine in parallel is the efficiencies of other, simpler technology such as VHF- or citizens’ band radios which do not need the massive network infrastructure of the cell phones. Jensen is a rationalizer for the expanding ‘growth’ status quo, the paper is filled with the usual econometric gibberish. What matters most is excluded from it by design: the cost of the network technology in its entirety against the best possible returns of the users.
Cell phones are a billion-dollar solution to a thousand dollar problem. The only way the phones can exist in the first place is when the entire country takes on the debts needed to construct the platform and keep it running. Fishermen are subsidized by everyone else: costs are smeared across the network, the fishermen by themselves cannot hope to pay for anything other than their own handsets and (limited) access. Creditors provide the funds and put future generations on the hook for repayment. Whether the enterprise supports itself is irrelevant because the (expanding) infrastructure — not the customer base — is collateral for (expanding) loans. Once constructed the infrastructure is self-supporting in that it is ‘too big to fail’: it will be bailed out as needed by the government in the form of central bank credit or government guarantees for private sector loans.
McAfee argues the medium matters more than the content itself. This is nothing new, television has been around for decades. The result is smart (chic) transmission means with users having little or nothing to say: smarter machines and dumber operators. The medium marginalizes any content that does not acknowledge the supremacy of the medium in a self-amplifying cycle. Even as ‘progress’ is busy cannibalizing itself, content which might break the cycle is shunted to the margins. Technology is a form of information rationing: fashionable content which supports the fashionable medium is transmitted. Anything else is deemed hopelessly old fashioned and is safely ignored.
The robots steal peoples’ jobs until the cheap energy that drives them becomes too costly. Robots become stranded capital, then recyclable junk. Ironically, the cheap energy is disappearing because there are too many robots! Technology requires a large supply of refined, concentrated energy along with a hyper-complex infrastructure of interrelated robots, to provide the desired services and to keep itself operating. Links in the system don’t have to break, they only to become unaffordable which strands the other links. Once gasoline becomes too costly, the marginal driver vanishes. Once he’s gone so goes the new car industry: without cheap fuel there are too-few gasoline users to support the massive enterprise.
Consider the fishermen in Kerala: efficient fish-pillagers become more successful than others over the short term. They gain subsidies to purchase high-performance fishing boats that allow them to exploit the fishery more completely than their competitors. There are diminishing marginal returns on technology: increasing the efficiency of the fishermen does not increase the fishery but diminishes it. At some point the fishery collapses from over-exploitation, leaving the fishermen turning to the government for a bailout. At the end of the day there is no fishery, little- or no fishing at all … the boats sit idle and corrode. Fishermen are out of work and cannot afford their cell phones without turning the girls in their families out into the street as whores. Gone forever is a thousand-year enterprise of fishing from small boats along with the communities that the unfashionably inefficient fishing once supported. The villages become concrete-block ‘resorts’: the fisherman, undone by their own technology, are hustled off to slums within sprawling mega-cities. The apologists for modernity rationalize for these things too.
The ‘cost error’ is fatal. Because machines cannot pay for themselves by way of the their use, they must be paid for with borrowed ‘money’ which itself is the ‘Mother Of All Innovations’. Most of the gadget-finagling of the past thirty or so years has nothing to do with actual improvements to machines but are restatements/reconfigurations of pre-existing versions. Innovation has taken the form of ‘money tricks’ that conjure more credit against non-existent collateral and discursive processes that make it easier for asset managers to steal from their customers. Because of the success of previous innovations and diminishing returns, the thefts are naked, the thieves desperate. They have pillaged too well for too long: there is only so much remaining … that isn’t bolted down.
Nobody asks the question, where do the thieves go with the loot? Lifeboats from the Titanic are picked up by other Titanics careering into icebergs. The passage of time and repetition of the lifeboat/sinking process also has diminished returns. The amount of work to be done conforms to available resources: at some point there is one lifeboat and a relative handful of passengers, this is what the resources will support over an extended period.
The basic idea is our mechanized economy isn’t productive enough to support all the demands made against it.
To the technologist, the obvious solution to our crisis is to deploy more machines so as to eliminate the productivity shortfall. Besides the techies, this is the argument of the so-called ‘free market’ types keep making over and over. Give us more productivity (machines), ‘innovation’ (machines), ‘entrepreneurs’ (machines) and old time religion (hard currency) and there will be paradise tomorrow!
The flip side of the argument is that everything but the machines must be sacrificed or tomorrow will be a disaster! To satisfy technology, our parents are tossed into the furnace their pensions are stolen. Payments to the seniors must be suspended or nothing will remain for machines (with real numbers to prove it). Of course the children and the grand-children were consumed a long time ago. There is nothing left, the machines have burned it all, what remains is to take what little capital remains, feed that into the fire then jump in after it!
Analysts wail because the US Social Security Trust fund is underwater with not a word is said about every other aspect of modernity that has drowned first. Real money/capital has been shoveled down the rathole for decades. It was given over for fuel put into our precious toys that never earned a dollar!
The country (countries) have been ruined while a handful of well-positioned criminals have enriched themselves. What else is there to show for the trillion$ simply extinguished? Those who want waste need only look to the ends of their driveways! Look to the insides of houses! Look at any automobile slum, any monstercity with hulking tombstone concrete towers that must be fed with rivers of petroleum every single day or else.
The way to solve the problems in the USA right now … along with those of China, Europe, Japan and the rest of the world is to shed the autos and leave the seniors and the kids alone. Instead, everything in sight — pensions, education, health care, privacy and civil liberties — are thrown into the fire in order to keep driving. This is madness!
Pauperization is a world-wide phenomenon: too many humans, too many machines, no return on the use of the machines. We love our machines, we will never let them go …
Phantom returns (from the machines) are actual claims levied against humans (and the rest of nature). Machines ‘prosper’ because humans starve (and capital is wiped out). The bosses say, “No problem! There are increasing numbers of humans, we can afford to sacrifice some of them (as the payment for my getting rich).”
When the machine-feeding system breaks down the outcome is Greece … then Yemen. Coming up is Spain then China and others … into the pauperization meat grinder. Higher input costs multiply exponentially through the system … whatever kind of system you have. In the end, nobody can afford what the system needs to function. The next step is shortages … which are permanent.
As fuel becomes more expensive, machines are fired and humans replace them: ruinous competition doesn’t follow any rules but its own! The entire machine-paradigm of expanding work, expanding machines, of expanding labor productivity and expanding marketplaces requires expanding capital to consume or it shifts into reverse. The amount of work to be done conforms to available resources. McAfee says nothing about ‘hyper-ruinous competition’ where tech competes with itself for diminished inputs.
The largest industrial input is petroleum. Regardless of production or reserves, Peak Oil occurred in 1998, when a barrel of Saudi crude cost less than $10. Price matters, nothing else. More costly crude strands all of world’s fuel wasting infrastructure. Even massive extensions of credit, public and private, cannot bring the cost of petroleum within reach even as credit has its own unbearable costs.
Pauperization is taking place right now in real time right under everyone’s noses. For this the technologists have no answer because there is none … What is needed is a complete change of thinking and attitude, a look beyond the mass technology magic mirror and toward functioning ways of living that demand more of the citizens than to be fashion slaves.