The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.
Showing posts with label OCCASIONAL LINKS & COMMENTARY. Show all posts
Showing posts with label OCCASIONAL LINKS & COMMENTARY. Show all posts

Friday, March 31, 2017

Introduce Robots; Talk Of Jobs

What, them worry? 

Posted: 31 March 2017

Treasury Secretary Steve Mnuchin may not be worried. Nor, it seems, are other members of the economic and political elite. But the rest of us are—or we should be.

As regular readers of this blog know (cf. all these posts), the robots are here and they’re rapidly replacing workers, thus leading to less employment, downward pressure on wages, and even more inequality.

The latest evidence comes from the work of Daron Acemoglu and Pascual Restrepo, who argue, using a model in which robots compete against human labor in the production of different tasks, that in the United States robots have reduced both employment and wages during recent decades (from 1993 to 2007). That conclusion holds even accounting for the fact that some areas of the economy may grow (thus increasing employment for some workers) when the use of robots raises productivity and reduces costs in other industries.

Even though U.S. employers have been introducing industrial robots at a pace that is less than in Europe, their use in American workplaces has in fact grown (between 1993 and 2007, the stock of robots in the United States increased fourfold, amounting to one new industrial robot for every thousand workers). And, once the direct and indirect effects are estimated, robots are responsible for up to 670,000 lost manufacturing jobs. And that number will rise, because industrial robots are expected to quadruple by 2025.

Actually, the effects have likely been even more dramatic, because Acemoglu and Restrepo take into account only three forces shaping the labor market: the displacement effect (because robots displace workers and reduce the demand for labor), the price-productivity effect (as automation lowers the costs of production in an industry, that industry expands), and the scale-productivity effect (the reduction of costs results in an expansion of total output).

What they’re missing is the effect on the value of labor power. As I explained last year, when productivity increases lower the prices of commodities workers consume, the value capitalists need to pay to get access to workers’ ability to work also goes down. As a result, even if workers’ real wages go up, the rate of exploitation can rise. Workers spend less of the day working for themselves and more for their employers. Capitalists, in other words, are able to extract more relative surplus-value.

And more surplus-value means more income for all those who share in the booty: CEOs, members of the 1 percent, and so on.

That’s why the increasing use of industrial robots, which under other circumstances we might actually celebrate, within existing economic institutions represents a disaster—not for their employers (who, like Mnuchin, are not particularly worried), but for all the workers who have been or are likely to be displaced and even those who manage to hang onto their jobs.

Workers are the ones who are going to continue to suffer from the “large and robust negative effects of robots”—unless and until they have a say in how robots and the resulting surplus are utilized.

Sunday, February 22, 2015

David Ruccio's Chart Of The Day: Disposable Income:.US Income Distribution

David Roccio's.....

on economics, culture and society

Chart of the day

Posted: 22 February 2015

This chart, devised by Branko Milanovic, illustrates the remarkable economic recovery that has taken place in the United States beginning in 2010—a recovery, that is, not for the vast majority of people, but for a tiny minority at the top.

Consider the first period (blue line). It is remarkable that real income of all groups declined. But the hardest hit were the rich, with percentage losses increasing as we move toward to right portion of the graph, and the very poor. I am not an expert on US welfare system, but it seems to me that the system failed to protect the poorest people from substantial income losses between 2007 and 2010. But for the bulk of the population, the years of the Great Recession meant a modest real income decline. The median person’s real income went down by a little over 3 percent. The upper middle class (the people between the 80th and 90thpercentiles) did not see much change in their real income. But the top 10% clearly lost out: notice how the blue line starts decreasing ever more steeply as you move toward the top 1%. The Gini coefficient decreased by less than 1 point.

Now, look at the red line which shows the real change in the second period. It is almost a mirror-image of what happened in the first. The growth was zero or positive along the entire distribution, the strongest among the very poor (around the lowest 5th percentile) and among the rich (the top 10%). Median inflation-adjusted per capita income decreased by just under 1%. For the two top percentiles, which got clobbered by the recession, real income growth was in excess of 10%.

In other words, those at the very bottom lost a great deal during and immediately after the crash and, as a result of special measures (like an expansion of the food stamp program and increases in state minimum wages) they’ve recovered some of what they lost—and they’re still poor. For pretty much everyone else, they lost out (as a result of growing unemployment and stagnant wages) and they still haven’t recovered (even though the unemployment rate has declined but their wages are still pretty much where they were before the crash). And those at the top? They lost a great deal (because of the initial decline in corporate profits and the stock market crash), and as a result of the nature of the recovery (which has successfully restored the profits of large corporations and the stock market), and have now recovered most of what they lost—and they’re still rich.

So, after a brief hiatus (in 2009), the United States is back to having the most unequal distribution of income of all the rich countries on the planet.

And, unless things change (and I don’t mean the Fed’s tinkering with interest rates), it’s only going to continue to get worse.